As if things couldn’t get worse for Obamacare, the Congressional Budget Office’s (CBO) latest economic forecast reveals a prediction so dire, it may be the gravest news since the Book of Revelation predicted Armageddon. (Some folks even believe that Obamacare itself marks the beginning of Armageddon.)
The CBO’s report on the federal budget and economic outlook for 2014 through 2024 undresses the Affordable Care Act, saying it “disincentivizes work” and will “raise effective tax rates on earnings from labor.”
Amazingly, though, that’s not even the report’s most harrowing conclusion. No, the worst news of all is that Obamacare may cut the full-time workforce by as many as 2.5 million people.
The CBO report states that “workers will choose to supply less labor – given the new taxes and other incentives they will face and the financial benefits some will receive.”
Furthermore, the report reminds us that healthcare subsidies are “phased out with rising income in order to limit their total costs… [which] effectively raises people’s marginal tax rates.”
So let me get this straight…
Because the Affordable Care Act provides such large subsidies to those who can’t afford healthcare, it’s now become more beneficial not to work – as an increased salary would just deflate the subsidy and act as a de facto tax hike.
Speaking of taxes, how do you think these subsidies are being paid for? You guessed it. So if tax rates also go up in order to pay for the subsidies, the incentive to work is even further removed. In that case, why wouldn’t you just work fewer hours – or none at all?
Why Work When Uncle Sam’s Got Your Back?
The twisted logic that’s resulted in this scenario is mind boggling. Essentially, there’s now a penalty for trying to work your way up the income ladder, which is completely contrary to people’s aspirations. Workers want to be rewarded for their efforts in the form of raises and bonuses. But Obamacare has now made it so that increasing your income could have potentially disastrous consequences for your healthcare situation.
And there’s another factor to consider. The latest numbers from the CBO don’t take the employer mandate into account, as that will not be implemented for another year. That means the numbers are likely understating the effects of Obamacare on the job market – perhaps significantly.
You see, once the mandate goes into effect, businesses with 50 or more full-time employees will be required to provide insurance for those employees, or else face a significant fine. That means that it’s now sensible (and cost effective) for businesses to hire more part-time workers and avoid this 50-employee threshold, leading to fewer full-time jobs available for those who are still interested in them.
The Ripple Effect
Unfortunately, the CBO report’s outlook doesn’t stop at the individual. It also projects a less-optimistic economic outlook for the whole country.
A quick review of the report shows that the CBO has reduced its projection of the total amount of wages and salaries from 2015 to 2023 by $3.2 trillion (3.6%). That’s not surprising considering the projected loss of millions of full-time workers.
On top of that, the CBO has reduced its expectations for GDP growth from 2.9% to 2.6% between 2014 and 2023. It also projected that federal deficits will be $1 trillion higher than seen a year ago. And by 2024, the report says, debt will climb to 79% of GDP.
It’s hard to imagine a more unfavorable summation of Obamacare’s projected impact on the country. Of course, some of us have been warning for months that the current Obamacare system is unfixable. But hey, what do we know?
In Pursuit of the Truth,