What do Caterpillar and John Deere have in common? Besides being America's two biggest makers of heavy equipment, they have both announced huge increases in expenses due to ObamaCare. Wednesday, Caterpillar made official its estimate of $100 million in increased costs for 2011, though they will take the charge this year.
Yesterday, John Deere said it will face an additional $150 million in increased costs for 2010 in order to comply with the Democrats' assault on America's health care and health insurance systems, eliminating about 11% of the company's profits for the year.
In particular, the charges come from changes in tax regulations for contributions to employees and retirees' health care benefits.
As the Wall Street Journal explains (about Caterpillar):
The world's largest construction equipment manufacturer by sales, warned last week that provisions in the legislation would subject the company to federal income taxes on the subsidies it receives for providing prescription drug benefits for its retirees and their spouses.
Since the Medicare Part D program was enacted in 2003, Peoria, Ill.-based Caterpillar and more than 3,500 companies that already provided drug-benefit expenses to retirees have received tax-free subsidies as an incentive to maintain their drug programs.
The subsidies average $665 per person covered under a company-sponsored prescription program, according to benefits consultants Towers Watson.
About 40,000 Caterpillar retirees receive company-sponsored drug benefits, which are more generous than Medicare's drug plan, which requires recipients to pay some out-of-pocket expenses.
The charge is expected to be a one-time cost, but Caterpillar has argued that higher taxes and other potential cost increases related to insurance coverage mandates in the legislation will hinder the company's recovery this year after a 75% plunge in income during 2009.
"From our point of view, a tax increase like this cannot come at a worse time," said Jim Dugan, a Caterpillar spokesman.
So, in two days, we have two major companies -- major American employers -- who between the two of them will have a quarter billion dollars less with which to pay employees, invest in new plant and equipment, spend on advertising and marketing, pay dividends to shareholders, and broadly contribute to the American economy.
And that's just the first two big companies to announce the impact of ObamaCare, and just for one provision of the bill. Keep in mind that these charges represent the sorts of increased costs that the companies would face with every new employee, giving them strong incentive -- 250 million incentives just for starters -- to avoid hiring in America.[/quote]
American SpectatorIt sounds like Deere needs to make some big cuts to those pension and health benefits next contract.
