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Let's hear it for some reconciliation moral equivalence! (pg. 6)
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| Comrade Stalin |
| quote: | Originally posted by Shakka
Great. More entitlements for us evil rich folks to pay for you poor commies;) Wouldn't it be nice of the bill was 1/2 a page of simple explanation instead of 2500 pages of radical, hastily passed reformation that doesn't even really go after the evil insurance companies? And also begs the question--you seem to be able to boil down the good points to 1/2 a page. What of the other 2,499 pages of bull? |
They've been working on it for a year, so it's not "hastily put together". This is a complex subject so of course it's going to be a huge bill. To say otherwise is to be unrealistic.
| quote: | | This bill is more about government power than it is about saving money and holding down prices. |
That's utterly ridiculous. As if the Democrats had some nefariously evil intent in legislating healthcare reform.
| quote: | Which conveniently adds up to 89%. A simple majority is more than half. All I see is plurality.
Here's another interesting tidbit.
http://www.rasmussenreports.com/pub...l_tracking_poll
So 49% are apparently glad the healthcare bill passed, yet 49% also want their states to sue the federal government over the bill's passage. Doesn't exactly sound one-sided and clear-cut to me. |
Obama and the Democrats were voted into office on a huge margin. The American people knew exactly what they were getting when they voted so the polls really mean jack . I'm glad Obama realizes this important fact. Bush did too to his credit. |
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| Shakka |
Believe it or not, Lez, I do try to get opposing opinions to my own, provided they are not completely ludicrous. This article would be supportive of the chart you posted, though as the article also points out, (and since Nancy P-bag was courteous enough to remind us) nobody really knows what kind of bull is in this bill (other than kickbacks, backroom deals, exemptions, etc.), so the initial reaction is probably not necessarily a good indicator of where the public opinion will ultimately fall.
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Nearly half of Americans believe the health care reform bill signed by President Barack Obama on Tuesday was a “good thing,” according to a new Gallup poll.
Forty-nine percent of the 1,005 adults polled nationwide Monday said health reform was a “good thing,” compared with 40 percent who said it was bad.
The margin of error was plus or minus 4 percentage points.
Fifty percent of those surveyed were either “enthusiastic” or “pleased” by the bill’s passage. Twenty-three percent were “disappointed” the bill passed, while 19 percent said they were “angry.”
Not surprisingly, Democrats favored the bill by wide margins, while Republicans expressed displeasure. Forty-one percent of the self-identified Republicans polled said they were “angry” that the bill passed.
Independents, meanwhile, were split almost evenly. Forty-six percent said the bill was a “good thing,” compared to 45 percent who believed it was bad.
Forty-five percent of independents were either “enthusiastic” or “pleased” that the bill passed, while 47 percent were either “disappointed” or “angry.”
“Passage of health care reform was a clear political victory for President Obama and his allies in Congress,” Gallup’s Lydia Saad wrote in her analysis of the survey, released Tuesday. “While it also pleases most of his Democratic base nationwide, it is met with greater ambivalence among independents and with considerable antipathy among Republicans.”
“Whether these groups' views on the issue harden, or soften, in the coming months could be crucial to how health care reform factors into this year’s midterm elections,” she continued. “Given that initial public reaction to Sunday’s vote is more positive than recent public opinion about passing a health care reform bill, it appears some softening has already occurred.”
Read more: http://www.politico.com/news/storie...l#ixzz0j7VQcOFq
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http://www.politico.com/news/stories/0310/34887.html |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
They've been working on it for a year, so it's not "hastily put together". This is a complex subject so of course it's going to be a huge bill. To say otherwise is to be unrealistic. |
Disagree. It depends on just what kind of change and how much of it is in the bill.
| quote: | | That's utterly ridiculous. As if the Democrats had some nefariously evil intent in legislating healthcare reform. |
God damn right that some of them do. Both sides do. A congressman/woman's whole political career is dependent on securing money for their constituents and getting themselves reelected.
