Early ObamaCare Results: Companies Losing Value

One of the ways that Presbo and the Democrats decided to finance ObamaCare was by increasing taxes on corporations who choose to offer drug benefits to retirees instead of dumping them off on Medicare. So the bill is now law, and those companies are required to immediately restate their value to reflect their long-term health liabilities... including taxes.

So several high-profile companies have done so, and in the process "written down" their net worth by quite a lot of money... collectively, the new law cost them almost $1.4 billion.

And Democrats are quite upset.

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.

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."

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.

So the first effect of ObamaCare is to hurt corporations to the tune of BILLIONS of dollars of value. And Democrats, instead of giving voice to an honest mea culpa, are now turning on those companies and want to punish the victims!

Isn't this just so... progressive?