Rewriting ObamaCare... again

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?



GIGOT: A small detail.



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.


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.


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 --


GIGOT: They are not paying?

RAGO: They are not paying or their duplicates or errors created by the exchange system. This is a state-by-state exercise. Some of these states are doing really bad.

GIGOT: All right. We are going to keep watching this. We've got a long way to go in this law.

When we come back, GOP Senator Rand Paul with a warning for fellowRepublicans: Diversify or see the red state of Texas turn blue.


GIGOT: Kentucky Senator Rand Paul making headlines with a blunt message for fellow Republicans: Diversify or perish. Speaking at a GOP dinner in Houston last weekend, Paul warned his home state of Texas could soon turn blue. "Texas will be a Democratic state within 10 years if you don't change," Paul predicted. Adding, quote, "That doesn't mean we give up on what we believe in, but it means we have to be a more welcoming party. We have to welcome people of all races. We need to welcome people of all classes. We need a more diverse party. We need a party that looks like America."

We are back with Dan Henninger and James Freeman. And Wall Street Journal "Political Diary" editor, Jason Riley, also joins the panel.

So, Jason, is Rand Paul right?

JASON RILEY, POLITICAL DIARY EDITOR: Well, Paul, in terms of Texas, I'm not sure. Romney won Texas by 16 points, which is more than McCain won it by. Every statewide office there is Republican. I don't know Texas is in trouble any time soon.

But to his broader point about the country and demographic trends and the party being more inclusive, I think he is spot on, on that. For instance, Republicans improved their share of the vote over 2008 and 2012 among men, whites and young voters. Romney won the Independent vote. Paul, a Republican, still lost the election. That would suggest the problem isn't turning out more of the base but expanding the appeal of the party.

GIGOT: Let's show -- give the viewers a sense of the demographic change. In 1992, for example -- I think we have the data -- 87 percent of the electorate was white. By 2012, that had gone down to 72 percent. In Texas, it was not quite as big a drop but was 73 percent. In 2008, it was already down to 63 percent or close. You're seeing the magnitudes of that demographic change. But

There are some people within the Republican Party who say we don't need to worry about getting Hispanic vote, for example. We can get a bigger share of the white vote. Is that possible?

RILEY: Like I said, Republicans have been improving their numbers among base voters. Romney did that and they still lost the election. I think the demographic trends can't be ignored. Hispanics are about 17 percent of the population right now. Projected to be 30 percent by 2050. University of California is the largest university system in the country. One out of four students there are Hispanic, Paul. I don't think the party can continue to ignore those trends.

It doesn't mean you need to appeal to them using the identity politics that the left does. Appealing to Hispanics as Hispanics, women as women, appeal to them as Americans, but do make the appeal.

GIGOT: If Republicans don't appeal to these voter blocks, it makes it easier for the Democrats to make racial appeals, to try to divide the electorate on racial grounds, as I think Eric Holder does, for example, in his attacks on Voter I.D.

FREEMAN: Absolutely. For Republicans, I think it's true, Romney did leave a lot of white working class votes on the table last time. I would say that had a lot to do with Mitt Romney. But it shouldn't be an either/or. You go after the white working class or you go after immigrants and minorities. It should be both. The message, if they focus on job creation and values, those are issues, unlike immigration that can bring that coalition together -- a lot of these immigrant groups, small business, entrepreneurial, they should be natural Republican voters.

GIGOT: We've got another data point to look at, Dan. For example, in 2004, Republicans got more than 40 percent of the Hispanic vote and the Asian vote. But by 2012, it had fallen into the upper 20s. Those are killer numbers.

HENNINGER: They sure are. The problem with the Hispanic vote is the result of the immigration issue, and the Republicans, the idea being they can't do immigration reform.

