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Hearing of the Oversight Subcommittee of the House Ways and Means Committee - Opening Statement of Rep. Peter Roskam, Hearing on The Administration's Unlawful Funding of the Cost Sharing Reduction Program

Hearing

By:
Date:
Location: Washington, DC

House Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-IL) today delivered the following opening statement at the Oversight Subcommittee hearing entitled "Defying the Constitution: The Administration's Unlawful Funding of the Cost Sharing Reduction Program."

Remarks as prepared for delivery:

"Thank you, Chairman Brady. You and Chairman Upton have relentlessly pursued the facts in this investigation, and your work has paid off.

"As we all learned in elementary school, the United States system of government is one of checks and balances. At the federal level, the three branches--Congress, the courts, and the Executive--each have specific responsibilities and authorities that ensure the others do not grab power given to another branch. These checks and balances are essential safeguards that protect the American people from their government.

"In our hearing today, we will be looking at how this Administration has run roughshod over two key authorities the Constitution gave to Congress.

"As Chairman Brady just discussed, the FIRST key authority is Congress's power of the purse.

"The Constitution says, "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.' That means that the government may not spend any taxpayer money unless Congress passes a law that says it can. The American people elect members of Congress, and here in the House, we're up for election every two years. So, every two years, the American people get to have a voice in how Congress is spending their money.

"It also means that the President cannot take money from one program and spend it on another just because he wants to. Money is specifically appropriated for individual programs.

"But this Administration has ignored those constitutional restraints. The Affordable Care Act established many programs. One of them is the premium tax credit, which helps people pay for their insurance premiums. Congress wrote the Affordable Care Act to allow the Administration to pay for that program from an account held by the Treasury Department. That account is paid for with a permanent appropriation from Congress, so the tax credit account always has money. In this hearing, we might refer to that as the Section 1324 account or the premium tax credit appropriation.

"Permanent appropriations are unusual, though. Congress pays for most programs with annual appropriations--meaning that each year, the Administration has to ask Congress for money to pay for those programs.

"The ACA set up one of those programs that requires an annual appropriation, called the Cost Sharing Reduction program--or the CSR program. The Cost Sharing Reduction program requires insurance companies to reduce co-payments, deductibles, and other out-of-pocket costs for qualified people. Under the CSR program, the government is supposed to help offset the insurance companies' costs for the CSR payments. But unlike the Premium Tax Credit program, Congress did not give any money in the ACA for the CSR program. Instead, each year, the Presidentis supposed to ask for money from Congress, and Congress can decide whether or not to give the Executive Branch that money.

"In 2012, the Department of the Treasury wrote the President's Office of Management and Budget a memo saying exactly that. And in 2013, the President initially asked Congress for $3.9 billion to pay for the Cost Sharing Reduction payments in his FY 2014 budget request.

"But then something strange happened. In July 2013, the HHS Assistant Secretary for Financial Resources called the Senate Appropriations Committee staff and asked them to take that line out of the President's Budget.

"Then in the Fall of 2013, OMB created a memorandum explaining why the Administration could use the money Congress appropriated to pay for the Premium Tax Credit Program--that permanent appropriation I was just talking about--to pay for the Cost Sharing Reduction Program, using a permanent account to pay for an annual expense. OMB shared that memo with top officials in the Administration to get their approval, including General Counsels of Treasury and HHS, as well as Attorney General Eric Holder, who signed off on that the plan.

"Around that same time, the IRS's Deputy Chief Financial Officer was confirming that the Administration was squared away to make these payments--which were set to start being paid in January 2014. At first, he was under the impression that the payments would be made from an annual appropriation to HHS, but then he learned HHS had withdrawn its request. HHS explained to him that the payments would come from the Premium Tax Credit account.

"The Deputy CFO had two big concerns. First, how would HHS make payments from a Treasury account? He wanted to be sure that an audit trail would be in place to later trace the accuracy of the payments. But then he became concerned about a bigger problem: Were the funds in the Premium Tax Credit account even available for these payments?

"Because not only does the Constitution prohibit the Administration from making any payments unless they have an appropriation, a law called the Antideficiency Act, makes it a criminal violation for a federal official to pay for a program if Congress has not appropriated funds for that program. Helping the IRS avoid Antideficiency Act violations was one of the Deputy CFO's primary responsibilities.

"So he did the right thing: he raised red flags to the IRS's Chief Risk Officer, David Fisher, and the IRS Chief Counsel's office. His warnings set off a chain of discussions at the IRS. By early January 2014, IRS Chief Counsel William Wilkins reached out to OMB General Counsel Geovette Washington to discuss these issues. She then set up a meeting at OMB for seven IRS officials to come to OMB and look at the memo they had prepared about the CSR funding. So on January 13, 2014, IRS lawyers and chief risk officer and chief financial officer and several other officials piled into a van and went to OMB, in the Old Executive Office Building.

"There, these top IRS officials were escorted into an OMB conference room. Ms. Washington was at the meeting, along with several of her subordinates. The OMB lawyers passed out copies of the memo. Ms. Washington told the IRS officials not to take notes on it or to take a copy with them, which several of the meeting participants found to be strange.

"The OMB lawyers left the room and let the IRS officials read the memo. Then the OMB lawyers came back in. Ms. Washington talked about how she was excited that she had had the chance to brief Attorney General Eric Holder about this issue and that he had approved the memo.

"Chief Risk Officer David Fisher and others raised concerns that the payments would violate the Antideficiency Act and the Constitution at that meeting. According to Mr. Fisher, OMB offered a weak explanation for why the payments would be ok.

"Back at the IRS, the officials briefed Commissioner Koskinen about the OMB meeting, and Mr. Fisher told Commissioner Koskinen that he was worried about Antideficiency Act violations.

"Our investigation revealed, however, by the time the officials met with Commissioner Koskinen, the decision already had been made. At the meeting, the IRS officials saw copies of an Action Memorandum--directing the IRS to make CSR payments from the premium tax credit account. Secretary Lew already had signed off on that memo.

"Administration officials who constructed this plan and moved ahead with it chose to fund the CSR payments from money that Congress designated for other programs. In other words, all of those individuals chose to hijack Congress's power of the purse and make those payments in violation of the Constitution and federal criminal law. To this day, they have made more than $7 billon in CSR payments without congressional authorization.

"The second key authority we'll talk about here today is Congress's power to oversee the Executive Branch. Congress's oversight authorities are critical to ensuring the Administration is transparent with the American people. Congress has run into unprecedented obstruction during the course of this investigation. It took the Committees a year and a half to gather the facts surrounding the Administration's decision to make these illegal payments, and even now, OMB, Treasury, and HHS are in violation of subpoenas issued by the Ways and Means Committee.

"The Administration has argued that because the House sued the Administration to stop them from making these payments, the Ways and Means and Energy and Commerce Committees should not be investigating the facts surrounding the Administration's decision making. The House's lawsuit focuses only on legal issues--the House and the Administration agreed that the court did not need any fact finding to reach its decisions. The committees, on the other hand, want to know who, why, and how the Administration decided to embark on this unconstitutional course. While our oversight has been ongoing, the federal district court held that the Administration was making these payments in violation of the Constitution. That decision highlights how important it is that we understand the facts surrounding this decision so we can be sure it never happens again.

"Instead of accountability and transparency, the Obama Administration threw up roadblock after roadblock -- but despite those, through persistent efforts, we learned a great deal. We look forward to learning more today about why the Administration decided to make these payments illegally and why they have tried so hard to keep Congress from learning about how they have spent more than $7 billion in taxpayer money."


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