Funding the Affordable Care Act

Or not. With 2.5 million Americans leaving the workforce, that's 2.5 million less paying into it. Even the CBO (Congressional Budget Office) can do math:

White House: It's A Good Thing That Obamacare Will Drive 2.5 Million Americans Out Of The Workforce

[...] By 2024, says the CBO, Obamacare will reduce the size of the U.S. labor force by 2.5 million full-time-equivalent workers. That’s roughly triple what the CBO had estimated three years ago. Such a sizeable decline in the labor force will have substantial detrimental effects on the U.S. economic and fiscal picture.

[...]

In its annual, 182-page Budget and Economic Outlook, the CBO undertook an overhaul of the way it analyzes the effect of Obamacare on the job market. The new, larger estimate of the law’s negative impact on the labor force derives from three factors: (1) Obamacare’s employer mandate, which will discourage hiring and reduce wages offered by employers; (2) Obamacare’s $1 trillion in tax increases, which will discourage work and depress economic growth; and (3) the law’s $2 trillion in subsidies for low-income individuals, which will discourage many from remaining in the labor force.

Let’s focus on that last point, because it’s the one that has been the least-discussed in the media. In the past twelve months, a spate of research from academic economists has concluded that the health law, by offering economic benefits to low-income individuals, will disincentivize some of these individuals from continuing to work. Casey Mulligan of the University of Chicago has been particularly persuasive on this front, publishing two papers with the National Bureau of Economic Research.

Several economists, like Harvard’s Kate Baicker, MIT’s Amy Finkelstein, Texas A&M’s Laura Dague, and Northwestern’s Craig Garthwaite have found that expanding Medicaid is associated with rising unemployment. “Taking that research into account, CBO estimates that expanded Medicaid eligibility under the ACA will, on balance, reduce incentives to work.”

More significantly, as Casey Mulligan has warned, the new subsidized insurance exchanges will allow low-income workers to work less while maintaining the same effective income: what economists call the income effect. In addition, because the subsidies decline on a sliding scale as you make more money, that sliding scale means that as workers work more, they make less per hour worked: what economists call the substitution effect.

When Mitt Romney signed his health-reform legislation in Massachusetts in 2006, economists didn’t discern a substantial impact on the labor market. That led many Obamacare cheerleaders to dismiss concerns that the law would depress the workforce. But Mulligan observes that the Massachusetts law did not have a meaningful impact on income tax rates, unlike Obamacare. The ACA “increases national rates about 12 times as much as the Massachusetts law increased rates,” notes Mulligan; “among other things, [Massachusetts’] employer penalty is an order of magnitude less.”

CBO staff, to its credit, read the sheaf of new research on this topic, and revised its estimates accordingly. Hence all the hubbub about the new report. But wait—there’s more!

Carney: Americans should stop working ‘to pursue their dreams’

After the CBO review came out, White House Press Secretary Jay Carney published a statement in which he declared, remarkably, that it’s a good thing that millions of Americans may drop out of the work force:

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. At the beginning of this year, we noted that as part of this new day in health care, Americans would no longer be trapped in a job just to provide coverage for their families, and would have the opportunity to pursue their dreams.

Bored with your job? No worries—now you can quit, thanks to the generosity of other taxpayers. Want to retire early? No worries—now you can, thanks to the generosity of other taxpayers, and also thanks to the higher premiums that young people will be forced to pay on your behalf. The White House’s apparently sincere belief—echoed by progressive pundits at MSNBC, The New Republic, and the L.A. Times—is that it’s a good thing for fewer Americans to be economically self-sufficient.

If you’re one of the chumps out there who still toils away at a challenging job, and still pays taxes so that others can “pursue their dreams,” you have a right to resent the White House’s argument. And the “dream-pursuers” themselves should become aware of all the research suggesting that earned success, through hard work, is the most reliable path to true happiness.

Participation in the labor force was already declining, thanks to the poor economy and the retirement of the Baby Boomers. Obamacare, it appears, will accelerate that process, forcing fewer and fewer taxpayers to support a greater number of government beneficiaries.

No universal-coverage plan is immune from this problem

I should issue two caveats before I go on: any health-reform plan that seeks to offer coverage to the uninsured will have this type of effect on the labor market. As Josh Barro notes, the new Republican plan to replace Obamacare offered by Senators Tom Coburn (Okla.), Richard Burr (N.C.), and Orrin Hatch (Utah) also has a means-tested subsidy to help the poor buy health insurance.

In addition, it is genuinely a good thing for us to move to a system where people control their own health dollars and their own health coverage, and aren’t stuck at a job because they’re afraid of losing the coverage they have. But giving people the opportunity to switch jobs is quite a different goal from encouraging them to drop out of the work force altogether.