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Obama and the Democrats were voted into office on a huge margin. The American people knew exactly what they were getting when they voted so the polls really mean jack . I'm glad Obama realizes this important fact. Bush did too to his credit. |
Perhaps, though this doesn't seem to line up as much with the steadily declining approval rating of both Obama and every member of congress. Remember that a ton of people voted for Obama simply because they did not want to vote for "another Bush". Quite a few of them have come down with buyer's remorse. |
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| Comrade Stalin |
| quote: | Originally posted by Shakka
Disagree. It depends on just what kind of change and how much of it is in the bill. |
A big change needs a big bill. That's just reality. One year is plenty of time draft a bill. I mean, Obama has just 4 years, should it take 4 years to get to this point, just so Republicans can feel satisfied it's not "hastily put together"?
| quote: | | God damn right that some of them do. Both sides do. A congressman/woman's whole political career is dependent on securing money for their constituents and getting themselves reelected. |
Of course, but you seem to think there is some evil concerted effort to increase the government's power for some nefarious intent.
| quote: | | Perhaps, though this doesn't seem to line up as much with the steadily declining approval rating of both Obama and every member of congress. Remember that a ton of people voted for Obama simply because they did not want to vote for "another Bush". Quite a few of them have come down with buyer's remorse. |
What was Obama's slogan? "Change We Can Believe In". Voters shouldn't be surprised when he actually delivers on that promise. To their benefit, even when they don't know it yet. Most conservatives don't even acknowledge Obama has proposed and passed (WITHOUT REPUBLICAN SUPPORT) one of the largest tax breaks in this country's history, yet continue their alarmist anti-progressive rhetoric. |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
A big change needs a big bill. That's just reality. One year is plenty of time draft a bill. I mean, Obama has just 4 years, should it take 4 years to get to this point, just so Republicans can feel satisfied it's not "hastily put together"? |
C'mon. Even you can't deny the "urgency" that the bill's proponents consistently espoused in order to try to ram through the entire bill which none of them have likely even read through. Every day we hear "if we don't pass this NOW, we're going to go bankrupt." Meanwhile, Social security is on the verge of bankruptcy, Medicare is on the same track and yet our government continues to spend money "Keynesian" style (but in reality NOT Keynesian) in order to solve our debt problem with mountains of new debt. Ironically, there are news stories starting to come out about hospitals no longer accepting Medicare. Pretty ing sweet if you ask me.
| quote: | | Of course, but you seem to think there is some evil concerted effort to increase the government's power for some nefarious intent. |
I absolutely believe that. Every bit our government grows is a hit to liberty and individual freedom, two of the foundations that our nation was built upon. Some of our "elected" officials are downright evil as far as I'm concerned.
| quote: |
What was Obama's slogan? "Change We Can Believe In". Voters shouldn't be surprised when he actually delivers on that promise. To their benefit, even when they don't know it yet. Most conservatives don't even acknowledge Obama has proposed and passed (WITHOUT REPUBLICAN SUPPORT) one of the largest tax breaks in this country's history, yet continue their alarmist anti-progressive rhetoric. |
Without republican support = partisan = low quality (for lack of a better term). I repeat that the only thing bipartisan about the health-care bill is that both republicans and democrats voted AGAINST it.
Please tell me about the tax breaks we're all getting because it seems like a bunch of smoke and mirrors to me. I love the article I posted above about the CBO and how they work--the author of the piece (Douglas Holtz-Eakin) was the CBO Chairman from 2003-2005). ing rich. And the nanny-state devolves that much more. |
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| Joss Weatherby |
| Vote Republican for a Better World! |
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| Shakka |
Good interview.
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'Basically an Optimist'—Still
The Nobel economist says the health-care bill will cause serious damage, but that the American people can be trusted to vote for limited government in November.
By PETER ROBINSON
Stanford, Calif.
"No, no. Not at all."
So says Gary Becker when asked if the financial collapse, the worst recession in a quarter of a century, and the rise of an administration intent on expanding the federal government have prompted him to reconsider his commitment to free markets.
Mr. Becker is a founder, along with his friend and teacher the late Milton Friedman, of the Chicago school of economics. More than four decades after winning the John Bates Clark Medal and almost two after winning the Nobel Prize, the 79-year-old occupies an unusual position for a man who has spent his entire professional life in the intensely competitive field of economics: He has nothing left to prove. Which makes it all the more impressive that he works as hard as an associate professor trying to earn tenure. He publishes regularly, carries a full-time teaching load at the University of Chicago (he's in his 32nd year), and engages in a running argument with his friend Judge Richard Posner on the "Becker-Posner Blog," one of the best-read Web sites on economics and the law.
