06 Feb 2014 Cohn: Putting The Lipstick On The ObamaCare Pig
When the Congressional Budget Office released its Budget and Economic Outlook on Monday that was pretty devastating for ObamaCare, numerous progressives did their best to make it look rosy.
More important, CBO says, most of the people working fewer hours will be choosing to do so. And that’s a very different story from the one Obamacare critics are telling. Some of the people cutting back hours will be working parents who decide they can afford to put in a little less time with their co-workers and a little more time with their kids. Some will be early sixty-somethings who will retire before they reach 65, rather than clinging to low-paying jobs just to get health benefits. “This is what we want in a fair society,” says Jonathan Gruber, the MIT economist and Obamacare architect. “We don’t want to enslave the old and sick to their jobs out of some sense of meanness. If they are dying to quit/retire, then let’s them. That’s a good thing, not a bad thing.”
If you want my thoughts on Gruber’s nonsense, scroll to end of this post. As for Cohn, he’s leaving out some pretty important parts of the report regarding who is going to choose to work less. I mean, you didn’t think it was all retirees and people wanting to spend more time with their kids, did you? From page 120 of the CBO report:
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.
What the CBO is referring to are the incentives faced by lower-income workers. In short, ObamaCare’s Medicaid expansion and exchange subsidies discourage such workers from increasing their incomes. In his piece Cohn states that “Of course, some able-bodied will cut back on hours for reasons that conservatives, in particular, might not like.” One would think that lower-income workers cutting back on hours worked would be something that progressives like Cohn wouldn’t like. Or should their recent hyperventilating over income inequality not be taken seriously? Here’s Cohn from last July:
One reason so many Americans tolerate inequality is their belief that it’s not a permanent condition. Yes, you might start out life without a lot of money. But if you work hard and play by the rules, then you’ll get ahead. You might never become a millionaire, but you’ll still find your way into the middle class. And then your kids will have a shot to do even better. Experts call this income mobility. The rest of us call it “the American dream.”
But for too many of us, it really is a dream—and nothing more. The comparison to other developed nations is striking. In Europe and in Asia, the countries most similar to the U.S. have both more equality and more mobility. In other words, they have fewer rungs on the income ladder to climb, and they have an easier time making each step.
Will giving lower-income workers incentives to work less make it easier for them to get ahead? The question is rhetorical. Perhaps that’s why Cohn ignored that part of the CBO report.
As for Gruber, he’s absolutely right! Slavery of must end! We as a society must stop our practice of sending cruel overseers to ensure that workers in their 50s stay chained to their desks! I mean, the floggings those poor codgers endure when they merely ask to use the bathroom at the wrong time!
On a more serious note, I wonder what the 28-year-old living in Omaha, Nebraska making $32,000 annually thinks about his 58-year-old neighbor who has $40,000 annually in retirement income. As the Kaiser Family Foundation subsidy calculator shows, the 28-year-old receives no subsidy on the ObamaCare exchange. He will, though, pay over $2,800 in federal income taxes according to the Tax Calculator. Presumably those taxes help pay for the annual subsidy of $2,684 the 58-year-old retiree receives on the exchange. I wonder, does the 28-year-old agree with Gruber that this “is what we want in a fair society”?
UPDATE: Via Twitter, Cohn said that he did address the issue of low-income workers when he wrote “some able-bodied.” I think using that term is too vague, but I’ve always known Cohn as a straight shooter, so if he says that phrase was meant to address it, I take him at his word.