Given the number and frequency of the Obama administration’s delays of Obamacare — more than a dozen, by some counts — it’s clear that the White House believes the law is as malleable as it needs it to be and that almost any alteration of it falls within the purview of executive authority.
But as Michael Tanner, Yuval Levin, Avik Roy, and others have pointed out, the statutory text of the Affordable Care Act doesn’t appear to allow for these rolling, ad hoc delays. Not only does the law dictate that the employer mandate take effect January 1, 2014, but it states bluntly that if employers do not begin providing health coverage by then, the ACA will impose “on the employer an assessable payment.”
So far, the administration has not given much in the way of a legal justification for shrugging off the requirements of the statute. But because the executive branch obviously thinks it can forgo legal justification and simply change Obamacare by administrative fiat, it’s important that we understand why. (Jonathan Cohn at The New Republic, among others, thinks it’s impossible to say what the administration’s rationale is — and that it doesn’t really matter anyway — but that’s not quite the case.)
To get there, one has to go back to a letter
sent to Representative Fred Upton (R., Mich.) by Treasury Department official Mark Mazur last summer, after the first employer-mandate delay. Mazur cited “the Treasury Department’s longstanding authority to grant transition relief when implementing new legislation like the ACA.” As examples of transition relief, he cites the Small Business and Work Opportunity Act of 2007 and the Airport and Airway Extension Act, part IV, signed in August 2011.
The Small Business and Work Opportunity Act expanded tax credits available to small businesses that employ people generally in need of a job — welfare recipients, veterans, ex-felons. The law took effect May 25, 2007, but in July of that year the Treasury Department issued a detailed bulletin describing how one section of the statute, a penalty for income-tax-return preparers, needed to be delayed so the IRS could “alter existing procedures in order to process disclosures with certain forms and in electronic formats.” In other words, the agency had to modify some tax forms to accommodate the requirements of the statute. Thus transitional relief was granted for that section of the statute. However, the bulletin carefully delineated the scope of transitional relief to be granted and set a hard date for its expiration:
This transitional relief will apply to all returns, amended returns, and refund claims due on or before December 31, 2007 (determined with regard to any extension of time for filing); to 2007 estimated tax returns due on or before January 15, 2008; and to 2007 employment and excise tax returns due on or before January 31, 2008.
Note how brief and targeted the transitional relief is, and how its purpose is relatively clear. “The amendments made by the Act raise questions regarding activities representing preparation of a tax return, who is a return preparer within the meaning of section 7701(a)(36) (as amended), and how the statute applies to signing and non-signing preparers,” the brief explains. Although written in dense IRS bureaucratese, the point is that there was a lack of clarity in the statute that needed to be addressed.
The other example cited by Mazur, the 2011 Airport and Airway Extension Act, was a retroactive extension of some aviation-related excise taxes that expired in July 2011. The statute was signed into law on August 5, 2011. A month later, Treasury issued a bulletin to explain why it was not collecting excise taxes on purchases of airline tickets made after July 22, 2011, and before August 8, 2011, citing section 7805(a) of the IRS Code, which gives the agency authority to “prescribe all needful rules and regulations for the enforcement of this title.”
In this case, the problem was that after July of that year, airline-ticket taxes were not collected or paid by airlines and passengers because said taxes had expired. Retroactively collecting taxes on purchases that had already occurred, Treasury said, would pose an “administrative burden” on both parties. But note that the exemption ends on August 8, 2011 — presumably because the taxes were reauthorized by a law signed three days before that, and the relevant parties had begun paying and collecting the taxes on their own again.