Obamacare Supporters, Critics Clash at Supreme Court Over Law’s Subsidies

Melissa Quinn /

The highly anticipated case that could topple the Affordable Care Act reached the Supreme Court Wednesday, and already onlookers are attempting to deconstruct the justices’ inquiries in an effort to predict how the court will rule.

The nine justices met in the marble courthouse to hear oral arguments in King v. Burwell, opting to extend the discussion for an additional 20 minutes. The court will decide whether the federal government can grant subsidies to states selling insurance through the federal exchange, HealthCare.gov.

Michael Carvin, who represents the four plaintiffs named in the case, and Solicitor General Donald Verrilli, who represents the federal government, went before the court to argue their cases and take questions from the justices.

“It’s a very intelligent court that asks a lot of pointed questions. I always think it’s stupid to try and guess how they’re going to rule,” Carvin told The Daily signal. “But I think we had a fair opportunity to present our case, and I think our case was very compelling. I’m happy with the way the argument went.”

“I think we had a fair opportunity to present our case, and I think our case was very compelling. I’m happy with the way the argument went,” said Michael Carvin, the lawyer for the plaintiffs in King v. Burwell.

The court’s right-leaning justices—Clarence Thomas, Samuel Alito and Antonin Scalia—directed their questioning toward the law’s text, specifically the statute that authorizes subsidies for states that create their own exchanges.

To the contrary, the four left-leaning justices—Ruth Bader Ginsburg, Sonia Sotomayor, Elena Kagan and Stephen Breyer—focused on the consequences of striking down the subsidies.

“In those states that don’t—their citizens don’t have subsidies—we’re going to have the death spiral that this system was created to avoid,” Sotomayor told Carvin, referencing a potential rise in the cost of insurance should the court rule against the Obama administration.

Many are looking to either Chief Justice John Roberts or Justice Anthony Kennedy to cast the deciding vote in the case.

In the first challenge to the Affordable Care Act in 2012, National Federation of Independent Business v. Kathleen Sebelius, Roberts was pivotal in upholding the law and sided with the administration.

(Photo: Melissa Quinn)

(Photo: Melissa Quinn)

Kennedy, meanwhile, is typically the bench’s swing vote.

In an interview with The Daily Signal, Hans von Spakovsky, senior legal fellow at The Heritage Foundation, said both justices posed difficult questions to Carvin and Verrilli.

Roberts, however, offered few clues to how he would rule in the case.

“The chief justice asked a few questions—he didn’t ask a lot,” von Spakovsky said. “But he also seemed to zero in on the text of the statute and whether it was ambiguous or not.”

>>> In Under 3 Minutes, Watch Instant Analysis on Today’s Oral Arguments in Obamacare Supreme Court Case

The justices are expected to begin private deliberations on the case Friday. A decision won’t be handed down until June.

The Affordable Care Act states that subsidies are available to customers who purchase coverage “through an exchange established by the state.” But the law also gave the U.S. Department of Health and Human Services the ability to create a federally run exchange for states that opt out of running their own.

After 34 states decided to use the federal exchange, the Internal Revenue Service extended the subsidies to all 50 states.

“One of the unfortunate consequences of the IRS rule is that they did a bait-and-switch to the states and led them not to take this deal in the first place,” Carvin said. “I’m sure that if the court restores the original deal, the states will take it up or the federal legislature will assure that no unfairness occurs to American citizens.”

If the Supreme Court rules against the Obama administration, health policy experts warn that millions of Americans could lose their subsidies. In addition, Obama administration officials feel the court’s decision could lead to the health care law’s collapse.

Opponents of the law believe the IRS overstepped its bounds and took on the role of the legislative branch.

“The goal of this litigation is not just to restrain the IRS from violating the law and taxing people without congressional authorization,” Michael Cannon, director of health policy studies at the Cato Institute, told The Daily Signal. “It’s also to create an opportunity for real and better health care reform that actually makes health care more affordable.”

>>> Commentary: The Supreme Court Heard King v. Burwell. Here’s What the Justices Asked About and Commented On.


