Yesterday AT&T announced that it will be forced to make a $1 billion writedown due solely to the health bill, in what has become a wave of such corporate losses.The reaction among the Democrats - they are stamping their feet and getting angry at these corporations for not falling in line in admiration of what the Democrats have wrought. So the lovely Henry Waxman is subpoenaing the corporate presidents to come testify in front of his committee to explain why they are being so rational about the consequences of the Democratic bills.
This wholesale destruction of wealth and capital came with more than ample warning. Turning over every couch cushion to make their new entitlement look affordable under Beltway accounting rules, Democrats decided to raise taxes on companies that do the public service of offering prescription drug benefits to their retirees instead of dumping them into Medicare. We and others warned this would lead to AT&T-like results, but like so many other ObamaCare objections Democrats waved them off as self-serving or "political."
In other words, shoot the messenger. Black-letter financial accounting rules require that corporations immediately restate their earnings to reflect the present value of their long-term health liabilities, including a higher tax burden. Should these companies have played chicken with the Securities and Exchange Commission to avoid this politically inconvenient reality? Democrats don't like what their bill is doing in the real world, so they now want to intimidate CEOs into keeping quiet.American businesses not are in a no-win situation. As Andy McCarthy reports, they would face prosecution for not reporting the effect of the law on their bottom line.
On top of AT&T's $1 billion, the writedown wave so far includes Deere & Co., $150 million; Caterpillar, $100 million; AK Steel, $31 million; 3M, $90 million; and Valero Energy, up to $20 million. Verizon has also warned its employees about its new higher health-care costs, and there will be many more in the coming days and weeks.
If a company like AT&T failed to make a legally mandated restatement of its financial position while continuing to participate in the capital markets, it would be investigated and the responsible management officials would likely find themselves prosecuted while the SEC, concurrently, went after the company and its officials in civil enforcement suits. There are prosecutors and investigators who would salivate at the prospect of doing such a career-making case.They will be testifying before Bart Stupak who chairs the subcommittee that is calling them in. They will be able to explain to Stupak what the Democrats have wrought and how it affects the bottom line in the real world. Of course, the Democrats don't understand the real world because they've never had to work and make a living in the business world where CEOs have to look at the effect of withdrawing a tax deduction on their health care policies and how it would affect their bottom line. The American Prowler reports,
If we are now under a system where disclosure gets you a public whipping and other threats by the Powers That Be while nondisclosure promises the ruinous expenses of defending against criminal investigations and civil enforcement, this is no longer anything but a thugocracy.
"Most of these people [in the Administration] have never had a real job in their lives. They don't understand a thing about business, and that includes the President," says a senior lobbyist for one of the companies that announced the charge. "My CEO sat with the President over lunch with two other CEOs, and each of them tried to explain to the President what this bill would do to our companies and the economy in general. First the President didn't understand what they were talking about. Then he basically told my boss he was lying. Frankly my boss was embarrassed for him; he clearly had not been briefed and didn't know what was in the bill."You don't have to take the Prowler's word for it; the Associated Press reports the same thing and also indicates that more companies will be reporting the effects of removing this deduction on their health care plans. The Democrats were warned that this would cause companies to end their coverage of retirees' prescription benefits, but they ignored those warnings. Now they're discovering the reality behind their actions.
It isn't just the President who didn't understand his own proposal. Late Friday, House Energy and Commerce Committee Chairman Henry Waxman and Rep. Bart Stupak, chairman of the Oversight and Investigations panel, announced that they would hold hearings in late April to investigate "claims by Caterpillar, Verizon, and Deere that provisions in the new health care reform law could adversely affect their company's ability to provide health insurance to their employees."
Neither Waxman or Stupak -- who betrayed the pro-life community by negotiating for more than a week with the White House to ensure his vote on the health care bill -- had anything more than a cursory understanding of how the many sections of the bill would impact business or even individual citizens before they voted on the bill, says House Energy Democrat staff. "We had memos on these issues, but none of our people, we think, looked at them," says a staffer. "When they saw the stories last week about the charges some of the companies were taking, they were genuinely surprised and assumed that the companies were just doing this to embarrass them. They really believed this bill would immediately lower costs. They just didn't understand what they were voting on."
That's where we are these days. The Democrats don't understand how the real world works and when it doesn't measure up to their fictions, their ignorance leads them to assume that the CEOs must be lying because, after all, they're just big business and we all know how evil businessmen are in the eyes of the Democrats.