Independent Analyst: "This Is Having An Impact On The Bottom Line And That Can Cut Jobs."
Washington, Apr 2 - While Democrats in Washington take a victory lap for a 9.7 percent unemployment rate, America’s employers and small businesses are already being squeezed by President Obama’s new health care law, with its job-killing tax increases and cost hikes. In just 10 days, America’s major employers have announced at least $2.8 billion in additional costs as a result of Democrats’ government takeover of health care. One independent analysis has determined that U.S. companies may lose as much as $14 billion on account of this job-killing tax hike. Coming during a time of economic anxiety, how will these cuts affect the workers trying to hang on to their jobs and the retirees in danger of losing their health care and prescription drug benefits? What about the customers who may have to pay higher prices to make up for these losses? And the small businesses that rely on these companies, what about them? That’s exactly what House Republicans have been discussing with their constituents this week while Democrats are attacking employers having a hard enough time trying to survive this recession without Washington getting in the way.
More than 130 economists sent a letter to President Obama and Congress last month warning about the impact of the new health care’s job-killing tax increases and cost hikes:
“In addition to constricting economic growth and reducing employment, the health care bill will increase spending on health care and will increase the cost of health coverage. The new and higher taxes on America’s small businesses and workers included in the bill are detrimental to job creation and economic growth, especially now given the fragile state of the economy.”
AT&T, $1 billion. “’Companies like AT&T, that have large employee bases, are going to have higher health-care costs and, therefore, lower earnings unless they can negotiate something or offer less to their employees,’ said Chris Larsen, an analyst at Piper Jaffray & Co. in New York…” (Bloomberg, 3/26/10)
Verizon, $970 million. “The nation’s second-largest telecommunications company will take a $970 million hit, following the largest carrier AT&T…” (The Hill, 4/1/10)
Deere & Co., $150 million. “Verizon follows AT&T Inc., the biggest U.S. carrier, Deere & Co., Caterpillar Inc. and other companies in disclosing similar expenses.. ‘While it is a non-cash charge, it does reflect real value destruction, based on expected cash flows over the life of the company,” said Jonathan Schildkraut, an analyst at Jefferies & Co. in New York. … ‘This is having an impact on the bottom line and that can cut jobs,” said Chetan Sharma, an independent wireless analyst in Issaquah, Washington.” (Bloomberg, 4/2/10)
Boeing, $150 million. “Boeing Co., the world’s second-largest commercial-plane maker, plans to record a $150 million charge in the first quarter because of a new law reshaping the U.S. health-care system.” (Bloomberg, 3/31/10)
Caterpillar, $100 million. “Obama Tax’s $14 Billion Charge Starts at Caterpillar. The world’s largest maker of bulldozers put a price tag on that defeat yesterday: a $100 million charge to earnings. … ‘This could be a huge hit for bigger companies,” said Roland McDevitt, health-care research director in Arlington, Virginia, for New York-based Towers Watson. ‘This will be the kind of charge that will get the CFO looking and asking what are we doing here?’” (Bloomberg, 3/25/10)
Prudential Financial Inc., $100 million. “Prudential Financial became the latest company to detail the financial impact of President Barack Obama’s health-care overhaul, saying Tuesday it has taken a $100 million charge in the current quarter due to lower tax deductions related to the law.” (FOX Business, 3/30/10)
