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Health

Waxman Cancels Hearing, Report Shows Actual Loses From Retiree Benefit Change Costs Employers Little

070402_waxmanAfter President Obama signed the new health care bill into law, large corporations like AT&T, Catepillar and John Deer announced that a provision in the law that preserves the subsidy employers receive for providing retirees with prescription drug coverage, but prevents companies from deducting it from their taxes, would lead to billions in losses. Energy and Commerce Chairman Henry Waxman (D-CA) called a hearing to investigate the claims and Republicans immediately seized on business’ opposition to the provision to argue that the new law would severely disadvantage employers and hurt the economy. Conservatives even portrayed Waxman’s hearings as a “witch hunt” against “companies who dare speak out about the costs and consequences of Obamacare.”

Well yesterday, Waxman unexpectedly canceled the April 21st hearing, but not before releasing the results of the committee’s investigation into the corporation’s claims. Committee staff “reviewed records produced by each company,” met or spoken with representatives of the companies, as well as with a number of industry trade associations” and concluded that while the companies “acted properly and in accordance with accounting standards” in projecting losses from the bill, “the actual impact on annual company cash flows will be only a fraction of the amount of the noncash charges reported to the SEC”:

Although the reported noncash charges are quite large, the impact is spread over a long period of time. The tax change also does not take effect until 2013. The actual impact on the companies’ annual cash flows will be much smaller than the amount reported in the filings. Companies that made the filings calculated the present day value of taxes that will be paid over 30 or more years. In fact, AT&T told the Committee staff that its figure was calculated to “infinity.” [...]

The result is that the annualized impact on each company will be less than the amount charged against earnings. AT&T reported a one-time charge of $1 billion to the SEC, but documents provided to the Committee estimate that the tax change will reduce the value of the subsidy by just $44 million annually. Caterpillar reported a one-time charge of $100 million, but the documents it provided to the Committee estimate that the annual cost will be just $8 to $10 million. While Verizon reported a one-time charge of $970 million, it predicted an annual decrease in net income of $100 million, less than 1% of the $10.4 billion in net income the company reported for 2009.

In fact, when staff spoke to these companies, they acknowledged that reform could help reduce their health care spending. John Castellani, the President of the Business Roundtable, said, “If implemented right, the law has the potential to make employers and employees better off because it could bend the cost curve.” “Should the structural reforms intended to reduce the costs of delivering healthcare under the PPACA ultimately prove successful over time, self-insured companies like AT&T would likely benefit from such reduced costs,” an AT&T representative added.

None of this is very surprising, however, because closing the double dipping provision for retiree benefits does not result in a loss of real wealth. For the last seven years taxpayers have been bribing these companies to continue providing prescription drug coverage to their retirees by paying for 28% of their expenses. AT&T and Boeing cashed the checks and deducted the value of the credit from their taxes. Under the new health reform law, companies are still being bribed, but they’re no longer able to deduct that money from their taxes and so they must revise their future earning projections. They’re revising how much they think they will receive in subsidies in the future.

Politics

Sen. Hatch Vows To Filibuster DC Voting Rights Bill

Sen. Orrin Hatch Last year, legislation giving Washington, DC voting rights in the House of Representatives stalled after city leaders objected to an amendment that would break down the city’s strict gun control laws. The bill had managed to pass both the House and the Senate, with the support of Sen. Orrin Hatch (R), whose home state of Utah would also have received a fourth House member.

Congressional leaders now intend to resurrect the bill “as early as next week.” DC Del. Eleanor Holmes Norton (D) said that they are trying to “weaken the gun amendment language,” but insisted that she was “unwilling to sacrifice the opportunity to win a long-sought voting seat for the District by insisting on a stand-alone bill.” “This is the best chance we’ve had to get a House vote for D.C. in my lifetime,” Norton said. “Nobody would leave it on the table because it’s not at all clear when there will be another chance.”

Despite his past support, Hatch is now saying that he will oppose the legislation:

Hatch championed the D.C. voting bill as recently as last year when it passed the Senate, but not this go-around. He is upset that the new proposal would give Utah a temporary fourth seat on a statewide basis, instead of using a map of four districts previously drawn by Utah’s Legislature. [...]