When his teaching schedule permits, Mr. Becker visits the Hoover Institution, the think tank at Stanford where he has been a fellow since 1988. The day he and I meet in his Hoover office, Mr. Becker has already attended a meeting with former Treasury Secretary Hank Paulson and spent several hours touring Apple headquarters down the road in Cupertino with his wife, Guity Nashat, a historian of the Middle East, and their grandson. "I guess you'd call our grandson a computer whiz," he explains proudly. "He's just 14, but he has already sold a couple of apps."
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I begin with the obvious question. "The health-care legislation? It's a bad bill," Mr. Becker replies. "Health care in the United States is pretty good, but it does have a number of weaknesses. This bill doesn't address them. It adds taxation and regulation. It's going to increase health costs—not contain them."
Drafting a good bill would have been easy, he continues. Health savings accounts could have been expanded. Consumers could have been permitted to purchase insurance across state lines, which would have increased competition among insurers. The tax deductibility of health-care spending could have been extended from employers to individuals, giving the same tax treatment to all consumers. And incentives could have been put in place to prompt consumers to pay a larger portion of their health-care costs out of their own pockets.
"Here in the United States," Mr. Becker says, "we spend about 17% of our GDP on health care, but out-of-pocket expenses make up only about 12% of total health-care spending. In Switzerland, where they spend only 11% of GDP on health care, their out-of-pocket expenses equal about 31% of total spending. The difference between 12% and 31% is huge. Once people begin spending substantial sums from their own pockets, they become willing to shop around. Ordinary market incentives begin to operate. A good bill would have encouraged that."
Despite the damage this new legislation appears certain to cause, Mr. Becker believes we're probably stuck with it. "Repealing this bill will be very, very difficult," he says. "Once you've got a piece of legislation in place, interest groups grow up around it. Look at Medicare and Medicaid. Originally, the American Medical Association opposed Medicare and Medicaid. Then the AMA came to see them as a source of demand for physicians' services. Today the AMA supports Medicare and Medicaid as staunchly as anyone. Something like that will happen with this new legislation."
Bad legislation, maintained by self-seeking interest groups. Back in 1982, I remind Mr. Becker, the economist Mancur Olson published a book, "The Rise and Decline of Nations," predicting just that trend. Over time, Olson argued, interest groups would form to press for policies that would almost invariably prove protectionist, redistributive or antitechnological. Policies, in a word, that would inhibit economic growth. Yet since the benefits of such policies would accrue directly to interest groups while the costs would be spread across the entire population, very little opposition to such self-seeking would ever develop. Interest groups—and bad policies—would proliferate, and the nation would stagnate.
Olson may have sketched his portrait during the 1980s, but doesn't it display a remarkable likeness to the United States today? Mr. Becker thinks for a moment, swiveling toward the window. Then he swivels back. "Not necessarily," he replies.
"The idea that interest groups can derive specific, concentrated benefits from the political system—yes, that's a very important insight," he says. "But you can have competing interest groups. Look at the automobile industry. The domestic manufacturers in Detroit want protectionist policies. But the auto importers want free trade. So they fight it out. Now sometimes in these fights the dark forces prevail, and sometimes the forces of light prevail. But if you have competing interest groups you don't end up with a systematic bias toward bad policy."
Mr. Becker places his hands behind his head. Once again, he reflects, then smiles wryly. "Of course that doesn't mean there isn't any systematic bias toward bad policy," he says. "There's one bias that we're up against all the time: Markets are hard to appreciate."
Capitalism has produced the highest standard of living in history, and yet markets are hard to appreciate? Mr. Becker explains: "People tend to impute good motives to government. And if you assume that government officials are well meaning, then you also tend to assume that government officials always act on behalf of the greater good. People understand that entrepreneurs and investors by contrast just try to make money, not act on behalf of the greater good. And they have trouble seeing how this pursuit of profits can lift the general standard of living. The idea is too counterintuitive. So we're always up against a kind of in-built suspicion of markets. There's always a temptation to believe that markets succeed by looting the unfortunate."
As he speaks, Mr. Becker appears utterly at ease. He wears loose-fitting clothes and slouches comfortably in his chair. His hair, wispy and white, sets off his most striking feature—penetrating eyes so dark they seem nearly black. Yet those dark eyes display not foreboding, but contentment. He does not have the air of a man contemplating national decline.
