House Democrats turn to McCarthy-ite tactics against businesses

The new federal health care law is barely a week old, and already House Democrats are using their power as the majority party to intimidate businesses and silence criticism of the massive legislation.  Not surprisingly, this first round of bullying is coming from the Commerce Committee, headed by Henry Waxman of California, perhaps the Capitol’s meanest and most feared inquisitor.

Shortly after President Obama signed the lengthy piece of legislation into law on March 23rd, several major companies released their own analyses of how the law’s many provisions would affect their companies and their employees.  Caterpillar, for example, estimated the cost to the world’s largest manufacturer of heavy construction equipment to be in excess of $100 million; the John Deere company estimated its expenses would increase by some $150 million.  Verizon and AT&T, while releasing analyses less specific than those issued by Caterpillar or John Deere,  noted that the new law would have significant negative impact on their businesses as well.

Almost as soon as these companies issued their statements, the Commerce Committee’s investigations subcommittee sent ominous letter to the four CEOs, demanding to know how they arrived at their figures and “requesting” that they appear at a hearing scheduled for April 21st.  The letters were signed by Waxman and subcommittee chair Bart Stupak of Michigan, who probably still is smarting from the negative publicity he received after his 11th-hour conversion from pro-life opponent of the health care bill to ardent supporter.

In Orwellian prose, the Waxman-Stupak letters express “concern” with the CEOs’ figures and analysis, especially since they are identified by the congressmen as being “in conflict with independent analyses.”  One of the “independent analyses” cited in the letters is one used by the White House and congressional Democrats to support their position that the $1 trillion bill would wind up actually “saving” taxpayers monies.  The analysis referenced by Waxman and Stupak actually was conducted by the Congressional Budget Office (CBO), which is well-known for furnishing members of that body numbers that support whatever they want them to support, since its analyses must be based only on figures furnished by the requesting members themselves.

Another “independent” analysis noted in the letters included figures from the Business Roundtable,  a group of businesses which already had alienated many of its members because it had decided early on to actively support the health care legislation.

The four targetted CEOs are “requested” by Waxman and Stupak to provide not only the “analyses” on which were based the estimates of the cost of the health care legislation to their companies; but also any other data — internal company including e-mails – relating in any way to the matter of determining the impact on their companies.  Additionally, the companies are “requested” to furnish an explanation of the “accounting methods” used by them over the past seven years in calculating the financial impact of the deductability or non-deductability of retiree drug coverage.

Whether and how these companies will stand up to this thinly-veiled move to intimidate them for simply disagreeing with self-serving congressional “analyses” of its health care legislation, remains to be seen.  However, if they fail to exhibit sufficient resolve in doing so, a new wave of McCarthy-like bullying designed to silence criticism can be expected to permeate future political and economic debates.

69 comments Add your comment

jt

March 31st, 2010
6:16 am

These four super conglomerates have been in bed with the Feds for years. They will reap what they have sown.

You will find no Hank Reardon among these corpo/government entities. It is all for show.

Peadawg

March 31st, 2010
6:57 am

You mean to tell me Obama and Pelosi lied? OMG! I AM SHOCKED!!!!!

~ sarcasm ~ if you couldn’t catch it

leeh1

March 31st, 2010
7:27 am

“House Democrats are using their power as the majority party to intimidate businesses and silence criticism of the massive legislation.” For far too long in the Bush administration, big business was using their power to intimidate Congress and silence criticism of their “self-regulation”, which led to the economic meltdown and massive unemployment.

I’m glad to see Congress finally standing up for America, and demanding an accounting from these jokers. Finally Congress is showing some cojones, and big business is finally rolling over and let their policies and politics be shown for what they are!

Presbo

March 31st, 2010
7:56 am

The reason they have requested this information from the CEO’s is simple. It is merely due to the fact that these elected officials (especially the President) have never run a business or had to figure out how expenses affect the bottom line of a company’s profitability. Therefore, they are just asking people who actually know what they are doing to show them how budgetary forecasting is done.

Ragnar Danneskjöld

March 31st, 2010
8:02 am

Given that most democrats are economics illiterates as well as ignorant of the contents of the post-Enron Sarbanes-Oxley, it is unsurprising that the dimmest bulb in the House (excluding the Speaker) would demand a hearing to try to discover why companies have to declare the likely effect of the late Constitutional mugging by the democrats.

