Greedy corporate executives are doing something truly despicable and evil, and Rep. Henry Waxman is not going to stand for it. He has declared that there will be hearings, and CEOs from AT&T, Verizon, Caterpillar, Deere, Valero Energy, AK Steel and 3M had damn well better show up and explain themselves to the American people.
What are these companies guilty of? Has Waxman found the next Enrons?
No. In fact, it’s sort of the opposite. These companies aren’t guilty of shady, deceptive accounting practices to make their stock prices artificially high. They are guilty of what Waxman seems to think s an even worse sin. They followed standard accounting practices and the law in stating that the newly passed healthcare bill would cost their companies millions (sometimes hundreds of millions) of dollars.
Well Waxman isn’t going to stand for that. If lying to the American people about the impact of the healthcare bill is good enough for our elected representatives then American corporate executives have no business running around telling people the truth. Who do these people think they are?
The Washington Examiner has some details of Waxman’s threatening letter to the CEOs demanding they show up for the April 21st hearing, but you can just go straight to the letters themselves. Here are Waxman’s demands for AT&T:
…we request that you provide the following documents from January 1,2009, through the present: (1) any analyses related to the projected impact of health care reform on AT&T; and (2) any documents, including e-mail messages, sent to or prepared or reviewed by senior company officials related to the projected impact of health care reform on AT&T. We also request an explanation of the accounting methods used by AT&T since 2003 to estimate the financial impact on your company of the 28% subsidy for retiree drug coverage and its deductibility or nondeductibility, including the accounting methods used in preparing the cost impact statement released by AT&T this week.
We ask that you provide the requested information by April 9, 2010. For purposes of this request, the term “senior company officials” includes all company officials at the level of Vice President and above for the company or any subsidiary. Attachments to this letter provide additional information about responding to Committee document requests and testifying before the Committee.
Let’s get one thing clear: this is outright intimidation. Everything from the tone of the letter to the quantity of documents requested (health care analyses going back to 2003?!) to the short time frame to the number of executives targeted constitute a clear message. And the audience isn’t the company officials who’ve been summoned to appear before their healthcare overlords in D.C. The audience is all the other companies who are thinking about issuing similar statements.
The Democrats are embarrassed by the truth, and so the truth must be suppressed.
The problem is that these companies aren’t just trying to stick it to the man. They are following standard accounting practices and obeying the law. Megan McArdle of The Atlantic explains:
Accounting basics: when a company experiences what accountants call “a material adverse impact” on its expected future earnings, and those changes affect an item that is already on the balance sheet, the company is required to record the negative impact–”to take the charge against earnings”–as soon as it knows that the change is reasonably likely to occur.
This makes good accounting sense. The asset on the balance sheet is now less valuable, so you should record a charge. Otherwise, you’d be misleading investors.
The Democrats, however, seem to believe that Generally Accepted Accounting Principles are some sort of conspiracy against Obamacare, and all that is good and right in America.
You get the impression from Waxman’s letter that all of this comes as a huge surprise to him. He writes:
The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern. They also appear to conflict with independent analyses. The Congressional Budget Office has reported that companies that insure more than 50 employees would see a decrease of up to 3% in average premium costs per person by 2016. The Business Roundtable, an association of chief executive officers from leading U.S. companies, asserted in November 2009 that health care reform could reduce predicted health insurance cost trends for businesses by more than $3,000 per employee over the next ten years.
See? The law is supposed to save money! Look, I even have footnotes! This is all bunk. As McArdle explains:
…one of the provisions in the new health care law forces companies to treat the current subsidies for retiree health benefits as taxable income. This strikes me as dumb policy; there’s not much point in giving someone a subsidy, and then taxing it back, unless you just like doing extra paperwork. And since the total cost of the subsidy, and any implied tax subsidy, is still less than we pay for an average Medicare Part D beneficiary, we may simply be encouraging companies to dump their retiree benefits and put everyone into Part D, costing us taxpayers extra money.
But this is neither here nor there, because Congress already did it. And now a bunch of companies with generous retiree drug benefits have announced that they are taking large charges to reflect the cost of the change in the tax law.
I would say “I’m not sure what Waxman is having a hard time understanding here”, but the fact is that there’s nothing to misunderstand. The government removed a tax-break on health insurance. So the price of providing health insurance goes up. In other news, water is wet.
The only thing Waxman is surprised about here is the fact that some Americans still have the gall to contradict Democratic leadership. Didn’t we all get the memo? They have the House, the Senate, and the White House. They won the elections in 2008, and they won the vote on healthcare just days ago. Clearly it’s time for Americans to sit down, shut up, and let the adults tell us all what’s good for us.
Right now the Democrats are feeling emboldened. Healthcare came down to the wire, but they won. They media is once again providing sycophantic coverage to President Obama and portraying anyone who opposes him or his agenda as racist rednecks who might go off and shoot someone at any moment. They ran a risk by pushing healthcare through on a partisan vote, and it paid off. They’re in the mood to roll the dice again.
Waxman is betting that this hearing will terrify other companies into either hiding completely or quietly downplaying the impact of the healthcare bill on their finances. He might be right. I don’t imagine that the folks at AT&T, Deere, or any of the other companies were out there trying to make some kind of a principled stand. They were just doing their job.
But we have to hope that as Democrats continue to shift from a facade of bipartisanship to outright thug-style politics that more Americans will take offense. This isn’t really about politics of left or right, or even about healthcare. It’s about whether or not you want to live in a country where pompous elitist career politicians who haven’t seen a day’s worth of real-work in 3+ decades can threaten and intimidate honest businessmen for doing their jobs. Americans don’t like that kind of behavior. They won’t stand for it, if they find out about it.
So that’s the question. Is Waxman going to successfully bury this embarrassing story, or are Americans going to catch another glimpse into the true principles behind the progressive movement?