Free Markets, Free People

I’ll take that bet

Sen. Chuck Schumer (D- Outer Space) has made a prediction that just doesn’t ring true for me.

“I predict that by November those who voted for healthcare will find it an asset and those who voted against it will find it a liability,” Schumer said on NBC’s “Meet the Press.”

Uh, yeah, I don’t think so.

Anyone been following the first effect of this bill?  Billions of dollars in new charges against the earnings of businesses who were able, previously, to write off a subisdy and all of health care coverage they paid (for prescription drugs for retirees) that they can no longer do.

Now you’re probably saying, “libertarian dude – I thought you were against all government subsidies”.   I am.  And there’s nothing different about this.  I’m actually rather pleased to see the subsidy ended.  However that’s not the point of the post.  This development runs counter to two promises the administration and Congress made concerning this bill -a) your coverage wouldn’t change and b) it would cost less.

In fact, given the fact that accounting laws require companies to immediately restate their earnings when the law changes and they take on an increased tax burden.  What the likes of AT&T, Deere and Caterpillar are doing is complying.   That means a) if you work for AT&T or the others your coverage will change (most likely it will end and they’ll end up on Medicare’s much less generous drug program) and b) it will cost more.

How much more?  Well, if you look at the loss Caterpillar will take, it works out to about $1,200 dollars per employee.  That 100 million they’re talking about in increased cost has to be made up somewhere.  If that’s true about all large companies – even those with union contracts which aren’t ending anytime soon – then that equals one heck of a lot of PO’d pensioners.  Certainly not a good sign for those that voted for this, is it?

As I covered previously, Verizon has sent word to its employees that coverage may cost more.  That gives the company a couple of choices – it can maintain the level of coverage and raise the price to meet the increased cost, or it can cut benefits to match the present cost.  Either way, either a) or b) end up being incorrect.

This has Democrats a little flustered.  And Henry Waxman, (D-Odius) has decided that these evil corporations must answer to him for this since all those billions in charges they’re having to take against earning wasn’t the intent of this legislation – so he’s going to have hearings to get to the bottom of this.  After all, according to Waxman, in the letter he sent to these businessmen their findings just can’t be right (I mean, face it, these businesses want to take a hit against earnings of billions of dollars just to show the Dems up, huh?):

“They also appear to conflict with independent analyses. … The Business Roundtable, an association of chief executive officers from leading U.S. companies, asserted in November 2009 that health care reform could reduce predicted health insurance cost trends for businesses by more than $3,000 per employee over the next 10 years…”

You’ve got to love it – Waxman’s strongest case is an association comprised of some CEOs who “asserted” – got that?  “asserted” – that health care reform “could” – again, “could” – reduce cost trends.

In other words, instead of actually doing the work of checking with authoratative sources that could have actually run the numbers and vetted the requirements of the law, he, Waxman, went with the assertions of a bunch of CEOs because they said what he wanted them to say.  Reminds you a bit of the IPCC, doesn’t it?

Another entity with a bit more credibility has actually taken a look at the law and its impact and come up with this interpretation:

The Employee Benefit Research Institute says this exclusion—equal to 28% of the cost of a drug plan—will run taxpayers $665 per person next year, while the same Medicare coverage would cost $1,209.

In a $5.4 billion revenue grab, Democrats decided that this $665 fillip should be subject to the ordinary corporate income tax of 35%. Most consulting firms and independent analysts say the higher costs will induce some companies to drop drug coverage, which could affect about five million retirees and 3,500 businesses.

And that brings us back to Schumer.  Why does Schumer think that it will be all unicorns and rainbows for those who voted for this monstrosity?

“It’s going to become more popular and here’s why,” Schumer said. “The lies that have been spread, they vanish because you see what’s in the bill.”

[...]

“The No. 1 lie that bothers people is that you’ll lose your insurance if you have it now and are pretty happy with it,” Schumer said.

Yeah, well, so far, not so good on that front, huh Chuck?

