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The President’s Power to Spend

In House of Representatives v. Burwell, yet another big case arising over the Affordable Care Act, U.S. District Judge Rosemary Collyer has ruled that the administration’s implementation of the Act’s subsidy provisions violates the Constitution. Lots of fun here; let’s start with the basics.

The power of the purse belongs to Congress. Thus, Article I gives Congress the power to tax and to borrow money on the credit of the United States—but, oddly, no power to spend. Here as in so many other places, though, the Constitution is better (and certainly less weird) than its many critics allow. Congress cannot literally spend money on anything except its own operations. The Constitution’s term for “spending” is to “draw money from the Treasury,” which must be done by whatever drone in the executive signs the checks. But all such transactions must be authorized by Congress. Article I Section 9 is crystal-clear on the point: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” In the case at hand, the administration contends that Section 9 is just a suggestion.

The ACA subsidizes policies purchased on “Exchanges” in two ways. First, Section 1401 provides “premium tax credits” to qualifying individuals. Those expenditures are authorized through a “permanent appropriation.” Second, Section 1402 provides that insurers must give qualified individuals reductions for co-pays, deductibles, and the like; and the insurers are then to be reimbursed for these “cost-sharing reductions.” However, while Congress authorized those expenditures, it never appropriated the requisite funds and in fact specifically declined to do so. Beginning in 2014, the administration made the payments anyway. How, and with what? With 1401 monies. That maneuver, Judge Collyer has held, violates the Appropriations Clause.

All but one of the administration’s defenses belong in the laugh-in corner of ConLaw. E.g., the administration contends that the idea of an “appropriated entitlement”—i.e., a legal entitlement (the insurers’ reimbursement) whose satisfaction depends on future appropriations is a “dormant construct.” Congress has legislated in that fashion quite often—but never since 1997. Thus, barring an unequivocal statement to the contrary, Congress should be deemed to have appropriated whatever expenditures it has authorized. That contention conflicts with the constitutional language; with two centuries of appropriations law; and with the administration’s own 2013 appropriation request for 1402 reimbursements. Only when and because Congress explicitly denied that request did the administration decide that what the heck, we’ll reimburse anyhow. We’ll think of a legal argument later. The folks at DoJ can fix anything and will say anything.

The administration lone non-frivolous argument rests on the Supreme Court’s 2015 decision in King v. Burwell, which held—with respect to the tax credits also at issue in this case—that under the ACA, an “Exchange established by [HHS]” under one section is an “Exchange established by [a] State” under another section. When read in context. Otherwise, King held, the statute would defeat its own purposes, and that’s absurd. Same thing here, says the administration: no reimbursements means fewer policies and that’s absurd. Besides, no subsidies to insurers mean higher tax credits for the insured and that money was appropriated and so what’s the diff.

Judge Collyer does her best to distinguish King. That statutory re-write, she says, served to avert an absurdity caused by inartful drafting. Here, the alleged absurdity comes not from the statute but from Congress’s subsequent failure to appropriate funds.

Plausible? Sure. Compelling? Not if you read King for all that it’s worth, and not if you consider the Congress that enacted the ACA. That Congress plainly intended to protect its break-through enactments (the ACA, and Dodd-Frank) against any attacks, including attacks by any future Congress that might not be dominated, as that one was, by Democratic majorities. In that context, who’s to say that the statutory language at issue, or for that matter any statutory language, should not “yield to the overriding principle of the present Court: The Affordable Care Act must be saved”?

That sentence from the late Justice Scalia’s dissent in King furnishes the grounds for the administration’s appeal. Judge Collyer’s thorough opinion notwithstanding, King—especially in conjunction with NFIB v. Sebelius—may be best read as saying that there is an ACA exception to every known principle of American law.

Memo to the author of NFIB and King: this had to happen. Good luck in finding five votes for the proposition that that’s not what you meant.

Memo to blog readers, prompted in part by the recent Forum with Stephen Smith: the real action here isn’t with the legal rule (which is easy); it’s the remedy. Suppose Judge Collyer is right on the rule, as I think she is: the folks who knowingly drew unappropriated funds from the Treasury should be criminally indicted, yes? (There’s a statute to that effect.) The insurers who received those funds should give them back, yes? And they would then have a (Tucker Act) claim against the feds that’ll make your ears ring, yes?

Yes, yes, and yes. Judge Collyer, however, issued only an injunction to the effect of, “don’t keep doing this.” And she stayed even that remedy pending appeal. Meaning that the administration has effectively won a case that it has nominally lost.

That’s their game.

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