ObamaCare Writedowns Will Cost Business $14 Billion

So says the Wall Street Journal in an editorial today:

So the wave of corporate writedowns—led by AT&T's $1 billion—isn't caused by ObamaCare after all. The White House claims CEOs are reducing the value of their companies and returns for shareholders merely out of political pique.

A White House staffer told the American Spectator that "These are Republican CEOs who are trying to embarrass the President and Democrats in general. Where do you hear about this stuff? The Wall Street Journal editorial page and conservative Web sites. No one else picked up on this but you guys. It's BS." (We called the White House for elaboration but got no response.)

In other words, CEOs who must abide by U.S. accounting laws under pain of SEC sanction, and who warned about such writedowns for months, are merely trying to ruin President Obama's moment of glory. Sure.

Presumably the White House is familiar with the Financial Standard Accounting Board's 1990 statement No. 106, which requires businesses to immediately restate their earnings in light of their expected future retiree health liabilities. AT&T, Deere & Co., AK Steel, Prudential and Caterpillar, among others, are simply reporting the corporate costs of the Democratic decision to raise taxes on retiree drug benefits to finance ObamaCare.

When the Medicare prescription drug plan was debated in 2003, many feared that companies already offering such coverage would cash out and dump the costs on government. So Congress created a modest subsidy, equal to 28% of the cost of these plans for seniors who would otherwise enroll in Medicare. This subsidy is tax-free, and companies used to be allowed to deduct the full cost of the benefit from their corporate income taxes (beyond the 72% employer portion).

Democrats chose to eliminate the full exclusion and said they were closing a loophole. But whatever it's called, eliminating it "will be highly destabilizing for retirees who rely upon employer sponsored drug coverage" and "will impose a dramatic and immediate impact on company financial statements."

There's more at the link.

Henry Waxman is on a fool's errand if he thinks summoning the CEOs of these companies to D.C. for a show trial is going to change their outlook or their numbers. As the WSJ points out above they are simply responding to a financial accounting requirement, and not some political grievance with the president or the Democrats (though I don't doubt for a minute they have one).