Conservative Reform Party Wins Estonian Parliamentary Elections - Daily Signal

Conservative Reform Party Wins Estonian Parliamentary Elections

Melissa Quinn / Daniel Kochis /

Estonia’s center-right Reform Party won the most seats in the parliamentary elections that concluded on Sunday. The Reform Party won 30 seats, while the Centre Party, which is supported by most ethnic Russian voters, came in second with 27 seats. In all, six parties won seats in the 101-seat Riigikogu, Estonia’s unicameral parliament.

The Reform Party has come in first in the past three elections. The Reform Party and the Social Democratic Party have ruled in coalition since 2011. However, following the most recent election, the two parties no longer have enough seats to form a majority. Smaller parties are therefore being courted to help form a ruling coalition. Estonia’s Prime Minister and head of the Reform Party Taavi Rõivas has ruled out working with the Centre Party.

The results of Sunday’s election are good news for the United States. Under the leadership of the Reform Party, Estonia has flourished. It currently ranks eighth in The Heritage Foundation/Wall Street Journal Index of Economic Freedom, and is one of only four NATO members who keep defense spending at the 2 percent of gross domestic product benchmark.

Estonia is a strong partner for the United States in Europe. This past September Prime Minister Rõivas paid tribute to the alliance between the two countries saying: “We both stand for what’s right and good. We are both prepared to accept responsibility for helping to ensure the freedom and prosperity of all nations that stand with us.”

Against the backdrop of Russia’s invasion of Ukraine and continued aggression, the U.S. should develop and implement a robust strategy to support the Baltic region. This strategy should include an indefinite extension of the European Reassurance Initiative and prepositioning of U.S. equipment in the Baltics.

The result of Estonia’s 2015 elections means the nation’s economic success and commitment to transatlantic security is likely to continue. However, with the menacing Russian bear on Estonia’s border, how robustly the U.S. commits to Baltic security will prove vitally important.

The Supreme Court Heard King v. Burwell. Here’s What the Justices Asked About and Commented On. - Daily Signal

The Supreme Court Heard King v. Burwell. Here’s What the Justices Asked About and Commented On.

Melissa Quinn / Daniel Kochis / Andrew Kloster / Hans von Spakovsky /

Today the Supreme Court heard oral argument in King v. Burwell, an important case dealing with the Obama administration’s attempt to hand out tax credits not authorized by the text of the law.

This is the third appearance of Obamacare before the Supreme Court and the justices were so intrigued by the case that Chief Justice John Roberts extended the time for both sides to make their presentations as the case was being argued.

There was a huge scrum of reporters and television cameras on the plaza outside of the Supreme Court building and a large number of protesters, including Tea Partiers protesting over the IRS’s involvement in their health care.

In brief, Section 1311 of Obamacare grants tax credits to individuals who purchase health insurance on exchanges “established by the State.” However, when the majority of states refused to set up Obamacare exchanges, the federal government stepped in and set up federal exchanges. So far so good. However, the IRS then began authorizing tax credits for individuals on the federal exchanges, despite the fact that the text of the law authorizes tax credits only for state-run exchanges.

The IRS was challenged by Virginia residents (a state which didn’t set up an exchange) who don’t want to receive the subsidy because, with it, they will be obligated to buy insurance or pay a penalty pursuant to the individual mandate (both of which they object to), but would be eligible for an “affordability” exemption from that mandate without the subsidy.

The case was the only one heard today by the Supreme Court. Mike Carvin, the lawyer representing the challengers, gave a tour de force performance under heavy siege by the liberal justices on the Court.  They almost immediately sought to divert attention away from the plain language of the statute, which is unambiguously in conflict with the position taken by the IRS and the administration, by asking questions about the supposedly dire consequences that could ensue if the Court rules against the government. Of course, this is a policy issue that should have nothing to do with the legal question at issue. As Carvin said in his very first words at the podium, “This is a straightforward case of statutory construction where the plain language of the statute dictates the result.”

Right out of the gate, however, Justice Ruth Bader Ginsburg raised an issue that has been in the news recently but which had not even been mentioned or raised in the Justice Department’s brief. Early last month, a number of left-wing outlets began to argue that the plaintiffs did not have standing to challenge the IRS rule because they had not suffered any injury.

Carvin dismissed this as an issue, but Solicitor General Donald Verrilli appeared to vacillate. On the one hand, he did not want to concede an argument that might help the government win. On the other hand, it would be difficult to contest standing at this point due to the factual finding of standing by the lower court and the fact that the government had not raised the issue before the Supreme Court.

