Henry Waxman's War on Accounting

the atlantic ^ | 3/31/10 | Megan McArdle

[Nachum]

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.

[FrankR]

[SWAMPSNIPER]

The inside of Henry’s head probably looks just like the outside!

[aquila48]

“Henry Waxman’s War on Accounting”

More like war on free enterprise.

[Knitting A Conundrum]

Some accounting charges that Waxman wasn’t expecting:

ATT 1 billion
Caterpillar 100 million
Deere & Co. 150 million
AK Steel 31 million
3M 90 million
Valero Energy 20 million
Prudential 100 million
Allegheny Tech 5 million
Illinois Tool Works (ITW) 22 million
Boeing 150 million
Xcel Energy 17 million
Goodrich Corp 10 million
Honeywell 13 million
Lockheed Martin Corp 96 million
Ingersoll-Rand Plc 41 million

Comes up to 1.845 billion so far....

[Bullish]

Waxman is certifiable.... Nuff’ said.

[21twelve]

“Some accounting charges that Waxman wasn’t expecting:
Comes up to 1.845 billion so far....”

1) This money covers that which will ultimately end up with the gov’t.
2) These losses will damage the companies.
3) These losses will increase unemployment.
4) See my tagline.

[fightinJAG]

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.

Yathink?

This is exactly what this is all about: making companies drop people into the taxpayer's lap.

[Recon Dad]

That is an ugly, ugly thought.

For the life of me either he is very stupid and has no clue as to why and how these Corps are making this deduction.
Under the Dem Sarbanes/Oxley if that don't report a write down they are libel.

[taildragger]

If the RNC had any brains...

They would propose in the mytical "2nd Contract for America" that they would hold members of Congress to Sarb/Ox and make them face jail time just like CEO's.

Then maybe their funny money four sets of books Accounting that they are now engaged in would stop.

[UnbelievingScumOnTheOtherSide]

My new TAG says it all.

[x_plus_one]

Legislating the process of double entry book-keeping is like legislating gravity. It’s a fools errand.

[x_plus_one]

This means there are gong to be three sets of books for each going concern -

a set for internal accounting which is that actual picture in accordance with fasb,

a set for the IRS which takes into account their rules for all things taxable

and a set for the Dept. of Health and Human Services which requries creation of a fictional enterprise based on the post-racial hope and change theory of accounting.

[jamaksin]

The GAAP percept being used here is called CONSERVATISM.

[Paladin2]

The Federal Gov’t needs a real accounting system for itself.

[leprechaun9]

Henry Waxman was born in AREA 51!

[Mich Patriot]

AYFKM? For all the talk about crackdowns in the financial reporting arena and demands of more “transparency”, it’s clear that Omoron only wants “transparency” when it doesn’t contradict his evil commie plan. What a KNUCKLEF#CK.

Write-downs to reflect changes in financial position have been mandated since forever. Maybe in Kenya, “transparency” actually describes a ten-foot thick wall of concrete.

[Servant of the Cross]

Henry Waxman: a living horror film ....

[FrankR]

I heard a good blurb about all this on Beck (Napolatano) yesterday.

[Sarajevo]

Waxman is not only an idiot, but he’s ugly too.