Courts issue conflicting rulings on major piece of Obamacare

If the decision by the three-judge panel survives, it would mean that millions of Americans who signed up for insurance through Obamacare in those 36 states would no longer qualify for subsidies. It would also mean that hundreds of billions of dollars of taxpayer money would be saved. And businesses in states that have federal health exchanges would no longer be subject to the employer mandate because the requirement to provide insurance is tied to the ability of uninsured workers obtaining government subsidies.

The Obama administration said it will appeal the decision to the full 11-judge D.C. Court, where it will face a friendly audience. Seven of the circuit’s 11 active judges were picked by Democratic presidents, including four by Obama himself.

Meanwhile, a three-judge panel of the 4th Circuit Court of Appeals in Virginia upheld the tax subsidies. Several other lawsuits on the matter are pending across the country.

At issue is the part of the Affordable Care Act that says the subsidies are to go to individuals obtaining insurance through an “exchange established by the State.” A rule released by the Internal Revenue Service subsequently instructed that subsidies also would apply to exchanges set up on behalf of states by the federal government.

There’s no guarantee the full D.C. Circuit appeals court would take up an “en banc” review of the case. And some legal experts say such a move by the court is somewhat of a long shot.

Thomas Miller, a health care economist with the American Enterprise Institute, a conservative-leaning Washington think tank, said the D.C. Circuit court accepts less than 1 percent of all appeals for full reviews.

But Elizabeth Taylor, executive director of the National Health Law Program, expects the court will take up the case due to its “exceptional importance.”

Whether the D.C. appeals court takes up the case, and regardless of the outcome if it does, the final arbiter in the matter could be the Supreme Court.

“I do not think that the D.C. Circuit panel ruling will be the final word,” Taylor said.

— Philip Klein, Senior Writer, and Sean Lengell, Congressional Correspondent

DEJA VU AS SPENDING BILLS TAKE A BACK SEAT TO PARTISAN POLITICS

Congress appears resolved to punt on one of its fundamental duties — passing spending bills.

House Speaker John Boehner, R-Ohio, said as much when he told reporters he expects Congress to pass a stopgap “continuing resolution” in September that would keep the government funded until late this year.

“I expect we’re going to do a CR [in September], and I would imagine it would go into early December,” Boehner said.

After a long partisan fight that forced a partial government shutdown last October, the two chambers in December agreed to a $2 trillion budget deal to fund federal agencies until October 2015.

To determine exactly how to spend the money, Congress was supposed to draft and pass its 12 annual appropriation bills. But calcified by partisan gridlock, lawmakers are expected to once again kick their appropriating responsibilities down the road by passing a temporary funding measure in time for fiscal 2015, which begins Oct. 1.

The last time Congress passed all 12 appropriations bills was for fiscal 2006, and even then several stopgap bills had to be used to extend the deadline.

Only twice since 2000 have both chambers passed all 12 appropriations bills in time for the start of the fiscal year. Over the past three years, Congress hasn’t passed any of its individual spending bills.

— Sean Lengell, Congressional Correspondent

OBAMA WALKS ENERGY TIGHTROPE

President Obama walked a very fine tightrope in talking up the administration’s energy accomplishments while in California.

“We’re more energy independent: The world’s no. 1 oil and gas producer is not Russia, it’s not Saudi Arabia, it’s the United States of America,” he said to widespread applause from the friendly audience.

Then he followed with this: “We’ve reduced our carbon pollution over the past eight years more than any country on earth.”

In the span of back-to-back sentences, the president took credit both for an oil boom and for a crackdown on carbon emissions.

The administration would argue that the centerpiece of its climate agenda, proposed Environmental Protection Agency regulations on power plants, primarily targets coal. However, oil is still a huge factor in the carbon footprint that Obama was touting.

The president told Californians that the state was off to its hottest start on record, saying the summer of 2014 proves “why we have to worry about climate change.”

Obama then went on to promote a new push to crack down on U.S. companies that relocate overseas to reduce their taxes.