I have to tell you, Paul, I think at this point this immigration issue has become a bit of a red herring. The number of Mexicans coming into the United States is receding at the moment, partly because of the post- recession economy in the United States. But partly because Mexico is about to undergo a huge economic boom related to its liberalization of its energy laws. What fracking did to the United States is about to do bigger in Mexico. A lot of those Mexicans are going to go back to Mexico.

So I think this immigration issue has become a proxy for disaffection, about what's happening in the American culture. A lot of conservatives are trying to argue that unless you are with us on opposing the immigration bill, you're not with us on traditional American values. This somehow translates into the idea that white people represent those values. Long term, Paul, I do not see how a major party in this country can sustain itself with that argument.

GIGOT: If you want to be a majority party, by definition, you should appeal to all groups in the country.

But to what extent, Jason, has immigration become a threshold issue? I know Hispanic voters and ethnic voters, not any more than whites, they are not one-issue voters.

RILEY: True.

GIGOT: But is immigration one of those issues where if you're opposed to immigration, then you really are sending a signal that you don't want people like me.

RILEY: That seems to be the debate in Washington, Paul, and in Congress. But if you look at poll after poll after poll, a majority of Americans are sympathetic not only toward immigrants but illegal immigrants. FOX News put out a poll a few weeks ago that showed that 69 percent of people favored a solution that included a path of citizenship for people already here, provided they pass certain tests of jump through certain hoops.

GIGOT: But you're making my point.


RILEY: My point --


GIGOT: -- politics of this. Is it a threshold issue?

RILEY: The anti-immigrant folks I think have done a much better job, or on talk radio, for instance, have done a much better job of persuading people in Congress that it's a threshold issue than they have in persuading the American public that it's a threshold issue.

GIGOT: When I say threshold issue, I don't mean for conservatives, necessarily. I mean for reaching out to, for example, the Asian-America vote. If you appear as a Republican party to be opposed to immigration, they are not going to listen to you on any other issues. That's why I'm --

RILEY: There is some of that. Although, the polls also show that people care about things other than immigration. They care about the economy. And I think to James' point, if the GOP focuses on that, they will also be able to bring in some of these voters. You don't need to make specific racial or ethnically based fields.

GIGOT: All right, Jason, thank you.

When we come back, the great progressive experiment is under way in the Big Apple with newly elected mayor, Bill de Blasio, wasting no time pushing through his liberal agenda. Can New York City charter schools survive his political assault?


GIGOT: New York City's newly-elected Democratic mayor wasting no time implementing what he calls his aggressive agenda. Bill de Blasio's first priority appears to be a political and economic assault on charter schools, which teach some 70,000 of the city's children.

Wall Street Journal editorial page writer, Allysia Finley, joins us with more.

Alyssa, charter schools, so our audience knows, is basically public schools that are freed from the traditional work rules and union collective- bargaining agreement so they can hire and fire at will, no teacher tenure, that sort of thing. Now 1.1 million students, K-12, in New York, 70,000 charter schools, some very successful. What does -- what is Bill de Blasio trying to do and why?

ALLYSIA FINLEY, EDITORIAL PAGE WRITER: Basically, he wants to shut them down. He wants to do that by making it more expensive for them to teach.

GIGOT: For them to operate?

FINLEY: That's right.

GIGOT: He is doing that by what?

FINLEY: He wants to charge them rent to share spaces with public schools.

GIGOT: In a particularly interesting way, right? He wants to charge them I guess for progressive, you know --


FINLEY: Based on their ability to pay. The richer or the more well- endowed schools, the more successful schools that can raise more money will be charged based upon how much money they have.

GIGOT: A lot of these charter schools go out and raise money from philanthropists to do other things in the classroom. So if they go out and are successful in raising money, he is going to charge them more rent?

FINLEY: Yeah, it's a tax on success.

GIGOT: He's also against co-location, which means if there is room in a traditional public school, the charter can come in and say we'll take half the building or one-third of the building, and he wants to make that more difficult.

