REVIEW & OUTLOOK MARCH 27, 2010 The ObamaCare Writedowns The corporate damage rolls in, and Democrats are shocked! 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. http://online.wsj.com/article/NA_WSJ_PUB:SB10001424052748704100604575146002445136066.html
1.I dont equate Bush's expiring tax cuts to Obama raising taxes.With the current congress no president would be able to extend all of them nor do I agree all of them should be extended.Even Bush had to get the tax cuts through reconciliation with a Republican congress .Obama and many democrats have said they want to keep the tax cuts for the middleclass and I believe they will I dont think Obamacare is perfect,but I believe every working american should be able to have affordable healthcare.I also like and would vote for Mitt Romney and I would be a hypocrite to hate Obama for Obamacare but be willing to vote for the guy who started it first Is the 3rd wave of taxes new Obama taxes or are they Bush tax cuts expiring ?
I pray to god, (and im not even religious) that Mitt Romney wins, he is a businessman, that is what we need right now, not a community organiser..... i have already shown you with the previous posts that raising taxes has killed big business, i could come up with 20 more examples if you want. The only misinformation in terms of tax hikes is coming from the dems at this point.
K i actually agree that including the expiring bush tax cuts as Obama increases may be disingenuous, but there is no denying that the rest of the Obamacare package will crucify big business.
I see this as companies being cheap and not wanting to offer insurance to employees.If they offered insurance to employees Obamacare should not be an issue for them. I am against taxing business for stupid wasteful government spending,but everyone else and the government pays for the uninsured when their employers dont Unless I'm mistaken this also goes into effect in 2014,not now during the recession
At least we have some commen ground with Romney I'm torn on Obamacare,the sleazy deals,the tax hikes,putting strain on a system that is already short docters and nurses etc but I feel its morally wrong for a working american not to have the option of affordable healthcare
Im sorry my friend, but this is life, companies do what they need to do to produce the maximum profit at the minimum cost, this is EXACTLY why programs such as Obama care dont work, it aint about companies being cheap, its about survival of the fittest, Whether it is a CEO trying to survive, or an Accountant trying to survive, or the piddly low end salesman trying to survive, every single person on the chain is doing whats best for THEMSELVES, it has nothing to do with being "Cheap" it has to do with everyone on the chain making the most they can for themselves, at the littlest cost. When you introduce new costs into the scenario, such as obamacare there tends to be layoffs, because the guy at the top is going to fire a bunch of people knowing his taxes are about to sky rocket, there is no free money in society there never has been and there never will be, you cant tax the shit out of one guy and expect that a risk free job will magically appear for another guy. Obama seems to think this kind of scenario is actually possible.
Personally I think we should be off an employer based health system .I dont see why the business lobby doesn't fight for that since they dont want to pay health care expenses .I would fully support that idea