In a rather bizarre White House press briefing yesterday, Chairman of the Council of Economic Advisers Jason Furman told reporters that the latest estimate that the Affordable Care Act will cause the loss of some 2.5 million jobs over the next 10 years is apparently a good thing. He responded to a question about the Congressional Budget Office’s damning report on the Affordable Care Act by saying,
“The report finds that there will be less — that workers will choose to supply less labor, correct. It describes it as a choice. Again, it’s not that the businesses are cutting those jobs.”
When the reporter asks if this might be considered a negative thing, choice or not, Mr. Furman replies,
“Two things. One, just a small, picky thing. It doesn’t say “losing jobs.” It says FTEs. So to some degree, this might be somebody who used to work 60 hours because they needed health insurance and that was the only job that offered it, and now they can get a different job at 35 hours that doesn’t offer health insurance, but they’re getting it through this and they’re switching from one to the other. And that’s a better choice for that person, and this is giving them that option that they didn’t used to have.”
Um…I haven’t heard this much spin in a Laundromat. Even in today’s lackadaisical society, most people view disincentives to work as a bad thing. Just ask the top 1 percent. It’s bad enough that they get so much grief for working and being successful, but for the very few who inherited their money and didn’t have to lift a finger; there is a stigma attached to ready-made wealth as an incentive not to work.
But Mr. Furman seems to glorify the flip side of the coin, those who are not wealthy but who choose not to work in order to receive an ObamaCare subsidy. The CBO report is not quite as rosy about this so-called “choice.”
- On the effects of the employer penalty (for not providing insurance) on the demand for labor:
The penalty will be borne primarily by workers in the form of reduced wages or other compensation..
- On the effects on labor incentive:
The decline in fulltime-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours…Subsidies that help lower income people purchase an expensive product like health insurance must be relatively large to encourage a significant proportion of eligible people to enroll. If those subsidies are phased out with rising income in order to limit their total costs, the phaseout effectively raises people’s marginal tax rates (the tax rates applying to their last dollar of income), thus discouraging work. In addition, if the subsidies are financed at least in part by higher taxes, those taxes will further discourage work or create other economic distortions, depending on how the taxes are designed. Alternatively, if subsidies are not phased out or eliminated with rising income, then the increase in taxes required to finance the subsidies would be much larger.
But on the bright side, the CBO says health care subsidies will allow lower-income people to spend money that would have gone toward health care on other goods and services, thereby increasing demand. The question I have is, if people stop working in order to receive the subsidy, where are they going to find the money to pay for other goods and services? Or, is that going to come from other government subsidies payed for by taxpayers?
Is the CBO report good news or bad? You be the judge.