Lockheed Martin, $96 million. “Lockheed Martin, the world's largest defense contractor, said it expected to record a $96 million, or about 25 cents a share, after-tax charge in the first quarter.” (Reuters, 3/31/10)
Exelon, $65 million. “Exelon Corp., the largest operator of nuclear plants in the United States, expects a non-cash charge of about $65 million in the first quarter of 2010 due to the recently passed healthcare reform law.” (Reuters, 4/1/10)
3M Co., $85-$90 million. “They ‘have a stream of tax benefits that they are losing way out into the future,’ said Roland McDevitt, director of health-care research at benefits consultant Towers Watson. On Friday, 3M Co. joined AT&T in saying it would take a first-quarter charge, in 3M's case of $85 million to $90 million.” (The Wall Street Journal, 3/27/10)
Ingersoll-Rand, $41 million. “Ingersoll-Rand, a maker of air compressors and cooling systems, expects to record a non-cash charge of $41 million, or 12 cents a share, related to the healthcare overhaul.” (Reuters, 3/31/10)
AK Steel, $31 million. “AK Steel Holding Corp., the third largest U.S. steelmaker by sales, said it will record a non-cash charge of about $31 million resulting from the health-care overhaul signed into law by President Barack Obama.” (Bloomberg, 3/23/10)
Eaton, $25 million. “The maker of hydraulics, electrical controls and truck transmissions joins a growing list of big U.S. employers including AT&T Inc., Boeing Co and Caterpillar Inc bracing for a financial pinch from the overhaul.” (Reuters, 4/1/10)
Illinois Tool Works, $22 million. “Illinois Tool Works, Inc. lowered its first quarter and yearly earnings forecast Tuesday due to costs related to the health care legislation recently passed by Congress. The industrial equipment maker said it will record a tax adjustment of $22 million…” (Associated Press, 3/30/10)
Xcel, $17 million. “Xcel Energy, the owner of utilities that operate in eight U.S. states including Colorado, expects to record a $17 million charge in the first quarter because of the new U.S. health care law.” (Denver Post, 4/1/10)
Valero, $15-20 million. “But in the midst of high unemployment, statements from companies such as AT&T and Valero Energy that the new law would cost them weren't the headlines Democrats wanted on their victory lap. When major employers talk about hits to the bottom line, workers hear ‘layoffs.’” (Chuck Raasch, USA Today op-ed, 4/1/10)
Honeywell, $13 million. “Honeywell will also take a one-time charge of $13 million in the quarter because of the recently passed health-care reform bill.” (MarketWatch, 3/30/10)
Goodrich, $10 million. “Goodrich Corp. says it expects to incur a one-time charge of $10 million, or 8 cents per diluted share, against its first-quarter results. The company cites the recently passed U.S. health-care reform legislation.” (Charlotte Business Journal, 3/31/10)
Carpenter, $5.9 million. “Carpenter Technology will take a quarterly charge of $5.9 million due to recently passed health care legislation, the specialty metals maker said Thursday.” (Associated Press, 4/1/10)
Allegheny Technologies, $5 million. “Metals processor Allegheny Technologies Inc. said Monday that it plans to take a $5 million non-cash charge in the first quarter related to the health care overhaul legislation.” (Associated Press, 3/29/10)
More than 130 economists sent a letter to President Obama and Congress last month warning about the impact of the new health care’s job-killing tax increases and cost hikes:
“In addition to constricting economic growth and reducing employment, the health care bill will increase spending on health care and will increase the cost of health coverage. The new and higher taxes on America’s small businesses and workers included in the bill are detrimental to job creation and economic growth, especially now given the fragile state of the economy.”