I read aloud from an article by historian Victor Davis Hanson that had appeared in the morning newspaper. "[W]e are in revolutionary times," Mr. Hanson argues, "in which the government will grow to assume everything from energy to student loans." Next I read from a column by economist Thomas Sowell. "With the passage of the legislation allowing the federal government to take control of the medical system," Mr. Sowell asserts, "a major turning point has been reached in the dismantling of the values and institutions of America."
"They're very eloquent," Mr. Becker replies, his equanimity undisturbed. "And maybe they're right. But I'm not that pessimistic." The temptation to view markets with suspicion, he explains, is just that: a temptation. Although voters might succumb to the temptation temporarily, over time they know better.
"One of the points Secretary Paulson made earlier today was how outraged—how unexpectedly outraged—the American people became when the government bailed out the banks. This belief in individual responsibility—the belief that people ought to be free to make their own decisions, but should then bear the consequences of those decisions—this remains very powerful. The American people don't want an expansion of government. They want more of what Reagan provided. They want limited government and economic growth. I expect them to say so in the elections this November."
Even if ordinary Americans still want limited government, I ask, what about those who dominate the press and universities? What about the molders of received opinion who claim that the financial crisis marked the demise of capitalism, rendering the Chicago school irrelevant?
"During the financial crisis," he replies, "the government and markets—or rather, some aspects of markets—both failed."
The Federal Reserve, Mr. Becker explains, kept interest rates too low for too long. Freddie Mac and Fannie Mae made the mistake of participating in the market for subprime instruments. And as the crisis developed, regulators failed to respond. "The Fed and the Treasury didn't see the crisis coming until very late. The SEC didn't see it at all," he says.
"The markets made mistakes, too. And some of us who study the markets made mistakes. Some of my colleagues at Chicago probably overestimated the ability of the Fed to smooth disruptions. I didn't write much about the Fed, but if I had I would probably have overestimated the Fed myself. As the banks developed new instruments, economists paid too little attention to the systemic risks—the risks the instruments posed for the whole financial system—as opposed to the risks they posed for individual institutions.
"I learned from Milton Friedman that from time to time there are going to be financial problems, so I wasn't surprised that we had a financial crisis. But I was surprised that the financial crisis spilled over into the real economy. I hadn't expected the crisis to become that bad. That was my mistake."
Once again, Mr. Becker reflects. "So, yes, we economists made mistakes. But has the experience of the past few years invalidated the finding that markets remain the most efficient means for producing economic growth? Not in any way.
"Look at growth in developed countries since the Second World War," he continues. "Even after you take into account the various recessions, including this one, you still end up with a good record. So even if a recession as bad as this one were the price of free markets—and I don't believe that's the correct way of looking at it, because government actions contributed so greatly to the current problem—but even if a bad recession were the price, you'd still decide it was worth paying.
"Or look at developing countries," he says. "China, India, Brazil. A billion people have been lifted out of poverty since 1990 because their countries moved toward more market-based economies—a billion people. Nobody's arguing for taking that back."
My last question involves a little story. Not long before Milton Friedman's death in 2006, I tell Mr. Becker, I had a conversation with Friedman. He had just reviewed the growth of spending that was then taking place under the Bush administration, and he was not happy. After a pause during the Reagan years, Friedman had explained, government spending had once again begun to rise. "The challenge for my generation," Friedman had told me, "was to provide an intellectual defense of liberty." Then Friedman had looked at me. "The challenge for your generation is to keep it."
What was the prospect, I asked Mr. Becker, that this generation would indeed keep its liberty? "It could go either way," he replies. "Milton was right about that."
Mr. Becker recites some figures. For years, federal spending remained level at about 20% of GDP. Now federal spending has risen to 25% of GDP. On current projections, federal spending would soon rise to 28%. "That concerns me," Mr. Becker says. "It concerns me a great deal.
"But when Milton was starting out," he continues, "people really believed a state-run economy was the most efficient way of promoting growth. Today nobody believes that, except maybe in North Korea. You go to China, India, Brazil, Argentina, Mexico, even Western Europe. Most of the economists under 50 have a free-market orientation. Now, there are differences of emphasis and opinion among them. But they're oriented toward the markets. That's a very, very important intellectual victory. Will this victory have an effect on policy? Yes. It already has. And in years to come, I believe it will have an even greater impact."
The sky outside his window has begun to darken. Mr. Becker stands, places some papers into his briefcase, then puts on a tweed jacket and cap. "When I think of my children and grandchildren," he says, "yes, they'll have to fight. Liberty can't be had on the cheap. But it's not a hopeless fight. It's not a hopeless fight by any means. I remain basically an optimist."