A stylistic note on “McCarthy-ite”: You keep using that word. I do not think it means what you think it means. With the opening of the KGB archives, and the irrefutable proof that McCarthy was correct in each and every allegation, and that those democrats accused of working for the KGB lied at every step of the way, “McCarthy-ite” would appear to be a term for one who honestly and accurately discovers the truth; that is certainly not true of the House democrats. The term you seek, dear Mr. barr, is “Waxman-ite.”

joan

March 31st, 2010
8:02 am

I wish more corporations had released these figures much earlier. The public needed to know this information. Unfortunately, they all probably waited until the bill was at least formed before they started doing calculations based upon it. The Congress knows getting into all these figures will cost the companies involved hundreds of thousands apiece, and this is absolutely McCarthyism at its worst. What needs to happen is another 20-50 corporations need to step up to the plate and submit their numbers, and just overwhelm these limp noodle legislators. Bottom line is, the public will pay for it, either way.

Peadawg

March 31st, 2010
8:04 am

“I wish more corporations had released these figures much earlier.”

They couldn’t. Don’t you remember? Pelosi said we needed to pass the bill to see what’s in it.

joan

March 31st, 2010
8:05 am

Maybe I mispoke. This is a witch hunt. Calculated to cost the corporations time and money and to get into their accounting. And by the way, why couldn’t it be anyone but Waxman? I am sick of looking up his nose!

No More Progressives!

March 31st, 2010
8:24 am

joan

March 31st, 2010
8:05 am
Maybe I mispoke. This is a witch hunt.

Absolutely, Joan. Publicly held companies have an obligation to their shareholders to inform them of upcoming “hits” they’ll take on the books. Henry Waxman, a classic California Liberal, can’t justify his existence. Now he’s in a position to try to berate CEO’s that employ 1,000’s of people, and he wants them to shut-up about the true cost of this disaster called Health Care Reform.

Liberals/Progressives hate the disinfectant called “sunshine.”

Barack

March 31st, 2010
8:32 am

Of course since the leftist liberals can’t possibly defend this “consitutional mugging” (well said) and have failed at any transaprency that Candidate Obama promised…”you can see what’s in the bill after it’s passed” the only possible rebuttal is to accuse those opposed to this 9/11 legislation as to be racist because it was a black presiden’t agenda or hate mongers because they reject it.

Mr. Holmes

March 31st, 2010
8:57 am

Two things: You mean U.S. corporations claim the sky will fall tomorrow if [insert new government regulation here] is enacted? I am SHOCKED. Wow that never happens.

And that takes some brass nuggets on Bob Barr’s part to label anyone else in Congress an “inquisitor.” Umm, Bobbo, wasn’t that you out in front of the Clinton impeachment crowd, torch in one hand and pitchfork in the other? List for me, if you would, all of Clinton’s financial improprieties uncovered during that $50M Whitewater investigation?

Mrs. Norris

March 31st, 2010
9:00 am

Frightening, isn’t it? I used to think democrats were communist. Now I know they’re fascists.

Atlas Shrugged

March 31st, 2010
9:08 am

Oh leeh1, if all of you had any clue how America is supposed to work you wouldn’t make so many ill-informed statements. For example, congress has been harassing all businesses for years through the Sarbanes-Oxley act. You should read about it. So far the only people to benefit from SOX are auditors and lawyers whom have benefitted from the multi-billion dollar SOX compliance industry. Clearly it did nothing to stop many banks from inaccurately reporting earnings/assets.

Another thing about big business of which you may not be aware. Big companies, along with small businesses, generate 100% of the taxable income in the US that is used to run our government. You are probably surprised right. It’s OK you are not alone. Actually you are part of a very large group of US residents, albeit a minority, who actually believe that the government is this big, self-sustaining operation that would be better off with businesses at all. You all should educate yourselves about where most Americans go everyday, where they get their services, products, paychecks, healthcare, etc. Most of us get them not from the government, but from businesses. And without businesses there would be none of the above and eventually there would be no government to take care of the delusional minority. Have fun when that time comes.

