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Recommended Reading: WSJ’s The ObamaCare Writedowns

Posted by Larry Doyle on March 27, 2010 1:56 PM |

Do you think corporations are taking charges to earnings due to the new ObamaCare because they have nothing better to do? These charges will ultimately flow through to the economy in terms of higher costs and fewer jobs for you know who.

Uncle Sam is both too stupid to understand and too much of a liar to share these realities with the American public. Remember the Obama agenda is not about wealth creation while growing the economy, it is all about one thing…..WEALTH REDISTRIBUTION!! If Obama loyalists would just come out and state that fact very plainly and clearly, I may grant them a measure of respect for being honest. (Actually, Barack did state that to Joe the Plumber back in October 2008.)

On this topic, I strongly recommend reading and pondering The Wall Street Journal’s editorial, The ObamaCare Writedowns:

It’s been a banner week for Democrats: ObamaCare passed Congress in its final form on Thursday night, and the returns are already rolling in. 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.

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.”

Perhaps that explains why the Administration is now so touchy. Commerce Secretary Gary Locke took to the White House blog to write that while ObamaCare is great for business, “In the last few days, though, we have seen a couple of companies imply that reform will raise costs for them.” In a Thursday interview on CNBC, Mr. Locke said “for them to come out, I think is premature and irresponsible.”

Meanwhile, Henry Waxman and House Democrats announced yesterday that they will haul these companies in for an April 21 hearing because their judgment “appears to conflict with independent analyses, which show that the new law will expand coverage and bring down costs.”

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.

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.

As Joe Biden might put it, this is a big, er, deal for shareholders and the economy. The consulting firm Towers Watson estimates that the total hit this year will reach nearly $14 billion, unless corporations cut retiree drug benefits when their labor contracts let them.

Meanwhile, John DiStaso of the New Hampshire Union Leader reported this week that ObamaCare could cost the Granite State’s major ski resorts as much as $1 million in fines, because they hire large numbers of seasonal workers without offering health benefits. “The choices are pretty clear, either increase prices or cut costs, which could mean hiring fewer workers next winter,” he wrote.

The Democratic political calculation with ObamaCare is the proverbial boiling frog: Gradually introduce a health-care entitlement by hiding the true costs, hook the middle class on new subsidies until they become unrepealable, but try to delay the adverse consequences and major new tax hikes so voters don’t make the connection between their policy and the economic wreckage. But their bill was such a shoddy, jerry-rigged piece of work that the damage is coming sooner than even some critics expected.

Will the SEC crater on these accounting requirements in order to facilitate Obama’s smoke and mirrors campaign? If history is our guide, that is exactly what will happen.

The American taxpayers, and that includes the vast middle class, will pay for this healthcare program like there is no tomorrow……actually, at this rate, tomorrow is looking pretty ugly….and the Democrats wonder why Americans are increasingly enraged.

LD

  • Randy

    Ahh Larry.. this is clearly one of your best. Let’s see how they bend the accounting rules yet again to hide the truth and lie to the public about the horrendous impact this poorly contructed health reform bill will have on the nation.

    How can anyone, Democrat, Republican or any other political persuasion fall in line in support of such a bill when the administration which forced it through against the will of the majority of American citizens met with the health industry lobbyists early on and got their cooperation to support the bill by agreeing to eliminate the public option? That’s almost enough to make me gag even whenever I think about it.

    Here’s the really sad part… the Republicans are no better than the Democrats who pushed this through. They respond like bickering little grade schoolers and they have the temerity to even attempt to block or delay unemployment benefits for those who have already lost house and home and are at their wit’s end. Is that how they hope to secure their return to control in the political establishment in Washington? If so, we should put them on notice it most definitely is not going to work in their favor.

    Unless and until we totally do away with lobbyists and make lobbying Congress a felony and then do everything else we can to get the extraneous money out of the political process, our country will continue going to the dogs and there’s little effect we can have without continuous mass national demonstrations in the streets of America.

    My first gut reaction when this rotten bill passed was to vote out all the Democrats coming up for relection in November. But then I thought to myself.. “and replace them with whom.. a bunch of Republicans who also don’t really care about the people and are focus only on securing power and favors by doing the bidding of large corporations? Politicians across the board need to stop focusing on the party line and starting towing the line of respresenting the public and listening to what the public wants.

    While I think we should vote in enough of the other party to bring some balance to the political process.. the biggest thing we have to do is demand change now. Certainly not the redistribution of wealth from those who worked for it to those who did not, and clearly not the totally ambiguous “change” promised by our current President.. who is doing his level best to leave us with just a little “change” in our pockets instead of the hard earned retirement wealth we brought to the party. We want smaller and more efficient government. We want the elimination of special favors for corporations and the break-up of entities that are so large they put our economy at risk. We want and expect truth from those we elect and for them to live up to the promises they set out in the process of getting elected. We want an end to our involvement in wars outside of our own country. We want a serious and unfettered focus on true energy alternatives and not biofuels at a time when there is concern about enough food for the World to feed itself. I had better stop right there Larry, for I am getting too wound up again and going far off topic.

    • LD

      I concur with your assessments, I commend you for making them, and I thank you for sharing them with us!!

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