Great idea: How about extending SarbOx to Congress ?

Several companies have announced mega first quarter earnings charges to reflect the impact of ObamaCare. AT&T’s write-off: a staggering $1 billion.

The accounting is relatively straightforward: the companies have a future liability on their balance sheets — benefit payments to retirees for prescription drugs.  That liability was being partially offset by a favorable tax treatment that’s being eliminated by ObamaCare.  So, the liability has to be restated upward by the amount of the lost tax benefits.  That’s done by a non-cash charge to the P&L that must be recognized as soon as it’s evident.

Now, the Feds want the companies’ CEOs testify and provide evidence of the law’s projected impact.

Almost immediately, House Energy and Commerce Committee Chairman Henry Waxman of California and Rep. Bart Stupak of Michigan, chairman of the Oversight and Investigations panel, announced plans to hold an April 21 hearing on “claims by Caterpillar, Verizon, and Deere that provisions in the new health care reform law could adversely affect their company’s (costs) and ability to provide health insurance to their employees. These assertions appear to conflict with independent analyses, which show that the new law will expand coverage and bring down costs.”
http://blogs.wsj.com/washwire/2010/03/26/companies-charges-prompt-a-hearing/

One can reasonably expect that the Feds will try to browbeat the companies into making the charges go away (after all, its bad publicity) by recognizing that ObamaCare will substantially bend the health care cost curve downward.

Yeah, right.

Under Sarbanes-Oxley, CEOs have to sign off on the integrity of their company’s financial statements under penalty of fines and jail time.

Now, pardon these CEOs if they conclude — like many other folks — that the administrations’s financial projections re: huge cost savings, premium cuts, deficit reductions, etc., are at best uncertain, or at worst complete BS.

If that’s what they conclude  — and if they sign financial statements that are based on the incredible projections —  and if the pie-in-the-sky ObamaCare projections don’t materialize — then they get carted off to jail under Sarb-Ox. Uh-oh.

Perhaps Reps. Waxman and Stupak should have to sign the companies’ financial statements — under penalty of hard time in jail if the ObamaCare benefits don’t materialize.

Thinking more broadly, why not make all Senators and Congressmen who voted for ObamaCare sign statements that they’ll go to jail if the cost curve isn’t bent down, if the deficit isn’t reduced, and if premiums don’t plummet.  They should be willing since they profess to believe and voted accordingly.

Or, thinking even more broadly, why not make our sleazy reps sign similar statements every time they sign a bill with economic consequences.

If not jail time, at least make them forfeit their lucrative government pensions and retirement businesses.

Why not ?

3 Responses to “Great idea: How about extending SarbOx to Congress ?”

  1. Mark Davenport Says:

    Um, these charges reflect the costs of the 2003 prescription drug benefit, an enormous government entitlement that the Republican president and congress enacted (using reconciliation rules, btw) but didn’t pay for.

    It’s a bit tiresome to keep hearing about “Democrats are doing this…” “Democrats are doing that…” day after day, when Republicans spent the last eight years doing exactly the same things.

    There are lots of interesting critiques to make about policy directions without the tired “union giveaways” and “phony accounting” spiel that applies equally to both sides. Think: two wars that didn’t get paid for (oh and the budget still didn’t balance, even without accounting for the wars or the drug benefit).

  2. Steve Says:

    Mark,

    I appreciate your remarks – you’re absolutely correct when you bring up the fact that representatives from both major parties are culpable in the impending financial mess. However, if we are going to speak of “tired” spiels, can we please refrain from the same-old line that Republicans did the same thing for “eight years?” The Democrats took over the House in 2006 and the Republicans had an even split in the Senate (albeit broken by the Vice President as the 101st vote that effectively made the Senate Republican controlled; although certainly not filibuster-proof). Yes, the Republicans added to the deficit with tax decreases (not all for the rich), two wars, and a wrong-headed perscription drug benefit, but they did not control the legislature for eight years.

  3. Laj Says:

    I think Thomas Sowell wrote something similar about wanting an Congression Off-Budget Office, which would do realistic financial analysis of government policies. The problem, IMO, is that the interests of people doing such analyses are usually too easy to compromise. I do wish that Congress would get held to the same standard as CEOs, as pie-in-the-sky as such a wish might be.

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