FINLEY: Right. He says this will make kids in the public schools that are right next door feel inferior. But that's a total fallacy. Public schools under state law are required to spend money to renovate if a charter school spends money. So they have to match the money.

GIGOT: What is the educational evidence on success of charters versus traditional schools? Do they work better?

FINLEY: A number of studies have been done. In particular, in New York City, the Stanford Socreto Study (ph) found that students in charter schools gained five months of education in math and learning.

GIGOT: Per year --

FINLEY: Per year.

GIGOT: -- of being in a charter school.

FINLEY: Of being in charter of school.


FINLEY: Five months per year.

GIGOT: What about reading?

FINLEY: One month. Still, that is substantial.

GIGOT: Over eight years or 12 years? That makes a huge difference.

Jason, so politically, is this a free ride for de Blasio?


Can he do this and everybody will say, so what? These are 70,000 kids in Harlem and other poor neighborhoods mostly. Most minorities, most of their parents love these schools.

RILEY: Right.

GIGOT: So we say, well, that's --

RILEY: Well, the hope is that he can't. The hope is that there is a critical mass of people now with a vested interest to keep these schools open that know they work, the students themselves, parents and graduates of the schools. Paul, you're not even talking about the tens of thousands on wait list to get into the school in addition to those who attend them.

Because space is such a premium in New York City, he can make this co- location argument. What's really insidious though is he is claiming, as Allysia hinted at, that it is the inferiority of these schools that is the problem with them. We all know, when you described how charter schools work, de Blasio's problem here is that the schools do work, not that they don't work. Because they do work, it makes them a threat to traditional public schools. He has a political interest in keeping union control of those schools because the unions help support Democrats, including Bill de Blasio.

For de Blasio, this is about the adults that run the school system. It's not about the kids. These schools, not only are doing better in terms of student outcomes, in terms of test scores, graduation rates, college attendance, they are safer schools down the line. On academic grounds, there is no concept. These kids are better off than their peers in traditional public schools.

GIGOT: President Obama and Education Secretary Arne Duncan has spoken in favor of charter schools and had a lot of praise for them and like the idea but have they spoken up at here about New York so far, Allysia?

FINLEY: No. They basically have been silent. If you look at what's been going on in Louisiana, too, they say this is the civil rights issue of the time, but at the same time --

GIGOT: They are not letting that -- they're not supporting that --

FINLEY: Supporting it.

GIGOT: -- that community. That's right.

We have to take one more break. When we come back, "Hits and Misses" of the week.


GIGOT: Time for "Hits and Misses" of the week -- Jason?

RILEY: Paul, Attorney General Eric Holder wants states that block people from voting after they leave prison to overturn those laws and restore their right to vote. He says these laws are racist and discriminatory. I think his real motive here is that most these prisoners after they leave prison are more likely to vote Democratic. I wish the attorney general was as sympathetic about law-abiding minorities who want to use school voucher programs, for instance, that he is trying to shut down.

GIGOT: In Louisiana, for example.


RAGO: Paul, this week in the California desert, one of the world's largest solar farms opened, the Ivanpod Solar Plant (ph). The problem is that the process generates heat waves approaching 1,000 degrees. Birds are flying in and being eviscerated. The green lobby is complaining. A hit to the solar plant. Not only is it exposing environmentalist contradictions, but it's also an important lesson in how we organize our lives. We can't do it to protect the birds.

GIGOT: All right, Joe.

And, Dan?

HENNINGER: Paul, before "Saturday Night Live," there was comedian, Sid Caesar, who died this week, and was the godfather of the golden age of American comedy. He was so funny. But his comedy was good, clean fun. A few years ago, he reflected on the fact, to be funny today, comedians thought they had to be totally gross. As Sid Caesar said, they are creating a completely distorted view of reality. Boy, do we miss Sid Caesar.

GIGOT: OK, Dan, thank you very much.

That's it for this week's show. Thanks to my panel and to all of you for watching. I'm Paul Gigot. Hope to see you right here next week.

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