The Most Important Thing You Need to Understand About the CBO Report

The New York Times explains,

The Congressional Budget Office estimated on Tuesday that the Affordable Care Act will reduce the number of full-time workers by 2.5 million over the next decade. That is mostly a good thing, a liberating result of the law. Of course, Republicans immediately tried to brand the findings as “devastating” and stark evidence of President Obama’s health care reform as a failure and a job killer. It is no such thing.

The report estimated that — thanks to an increase in insurance coverage under the act and the availability of subsidies to help pay the premiums — many workers who felt obliged to stay in a job that provided health benefits would now be able to leave those jobs or choose to work fewer hours than they otherwise would have. In other words, the report is about the choices workers can make when they are no longer tethered to an employer because of health benefits. The cumulative effect on the labor supply is the equivalent of 2.5 million fewer full-time workers by 2024.

Which also seems to suggest that there will be 2.5 million job openings that other people might fill. Sounds like a win/win to me.

As soon as the CBO report was released, wingnut media were running headlines about Congressional Budget Office sends death blow to ObamaCare and The Jobless Care Act: Congress’s budget office says ObamaCare will increase unemployment, claiming that 2.5 million people would be fired because of Obamacare. And this is a lie.

This lie is so egregious that even Glenn Kessler, the Washington Post‘s false equivalency finder fact checker, says it’s a lie. Being Glen Kessler he manages to find some bullshit reason to give the lie only three pinnochios instead of five, but for Kessler to pin three pinnochios on Republicans is pretty amazing.

In fact, even Paul Ryan has admitted that the report says people would choose to work less, not that people would be fired from jobs. Imagine. I’m sure he’ll come up with some other way to demagogue the numbers, but this may mean that either the “jobless act” lie will die rather quickly on the vine, or Ryan’s unearned reputation as a “policy wonk” will soon be called into question by the Right.

Orrin Hatch, touted the CBO report with the lie, saying it would lead to two million fewer jobs, then turned around and trashed the report for saying that a part of Obamacare Republicans have been calling an insurance company bailout will save the government mpney.

The Hill reports:

The non-partisan Congressional Budget Office (CBO) on Tuesday threw a potential wrench into House Republican plans to tie an elimination of ObamaCare risk corridors to the next debt-ceiling increase.

The CBO now says that the program, which critics deride as an insurance “bailout,” will earn the government $8 billion over the 2015 to 2017 period. Last May, the CBO said that the program had not net budgetary effect.

The government will pay insurers $8 billion over the period but will collect $16 billion in return from companies, yielding a net benefit.

Another day, another faux scandal.

11 thoughts on “The Most Important Thing You Need to Understand About the CBO Report

  1. Republican don’t want to govern.
    They want to RULE.

    And they will lie, cheat, and steal, to do so. And feel no remorse, no pang of conscience, for doing so.

    As for the coverage of the CBA report, this is a result of over 30 years of Conservatives accusing the MSM of a “Liberal Bias.”

    It’s also the result of the “FOX Effect” – what I also call, “The FOXification of the News.”

    Coverage of politics has been dragged beyond the center-right.

    Think of the news mediums, and now imagine that they’re covering the weather.

    When Republicans are in charge, every day is sunny, with not a cloud in the sky.

    Rain is just liquid sunshine. Powerful winds are God’s kisses. A blizzard, is angel dandruff, blessing the exceptional American people.

    It takes something like a Hurrican Katrina, or an economic collapse, for the weather people to acknowledge that there may be some bad weather – but it’ll get better soon. Just you watch!

    When Democrats are in charge, every day it’s raining – and not just ‘trickling-down’ – but gushers of water, ciccada’s, frogs, poop, and pee!!!

    Deadly storms are always brewing, threatening life, limb, and property.

    Until our cowardly, compliant, and complicit MSM changes the way it does political coverage, representative democracy will continue to whither and die.

    But, then, how can it change?

    People in the MSM won’t see what they’re paid NOT TO SEE!

