King v. Burwell and the Trans-Pacific Partnership

Dean Baker Co-Director, Author, Center for Economic and Policy Research

One of the most important Supreme Court cases this year is King v. Burwell. The suit questions the legality of the subsidies to low- and middle-income families in the health-insurance exchanges run by the federal government. If the Court rules for the plaintiff, millions of people in the 36 states that did not set up exchanges could lose their subsidies. With insurance now unaffordable for much of the population in these states, their exchanges will no longer be operational, leading to the collapse of the Affordable Care Act in much of the country.

The whole basis for King v. Burwell is one sentence in the 1,700 page law indicating that subsidies are only supposed to be paid to people in states that have set up their own exchanges. This sentence contradicts the rest of the law, which clearly says that people are eligible for the subsidies regardless of whether they are enrolled via a state-established exchange or an exchange established by the federal government. The plaintiff’s argument is also at odds with the understanding of every member of Congress at the time they voted on the bill, as well as the understanding of all the various independent analysts assessing its impact.

In short, King v. Burwell should be a joke case. But in a context where at least four members of the Supreme Court are prepared to rule in whatever way they feel advances the interests of the Republican Party, it is very possible that it will be the basis for undermining a law that provides health insurance to millions of people and access to insurance to tens of millions more.

This predicament should be a warning to members of Congress as they debate the Trans-Pacific Partnership (TPP), and more immediately, the fast-track authority that will facilitate its passage. (A bill to establish such authority will reportedly be introduced in the Senate this week.) Under fast track, President Barack Obama would be able to get TPP an up-or-down vote in Congress without the possibility of amendments or filibuster.

TPP, as well as its sister agreement the Trans-Atlantic Trade and Investment Pact, would establish an investor-state dispute settlement mechanism, which will operate outside the U.S. judicial system. This system will consist of a panel of three judges, who will each be appointed to hear a single case. They are not bound by the laws of the United States, nor are their decisions subject to appeal within the U.S. judicial process. They are to determine solely whether a law or action in question violates the rules of the TPP. Furthermore, the reasoning behind their rulings will be kept secret for several years after the ruling.

The Obama administration has done somersaults to assure the public that these investor-state dispute settlement panels are harmless and that they will not interfere with laws passed to ensure the health and well-being of the population. But on what possible basis can the administration make such assurances?

Can the Obama administration assure us that a Justice Antonin Scalia clone will not sit on one of these panels and decide that any law that restricts fracking in any way is an unfair restriction on the behavior of foreign-owned oil and gas companies? Can the Obama administration assure the public that an investor-state dispute settlement tribunal won’t decide that restrictions on dangerous food additives, or possibly even labeling requirements, also impinge on the ability of a foreign-owned firm to profit in the United States?

Can the Obama administration promise us that no investor-state dispute settlement tribunal will limit the ability of cities and states to zone property to encourage high-density, environmentally friendly development? Can it ensure us that these investor-state dispute settlement tribunals will not decide that labor laws, such as the minimum wage, overtime restrictions and mandatory family leave don’t also reduce the profits of foreign investors and therefore constitute violations of the TPP?

Obviously the Obama administration is in no position to make such assurances, because it has no idea what sort of people will sit on the TPP tribunals and how they will feel about interpreting its provisions. Given what we have seen in the behavior of the Republican appointees to the U.S. Supreme Court, as well as many appointees to lower courts, there is zero reason to trust the behavior of the people appointed to the TPP tribunals. Regardless of the intention of the drafters of the TPP, it is quite likely that a substantial portion of the people appointed to sit on these tribunals will see it as an opportunity to overturn any law or regulation they don’t like.

Of course, no one can be happy with the current state of the U.S. judicial system, given the number of judges at all levels who are prepared to act as partisan hacks. However the advantage of the U.S. judicial system is that there is at least a clear remedy. If we elect presidents who appoint people who are committed to respecting the Constitution then eventually we will no longer be threatened by those who would use the courts to arbitrarily overturn laws approved by Congress and other elected bodies.

But with the TPP there is no clear route to fixing problems with the investor-state dispute tribunals apart from the repeal of the agreement itself. It would be much easier simply not to pass it in the first place. 

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This has been reposted from the Center for Economic and Policy Research.

Dean Baker is author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy,” PoliPoint Press, LLC. This piece was first published on the Center for Economic and Policy Research’s Jobs Byte. CEPR’s Jobs Byte is published each month upon release of the Bureau of Labor Statistics’ employment report. For more information or to subscribe by fax or email contact CEPR at 202-293-5380 ext. 102 or chinku@CEPR.net.

Posted In: Allied Approaches, From CEPR Co-Director Dean Baker

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