Can Obamacare Evade the IRS Shadow?

Comments made by former Speaker of the House of Representatives, Newt Gingrich, gave a dismal prognosis for what the IRS scandal would mean for President Barack Obama’s healthcare reform. “Obamacare relies very heavily on the IRS,” he said on MSNBC’sMorning Joe,” asking rhetorically why the American people would “trust the bureaucracy” with healthcare if you “can’t trust the bureaucracy” with politics.

In fact, news that the Internal Revenue Service singled out conservative groups for special examination when they applied for tax-exempt status during the 2012 election cycle has many Republican legislators asking how the agency can be trusted to administer Obamacare. “There is a lack of trust already, to begin with,” Representative Diane Black (R-Tenn.) told The Washington Post Wednesday. “People don’t have a lot of confidence, and now we’re about to give them an unprecedented amount of authority to get information that is highly personal.”

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Conversely, Democratic leaders have said the current controversy will have no effect on the agency’s efforts to implement the provisions of Obamacare. While Republicans have contended that the IRS has lost its credibility, Representative Rosa DeLauro of Connecticut, head of the Democrats’ Steering and Policy Committee, said Wednesday that even though the agency’s actions were “outrageous,” it should not be a barrier to installing the central elements of Obamacare.

“People agree on an investigation … but that shouldn’t get in the way [of implementation],” DeLauro said at a press briefing in the Capitol, according to The Hill. “We can walk and chew gum at the same time.”

Aside from the Department of Health and Human Services, the IRS is the most important government agency responsible for the implementation of the Affordable Care Act; it is charged with overseeing the law’s required purchase of health coverage as it will check whether millions of Americans are in compliance. It will also track individuals’ private health information in order to distribute tax credits to eligible individuals who purchase coverage under a qualified health plan through one of the exchanges. In total, there are 47 different Obamacare provisions that require involvement from the IRS.

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“The IRS’s most substantial implementation effort relates to the delivery of hundreds of billions of dollars in premium assistance tax credits that will help millions of American families afford health insurance starting in 2014,” IRS Commissioner Douglas Shulman said in a congressional testimony last summer.

So far, the White House has scrambled to distance Obama from the scandal. “At this point, we have to wait for the action of an independent investigator, if you will, the inspector general, before we can jump to conclusions about what happened, whether there was a deliberate targeting of groups inappropriately, and if that’s the case, what action should be taken,” White House spokesman Jay Carney said Tuesday.

But remarks such as those have done little to appease congressional leaders. Representative Sandy Levin, a Democrat from Michigan and a ranking member of the Ways and Means Committee, said that the IRS’s two senior officials should resign. Republicans on the committee have linked the scandal to Obamacare implementation, just as the House is preparing for a Thursday vote to repeal the Affordable Care Act — the 37th attempt since the legislation was enacted in 2010.

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Even more drastic action has been taken; Representative Randy Forbes (R-Va.) introduced a measure on Wednesday, officially known as the Prevent IRS Overreach Act, which if passed, would ban the tax collection agency from hiring anyone to implement Obamacare’s provisions.

Here’s how the market traded Thursday:

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