Friday, February 07, 2014

What the CBO Really Said About Obamacare and Jobs

The Republicans seized on the summary - the equivalent of 2.5 million people will exit the workforce over the next ten years due to Obamacare. The Democrats, lead by the White House, are insisting that this is a good thing since it allows people the choice of spending more time with their kids.

I listened to the director of the CBO's testimony. What he said is that the way Obamacare is structured, it acts as an indirect tax on employment. If you do not work then you receive government subsidies for healthcare. If you get a job these subsidies are reduced or eliminated. If you get a job that does not offer health insurance then you will have to make up the difference out of your own pocket, reducing your net income.

The expectation is that many people (2.5 million) will prefer to stay home and accept government subsidies than work.

The left has been arguing this point in reverse for years in justifying an increase in the minimum wage. The theory says that if you raise the minimum wage then more people will want to work because they will receive greater benefits.

Arguing that enticing millions of more people to accept government subsidies instead of working is a strange point of view.

Ironically, an administration that worries over income inequality has created a program that will hurt the lower-end of the wage-earners more than the upper-end.

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