I asked back in September whether all the bad news about Obamacare meant it was time to feel sorry for President Obama and other statists.
Some people apparently didn’t realize I was being sarcastic, so I got some negative feedback.
I’ve since learned to be more careful with my language, and subsequent columns about Obamacare developments have used more direct rhetoric such as Obamacare disaster, Obamacare Schadenfreude, and the continuing Obamacare disaster.
Well, I don’t even know if there are words that can describe the latest bit of bad news about Obamacare. The Congressional Budget Office, which usually carries water for those who favor bigger government, has been forced to acknowledge that Obamacare is going to wreak havoc with America’s job market.
Today’s Wall Street Journal has a column on the topic, giving considerable and deserved credit to Casey Mulligan, an economics professor at the University of Chicago who has produced first-rate research on implicit marginal tax rates and labor supply incentives.
Rarely are political tempers so raw over an 11-page appendix to a dense budget projection for the next decade. But then the CBO—Congress’s official fiscal scorekeeper, widely revered by Democrats and Republicans alike as the gold standard of economic analysis—reported that by 2024 the equivalent of 2.5 million Americans who were otherwise willing and able to work before ObamaCare will work less or not at all as a result of ObamaCare. As the CBO admits, that’s a “substantially larger” and “considerably higher” subtraction to the labor force than the mere 800,000 the budget office estimated in 2010. The overall level of labor will fall by 1.5% to 2% over the decade, the CBO figures. Mr. Mulligan’s empirical research puts the best estimate of the contraction at 3%. The CBO still has some of the economics wrong, he said in a phone interview Thursday, “but, boy, it’s a lot better to be off by a factor of two than a factor of six.”
That’s a lot of lost jobs, which is going to translate into lower levels of economic output and reduced living standards.
By the way, I can’t resist quibbling with the assertion that CBO is “widely revered” and that it’s the “gold standard of economic analysis.”
Utter nonsense. CBO helped grease the skids for Obamacare by producing biased numbers when the law was being debated.
And that’s just the tip of the iceberg. CBO also produces “analysis” which implies that you maximize growth with 100 percent tax rates. And the bureaucrats at CBO also are reflexive advocates of Keynesian economics, which is why they claimed that Obama’s so-called stimulus was creating jobs even though unemployment was rising.
So you can understand why I don’t like citing CBO numbers, even when they happen to support my position.
As far as I’m concerned, the bureaucracy should be shut down. And if Republicans win the Senate in the 2014 elections, it will be interesting to see whether they have the brains to at least reform CBO to limit future damage.
But I’ve digressed long enough. Let’s get back to the WSJ column about the latest Obamacare disaster.
Our friends on the left are in a very tough position.
…liberals have turned to claiming that ObamaCare’s missing workers will be a gift to society. Since employers aren’t cutting jobs per se through layoffs or hourly take-backs, people are merely choosing rationally to supply less labor. Thanks to ObamaCare, we’re told, Americans can finally quit the salt mines and blacking factories and retire early, or spend more time with the children, or become artists. Mr. Mulligan reserves particular scorn for the economists making this “eliminated from the drudgery of labor market” argument, which he views as a form of trahison des clercs. …A job, Mr. Mulligan explains, “is a transaction between buyers and sellers. When a transaction doesn’t happen, it doesn’t happen. We know that it doesn’t matter on which side of the market you put the disincentives, the results are the same. . . . In this case you’re putting an implicit tax on work for households, and employers aren’t willing to compensate the households enough so they’ll still work.” Jobs can be destroyed by sellers (workers) as much as buyers (businesses).
By the way, just in case you’re an unsophisticated rube like me, Wiktionary says that trahison des clercs means “a compromise of intellectual integrity by members of an intelligentsia.”
Which is a pretty good description of leftists who are twisting themselves into pretzels trying to rationalize that joblessness and government dependency are good things.
And Prof. Mulligan makes the right analogy.
He adds: “I can understand something like cigarettes and people believe that there’s too much smoking, so we put a tax on cigarettes, so people smoke less, and we say that’s a good thing. OK. But are we saying we were working too much before? Is that the new argument? I mean make up your mind. We’ve been complaining for six years now that there’s not enough work being done. . . . Even before the recession there was too little work in the economy. Now all of a sudden we wake up and say we’re glad that people are working less? We’re pursuing our dreams?” The larger betrayal, Mr. Mulligan argues, is that the same economists now praising the great shrinking workforce used to claim that ObamaCare would expand the labor market. He points to a 2011 letter organized by Harvard’s David Cutler and the University of Chicago’s Harold Pollack, signed by dozens of left-leaning economists including Nobel laureates, stating “our strong conclusion” that ObamaCare will strengthen the economy and create 250,000 to 400,000 jobs annually.