“I don’t care if it’s legal, it’s wrong,” Obama said of the practice.

“I’m not interested in punishing these companies, but I am interested in economic patriotism,” he added.

— Brian Hughes, White House Correspondent

ORTHODONTIST READIES FOR NEXT BIG OBAMACARE LEGAL FIGHT

A Florida orthodontist, backed by a conservative watchdog group, is gearing up for the next big court case challenging Obamacare.

The 11th U.S. Circuit Court of Appeals has scheduled oral arguments for the second week in October to hear Dr. Larry Kawa’s lawsuit against the Obama administration for delaying the employer mandate.

Kawa, who owns and operates Kawa Orthodontics in West Palm Beach, said his office lost $1.2 million in earnings after setting aside 100 hours to plan compliance with the 2014 employer mandate, which would require big companies to provide health insurance to employees or pay a fine.

In July 2013, President Obama announced the employer mandate would be delayed a year, and he later extended the date again, to 2016.

Kawa, represented by Judicial Watch, filed suit in October 2013, seeking to have the 2014 employer mandate reinstated. The case was tossed out three months later by a U.S. District Court in West Palm Beach, but this month it was allowed to move forward by the 11th Circuit in Atlanta.

“It’s a good indication that this case is proceeding apace,” said Tom Fitton, the president of Judicial Watch. “This is where the rubber is going to meet the road in a challenge to Obama’s lawlessness on Obamacare.”

Obama has altered the health care law dozens of times. The changes have earned widespread criticism from GOP critics who say the president is overstepping his executive authority and adding delays and changes to Obamacare for political reasons.

Michael Tanner, a health care policy expert at the libertarian Cato Institute, said the case might remain entangled in the courts well into 2016, when the employer mandate is supposed to take effect.

But the case is poised to make a critical determination, Tanner said, “in terms of laying down a marker as to what the president can or can’t do when implementing laws. That would be important.”

— Susan Ferrechio, Chief Congressional Correspondent

BARNEY FRANK DISMISSES WARREN’S FAVORITE IDEA

The Democratic Party’s former point man on financial regulation has a low estimation of Sen. Elizabeth Warren’s pet legislation.

Appearing before the House Financial Services Committee he used to head, former Rep. Barney Frank, the architect of the 2010 Dodd-Frank financial reform law, dismissed the idea of reinstating Glass-Steagall, the Depression-era law that split investment banks from commercial banks that Warren has advocated reinstating.

Frank, sporting a beard and facing a portrait of himself hanging on the committee room’s wall, was asked by Rep. William Lacy Clay, D-Mo., if he favored the bill to effectively recreate Glass-Steagall introduced by Warren with Sens. John McCain, R-Ariz., Maria Cantwell, D-Wash., and Angus King, I-Maine.

Frank responded that the Glass-Steagall separation of banks that take deposits from banks that make speculative investments would not have prevented the financial crisis.

“Glass-Steagall is a 70-year-old bill,” Frank said. “I think the things I talked about as having caused the problem — the invention of the financial derivatives without backing, credit default swaps, insurance not regulated in the way that insurance should be regulated, securitization of mortgages — Glass-Steagall wouldn’t have stopped any of that,” Frank said. “You could have made all these bad mortgage loans,” he added.

Simply breaking up the big banks isn’t a solution, either, Frank argued. He said that too much complexity, not just size, was part of the problem, and that the Volcker Rule, a Dodd-Frank provision intended to prevent banks from placing bets for their own profit with depositors’ money, helped reduced complexity.

— Joseph Lawler, Economics Writer

SURVEY: MORE PEOPLE WORSE OFF BECAUSE OF OBAMACARE

Eighteen percent of Americans, or fewer than one in five, say they or someone in their family is better off because of the Affordable Care Act, according to a new poll by CNN. Nearly twice that number, 35 percent, say they or someone in their family is worse off. A larger group, 46 percent, say they are about the same after Obamacare as before.

In nearly all demographic categories — age, income, education — more people say they are worse off because of Obamacare than say they are better off.