neo-Carlinist

March 31st, 2010
9:09 am

this is nothing more than “good cop/bad cop” played by Waxman and the Dems. it’s shameful, business as usual stuff. when push comes to shove the groveling politicos will cut a backroom deal with the highest bidder, and as always, the taxpayers will pick up the tab. the fact than ANYONE thinks this issue is red state/blue state or ideological is playing right into Washington’s hand.

retiredds

March 31st, 2010
9:17 am

I remember when the auto companies stated that they would collapse if they had to install seat belts. Come on Barr this is standard procedure and positioning by the major companies. It is almost laughable how you and your right wing friends get sucked in. What I find most interesting is that you don’t write about the transportation mess we have in GA and a Republican legislature that can’t grasp the magnitude of their stupidity in not getting anything done. I have business friends in Charlotte who keep cheering our legislature on because they, and the state of NC, are cleaning GA’s clock on attracting new business. But my complaint will fall on deaf ears because of your tight relationships with the very people who are dragging GA down.

Ragnar Danneskjöld

March 31st, 2010
9:35 am

Dear retiredds, “I remember when the auto companies stated that they would collapse if they had to install seat belts.” I do too. Since then three of the four disappeared: AMC absorbed by Chrysler, GM bankrupt, Chrysler bankrupt. Regulated to death. The auto companies were right, and as always, the democrats who denied the obvious were wrong.

Ragnar Danneskjöld

March 31st, 2010
9:39 am

Also retiredds, “I have business friends in Charlotte who keep cheering our legislature on because they, and the state of NC, are cleaning GA’s clock on attracting new business.” Good thing they are cleaing GA’s clock on attracting new business, as their unemployment rate reached 10.5%. http://charlotte.about.com/b/2009/03/19/charlottes-unemployment-rate-reaches-105-percent.htm

Mr. Holmes

March 31st, 2010
9:55 am

“Regulated to death.”

LOLOLOLOL. Oh that’s rich. The government to blame for the failure of AMC and the near-failure of GM & Chrysler? Yes, the government forced to them to fight fuel efficiency standards tooth & nail, the implementation of which might have forced auto companies to rely on something other than gas-guzzling SUVs for their profits. Yes, the government absolutely forced the auto manufacturers to keep making shoddy cars even as their competition’s quality was getting better.

That is about the most ignorant statement I’ve ever heard. Do I think the government is perfect? Of course not. But anyone who thinks over-regulation is what did in GM & Chrysler is living in a very special, Glenn Beck sort of crazy world. Or maybe is just plain stupid.

retiredds

March 31st, 2010
10:11 am

Ragnar, the auto companies demise had everything to do with poor management and the failure to adapt the the changing demand for oil. The die was cast long ago when the American auto executives paid more attention to the short term profits of large gas guzzling trucks and SUV’s while the turmoil in the middle east and the growing demand for oil from China and India seemed to elude their sights. In other words the high paid executives of the auto companies were having too much fun on the golf course to pay attention to the changes that were staring them in the face.

The difference between NC and GA right now is that NC is continuing to improve its infrastructure and building for the future, especially in the area of transit, rather than fighting over how to distribute a regional 1 cent tax, or an English-only drivers exam, or whether or not to build commuter rail, etc., etc., etc.

Ragnar Danneskjöld

March 31st, 2010
10:24 am

Dear Holmes & Retiredds, I appreciate that economics is difficult for many, but the Federal government passed laws requiring American automobile companies to conform to the Japanese design models, even though the differing corporate cultures made that uneconomic. Thus American car companies lost money on every tiny car they sole after 1980, but were compelled to continue to lose that money by selling a sufficient number of the money-losers as a condition of staying in business. When you lose money on every transaction you never make it up on margin. The overlords destroyed the companies. Nothing else mattered.

Ragnar Danneskjöld

March 31st, 2010
10:27 am

Dear retiredds, although i share much of your admiration for our Tarheel friends, the state still has a sharp competitive disadvantage compared to Georgia, the corporate taxation. Were we rational here in Georgia, we would model ourselves after the only state still growing, the perhaps seceding success of Texas.