Gee, that “strong conclusion” about an increase in jobs somehow turned into a cold reality that the economy might lose the equivalent of 2.5 million jobs.
This is very grim news. We can be happy that there’s now even more evidence that big government doesn’t work, but we should never forget that there are real victims when statist policies lead to less growth and more joblessness.
So let’s try to bring some cheer to a dismal situation with some new Obamacare cartoons.
Our first entry is from Chip Bok, who is mocking the New York Times for writing that fewer jobs was “a liberating result of the law.”
Gary Varvel’s analysis of the job impact has a seasonal theme.
And the great Michael Ramirez points out that the death panel has been very busy.
Lisa Benson picks up on the same theme, pointing out that at least Granny is still safe.
And Henry Payne makes a subtle, but superb point about labor supply incentives.
Just like this Chuck Asay cartoon, this Wizard-of-Id parody., and this Robert Gorrell cartoon.
Let’s now look at another Lisa Benson cartoon. It’s not about the job losses, but the underlying foolishness of how Obamacare is designed.
And if you like cartoons with sharks, here’s a classic one about Keynesian economics.
Let’s close with a couple of cartoons that look at the big picture.
Glenn McCoy shares a warning label.
And Steve Breen also has a warning label about Obamacare, but it’s much quicker to read.
Last but not least, Scott Stantis looks at one of the side effects of Obamacare.
Stantis, by the way, produced the best-ever cartoon about Keynesian economics.
P.S. If you want to learn more about how redistribution programs such as Obamacare trap people in dependency and discourage them from the job market, click here.
There are even some honest leftists who recognize this is a serious problem.
[…] Though I’m not sure how that would work since the statists are now saying Obamacare is a good thing because it “liberates” millions of people from having to work. […]
[…] Though I’m not sure how that would work since the statists are now saying Obamacare is a good thing because it “liberates” millions of people from having to work. […]
[…] Though I’m not sure how that would work since the statists are now saying Obamacare is a good thing because it “liberates” millions of people from having to work. […]
[…] votes and create more dependency with Rube Goldberg schemes, the results are well..we see the cluster-you-know-what of Obamacareunfolding before our […]
[…] buy votes and create more dependency with Rube Goldberg schemes, the results are…well, we see the cluster-you-know-what of Obamacare unfolding before our […]
[…] Crying about Obamacare, but also Laughing at Obamacare […]
sears is bankrupt… along with J.C. Pennies and radio shack… Wal-Mart is expected to close underperforming stores later this year… and to top of it all off… president Obama’s signature pos legislation will cost us an additional 2.5 million jobs… and destroy the health care industry…
anyone here speak French?
And it took until last year to figure this out? based on my comments on this blog about ObamaCare since 2008, I should then be given the Nobel prize in economics.
This is pathetic. Now! Now the WSJ realizes that this would happen? A family of four stands to lose a $15k subsidy as its income rises from about 35k to 90k. No matter how you slice it and dice it, that is an additional 25% marginal tax increase. And the reality is even somewhat more outrageous, since the subsidy withdrawal is not continuous but rather happens in steps, leading to marginal tax rates of ever 100% over smaller income ranges. But the meat of the situation is: “Start making less than 90k and someone else will start paying for your medical insurance to the tune of 15k per year”. Do you have to be a Mulligan to figure out that giving away and then withdrawing a 15k benefit between incomes of 35 to 90k will have a significant impact on people’s willingness to work at a decreased personal benefit ratio?
To make things worse, as you lose the subsidy, you have to start paying for the lost insurance premium subsidy with after-tax money.
But what is more pathetic is that virtually nobody assailed the ObamaCare law on the basis of this enormous redistribution flow. Why? Because nobody wanted to butt heads with voter-lemmings. Voter-lemmings WANTED this redistribution because a redistribution dollar today is worth five perpetually compounding growth dollars in the future. And this is why America may survive two Obama administrations but will not survive the voter-lemmings that voted for him. American voters crossed the point of no return in ’08, when they sought to fix the problems of coercive collectivism and dirigisme by electing a declared statist on steroids. Now American voter-lemmings will start voting like their European, French, Spaniard, Italian and Greek brethren across the Atlantic. Given the fact that the US middle class is the most prosperous on earth (excluding two or three spec-on-the-map nations) it is a long way down from here folks.
Instead of being honest and direct with voters about where the core problem of ObamaCare was, conservatives just cowardly nibbled at the edges with “death panels” and “website disasters”.