Two interesting lines of argument came up today. First, Justice Sonia Sotomayor unveiled a somewhat bizarre constitutional avoidance argument that did not make it into the briefs of either party. She claimed that if the tax credits were unavailable in the states with federal exchanges, this would be unconstitutionally “coercive” of traditional state authority by politically forcing them to set up exchanges. She used the popular phrase “death spiral” to describe what would happen to state insurance markets if the challengers won. Surprisingly, this argument appeared to appeal to Justice Anthony Kennedy, one of the purported swing votes in this case (the other being the chief justice).

Of course, the problem with this argument is that prior cases involving coercion of states by the federal government have involved programs where state governments would lose federal dollars if they did not comply with federal requirements. But here, there are no federal dollars going to state governments that can be used to “coerce” their behavior – the federal tax credits are payable to individuals.

Justice Elena Kagan also posed an odd hypothetical in which she tried to compare the problem of state exchanges vs. federal exchanges and federal tax credits to her assigning the writing and editing of a legal memo to her three law clerks, when one of them is unable to complete the assignment.

Her point seemed to be that it would not matter who ended up doing the work and that was comparable to it not being important for purposes of Obamacare subsidies whether the state or the federal government set up the exchange.

Carvin gamely answered the hypothetical, noting that while Justice Kagan may be indifferent as to who writes the brief, Congress was not indifferent as to who set up the exchanges when it drafted the Obamacare statute. Justice Samuel Alito noted that it certainly would matter to him to know which of the law clerks wrote a brief. He would not assume “it was written by Will, because Amanda stepped into Will’s shoes” and wrote it for Will.

In general, there was a great deal of discussion over an hour and a half about the language of the specific provision on exchanges, whether the text should be interpreted differently based on the overall structure of the statute, and on the possible effect on the insurance market and individuals of a finding that no tax credits can be provided through the federal exchange.

The courtroom was packed with a who’s who of Washington insiders listening to the spirited debate, from Sen. Orrin Hatch, R-Utah, to Sen. Ben Sasse, R-Ne., to former Secretary of Health and Human Services Kathleen Sebelius.

How the Court will rule is anyone’s guess, but we will likely hear one way or another by the end of June, when the Supreme Court’s current term ends.

Senate Fails to Override Obama’s Keystone XL Veto. See How Your Senators Voted. - Daily Signal

Senate Fails to Override Obama’s Keystone XL Veto. See How Your Senators Voted.

Melissa Quinn / Daniel Kochis / Andrew Kloster / Hans von Spakovsky / Kate Scanlon /

On Wednesday, the Senate failed to override President Obama’s veto of legislation authorizing construction of the Keystone XL pipeline.

Sixty-two senators voted to authorize construction of the pipeline, five short of the 67 votes needed to override a presidential veto. Thirty-seven voted to sustain the veto.

President Obama’s ridiculous veto of #Keystone prevented a great jumpstart to our economy. http://t.co/fVMMq4fVl8

— David Perdue (@sendavidperdue) March 4, 2015

Just who voted for these people??? Republicans say no to American-made steel for Keystone XL. Need to call for a vote of no confidence — NotForTheWealthy (@NotForWealthy) March 4, 2015

Today, I voted to override the president’s #Keystone veto. Read my statement & RT if you agree http://t.co/vfr4qekUo1 pic.twitter.com/cwiPbQssjO

— Shelley Moore Capito (@SenCapito) March 4, 2015

Senate fails to override President’s veto on Keystone. Falls short of the 67 votes required. — Senate Democrats (@SenateDems) March 4, 2015

The legislation was vetoed by the president on Feb. 24; his first veto of major legislation as president.

Here’s how some reacted on Twitter:

US Senate Fails…again. “@marknyt: Senate Fails to Override Obama’s Keystone Pipeline Veto http://t.co/cKdNVXbWXk

— Dan Cox (@dangcox54) March 4, 2015

Well it looks like our new Senate failed to override the Veto for the Keystone Pipeline. Expected, but disappointing nonetheless. — Joel Morder (@Joel_Morder) March 4, 2015

There are actually people blaming “spineless Republicans” for Dem Senators voting to sustain Obama’s veto of Keystone. I have no words…

— Ken Gardner (@kesgardner) March 4, 2015

Congress couldn’t pass Keystone after veto. Good. — Brian W. Porter (@riding_road) March 4, 2015

EVERY #Senator from EVERY state the #Keystone #pipeline would go thru wants it! Only #Obama‘s lapdogs are preventing it.

