Did political convenience convince a conservative journalist to re-categorize a bug as a feature? An examination of the Welch–Beutler–Suderman spat

August 6, 2014

By Matthew E. Milliken
Aug. 6, 2014

A Twitter feud between left-wing and right-wing pundits caught my eye last week.

The spat was launched by this tweet:

The difference between intellectual honesty () and a hackish attempt at oppo marginalization: ()

— Matt Welch @mleewelch 10:51 AM – 29 Jul 2014

Welch is the editor in chief of Reason, the libertarian magazine produced by the Los Angeles–based Reason Foundation. His tweet praised an article written by Reason senior editor Peter Suderman and published in Reason while panning one written by Brian Beutler, a senior editor at The New Republic, and published in that left-leaning magazine.

The articles promote dueling interpretations of the issue that many people refer to as Halbig. The tag comes from the plaintiff in one of a handful of pending lawsuits that seek to cripple the right’s favorite whipping boy, the Affordable Care Act.

The key to Halbig — beyond, of course, understanding that conservatives are obsessed with (a) opposing anything associated with Obama, especially (b) the health care reform law that is familiar known as Obamacare — is the question of whether one provision in that law means what it appears to say in the narrowest and most literal possible meaning.

This is the position on the right wing. As a result, they assert, buyers in states that did not establish their own online health-insurance marketplaces are ineligible for the tax credits that they were promised. In many cases, these subsidies make the coverage affordable.

Should this argument prevail, it could affect more than 7 million residents in the 36 states that rely on HealthCare.gov. (That’s the federally run website for comparing and purchasing health insurance plans offered by private companies; the site was created for residents of states that declined to create their own online exchanges.)

The opposing viewpoint, advocated by the Obama administration and many on the left, is that various factors require that the provision be interpreted as the vast majority of experts have generally insisted that it be interpreted. In other words, the (new) status quo should prevail, and the millions of Americans using HealthCare.gov should keep the tax credits they receive for purchasing health insurance. By extension, this viewpoint also means that these Americans should be able to keep their insurance.

One point cited by liberals — although not by the Obama administration, due to somewhat arcane legal reasons — is that the provision in question clearly represents a drafting error, not the actual intention of Congress. Conservatives have taken to claiming that the language is the law. Right-wing pundits and activists dismiss the various indications that the provision in question is erroneous; they also wave off repeated statements that the Halbig plaintiffs’ interpretation was never intended to be part of the law’s regulatory scheme.

Many bits and pixels have been devoted to arguing this topic, especially after a pair of federal district courts issued opposing rulings on which interpretation should prevail.

The Beutler article to which Welch linked starts by discussing conservative Phil Kerpen. In a July 26 tweet, the conservative implied that all liberal journalists were either actively covering up or simply clueless about the supposed fact that users of federal exchanges were ineligible for tax subsidies.

Beutler continues:

For years now, this has been a fringe position on the right, in part because many conservatives (like liberals and mainstream media reporters) were there to chronicle the legislative debate in great detail. They spoke to members of Congress, immersed themselves in the substance of the legislation, and pored over Congressional Budget Office reports. Some of them even read hundreds of pages abstruse bill text and did their best to reconcile it with their understanding of the policy intent. If in our sleuthing, any of us who covered the debate had divined through interviews or other methods that the law’s authors intended to make the subsidies conditional — to coerce states into setting up their own exchanges — it would have been among the biggest scoops of the entire process. If, for instance, Louisiana Senator Mary Landrieu had any reason to suspect that the bill she’d used so much leverage to constrain would allow Governor Bobby Jindal to deny the law’s core benefits to her constituents [by failing to create a state-run marketplace], she wouldn’t have voted for it.

