WASHINGTON — When major companies declared that a provision of the new health care law would hurt earnings, Democrats were skeptical. But after investigating, House Democrats have concluded that the companies were right to tell investors and the government about the expected adverse effects of the law on their financial results.
At issue is a section of the law that eliminates a tax break available to companies that provide drug benefits to retirees as part of their insurance coverage. The tax change, expected to generate $4.5 billion of revenue over the next 10 years, will help offset the cost of providing coverage to the uninsured.
Within days after President Obama signed the law on March 23, companies filed reports with the Securities and Exchange Commission, saying the tax change would have a material adverse effect on their earnings.
The White House suggested that companies were exaggerating the effects of the tax change. The commerce secretary, Gary F. Locke, said the companies were being “premature and irresponsible” in taking such write-downs.
Representative Henry A. Waxman of California and Bart Stupak of Michigan, both Democrats, opened an investigation and demanded that four companies — AT&T, Caterpillar, Deere and Verizon — supply documents analyzing the “impact of health care reform,” together with an explanation of their accounting methods.
Representative Joe L. Barton of Texas, the senior Republican on the House Energy and Commerce Committee, said, “From a financial standpoint, from a purely economic standpoint, many companies would be better off discontinuing health care as a fringe benefit, paying the penalty and pocketing the savings.”
In a memorandum summarizing its investigation, the Democratic staff of the committee said, “The companies acted properly and in accordance with accounting standards in submitting filings to the S.E.C. in March and April.”
Moreover, it said, “these one-time charges were required by applicable accounting rules.” The committee staff said this view was confirmed by independent experts at the Financial Accounting Standards Board and the American Academy of Actuaries.
Duh. How many conservatives were saying this after Waxman called for the hearings?
I refuse to believe that Waxman and Stupak simply ‘weren’t aware’ of the SEC’s requirement that companies file the very reports that Verizon and Caterpillar, among others, filed after the passage of ObamaCare. This was a coordinated attempt by Congressional Democrat leaders to try to “embarass” these companies by making them reveal their internal paperwork to the public, much like they’re doing now with Goldman Sachs.
Ed Morrissey writes:
As explained here repeatedly, Congress set the rules that required publicly-traded companies to make those statements. The Sarbanes-Oxley laws demand full and complete disclosure of changes to financial positions, especially negative changes. The CEOs would have broken SEC laws had they not announced the writedowns as soon as they were calculated and substantiated.
To some extent, though, this entire episode was a farce. Democrats knew full well that they had ended the tax credit for the subsidy that keeps retirees on private, employer-based prescription coverage. They did that deliberately in order to gain $5.4 billion in revenue to close the gap for the CBO analysis of ObamaCare. That money comes right off of the balance sheets of private industry — in fact, Democrats counted on it.
Now the private sector has $3.4 billion less to invest in new jobs and expansion (with more writedowns coming), plus Democrats have incentivized these companies to dump their retirees into the overextended Medicare Part D program. Small wonder Waxman’s colleagues convinced him to call off the hearing.
Interested in hearing an apology from Waxman and Stupak and all the other clueless wonders in government who get paid with your taxpayer dollars to know the things that apparently they have to conduct an internal “inquiry” about just to be sure about? Don’t hold your breath. Democrats never will apologize for their shameless attempts at naked power grabs, especially not this bunch, led by President Obama and the Axelturf/Rahmbo/Fibbs axis. In fact, “shameless” hardly scratches the surface of what this crowd is attempting to do to America under the guise of “helping others.”
“You never want a serious crisis to go to waste … Things that we had postponed for too long, that were long-term, are now immediate and must be dealt with. This crisis provides the opportunity for us to do things that you could not do before.” – Obama COS Rahm Emanuel to a WSJ conference of top corporate CEOs, November 21, 2008