It seems the House Energy and Commerce Committee is the new House Un-American Activities Committee.
The current version of HUAC doesn’t seem bent on rooting out communists in our government and in Hollywood. It’s something different altogether, though it’s amazing the way history tends to repeat itself. This incantation of that dastardly abuse of political theater isn’t interested in either communists OR Hollywood, though Energy and Commerce chair Henry Waxman is often indistinguishable from a communist apparatchik and his congressional district includes West Hollywood.
No, this frightening little cabal is interested in rooting out capitalism. Or so it seems.
Let’s remember some of the highlights from Waxman’s committee. You may remember in 2008 amid rising gasoline prices when Waxman dragged the CEO’s of major oil companies before the committee to be grilled by the likes of Maxine Waters:
And then in February, we had this bit of theater in Waxman’s hearings, when attack-dog congresswoman Jan Schakowsky of Illinois, whose husband Bob Creamer went to prison for bilking banks out of some $2.3 million in a check-kiting scheme, attacked Wellpoint CEO Angela Braly for her compensation:
Waxman’s committee is currently engaged in attempting to regulate hydraulic fracturing through the EPA, and hauled CEO’s of ExxonMobil and XTO Energy in front of its subcommittee on energy in late January to discuss the merger of the two companies – which subjected them to insipid questioning from left-wing members of Congress like Diana DeGette:
The examples of rough treatment and stupid questions in Waxman’s committee and its subcommittees are legion, and we could show video after video of them.
But what seems to be coming now could be the mother of all Energy and Commerce Committee CEO harrassments. Because following passage of the Obamacare legislation last week, several major corporations reported they’ll be taking massive writedowns as a result of its effects. Most specifically, Obamacare repeals a provision in the 2003 Bush Medicare prescription drug legislation which gave tax breaks to companies who carried prescription drug benefits to their retirees. The cost of that program to the taxpayer was about $650 per person it affected, as opposed to $1100 or so for Medicare recipients, which meant it actually saved the government money.
Now that the tax break is gone, the effect on major corporations is pronounced. AT&T announced it’s going to take a $1 billion charge. John Deere said they’ll be hit for $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. That doesn’t count the effect of a new tax on medical devices, which Zoll Medical (which turned a $9.5 million profit last year that will be eaten up by $7.5 million in new taxes under the plan) said basically puts them in a position of running at breakeven now.
The consulting firm Towers Watson has estimated the effect of the prescription drug provision will be some $14 billion to American business this year – before many of these corporations, already saddled with the second-highest corporate tax rate in the developed world at 35 percent, begin dumping their retirees into Medicare next year – or whenever their labor agreements allow – in an attempt to shed costs. They’ll likely be dumping their employees into the ranks of the unemployed this year as well in an attempt to survive in this economy. Some of them will probably be offshoring their operations as much as possible, too.
Bear in mind that under requirements passed in the Sarbanes-Oxley bill in 2003, these companies are REQUIRED to disclose writedowns on pain of federal prosecution. As National Review’s Andy McCarthy noted:
“If a company like AT&T failed to make a legally mandated restatement of its financial position while continuing to participate in the capital markets, it would be investigated and the responsible management officials would likely find themselves prosecuted while the SEC, concurrently, went after the company and its officials in civil enforcement suits. There are prosecutors and investigators who would salivate at the prospect of doing such a career-making case. If we are now under a system where disclosure gets you a public whipping and other threats by the Powers That Be while nondisclosure promises the ruinous expenses of defending against criminal investigations and civil enforcement, this is no longer anything but a thugocracy.”
So what does Waxman do? He calls hearings for April 21, and he fires off letters to the CEO’s of the companies involved summoning them to a grilling. The one he wrote to Samuel Allen, CEO at John Deere, goes like this:
After the President signed the health care reform bill into law, your company announced that the new law would adversely affect its financial outlook for Fiscal Year 2010, stating, “As a result of the legislation, the company’s expenses are expected to be about $150 million higher on an after-tax basis.”
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,z 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.
The Subcommittee on Oversight and Investigations will hold a hearing on April 21, 2010 at 10:00 a.m. in Room 2123 of the Rayburn House Office Building to examine the impact of the new law on Deere & Company and other large employers. We request your personal testimony at this hearing.
To assist the Committee with its preparation for the hearing, 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 Deere & Company; 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 Deere & Company. We also request an explanation of the accounting methods used by Deere & Company 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 released by Deere & Company 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.
Similar letters also went out to James W. Owens, Chairman and CEO, Caterpillar Inc.; Ivan G. Seidenberg, Chairman of the Board and CEO, Verizon Communications Inc.; and Randall Stephenson, Chairman, President, and CEO, AT&T. It’s likely they’ll get to put up with grilling by troglodytes like Schakowsky or morons like DeGette about what they personally make and how their health plans work, where they held their company retreat this past year and what kind of profits they pull down – this is what they can expect for daring to dissent – as they are legally required to do – with the officially-approved line that Obamacare is good for everyone.
Of course, these are highly capable, competent people – unlike the dysfunctional empty suits populating Waxman’s committee. They’re more than capable of handling themselves under fire, and it’s quite possible Waxman’s hearings might go very badly for the Democrats. After all, these companies will be armed with actual, real numbers – not fantasyland, garbage-in, garbage-out Congressional Budget Office delusions like the politicians live with – and the expertise to explain them. And they’re quite likely to be more than a little preturbed at being hauled into a clown show.
So don’t be surprised if we see some fireworks. And while they might be entertaining, ask yourself whether politicians like Waxman, who would be hard-pressed to get a job anywhere but the mail room of any of these companies, and whose record of managing finances in Congress would have buried them under a federal penitentiary long ago, ought to be wasting the time of America’s corporate executives in committee hearings designed to punish them for using mathematics in the Age of Obama.