Mr. Robinson, a former speechwriter for President Ronald Reagan, is a fellow at Stanford University's Hoover Institution. |
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| pkcRAISTLIN |
| quote: |
I begin with the obvious question. "The health-care legislation? It's a bad bill," Mr. Becker replies. "Health care in the United States is pretty good, but it does have a number of weaknesses. This bill doesn't address them. It adds taxation and regulation. It's going to increase health costs—not contain them."
Drafting a good bill would have been easy, he continues. Health savings accounts could have been expanded. Consumers could have been permitted to purchase insurance across state lines, which would have increased competition among insurers. The tax deductibility of health-care spending could have been extended from employers to individuals, giving the same tax treatment to all consumers. And incentives could have been put in place to prompt consumers to pay a larger portion of their health-care costs out of their own pockets.
"Here in the United States," Mr. Becker says, "we spend about 17% of our GDP on health care, but out-of-pocket expenses make up only about 12% of total health-care spending. In Switzerland, where they spend only 11% of GDP on health care, their out-of-pocket expenses equal about 31% of total spending. The difference between 12% and 31% is huge. Once people begin spending substantial sums from their own pockets, they become willing to shop around. Ordinary market incentives begin to operate. A good bill would have encouraged that." |
haha. the market has provided decades of evidence illustrating its woeful inability to provide affordable healthcare to the average american citizen. but the stalwarts aren't phased! more market mechanisms would somehow change the fact that profit-driven companies in certain specialised industries tend to have ballooning costs.
i was watching an interview on the news hour a couple of weeks ago, where a health insurance spokesman was telling us that insurance contributes a paltry 3% to the cost of healthcare. exactly how is more competition across state lines going to engender a significant benefit to consumers, if the insurance industry only have 3% from which to cut discounts from? if doctors and nurses and hospital rooms and enemas are still woefully expensive, its doesn't really matter how much "competition" there is on the insurance side of the equation.
but hell, what do i know,? im stuck in a communist nation which has been going down the tubes ever since we let the government into our lives. oh the humanity of my 1.5% healthcare tax. |
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| Shakka |
How dare they rain on PrezBO's parade! I guess Waxman can't seem to accept reality. More of that vast right wing conspiracy I guess.
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Democrats threaten companies hit hard by health care bill
By: Byron York
Chief Political Correspondent
March 28, 2010
Rep. Henry Waxman, D-Los Angeles (Susan Walsh/AP)
Rep. Henry Waxman, chairman of the House Committee on Energy and Commerce, has summoned some of the nation's top executives to Capitol Hill to defend their assessment that the new national health care reform law will cost their companies hundreds of millions of dollars in health insurance expenses. Waxman is also demanding that the executives give lawmakers internal company documents related to health care finances -- a move one committee Republican describes as "an attempt to intimidate and silence opponents of the Democrats' flawed health care reform legislation."
On Thursday and Friday, the companies -- so far, they include AT&T, Verizon, Caterpillar, Deere, Valero Energy, AK Steel and 3M -- said a tax provision in the new health care law will make it far more expensive to provide prescription drug coverage to their retired employees. Now, both retirees and current employees of those companies are wondering whether the new law could mean reduced or canceled benefits for them in the future.
The news is an embarrassment for Democrats. As President Obama and congressional leaders tout the purported benefits of the new health care law, some of the nation's biggest companies are saying it will mean higher costs and fewer benefits -- not exactly what Democrats want to hear in the days after their historic victory.
So Waxman has ordered the executives to explain themselves at an April 21 hearing before the Energy and Commerce Committee's investigative subcommittee. That subcommittee just happens to be chaired by Rep. Bart Stupak, the Michigan Democrat who held out his vote on health care reform until a few hours before final passage on March 21, giving the bill's opponents the unfounded hope that he might vote against it.
Waxman's demands came Friday in letters to several executives. "After the president signed the health care reform bill into law, your company announced that provisions in the law could adversely affect your ability to provide health insurance," Waxman wrote to Randall Stephenson, chairman and CEO of AT&T. A few hours before Waxman sent his letter, AT&T announced it will take a $1 billion charge against earnings because of the tax provision in the new health bill. AT&T also said it will be "evaluating prospective changes" to its health care benefits for all workers.