The negative effect of Obamacare on the labor market is far worse than any Republican alternative would be, because the ACA dramatically expands Medicaid, and because the law heavily subsidizes health insurance for those nearing retirement. In addition, Obamacare depresses economic growth through a $1 trillion tax increase, and increases the cost of hiring new workers, because of its employer mandate requiring most businesses to offer health coverage to every worker.

The CBO report harbors more bad news

The new CBO report contained a lot of other interesting information. CBO projects that economic growth will be more sluggish than they had previously projected. From 2018 to 2023, nominal GDP growth will average 4.2 percent, compared to the CBO’s previous estimate of 4.4 percent. Over the same period, unemployment will average 5.6 percent, higher than the previous estimate of 5.4 percent.

Because of this slower economic growth, CBO projects that from 2014 to 2023, the federal government will receive $1.4 trillion less in tax revenue than it had projected last year. As a result, “CBO now estimates that the cumulative deficit for the 2014-2023 period…would be about $1.0 trillion greater than it projected in May [2013].” [...]

The biggest problem with the ACA, the way it is, is funding it. Parts of it were fine, and the Republican plan embraced those parts. But other parts are unsustainable. What is the point of passing legislation that is unsustainable?

Ideally, the president should have worked with Democrats and Republicans in Congress to combine aspects of both their plans, into something that would work. But that didn't happen. We got the Democrats plan shoved down our throats. Now what's going to happen, as this disaster continues to unfold, and it starts to fail?

It looks like we shall see. We will all have front row seats, whether we want them or not.

The full article at Forbes.com has many embedded links, graphs, and videos.

     

Why Obamacare is a swindle

Thomas Sowell breaks down the talking points versus the reality of Obamacare.

And what IS the updated price tag, as they are about to push this through? Have a look:

Updating the Price Tag

Even the estimates keep rising. The reality, even more so.
     

Leah speaks for me. How can we trust people who lie to us about things we know are true?

From Neal Boortz:

LEAH FROM NEW HAMPSHIRE

Something entertaining actually happened on CSPAN. Yes, folks ... I know. But over the weekend a woman by the name of Leah called in to a show called "Washington's Journal." Leah wanted to comment on the media's coverage of these healthcare townhalls. Here's just a taste of what she had to say.

Hi, yeah, I just wanted to clarify a few things about these "manufactured, angered crowds." I've never been politically active in my life. I've never done anything like go to a protest ever. I started going to protests, these Tea Parties back on the Fourth of July, and the reason that you're seeing the numbers grow and swell and become bigger and bigger is not only because of the healthcare legislation, but like you said earlier, all these massive bills, thousands of pages long that are passed with almost no debate, no time for us to see what's in it, in direct contravention of what was promised about transparency and a near era and we're going to know what we're doing in advance. I see, I see politicians admit on TV that they can't read it, that they can't understand it because of its complexity. Lawyers who are writing these bills say they need lawyers to tell them what's in the bill.

Now, when I watch the news people stand here and tell me that I am a member of a hired mob, that I've been called up by the Republican Party, they only wish they could have done something like this. I've never been contacted by any organized group. This is an organic movement, and when people stand there, and lie to me about what I know is going on, how can I trust them when they tell me it's going to save money when the Congressional Budget Office says it isn't? That it's going to cover everybody when the Congressional Budget Office says it isn't? That it's going to let me keep my, my healthcare when common sense tells you that's not what's going to be the end result of this when the government ends up providing all the healthcare which the man who wrote the bill in the beginning says. Go watch it, Jacob Hacker who wrote this says that in time, and President Obama said it, we will all be swallowed up in this government plan.

When people lie to us, we don't trust them when they give us platitudes about what's in the bill.

Yep. And she's got more to say too, listen to the whole thing:



That's what real grass roots sounds like, it's not the root-less Astro-turf the Democrats are manufacturing with Millions from George Soros.

Leah mentions Jacob Hacker. Neal follows up with a post about that:

WHO IS JACOB HACKER?
     

Even in 2002 the Congressional Budget Office saw the unsustainable path we're following

And everyone in Washington knew. Maynard at TammyBruce.com had this recent post, about where the Congressional Budget Office said we are headed, even before the economic crisis kicked in:

Things to Come

[...] Take a look at this report from the Congressional Budget Office, "A 125-Year Picture of the Federal Government's Share of the Economy, 1950 to 2075". This report was prepared in 2002, before the budget went to hell. So this is a projection from a better day. Take it as an optimistic projection. (Fox just issued a report noting that Social Security and Medicare would go broke several years sooner than previously expected, and that many trillions of dollars would be needed to close the gap. Again, this is independent of the recent spending binges.)

Here's the key chart, based on spending patterns and demographics as of the good old days of 2002:

Federal outlays as a percentage of GDP
Two notes: First, overall expenses are rising steadily and dramatically from approximately now until the end of the graph in 2075, where it's at 40% of GDP and rising.

