Analysis: 'Obamacare' Discourages Work and That's a Bad Thing; Here Is Why

U.S. President Barack Obama (2nd L) looks at a toy K'nex roller coaster made at the Rodon Group, a manufacturer of toys in Hatfield, Pennsylvania, November 30, 2012. Facing a year-end fiscal crunch, Obama used the visit to try to drum up support among Americans and pressure Republicans in Congress to agree to his proposal to let the tax cuts expire for Americans who make more than 0,000 a year. |

The Affordable Care Act, or "Obamacare," will encourage some Americans to work less, the Congressional Budget Office recently reported. That is great news, the Obama administration argued. Here is why they are wrong.

Workers will choose to supply less labor, the CBO concluded, because working more could mean a reduction in or loss of government subsidies for health insurance. This reduction in labor is the equivalent of two million jobs by 2017, and 2.5 million jobs by 2021.

Americans should feel encouraged by this news, according to the White House, because it means they will have more time to spend with their kids, their hobbies or just enjoying life.

"Over the longer run," White House spokesperson Jay Carney said Tuesday, "CBO finds that because of this law, individuals will be empowered to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years or choosing to spend more time with their families. At the beginning of this year, we noted that as part of this new day in health care, Americans would no longer be trapped in a job just to provide coverage for their families, and would have the opportunity to pursue their dreams. This CBO report bears that out, and the Republican plan to repeal the ACA would strip those hard-working Americans of that opportunity."

The White House was busy Tuesday selling this spin on the CBO report to media organizations. "Job lock" has become the new buzzword among liberal pundits.

"The new law will free people, young and old," the New York Times editorial board declared Tuesday, "to pursue careers or retirement without having to worry about health coverage. Workers can seek positions they are most qualified for and will no longer need to feel locked into a job they don't like because they need insurance for themselves or their families."

As a rhetorical strategy, the argument is brilliant. By placing themselves on the side of helping Americans pursue their dreams, the White House is positioning its detractors as on the side of forcing people to remain in miserable jobs. (This is not true. Republican proposals to replace the ACA include decoupling health insurance from employment so your health insurance would stay with you when you change jobs.)

Spending more time with ones kids or hobbies, volunteering more, working less, and retiring early can all, of course, be good things. There are two important components, though, that are missing in the White House argument — why Americans will be choosing to work less and what the consequences of those choices will be.

Americans will choose to work less in order to receive more government benefits.

The loss of the equivalent of 2.5 million full-time jobs is also the loss of an equivalent 2.5 million taxpayers. But it is even worse than that because the losses are due to Americans choosing to take government benefits instead of choosing to work.

The consequence of this is more takers and fewer payers.

Less revenue will be going into the U.S. Treasury and more spending will be going out. This might be justifiable if the Treasury had a surplus. As the CBO report also shows, though, the federal government is on an unsustainable path with regard to its debt.

The government has been running yearly deficits of around $1 trillion since the 2008 financial collapse. Total national debt is currently over $17.3 trillion.

Under its current trajectory, the CBO estimates that in 10 years just the interest paid on the debt, currently $233 billion, will become the third highest government expense (after Social Security and Medicare) at $880 billion.

The White House argument is, essentially, "take a break, America. You deserve it. This one is on us." It sounds like a tempting offer, until you realize that the "us" is other taxpayers, or future taxpayers.

Federal Budget 2024
Interest costs will be the third largest category of the budget in 2024. SOURCE: Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2014 to 2024, February 2014. Compiled by PGPF. NOTE: CHIP = Children's Health Insurance Program. Medicare spending is net of offsetting receipts. |

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