Farm equipment manufacturers take deep hits from ObamaCare

Caterpillar announced last week that it would take a $100 million hit from the mandates in ObamaCare, and yesterday, they made it official.  As a publicly-traded firm, Caterpillar had to reveal the major change to its financial standing to its investors:

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Caterpillar Inc. said Wednesday it will take a $100 million charge to earnings this quarter to reflect additional taxes stemming from newly enacted U.S. health-care legislation.

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. …

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.

As it happens, Caterpillar isn’t alone, not even among its competitors.  In fact, the massive charge actually amounts to less than what John Deere had to announce today:

Farm equipment maker Deere expects after-tax expenses to rise by $150 million this year as a result of the health care reform law President Barack Obama signed this week.

Most of the higher expense will come in Deere’s [DE  60.94    0.45  (+0.74%)   ] second quarter, the company said on Thursday. The expense was not included in the company’s earlier 2010 forecast, which called for net income of about $1.3 billion. …

The law could raise expenses for large U.S. employers. Industrial companies, which typically have large numbers of retirees, may be among those facing the biggest bill. Caterpillar had argued before the legislation passed that health reform would put it at a disadvantage against global competitors.

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Now we have two American-based manufacturers that suddenly have a quarter of a billion dollars less capital than they did on Saturday.  That’s just two companies.  How much more capital will that grab from American businesses?  We’ll start seeing it in their financial disclosures soon enough, and it will run into the tens of billions of dollars, perhaps more.

Some may say, Well, great!  It pays for ObamaCare. It also takes the cash that would have fueled expansion, new job creation, and retirement income and sticks it into the hands of government bureaucrats.  It will massively bleed the economy at a point in time where we desperately need the private sector to invest in itself and create new jobs and new opportunities.

Instead, those manufacturing jobs will simply go outside the US.  If John Deere or Caterpillar doesn’t move them overseas, then foreign manufacturers will take up the slack instead.  There would have been no good time for ObamaCare, but this is the absolutely worst time of all to impose these backbreaking taxes on the private sector.  Expect unemployment to remain high, and perhaps even go higher, as a result of Congress’ work.

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Let’s not forget who told us that we could discover much about America’s bottom line by looking at Caterpillar’s bottom line, after all:

John Deere’s too.

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