• With: Joe Rago, James Freeman, Dan Henninger, Jason Riley, Allysia Finley

    This is a rush transcript from "Journal Editorial Report," February 15, 2014. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," President Obama rewrites the Affordable Care Act once again. What's behind the latest delay and what does it signal about the future of the law?

    Kentucky Senator Rand Paul with a warning for fellow Republicans. Is the red state of Texas at risk of turning blue?

    And the Big Apple's new mayor wasting no time hammering home his progressive agenda. Will charter schools be the first to fall?

    Welcome to the "Journal Editorial Report." I'm Paul Gigot.

    Another big delay for President Obama's Affordable Care Act with the White House announcing this week it has decided to wave law's employer mandate for another year giving businesses with 50 to 99 full-time workers until2016 to provide insurance coverage. What's behind the move and what does it mean for the future of ObamaCare?

    Let's ask Wall Street Journal editorial board member, Joe Rago; columnist and deputy editor, Dan Henninger; and assistant editorial page editor, James Freeman.

    Joe, a big delay again. Now it's two years from the law had originally said where you had provide health insurance. So what is behind this? Is it economics or politics or both?

    JOE RAGO, EDITORIAL BOARD MEMBER: I think it's both. I think they want an alibi. We are having this furious debate right now about how the Affordable Care Act affects decisions to hire, decisions to work, decisions to staff full-time or part-time. Liberals are saying there is no effect whatsoever. Employers are saying there is a lot of damage in the real world. The administration's actions are showing that the employers are right.

    GIGOT: That there is ---

    RAGO: There is actually economic damage.

    GIGOT: That there is economic harm. Let's put off the employer mandate for two years. But are employers going to change their behavior if they know they'll have to provide health insurance in another year?

    RAGO: I don't think it mitigates the damage to a great degree. That's why it also speaks to politics. They are looking for an alibi.

    The other thing going on here is you're only supposed to qualify for ObamaCare subsidies if you don't have coverage from your employer. By releasing some of these medium-size businesses from the mandate and saying to larger businesses you only have to cover three-fourths of your work force instead of the 100 percent mandated by the law, they are creating more people who can flow to the exchanges to cram more people on to those and make the economics of the ObamaCare exchanges work over time.

    GIGOT: This is related to the problem the exchanges are having because they don't have enough young and healthy people. This they hope, you're saying, will get more of those young and healthy people into the exchanges?

    RAGO: That's right. The enrollment figures that the administration released this week showed about three million sign-ups so far. How many of those are real sign-ups and duplications or people who haven't paid yet remains to be seen. But the demographics of the exchanges need to be 40 percent younger and healthier people. What we are seeing is only about 25 percent in that group.

    GIGOT: What about the legality of this?

    JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Yeah, right.

    (LAUGHTER)

    GIGOT: A small detail.

    FREEMAN: Yeah.

    (LAUGHTER)

    GIGOT: A lot of people, including us, argue, if you look at the statute, there is no, it doesn't say impose it in 2016 not after the end of 2013.

    FREEMAN: It's not in there. You can study all those words in ObamaCare and not find those words.

    GIGOT: And there are a lot of those words.

    FREEMAN: Yeah, there are a lot of them. You cannot find the legal authority for this. And it's not just us. Even Democrats in Congress starting to ask the White House, can you really rewrite this whole thing without coming back to Congress?

    The logic from the Treasury since the mandates in ObamaCare, thanks to John Roberts in 2011, the Supreme Court decision, these are now considered taxes.

    GIGOT: Right.

    FREEMAN: The argument comes from the Treasury Department saying they have the statutory authority to mitigate the transitional effects of a new law when it imposes a big burden on taxpayers. This is wonderful that the Obama administration is finally admitting that ObamaCare is a big burden on taxpayers. But claiming in 2015 it's a new law, when it was enacted in 2010, is really a reach. I think you're going to see more Democrats have a hard time backing this kind of argument. I mean, even assuming that their legal reasoning is sound, just the idea five years later they can call it a new law, and they are basically saying that can go on past 2015.

    GIGOT: Dan, the last thing the administration wants to do is go back and ask Congress to revisit the bill, change a little bit. They know they won't just settle for a little bit. There will be a wholesale rewrite the House Republicans will insist on. They want to do this unilaterally by themselves. Are they going to get away with it?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: I don't think they are going to get away with it, Paul. Consider the way we're talking about this. They turned this ObamaCare exercise into something that sounds like enlistments for World War II.

    (LAUGHTER)

    You show up, you enlist in office, you look healthy, you're through, get on the ship, you'll find out where we are going once we arrive.

    (LAUGHTER)

    Really. And this is having a bad effect on the reputation of the administration, its competence, and its credibility, the president's credibility. That is not going to go away by November of this year when you have those midterm elections. This has put the Democrats in a very tough spot. I don't think these decisions like were taken this week by the administration is going to do much to help that at all. It won't go away.

    GIGOT: But, Dan, is there any legal remedy? You're talking about the electoral remedy, which is political accountability in November. Is there something legally? Can anybody sue? Can anybody have any other objection that would stop it?

    HENNINGER: I don't think so. It's a bit of a dilemma. Employers can't say that they are being damaged at this point because they are not being damaged. They aren't really participating yet. I don't think Congress has standing to sue in this instance either. It's become a kind of fire-and- forget law and with the administration sort of sitting on top of them missile, trying to guide it before it blows them up.

    GIGOT: Joe, one other bit of news this week, the exchange, another 1.1 million new enrollees. I think we're now up to three million total in January. The administration hailing this as a big advance. What do you make of the numbers?

    RAGO: Every enrollment they've announced, every bit of data they announced, they've hailed as great news. I don't see this as great news. As I was mentioning before about either four or five or three and four enrollments aren't really real. That's what the insurers are saying. And this is really --