Obama Assigns a New Power to the IRS

Posted: Nov 16, 2011 11:31 AM

Surprise! There's another problem with Obamacare, one that will affect its basic functioning so much that the president is proposing a new IRS rule to get around it (sans congressional approval, of course). Michael Cannon and Jonathan Adler have a very informative op-ed about it in todays Wall Street Journal.

Obamacare "encourages" states to create state-run exchanges, but permits federal exchanges for the states that decline. The law offers premium assistance (subsidies) for households participating in state run exchanges (no doubt to shield voters from the true cost), but there is no federal equivalent for the 33 states that have so far refused to create a state-run exchange.

Now for the fun part: States that refuse to create an exchange can block a lot of Obamacare spending, forcing Congress' hand on the law. Obviously, this is something that the president wants to avoid. His solution? Create an IRS rule that allows premium assistance for everyone, regardless of state vs. federal exchange participation.

This new rule will give the IRS the authority to spend money and mete out tax credits. Alloting new power to the IRS (not to mention making changes to the Patient Protection and Affordable Care Act after its passage) should be up to Congress, but, well, there you have it.

There will be a hearing tomorrow at the Internal Revenue Building (1111 Constitution Ave NW), tomorrow at 10 AM. We will let you know what happens, but in case you want to go, information is here.