Waxman's letter suggests he does not accept the company's decision. "The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern," Waxman wrote to Stephenson, in addition to letters to Verizon CEO Ivan Seidenberg, Caterpillar CEO James Owens, and Deere & Company CEO Samuel Allen. The companies' decisions, Waxman wrote, "appear to conflict with independent analyses."
Waxman's demands for documents are far-reaching. "To assist the Committee with its preparation for the hearing," he wrote to Stephenson, "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 AT&T; 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 AT&T. We also request an explanation of the accounting methods used by AT&T since 2003 to estimate the financial impact on your company of the 28 percent subsidy for retiree drug coverage and its deductibility or nondeductibility, including the accounting methods used in preparing the cost impact statement released by AT&T this week.
Waxman's request could prove particularly troubling for the companies. The executives will undoubtedly view such documents as confidential, but if they fail to give Waxman everything he wants, they run the risk of subpoenas and threats from the chairman. And all as punishment for making a business decision in light of a new tax situation.
The particular problem for the companies involves the prescription drug coverage they offer retired workers. In 2003, when President Bush and the Republican Congress passed the Medicare prescription drug entitlement, they offered a tax break to companies that continued to provide drug coverage for their retirees, rather than forcing them into the Medicare system. The new national health care bill ends that tax break, making it more expensive for the companies to continue offering the coverage. Ultimately, some analysts believe, the companies will stop covering the retirees, pushing them into the government system.
Waxman's action took Republicans on the Energy and Commerce Committee by surprise. Contacted Saturday, Texas Rep. Michael Burgess, who is the ranking Republican on the investigations subcommittee, said, "The timing of the letters and the hearing and the scope of information requested looks an awful lot like an attempt to intimidate and silence opponents of the Democrats' flawed health care reform legislation, which is unfortunately the law of the land."
Burgess added, "I heard from several businesses back home in North Texas that the Democrats' health reform would be bad for business, so I am not surprised that companies are beginning to announce that it will cost them&hellipI look forward to hearing more from the officials at these companies about the adverse effects of the Democrats' health reform will have on their business."
In coming days, Republicans are likely to emphasize the costs, both financial and human, of the new law. In an interview Thursday, Rep. Tom Price, head of the House Republican Study Committee, said his party's first priority will be to "identify as often as possible the detrimental and remarkably consequential effects of this bill on communities." Price specifically pointed to the Caterpillar and Deere announcements as examples of what GOP lawmakers will cite as the adverse effects of the law. (At the time Price spoke, AT&T had not yet announced its decision.)
Given that, it's no wonder Democrats are planning an aggressive campaign against the businesses involved. Elections are coming up, and Democratic leaders are in no mood to hear discouraging words about what they regard as their signature achievement.
Many, many times during the health care debate, President Obama promised the American people that if they have insurance and they are happy with it, then it would not change... |
Of course, someone might want to inform Senior Waxman that accounting rules REQUIRE companies to account for this.
| quote: | By DAVID REILLY, ELLEN E. SCHULTZ And RON WINSLOW
AT&T Inc. said it would take a $1 billion charge against earnings tied to the federal health-care overhaul, joining a number of other companies in reporting an impact from the bill signed into law this week.
The charges relate to prescription-drug benefits for retirees. Companies that provide this benefit, as AT&T does, receive a federal subsidy, plus they can deduct the value of this subsidy from their taxes. The health overhaul cancels the deductibility of the subsidy.
It's for that reason that companies are taking a charge against earnings. They "have a stream of tax benefits that they are losing way out into the future," said Roland McDevitt, director of health-care research at benefits consultant Towers Watson.
On Friday, 3M Co. joined AT&T in saying it would take a first-quarter charge, in 3M's case of $85 million to $90 million. Deere &Co., Caterpillar Inc. and AK Steel Holding Corp. said they were taking such charges.
AT&T's is much larger than the others' because it has far more current and future retirees, and a large number of them are unionized, with guaranteed benefits.
The charges are "noncash," meaning companies don't have to write a check. But ultimately their tax bills will be higher given the change in tax treatment of the drug-benefit subsidy.
AT&T plans to take a noncash $1 billion charge in the first quarter.
The charges are related to a 2003 law providing a prescription-drug benefit under Medicare. At the time it was adopted, some companies were threatening to drop drug coverage for their retirees, since this would now be available through Medicare. Congress voted them a 28% tax-free subsidy for continuing to provide coverage to retirees eligible for Medicare.
