ObamaCare's Economic Destruction
“It’s about jobs. In its life, [the healthcare bill] will create 4 million jobs—400,000 jobs almost immediately."
— Then-Speaker Nancy Pelosi, February 2010
Background
Against the wishes of the American people, Democrats passed the Patient Protection and Affordable Care Act (“ObamaCare”) into law last year promising, among other things, to “bend the cost curve” of medical care. Yet the ironically-titled law, in its 2,800 pages of federal intervention into the economy, is failing to “protect” anyone as health insurance becomes even less “affordable.” Even worse, ObamaCare is restraining an economic recovery and destroying jobs by burdening entrepreneurs and employers with tax increases and costly regulations. Congress can help end the economic uncertainty by keeping our Pledge to America and repealing this disastrous law.
Issues of concern
Restraining Employment—ObamaCare’s cost-increasing and job-destroying regulations are an economic albatross inhibiting a return to prosperity. In addition to the well-documented cost burden of its “1099 provision” requiring excessive IRS forms from small businesses, ObamaCare discourages growth in other ways, such as the $2,000 per employee tax on businesses with more than 50 employees that fail to offer health insurance. Unfortunately, this employer mandate will disproportionately affect the most vulnerable workers in the economy. The Congressional Budget Office (CBO) noted in its August 2010 Budget and Economic Outlook:
"Those penalties, whose amounts are based on the number of full-time workers in the firm, will, over time, generally be passed on to workers through reductions in wages or other forms of compensation. However, firms generally cannot reduce workers’ wages below the minimum wage, which will probably cause some employers to respond by hiring fewer low-wage workers."
Small employers that cannot afford to provide health coverage nor absorb the tax are likely to avoid hiring a 51st employee. Former chief economist for the U.S. Department of Labor, Diana Furchtgott-Roth, wrote in a recent op-ed for the Washington Examiner: “That's no way to increase employment, especially since small business is supposed to be the engine of job growth in the economy.”
Spending Up, Growth Down—Economists of all stripes are warning that the private sector’s willingness to expand and hire more workers is directly correlated to the federal government’s ability to control spending and reduce the massive national debt. This economic principle is known as “crowding out,” wherein deficit spending by the government is accompanied by a reduction in private sector consumption or investment. The costs of implementing ObamaCare, despite Democrats’ claims that it lowers the deficit, do not bode well for economic growth.
An analysis by the House Budget Committee estimates that implementation will result in $2.6 trillion of spending. The bill will cost drastically more than the original CBO estimate due to the accounting gimmickry mandated in CBO’s analysis. The House Budget Committee estimates that ObamaCare will actually increase the deficit by $701 billion over the next ten years. This sobering figure comes on top of CBO’s own admission that ObamaCare “does not substantially diminish” the pressure of rising health costs on the federal budget during the next few decades and beyond.
Speaker Boehner has released an extensive report outlining the case against the job-destroying, budget-busting ObamaCare.
For additional information, contact:
The House Republican Conference Policy Office
