CBO: Actually, ObamaCare is kinda’ like a tax, and it’s going to result in 2 million fewer workers by 2017
posted at 12:41 pm on February 4, 2014 by Erika Johnsen
The “Affordable” Care Act creates all kinds of adverse incentives for both employers to drop the number of hours they offer and for employees to reduce the numbers of hours they work, and the Congressional Budget Office has reexamined their erstwhile conclusions about the president’s crowning legislative achievement with an update to their original estimate of just how much of an impact those disincentives are going to have on our economy.
Now, this may come as a shock, but… it turns out that ObamaCare could actually end up eliminating the equivalent of almost three times as many jobs as the CBO first expected. You know, unexpectedly. Whoever could’ve called that one? Via the WSJ:
The Affordable Care Act is projected to reduce the number of full-time workers by roughly 2.3 million people through 2021 and insure 2 million fewer people this year than previously estimated, the Congressional Budget Office said Tuesday.
The CBO had previously estimated the labor force impact would be around 800,000 people in that time frame. …
The rolling impact of the law will lead to 2 million fewer workers in 2017, 2.3 million in 2021 and 2.5 million through 2024, the CBO forecast. This represents a 1.5% to 2.0% reduction in the numbers of hours worked. …
CBO attributed the law’s projected labor force impact to several factors. This included an impact on labor supply from an employer penalty in the law and “an effect from encouraging part-year workers to delay returning to work in order to retain their insurance subsidies,” among other things.
In a nutshell, as the CBO states, the “exchange subsidies effectively constitute a tax on labor supply for a broad range of workers;” i.e., as workers transition from part-time to full-time, many will actually lose income because of the insurance subsidies for which they will lose their eligibility. …”Absolutely no tax increases on the lower- and middle-class,” for the win!
An almost two percent reduction to the numbers of hours worked purely because of the law’s effects is kind of a big deal, and you can bet that this is not going to be welcome news to the handful of panicking Senate Democrats trying to stave off awkward questions about their “yea” votes for ObamaCare by focusing on their economically populist messaging strategy. Newly-bolstered-with-nonpartisan-statistics Republican rejoinder to their minimum-wage schtick: Hey, if you really wanted help out a lot of lower-income wage earners, why did you vote for ObamaCare, again?
And here’s yet another delightful tidbit from the CBO’s analysis: I’m seeing headlines pertaining to the report that run along the lines of, “deficit continues to drop” and “deficit shrinks to lowest level under Obama.” …I mean, I suppose the fact that we’re only at half-trillion dollar deficits now rather than a full-trillion certainly sounds lovely enough (whoop-de-doo), except that the drop is a pretty temporary blip brought on by tax increases and the 2011 Budget Control Act, and that after 2015, the budget deficit is on pace to pick right back up and eventually reach at least $1 trillion again by 2022.
For the current fiscal year, spending will grow by 2.6 percent, while tax revenues will grow more than three times faster, by about 9 percent, the budget office said in its annual budget and economic forecast. …
But the CBO also warned that after 2015 deficits will start rising again because federal spending will grow more quickly than the economy will.
Beyond 2017, the budget office is forecasting that economic growth will be less than the average growth over the past several decades, in part due to an aging population and slow-growing labor force.
By 2024, the end of its ten-year forecasting period, a surge of Medicare, Medicaid and Social Security spending will push federal debt held by the public to nearly 80 percent of GDP — “eventually increasing the risk of a fiscal crisis” in which investors would demand higher interest payments to buy federal debt, the CBO report said.
Slapping more taxes onto the wealthy, while making spending cuts that don’t even come close to covering the rate at which spending is accelerating and refusing to address systemic structural problems, can only last for so long.