More From The Dept. of Reaping What You Sow Dept....

Evidently Henry Waxman wasn't in school the day this letter was delivered to Harry and Kamikaze Nan on December 11, 2009:

Dear Leader Reid and Speaker Pelosi:

As Washington contemplates health care reform, we urge Congressional members and the Administration to consider the impact of these efforts upon the broader economy.

Of significant concern to us in both the House and Senate bills are the provisions that would change the tax treatment of the Medicare Part D Retiree Drug Subsidy (RDS) Program to generate revenue to help offset the cost of health care reform.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 added a new prescription drug benefit to the Medicare program for senior citizens. The Act also included a 28 percent subsidy for employers offering retiree prescription drug coverage to encourage them to "stay in the game" (as opposed to dropping coverage, which would have resulted in additional costs for the Medicare program). The strategy was effective, and the subsidy has enabled employers to offer prescription drug coverage to millions of retirees who would have otherwise elected to participate in Medicare Part D. The employer-sponsored plans have resulted in reduced costs to the government and to the retirees.

Health care reform proposals now before the House and Senate include changes to the RDS Program that would negatively impact both retirees and companies. The change would make the 28 percent subsidy taxable to employers, effectively reducing the value of the subsidy. As a result, we would anticipate significant reductions in employer-sponsored retiree prescription drug coverage. Some analysts of the proposal have characterized the non-taxable nature of the subsidy as "double-dipping" because companies receive a tax-deduction for the cost of the coverage and then receive a 28 percent tax-free subsidy. However, the cost of the coverage is considerably more than the combined value of the deduction and the 28 percent. Companies are absorbing more of the total cost than either the retirees or the government. Taxing the subsidy means that more companies will eliminate or reduce the coverage, and more retirees will shift to Medicare Part D, which will create more cost for both the government and the retirees. If more companies than predicted by the Government Accountability Office shift away from coverage, then the provision could result in a net revenue loss rather than the predicted slight revenue gain.

Further, this change would result in large earnings statement reductions due to U.S. GAAP income tax accounting rules, which would require employers to immediately account for the present value of this tax increase.

The impact of the proposed Medicare Part D changes would be felt throughout the overall U.S. economy as corporate entities and investors are forced to react. We urge our leaders in Washington to carefully consider the far-reaching effects of the health care reform effort and avoid unintended, negative consequences for all stakeholders.

And who was amongst the signors? The C.F.O.s of Caterpillar, Deere & Co. and Verizon. 

So what we have here is Barack Obama, Harry Reid and Nancy Pelosi being warned that would happen is exactly what has happened. It is a measure of the abject stupidity of each that between them they were unable to grasp the political implications of choosing to tax the RDS subsidy, much less the economic implications. It is also a useful measure of Henry Waxman's stupidity that he now going to publicly compound Obama, Reid and Pelosi's felony.

Question: On March 22, 2010, millions of Americans are covered under the Medicare Part D Retiree Drug Subsidy Program. On March 23, 2010, President Barack Obama signs Obamacare into law. On March 24, 2010, millions of Americans find out they may end up losing their Medicare Part D Retiree Drug Subsidy Program benefits because Obamacare taxes the subsidy that enables companies to offer the benefit cost effectively. Do you think that those millions of Americans who are now staring at a loss of a meaningful benefit are going to...

• Thank Barack Obama, Harry Reid and Nancy Pelosi for Obamacare?
• Thank their Democratic Representative and/or Senator for voting "for" Obamacare?
• Blame the nihilistic and obstructionist Republicans? Or,
• Curse the Cruel Hand of Fate?

Think real hard before answering.

Comments

[Dan from Madison]

I am glad you are documenting this, and you are doing a fantastic job.

Watching this unfold reminds me a little of science. Either you have the data, or you do not have the data. Either something works, or it does not.

No matter how hard you wish, pray or stomp your feet, the chemical symbol for water is still h2o - and if companies are forced to file 8-k's, well...

I am praying that these hearings are on CSPAN, I will have to go out and buy a tivo just for this to watch Waxman try to grill these ceo's who need do nothing but say - hey, we didn't pass the law, we are just following it.

I think your prediction from several posts before will be proven correct - much of Obamacare will be stillborn, pushed into the future and/or canned. When the shit hits the fan, the numbers will speak.

[mojo]

I wouldn't show up. Make the poor loon from Beverly Hills (the poor part, yes) subpoena my ass, that would be even more fun.

[Ken]

If Medicare Part D required a tax subsidy to be offered "cost-effectively," then it was never cost-effective.

Nor sustainable over time, but I know you already knew that. Good find, Dennis.

[anon]

Troll. Comment removed.

[Allen]

What I'm wondering is what publicly traded companies with a big union presence will do. I must admit this is the first time I've ever looked forward to reading an 8-k to provide me with gales of laughter.

You just have to assume that any large company with a significant health care plan will be taking a hit to earnings.

[BillT]

*knock-knock*

Troll delivery for Mister Peasant, oven-ready for roasting.

Popcorn's on, folks...

[Billy]

Like markg8 and elliotg before him, anon seems to have lost his ability to even ACT polite when things start falling down around him.

[Dan from Madison]

Sheesh, Anon - worst troll ever. You lose the internets for today.

[Mike C.]

Does it hurt to be that stupid ? Seems like it would.

[David]

But you've gotta admit, noted fuckwit Mark Garrity -- aka Markg8 -- had a certain bone-stupid intransigence to him. Anon seems too anodyne.

[Copper Quark]

Dang. I missed the troll. The perils of working, I suppose. Could we have a bowdlerized version, maybe, just so we'd have the gist of the thing?

[Dan from Madison]

CQ - just a bunch of swearing and incoherent b.s. You didn't miss anything.

[Dan from Madison]

Oh yes, Waxman can invite Prudential to his powwow now, who just came out with an 8-k. $100m.

"Item 8.01 Other Events.

The Patient Protection and Affordable Care Act, signed into law on March 23, 2010, and The Health Care and Education Reconciliation Act of 2010, expected to be signed into law on March 30, 2010 (together, the “Act”), will reduce the tax deduction available to Prudential Financial, Inc. (the “Company”) for retiree health care costs beginning in 2013. The federal government currently provides a subsidy, on a tax-free basis, to companies, including the Company and its subsidiaries, that provide certain retiree prescription drug benefits (the “Medicare Part D subsidy”). The Act would reduce the tax deductibility of retiree health care costs to the extent of any Medicare Part D subsidy received beginning in 2013.

In order to reflect the anticipated increase in taxes due to the change in law, the Company has incurred a charge for the impairment of deferred tax assets in an amount of approximately $100 million for the quarter ending March 31, 2010. The impairment reduces net income, as determined under generally accepted accounting principles, but is excluded from adjusted operating income of the Company’s Financial Services Businesses."

[Dennis the Peasant]

Actually, I'm fairly sure "anon" is my old "elliotg" troll. Same town, same tone.

[Eric Blair]

They just can't keep away, Dennis! Like moths to the flame! (or a drunk to a bar).

[Guesst]

<< what publicly traded companies with a big union presence will do >>

You mean what the companies like Caterpillar, 3M, ATT, Verizon will do, or what their unions will do?

[JeffS]

Like markg8 and elliotg before him, anon seems to have lost his ability to even ACT polite when things start falling down around him.

That's a symptom of cognitive dissonance reverberating within one's skull until the brain is crushed into a gray paste.

[tommy shanks]

>>On March 23, 2030, President Barack Obama signs Obamacare into law.

Please tell me he won't still be president in 2030?!?!

[Dennis the Peasant]

2010, 2030, what's the difference?