Well, as we posted here on FedUpUSA, Congress was absolutely WRONG in their attempt to call CEOs of various companies, which announced taking charges in response to the passage of the Health Care Reform bill, to testify about WHY they were taking the charges. Now Congress has had to suck it up and admit they were not only wrong, but that they unjustly accused these companies of taking the write downs for political reasons. How exactly can it be that Congress was unaware of the SEC laws that require firms to disclose material changes when they are realized? We are truly ruled by idiots.
Energy and Commerce Committee Chairman Henry Waxman, D-Calif., has cancelled a hearing intended to grill CEOs who took a charge against profits because of the health care reform bill.
The cancellation came after they realized what everyone already knew – that the companies were required to do what they did because of accounting rules. Waxman and others had reacted with outrage and accused the companies of doing it – in essence, to make health care reform look bad.
AT&T took a $1 billion charge and other companies including Caterpillar, John Deere, and Valero Energy, and 3M took hundreds of millions in charges because of the health care reforms.
The new bill ended a tax break intended to make it attractive for the companies to keep their retirees on company drug benefit plans instead of ending those plans and pushing them into Medicare which would have cost the government much more money.
The Democratic memo cancelling the hearing notes, “These one-time charges were required by applicable accounting rules. Under Generally Accepted Accounting Principles as determined by the FASB, companies are required to take a noncash charge against current earnings to recognize a tax liability for the estimated future tax effects of a new law.”
It goes on to read, “This noncash charge must reflect the entire present value of the loss of future tax deductions on the subsidy, and it must be taken in the period in which the law is enacted. Moreover, if the level of the impact is deemed “material” under SEC regulations, the company must file the report promptly following the triggering event, in this case the enactment of the law.”
Some 3,500 companies are likely to be affected. But on the hearing – a big “never mind” from Chairman Waxman.