To the extent that the question wasn’t probed widely, if at all, it’s because that would’ve been almost like asking whether the subsidies were intended to be denominated in Rubles. Indeed, outside the Halbig-Truther fringe, the debate over setting up state-exchanges was one that divided conservatives. All of them correctly understood that opting out would cede power to the federal government. But they parted ways over whether it was strategically wiser to hold the feds at bay, or overwhelm them with responsibility for creating more exchanges than they’d anticipated. The flashpoint wasn’t over an obscure loophole in the law, but over how best to cope with the obvious universality of Obamacare. Likewise, liberals didn’t panic as more and more red states opted not to set up their own exchanges, but rather chuckled at the ironic spectacle of “states’ rights” Republicans standing aside and allowing the federal government to gobble up some more of their sovereignty.

Any port in a storm, though, which is why some right-wing activists have spent the last several months fabricating a rival narrative — a ludicrous theory of intent, in which leading Democrats meant to condition the subsidies, but decided to keep the inducement a secret from reporters, back bench members, governors, budget analysts, and health care reform advocates.

Beutler goes on to criticize conservative journalists, none of whom informed their audience about Congress’s intent to bar subsidies for users of federal exchanges, for failing to catch what many of them now claim is a central tenet of Obamacare:

[T]he Halbig Truther claim isn’t that Dems accidentally enacted a policy at odds with their unanimous intent. It’s that the bill writers meant to do this all along, and the Dems who voted for it either knew what they were doing or didn’t get the memo. “Didn’t catch everything” doesn’t just mean that you missed the key, unintentional phrasing buried in the statute, but that you and everyone around you failed in the most basic execution of duties as reporters, analysts, government officials and so on.

Suderman’s piece, by contrast, vigorously argues that the Affordable Care Act should be interpreted literally, without accounting for the possibility that the provision in question represents a drafting error.

Some of the evidence Suderman cites, oddly, is extra-textual — namely, the fact that other laws have conditioned the disbursement of federal money upon certain conditions:

The idea that federal health care benefits would be withheld unless states fulfill certain requirements isn’t some kooky idea dreamed up by critics. The pattern here is clear. Congress has often proposed withholding credits for health coverage unless states play by certain federal rules.

Suderman also cites comments — since disavowed — made by Jonathan Gruber, a Massachusetts Institute of Technology economist who was a prominent architect both of Obamacare and of its precursor, the system enacted by Republican Gov. Mitt Romney and Massachusetts’s Democrat-controlled legislature. Gruber’s comments have provided significant fodder to conservative critics of Obamacare (and proponents of the Halbig plaintiffs). But again, it seems odd to look outside the text of the law when one’s core contention is that the interpretation of the law should be governed solely by, well, the text of the law.

What really caught my eye about Suderman’s piece, however, was this passage near the beginning (emphasis added):

Any hunt for the congressional intent behind a piece of legislation should start with the actual language of the law in question. And in this case, the language is unambiguous. Tax credits — that is, subsidies for health insurance — are limited to “Exchanges established by a State.” In case there was any confusion, the law defines “State” as “each of the 50 states plus the District of Columbia.” These qualifying exchanges must further be established under Section 1311 of the law, the section which deals with state-based exchanges. The federal exchanges are set up under the authority of a different section, 1321.

That’s it. That’s what the law says. That’s what Democratic members of Congress, in both the House and Senate, voted to pass, despite some initial disagreement over whether states or the federal government should be in charge of the exchanges. That’s the language that President Obama signed into effect.

Arguably, that should be the end of the debate. The language is clear and direct, and it is repeated several times. There isn’t really another plausible interpretation of the text in question.

That’s not just common sense. It’s also the conclusion of the Congressional Research Service, which wrote in a July 2012 report that “a strictly textual analysis of the plain meaning of the provision would likely lead to the conclusion that IRS’s authority to issue the premium tax credits is limited only to situations in which the taxpayer is enrolled in a state-established exchange.”

I was moved to seek out the Congressional Research Service memo Suderman cited in that last paragraph. It’s a 10-page document, and it does indeed say, as quoted, that a strictly textual analysis favors the Halbig plaintiffs.

