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.
In Illinois, where Caterpillar, John Deere, Boeing, and Exelon are headquartered, the state maintains a staggering 11.4 percent unemployment rate. In New Jersey, where Prudential is headquartered, unemployment is at 9.8 percent. The state of Ohio, the headquarters for AK Steel, maintains 10 percent unemployment. And in Texas, the headquarters of AT&T, unemployment is comparatively low, but still a problem at 8.2 percent. The additional tax burden on these leading companies is bad news for the unemployed in these states.
Instead of considering policies that might alleviate this new burden and encourage job creation, Democrat Congressional Leaders are on the attack. Democrat Representative Henry Waxman, displaying his characteristic Napoleonic charm , has called up the CEOs of John Deere, AT&T, Verizon and Caterpillar for hearings to investigate what he’s convinced is an orchestrated public relations hit job on Obama’s healthcare reform bill by these companies.
Never mind that these companies are required to report this earning data to their investors. Never mind that many of these companies politely alerted the White House prior to the announcements being made.
Interestingly, the White House has had to come to the defense of big business from these teeth-baring Democrats. Valerie Jarrett, White House liaison to corporate America, disagreed with Waxman. Interviewed recently about the corporate losses, Jarrett said “I have not observed an orchestrated effort,” and praised the White House's working relationship with industry saying “throughout the health-insurance reform process, we have had a frequent and consistent dialogue with the business community -- small, medium and large -- to analyze and evaluate the impact that reform would have on them.”
Yet if that was the case, then the White House and Congressional Democrats should have seen this coming. Perhaps business was warning the White House about the consequences of the health care bill, but they should have also been warning the American people, because it's all of us, ultimately, who will be paying the price.