And they still refuse to tell voters they are suicidal straight in the face. So now they claim that “ObamaCare will hurt jobs”. Yes, but it will hurt the jobs of those who choose to continue working not the jobs of those who take the redistribution money and pull out. Those who leave or throttle down from the workforce will leave those who continue working stuck with the bill for what they consume (the ObamaCare they consume).
Of course the ObamaCare recipients will not want to climb the income ladder. ObamaCare already puts them u a couple of feet and pays them other people’s money for doing nothing. What a discovery indeed! How many economics professors it took to figure this out? Reminds me of a 1950’s Marxist with three PhDs explaining to a Midwestern county bumpkin about communism. And when the country bumpkin asks: “But how many people will really work to have their work reward diluted into the millions of community citizens?” the Marxist erudite replies: “You don’t know anything about economics”.
So 2-3% of the labor supply, ie. two million full time job equivalents, will withdraw but will continue to be paid. Who do you think will foot the bill?
Because, when you give according to need, you must sooner or later (sooner — a few short years) take from each according to ability. Or at least attempt to take, and demagogue that you will try, because when you do that only a very small fraction of the population comes forward to admit, pursue or earn any ability.
But this is only the beginning…
Whether through the opportunity to provide political fixes to current ObamaCare frustration and problems or through an another outright wave of HopNChange, ObamaCare will be expanded to become more attractive to a lot more people. The labor withdrawal, as well as the costs, will be much much higher. How can anyone ever think that such a redistribution bonanza would have a different politicoeconomic trajectory that the other two major entitlements of Social Security and Medicare? With America already at the margin of loosing its status as the most fertile sizable country to do bussiness, American prosperity will not survive a third major entitlement. Now, as voter lemmings start experiencing the decline towards worldwide averagedom, they will flock to the polls in desperation to strengthen the safety neets, such as ObamaCare, and seal their fate downwards.
Have you seen the French Steve jobs? Have you ever wondered why? He sure does exist, France has many smart people, but with a workforce as welfare motivated as the French, their Steve Jobs will never have a chance to outcompete Apple. So, being smart and full of intuition, our French Steve Jobs does not even attempt it, knowing a-priori that he will fail. So he stopped after earning a handful of millions and is now relaxing semi-permanently on a yacht in the Carribean. That is why you have never seen him and that is why you have to rely on American Steve Jobses to create your job. Until the tipping point is reached (already has) and things start going down fast and irreversibly.
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The left, or at least most of the left, does understand the labor supply impact of ObamaCare. But it thinks it is a worthwhile price to pay. What they are underestimating, or choosing to ignore and devalue, is that (a) growth dwarfs all other factors in determining long term prosperity, (b) motivation to work does not have to drop that much before a country hits the skids, it is enough to drop below the top group of most competitive nations in the world and you are done, you fold quickly, as competitiveness and prosperity are very non-linear, just like in business (c) the vicious cycle will unleash, because when the number of people riding the cart becomes a majority, it becomes impossible to get anyone out of the cart through the electoral process. And then life on the van itself goes south. The cartoon is inaccurate. Riders of the van do not have a good life any more than Soviets had a good life or the life the French have now been sliding towards for a while.
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Reblogged this on Chowchilla Patriot.
This further highlights that support programs including: means-testing programs, Obamacare, unemployment and disability insurance are disconnected from the tax system, creating extremely high effective tax rates for those losing benefits.
Instead, we should replace some of those support programs with a Basic Income for citizens that cannot be lost by earning income and cannot be earned by avoiding income. For tax payers, the Basic Income would also replace the standard deduction and all other tax deductions. When combined with a 25% Flat Tax, you would have created a progressive flat tax, where everyone pays the same 25% marginal rate, but those with no income would have a negative effective tax rate. As earned income increases, a curve of the effective tax rate would go smoothly from negative to a maximum of 25%. And, because distribution could be severed from tax collection, businesses would withhold an accurate 25% from everyone, avoiding the need for those with no business income to file annual tax forms, not even a postcard.
If this Basic Income was set at 100% of the poverty line, we could eliminate financial poverty, and close to 1,000,000 federal bureaucrats. States could provide additional support over the 100% mark, as Dan suggested in his federalization recommendation.
Legal immigrants could get rebates up to the Basic Income, based on taxes paid. States would decide what support should be given to both legal and illegal immigrants. With such a plan in place the immigration issue would have far easier solutions.
LOL! Enjoyed the toons…. Hmm… where’s the common sense? Let’s just all turn Punchyish to cope what do you think???