Mr. Holmes

March 31st, 2010
10:52 am

“the Federal government passed laws requiring American automobile companies to conform to the Japanese design models,”

Please go ahead & tell me which laws you’re talking about and what “design models” you’re referring to. See, because from where I sit it’s the precise *failure* of the U.S. auto companies to introduce Japanese production standards during the 1980s and 1990s that led to many of the quality issues that contributed to consumer dissatisfaction. Now, I fully admit that the UAW and rules for union workers prevented this from happening, but that die had been cast decades earlier. In fact, one could make a persuasive argument that the government should have played a *more* heavy-handed role in ironing out some of the gross inefficiencies imposed by labor agreements.

But no, the auto companies weren’t eager to rock that boat because they were raking in money building their Suburbans and Humvees and Excursions that got about 8 mpg, thinking there would always, always, always be cheap oil, and even if it wouldn’t last forever, well heck let’s go ahead and make our profits now.

Now, perhaps you’re talking about safety standards, which indeed the government did impose. That, however, has as much to do market demand as government intervention; try selling a cheap car these days with “No seatbelts! No airbags!” as the focus of your marketing. Plus, I’d bet the decline in automotive-related health care costs due to these increased safety standards resulted in an overall gain to the economy that outweighed the marginal cost to the automakers.

But, please, continue to spin this cr@p about Washington being responsible for GM’s being a massive, bloated, inefficient, mismanaged mess. It’s entertaining.

Sandy Bittman

March 31st, 2010
10:58 am

How could they possible go against the Congressional Budget Office. Especially on Health Care issues! In 1965 the CBO estimated the cost of Medicare at $3 billion and said it would grow to $12 billion in 25 years. The actual cost in 1990, 25 years later, was only $107 billion. They were only off my 892%. Isn’t that close enough for government work!

James

March 31st, 2010
11:18 am

I’m having trouble feeling outraged at businesses not being able to get a tax credit equal to the amount of money being *given* to them by the government already for paying for the employee’s prescription drugs/pension out of pocket. The outrage trying to involve small businesses is just silly as well.. how many small businesses pay for employees prescription drugs, I’m going to bet it’s somewhere close to “almost none”

Ragnar Danneskjöld

March 31st, 2010
11:24 am

Dear Mr. Holmes @ 10:52, CAFE.

T-Town

March 31st, 2010
11:31 am

James, You may have “trouble feeling outraged at businesses not being able to get a tax credit equal to the amount of money being *given* to them by the government already for paying for the employee’s prescription drugs/pension out of pocket,” but part of the savings within the plan was to have these businesses continue paying for this. If the businesses eliminate this benefit, the retirees will have to enroll in Medicare and the cost will be about double, thus no savings.

Abrazos

March 31st, 2010
11:47 am

As a corporate manager who has done actual process implementation for Sarbanes-Oxley GAAP rules, I would venture to say that Mr. Ragnar is a little out of his/her element to speak to it. The write-downs, if you are not aware, are the result of corporations’ “double-dipping”, i.e. taking both subsidies AND tax deductions. And yes, they should be given an opportunity to explain this rather interesting bit of accounting logic since most other companies, including mine, are not planning the write-offs.

Ragnar Danneskjöld

March 31st, 2010
11:51 am

Dear Abrazos @ 11:47, you err. I’ll claim SOX expertise. Your error is that you are so focused on the accounting elements that you are blind to the legal liabilities arising therein, which is the basis for the corporate advisories of the last few (and next few) days. WSJ has a couple of marvelously funny essays on the topic from the past two issues.

Ragnar Danneskjöld

March 31st, 2010
11:54 am

Dear Abrazos @ 11:47, hope your employer does not receive (from me or one of my ilk) in the next five years a document that opens, “Abrazos knew or should have known the consequences of the new healthcare legislation on the corporate obligations, but failed to honestly and accurately disclose…”

Mr. Holmes

March 31st, 2010
11:55 am

Mr. Danneskjold,

As you may or may not know, CAFE standards deal with fuel efficiency. It pretty much goes without saying that the #1 reason the auto companies were staring into the abyss in 2008/2009 is because of the sudden and significant jump in gas prices. Nobody want to buy those SUVs anymore.

Now you’re saying that if CAFE were relaxed, and companies were free to make their vehicles as fuel-inefficient as they wanted, this would somehow allow them to compete better in a world of $4/gallon gas? Because that’s just brilliant logic.

Or maybe you meant something else…?

