In their desire to make history with a cradle to grave healthcare program the Democrats (Mary Jo Kill-jobs included) have further devastated the economy without even understanding their blunder. It seems in their preoccupation with passing Obamacare, Democrats failed to take a great many factors into account. One of which was the effect raising taxes on businesses would have on job growth. In recent years Democrats seem to have developed a skewed view of corporations as needlessly greedy and self-serving. The Democrats have lost perspective. Corporations have a fiduciary responsibility to make a profit so they can provide a return on investment to their shareholders. Corporations aren’t made up of nameless, faceless suits with sardonic grins; they’re made up of regular people. The executives, shareholders, managers, and employees alike are all human. When the government raises taxes on a corporation, they’re raising taxes on people.
Part of the Democrats’ plan to make Obamacare appear affordable is to close what White House Press Secretary Robert Gibbs calls a “loophole” which allowed corporations to deduct the full amount spent on prescription drug benefits for retirees from the corporation’s taxable income. This “loophole” was originally created in 2003 to incentivize employers to provide drug benefits to retirees in order to prevent the public system from being overwhelmed. Now, in the aftermath of the Obamacare legislation’s passage, companies of all kinds are facing an increased tax burden as a result of their decision to provide prescription drug benefits to retirees.
In the long term, this means many companies will terminate their retiree prescription drug benefits programs, leaving their retirees to rely on Obamacare and, thus, creating additional costs not factored into the estimates that claimed Obamacare would reduce the deficit. In the short term, employers are taking the increased tax burden right on the chin. Black-letter financial accounting rules require that corporations must immediately restate the present value of their earnings when a material change has been made. As the increased tax burden of Obamacare constitutes a material change, corporations have been announcing massive writedowns as a result of the Obamacare tax hikes:
Valero Energy -- up to $20 million
And those writedowns are just the tip of the iceberg; the consulting firm Towers Watson estimates that the total number of Obamacare writedowns will reach nearly $14 billion by year end. That’s $14 billion of wealth disappearing from the economy--$14 billion that could’ve been used for job growth: gone. It’s an obvious fact that too many Americans know all too well: when employers are faced with increased costs and economic downturn, they lack the resources to hire new workers. The state of our economy was already dire, now it’s worse.
Are the Democrats concerned? Yes, but not because of the implications for job growth. They’re concerned because in announcing the writedowns, employers have voiced an inconvenient reality the Democrats would prefer be kept silent: Obamacare is a job killer.
Infuriated by the audacity of corporate America in speaking the truth, Henry Waxman (D-CA), Chairman of the House Committee on Energy and Commerce, and Bart Stupak (D-MI), Chairman of the Subcommittee on Oversight and Investigations, will haul the CEOs of Deere & Co., Caterpillar, AT&T, and Verizon before Congress for a hearing on April 21. Apparently, the Congressional Democrats would prefer for CEOs to cook the books to make their balance sheets appear healthier than they are. The Democrats really ought to think through the aftereffects of using intimidation to bully CEOs into muddying the truth. It could wind up being even worse than that time they forgot to think through the aftereffects of passing a massive, shoddily-contrived healthcare reform bill.
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