The subsidies caused the cost of companies' obligations for retiree benefits to decline. AT&T, for example, saw its obligation drop by $1.6 billion at the time.
The cost of providing retiree prescription-drug coverage was already tax-deductible before the 2003 law. After that law was signed, companies remained able to deduct the cost of providing the benefit, including the portion paid for by the subsidy.
The current health-care overhaul doesn't eliminate the subsidy, nor make it taxable. What it changes is that companies will no longer be able to deduct the portion of the drug benefit paid for by the subsidy.
Since companies had created an asset based on the expectation they would be getting these deductions over the lives of their current and future retirees, they say they need to take a charge reflecting the fall in the asset's value.
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Accounting rules say the charges, which affect what are called "deferred tax assets," must be taken in the quarter in which a tax-law change is enacted. The first quarter ends Wednesday. Companies wouldn't have to announce the charges before they actually report their first-quarter earnings over the next several weeks. However, if they viewed the charges as material, they might feel they needed to inform shareholders immediately.
The one-time charges, running into the hundreds of millions of dollars, could add to the ongoing debate about the health overhaul's impact, even though the charges are noncash.
Mr. Zion of Credit Suisse estimated in a report this week that companies in the S&P 500 index will rack up a combined $4.5 billion charge due to the change in the value of the tax asset.
—Roger Cheng contributed to this article. |
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| MisterOpus1 |
| quote: | Originally posted by Shakka
How dare they rain on PrezBO's parade! I guess Waxman can't seem to accept reality. More of that vast right wing conspiracy I guess.
Of course, someone might want to inform Senior Waxman that accounting rules REQUIRE companies to account for this.
Source |
I think the post over at MarketWatch blog answers your second piece well:
| quote: | Now stick with me for one minute before we talk markets-impact, okay? I want to be clear about the ambiguous “a change in the tax treatment of the Medicare Part D subsidy” line there. Here’s what facts are:
As explained in plain English in today’s Wall Street journal, “companies that provide this [Medicare Part D] benefit, as AT&T does, receive a federal subsidy, plus they can deduct the value of this subsidy from their taxes. The health overhaul cancels the deductibility of the subsidy.”
Let me ask a question of readers here in even plainer English: Can anybody actually be upset about the fact that giant corporations have to stop taking tax deductions for welfare checks they get for providing health care to their employees and retirees?
Imagine if you will, the government sending you a check to pay for your prescription drugs and then you getting to deduct that amount from your income tax statement. HEY, BIG GOVERNMENT, KEEP YOUR DAMN HANDS OFF MY SUBSIDIES AND ENTITLEMENTS!
Okay, so let’s talk markets and what it might mean for your companies when they lose the right to deduct their checks from taxpayers out of the companies’ tax obligations -
First off, let’s use the numbers from Caterpillar, AT&T, 3M and the other Fortune 500 companies that have taken health-care-bill-related write downs so far to try to quantify just how much money we’re talking about in lost tax-benefit income streams:
CAT – 200k employees, $100MM charge
T – 350k employees, $1BB charge
3M – 75k employees, $90MM charge
Simple average: $1.19BB/525,000 employees = $2266 in lost tax benefits/employee
Remembering that we’re using rough numbers to simply get some gauge of reality on the magnitude of how much the DJIA will no longer be able to legally plunder from taxpayers through these large, targeted corporate tricks, let’s see the final price tag from this specific reform:
7,000,000 (approximate number of employees in DJIA 40) * $2266 in lost corporate welfare per employee = $15 billion.
Total expected earnings of DJIA 40 in 2010: $300 billion.
So the upshot is this – the total long-term charge (nay, hit to earnings) from this particular provision of the reform bill that these companies are issuing ambiguous and scary press releases about is at most simply a loss of welfare income equivalent to about 5% of this year’s earnings.
And here’s the really good news, aside from the fact that these companies are going to be on a little bit less welfare this year – now we have confidence. We just quantified the costs of this part of the reform, and we’ll be quantifying all these reforms in coming weeks and months. And quantification builds certainty and certainty builds confidence and confidence builds booming economies and bull markets.