    Will the last person around please pull the handle and hold it down to make sure everything and everyone is completely flushed down the sh*tter?!?!?!?!?!

  2. Nod. If there were 2.5 million fewer people working, unemployment would drop by a fair amount, and we could certainly use a bit of tightening in the labor market to stop wage atrophy.

    It drives me crazy how that kind of thing works. It’s one thing to try to find every flaw and make it sound like DOOM but it’s another to flat out lie because you think you can confuse people.

  3. Once you read the CBO report some things will be clarified.

    For example, re “Which also seems to suggest that there will be 2.5 million job openings that other people might fill. Sounds like a win/win to me. “, the CBO is quite clear about that (p. 132 of the .pdf):

    CBO anticipates that the unemployment rate will remain high for the next few years. If changes in incentives lead some workers to reduce the amount of hours they want to work or to leave the labor force altogether, many unemployed workers will be available to take those jobs—so the effect on overall employment of reductions in labor supply will be greatly dampened.

    CBO anticipates that output will return nearly to its maximum sustainable level in 2017 (see Chapter 2). Once that occurs, the net decline in the amount of labor that workers choose to supply because of the ACA will be fully reflected in a decline in total employment and hours worked relative to what would otherwise occur.

    So it is a win/win for a couple of years, and then a permanent drag on output and employment amongst the lower-earning groups. But no worries – we can tackle income inequality and the problem with the inability of the working class to keep up another day.

    As to the Times notion (And DNC spin) that what makes wages slaves is wages, well, the report is clear on that too. The econo-speak gets heavy, but the gist is this:

    “Correspondingly, the negative effects of exchange subsidies on incentives to work will be relevant primarily for a limited segment of the population—mostly people who have no offer of employment-based coverage and whose income is either below or near 400 percent of the FPL. “

    This is from around p. 125 and following:

    “Nonetheless, another subgroup that has employment-based insurance does seem likely to reduce their labor supply somewhat. Specifically, those people whose income would make them eligible for subsidies through exchanges (or for Medicaid), and who work less than a full year (roughly 10 to 15 percent of workers in that income range in a typical year), would tend to work somewhat less because of the ACA’s subsidies.

    For those workers, the loss of subsidies upon returning to a job with health insurance is an implicit tax on working (and is equivalent to an average tax rate of roughly 15 percent, CBO estimates). That implicit tax will cause some of those workers to lengthen the time they are out of work—similar to the effect of unemployment benefits.

    CBO’s estimate of the response of labor supply to the subsidies is based on research concerning the way changes in marginal tax rates affect labor supply and on studies analyzing how labor supply responds to changes in after-tax income.

    So they were looking at fairly generic elasticities which attempt to predict whether someone will put in the hours to earn an extra $5K if they lose $1K in subsidies by doing so. Corporate drones who quit their $100K job to re-launch their high school rock band (and let the rest of us buy their health coverage) may exist but were not part of this modeling exercise.

    Well, I doubt the Times editors actually read what they claimed to be opining on. As to their spin that the working class can slack their way to prosperity, well, good luck with that.

    • Maguire — This is not difficult. Lies are lies. Your side is spinning the lie that the CBO report said 2.5 million people would be fired, or their jobs will be eliminated, and that is not what is said. The CBO is predicting that a large number of people will likely drop out of the workforce or reduce hours because now they have the freedom to do so.

      The CBO has been wrong about things before, of course. Also, the impact of these decisions in aggregate may affect the economy in other ways that are less than optimum. Or not. I personally think freedom is more important than money, but that’s me. I’m not a conservative, obviously.

  4. WAAAAAAAAAAAAAAAAAAAAAAY OT – and sorry about that, this early in the thread – but somebody made a huge “WHOOOOOOOOOPSIE!,” and left their copy of the Koch Brothers donor contact list in their hotel room, after the groups last meeting.*

    Take a look at this list of sociopathic Plutocratic Fascists, and try to never buy or use any of their goods or services – one of them is easy for me, the owner of Papa John’s is on that list – aka: America’s sh*ttiest faux-pizza:

    *We’ll know who it is, when he/she is reported missing, and is never heard from again!