— Doug Day (@mortgageprotx) March 4, 2015

SOOOO relieved!! http://t.co/JYLVzFU9WL — Merle Ann Loman (@AMontanaView) March 4, 2015

Obama doesn’t care about jobs RT @Salon: After months of trying, Republicans’ attempt to force through Keystone pipeline ends in defeat

— Matthew (@Matthops82) March 4, 2015

Keystone got scuttled, Dems all about job creation and helping Americans at the pump….except when they vote on these matters — Rothbardian (@HippieH8er) March 4, 2015

Congratulations to U.S. Senate Democrats for keeping President Obama’s KXL pipeline project veto in place…. http://t.co/xzdc1nX9XJ

— PennEnvironment (@PennEnvironment) March 4, 2015

“Senate Fails In Bid To Override Obama’s Veto On Keystone XL Pipeline http://t.co/O4k0XQTyqE” Checks & balances in action!! WOOT! — Ben Nichols (@Nichols_mlchs) March 4, 2015

See how your senators voted here:

Screenshot from Senate.gov

Screenshot from Senate.gov

In Under 3 Minutes, Watch Instant Analysis on Today’s Oral Arguments in Obamacare Supreme Court Case - Daily Signal

In Under 3 Minutes, Watch Instant Analysis on Today’s Oral Arguments in Obamacare Supreme Court Case

Melissa Quinn / Daniel Kochis / Andrew Kloster / Hans von Spakovsky / Kate Scanlon / Melissa Quinn /

Today, the U.S. Supreme Court heard oral arguments in the highly anticipated case King v. Burwell.

After the 85-minute long arguments, Hans von Spakovsky, senior legal fellow at The Heritage Foundation, spoke to The Daily Signal on the steps of the high court to provide an analysis of the proceedings.

The Supreme Court is examining whether the Obama administration can grant subsidies to those enrolling in the Affordable Care Act’s federal exchange. As it’s written, the law states that only states operating their own exchanges are eligible for the tax credits. However, the IRS issued a ruling extending those subsidies to include the 34 states selling insurance through the federal exchange.

In his analysis, von Spakovsky discussed the questions the nine justices asked of Michael Carvin, attorney for the plaintiffs, and Donald Verrilli, solicitor general and attorney for the federal government.

“[Carvin] had very quick answers to even the toughest questions he was being asked,” he said. “I thought that the solicitor general, Donald Verrilli, was really trying to paddle uphill because he was constantly trying to get the court away from a plain interpretation of the statue, which is pretty clear. And that is the big weakness of the government’s case.”

>>> How Will Congress Respond to Supreme Court Ruling on Obamacare Subsidies?


The Damaging Effects of Obamacare - Daily Signal

The Damaging Effects of Obamacare

Melissa Quinn / Daniel Kochis / Andrew Kloster / Hans von Spakovsky / Kate Scanlon / Melissa Quinn / Alyene Senger /

The Supreme Court heard oral arguments today in the case of King v. Burwell—a challenge to an IRS rule under Obamacare that provides the payment of premium subsidies to individuals enrolled in the federal exchange. Obamacare’s advocates have made various claims about the harm that would supposedly occur if the court were to find for the plaintiffs (King) in this case. While it is not surprising that those claims have attracted attention, it’s important to remember the harm being caused by Obamacare.

Infographic by Kelsey Harris

Infographic by Kelsey Harris

How the New Lee-Rubio Tax Plan Would Boost the Economy - Daily Signal

How the New Lee-Rubio Tax Plan Would Boost the Economy

Melissa Quinn / Daniel Kochis / Andrew Kloster / Hans von Spakovsky / Kate Scanlon / Melissa Quinn / Alyene Senger / David Burton /

The U.S. has the highest corporate tax rate in the developed world, is the only major country to tax its businesses on income earned outside the country and delays the ability of businesses to deduct capital expenses for as long as 39 years. The monstrous complexity of the U.S. tax system has a disproportionately adverse impact on small businesses. It is a major reason why U.S. economic performance is anemic.