So I’ll leave you with a trademark flip it: These big health-care related charges that we keep hearing about from the markets are very bullish and good for your portfolio. And btw, in case you want to try to invest in names that will actually benefit from these rule changes, you can find some in my newsletter at http://marketwatch.com/cody.
http://blogs.marketwatch.com/cody/2...your-portfolio/ |
So wait, we need to cry about big corps. no longer being able to double-dip by taking tax deductions on subsidies they are receiving from the government (i.e. us taxpayers)?
Huh. Okay then - boo ing hoo. There, I feel better. Don't you? And this whole time I thought it was Republicans and Conservatives who get annoyed with free welfare handouts........
And about Waxman's letter, let's also examine an interesting factoid in that letter:
| quote: | 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. 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.
http://tpmdc.talkingpointsmemo.com/...ns-millions.php |
And so we're all supposed to be appalled by Waxman telling big corps. to prove these figures incorrect, considering such figures came from an association of CEOs of leading U.S. companies? Umm, 'kay.
It's this kind of bull, faux outrage that just leaves me shaking my head at the GOP. Don't get me wrong, the Democrats have royally pissed me off in a healthy number of ways over the past year, but if it's a toss-up between being pissed off with one group but finally seeing some sort of result pointing in the right direction, versus the utter, asinine stupidity of the other group being led and kowtowed by complete dip tea partier jerkwads and talk show blowhards, well, the decision still isn't too difficult. |
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| Shakka |
| quote: | Originally posted by MisterOpus1
I think the post over at MarketWatch blog answers your second piece well:
So wait, we need to cry about big corps. no longer being able to double-dip by taking tax deductions on subsidies they are receiving from the government (i.e. us taxpayers)?
Huh. Okay then - boo ing hoo. There, I feel better. Don't you? And this whole time I thought it was Republicans and Conservatives who get annoyed with free welfare handouts........
And about Waxman's letter, let's also examine an interesting factoid in that letter:
And so we're all supposed to be appalled by Waxman telling big corps. to prove these figures incorrect, considering such figures came from an association of CEOs of leading U.S. companies? Umm, 'kay.
It's this kind of bull, faux outrage that just leaves me shaking my head at the GOP. Don't get me wrong, the Democrats have royally pissed me off in a healthy number of ways over the past year, but if it's a toss-up between being pissed off with one group but finally seeing some sort of result pointing in the right direction, versus the utter, asinine stupidity of the other group being led and kowtowed by complete dip tea partier jerkwads and talk show blowhards, well, the decision still isn't too difficult. |
Funny how Waxman's position is to go back to the CBO. If you go back to one of my posts way back up by a former CBO head you'll probably understand why Waxman's argument probably doesn't hold water. They think the CBO is all-knowing, but the CBO just crunches numbers based on the assumptions they are told to use (i.e. garbage in, garbage out as the author stated). |
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| Lebezniatnikov |
| quote: | Originally posted by Shakka
Funny how Waxman's position is to go back to the CBO. If you go back to one of my posts way back up by a former CBO head you'll probably understand why Waxman's argument probably doesn't hold water. They think the CBO is all-knowing, but the CBO just crunches numbers based on the assumptions they are told to use (i.e. garbage in, garbage out as the author stated). |
Those "assumptions" are typically the numbers in the language of the bill. Though Holtz-Eakin is qualified to speak on making things up I suppose - http://www.nytimes.com/2008/03/19/w...ton/19cost.html
Somebody reposted that article in another thread, so you may have missed some of my thoughts on the inaccuracy of his rebuttal.
My first reaction is that it seems unfair to add $162 billion onto a new bill if it is a pre-existing cost. Even if this cost hasn't been accounted for in the CBO analysis, the CBO is conducting a comparative estimate of deficit reduction as compared to the status quo. So you'd be adding $162 billion to each side for a net increase of zero. It still reduces the deficit in relation to the status quo.
His "Gimmick #1" strikes me as complete bollocks. It's true that revenue collection starts before subsidies are doled out. But by his logic - that 10 years of revenue is used to finance 6 years of cost, wouldn't we expect the next 10 years of implementation to be horrendous deficit spending? Why then do we have 10 years of revenue and 10 years of subsidies at a sticker price of $1.2 TRILLION in deficit reduction??? He's grasping at straws here.
And given the "overestimation of Medicare cost reduction" - well his math is as fuzzy or more than the CBO. Why is it somehow more plausible that putting an add-on freeze on Medicare and closing the prescription drug doughnut hole won't stick? Skepticism doesn't make good policy rebuttal. |
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