Friday, February 28, 2014

The war between the Democrats and non-partisan government agencies

One of my last posts (which, I admit, was too long ago) dealt with the non-partisan Congressional Budget Office’s report on the economic effects of the Affordable Care Act. I felt vindicated by the report, as did conservatives everywhere. Essentially, I felt that the CBO had come to my rescue, adding a neutral note of endorsement to the classic conservative objection to laws like Obamacare—namely, that it is little more than an entitlement program and that such programs provide a powerful disincentive to work. That simple message was pretty clear in the report, notwithstanding the rather ridiculous spin the left worked on it.

Well, it seems that the fun didn’t end there. Last week, the CBO came out with another report examining the economic effects of another darling policy of the left: raising the minimum wage to $10.10 an hour. Much like with the Obamacare report, the coverage by conservative and liberal voices in the news media gave the impression that they weren’t even talking about the same report at all. The reason for that is quite simple: the report provided some strong support to both sides of the argument. Namely, the CBO stated that a $2.85 increase in the minimum wage would raise the incomes of as many as 16.5 million low-wage workers and could lift as many as 900,000 people out of poverty. However, the same report also stated that the minimum wage hike would also kill about 500,000 jobs.

Understandably, those on the right seized immediately on that last figure, saying that the CBO had confirmed the conservative assertion that a minimum wage hike kills jobs. What I found to be really interesting, however, was the fact that the left didn’t really spend a whole lot of time talking about the 900,000 people who might be lifted out of poverty. Instead, the White House immediately began waging a defensive war, touting the overwhelming “consensus” among economists that a minimum wage increase doesn’t cost jobs. Apparently, I was supposed to believe that most economists think that raising the cost of something (i.e. labor) doesn’t cause businesses (the consumers of labor) to buy less of it. Hmmm.

First of all, let me address the “lifting people out of poverty” portion of the report. That number—900,000 people—is quite a bit lower than the 16.5 million people whose yearly earnings would increase under a higher minimum wage. Why is that? Quite simply, it’s a reflection of the fact that most workers who earn the minimum wage aren’t poor. Many of them are dependents—high schoolers working summer jobs, for instance—or older people who work part-time to live out a more comfortable retirement. In fact, according to the Bureau of Labor Statistics, about half of minimum wage earners are under age 25. These workers tend to live in suburban, middle-class homes and are certainly not living under the specter of poverty. These are the workers who would receive the benefits of a minimum wage hike, not the working poor whom the Democrats always claim to be looking out for. The minimum wage is, at best, a very blunt tool with which to combat poverty.

As for the “job killing” numbers from the report—well, this is just simple economics. If you raise the cost of something, people will buy less of it. The White House and Congressional Democrats would have you believe that most economists refute this claim. In fact, they would (not surprisingly) have you believe that most economists are in favor of just about every liberal policy position ever. According to David Harsanyi of The Federalist, economists are pretty much evenly split on that issue. He points to a survey conducted by the Booth School of Business at the University of Chicago that asked 38 top labor market economists if they agreed or disagreed with the following statement: “Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment.” Thirty-four percent agreed, 32 percent disagreed, and 24 percent were uncertain. That’s not what I would call a “consensus.”

But wait, there’s more! Yet another non-partisan governmental agency came to the rescue that same week. The Centers for Medicaid and Medicare Services reported that under the new rules of Obamacare, nearly two-thirds of small businesses who provide their employees with health insurance would face increased costs under the law. Only 35 percent of small businesses would face lower costs. That translates to 11 million out of 17 million people employed by small businesses who would pay more for their health insurance. So, to review, 11 million people are paying more and 6 million are paying less—that’s almost a 2-to-1 ratio. Affordable care indeed.

Needless to say, the Democrats wasted no time getting out in front of this one. In a nutshell, their argument is that it’s ok for most people to be paying more for their health insurance because the market can no longer exclude older, sicker people or those with pre-existing conditions. Philosophically speaking, I suppose I don’t have an objection to that line of reasoning. Nevertheless, I still can’t figure out how a law can call itself the Affordable Care Act when all it seems to do it raise everybody’s healthcare costs. It amazes me even more that none of the law’s proponents ever saw this coming. This is why it’s nice to occasionally have a non-partisan governmental agency come along and say, “Hey, wait! Maybe the conservatives were right all along!” 

Thursday, February 13, 2014

Barack Obama, Delayer-in-Chief

This post isn’t so much an opinion piece as it is a link to some neat information. The White House announced on Monday that there will be a second delay of Obamacare’s employer mandate. The mandate, which states that businesses who employ 50 or more fulltime employees must provide health insurance for them or pay a fine, was already delayed by one year from its initial start date of January 2014 to January 2015. But with this most recent announcement, employers with fewer than 100 employees who would normally have to comply with the mandate next year get a further reprieve until 2016. Businesses with 100 or more employees will only have to cover 70% of them next year.