    And their body(ies) will never be found, because I’m sure it/they’ll end up far under the Earth’s surface, stuffed down and buried deep in it, with the oil that they all worship.

  5. Paulie did a good job of knocking down assertions of Obamacare being a job killer in respect to the CBO report while continuing to support his underlying message that all us economically disadvantaged people are only interested in getting on the governments teat. We’ve made a conscious and deliberate choice freeload because we are inherently lazy.
    I’m understanding Paulie’s take on the report as saying it’s not a job killer, but it actually allows the means of redemption for those who choose to lift themselves up from an economic situation that they themselves are responsible for.
    He’s handing out poisoned candy by deciphering statistics that are so vague and insignificant in the big picture that they are essentially meaningless. Beware of Greeks bearing gifts.

  6. “Another day, another faux scandal”

    No shit, I’m beginning to think that this is all a joke. I’m amazed at how elected members of congress can go on the air and repeat Roger Ailes bullshit talking points with a straight face.

  7. Actually, not all of those people will work “part-time or not at all.” Number I saw recently indicate that the number of companies started by individuals rises between the ages of 63 and 65, solely because at age 65 people have Medicare and can venture out into the business world without giving up insurance. The exact same thing will happen to a portion of the 2.5 million people ‘kicked out of their jobs’ [sic].

    Republicans see the world a s a set of dichotomies; the world is a set of choices, many of which have more than two possible outcomes. Republicans thought processes [sic] are barren and unimaginative.

  8. This is a bit tangential, but, I worked many years in programs for people with disabilities. Employment was always very high among their concerns and aspirations. Many studies and surveys bore this out. The chief problem was that once a person had a traumatic injury or a diagnosis of a disabling condition, healthcare was prohibitively expensive. Few employers were willing to ante up the added cost and beyond that once a person opted out of, or lost their medicaid coverage, they could well face difficulties or delays before being reinstated. That could be extremely risky. Healthcare was the major impediment to employment and a meaningful career. The lack of access to employment would shut off access to many social, educational and economic benefits of our society.

    If the ACA is successful, and I think it will be, it will be a huge step towards the liberation of people with disabilities.

  9. So it is a win/win for a couple of years, and then a permanent drag on output and employment amongst the lower-earning groups. But no worries – we can tackle income inequality and the problem with the inability of the working class to keep up another day.

    Not sure I see that. It sounds like people will have to come up with more incentives to get people to work and won’t be able to do so unless the marginal benefit is sufficiently high.

    This will tend to work better. The idea of a “loss of health care” stick works on what I think of as the slavery principle.

    A slave works to avoid being punished; a free person works for rewards. A person who works to avoid losing health insurance is working to avoid being punished, but a person who works because they want the money is working for the reward.

    The reason a free society tends to kick the economic ass of a slave society is that people work harder and longer when they’ll get something nice out of it.

  10. A few months ago, there were dire predictions and (empty) threats by WalMart & their ilk to cut the work force to all part-time to avoid paying for Obamacare. I went around endless times with a wingnut trying to explain that if WalMart cut hours by half, they must double the number of employees. Shelves have to be stocked – somebody has to ring out the customers and it takes a predictable number of hours.

    He refused to get it. Obviously, people would get two part-time jobs and qualify for subsidies, but any business who ducks providing insurance by cutting the work force to part-time will incur greater headaches than they derive in benefits – which is why WalMart and others did NOT follow thru.

    But purely frightening was the boneheaded conviction that huge cuts in the work force were going to slash the hours worked and paid with no adjustment (by mass hiring and training). He did not want to believe anything else and he refused to consider anything else.

    That workers will leave the work force voluntarily or work fewer hours when guaranteed health coverage makes that option possible does not suggest that the work has evaporated. Employers will fill the need with other workers, either with OT or new hires.

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