So there’s this $15 trillion mega-company, USA Inc. Great brand, great history, great products (liberty, entrepreneurial capitalism). We all know it.
But USA Inc. is way, way in debt. Borrowing 40 cents for every dollar it spends. Cash flow negative. Net worth negative and deteriorating. Massive off-balance sheet liabilities. Recently had its credit rating downgraded. Company has hardly grown since 2006.
And the new CEO it hired in November 2008? Jury is still out on that guy, but it’s looking bad.
He’s certainly good at spending money though. Instead of trimming product lines, cutting overhead, and getting back to core competencies, he created a pricey, new health benefit, Obamacare, that is somehow supposed to save $143 billion over 10 years. The key phrase here is “supposed to save.”
A courageous whistleblower, Charles Blahous, says Obamacare will actually increase USA Inc.’s indebtedness by at least $346 billion between now and 2021 — and the price tag might be as high as $527 billion. See, the company is double counting savings from the reworked company health plan to both reduce debt and pay for increased benefits. It is spending the same buck twice. A bunch of company flacks — most notably Paul Krugman — are attacking this blahous guy like crazy, but the grift is pretty easy to understand.
It’s kind of like someone who wins $50,000 in the lottery and puts the money in an investment account to pay for his kids’ college education. But Mr. Lottery Winner “borrows” the money from the investment account to buy a Chevy Volt, replacing the investment dollars with slips of paper reading,”Promise to pay in full in 18 years. Double-dog promise.” Let Future Mr. Lottery Winner worry about that one.
Clearly some shareholders have had enough. They want to hire this hot-shot, turnaround artist as the new CEO by year end, Guy used to work at Bain Capital. Great track record making troubled companies profitable again, saving thousands of jobs in the process. Lots of ideas to do the same for USA Inc.
These insurgents may not have the votes to pull off a leadership switch, but the Obamacare scandal just improved the chances that USA Inc. will have a new CEO come 2013.
This post was originally published by The Online Magazine of The American Enterprise Institute.
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