And fyi – polls aren’t supporting the Schumer claim either.   Most are running against the bill.  The one mentioned in the article with the Schumer quotes has it 50-46 against.  My guess is that was before the news broke about the charge offs and the effect on pensions.

But hey, it’s all theirs now and they can whistle past the graveyard if they want too – it’s not going to change what happens in November one bit.

~McQ

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26 Responses to I’ll take that bet

  • The subsidy was meant to allow businesses to integrate the the subsidy of Medicare Part D into their health plans.  I don’t see how its any worse than just shifting everyone over to Medicare Part D, which is the likely outcome, other than it deprives those retirees of those additional benefits that were in their drug plans before Medicare Part D came along.
     
    And 5 will get you 10 that the amount of the subsidy is probably smaller per person that the cost of Medicare Part D.  If the wager goes my way, retirees get less and taxpayers pay more.  Don’t see the upside.

  • Charles Schumer? I’ve watched that idiot for a quarter century. I always thought, when he was in the House, what a strange thing it was that anyone would vote for such an incredible schmuck. Then he got elected to the Senate. An awful, reprehensible human being.

  • In general health care reform will be a benefit for Democrats, but for some in particular districts it will be a liability.   Expect a very busy agenda from Obama in both foreign policy and domestic issues in the coming months.   By November there will be so many other issues around that only that core of opponents of health care reform who would never support the Democrats anyway will still be focused on this issue.   Moreover, a lot of the opponents are out of touch with reality, claiming it takes the US away from “what America is” to socialism or something else.  The fact is that such policies are necessary for all advanced industrialized countries.  The wild west days are over; the US is destined to have policies like the Europeans because that comes with the territory of being an advanced industrialized state.  That is why when the Republicans win they also go in that direction — perhaps more slowly and in different ways, but the direction is the same.   And it’s not some simplistic dichotomy of market vs. government or freedom vs. control (those dichotomies, favorites of the tea partiers, are inherently irrational and untenable).  It’s simply society growing in sophistication and requiring functional governance in order to be sustainable.

    • Your opinion is based on what you want to believe, as opposed to what actually is.

      • Didn’t Scott complain about someone else doing that yesterday.  That is funny’
        Now Scott is arguing (but providing no basis for the argument) that people will forget (very doubtful), European governance and programs are necessary to be an advanced industrialized state.  In other words, I guess, libertarianism and conservative must fall in the face of statism.  Of course, Scott offers no argument, just claims.

    • “The fact is that such policies are necessary for all advanced industrialized countries”

      Horse hockey. Those policies are necessary for an advanced socialist state, not an industrial one.

      • Nope — you are operating under a false set of premises and beliefs about reality.  That is why you are doomed to lose.   Your ideology is simply wrong.

        • This from the schmuck who thinks reality is in his head, not in the outside world.
          That’s called schizophrenia.

        • “Your ideology is simply wrong.”

          My opposition is not a matter of idealogy, but of pragmatism. The costs are greater than the benefits. Further, you do not know what my premises and beliefs are, but ignorance has never stopped you from stating something as fact.

        • Scott, can you offer anything besides mere assertion?  Or, in the rarefied academic atmosphere of Maine, is assertion enough?

    • Scott, that’s so funny. You are probably aware of how hard you are trying not to sound like a doctrinaire Marxist, but probably not aware of how much you also sound like you’re reading a bowdlerized Father Coughlin speech.

      Hilarious: “The wild west days are over; the US is destined to have policies like the Europeans because that comes with the territory of being an advanced industrialized state.”

      The logic of history. Will you be back tomorrow with the logic of race? We can have a 1930’s retro party.

      Here’s a clue for you, you old snuffler: The market is not an ideology. It is the extended order of liberty and functions on freedom. It invents, creatively destroys, innovates, jet propels productivity, throws out the worthless (better hope it doesn’t come to academia), and creates the wealth that the slow-footed policy dweebs and social hygienists like to steal and use to get the less fortunate addicted to so that there will be an inter-generational clientele for more of the same.