AT&T, $1 billion. “’Companies like AT&T, that have large employee bases, are going to have higher health-care costs and, therefore, lower earnings unless they can negotiate something or offer less to their employees,’ said Chris Larsen, an analyst at Piper Jaffray & Co. in New York…” (Bloomberg, 3/26/10)
Verizon, $970 million. “The nation’s second-largest telecommunications company will take a $970 million hit, following the largest carrier AT&T…” (The Hill, 4/1/10)
Deere & Co., $150 million. “Verizon follows AT&T Inc., the biggest U.S. carrier, Deere & Co., Caterpillar Inc. and other companies in disclosing similar expenses.. ‘While it is a non-cash charge, it does reflect real value destruction, based on expected cash flows over the life of the company,” said Jonathan Schildkraut, an analyst at Jefferies & Co. in New York. … ‘This is having an impact on the bottom line and that can cut jobs,” said Chetan Sharma, an independent wireless analyst in Issaquah, Washington.” (Bloomberg, 4/2/10)
Boeing, $150 million. “Boeing Co., the world’s second-largest commercial-plane maker, plans to record a $150 million charge in the first quarter because of a new law reshaping the U.S. health-care system.” (Bloomberg, 3/31/10)
Caterpillar, $100 million. “Obama Tax’s $14 Billion Charge Starts at Caterpillar. The world’s largest maker of bulldozers put a price tag on that defeat yesterday: a $100 million charge to earnings. … ‘This could be a huge hit for bigger companies,” said Roland McDevitt, health-care research director in Arlington, Virginia, for New York-based Towers Watson. ‘This will be the kind of charge that will get the CFO looking and asking what are we doing here?’” (Bloomberg, 3/25/10)
Prudential Financial Inc., $100 million. “Prudential Financial became the latest company to detail the financial impact of President Barack Obama’s health-care overhaul, saying Tuesday it has taken a $100 million charge in the current quarter due to lower tax deductions related to the law.” (FOX Business, 3/30/10)
Lockheed Martin, $96 million. “Lockheed Martin, the world's largest defense contractor, said it expected to record a $96 million, or about 25 cents a share, after-tax charge in the first quarter.” (Reuters, 3/31/10)
Exelon, $65 million. “Exelon Corp., the largest operator of nuclear plants in the United States, expects a non-cash charge of about $65 million in the first quarter of 2010 due to the recently passed healthcare reform law.” (Reuters, 4/1/10)
3M Co., $85-$90 million. “They ‘have a stream of tax benefits that they are losing way out into the future,’ said Roland McDevitt, director of health-care research at benefits consultant Towers Watson. On Friday, 3M Co. joined AT&T in saying it would take a first-quarter charge, in 3M's case of $85 million to $90 million.” (The Wall Street Journal, 3/27/10)
Ingersoll-Rand, $41 million. “Ingersoll-Rand, a maker of air compressors and cooling systems, expects to record a non-cash charge of $41 million, or 12 cents a share, related to the healthcare overhaul.” (Reuters, 3/31/10)
AK Steel, $31 million. “AK Steel Holding Corp., the third largest U.S. steelmaker by sales, said it will record a non-cash charge of about $31 million resulting from the health-care overhaul signed into law by President Barack Obama.” (Bloomberg, 3/23/10)
Eaton, $25 million. “The maker of hydraulics, electrical controls and truck transmissions joins a growing list of big U.S. employers including AT&T Inc., Boeing Co and Caterpillar Inc bracing for a financial pinch from the overhaul.” (Reuters, 4/1/10)
Illinois Tool Works, $22 million. “Illinois Tool Works, Inc. lowered its first quarter and yearly earnings forecast Tuesday due to costs related to the health care legislation recently passed by Congress. The industrial equipment maker said it will record a tax adjustment of $22 million…” (Associated Press, 3/30/10)
Xcel, $17 million. “Xcel Energy, the owner of utilities that operate in eight U.S. states including Colorado, expects to record a $17 million charge in the first quarter because of the new U.S. health care law.” (Denver Post, 4/1/10)
Valero, $15-20 million. “But in the midst of high unemployment, statements from companies such as AT&T and Valero Energy that the new law would cost them weren't the headlines Democrats wanted on their victory lap. When major employers talk about hits to the bottom line, workers hear ‘layoffs.’” (Chuck Raasch, USA Today op-ed, 4/1/10)
Honeywell, $13 million. “Honeywell will also take a one-time charge of $13 million in the quarter because of the recently passed health-care reform bill.” (MarketWatch, 3/30/10)
Goodrich, $10 million. “Goodrich Corp. says it expects to incur a one-time charge of $10 million, or 8 cents per diluted share, against its first-quarter results. The company cites the recently passed U.S. health-care reform legislation.” (Charlotte Business Journal, 3/31/10)
Carpenter, $5.9 million. “Carpenter Technology will take a quarterly charge of $5.9 million due to recently passed health care legislation, the specialty metals maker said Thursday.” (Associated Press, 4/1/10)
Allegheny Technologies, $5 million. “Metals processor Allegheny Technologies Inc. said Monday that it plans to take a $5 million non-cash charge in the first quarter related to the health care overhaul legislation.” (Associated Press, 3/29/10)