The Lee-Rubio plan, announced today, would fix these problems and result in a rapidly growing economy. Based on a forthcoming Tax Foundation study of the plan and previous analyses of similar plans in the past, the plan from Sens. Mike Lee, R-Utah, and Marco Rubio, R-Fla., has the realistic potential to increase the size of the economy by 15 percent over what it would be if we do nothing. Although tax lawyers would probably see their incomes decline, most Americans would see substantially higher real incomes.

The plan does this by reducing business tax rates to 25 percent, allowing business to deduct capital expenses when incurred, moving to a tax system that does not punish U.S. businesses for operating and selling abroad and eliminating the double taxation of corporate income.

The individual side of the plan moderately reduces tax rates for some, but not all, taxpayers. It eliminates most itemized deductions. It would provide a large child credit that would cut taxes for many families with young children. But child credits do not improve the incentive to work, save, invest or take entrepreneurial risks. The revenue used to fund the additional child credit would be better used to lower tax rates. This would further improve economic growth and increase incomes for all families.

The business reforms in the Lee-Rubio plan are extremely good and would make virtually all Americans better off but the individual reforms could be improved.

A full analysis of the plan is forthcoming.

Can Obama Raise Your Taxes Without Congressional Approval? - Daily Signal

Can Obama Raise Your Taxes Without Congressional Approval?

Melissa Quinn / Daniel Kochis / Andrew Kloster / Hans von Spakovsky / Kate Scanlon / Melissa Quinn / Alyene Senger / David Burton / Kate Scanlon /

The U.S. Constitution requires that tax bills originate in the House of Representatives. So could President Obama really impose a tax hike on Americans through executive action?

White House Press Secretary Josh Earnest said Monday that Obama is “very interested” in raising taxes without congressional approval, according to a report by Townhall.

Recently, Sen. Bernie Sanders, I-Vt., sent a letter to the president, advocating that the administration “act on its own” to close tax “loopholes.”

“Since the Republican-led Congress has refused to raise revenue by asking the most profitable corporations to pay their fair share, I would hope that the president could take executive action to remedy some of the most egregious loopholes,” Sanders said in a statement regarding the letter.

Asked about Sanders’ suggestion, Earnest said the president is “very interested in this avenue generally.”

“The president certainly has not indicated any reticence in using his executive authority to try and advance an agenda that benefits middle class Americans,” Earnest told reporters.

Earnest cautioned that there is no “imminent” plan to raise taxes, but that the president is considering an “array of executive authorities that are available to him to try to make progress on his goals.”

Hans von Spakovsky, manager of the Election Law Reform Initiative and senior legal fellow at The Heritage Foundation, said that the president doesn’t have the constitutional authority to raise taxes unilaterally.

“This is another sign of how arrogant (and dangerous) this president is,” said von Spakovsky. “He believes he can rule by executive fiat and that the restrictions and limitations in the Constitution on the executive can just be ignored or shrugged off. The president has no authority to raise taxes whatsoever. Only the House of Representatives can originate bills for raising taxes, and this would be just the latest unilateral, abusive and unconstitutional action of the president.”

Curtis Dubay, a research fellow in taxes and economic policy at The Heritage Foundation, added that even through legal means, now is not the time for a tax hike.

“Tax revenue is near its historical average as a percentage of the economy,” said Dubay. “Washington has no business raising taxes today, whether legitimately through a bill passed by Congress and signed by the president, or unilaterally and illegitimately by a president far overstepping his legal authority.”

A White House spokeswoman told The Wall Street Journal they had “received the letter and would respond directly to Mr. Sanders.”

‘Protect the Land Owner': Virginia Farmer Continues Fight Against Environmental Group - Daily Signal

‘Protect the Land Owner': Virginia Farmer Continues Fight Against Environmental Group

Melissa Quinn / Daniel Kochis / Andrew Kloster / Hans von Spakovsky / Kate Scanlon / Melissa Quinn / Alyene Senger / David Burton / Kate Scanlon / Kevin Mooney /

Instead of filing the same version of the conservation easement that was signed by its president and a Virginia farmer, the Piedmont Environmental Council pulled a “bait and switch” that dramatically altered the document’s terms and conditions.

