Tuesday, February 4, 2014

What the CBO Really Said About Obamacare and Future Employment

Did Dylan Scott really scoop economist bloggers as he refuted the latest GOP spin:
They had a new talking point: President Obama's hated health care reform law would cost more than 2 million American jobs. "Obamacare To Print Even More Pink Slips," read the subject of the Senate Republican conference email blasted out after the report's release. "Obamacare will cost our nation about 2.5 million jobs," tweeted Sen. Lindsey Graham
The CBO report can be found here. As Dylan succinctly noted:
Those lost hours will "almost entirely" be the result of people choosing to work fewer hours because of Obamacare -- not because they lost their jobs or can't find a full-time job.
If a Republican economist blogger has stepped up to the plate and been honest about what the CBO really said – I’d be impressed. I just checked the blogs of Greg Mankiw and John Taylor and nothing yet. But then this is still early in the discussion. To be fair - the CBO did talk about the substitution effect from higher marginal tax rate, which is something a conservative economist might want to emphasize. But the CBO discussion went further than that in discussing the multitude of channels as to how the ACA will affect labor markets including the income effect from better health care access. Don't trust the political spin and do read the CBO's interesting discussion.


Steve From Virginia said...

Sorry dude, the report is in English and it says that compensation will be reduced; that workers will 'choose' to work less.

Who chooses? How much less? The equivalent of 2 - 2.5 million jobs.

Of course, this is in the far distant future, with a 'boisterous' economy humming along in the backgr ... oops! Sorry, dude, the economy is sliding down the drain right this minute so all bets are off.

Meanwhile, the insurance industry gets a $4,700 - $8,340 annual payment for every 'sucker' who signs on for a subsidized policy, the ACA being an expansion of Medicaid and the $$$ being the necessary 'grease' to insurance companies.

USA = for, by and about well-connected criminals and their lackeys on Capital Hill.

ProGrowthLiberal said...

Steve? "compensation will be reduced"? Odd - as an inward shift of the labor supply curve raises wages. Yes - this is the theme being pushed by Talking Points Memo which admittedly is slightly left of center. But they do have a point. So let's be a little more careful how we express what the CBO has really said.

Benedict@Large said...

It is nice that these 2.5 million people equivalents will not be fired or laid off, but what does that have to do with anything? Their bosses will choose not to replace them as they go, and that is the loss of 2.5 million jobs.

Larry Signor said...

The CBO also had this to say:

CBO, Feb. 4: [T]he ACA’s subsidies for health insurance will both stimulate demand for health care services and allow low-income households to redirect some of the funds that they would have spent on that care toward the purchase of other goods and services — thereby increasing overall demand. That increase in overall demand while the economy remains somewhat weak will induce some employers to hire more workers or to increase the hours of current employees during that period.

Most consumers are cash constrained due to underemployment or DE-leveraging. These people will choose to work less? Sketchy logic.