Posted on 03/27/2010 11:46:27 AM PDT by Attention Surplus Disorder
PEORIA - Caterpillar Inc. and other large companies are being criticized by the Obama administration for reporting now that they will take millions of dollars in hits to their earnings because of one portion of the new health care legislation.
Caterpillar and Deere were accused of being “premature and irresponsible” by U.S. Secretary of Commerce Gary Locke for saying a change to Medicare Part D laws would hurt their earnings in the present quarter.
Those companies are also being questioned about the amounts they are claiming — amounts that seem to get larger with every company that makes a report to the U.S. Securities and Exchange Commission about taking a one-time charge as a result of the legislation.
Caterpillar started it all by saying it would take a $100 million hit on its first quarter earnings. Deere & Co. followed with a report it would lose $150 million to its fiscal second quarter earnings.
The largest estimated hit yet, $1 billion, was announced Friday by AT&T.
At issue is what kind of hit corporate America will take because it is losing a tax deduction from Medicare Part D. Before, companies were paid subsidies of $1,330 a year, tax-free, for every retiree for whom it provided a prescription drug plan. Then, that amount could be deducted from the company’s taxes.
The new law still provides the subsidy tax free, but companies will no longer be able to deduct it from taxes.
Also on Friday the Wall Street Journal said in a published report that it calculates Caterpillar’s loss would be more like $7 million, based on the fact Caterpillar told the SEC it expected to receive about $20 million annually from the tax deduction and the 35 percent corporate tax rate that would now be applied to that deduction amount.
But Caterpillar on Friday defended itself, reiterating its belief it must, under accepted accounting rules and regulations, record any one-time tax charge in the quarter in which the legislation causing that charge is signed.
The $100 million, said Caterpillar spokesman Jim Dugan, “is our calculation of what that change in Medicare Part D will mean to the company.”
Dugan was pressed for further explanation of how the calculation was made, including whether the $100 million was an estimate of what the change will cost Caterpillar in perpetuity since it can only be charged once.
He said further details will be included in Caterpillar’s first quarter earnings report, which will be released April 26.
On the time of the filing, Dugan said, “We felt it was very appropriate and prudent to file the disclosure with the SEC immediately. We tend to take a conservative approach to SEC filings.”
Dugan declined to comment on the statement of Commerce Secretary Locke, which he made in a live interview Thursday on CNBC.
He also declined to say anything more about a telephone call made Thursday from the White House to Vice Chairman Doug Oberhelman, which Oberhelman revealed while speaking to the Morton Rotary Club later on Thursday.
While he acknowledged the call was regarding the health care legislation, Oberhelman would not say from it it came or what was said. He did describe the call as “productive.”
Paul Gordon can be reached at 686-3288 or pgordon@pjstar.com
Copyright 2010 pjstar.com. Some rights reserved
What are you going to do about it obama, take them over and send the board of directors to the salt mines?
Oh boy, here we go. Another parade in front of Congress, grilling CEO’s - Americans are going to boil over if the Democrats keep demonizing everyone that speaks out against them.
Now that is just funny!
Can CAT and other huge businesses survive the FASCIST onslaught of the Obama administration?
And now we learn that Henry ‘nostrilitis’ Waxman is going to haul these CEO’s in front of his committee to answer for these slanders against ObamaCare.
These are thugs in the White House.
What are you going to do about it obama, take them over and send the board of directors to the salt mines?
Can’t say or do anything before they bring in the clowns........paethetic!
I think the real question goes the other way. Obama and the Dems have starting to poke sharp sticks at the Big Dogs now. And, conveniently, the USSC just overturned McCain-Feingold.
Companies have been paying tribute of one kind or another to the left and the Dems for decades. It's always made things more expensive for them, but only incrementally. So although the cumulative cost has been huge, the individual components didn't seem to cost that much.
Until now. Combine these health care costs, the Cap&Trade proposals, and the utterly insane deficits, and you've got a set of circumstances that even the Big Dogs can't ignore.
Which is why all of these big companies have started trotting out such large numbers for what Obamacare is costing them. They're going to push back now, and hard.
So the question is: can the Obama administration survive the political consequences of what they're doing to CAT and other huge businesses?
Yes they can, CLOSE YOUR DOORS, FIRE EVERYBODY, Liquidate all Buildings and other assets, with the exception of those REQUIRED to build Equipment (force any newcomer to MAKE THEIR OWN) and Give nice Severance packages to all Ex-Employees, Move your company to another State that did not Vote for Obamacare. Bankrupt every Blue State, let them waller in their welfare class. This can be done, but will anyone have the Balls to do it?
WE NEED CEO’S LIKE HOWARD HUGHES to stand up to congress.
I have never read about a company later stating that its write downs were less than originally estimated. On the other hand, I have read where companies had to revise their write off to a higher level. That said, given the pressure Wall Street puts on companies to be profitable, I expect any "correction" to revise the write offs will be upward, not downward.
Wouldn’t it be criminal to withhold this kind of information from their investors and future investors? Is Barry asking them to “lie by omission”?
This is beyond insane. Now they want to force companies to lie and hide the disastrous impact of Obamacare on them.
Not asking but forcing them to lie.
I know I’m preaching to the choir, but can’t they get into really big trouble if they were to “not disclose” something that will impact the company?
“Wouldn’t it be criminal to withhold this kind of information from their investors and future investors? Is Barry asking them to “lie by omission”?”
Absolutely and unequivocably. SEC regs compel listed companies (eg; those who have issued publicly-traded stock) to make public any information *as soon as they become aware of it* which may affect or influence their financial results.
As if National Socialist Healthcare isn’t bad enough, Hussein just appointed a rabid ACLU type to a recess appointment to the NLRB. He will impose card check, which couldn’t get through the most radical Congress in history.
There are no laws under Obama now except the laws that favor him politically. The man has crossed all the boundaries allowed under our Constitution.
Careful, guys! Bureaucrats from OSHA, IRS, and other alphabet agencies will show up at your door and say, “We’re from the government and we are here to inspect you!”
Criticism from an Obama Chicago mob group that has already spent the country into a bankrupt state we won’t recover from until
we start drilling for oil and gas. Then, we can sell to the Chinese instead of buying from them.
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