CBO director: Obamacare will reduce unemployment

As noted here yesterday, Republicans went mad with glee at the new Congressional Budget Office report on deficits and the Affordable Care Act, with multiple GOP officials claiming it showed the law will kill over two million jobs. That was false.

Under questioning today before the House Budget Committee from Dem Rep. Chris Van Hollen, CBO director Douglas Elmendorf confirmed that in reality, his report suggests Obamacare will reduce unemployment:

The CBO report found that Obamacare — through subsidizing health coverage – would reduce the amount of hours workers choose to work, to the equivalent of 2.5 million full-time workers over 10 years. This was widely spun by Republicans as a loss of 2.5 million jobs.

To counter this, Van Hollen cited the report’s findings on Obamacare’s impact on labor demand, rather than supply. On page 124, the report estimates that the ACA will “boost overall demand for goods and services over the next few years because the people who will benefit from the expansion of Medicaid and from access to the exchange subsidies are predominantly in lower-income households and thus are likely to spend a considerable fraction of their additional resources on goods and services.” This, the report says, “will in turn boost demand for labor over the next few years.”

“When you boost demand for labor in this kind of economy, you actually reduce the unemployment rate, because those people who are looking for work can find more work, right?” Van Hollen asked Elmendorf.

“Yes, that’s right,” Elmendorf said.

Elmendorf added that the factor Van Hollen had identified was something CBO thinks “spurs employment and would reduce unemployment over the next few years.”

So there it is: The CBO report found the opposite of what some foes of the law claimed.

Now, it’s true that elsewhere in his testimony — when questioned by Paul Ryan — Elmendorf confirmed that the subsidies from Obamacare would reduce the incentive to work, and that this would reduce economic growth. But as Brian Beutler explains well, for many people this incentive to work is not even necessarily a good thing, because it flows from “job lock,” i.e., they are tied to their jobs in order to have health care.

As Jonathan Cohn points out, conservatives might have a principled policy disagreement with that point, arguing that some people will have bad reasons for working less (they don’t want to work more), but even if they do, a similar impact is felt from any policy offering financial assistance that’s conditioned on income level — even conservative health reform ideas.

Wherever you come down on that debate, conservatives making that case are at least remaining within the parameters of what the CBO report actually said. The claim by GOP officials that Obamacare will snuff out over two million jobs does not fall within the parameters of what the CBO report actually said.

What this really comes down to is that Republicans mischaracterized the report’s findings because they don’t want to let go of their “Obamacare is a job killer” talking point. After all, it’s much harder politically to argue that helping poor people get health coverage is a bad idea because it reduces their incentive to work than it is to argue that Big Bad Government Regulations (in the form of unpopular Obamacare) are killing millions of jobs, driving up unemployment, and strangling the recovery.

But the CBO report just doesn’t support that latter claim, and the director of the CBO himself has now confirmed it.

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