Obama's Economists Risk Academic Integrity With CBO Spin

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The Congressional Budget Office's most recent release of its annual Budget and Economic Outlook has set off alarm bells in the White House due to claims that the Affordable Care Act will actually reduce the number of hours worked in America by about 2 million jobs by 2017. As the CBO states, "Changes in people's economic incentives caused by federal tax and spending policies set in current law are expected to keep hours worked and potential output during the next 10 years lower than they would be otherwise." Overall, the CBO has adjusted its numbers for economic growth downward while forecasting federal debt levels not seen since the end of World War II.

The glum news has Jason Furman, Chairman of Obama's Council of Economic Advisers, dancing on the head of a political pin while trying to maintain academic integrity. Proponents of ObamaCare have launched a concerted effort to address the dour CBO report, with the overall message that the increase in unemployment is actually a good thing, creating new choices that will benefit workers. Furman suggested that some of the job losses will be due to the elimination of "job lock," where individuals remain in the workforce just to make sure they have insurance; ObamaCare eliminates job lock by providing new options for health insurance. Furman continued that ObamaCare creates "an incentive for more entrepreneurship because they're not locked into a job. There's an incentive for employers to hire more people because the cost of health care is lower."

If job lock is the problem, why did the Patient Protection and Affordable Care Act not simply change the tax laws that make employers the main providers of health insurance in the United States? This relic of the price controls of World War II remains the single most harmful distortion in our health care markets. Employers continue to play a dominant role in health insurance markets under ObamaCare, which does not eliminate the third party payer problem.

And with respect to ObamaCare lowering health care costs, the data is far from conclusive. Health care costs have come down in recent years, but the trend started before ObamaCare was enacted, and we have yet to see the full implementation of the health care law. To date, implementing the law has been problematic, and a recent study by Bloomberg Government Analysis suggests that enrollment is running 40 percent below target. According to the report, ACA-related Medicaid enrollments are well below the administration's claims of 4 million to 6 million enrollees. In addition, enrollment in the exchanges is roughly 2.5 million-only about a third of the 7 million enrollees needed by the March deadline. Without a substantial infusion of young enrollees, the costs of this program remain an important, unsolved question.

Furman also equated the situation to seniors who leave the work force because of the entitlements they receive through Social Security and Medicare. White House Press Secretary Jay Carney chimed in: "Over the longer run, CBO finds that because of this law, individuals will be empowered to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years, or choosing to spend more time with their families." While it may be true that some in the workforce face job lock and continue working for health care coverage, it is disingenuous to suggest that those in the prime of their careers face the same incentives to work as seniors who have transitioned to retirement.

Furman also claimed that the CBO unemployment numbers only look at one aspect of the law and ignore forecasts suggesting that ObamaCare will create 250,000 to 400,000 jobs per year. Absent any accepted methodology for dynamic scoring, the claim that ObamaCare will create new jobs remains a debatable hypothesis. Even more so, if we maintain the analysis we must determine if ObamaCare, in fact, creates new jobs rather than simply transferring jobs from other, more productive sectors of the economy into a new bloated bureaucracy in the new health care sector.

From the website fiasco, to enrollment challenges, to the new CBO report, mounting evidence suggests that the Affordable Care Act may not be able to offer protection or affordability. For many, this is not surprising. Central planning has proved to be a costly way to allocate resources; putting the nearly 20 percent of the economy that health care represents under government management is bound to create problems.


Wayne Brough, Ph.D is Chief Economist and Vice President of Research at FreedomWorks.  

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