      That is the sickness of what you preach, teach.

    • Is that why half of the European nations are trying to back out of their cradle to grave welfare state as fast as they politicaly can, and the other half are bankrupt?

  • There will be two issues the Democrats cannot escape no matter what happens in the intervening months.

    The first is Jobs!  Unless the economy takes a huge swing upward, far beyond anything it has shown to date, the Democrats are going to be hung out to dry with the Jobs issue.  Current levels of unemployment show approximately 450,000 newly unemployed every week.  Unless we see consistent numbers less than 300,000 then unemplyment will remain around or above 10% well into the next year.  And don’t you know the GOP are going to remind the voters time and again that the Democarts continually pursued the HealthCare while promising America that Jobs was their first concern – and then they did nothing about it.  And I can garuntee you there will be story after story of jobs being lost because of the health care debacle – we are already seeing it today.

    Second, and here I think I will surprise all of you because the number two issue is not health care but Hubris!  The voter will be reminded time and again how Obama ran on a platform of a new Washington, one that will rid America of the “politics as usual” of days gone by.  Obama and company are going to eat lots of crow for this and time and time again the arrogance of the “Chicago Way” of doing politics is going to slam the door on the Dems.  America doesn’t care that the “Republicans did it too.”  They will just remember Obama said he wouldn’t do it.  And they will see that as hubris, arrogance, and the return of the smoke filled room of politics.  In this regard, Health care is but a symptom – it is the Democrat’s hubris that will bring them down – and that more than anything else is a repeat of 1994.

  • “opponents are out of touch with reality”… such policies are necessary for all advanced industrialized countries… the US is destined to have policies like the Europeans because that comes with the territory of being an advanced industrialized state… [opponent’s policies]… are inherently irrational and untenable… It’s simply [!] society growing in sophistication and requiring functional governance in order to be sustainable.”
    Recognize it?  The classic Liberal Narrative about big government.
    Not having big government control is “unsophisticated”.  All the problems of health care will disappear when big government takes over and “functions”.  [Oh..., well, not like Europe and Canada, but better somehow.]
    Smell anything?  The one thing I agree with in the above comment is that, if we don’t keep big government out of our affairs, we are destined to have the same “policies like the Europeans because that comes with the territory of” big government.
    Gee, Progressive policies are not only better, they are inevitable!  Who knew?

    • ” they are inevitable!  Who knew?”

      All good Marxists know about the inevitability of history.

  • “I predict that by November those who voted for healthcare will find it an asset and those who voted against it will find it a liability,” Schumer said on NBC’s “Meet the Press.”

    Can it be that he really believes this?  Or is he counting on MiniTru to beat democrat agitprop into our heads so thoroughly – and so thoroughly trash / discredit the Tea Parties and anybody else who criticizes Imeme and the dems – that he is confident that his prediction will come to pass?  Will the American people be suckered into believing that the chocolate ration has been increased when, in fact, it’s been cut for many people?

    Or it could be that Schumer knows so many Americans will be on the dole with Uncle Sugar as their de facto health care provider that they really will like ObamaCare?

    If people really start to see their take-home wages fall, their benefits get cut, and their jobs eliminated due to ObamaCare, then the dems are in for a bad time in November… IF they make the connection.  My guess is that Imeme and MiniTru will continue to blame Bush, but also start shifting blame to the “greedy corporate executives”.  You didn’t lose your job because your company had to cut costs to pay for all the new taxes, fines, fees, and mandates: you lost your job because those greedy corporate execs wanted bigger bonuses and newer corporate jets and more trips to Las Vegas Chicago.  It’ll basically be a replay of the AIG bonus issue, complete with union thugs stalking corporate execs, Star Chamber congressional “investigations”, MiniTru “special reports”, and every other propaganda tool at the dems’ disposal.

