Caterpillar Inc. Exposes Another Dirty Little Secret of Health Care Reform

Last week, Caterpillar, Inc. announced that the proposed health care reforms currently being processed through Congress will cost them at least $100 million in the first year (Click to See Full Story: Caterpillar: Health Bill Would Cost Company $100M ).

Most people, probably just shrugged their shoulders and thought this to be no big deal. After all, Caterpillar is a big company and they can afford it. Right? Well, to those people, I say you're not understanding the massive implications of what Caterpillar is saying.

What Caterpillar is "effectively" saying is that they will have, at the very least, an additional $100 million dollars in new expenses per year. Anyone who understands how business income taxes are calculated will understand that this $100 million in new expenses will reduce their profits and, subsequently, will reduce both their state and federal tax burdens. At the very least, that is about 40% of that $100 million dollars or a $40 million reduction in federal taxes they will have to pay. There will also be another $2 to $5 million reduction in their various state income tax bills. And, this story will be repeated across the country; from small businesses to the more than 25,000 publicly-traded corporations that exist here.

When the Democrats claim that their health care bill is deficit neutral and, in fact, claim that they will save billions against the deficit over the next 10 years, they are being blatant liars. They are completely basing this on gimmicks and tricks such as collecting taxes and penalties for ten years while only providing the program benefits for 6. They are also double counting cash inflows from things like Social Security payments. But, this reduction in tax burdens across the corporate and small business spectrum is something that no one has taken into consideration and it could be substantial. It could really inflame the already massive deficit spending levels. It won't just be because some companies will have to now provide health insurance for their employees. It will also be because of those companies who must increase their insurance costs to meet new federal mandates. Either way, those new higher expenses will mean lower tax revenues for our government.

When Social Security was passed, no one seemed to take into consideration that Americans would be living longer with both parents of a family working and becoming eligible for that benefit. It was also assumed that the big families of the past would continue on so that there would always be an abundance of younger workers to sustain payments for those who had retired. But, things are all different now. Because of that lack of foresight, it won't be too much longer before Social Security is both broke and broken. The same will happen to health care reform when the reduction of tax revenues becomes evident. Like Medicare and Social Security, the federal health care system will fail and will be fiscally insolvent in the not too distant future. What the Democrats are really doing is piling on another unsustainable social obligation that could eventually bring this nation to its fiscal knees.