As the final push to entice young people to sign up for Obamacare has shifted into overdrive, it seems that White House officials and celebrities are popping up everywhere.
From the talk show circuit to websites and from the basketball court to the music industry, the pitches are flowing like water. With good reason, of course: The deadline for open enrollment is March 31, and the numbers are not where the Obama administration would like them to be.
It seems that they may be missing a rather easy selling point. President Franklin Delano Roosevelt lauded “four freedoms” during his revolutionary presidency – two of them of dubious constitutional mooring. President Obama is adding another – “freedom not to work” – and it seems as though his administration is missing the opportunity to pitch this newfound freedom to promote Obamacare.
A recent CBO study found that the Patient Protection and Affordable Care Act (Obamacare) will reduce the workforce by 2.3 million workers, considerably more than the 800,000 reduction that the CBO originally predicted.
In response to the CBO study, Jason Furman, chairman of the President’s Council of Economic Advisors, argued that this is a good thing, since the job losses will be largely the result of workers’ choices. Many of those who work less can afford to do so because of government subsidized health insurance or because they have become eligible for Medicaid. Contrary to Furman’s statement, the fact that many people are choosing to quit their jobs or work fewer hours is not good news; it reflects a fundamental flaw of health care reform and other policies of the Obama administration that have expanded entitlements.
It is a good thing for people to work and produce goods and services, thereby contributing to economic prosperity. Without entitlements, the vast majority of adult Americans would need to work to earn an income adequate to support their family’s needs.
But the Affordable Care Act expands the entitlement state and weakens the link between having to work and meeting basic needs. Economic output declines while the government takes a greater share of this reduced output.
If some people choose to quit their jobs or work fewer hours in response to health care reform, won’t it free up jobs for those who are currently unemployed or underemployed?
The problem with this line of reasoning is that the total number of jobs in the economy is not fixed so that some people must work fewer hours in order for others to work more hours. Instead, if more people are employed producing goods and services that firms can sell in the marketplace, the total demand for goods and services and thus the demand for labor will be higher. More production generates more income, which in turn enables those who earn it to buy more goods and services.
Ever since the financial crisis and the Great Recession, Keynesian economists have advocated more government spending to increase demand in the economy. Generous unemployment benefits, along with the extension of those benefits, was intended to jump-start demand because it was believed that there weren’t enough jobs to go around. Eventually, the additional spending was supposed to work its way through the economy so that more workers would be hired to produce the additional goods and services demanded. The unemployment benefits, however, like the subsidies that are part of the Affordable Care Act, give workers an incentive to remain unemployed longer rather than accepting jobs that they consider less than ideal.
Thus, more government spending, whether to increase health care subsidies or provide extended unemployment compensation, not only makes it easier for people to voluntarily work less, it may actually make it harder for those looking for work to find jobs. The resulting huge government deficits and rapid growth in the money supply since 2008 have created great uncertainty about the future among entrepreneurs who are considering whether to invest in expanding their businesses or starting new ones. They recognize that growth in the money supply will eventually cause inflation, while government deficits, if not paid for by inflationary money growth, will necessitate massive tax increases.
If government was not increasing spending to pay for all the bailouts, extended unemployment compensation, and health care reform, businesses would be more inclined to invest and create jobs, which would raise standards of living through increased output of goods and services.
Of course we won’t be hearing this from the celebrities and the White House officials as they make their final rounds into our living rooms, over our computers, and over the airwaves as we drive…to work.
Tracy Miller is a fellow for The Center for Vision & Values at Grove City College.
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