Numerous companies already have announced enormous financial write-downs related to Obamacare’s cutback of subsidies for prescription drug benefit programs for retirees.
These subsidies, while characterized by Democrats as “loopholes,” actually saved the government money because it cost less to subsidize private drug programs than for the government to provide the same benefit through Medicare:
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.”
As explained at Volokh Conspiracy the write-downs must be taken immediately:
The writedowns are in response to the loss of a tax-free subsidy for providing prescription drug coverage to retirees. Several years ago, Congress decided it was better to induce corporations to provide prescription drug coverage for retirees than to have the costs paid by Medicare, so it enacted a tax-free subsidy, while still allowing companies to take a tax deduction for the coverage . Under the health care reforms Congress just enacted, however, the deduction will be eliminated in 2013.
Why are the companies announcing these changes? And why now if the tax change does not take effect until 2013? Because failure to do so could get the companies in trouble with the SEC. Under standard accounting rules, companies are supposed to take the charge in the quarter in which the tax law change is enacted, not when it takes effect. Because the first quarter ends Wednesday, more writedown announcements may be forthcoming.
If these were just financial write-downs, the Democrats would not care.
But as explained at Powerline, the result will be the elimination of these private benefits for retirees, which has caused the bullies in Washington to use the power of Congressional investigation for intimidation:
These announcements are the tip of the iceberg; hundreds like them will follow as Obamacare becomes a reality. Congressional Democrats, evidently stung by the bad publicity, are trying to strike back. A reader writes:
Good post on the true cost of ObamaCare. But it gets better: the Dems are now shaking down CEOs who don’t get with the program. In the attached letter, Henry Waxman not only orders the CEOs of AT&T;, Caterpillar, Deere & Co, and Verizon to testify before the Energy and Commerce Committee, but also to produce internal analyses and emails related to their statements. They don’t expressly subpoena the CEOs, so we can hope that they tell the Dems to GFY, though somehow I doubt that will happen.
The Dems sent these letters to the Republicans on the committee after 6pm tonight with no advance notice or prior cooperation.
Obamacare’s chickens already are coming home to roost, and it only has been a week.
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Comments
The last part is particularly chilling:
"Henry Waxman not only orders the CEOs of AT&T;, Caterpillar, Deere & Co, and Verizon to testify before the Energy and Commerce Committee, but also to produce internal analyses and emails related to their statements."
Meaning that you must go along or you WILL appear before the Politburo to explain yourself.
Re-education Camps, anyone?
So, the law is on the companies' sides, and Waxman is mad. Is this a we make the rules up as we go moment?
I would like to see a posting here elaborating on where this puts the economy. If THIS many top corporations (that we know of so far) have had to write off THIS kind of money, this can't simply go unnoticed over the next few days, weeks or months. Wouldn't this ripple out to do serious damage somewhere in our economy?
BTW, Waxman sent a warning out to other corporations – speak up like this and YOU will be summoned to account for your disloyalty. You can bet Verizon executives will come smiling and grovelling, using complex flowery speech to worm around the real topic – that they just got their asses handed to them by the very people their union (Communications Workers of America) worked very hard to get elected. Will other corporations suddenly find ways to disguise their losses so as not to offend the dicator and draw his wrath? Time will tell.
I am not sure what Waxman hopes to gain. It is a matter of law and the SEC that these companies are required to announce financial impacts as soon as they know them. It seems that all hearings would do is emphasize the problems. I don't know what Waxman hopes to gain. Moreover, I would expect other companies to start releasing their evaluations. It will become a flood and Waxman cannot bring them all to the inquisition.
I've already written off our President as a left wing idealogue socialist anti-American racist liar wealth distributer. He's the worst President we've ever had, I know that. He snookered and hoodwinked American voters with his smooth talk and a deceitful Chicago-style power take-over game plan that took advantage of our inate kindness and good will. I already get that. But what the hell is going on with the rest of these bastards in Congress? Is there a God damn decent Democrat in the entire bunch? Where the hell are they? If this is the shit that we are going to get from them then their entire party is going to be extinct shortly. They're selling out to people trying to take this country to her knees… and for what? Do they like living in a world where they have to lie and subvert the will of their constituents? Do they like being lumped in with guys like that nut traitor from California Bahgdad McDermott or Castro lovers like Maxine Waters? Do they even realize how ridiculous and completely out of touch they appear patting each other on the back for passing a bill they didn't even read while their constituents are in tears? What has this Administration done to them? Is there a real man in the bunch? Do they enjoy being "bent over" and humiliated in front of their entire country? Do they understand that there are real men, real patriots, outside the Washington Beltway that are appalled and actually embarassed? There's no spin for this. We are watching it with our own eyes. They're betraying their constituents and their country right before us and they think we can't see it or they believe they can talk their way out of it. Real men, the type that fight and bleed for our country, keep the peace on our streets, and who have served this nation couldn't possibly live in a world where they couldn't say what they wanted to say, vote the way they wanted to vote, or live in a world where everything was calculated. We'd go nuts and we surely wouldn't feel like men.
What's a tax-free subsidy to big companies other than wealth redistribution? I thought Republican's were against government handouts?
And I don't think it has been calculated weather it's cheaper to distribute prescription drug benefits through medicare D or subsidized through big companies? Where are your numbers coming from?
One thing that is clear, it is a lot fairer to the American people if tax money for drug benefits go to all retirees, not just those that happen to work for large companies.
And little henry waxman is going to start the inquisition in the last week of April. Basically to satisfy his own ego and lust for control. Sounds like his buddy Dingell. Dingell? Isn't that what is hanging off the rear view mirror?
Looks like ski resorts and medical device mfgs. are also too stupid to realize how good Obamacare is for them: http://arkansasgopwing.blogspot.com/2010/03/brace-for-economic-impact.html
I think this sort of immediate blowback is critical to the repeal effort. The Dems laced all sorts of short-term goodies into the bill, clearly hoping that it would medicate sufficient numbers of Americans into thinking, "Oh, this isn't that bad after all!", resulting in paltry or moderate Congressional losses in November. However, if large sections of the economy stagger all at once, thousands of people get laid off, and thousands more lose large chunks of their benefits – 'Repeal It!' may indeed be the rallying cry of one of the most dramatic political turnarounds in American history.
And Josephine, I agree – how about instead of Obamacare we follow the recent *GOP* idea to let individuals take the same tax writeoffs as companies for purchasing health coverage? That way, *everybody* would have access to that benefit, whether they're working or not!
Also, Josephine, from here:
"The cost to taxpayers of that 28 percent [subsidy] is about $665 per person. The cost to taxpayers of equivalent Medicare coverage is about $1,200 per person. So we’re roughly doubling the cost of covering an estimated 5 million retirees."
Public pensions get the subsidy too. Will they have to forfeit and send their retirees into Medicare?