That’s one of several revelations that have come to light in the past few days as Martha Boneta, the owner of Liberty Farm in Fauquier County, Va., prepares to initiate a new round of litigation against Piedmont Environmental Council, a non-profit land trust.

Boneta refiled a lawsuit Wednesday in Fauquier County Circuit Court that says the environmental group colluded with realtors and government officials to issue zoning citations against her property. This was done to force Boneta into selling her farm, she alleges in the suit.

Boneta also is considering filing a second lawsuit at the federal level against Piedmont Environmental Council.

That suit would be based on the Racketeer Influenced and Corrupt Organization Act, commonly known as RICO.

The environmental group’s inspectors and officers have overstepped their authority under the easement to the point where they have trespassed across Liberty Farm and interfered with her farming activities, Boneta alleges.

Moreover, an analysis of the discrepancies that exist between the documents underpinning the easements shows that it may be “invalid,” and “unenforceable,” she says.

>>>Va. Farmer Says Green Group Urged County to Harass Her With Zoning Citations

Boneta bought the farm from the Piedmont Environmental Council in July 2006 with the easement already attached. On June 29, 2006, Boneta and Chris Miller, the Piedmont group’s president, signed each page of the purchase contract with the easement.

But on July 26, 2006, the Piedmont Environmental Council filed the alternative easement with Fauquier County officials, without Boneta’s consent, just prior to transferring the title of the property over to her. The new agreement provides the green group with rights and privileges not in the version Boneta agreed to when she purchased the farm.

There’s more.

New evidence has emerged that appears to debunk a historical designation the Piedmont Environmental Council makes in both the signed and filed versions of the easement that says Thomas “Stonewall” Jackson, the confederate Civil War general, encamped on Boneta’s property on the evening of July 18, 1861.

Historical accounts of Jackson’s movements in and around the Paris, Va. section of Fauquier County at that time place the encampment at another location.

Oddly enough, the Piedmont Environmental Council makes a similar historical claim about Jackson’s whereabouts in the easement documents it has associated with Ovoka Farm, also located in Paris, but on a separate parcel of land from Liberty Farm.

The general couldn’t have been in both places at the same time.

Boneta has provided The Daily Signal with an “Analysis and Assessment of Damages” — prepared by an economist she hired — that details the losses she incurred as a result of the altercations and discrepancies in the easement documents.

The analysis shows that the historical claim made about the Jackson encampment inflated the real estate price of Liberty Farm well beyond its actual value.

Boneta paid $425,000 for the property in 2006. Over a two-year period, she was forced to fence off about 18 acres of the Oak Grove section of the farm — where the Piedmont Environmental Council located the Jackson encampment — which meant she could not farm in this area.

“What the PEC has done is unethical and a breach of contract,” Boneta told The Daily Signal in an interview. “If they can do this to me and my family, what else have they done? We are shocked to learn that a non-profit 501(c )(3) that is supposed to operate in the public interest would commit this kind of an act.”

“What the PEC has done is unethical and a breach of contract,” says Martha Boneta, a Virginia farmer.

The idea behind conservation easements is for property owners to receive tax breaks in exchange for agreeing to restrict future development on a portion of their property. The Boneta easement lists the Piedmont Environmental Council and the Virginia Outdoors Foundation as co-holders.

The environmental council has not responded to recent inquiries from The Daily Signal seeking comment, but it has presented the public with an online post that provides details of its history with the property and the differences it has with Boneta.

The Virginia Outdoors Foundation passed a resolution last November that said it would be willing to assume full control of the easement if the opposing sides could come to terms. That has turned out to be a big “if.” The Virginia Outdoors Foundation has uncovered “a number of serious flaws” in the easement it says must be addressed through “a corrective amendment.”

>>>Virginia Farmer’s Property Rights Dispute With Green Group Hits Another Snag

What Boneta describes as a “bait and switch” between the signed easement and the easement filed with the county government further complicates the ongoing legal standoff as there are substantial differences between the two documents. In fact, entire sections were added to the filed version of the easement without Boneta’s consent, according to the “Analysis and Assessment” paper.

These new revelations could serve as the basis for the federal lawsuit Boneta expects to file on top of the suit that has been reactivated at the state circuit court level.

