Obama is heading out to sell ObamaCare. But investors and employees are getting a different message. This report explains:
Caterpiller Inc. said Wednesday it will take a $100 million charge to earnings this quarter to reflect taxes stemming from the 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 it 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, the Peoria, Ill., company and more than 3,500 others 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 by a company-sponsored prescription program, according to benefits consultant Towers Watson. (Please see related article on page B9.)
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 argues that higher taxes and other potential cost increases related to insurance mandates in the legislation will hinder the company’s recovery this year after a 75% profit plunge in 2009.
“From our point of view, a tax increase like this cannot come at a worse time,” said Jim Dugan, a Caterpillar spokesman.
One recalls that Caterpillar also played a part in unveiling the president’s lack of credibility on the stimulus plan. Obama visited a Caterpillar facility to tout his mammoth Keynesian stimulus strategy, which was to save millions of jobs and cap unemployment at 8 percent; Caterpiller subsequently announced more layoffs.
The White House keeps expecting Obama to persuade ordinary Americans of things that aren’t so, to induce them to ignore their own life experience. But reality intrudes and voters become less enamored, not more so, of the president’s statist policies and political spin. While the Left may be thrilled by the “historic” legislation, voters will be learning a different lesson over the months that follow and will have their chance to register their views at the ballot box.