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Friday, March 19, 2010

Well. That Will Be Good for Job Growth.

I know that some people think that I, being the Republican that I am, oppose this health care reform package because I hate poor people (or words to that effect). This ignores the fact that I am poor people, that my wife and I already pay a pretty good amount for our health care plans and might well see our direct costs reduced by the plan, and that I don’t, in fact, hate poor people.

What I fear is that government doesn’t do much well, efficiently, or within budget. I fear the tax increases, the cost burdens that will be faced by the states, and the relentless drive toward the Federal government regulating our lives in new and exciting ways. I would suggest these are all reasonable worries.

Here’s another one: job growth.

Caterpillar Inc. said the health-care overhaul legislation being considered by the U.S. House of Representatives would increase the company’s health-care costs by more than $100 million in the first year alone.

In a letter Thursday to House Speaker Nancy Pelosi (D-Calif.) and House Republican Leader John Boehner of Ohio, Caterpillar urged lawmakers to vote against the plan “because of the substantial cost burdens it would place on our shareholders, employees and retirees.”
Caterpillar, the world’s largest construction machinery manufacturer by sales, said it’s particularly opposed to provisions in the bill that would expand Medicare taxes and mandate insurance coverage. The legislation would require nearly all companies to provide health insurance for their employees or face large fines.

The Peoria-based company said these provisions would increase its insurance costs by at least 20 percent, or more than $100 million, just in the first year of the health-care overhaul program.

The direct effect of having to spend that much more on health care, of course, is less money available for investment, development, research and hiring. It also makes it harder for a company to want to hire new full time employees by making the long term commitment even more onerous.

It’s obvious, but I feel like I have to say it: profit is not a bad word and a company has to make a profit to survive. Without that profit, there are no jobs, there is no company, and there are no taxes paid. For that matter, when it becomes too costly to do business here, will they simply move their operations somewhere else? Somewhere more friendly to businesses? Certainly that’s never happened before.

Read the rest.

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Caterpillar would be full of crap. Self-funded and large group plans are ERISA exempted. There will be virtually no change in their plans whatsoever. And they already have plans, and they are covered by collective bargaining agreements. This is smoke-blowing, probably angling to get more assistance on exports from the Department of Commerce, or to get the Treasury to take a harder line against China’s currency manipulation.

Nothing is ever as it seems when there’s a big issue dominating everything.

on Mar 19 2010 @ 09:34 AM

Sure, “virtually” no change, Michael.  You are not repeating Obama’s “3,000 percent reduction in premiums” thankfully, but that’s still nothing but a talking point.  Look at the CBO’s own report, in the section on premiums, there is good reason for Catepillar to believe that its premiums would rise.

Meanwhile, the Democrats are on an orgy of proposing job killing legislation.  I’ve not seen such economically disasterous proposals since the FDR administration extended the Great Depression by 5 years.

on Mar 19 2010 @ 09:57 AM

By the way, for those who don’t follow Catepillar, CAT is perennially struggling in a low margin business against foreign competition in the heavy equipment market.  What sounds like a small increase in their costs could easily become a tipping point for their final collapse.

Then we can all buy our bulldozers from China.

on Mar 19 2010 @ 10:51 AM
jed

I heard a rumor that Caterpillar is building a manufacturing facility in Mongolia. Companies looking to save money surely know how to accomplish that. If it means offshoring, well, at this point, who can blame them? If you’re trying to compete with Komatsu, I don’t know that Detroit is where you want to do it. And with higher hiring and overhead costs, not Tennessee or Kentucky either.

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