He is so angry he vowed to filibuster the bill in the Senate, which would greatly reduce the chance of it passing.

Hatch’s argument is that an at-large seat for Utah would be unconstitutional, since each Utahn would be able to “vote for two House members — one in their existing district, plus one in the new at-large seat.” In the past, he and Sen. Joe Lieberman (I-CT) sponsored a DC voting rights bill in the Senate but made sure that Utah would be “free to redistrict into four equal districts.”

So why is the House insisting on a temporary at-large seat? ThinkProgress spoke to DC Vote Executive Director Ilir Zherka, who said that while his organization is neutral on how the Utah seat is constituted, he believes that an at-large representative — which would be temporary until the Census results are done — is not only the most viable option right now, but is also favored by many members of the Utah delegation:

ZHERKA: The primary process in Utah is underway. I think most Utahns would agree that the only reasonable thing for Utah to do if it gets a seat in the next few months…and not disrupt the process that’s already underway is to make that seat at-large, and I think other people in Utah would prefer an at-large for the fourth seat. I feel comfortable in saying that’s true for the House delegation, so I’m disappointed that he’s taken that position. [...]

They [Members of the Utah delegation] prefer an at-large. They don’t want to run in new districts. They’re months away from an election. So a member of the House doesn’t want, just months before they’re going to run, a whole new set of constituents. And so that’s been an issue.

While the fourth Utah representative would be a Republican no matter how the seat is constituted, there are political considerations on each side. Last year, Democrats and civil rights leaders worried that with the redrawing of districts, “Utah might be tempted to draw districts in a way to eliminate the Utah delegation’s lone Democrat, Rep. Jim Matheson.” Although Hatch has opposed an at-large seat in the past, his new threat to veto the DC legislation may be an attempt to appeal to some of his far-right constituents who oppose DC voting rights.

Neither Norton nor Hatch returned our request for comment.

Justice

Draft House Ethics Committee Rules Recognizing Gay Marriages Pulled Down From Website

Roll Call is reporting that the House ethics committee “has drafted rules that for the first time would define gay married couples as ‘spouses’” in the financial disclosure forms Congressional members and their staffers file each year. While the change would not affect any openly gay members — none have married — “it is possible that there are gay married couples among the thousands of senior Congressional staff who are required to complete the form each year.”

“Activists on both sides of the gay marriage issue said the reporting requirements, if adopted, would mark the first time Congress has recognized a gay partner as a spouse,” the paper notes.

The draft rules were posted this week, but were taken down after “Roll Call inquired about them.” Here, however is an HTML version of the archived copy, page 12:

Draft Rules Pg. 12 (HTML version)

Draft Rules Pg. 12 (HTML version)

While the new rules, if finalized, could mark an important step forward towards equality, one gay rights advocate told Roll Call that “the disclosure requirement is an attempt to saddle gay couples with some of the obligations of marriage without providing the full benefits of marriage, such as the right to file joint federal tax returns.” “This is yet another example of the unequal treatment created by the discriminatory Defense of Marriage Act. Married same-sex couples should be subject to the same obligations, and entitled to the same rights and benefits, as their heterosexual counterparts,” Brian Moulton, chief legislative counsel for the gay rights advocacy group Human Rights Campaign said.

The new rules may have been drafted in response to President Obama’s June 2009 memorandum calling on department and agency heads to begin internal reviews to determine if they can offer additional benefits to gay and lesbian employees.

Security

Pro-Immigration Reform Activists Say ‘Viva Taxes!,’ Cite Immigrants As Untapped Revenue Source

jess gonzalez and erica ramirezIn stark contrast to the angry “tea party” activists who marched on the nation’s capital today to protest excessive taxation, crowds of peaceful immigration reform supporters gathered outside post offices in several cities yesterday and today bearing signs with slogans stating “We Love Taxes!” and “Viva Taxes!” The demonstrators wanted to display that while tea party protesters are retaliating against what they perceive as their “burden” to the government, there are millions of undocumented immigrants who are eager for a chance to be brought in to American civil society and pay taxes as part of their civic duty.

