Waxman’s War on Truth

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?

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Comments

  1. Anonymous says:

    We are pitiful patriots.

  2. nana says:

    The WAXMAN COMETH and he is going to root out all those greedy corporations with that snout of his…oink, oink. These Nazi-wanna-bes are so drunk on power they have lost all touch with reality. Their own corruption is what we need to worry about but their plan of pointing their slimy fingers at everyone else will come back to bite them, I pray.

  3. Dee says:

    My husband was an accountant for 36 yrs for a large company in Pittsburgh. He said that companies have to disclose their costs to the stockholders and what these companies are doing is the right thing. However, as I have learned this past year, the “right” thing is not what this administration believes in.

  4. Linda B. says:

    This is harrassment and Waxman and the Democrats are showing their muscle and revealing how they actually feel about Corporate America. There are two things wrong here.

    1. Without Corporate America there will be nothing, but government work. Without private businesses especially major corporations there will be fewer jobs and America will lose its competitive edge. The increase in health care costs foster upon Corporations and small businesses alike reduces their ability to fund research and continue to be innovative.

    2. The Obama administration is becoming more and more aggressive and trying to draw more power and control over people and businesses alike.

    This will bring us to a crisis before any health care ever gets set in place, but then this is what they want…a good crisis to assume complete control.

  5. The government wants economic collapse so they plan to do it with death by taxes.

    http://www.theleftisntright.com/2010/03/govt-guarantees-death-by-taxes-from.html

  6. Boston Blackie says:

    My response to their “request” to appear before Congress would be SCREW YOU. To answer how they came to the conclusion that costs will increase tell them we follow generally accepted accounting practices not your fuzzy math. Then I would refer to the SEC filing regulations THEY enacted after the Enron collapse. One question, are you allowed to walk out of a hearing?

  7. Steve Crown says:

    If I were these companies, and there was no wrongdoing to be revealed in the historical documents requested, I would insist on open hearings. What a great opportunity to make Waxman and, by association,a lot of representatives look like fools. The films could make for some really great Fall campaign ad footage. If the companies prevail, the cost for defense,including the production of documents, would be a neat number to heavily publicize as it relates to the pass through to consumers necessitated by the action of the House Committee.

  8. Waxman on, Waxman off says:

    “Mrs. Sanders, this is Dr. Jones at St. Agnes
    Laboratory. When your husband’s doctor sent
    his biopsy to the lab last week, a biopsy from
    another Mr. Sanders arrived as well. We are
    now uncertain which one belongs to your husband.
    Frankly, either way the results are not too good.”

    “What do you mean?” Mrs. Sanders asks nervously.

    “Well, one of the specimens tested positive for
    Alzheimer’s and the other one tested positive for
    HIV. We can’t tell which is which.”

    “That’s dreadful! Can you do the test again?”
    questioned Mrs. Sanders.

    “Normally we can, but the new health care system
    will only pay for these expensive tests just one time…”

    “Well, what am I supposed to do now? ”

    “Rep. Waxman at ‘ObamaCare’ recommends that
    you drop your husband off somewhere in the
    middle of town. If he finds his way home, don’t
    sleep with him.”

  9. Get a real job says:

    I’m sorry, but there are some people, many of them congressmen, that you can look at and just tell, in your heart of hearts, that they could procure no other, and hold no other, job.

  10. Aunt Ralph says:

    You best believe GAAP are now Verboten! Right up there with common sense!

    Pass the popcorn– this should be good.

  11. Robert Wallace says:

    Steve Crown-

    I’m with you. But then, I’m not primarily concerned with putting the welfare of my employees and shareholders. I’m looking for a fight.

    I really don’t know what these guys are going to do.

  12. m00pa says:

    The economy is not the only thing these ‘regulators’ apparently don’t understand, this “calling all CEO’s” shows they don’t even understand their own regulations.

    Evidence:
    The new health law was to inact the “bad stuff” after the November elections. Unfortunatly these “regulator dim-bulbs” had fogotten about Security and Exchange legislation that requires companies to desclose finacial changes as soon as they learn about them….(because of ENRON)

    You see, during the authoring period of this very special, back-room-deal, pay-off, special interest paying, and porkulus spending bill ‘obamanation’. The intent and action was to plan out everything so as to get the most Political Capital as possible. BUT, alas now the companies affected are reporting, and the regulators are stubling over legislation they had already put in place……(not funny)

    The problem I see in all of this is the fact we are currently stuck with these legislators who don’t understand what they are doing, and will continue to screw-up because of this lack of understanding…

    November, oh how sweet a month it will be…

  13. Hot or Not says:

    Rate this president, CBS wants to know!
    Check out the resulting numbers, this pres sucks.

    http://www.cbsnews.com/blogs/2010/01/19/politics/politicalhotsheet/entry6116297.shtml?tag

  14. Gail B. says:

    Robet, if the Progressives are scared of the companies, the hearing(s) won’t be televised. If they are not afraid, they have a good chance of being televised. What I would be afraid of, were I in Waxman’s shoes, is some CEO telling me that I am a damned fool if I supported such legislation without a middle school student’s knowledge of accounting–what the dickens am I doing in such a powerful position if I don’t know shit from Shinola?!

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