    Martin McPhillipsI always thought, when he was in the House, what a strange thing it was that anyone would vote for such an incredible schmuck.

    I always thought that Schumer looks like a greaseball mobster’s shyster lawyer, the sort who would do anything to get his guilty client off the hook, including fingering a witness to get clipped.

    SShiellI think I will surprise all of you because the number two issue is not health care but Hubris!  The voter will be reminded time and again how Obama ran on a platform of a new Washington, one that will rid America of the “politics as usual” of days gone by.

    Maybe.  I would say that it will be more of generalized dislike of a man who comes across as arrogant, hectoring, incompetent, vain, and tyrannical.

  • Waxman and the Democrats are walking into an ambush of their own design.

  • This is fascinating. If this is taking Dem’s by surprise, I have to wonder if the monies that the fed either won’t being out, or will be taking in is fully considered in the budget math. A Towers Watson business survey estimates the bottom profit impact across all US businesses will be 14B a year. That 14B won’t just vanish, it has to be either the fed won’t be giving out, or will be taking in. Those dollars just do not exist in the CBO estimates, espcially not in the current year, or the next, or the next. There’s zero new revenue in 2010, and 7B in 2011, and 8B in 2012. 

    The math just does not work. Either the fed is taking in far more money than they anticipated, or these companies are mistaken about the writedowns they think they need to take. I would tend think that corporate tax attorney’s would have a better idea of one company’s impact as opposed to CBO’s estimates of the impact on all companies, but it is definitely interesting.

    However, since that revenue is not accounted for as monies to pay for this, if these companies are interpreting this correctly, reversing those provisions would seem to have no impact.  There are a few other fixes that need to be made as well. No bill this size ever gets through without some mistakes and unintended elements, so I guess we’ll see what the case is here.

    Am I wrong, can these companies have writedowns based on loss of subsidies that would not positively impact federal revenues?

    • Yes, you are wrong.  Here are quotes from  the Bloomberg story:
      “The retiree drug subsidy is paid to companies that provide coverage for prescriptions to former workers who would otherwise be on a Medicare Part D plan. The average subsidy amounts to about $665 per plan member. Under prior law, the federal payment to companies was tax-exempt.
      The new law would require companies to “immediately account for the present value of this tax increase,” cutting earnings”
      And:
      “Employers may decide to stop offering the drug benefits, rather than pay the tax, said James Klein, president of the Washington-based American Benefits Council.”
       
      The problem for Waxman is two fold.  First, if the companies drop drug coverage, they get no subsidy and the government gets no tax.  Second, those retirees then move to Medicare Part D costing Medicare money.    So, Waxman is looking at no tax revenue and increased expenditures.
      “If enough companies drop the benefit, it may jeopardize the $4.5 billion in revenue that the tax was projected to generate and shove 1.5 million to 2 million retirees off of employer-sponsored plans to Medicare, raising government costs, said the American Benefit Council’s Klein.”
      http://www.bloomberg.com/apps/news?pid=20601202&sid=agZwb0aUO03g
      The strange part about all this is the major companies lobbied against this provision for exactly these reasons.  The Waxman’s ignored them.

    • Oh, and these charges affect profitability, so they also affect corporate income taxes.

  • Waxman’s true to form.  He wrote an entire book about how he believes that if the process of writing legislation is “perfect,” by which he means that all the people he thinks are important have had their say, then the legislation itself must by definition be perfect.  What I wonder about is how he gets all astonished every single time his legislation runs up against reality and it turns out that what he actually wrote matters more than his intentions.  Every single time!
    It’s like the guy who, in the course of a 30 year job-hopping career, has somehow managed to have every single one of his bosses  be a jerk and never once have it occur to him that perhaps he’s the problem.

  • (D- Outer Space)

    That’s redundant.

  • Schumer’s comment reminds me of that DC newsbabe who couldn’t understand that Reagan beat Carter, saying, “…no one I know voted for Reagan”. I’m sure Schumer is afflicted with the same myopic disease.