Accounting basics: when a company experiences what accountants call “a material adverse impact” on its expected future earnings, and those changes affect an item that is already on the balance sheet, the company is required to record the negative impact — “to take the charge against earnings” — as soon as it knows that the change is reasonably likely to occur. This makes good accounting sense. The asset on the balance sheet is now less valuable, so you should record a charge. Otherwise, you’d be misleading investors. The Democrats, however, seem to believe that Generally Accepted Accounting Principles are some sort of conspiracy against Obamacare, and all that is good and right in America.
Here’s the story: one of the provisions in the new health care law forces companies to treat the current subsidies for retiree health benefits as taxable income. This strikes me as dumb policy; there’s not much point in giving someone a subsidy, and then taxing it back, unless you just like doing extra paperwork. And since the total cost of the subsidy, and any implied tax subsidy, is still less than we pay for an average Medicare Part D beneficiary, we may simply be encouraging companies to dump their retiree benefits and put everyone into Part D, costing us taxpayers extra money.
But this is neither here nor there, because Congress already did it. And now a bunch of companies with generous retiree drug benefits have announced that they are taking large charges to reflect the cost of the change in the tax law.
Henry Waxman thinks that’s mean, and he’s summoning the heads of those companies to Washington to explain themselves. It’s not clear what they’re supposed to explain. What they did is required by GAAP. And I’ve watched congressional hearings. There’s no chance that four CEO’s are going to explain the accounting code to the fine folks in Congress; explaining how to boil water would challenge the format.
West Elsdon, Ill. — In a little neighborhood near Midway airport — with “Proud Union Home” signs scattered across tiny front yards — canvassers spread out to talk to voters about Dan Lipinski, a pro-life, Democratic congressman running in a close primary against progressive challenger Marie Newman. The ... Read More
Happy Saint Patrick’s Day, everyone. Hope it has been a good one. Yesterday, I had a tale in my Impromptus column. I had been to Harvard, to conduct a couple of interviews, and I waxed nostalgic. In Widener Library, there are bag-checkers -- people checking your bags on your way out. Ages ago, there was this ... Read More
The Republican primary in the Illinois gubernatorial race has largely been characterized by incumbent Bruce Rauner refusing to confront his challenger Jeanne Ives, including in public debates. The only time the two candidates faced off was in front of the Chicago Tribune editorial board in late January, during ... Read More
Last October, the U.S. House passed the Pain-Capable Unborn Child Protection Act, which prohibits abortions after 20 weeks of pregnancy based on scientific evidence that fetuses can feel pain at this stage of development. The bill passed by a 237–189 vote; all but three Democratic representatives voted ... Read More
U.S. Catholic Bishops Conference Voices Support for Bill to Protect Those with Traditional Views on Marriage
Two chairmen of the U.S. Catholic Bishops Conference gave a resounding endorsement of a bill intended to prevent the government from discriminating against citizens based on their belief that marriage is a union between one man and one woman. Senator Mike Lee of Utah reintroduced the First Amendment Defense ... Read More
The Senate on Wednesday passed a bill that would roll back parts of Dodd-Frank. The vote was 67–31, with 17 members of the Democratic caucus breaking party lines. If the legislation passes the House and is signed, it will be the largest change to the controversial financial-reform package since it became law in ... Read More
I am still chuckling at Hillary Clinton’s speech in India. Among the things she said: If you look at the map of the United States, there is all that red in the middle, places where Trump won. What that map doesn’t show you is that I won the places that own two thirds of America’s Gross Domestic product. ... Read More
Over at The Atlantic, Michael Gerson, a former George W. Bush speechwriter, has penned an extended essay that attempts to explain a complex and disturbing reality — how Evangelicals “became an anxious religious minority seeking political protection from the least traditionally religious president in living ... Read More
‘I’ve had a lot of bad ideas in my life,” former U.N. ambassador Samantha Power tells Politico. “Though none as immortalized as that one.” Wow. It’s a major concession. And what might “that one” be? Not standing idly by in the White House while Iranians protested a fixed election in 2009, then ... Read More