In January, the Immigration Policy Center and the Center for American Progress found that legalizing undocumented immigrants through comprehensive immigration reform would generate $4.5 to $5.4 billion in additional net tax revenue within three years. The study predicted that ultimately the benefits of immigration reform would go beyond pure tax revenue and would yield at least $1.5 trillion in cumulative U.S. gross domestic product over 10 years. It also found that any mass deportation strategy would result in a cumulative reduction in GDP of $2.6 trillion over 10 years.

While many undocumented immigrants don’t receive W-2 forms because they are paid under the table and therefore can’t pay federal income taxes, there are millions more immigrants who are able to pay taxes by using an alternative to the Social Security number offered by the IRS. As a result, the Social Security Administration estimates that about three-quarters of all undocumented workers already pay taxes that contribute to Social Security and Medicare coffers. In 2005, the last year for which figures are available, undocumented immigrants contributed approximately $9 billion in federal income taxes. Meanwhile, the Immigration Policy Center has found that, on average, each immigrant — regardless of his or her immigration status — ends up paying between $20,000 and $80,000 more in taxes than that individual consumes in public benefits.

Later today, the Reform Immigration for America Campaign will be delivering blank tax forms to the office of Sen. Kay Bailey Hutchison (R-TX). Advocates hope to show that, by submitting tax forms that could’ve been filled out and sent to the IRS along with millions in tax revenue, they are illustrating the cost of inaction. Many have suggested that Hutchison is open to immigration reform, with some pundits suggesting it would be a smart career move after the devastating loss of her bid for Texas governor.

we-love-taxes

Yglesias

Endgame

Tell your children not to hear my words:

— Tom Ricks slaps Marc Thiessen.

“Afghanistan: Searching for Political Agreement”.

— Robert Menendez proposes smart bill to give tax credits to transit-oriented development.

— Robert Litan on derivatives regulation.

— For the record, I’m a bit skeptical that the “end user hedging” vs “financial institution speculating” distinction on derivatives holds up logically.

Generation scold.

Inspired by this post from Spencer Ackerman, here’s Sleater-Kinney playing “Mother”.

Politics

Romney indicates he is prepared to flip-flop on health care, support it in a general election.

On Sunday, the New York Times’ Kevin Sack reported on the difficulty Mitt Romney faces in convincing conservative voters that the new health care reform law is substantially different from the reform he signed in Massachusetts. While Romney is currently denying that Massachusetts served as a template for national health reform, the former Governor indicated that he may be prepared to change his position if he wins the Republican Presidential nomination in 2012:

“I keep on scratching my head,” Mr. Obama said at a fund-raising reception in Boston. “I say, ‘Boy, this Massachusetts thing, who designed that?’”

In response, Mr. Romney is reminding audiences that Mr. Obama has cast the Republicans as the “party of no,” devoid of ideas. “And yet,” Mr. Romney said in Bedford, “he’s saying that I was the guy that came up with the idea for what he did. He can’t have it both ways.”

He added, “If ever again somewhere down the road I would be debating him, I would be happy to take credit for his accomplishment.”

Last week, Romney added even more nuance to his position, telling the New Hampshire Union Leader that it was unconstitutional for the federal government to require everyone to purchase insurance coverage. “I think it’s unconstitutional on the 10th Amendment front,” he said.

Economy

What Does The Government Do With All That Money?

Today is tax day, when about $1 trillion is due from American taxpayers to fund their national government. Income taxes make up the largest slice of the revenue pie, though payroll taxes, whose burden fall heaviest on working families, are close behind. The combination of President Bush’s tax cuts for the rich and President Obama’s tax cuts for the rest of us means that Americans paid a lower share of their national income in taxes in 2009 than at any time since 1950. Yet the sheer size of our country and our economy means that the federal government still collects an awful lot of money in tax revenues. Total federal revenues exceeded $2.1 trillion in 2009, and 2010 collections will be up slightly with the economy recovering. So it seems very reasonable to ask, “What does the government do with all that money?”

To help us understand, the Center for American Progress has prepared this remarkable interactive chart of the federal budget, from the 20.3% that goes to Social Security down to the 0.01% that goes to the Mine Safety and Health Administration:

Getting a better sense for where our dollars go can help take some of the sting out of tax day. Did you know, for example, that more than 60 percent of all federal spending goes to just four areas: Social Security, Medicare, Medicaid, and defense? These are all programs that enjoy broad public support. The next largest category of federal spending is unemployment compensation (5.5 percent). And fewer than 20 percent of people want to cut back there. Another sizable chunk of our tax dollars go to pay for veterans’ benefits (3.5 percent), which is the absolute least popular thing to cut according to a recent Economist/YouGov poll.

