I feel I must, Here Havasucker, now after reading this if you dont think the presidents polocies effect the market then you are a twit (P.S. you do know what "bell weather company" means and does to the market, right):
By Christopher Hinton, MarketWatch
"NEW YORK (MarketWatch) -- Caterpillar Inc. and Deere & Co. will see costs increase this year when a government subsidy for retiree drug benefits loses its tax-exempt status under the new health-care law.
On Thursday, Deere (DE) said taxing the subsidy meant to help lower costs for companies that offer retiree drug coverage will result in a one-time charge of $150 million. Earlier, Caterpillar (CAT) said the same tax will raise its costs by $100 million.
"Although this tax increase does not take effect until 2011, Caterpillar is required to recognize the full accounting impact in its financial statements in the period in which the Act is signed," Caterpillar reported in a government filing.
President Barack Obama signed the Patient Protection and Affordable Care Act into law on Tuesday. A Senate reconciliation bill meant to tweak some parts of the new law is currently in the House for a final vote. Read more about the Senate health-care bill.
The change in how businesses account for the subsidy closed a loophole created in the Medicare Part D prescription drug benefit that allowed two tax write offs, according to White House Press Secretary Robert Gibbs. The loss of the deduction will be partially offset by $10 billion in support for businesses with early retirees.
Industrial companies with employer-based retiree benefits are likely to post similar cost increases, including aerospace giant Boeing Co. (BA), insurer MetLife Inc. (MET) and truck-maker Navistar International Corp. (NAV).
"Deere and Caterpillar are bellwether companies and it's hard to believe that they are unique," said Longbow Research analyst Eli Lustgarten. "We expect that most companies will have to adjust to the new regulations."
In the case of Deere, the higher costs represent nearly 12% of its projected fiscal 2010 profit of $1.3 billion.
It's a big charge, and though additional cost increases are likely to follow, none are expected to be as large, according to Longbow's Lustgarten.
Deere, along with other companies contacted for this story, said it was still evaluating the impact of the new law, and speculation on additional cost increases or savings at this time would be premature.
"It's hard to understand what we will, and will not see because the health care law doesn't end the subject, but really just begins it," said Lustgarten. "It lays out a framework, but the details are still shaking out."
Long term, costs will be materially higher for the industry, he added.
Investors were unconcerned about the new tax provisions and focused instead on evidence the economy was improving. Shares of Deere and Caterpillar were each up 1% in afternoon trading.
Earlier, the U.S. said weekly unemployment-benefit claims at its lowest point since July. Read more about jobless claims.
In a December letter to Congress, Caterpillar, Deere and eight other U.S. companies including Boeing and MetLife wrote that making the drug subsidy taxable could result in companies reducing coverage and more retirees shifting to Medicare Part D, a federal program that subsidized the cost of prescription drugs for Medicare beneficiaries.
According to an industry report from the Employee Benefit Research Institute, each retiree who loses employer-based drug coverage and gains it through Medicare Part D will increase government cost by $544.
"If more companies than predicted by the Government Accountability Office shift away from coverage, then the provision could result in a net loss rather than the predicted slight revenue gain," the companies wrote."