Ragnar Danneskjöld

March 31st, 2010
12:00 pm

Dear Mr. Holmes @ 11:55, actually both. The leftist overlords, by commanding the waves to remain away, restricted management’s capacity to respond to the economic winds that buffeted the world during those periods when leftists inflicted “change.” Nothing kills a company faster than an incapacity to react to international market changes.

Ragnar Danneskjöld

March 31st, 2010
12:03 pm

Dear Mr. Holmes @ 11:55, your note suggests that you believe leftist politicians, totally devoid of experience in actually producing or selling a good, are better qualified to direct production via legislation than are those who have experience? We certainly see the benefits of that philosophy over the past 15 months.

Ragnar Danneskjöld

March 31st, 2010
12:04 pm

Enter your comments here

Mr. Holmes

March 31st, 2010
12:07 pm

Seriously, you gotta stop it, I might just burst my appendix from laughing so hard.

You truly believe that U.S. automakers really *wanted* to build higher quality, more efficiently manufactured vehicles that got higher gas mileage, but were prevented from doing so by onerous federal regulation?

Ragnar Danneskjöld

March 31st, 2010
12:08 pm

Dear Mr. Holmes @ 12:07, the true comedy here is that leftist belief that retooling costs nothing, and that there is no need to earn anything in order to pay for such changes.

Mr. Holmes

March 31st, 2010
12:12 pm

“We certainly see the benefits of that philosophy over the past 15 months.”

Hate to burst your bubble, sparky, but the Dow was hovering around 7,500 when Obama was elected. Now it’s approaching 11,000. That’s a gain of nearly 50% during the period you describe. So, clearly, at least a few capitalists think these “leftist politicians, totally devoid of experience” are not poised to destroy the U.S. economy.

Ragnar Danneskjöld

March 31st, 2010
12:16 pm

Dear Mr. Holmes, actually the Dow bubble burst as the likelihood of Obamanomics arose, and has recovered only as his agenda stalled.

Ragnar Danneskjöld

March 31st, 2010
12:18 pm

But, Mr. Homes, perhaps we would agree that the Dow will jump 2000 points as the likelihood of a republican sweep in November develops?

No More Progressives!

March 31st, 2010
12:18 pm

Mr. Holmes

March 31st, 2010
8:57 am
Two things: You mean U.S. corporations claim the sky will fall tomorrow if [insert new government regulation here] is enacted? I am SHOCKED. Wow that never happens.

And that takes some brass nuggets on Bob Barr’s part to label anyone else in Congress an “inquisitor.” Umm, Bobbo, wasn’t that you out in front of the Clinton impeachment crowd, torch in one hand and pitchfork in the other? List for me, if you would, all of Clinton’s financial improprieties uncovered during that $50M Whitewater investigation?

So I guess Lawrence Walsh and the Iran-Contra witch-hunt was OK by you?

Ragnar Danneskjöld

March 31st, 2010
12:30 pm

Dear No More, I have benefit of a little knowledge of your topic. I think it fair to note that President Clinton was not implicated in “financial improprieties,” not in Whitewater nor in any of the other apparently abusive actions of his administration. All of the “financial improprieties” implicated his wife, only. The president’s primary crime, of course, was the co-ordinated effort he directed to deprive a common Jane Doe of a fair hearing in court; the lying under oath was only the culmination of a series of gross improprieties.

To Mr. Clinton’s great credit, and perhaps only due to the integrity of Mr. Barr’s efforts, Mr. Clinton eventually acknowledged his criminal act and surrendered his law license.

Mr. Holmes

March 31st, 2010
12:36 pm

NMP: Errr… witch hunt? Iran-Contra resulted in the resignation of a U.S. national security advisor, a high profile trial (and conviction) of Oliver North and John Poindexter, and admissions by both the U.S. attorney general and the secretary of defense that the U.S. sold arms to Iran in exchange for release of Hezbollah hostages–in effect, negotiated with terrorists. Multiple people received presidential pardons from Reagan and Bush the Elder for their roles in the scandal.

Whitewater started as an investigation into a $100K land deal and, $50 million later, resulted in the impeachment of a president for lying about having an affair with a White House intern. Which, surely, threatened the global balance of truth and justice.

