The Obamacare poverty trap

Reuters

Chairman of the White House Council of Economic Advisers Jason Furman speaks about the Congressional Budget Office (CBO) report and the Affordable Care Act at the White House in Washington February 4, 2014. Obama's health care law will reduce American workforce participation by the equivalent of 2 million full-time jobs in 2017, the CBO said on Tuesday.

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  • While liberals celebrate people choosing to work less under ACA, @stanveuger is worried

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  • Fewer people working is a bad thing for the economy - @stanveuger

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  • No, ACA incentivizing part-time work isn't good for the economy -@stanveuger

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When the Congressional Budget Office announced on Tuesday that by 2024 the equivalent of 2.5 million full-time jobs would be lost due to the impact of the Affordable Care Act, much more than it claimed before President Obama’s re-election, I expected that even the law’s most ardent supporters would be somewhat upset.

Surprisingly, they were not. Instead of worrying about job losses, liberals celebrated the CBO’s prediction that people will “choose” to work less. They were also pleased to point out that is not just 2.5 million people who will be affected, but even more, as those 2.5 million full-time jobs correspond to many more full part-time jobs or hour reductions.

Fascinating. Only a few weeks ago, President Obama and his acolytes were all up in arms about inequality and how the War on Poverty needed to be intensified. The administration then pivoted toward talk of opportunity and mobility and the middle class. And now we appear to have moved all the way to praise of poverty traps. Look how powerful our new poverty trap is! Millions of people now face incentives that will keep them from working! We’re giving them so much free stuff they’ll never acquire the experience and skills they’ll need to take care of themselves! They’ll vote for us forever, utterly dependent on our new subsidies!

At least old-school Marxists, like Marx, had some notion of ευδαιμονία in mind when they promised that their magical destruction of scarcity would lead to a society that “makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.” None of that here: Cutting ties with productive society and sitting around waiting is seen as a praiseworthy endeavor by their modern-day intellectual descendants.

But, they say, no “jobs” are actually disappearing! It is only the labor supply that is affected! Businesses will thrive as always! Sadly, that is not how it works. I know that many of the left see the productive parts of the economy as a forever-auto-replenishing source of wealth to be seized, but those parts of the economy use inputs. And when you make crucial inputs more expensive, there will be less wealth for all, and more poverty across the board. But I guess the left believes that its new and improved Obamacare poverty traps are powerful enough to contain as many people as needed.

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About the Author

 

Stan
Veuger

  • Stan Veuger is a resident scholar at AEI.  His academic research focuses on political economy, and has been published in The Quarterly Journal of Economics. He writes frequently for popular audiences on a variety of topics, including health and tax policy. He is a regular contributor to The Hill, The National Interest, U.S. News & World Report, and AEIdeas, AEI’s policy blog. Before joining AEI, Dr. Veuger was a teaching fellow at Harvard University and Universitat Pompeu Fabra. He is a board member of the Netherland-American Foundation in Washington and at The Bulwark, a quarterly public policy journal, and was a National Review Institute Washington Fellow. He is a graduate of Utrecht University and Erasmus University Rotterdam, and holds an M.Sc. in Economics from Universitat Pompeu Fabra, as well as A.M. and Ph.D. degrees, also in Economics, from Harvard University. His academic research website can be found here.


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