“The only reason why the lawsuit was withdrawn at all was to give an opportunity for mediation,” Boneta explained.

“The PEC has not taken responsibility for the horrendous bad acts and damage they have done. We have no choice than to re-file the existing lawsuit as well as additional lawsuits and claims.”

Congress Holds Hearings on the Need for SSDI Reform - Daily Signal

Congress Holds Hearings on the Need for SSDI Reform

Melissa Quinn / Daniel Kochis / Andrew Kloster / Hans von Spakovsky / Kate Scanlon / Melissa Quinn / Alyene Senger / David Burton / Kate Scanlon / Kevin Mooney / Sophie Simunek /

The House Ways and Means Social Security Subcommittee held a hearing last week on the impending crisis of the insolvency of the Social Security Disability Insurance program. The Senate Budget Committee held a similar hearing earlier in February.

These hearings are happening as the Disability Insurance (DI) program is running toward insolvency before the end of 2016. Absent congressional action, beneficiaries of DI and their dependents will see a 19 percent indiscriminate cut in their benefits. The average monthly benefit received in December 2013 was $1,146. A 19 percent cut in benefits would decrease the average monthly benefit to $928, leaving many beneficiaries and their dependents—many of whom rely on the disability insurance program as their only source of income—below the poverty line.

Congress is holding hearings to identify solutions to address the disability program’s imminent funding shortfall without worsening the finances of Social Security’s retirement program. A responsible Congress would adopt meaningful reforms to improve Social Security’s retirement and disability programs to protect seniors and the disabled from indiscriminate benefit cuts without burdening younger, working generations with a higher tax or larger debt burden.

Much work remains to be done for Congress. At the most recent hearing, ranking member Xavier Becerra (D–CA) suggested shifting a percentage of the payroll tax from the Old-Age and Survivors Insurance (OASI) trust fund to the disability trust fund, echoing a proposal in the President’s budget. Adopting the Administration’s proposal would transfer nearly $330 billion over five years from the retirement program to the disability one. This transfer threatens to delay comprehensive Social Security reform until 2033 when both trust funds would become insolvent at the same time.

To avoid this scenario, the House passed the Johnson rule at the beginning of the congressional session, specifying that no funds shall be transferred between the two trust funds unless this transfer is accompanied by savings to the combined Social Security system.

Representative Mike Kelly (R–PA) emphasized that in the five years he has been in Congress, he has been disappointed with Washington’s inability to address long-term problems. Representative Kelly argued that “serious structural changes” are necessary to address the imminent Social Security shortfall.

Lawmakers heard a similar message from their witnesses. Dr. Charles Blahous, public trustee of the Social Security and Medicare Boards of Trustees, pointed to the Section 709 letter in which the trustees wrote that “lawmakers should take prompt action to strengthen the actuarial status of the DI Trust Fund.” Moreover, the letter warns that “[solely reallocating the payroll tax rate between OASI and DI…as they did in 1994] might serve to delay DI reforms and much needed financial corrections for OASDI as a whole.”

Ed Lorenzen, senior advisor on the Committee for a Responsible Federal Budget, also suggested that Congress should respond to the crisis with comprehensive Social Security reform. Lorenzen emphasized the consequences of delay in his written testimony:

Unfortunately we have seen an increasing trend of policymakers failing to deal with issues until we reach a crisis. If we paper over the imminent crisis facing the DI trust fund with reallocation and delay action until we face the crisis of impending depletion of the combined OASDI trust fund, the consequences will be dire for beneficiaries, taxpayers and the Social Security program.… If we continue to delay action for another twenty years the magnitude of changes necessary to restore solvency will be 50% greater than if we act today.

Instead of solely focusing on the financial crisis in the disability program, Congress should consider the system as a whole and ask why we are facing this crisis in the first place. If Congress wants to preserve disability and retirement benefits for those most vulnerable in society, Congress should adopt reforms that strengthen both programs at this critical decision point.

The Heritage Foundation recently held an event on Capitol Hill to reveal some of the shortcomings in the current disability program and to recommend reforms, including adopting a needs-based period of disability and reducing incentives for using DI as an early retirement program to preserve benefits for those who need them the most while improving incentives to work for those who are able to work.

Sophie Simunek is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please click here.