Ragnar Danneskjöld

March 31st, 2010
12:45 pm

Dear Mr. Holmes @ 12:26, minor corrections, the North and Poindexter “convictions” were thrown out due to inappropriate acts by the prosecutor, who thereafter determined he could not obtain convictions in an honest trial and dropped the allegations. President Reagan did not pardon anyone, although President Bush did.

The upshot of Iran-Contra was that the Congressional democrat effort to make communism safe from American interference was successfully frustrated by the republican administration. Even today most of the democrats still wish the communists were a force in the world.

Abrazos

March 31st, 2010
12:52 pm

Mr. Ragnar, sorry you didn’t scare me with “Abrazos knew or should have known the consequences of the new healthcare legislation on the corporate obligations, but failed to honestly and accurately disclose…”. However, thank you for sharing with us that you work for the Securities and Exchange Commission which is the entity that has actual SOX enforcement authority. Now I understand why you have so much time during the day to spend on the internet. Just wondering if you worked at the SEC when it ignored the red flags about Bernie Madoff that were sent up by Harry Markopolos. That’s a real feather in anyone’s cap.

Ragnar Danneskjöld

March 31st, 2010
1:02 pm

Dear Abrazos @ 12:52, sorry, my field is banking. While I deal with SECers from time to time, I do not work for the government. But I do have an interest in false and misleading publications.

Mr. Holmes

March 31st, 2010
1:06 pm

“The upshot of Iran-Contra was that the Congressional democrat effort to make communism safe from American interference was successfully frustrated by the republican administration. Even today most of the democrats still wish the communists were a force in the world.”

Not much point in arguing with someone who earnestly believes anything in the above statement has the slightest resemblance to truth. Enjoy your day, sir.

retiredds

March 31st, 2010
2:15 pm

Ragnar, if you recall the bottom dropped out on gas prices in the 80’s because of the conservation efforts of all Americans after the oil embargo of the 70’s that pushed up gas prices dramatically. Detroit began making and selling large cars again and American consumers bought them thinking that gas prices would not go up again. Japanese auto makers did not buy into it and continued to make more fuel efficient cars. As gas prices began to escalate around 2002/03 the far sighted American auto executives decided that it was in their best ($$$$) interest to continue to make large fuel inefficient autos (large pick-ups and SUV’s) even as it was becoming evident that the fuel shortage problems were much different this time around, namely the demand from China and India escalating as their economies grew. All along the Japanese were working on the new generation of fuel efficient cars, the hybrid. The rest is history.

I don’t buy into your argument that CAFE or government regulation is the cause of the demise of the American auto industry. The demise can be laid mostly at the feet of executives whose vision was fixed on quarter-to-quarter profits at the expense of the longer term view that the fuel (gasoline) equation was changing drastically before their eyes.

By the way if have looked at GM adds lately their most touted product is fuel efficiency. They are now moving in the right direction.

No More Progressives!

March 31st, 2010
2:38 pm

Mr. Holmes

March 31st, 2010
12:36 pm
NMP: Errr… witch hunt? Iran-Contra resulted in the resignation of a U.S. national security advisor, a high profile trial (and conviction) of Oliver North………..

Yes, and Oliver North had his conviction overturned. Why? Because the ACLU (the liberals favorite men in white hats) demonstrated that Mr. North was compelled to testify against himself, a 5th Amendment violation. But, hey, why let the Constitution get involved when your, well, hunting witches.

No More Progressives!

March 31st, 2010
2:40 pm

Mr. Holmes

March 31st, 2010
12:36 pm
Whitewater started as an investigation into a $100K land deal and, $50 million later, resulted in the impeachment of a president for lying about having an affair with a White House intern.

You conveniently forgot “lying under oath.”

No More Progressives!

March 31st, 2010
2:41 pm

Ragnar Danneskjöld

March 31st, 2010
12:30 pm

Excellent post, Sir.

Jess

March 31st, 2010
2:45 pm

I think Mr. Waxman will learn that these companies know a lot more about their individual situations than the CBO or a dem. friendly panel of execs. Basically these companies are following the laws, and good accounting practices set up by the government. AT&T is claiming up to a $1 billion loss. Were they to ignore this they could be held liable by their stockholders for with holding information which could have a significant impact on profits. Waxman should know this, and probably does. He just can’t stand it when the truth gets in the way of ideology.