President Obama touted the health care bill as a jobs creator and a vehicle for economic growth. Yet not even a week passed before U.S. businesses started warning about the new law's costs. Don’t expect business to boom as a result of this new healthcare reform legislation. Many companies will need to spend their money, not on job creation, but on new federal taxes.
A year ago, President Obama praised Midwest manufacturing giant Caterpillar for supposedly backing his $800 billion stimulus package and told company employees that their CEO pledged to rehire laid-off employees if the stimulus bill passed.
It was a nice touch during the final push for the stimulus bill. The statement made quite a splash both with the local Illinois and national press as the news media played up this big business endorsement of Obama’s big government policy.
And when the Caterpillar CEO began backtracking (one suspects this so called “endorsement” of the stimulus was more a star-struck CEO fawning over the President in what he thought was a private conversation), it didn’t matter. The news cycle had moved on. The press already had their tag line: stimulus means jobs. Of course, Caterpillar was never able to hire back those employees and the job cuts have continued--just last week Caterpillar announced it would lay off 121 employees in North Carolina.
Now, Caterpillar once again finds itself in the political crosshairs. Last week, Caterpillar, along with AT&T, Exelon, Boeing, AK Steel, Verizon, Prudential, 3M, and John Deere, all issued statements indicating their companies are now facing millions in charges to earnings this quarter because of Obama’s healthcare legislation. This added burden to corporate America would be significant at the best of economic times, but unfortunately we’re living in the worst of times—when every spare corporate dollar should be spent on retaining or hiring new employees.
What does that mean for the average consumer? Companies will have to pass on some of the costs of those taxes to you and me by charging higher prices for their goods and services. But higher prices aren't the only effect of the increased tax burden. Companies will have less money to spend on retaining workers, which means there could be additional jobs cut.