For example, one might expect respondents with incomes below $50,000 to be somewhat likely to say Obamacare has helped them. And that is the case: 21 percent say they are better off because of the Affordable Care Act. But 35 percent say they are worse off. Forty-four percent are the same.

Likewise, one might expect young respondents to report benefits from Obamacare. And they do: 23 percent say they’re better off. But 33 percent say they’re worse off. Forty-three percent are the same.

In other categories, the gap between better off and worse off is larger. In just one demographic group, nonwhites, is the group of those who say they are better off, 29 percent, bigger than the group who say they are worse off, 17 percent. Fifty-four percent say they are the same.

The CNN numbers are basically consistent with other surveys. The most recent Kaiser Family Foundation poll, for example, found that 18 percent said that they or their family were better off because of Obamacare, while 26 percent said they were worse off and 53 percent reported no difference.

— Byron York, Chief Political Correspondent

INFLATION FLATTENS OUT IN JUNE

Consumer inflation held steady at 2.1 percent yearly in June after rising the previous four months, the Bureau of Labor Statistics reported.

The good news for consumers is that food prices moderated, with grocery prices flat. The bad news is that gasoline prices spiked 3.3 percent, driving two-thirds of the Consumer Price Index inflation.

For the Federal Reserve, which is trying to stabilize inflation at 2 percent, the report is a mixed bag. The fact that headline inflation is flattening out raises the possibility that the months-long move away from very low inflation may have been another short-term fluctuation and not a longer trend.

Core inflation, a less-volatile measure that strips out changes in food and energy prices, slowed slightly to 1.9 percent.

Inflation at the producer level stopped rising in June, as well. The Producer Price Index slowed from 2 percent in May to 1.9 percent in June.

Inflation remains even lower in the Fed’s preferred gauge, which is the Personal Consumption Expenditures Index maintained by the Bureau of Economic Analysis. The latest data, for May, showed headline inflation at 1.8 percent, and core inflation at just 1.5 percent.

In other words, even with CPI inflation at 2.1 percent, there’s still a long way to go as far as Federal Reserve Chairwoman Janet Yellen and the Fed are concerned.

— Joseph Lawler, Economics Writer

PROPOSED RULES TRY TO KEEP TRAINS CARRYING CRUDE FROM EXPLODING

The Transportation Department floated new rules designed to prevent trains carrying crude oil from exploding.

The effort is a response to a number of recent derailments and explosions that have increased partly because of booming oil production in the Bakken shale formation in North Dakota and Montana. The DOT’s Pipeline and Hazardous Materials Safety Administration is investigating whether crude from that region is more flammable than other varieties.

The multi-pronged proposal affects trains carrying 20 or more carloads of flammable liquids such as crude oil and ethanol. It calls for phasing out old tankers, thicker walls for new ones, reduced speed limits and a testing program to properly classify types of crude. The proposed rule will be open for public comment for the next 60 days.

The DOT noted in the proposed rule that carloads of the class of crude originating from the Bakken, which now produces 1 million barrels of oil per day, have jumped from 10,800 per day in 2009 to more than 400,000 last year. Accidents involving trains carrying crude oil have increased as well, going from zero in 2010 to five last year and this year. DOT predicted derailments would rise to 15 next year without new safeguards, settling at five annually by 2034.

— Zack Colman, Energy & Environment Writer

COUGH UP ANOTHER $2.85M TO FUEL OBAMA’S 3-DAY FUNDRAISING TRIP

President Obama’s three-day West Coast fundraising trip cost nearly $3 million just to fly Air Force One.

At $228,288 an hour, the base flight time of 12.5 hours from Washington to Seattle, San Francisco, Los Angeles and back to Andrews Air Force Base will cost taxpayers $2.85 million.

Expensive? That bill doesn’t include the cost of flying and housing staff and the Secret Service, or equipment like limos to get the president from his hotel to events.

The hourly cost of flying Air Force One has risen under Obama, largely due to the increase in fuel prices. The Air Force recently told watchdog Judicial Watch that the price jumped to $228,288 from $179,750, an increase of 27 percent.