Second, the cause of the rise is Social Security, Medicare, Medicaid, and interest on the rising debt. Demographics will catch up with us, pushing claims through the roof.

In other words, the Federal Government has long been on autopilot to transform itself into a machine whose major function is to seize wealth from party "A" and hand it over to party "B". (And, with respect to servicing the national debt, our government's fundamental job will be to suck money out of our children's pockets and pay it to China.) None of the rise has to do with defense or infrastructure maintenance or any of what we would regard as legitimate functions of government. In fact, real government functions will get crowded out by the mandatory giveaway programs.

This other chart is also important. It's the projected graph of Federal income and outgo. As you see, the anticipated expenses rise but the income does not. That's because the taxation levels were projected to be stable. So the deficit heads skywards.

Federal revenues versus outlays as a percentage of GDP

So we were heading for a big problem as of 2002. And everyone in Washington knew it.

Then along came George Bush and Barack Obama, evil twins that decided the Federal Government hadn't made enough commitments. So they both grew the government and made more big, unfunded promises and are spending even more money.

On the revenue side, George Bush cut taxes for everyone. And Barack Obama promised to cut taxes for 95% of the people.

In other words, with disaster looming on the horizon, our political leaders have aggressively chosen the course that will magnify the problem and cause it to strike sooner.

How can this be happening? Have we gone mad? Am I saying anything here that is either unimportant or less than obvious?

Will we change course?

So where does this all lead? Obviously to some sort of unpleasantness on a grand scale. [...]

Maynard reluctantly speculates about where all this might go, and what might be done about it. Or not. I've done speculation of my own about what sort of "unpleasantness" this could be leading to, such as the collapse of US currency, or a growing vulnerability due to increasing military weakness and poor technology decisions without safeguards.

I hate all that depressing stuff. On the whole, I prefer to cultivate a positive outlook, and work toward improvement. But to be balanced, you also have to be aware of dangerous pitfalls, so you can avoid them. Sometimes ringing the alarm bell is enough to keep the ship from hitting an iceberg. Forewarned is forearmed, for those who are paying attention.

I don't know what is going to happen, but it does seem obvious that we are going down a path that is unsustainable. Something, somewhere, sometime, has gotta give, it just can't continue on like this.


Related Links:

Deep Impact: The Federal Deficit

Global Banking Crisis? Leading to...?

Is Obama compounding Bush's mistakes?

Can the Dow Jones Industrial Average and Age Demographics foretell Economic Depression?
     

Hillary lies again; what she isn't telling you.

"Tax cuts for the wealthy" is a favorite complaint of Hillary and many Democrats. The "evil rich" aren't paying their share. Well apparently, the Congressional Budget Office doesn't support that contention. In fact, the wealthy are paying more taxes now than ever before. From Nealz Nuze:

[...] This comes from the Congressional Budget Office. Hillary has access to this information, as do all members of the media. So ... let's see what the Congressional Budget Office has to say about this "tax cuts for the wealthy" stuff.

First .. here's a chart you can refer to for verification. This chart was prepared by the Congressional Budget Office. There are two lines on this graph, one for the bottom 80% of taxpayers, the other for the top 1% of taxpayers. The trend there is so obvious that even Democrat voters should be able to see what is going on. The share of federal taxes paid by the evil rich is constantly going up, while the share paid by the bottom 80% is on a steady downward trend. Bear in mind that this chart shows a percentage of ALL federal taxes, not just income taxes.

Now ... some bullet points for you to consider:

• The richest 1% of households in the U.S. are now paying a record 27.6% of all federal taxes and a record of 38.8% of all federal income taxes.
  
• The richest 1% of households only earn about 17% of all income.
  
• The top 1.1 million households (the evil rich) pay a greater share of the income tax burden than the bottom 90 million households combined.
  
• The chart and the report from the CBO shows that the nation's tax burden has been shifting away from typical Americans to the wealthiest households since the early 1980s.

You are never going to see this chart or read this information on the news pages of America's leading left-wing newspapers, nor will you see this information presented on network newscasts. Why not? Because the more the people of this nation understand what is really happening with our tax situation, the less the demagoguery of people like Hillary Clinton --- that "tax cuts for the wealthy" line --- will work on the voters. Informed voters are the enemies of the MoveOn Democrat Party. The media admits that Hillary appeals to less educated voters. Well, there's no sense educating these voters. If you do, they might not be Hillary supporters any more?

Something else we need to cover. These evil, filthy rich people that are so much fun to hate ... these are the people who invest. These are the people who create the jobs. These are the people who start new businesses. These are the people the very people who hate them will have to depend on for a better job or a growing economy.

Spread the word. The other side is sure getting out the "tax cuts on the wealthy" line. We need to do a better job of getting the truth out there.

It's taxes on corporations that cause people to invest their money overseas; American jobs go overseas as well. You can't have your cake and eat it too, no matter how much Democrats like Hillary lie and say that you can.