CNN Slams Papa John's Over Concerns About ObamaCare Costs; Insists Claim 'False' Even With Data to Prove That

August 10th, 2012 3:36 PM

Apparently CNN considers the stating of cold, hard economic realities to be risky partisanship now. Take the case of  Papa John’s CEO John Schnatter claiming that ObamaCare will increase costs for his company.  

Papa John's is not the first company to claim Obamacare will raise its costs, but it is the first to be viciously attacked by CNN.  [Video follows page break;  MP3 audio here.]

On Thursday’s Situation Room, CNN felt it necessary to not only examine the ‘truth’ behind Schnatter’s claim but also to attack his comments for their supposed political repercussions.  CNN’s Lisa Sylvester claimed that:

Schnatter may not have realized his comments would be picked up by the political blogs, but what corporate bosses say even to a small audience can quickly go viral. That's what happened to the executive Dan Cathy of Chick-fil-A after comments to a Baptist publication that he supports the biblical definition of the family unit.


The first half of the segment following Sylvester’s comment included a soundbite with University of Maryland Economist Peter Morici, brought on to claim that, “if they [CEOs] take strong views on hot button issues, like abortion, gay rights, things of that nature it becomes problematic.”  It is odd that CNN would cite an economist who himself has said that Obamacare will raise business costs.

But of course Schnatter was not addressing hot-button social issues but rather the bread-and-butter economic issue of the higher cost of doing business in a post-ObamaCare America. To CNN, it's politically toxic for a job creator to speak out against policies that are adverse to his business?

The second half of the segment was even more bizarre as CNN’s Tom Foreman attempted to ‘fact-check’ Papa Johns claims about the costs associated with ObamaCare.  Because Papa John’s does not publish its corporate financial information to the general public, it seems very strange that CNN would attempt to ‘fact-check’ them.  Nevertheless, Foreman had the audacity to claim that, “the math doesn’t matter” in response to Wolf Blitzer asking how any conclusions can be made without Papa Johns releasing their data. 

Instead, CNN chose to rely on hypothetical scenarios provided by an unidentified Treasury Department official to deem Papa John’s claims false despite not having all the data to back up such wild claims.  Once again, CNN has chosen to demonize a company with legitimate business concerns over ObamaCare as being highly political and to deem such concerns as false despite CNN having the necessary data to critique them.  

The transcript follows

The Situation Room with Wolf Blitzer
5:30 p.m. EDT

WOLF BLITZER: It's the latest in a string of powerful businesses whose political views have gone public and created some backlash in the process. The CEO of Papa John's pizza chain now saying he's going to have to raise the price of his pizzas because of President Obama's health care law. Lisa Sylvester is here in the Situation Room working the story for us. Give us the details, Lisa.

LISA SYLVESTER: Well Wolf, there used to be a time when company leaders could say things, even controversial things and it would fly under the radar, but that's no longer the case largely because of social media and bloggers. The latest CEO's political comments making headlines, the CEO of Papa John's.


SYLVESTER (voice-over): The CEO of Papa John's Pizza is getting his slice of politics. On a conference call with analysts John Schnatter was asked about the impact of the federal health care law.

JOHN SCHNATTER: We're not supportive of Obamacare, like most businesses in our industry. But our business model and (INAUDIBLE) economics are about as ideal as you can get for a food company to absorb Obamacare.

SYLVESTER: Schnatter says Obamacare will likely cost 11 to 14 cents per pizza, a cost likely to be passed on to customers. Campaign contribution records reviewed by show that Schnatter has donated about $40,000 to Republicans in recent years. In Apri, Schnatter held a fundraiser for Mitt Romney at his home outside Louisville, Kentucky. He declined to comment to CNN.  But the company in a statement said quote "we certainly understand the importance of health care to our customers, our employees, small business owners and their employees. When certain business costs increase such as fuel, ingredients or employee health care, there is an impact to the price of products and services."  Schnatter may not have realized his comments would be picked up by the political blogs, but what corporate bosses say even to a small audience can quickly go viral. That's what happened to the executive Dan Cathy of Chick-fil-A after comments to a Baptist publication that he supports the biblical definition of the family unit.