It seems that every time I turn on the TV, I hear that some new change has been made to the Affordable Care Act. There has been some very real debate as to the constitutionality of most of these changes, as many of them have been made unilaterally by the executive branch. That’s not really a discussion I’m going to get into here (although, for the record, I do think most of the unilateral changes are constitutionally dubious). I’m mostly just struck by how many times this law has had to be amended, only for it to roll out as poorly as it has so far. I can’t even imagine what things would have been like if the law was implemented as originally written. Disaster, I suppose. And of course, as the employer mandate keeps getting delayed further and further, pressure builds on the White House to delay the mandate for individuals to purchase insurance, the very thing Congressional Democrats accused their Republican colleagues of being “anarchists” for wanting just last fall.

With this latest announcement, I found myself wondering just how many times the law has been changed. So I did a little research and stumbled upon a few very useful lists. The New York Times summarizes the 13 major changes that have been made in just the last year. And the Galen Institute, a free-market health policy think tank, counts 35 changes that have been made by the executive branch, Congress, and even the Supreme Court. Eighteen of those changes were made unilaterally by the executive branch. Pretty crazy, right? Anyway, just thought I’d pass those links along in case anyone else was curious like I was:

The Galen Institute: 35 Changes to Obamacare…So Far

Monday, February 10, 2014

Not working is now a good thing

I’ve written in this blog before about the very real dilemma of the post-crash “new normal” economy. It’s an economy with sluggish growth, persistently high unemployment, a frighteningly low number of jobs added each month, and a record-high number of Americans not participating in the labor force (this last factor is why the nominally lowering unemployment rate means virtually nothing). Thus far, both parties in Washington have been content to ignore the fact that this is even going on. Republicans would rather do nothing in the House than try and find some common ground with Democrats to pass job-creating legislation. The Democrats in the Senate seem to think things like immigration reform and confirming judicial nominees are more pressing concerns. But with the recent CBO report on the economic effects of Obamacare, I think we’ve finally reached the point of no return.

The report, which comes from the non-partisan Congressional Budget Office, found among other things that the Affordable Care Act will lead to a reduction in workers’ hours over the next ten years that will cost the economy the equivalent of about 2.3 million fulltime jobs. Basically, since the subsidies in the Act allow people with lower incomes to get cheap insurance without having to hold down a job, many of them will decide to work fewer hours or, in some cases, drop out of the workforce entirely. If you haven’t heard about this, you must be living an impressively insulated life. It’s the talk of the political world right now. Republicans are understandably using the report as a giant “I told you so” moment. After all, this new figure more than triples the CBO’s previous estimate as to how many jobs Obamacare will cost us. And the icing on the cake, as far as they’re concerned, is that this number comes from the very same non-partisan agency whose figures Democrats once proudly waved around to help make their case for why the law was a good idea in the first place.

And Democrats, bafflingly and perhaps merely because they have no other choice, are actually spinning this report as good news. Their argument goes something like this: since the ACA helps separate the link between employment and health insurance, people who are holding down a job merely to provide healthcare for themselves and their families are now free to let that job go. Moreover, they argue, it is disingenuous to claim that Obamacare “kills jobs,” since the reduction in fulltime employment comes from a voluntary reduction in labor supply rather than any constriction of labor demand. This new “freedom” allows low-wage workers to spend more time with their families, pursue their passion, and so on. Some have even gone so far as to say this could encourage “entrepreneurship.” Check out these articles from CNN, The Seattle Times, and The LA Times. I will give the Left credit: they sure do keep their talking points concise and consistent, don’t they?

This is absolutely mind-blowing. Let me reiterate: this is utter, nonsensical desperation. I can’t characterize it as anything less. Did I mention that this is insane? Yes, I suppose supporters of the ACA are technically correct in asserting that Obamacare is not a “jobs killer” in the way Republicans are trying to say it is. But how, in good conscience, can you argue that people choosing to exit the labor force in order to live off the government dole is better than people getting laid off in the traditional sense? As far as I can tell, this report is definitive proof that conservatives and Republicans have been right all along in their criticisms of the ACA and other programs like it—that is, Obamacare is an entitlement and entitlement programs are a disincentive to work. They directly incentivize low-income workers to work less and collect government subsidies more. There’s nothing disingenuous about interpreting the CBO report in that way, because that is exactly what it says. Exactly:

CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive.
That’s what I mean when I say we’ve finally reached the turning point. It’s no longer enough to simply ignore the jobs crisis. Now, we’re acknowledging it and trying to spin reduced working hours as a good thing. And let’s not forget that this is primarily impacting low-wage workers. If these people are reducing their hours and living off subsidies provided by other people’s money—the people who aren’t reducing their hours—then you’ve got exactly what conservatives are always warning about. As far as I can tell, the party that is ostensibly in favor of pulling families out of poverty is now telling us that it’s totally fine for those people to reduce their hours and thereby reduce their likelihood of ever escaping poverty. The party that has told us time and time again that government insurance doesn’t discourage work is now saying that it does, and that it’s a good thing.

I was raised on the idea that hard work is not only a necessity to get ahead in life, but also a virtue. Now, I’m being told by my government that it’s good for me not to work, especially if I’m poor. Especially if I’m poor. That’s the part that I just can’t wrap my head around. But I suppose this is the “new normal.” Forget about your job. You’ve got your government check.  

Why do we do this to ourselves?

Why do we do this to ourselves?