Take a look for yourself at CAP’s new interactive tool to explore the federal budget and see exactly where the tax dollars actually go. It might make mailing in that tax return just a little bit easier.

Yglesias

Protecting People By Not Taking Actions That Lead to Their Deaths

My latest TAP column expands on the themes from yesterday’s blog post, noting that for all the talk of “counterinsurgency”-oriented warfare putting more emphasis on avoiding civilian casualties, there are still an awful lot of civilians getting killed under COIN doctrine.

Spencer Ackerman responds by asking me to take note (in turn I would like him to take note of the indications that adopting a COIN approach in Iraq led a big increase in civilian casualties) of the civilian casualty data from the United Nations Assistance Mission to Afghanistan which he summarizes thusly:

During this time, civilian deaths caused by insurgent attacks increased, according to the U.N., by 41 percent, from 1,160 to 1,630. So did the operational tempo of NATO-ISAF forces — think the Helmand River Valley last year — and I can only guess it will increase again this year, owing from Marja and soon Kandahar. What’s significant is that the proportion of civilian casualties caused by U.S. and allied forces are dropping. And that’s because, according to the United Nations, of greater population-protection measures taken first by McKiernan and now by McChrystal. [...]

But I don’t know how you can wage a war that does not involve civilian casualties, which is one of the reasons war is a wretched thing that should be avoided when the national interest is not implicated, and I don’t know how you can neglect the reduced proportion of U.S.-caused deaths when evaluating the success of a strategy that seeks to get that civilian-casualty-causation figure down.

Well so we agree. War—even war conducted by counterinsurgency warrior intellectuals with friends at all the hottest think tanks—is bad and should be avoided. To press this further, if civilian deaths are bad and if increases in civilian deaths are being driven by increases in our operational tempo, then maybe we should reconsider the wisdom of a situation in which it “will increase again this year, owing from Marja and soon Kandahar.” If war is so bad, and inevitably leads to the deaths of innocents, and we want to avoid the deaths of innocents, then shouldn’t we maybe consider not doing this instead of just feeling really sad when it ends up leading to the deaths of innocent people? That’s all I’m saying.

Politics

Returning Wall Street’s Favor, Brown Vows To Oppose Financial Reform And Offers No Ideas To Improve It

Brown2 Sen. Scott Brown’s (R-MA) surprise election in January may not have been possible without the help of Wall Street’s “largest political enforcers.” The U.S. Chamber of Commerce spent $1 million on television ads backing Brown and boasted about its “influence” in the race. After the election, the Chamber proudly said that Brown’s election would “allow Republicans to block legislation” the business lobby opposed. Wall Street front groups FreedomWorks and Club for Growth also mobilized get out the vote efforts and strongly “boost[ed]” Brown’s campaign.

Moreover, as a ThinkProgress analysis revealed, business and Wall Street executives lavished Brown’s campaign coffers with over $200,000 in 11th hour contributions — nearly half of his total haul over that period.

Now, Brown seems to be returning the favor. As the Senate prepares to take up Sen. Chris Dodd’s (D-CT) financial regulatory reform bill, Brown said “in his strongest statement yet” that he “can’t support it.” While Brown said he is still “open” to working on a bipartisan bill, he seemed befuddled when asked how the bill could win his support:

Brown, whose vote could be critical as Democrats seek to find a GOP member to avoid a filibuster, assiduously avoided talking about specifics.

When asked what areas he thought should be fixed, he replied: “Well, what areas do you think should be fixed? I mean, you know, tell me. And then I’ll get a team and go fix it.”

Brown is hardly the only Republican to take money from Wall Street while opposing financial reform. His lack of ideas on how to improve the bill underscores the fact that many in his party seem more interested in stopping reform than negotiating a compromise.

It’s ironic that Brown would toe Wall Street’s line so dependably, considering that a majority of his voters said they were motivated by a belief “that Democratic policies were doing more to help Wall Street than Main Street.”

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