By John Galt, Visit John Galt Speaking
“Nearly all men can stand adversity, but if you want to test a man’s character, give him power.”
Abraham Lincoln (1809 – 1865)
If you subscribe to Abraham Lincoln’s test of character, both Representative Henry Waxman and
Representative Bart Stupak have flunked. On Friday, March 26, Waxman and Stupak sent letters to four companies CEO’s requesting their presence at an upcoming hearing in the House of Representatives. Why would Waxman and Stupak want to question these CEO’s? Because these CEO’s informed their shareholders, per SEC requirements, that the recently passed Health Care Reform Bill would impact their financial statements by millions of dollars. AT&T alone took a $1 billion dollar non-cash charge last quarter.
According to statistics quoted on CNBC, approximately 3,500 companies representing some six
million retiree’s will post an estimated $16 Billion in charges because the recently passed Health Care Reform Bill eliminates a major tax deduction for a subsidy for prescription drug coverage. Do Waxman and Stupak actually believe that a removal of a tax deduction wouldn’t adversely impact these companies? These hearings have nothing to do with the recent SEC filings these companies recorded. It has everything to do with intimidation and vilification.
Don’t get me wrong….I am not a proponent of federal subsidies. But even this accounting challenged writer can foresee the impact the removal would have on a company’s balance sheet. Ironically, the federal government encouraged these companies to provide these benefits to retiree’s when Bush passed the ill advised Medicare Modernization Act in 2003. Now these CEO’s
are faced with either paying the bill or eliminating the benefit. In removing this deduction, the federal government is now encouraging these companies to dump their retiree benefits while putting everyone into Medicare Part D, likely costing the tax payers even more.
Reminiscent of the days of McCarthy, if you criticize the government, or say or do anything
that contradicts the government line, you’ll likely be hauled in front of some committee to
explain yourself. Certainly you remember the oil company CEO’s testifying? It’s interesting
that Congress did not recall these CEO’s to testify when the price of oil dropped near $40 a
barrel in December of 2008. And then there was the CEO of Humana who informed his customers
of the pending cuts to their Medicare coverage. So…..what did these CEO’s do wrong?
Apparently, they exercised their freedom of speech and fulfilled their obligation to both their
customers and shareholders. Considering most of these congressional hearings never seem to
result in any definitive actions or results, the real reason must be to stifle free expression
and intimidate free enterprise.
“The threat to free speech and private enterprise represented by this hearing fits in well with
the increasingly authoritarian atmosphere emanating from Washington, replete with the abrogation
of contracts, bail out of business, levy of arbitrary taxes on bonuses, takeover of large
swaths of private industry and the populist attack on commerce in general” writes Andrew
Mellon in an editorial posted on Big Government dot com. Mellon goes on to compare the actions
of the Obama Administration with Herbert Hoover and FDR. How appropriate.
I have to assume that both Waxman and Stupak are upset because these announcements seem to fly
in the face of the claim that if you like your coverage…nothing will change. But of course
this is not true. Medicare Advantage members will see their benefits cut and retiree’s with
drug benefits may have their benefits discontinued. Some employers will find it easier and
more economical to shut down their plans and pay the fines.
Since I opened with a Lincoln quote…I will close with one as well. “Tis better to be silent
and be thought a fool, than to speak and remove all doubt.” I guess this advice is a little
late for Waxman & Stupak!
This is John Galt Speaking!