PETER MORICI, ECONOMIST: CEOs can no longer act stealthily in their participation in politics. Folks are going to know where they stand. But if they take strong views on hot button issues, like abortion, gay rights, things of that nature it becomes problematic.

SYLVESTER: Risky it may be, but that hasn't stopped other corporate executives from dipping their toes in politics. Other recent examples, Amazon CEO Jeff Bezos pledging $2.5 million to defend gay marriage, Starbucks CEO Howard Schultz ripping Washington and pledging not to donate to political campaigns.

UNIDENTIFIED MALE: Well, it's always a risk when you put yourself out there politically. You're going to maybe make some friends and you're going to maybe make some enemies. So it's always a political risk for a company to do that. I think that's -- but this is America. They can choose to do that if they want.


SYLVESTER: Ok. As for those Papa John's customers, at least the ones that we talk to, they say an 11-cent, four-cent -- 14-cent difference, that isn't going to stop them from buying a pizza. And a number of them added, Wolf, especially if that means actually that more people will have access to health care 11 cents to 14 cents, not a lot of money when you're talking a pizza pie --

BLITZER: That's not per slice. That's for the whole pizza.

SYLVESTER: Yes, that's for the whole pizza --

BLITZER: Lisa, thanks very much. I want to dig a little bit deeper into this pizza story. Tom Foreman is joining us right now. He's got a little fact checking of Papa John's claims. What are you finding out, Tom?

TOM FOREMAN, CNN CORRESPONDENT: Well Wolf, like restaurant chains all over the country, Papa John's does not want to pick up this extra cost to cover Obamacare. Unlike others Papa is putting a price tag on that extra pepperoni. Our best estimate he says is that Obamacare will cost 11 to 14 cents per pizza. That's the quote. How did Papa come up with that number? Let's open the pizza oven and we'll pull out the math here.  And this is complicated. It's a lot of you know carry the two, move this around. But suffice to say we did it and if Papa John's ran up against the worst case scenario, having to pay a penalty for not providing medical coverage for all 14,000 of its restaurant employees that could add up to $28 million. Now, taking the company's own estimate that Obamacare would cost at least 11 cents a pizza, Pap would have to sell about a quarter of a billion pizzas a year to reach that $28 million total.  Now we calculated all of this based on SEC filings and public information because Papa John would not tell us how many pizzas they sell or explain their math or tell us how many of their employees are part-time or how much they're providing in health care currently for their employees and how much that costs the company -- Wolf.

BLITZER: So, Tom, if we don't know that, how can we judge if the statement is actually true or false?

FOREMAN: Because, Wolf, you're going to hear me say something I almost never say. In this case, the math does not matter. That's why. A Treasury official came and talked to us about this. And basically what he said was that on background in the worst-case scenario that we're talking about here that just can't happen for Papa John's. Employers have no obligation to provide health care for part time workers, those working fewer than 30 hours a week.  Papa John's certainly has plenty of those even if they won't tell us how many, so that would reduce their burden. The great bulk of Papa John's operations are through franchise operators, not the parent company. And many of them would be too small to be penalized. Remember, those exemptions for businesses with fewer than 50 workers that would happen to many of the franchises. And the regulations about how and when and who will pay these penalties under the Obamacare changes are still being sorted out.  We received a statement from Papa John's last night that said in part, the vast majority of Papa John's restaurants are owned by small business people, each of whom will be impacted in different ways by costs associated with the Patient Protection and Affordable Care Act. But our bottom line is this. This estimate that Papa John's threw out there came out of the oven a little bit too soon. It's not fully cooked and since Papa won't deliver the documents to support the claim, we're going to have to say that this claim is false -- Wolf.

BLITZER: Bottom line false, all right thanks very much for that, Tom Foreman. I actually understood what you were saying, pretty good, good explanation