Lead attorney in ObamaCare subsidies challenge: 'Our argument is very compelling'

This is a rush transcript from "The Kelly File," March 4, 2015. This copy may not be in its final form and may be updated.

MEGYN KELLY, HOST: Developing tonight, a bipartisan group of senators vowing to keep trying after the Senate fell five votes short of overriding President Obama's veto of the Keystone XL Pipeline project. Eight Democrats voted with Republicans. The pipeline would carry nearly a million barrels of crude oil a day from Canada to refineries and ports along the U.S. Gulf Coast. The project's approval has been held up for more than six years.

Also today in Washington, a crowd gathered in front of the Supreme Court for a critical hearing on ObamaCare. A hearing which could mean the end to the integral part of the president's health care plan.

Michael Carvin is the lead attorney in that case. He argued the matter before the U.S. Supreme Court this afternoon. And he's also former deputy assistant attorney general. We are also I'm proud to say former colleagues at Jones Day.

Mike, good to see you tonight. So, let's start with how you think it went.

MICHAEL CARVIN, LEAD ATTORNEY IN KING VS BURWELL: Well, it went really well mainly because our argument is very compelling, it's very straightforward. The statue clearly says that subsidies are available on exchanges established by the state.

KELLY: Hold on, stop right there because most of the folks watching haven't been following it. Basically this comes down to whether -- ObamaCare said, all right states are supposed to establish these exchanges and if they do so then the people who sign up for ObamaCare on those exchanges, they can get subsidies. It's wonderful, its utopia, go, do that. A lot of these states said, I'm not doing it, and then the feds stepped in and did it, and you say, guess what, that's not what Congress intended.

CARVIN: Yes, I mean it's pretty straight forward. The federal government is not the state government. So, if federal government establishes the exchange then under the plain language of the statue you don't get the subsidies.

So, really the IRS was saying black means white and that's why we challenge the law because it's completely contrary.

KELLY: OK. So, what happened was the states said we're not doing it, and the feds stepped in, tried to save the day, and the lawyers took a look and said that's not how it works. And then the government, the Obama administration said, you lawyers, Carvin, you don't know what you're talking about. This is the way we intended it to work all -- forget the language of that step, forget that this is the way we intended to work all along.

The problem is there's a little man named Jonathan Gruber who has been telling us all that we're morons. And he told you you were a moron when you went before the Supreme Court the first time to say that this law is unconstitutional. But secretly, he was saying similar things behind closed doors and he a couple of years ago made your argument, here he is.


JONATHAN GRUBER: If you're a state and you don't set up your change that means your citizen don't get their tax credits. But your citizens still pay the taxes that supports this bill. So you're essentially saying your citizens are going to pay all the taxes to help all the other states in the country. I hope that that's a blatant (ph) enough political reality that states get their act together to realize there are billions of dollars at stake here in setting up these exchanges and they'll do it.


KELLY: Does the Supreme Court listen to some -- do they even consider that one of the architects of the law says is exactly what you are arguing today?

CARVIN: Well, again that's what the law says and all Jonathan Gruber did is repeat what the law says. So, there was this theory that we had somehow made this up out of whole cloth and Gruber confirmed that, what was obvious to everybody. If it says you only get the subsidies on state exchanges, that doesn't mean you get the subsidies on federal exchange.

KELLY: If this law -- if you win, what will happen? Is it the end of the ObamaCare?

CARVIN: Well I think it presents a real opportunity to reform ObamaCare. The leadership of the Senate and the House has made clear that they're not going to let this people who got victimized by the IRS hang in the wind, but what they are going to do is to give them some subsidized or tax credits where they can go by the kind of insurance they want rather than what the federal government is telling them what they should want.

KELLY: And so, it all comes down probably between Justice Kennedy and Chief Justice Roberts. Kennedy said some bad things towards you and he said some good things towards your argument. You want to take a prediction on him and Chief Justice Roberts?

CARVIN: I never make predictions on the basis of oral argument. I will say that the law is so clear that I would suspect that all Justices would agree that the rule of law means that we've got to enforce it the way it's written.

KELLY: Well, you're wrong about that. That's definitely not going to happen. So, I'll take you up on that bet because you're definitely losing the four liberals on the court.

CARVIN: Yes, that's true.

KELLY: Great to see you, Mike.

CARVIN: Thanks, appreciate it.

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