Thursday, February 13, 2014

Transcript from my Feb 9-10 2014 show in the Controversy regarding the CBO Report on Obamacare

This past week, the Congressional Budget Office released a huge 182 page report detailing their analysis of the future of the economy and the budget for the next ten years from 2014 to 2024.

What I said just there is probably mystifying to most of you because the only thing that seemed to be reported in the news is that the Congressional Budget Office said something about Obamacare that affected around two million jobs.

No, the report was meant to cover every aspect of the economy and budget and give a ten year outlook. I am going through the report and hope to have more interesting tidbits for you during my next few shows. 

There is a lot to take in.

I am going to ask you to stay with me here because the report is really wonky and full of somewhat dry details. I am going to try to address what the report said and the reaction to it by Republicans a couple of ways that I think you will enjoy it’s just going to take a little bit of time to get there.

What immediately made headlines is a suggestion regarding two million jobs and Obamacare. Now, the first thing you have to understand is that where this is all detailed is appendix C of the CBO report in question, titled Labor Market Effects of the Affordable Care Act: Updated Estimates. This section is eleven pages long and divided into an Overview where the report first explains what it thinks is going to happen, and two major subsections, one called “effects on the Supply of Labor” and another titled effects on the Demand for Labor where it painstakingly details the reasons why it thinks the things outlined in the Overview will happen.
The Supply of Labor is of course us the workers and whether we want to work and how much. Demand for labor refers to whether businesses out there want to hire.

In the overview, it talks about how quote
the CBO estimates that the Affordable Care Act will reduce the total number of hours worked, on net,by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive.

That is a verbatim read from the report. So right off the bat, the CBO’s report says that it is talking about workers choosing to work less, not businesses offering fewer jobs and it as much as says that this accounts almost entirely for the reduction in hours and jobs.

Now, I want to talk about what that means and whether I agree with it or not and I will get to that, but first I want to address what happened when this information came out, namely, the mischaracterization of this information in Republican and Conservative circles and failure of huge segments of the press to report this properly. Let’s get started with Republican Senate Minority Leader Mitch McConnell. Certainly we can have the expectation that the Senate Minority Leader has a staff that can get him the correct information on things right? Well, let’s hear what he said:

            <I play a clip by Sen Mitch McConnell on the CBO where he talks about 2million jobs being lost>

Almost everywhere you went where a Republican or Conservative elected official or members of the press was speaking you heard something similar to what Mitch McConnell just said. I can give a lot of examples, but one of them that stands out is The Washington Free Beacon, a conservative publication started in 2012 with ties to Tea Party organizations like the Center for American Freedom which has William Kristol on its board, this publication deserves special mention for putting out no less than four misleading videos on this. Here is part of the audio of just one of those four videos:

            <I play a clip from the Washington Free Beacon where they have several people talking about jobs being lost>

Even supposedly non-partisan members of the media rushed to make statements that were completely unsupported by the document the CBO put out. Talking Points Memo put out an article where they showed Tweets by several high profile journalists that fell into this category. For instance

Chuck todd, the Chief White House Correspondant for NBC news tweeted:
CBO essentially reaffirms GOP talking points on health care. Says it will cost jobs, feel as if it raises taxes and contributes to deficit

Ben White from Politico tweeted:
Devastating #CBO report: Obamacare will cost 2 million full-time jobs over next three years.

The ability of our media here in the US particularly those conservative aspects of it to put out misleading information has really become breathtaking. Jon Stewart did a hilarious piece on this where he showed clips of a number of Republican elected officials repeating the incorrect information about job losses and then played this piece of congressional Democrats asking the head of the CBO Mr. Elmendorf some questions about it:

            <Jon Stewart Questions Elmendorf who reiterates jobs are not being lost in his scenario, people are choosing to work less>

So not only is the head of the CBO, Mr. Elmendorf refuting what Republicans are saying about his report, he basically says that Obamacare is going to cut the deficit and has not caused employers to cut jobs or reduce hours. The funny thing is, there is stuff worth discussing in this CBO report regarding jobs and Obamacare. To get us started on those things, here is some audio from an appearance I did on Thursday on Your World with Neil Cavuto to discuss it.

            <I reiterate that the 2 million refers to people deciding to work less not that people are being let go and I talk about how I don’t agree with the CBO’s analysis because in my experience people are holding onto their jobs and hours out of fear after the economic downturn>

That’s my main contention with this small piece of the CBO report and that is that I don’t think it captures how unwilling people are to give up their jobs right now even folks who are deeply unhappy with their current job. People are not quitting their jobs and they are not willingly giving up hours, and I don’t know if there is a way for the CBO to factor in angst like that in their analysis. That’s why I think they are wrong. If you are out there in the workforce, I think you know what I am saying is true. People are generally not leaving jobs of their own free will.

But let’s assume the CBO is right for a moment. Obamacare allows everyone to get good and affordable insurance outside of an employment situation. CBO is correct about that. CBO then says that because of that, some folks will work less or leave their jobs because of that for a variety of reasons.

One of those reasons is that you have a two parent family with both parents working and one will now spend more time at home taking care of the kids. That is one of the situations contemplated by the CBO.

Another is that someone will leave their job to start a business. Now you might ask what Obamacare has to do with that. I’ll explain.

Let’s say that you are also one of two working parents with children. Let’s say you are a plumber or a carpenter or a computer programmer or an accountant or one of a lot of other jobs working in a medium sized firm that provides health insurance and because of this you are the reason your family has health insurance. If this was before Obamacare and you quit your job to try to start a business, your entire family would lose their health insurance. That is a huge disincentive to start your own business particularly if you or another member of your family has health issues.

But now with the Affordable Care Act, you can leave your job and start your own carpentry or plumbing or programming or accounting business. You can afford health insurance for your family without having to continue to work for someone else. That is a great thing. That encourages good risk taking to create new businesses. In short, Obamacare supports capitalism.

That’s the funny thing about social programs. Social programs plus capitalism does capitalism better than capitalism by itself.

And that a the succinct way of describing the Liberal and Progressive position on economics in a nutshell.

We’ll be right back.