“We need a fundamental rethink of the costs of the traveling presidency. Presidential fundraising gets taxpayer-funded subsidies that are incalculable,” said Tom Fitton, president of Judicial Watch.

Typically, some of the costs of party fundraising are covered by the groups hosting the president.

— Paul Bedard, Washington Secrets Columnist

REGULATOR CFTC’S ‘REVOLVING DOOR’ MOVE CRITICIZED

An outgoing commissioner of the regulatory agency that oversees derivatives contracts will become the CEO of the International Swaps and Derivatives Association, a trade group for firms that engage in derivatives transactions, according to a statement from the ISDA.

The commissioner, Scott O’Malia, had announced his departure from the Commodity Futures Trade Commission just two days before the trade group made its announcement. O’Malia, who had worked as a Senate staffer for Minority Leader Mitch McConnell of Kentucky and Sen. Pete Domenici of New Mexico, was a Republican nominee to the five-member CFTC.

O’Malia’s move to a trade group involved in CFTC matters drew immediate criticism from financial reform advocates. The group Better Markets wrote that “O’Malia’s spin through the revolving door is a record setter for influence peddling.”

The statement also noted that the ISDA, described as one of the “derivatives industry’s leading battering rams against the CFTC,” has been involved in recent lawsuits against the CFTC over position limits on commodities speculation and regulation of overseas derivatives agreements.

The CFTC, which originated as an agency to oversee agricultural futures contracts, was given expanded authority by the 2010 Dodd-Frank financial reform law to oversee the trillions of dollars in swaps between large financial institutions.

— Joseph Lawler, Economics Writer

IRS OFFICIAL: LOST LOIS LERNER EMAILS MAY STILL EXIST

New testimony from a key Internal Revenue Service official indicates the IRS may not have lost two years of emails sent by former top IRS official Lois Lerner after all.

That is what the House Oversight and Government Reform Committee suggested in a newly released transcript of a recent closed-door interview with IRS Deputy Associate Chief Counsel Thomas Kane, who was subpoenaed by committee Chairman Rep. Darrell Issa.

Kane is responsible for producing documents requested by Congress that are related to a probe into the IRS’ past practice of targeting conservative groups.

Kane told Oversight Committee staffers that the backup tapes that held two years of lost Lerner emails may still exist.

That would contradict claims made by IRS Commissioner John Koskinen, who told Congress that Lerner’s emails to outside agencies sent between 2009 and 2011 were lost when Lerner’s hard drive crashed and was destroyed and backup tapes were overwritten after six months.

At the time the emails were lost, Lerner was head of the IRS tax-exempt division and House investigators believe she holds the key to establishing whether higher-ranking administration officials were involved in the targeting.

— Susan Ferrechio, Chief Congressional Correspondent

U.S. SPENDS $35 MILLION TRYING TO GROW SOYBEANS IN AFGHANISTAN

Despite warnings that it wouldn’t work, the American Soybean Association was given $34.4 million in federal funds in 2009 to try to jumpstart soybean farming in Afghanistan, according to a government watchdog agency.

The project was first scrutinized in 2010, when the Special Inspector General for Afghan Reconstruction learned the soybean association had failed to determine whether the program was financially sound before approval.

The soybean program has not met expectations, and its long-term sustainability is now in doubt, SIGAR said in a new audit.

Research conducted by British authorities in 2008 showed that “soybeans were inappropriate for conditions and farming practices in northern Afghanistan,” where the program was to be implemented.

“The lessons […] are valuable in that it can strongly advise against any further encouragement of farmers growing soybeans in Afghanistan,” the British report said.

However, the U.S. Department of Agriculture still gave the soybean association nearly $35 million for the “Soybeans for Agricultural Renewal in Afghanistan Initiative,” according to SIGAR.

“What is troubling about this particular project is that it appears that many of these problems could reasonably have been foreseen and, therefore, possibly avoided,” SIGAR said in a letter to Agriculture Secretary Tom Vilsack.

— Kelly Cohen, Staff Writer