The first attacks based on the CBO report on Obamacare and workers

February 7

“How many workers will have to lose their jobs?”
–voiceover of attack ad against Sen. Kay Hagan (D-N.C.) by the campaign of Senate hopeful, Thom Tillis (R), North Carolina speaker of the House

“Hagan’s Support of ObamaCare Will Reduce Employment in North Carolina: Equivalent of 74,469 Jobs Could Be Lost”
–National Republican Senatorial Committee news release, citing a study by Americans for Tax Reform

The Congressional Budget Office report on the impact of the Affordable Care Act was released on Tuesday, and already we have the first attack ads.

The Fact Checker devoted one column to explaining what the CBO’s report actually meant. But we have long learned that all the fact checks in the world won’t stop politicians if they think an attack line moves voters. So how do these early attacks fare?

The Facts

In its report, the CBO said ACA, a.k.a Obamacare, would reduce the number of hours worked by the equivalent of 2.5 million full-time workers by 2025. That means that workers will decide to reduce their hours, not that employers are reducing the number of jobs.

A fierce dispute has erupted between liberal and conservative economists about what this figure means, and depending on your political perspective, both sides make compelling cases. (Conservatives decry the smaller economy that will result; liberals celebrate that workers will not be bound to their jobs because of health insurance.) But that’s not The Fact Checker’s business. Our concern is whether the CBO’s report is being described correctly by politicians.

The Thom Tillis ad, first highlighted by our colleague Greg Sargent, flashes this language when the voiceover asks, “How many workers will have to lose their jobs?” because of Hagan’s support for the health care law: “Congressional Budget Office estimates 2 million lost jobs due to Obamacare.”

But that’s not what the report says. Don’t take our word for it. Here’s what CBO Director Douglas W. Elmendorf said in congressional testimony when he was asked about claims that jobs are being lost because of the law:

The reason that we don’t use the term “lost jobs” is there’s a critical difference between people who like to work and can’t find a job or have a job that was lost for reasons beyond their control and people who choose not to work.

If somebody comes up to you and says, “Well, the boss said I’m being laid off because we don’t have enough business to pay me,” that person feels bad about that and we sympathize with them having lost their job.

If somebody comes to you and says, “I’ve decided to retire” or “I’ve decided to stay home and spend more time with my family” and “I’ve decided to spend more time doing my hobby,” they don’t feel bad about it, they feel good about it, and we don’t sympathize. We say congratulations. And we don’t say they’ve lost their job because they have chosen to leave that job.

Rep. Paul Ryan (R-Wis.) put it this way in the hearing: “So just to understand this, it’s not that employers are laying people off, it’s that but people aren’t working in the workforce, aren’t supplying labor to the equivalent of 2.5 million jobs in 2024. And as a result, that lower workforce participation rate, that less labor supply, lowers economic growth.”

There is little dispute that the reduction in the size of the labor force will yield a slightly smaller economy. The question is whether introducing universal health care is worth that trade-off, and of course that’s a political issue beyond the realm of The Fact Checker.

The Tillis ad gets in trouble by using language such as “Congressional Budget Office estimates 2 million lost jobs due to Obamacare.” First of all, it’s not jobs, but workers. Second, it is lacking context, since that is off a base of more than 160 million workers (i.e, less than 2 percent.)

Now, all things being equal, a reduction of 2 million full-time workers eventually would mean 2 million fewer jobs. But the CBO estimate was a mix of full-time and part-time workers, which result in the hours worked equal to that many full-time workers. But some workers might reduce their weekly hours by only an hour or two, so the impact on overall jobs would be muted.

“Whether faulty government policies drive people to quit work, or if a person is fired, or if a person is not hired in a job they’d otherwise get because companies can’t expand, that is a job that is lost,” said Jordan Shaw, campaign manager for Tillis.  “In many cases, a 2-income family will drop to a 1-income family to stay eligible for subsidies — that is a ‘lost’ job due to this policy.  The bottom line is that Obamacare costs jobs, and that hurts families, communities, and the economy.  Period.”

The NRSC news release is also an interesting example. The headline actually tries hard to be restrained and relatively accurate. It says that the law will “reduce employment” and then carefully notes this is the “equivalent” of a number of jobs. The release further says “fewer people will be employed and fewer hours worked because of the unpopular law.” That’s phrased correctly.

Brad Dayspring, a spokesman for the NRSC, said the release purposely avoided saying the law would “cost” jobs. “We did that with cognizance because we want to be factual while pointing out the potential harm of what we believe to be a terrible policy,” he said.

The problem is the number of 74,469 jobs, which is derived from an analysis by the Americans for Tax Reform, which is titled “How many Jobs Might Obamacare Cost Your State?” The anti-tax group did a simple calculation, based on how many jobs each state currently has.

But that is inherently misleading. Not every state expanded Medicaid, so the effects are different. Indeed, North Carolina is one of those states that did not expand Medicaid, so right away, that means the impact on worker participation will be lower than in other states. Moreover, every state has a different distribution of income, so there can be vast differences in the percentage of people who will be affected by the subsidies for low-income workers and the law’s taxes on the wealthy. That could also significantly change the result, state by state.

Finally, the emphasis on “jobs” once again takes the claim further from the CBO’s initial emphasis on workers. As we noted, because the estimate of hours is a mix of full-time and part-time work, there is no 1:1 relationship between the reduction in full-time equivalent workers and the fewer jobs that will exist in the economy.

“The table does not make any firm claims that a state will lose x or y number of jobs,” said Ryan Ellis, ATR’s tax policy director. “Rather, it points out what may happen based on that state’s participation in the national labor pool. As you point out, the state-by-state results are likely to vary from this, but this is the starting point for research.”

He defended the “cost jobs’ language, saying: “We would say that if a person chooses not to work because Obamacare has made their working a prohibitive financial choice for them, then that’s a job killed by Obamacare.”

The Pinocchio Test

We are going to excuse the NRSC from the Pinocchio Test, because it is clear they tried hard, within the confines of a news release, to accurately describe the CBO report. The poison root was the ATR analysis, with its misleading headline.

Both the Tillis campaign and ATR fall into the trap of saying a specific number of jobs will be lost. This is not what CBO said, as made clear by Elemendorf’s testimony. For non-economists, the use of the phrase “jobs” is especially confusing because it sounds like the decision made by employers, rather than workers.

There is certainly damaging material in the CBO report, ripe for plucking. Keith Hennessey, a former Bush administration official, offered some variations of possible attack lines, such as “Obamacare will shrink our economy by driving millions of moderate income people to work less, and discouraging some of them from working at all.” That’s a negative interpretation – liberals would emphasize the benefits—but it also is a statement that accurately reflects what the CBO said.

But in the meantime, “costs jobs” attacks are going to keep earning Three Pinocchios.

Three Pinocchios

 


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