What the CBO Actually Said

By Alan R. Davis

“Did you see the latest report on Obamacare from the non-partisan Congressional Budget Office (CBO)?  They're projecting 2.3 million people will leave the workforce by 2017 as a direct result of Obamacare.”

The above comes directly from an email I received from a prominent Republican Senator.  What makes it worse is this particular Senator had a career in business before being elected.  I hate to correct them, but that’s not what CBO told us or the point they were making.

What they said was they estimated that workers will voluntarily reduce hours by approximately 92 million per week because of the disincentives built into the Obamacare program.  (92 million divided by 40 hours per week = 2.3 million F(ull) T(ime) E(quivalent)s.)  Some of those hours may be from individuals dropping out of the workforce, but in many cases it would be from them reducing their hours.  But in each case it would be voluntary and a result of the adverse incentives Obamacare has built into it. 

So the statements regarding 2.3 million lost jobs or 2.3 million people leaving the workforce just aren’t accurate.  And the statement that for some people this might be a good thing is most likely be true.  Some people may be able to access insurance while working fewer hours now that Obamacare is law.

Since in a rationale economy hours are offered because there is an actual need for the hours to be worked, a voluntary reduction in hours by some should mean hours available for others.  Just as an example, if an individual working the counter at a McDonalds voluntarily works fewer hours the employer has two choices.  Don’t fill those hours or find someone else to work them.  Most likely they will look for someone else work those hours or else the person wouldn't have been working them in the first place.  That person will either be a current employee who would like more hours or a new employee.  So this may actually be a good thing for those looking for work.

The point that the CBO was making is that Obamacare gives negative incentives to people.  And those negative incentives come with a cost to our Federal Budget.  It’s called “subsidies”. 

With over 65% of all Federal Outlays going to “Payments for Individuals” ⁽¹⁾ and with the Federal Government already facing huge deficits, how many more subsidies can we afford?  The answer is none!  And the reality is the Federal Government needs to have a substantial reduction in its deficits in order to bring some sanity to our Nation’s finances.  More subsidies isn’t the way to do that.

(1)   Source: Historic Table 11.1, 11.2 & 11.3.   http://www.whitehouse.gov/omb/budget/Historicals