Two sentences later, the document — which, incidentally, was penned by a pair of legislative attorneys — also says this:

However, given the previously discussed alternative interpretive arguments that may suggest a more inclusive construction — including legislative history, legislative purpose, and context — a more searching analysis of Congress’s intent in enacting the provision may lead to a less clear result.

In other words, the “conclusion” of the Congressional research memo is hardly as, well, conclusive as Suderman would have us believe.

I want to quote one other passage from the document (omitting footnote numbers, and with added emphasis). Before I do, however, I’d like to provide two items of context. One is that the memo refers several times to a two-step test, known as Chevron after the court case in which it was established. Another even more technical point is that Section 36B of the Internal Revenue Code describes allowable tax credits, including those granted by IRS regulations to people who obtain health insurance through the online exchanges.

That said, consider this portion of the Congressional Research Service memo:

[I]f Congress has not directly spoken to the question at issue, the reviewing court’s role is limited to determining whether the agency’s interpretation was “based on a permissible construction of the statute.” Where Congress has not clearly expressed its intent, a court “may not substitute its own construction of a statutory provision for a reasonable interpretation” of the agency. Therefore, if Congress’s intent is unclear, the Court’s role at Chevron “Step Two” is generally to defer to any reasonable agency interpretation of the pertinent statutory language. The Supreme Court has indicated that deference to an agency’s interpretation under step two is appropriate “whether or not it is the only possible interpretation or even one a court might think best.” Thus, if a reviewing court determines that there is ambiguity surrounding the issue of whether premium credits are available in federal exchanges and reaches step two of the Chevron analysis with respect to the regulations issued under §36B, the regulations will very likely be considered a reasonable agency interpretation of the statute and accorded deference by the court.

These words appear at the very end of the memo.

Returning to Reason magazine piece, let’s ask ourselves this: Does either the literal or the figurative conclusion to the Congressional Research Service report square with the words Suderman cited?

I think not. In fact, he seems to have gotten it exactly backwards.

Let’s return to that Matt Welch tweet that I quoted at the beginning of this post. Roughly 40 minutes after Welch sent it, Beutler replied with this tweet, which cites a 2011 Suderman blog post discussing whether users of the federal exchange are eligible for tax subsidies.

This brief piece — it’s 475 words, of which about a third comprise excerpts of an Investor’s Business Daily article — is relevant because Suderman and the IBD piece refer to the Obamacare provision in question as:

• “a bug in the legislation”;

• “an error in the legislation”;

• “this technical problem in the law”;

• “the glitch”;

• “unusually shoddy legislative drafting”; and

• “this newest glitch in the law.”

Suderman also wrote — as liberal allies of the law have consistently noted throughout the Halbig litigation process — that the interpretation favored by the plaintiffs in the case completely undermines the incentive structure that the law puts in place in order to decrease the ranks of the uninsured.

Got that? In 2011, Suderman repeatedly called the provision contested in Halbig a bug, not a feature, and he acknowledged that it was logically inconsistent with the law’s entire scheme. Now, Suderman insists that the contested point is an intentional feature — not a bug.

Welch answered Beutler’s riposte with this tweet:

I trust @petersuderman to make good-faith assessments of all relevant and new information, @brianbeutler. Unlike so, so many others.

— Matt Welch @mleewelch 2:36 PM – 29 Jul 2014

It’s great to see an editor in chief display such faith in his employee. However, after comparing Suderman’s July 29 article with the 2012 Congressional Research Service report it cites, and after contrasting Suderman’s 2011 reasoning with his current line of argument, my suggestion for Welch is this: Perhaps he should reassess the trust he places in his deputy.

One Response to “Did political convenience convince a conservative journalist to re-categorize a bug as a feature? An examination of the Welch–Beutler–Suderman spat”

  1. Reader 1 Says:

    Hell of a write up. Thanks for posting this.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: