CBO's Obamacare Figures Just Don't Work for Dems

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The Congressional Budget Office is a rare Washington creation—a non-partisan governmental entity with a politically sensitive mission. CBO is tasked with forecasting the impact of current government policies on future government revenues. This task, which is difficult enough, entails predicting what lies ahead for the U.S. economy.

CBO has a mixed record, but it tries to get it right, which is more than one can say for its critics.

For years, the Obama administration liked what the CBO had to say, mainly because its projections showed a lowering of future government debt due to the Affordable Care Act.

There was always one CBO study the White House didn’t tout: a preliminary report showing that Obamacare’s subsidies would induce many at the margins of the economy to drop out of the workforce, perhaps costing the economy the equivalent of 800,000 full-time workers. This was problematic for a president whose entire tenure has been characterized by high unemployment and anemic job growth, but that’s what CBO’s numbers said—and now they say something worse.

In its updated report, the office says it underestimated the negative impact of Obamacare on employment. This number is now estimated to be the equivalent of 2.3 million full-time workers. On its face, this news is disturbing, and it was made worse on Wednesday when CBO director Douglas Elmendorf appeared before the House Budget Committee and was asked by Rep. Diane Black, R-Tenn., what effect reduced labor force participation would have on the economy.

“It is the central factor in slowing economic growth,” he replied. “After we get out of this current downturn, but later in this decade and beyond, the principal reason why we think the economic growth will be less than it was for most of my lifetime will be a slower rate of growth by the labor force.”

It’s true that Elmendorf’s answer referred to more than Obamacare, but it’s also true that this is one of the factors he cited in the anemic growth of the U.S. economy.

At the White House, aides scrambled, not altogether successfully, to refute CBO’s conclusions. Presidential press secretary Jay Carney characterized the report as “incomplete,” adding that it “does not take into account” some favorable effects of the law. Jason Furman, head of the White House Council of Economic Advisers, claimed that because 8.1 million jobs had been created since the passage of the Affordable Care Act, the law couldn’t be a jobs killer. This was an odd argument, especially considering that the law hasn’t taken full effect yet.

On Capitol Hill, the Democrats’ logic was even more tortured.

“Yesterday, the CBO projected that by 2021, the Affordable Care Act will enable more than 2 million workers to escape ‘job-lock’ — the situation where workers remain tied to employers for access to health insurance benefits,” asserted House Minority Leader Nancy Pelosi. “The GOP seems to have forgotten that ending ‘job-lock’ has been an avowed Republican goal for years — even a highlight in the Republican Sen. John McCain’s 2008 presidential race.”

This is counterfactual, and on several levels. For starters, job-lock wasn’t a “highlight” of McCain’s 2008 campaign; it was a throwaway line. Even then, McCain—like other Republicans—never dreamed of having the government taking over health care. He floated the idea of insurance portability: allowing workers to take health insurance from one job to another.

But the CBO report isn’t really about job-lock—at least in the way the term had been used until now. The problem was previously understood to mean that barriers to obtaining health insurance were preventing Americans from moving to more attractive jobs, starting their own businesses, and, yes, even occasionally taking early retirement.

What the CBO report makes plain is that under Obamacare a huge cohort of Americans will realize they’d be better off financially if they cut back on their hours or quit working altogether so as to not jeopardize their (taxpayer-financed) health care subsidies.

Here’s the rub: Who will be paying for their health care costs? There are two possible answers; one: Americans who remain in the workforce, most of whom are middle class, with economic worries of their own; two: future generations of Americans—as we are borrowing prodigiously to pay for current spending.

In 1992, Bill Clinton led a Democratic Party revival in large part because he realized that divorcing government benefits from work requirements did not resonate with working-class Americans. He coined a mantra about working hard and playing by the rules. When he accepted his party’s nomination that year, here is what he said:

“In the name of all the people who do the work, pay the taxes, raise the kids and play by the rules, in the name of the hard-working Americans who make up our forgotten middle class, I accept your nomination for president of the United States.”

Obama has used a truncated version of that passage, and he mentioned work and job creation repeatedly in his 2014 State of the Union address. The net effect of his policies, however, deemphasizes the “hard-working” part of the equation while stressing the “play-by-the rules” part. And under his leadership, playing by the rules includes accepting government largesse.

To some, the Democrats’ glee over offering people health care so they’ll quit working reprised memories of a hilarious old headline in the satiric online magazine The Onion: “IBM Emancipates 8,000 Wage Slaves.”

There’s a serious side to this, a seriously disquieting side: For years, it seemed that although Democrats profess to love jobs, they couldn’t stand employers. Now they’ve gone a step further: They don’t even favor work. 

Carl M. Cannon is the Washington Bureau Chief for RealClearPolitics. Reach him on Twitter @CarlCannon.

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