Maybe The GOP Won't Get Much Mileage Out of CBO Obamacare Lie

     The Very Serious Media was full of stories about how the CBO estimates about ACA increasing unemployment by 2.5 million jobs would give the GOP lots and lots of political mileage-whether or not the spin was accurate. 

    http://diaryofarepublicanhater.blogspot.com/2014/02/gop-and-very-serious-media-erroneously.html

    However, what chance does the spin have if Paul Ryan can see through it?

    "At least one Republican is setting the record straight on what the Congressional Budget Office actually said this week about Obamacare and its effect on jobs."

   "House Budget Chair Paul Ryan (R-WI) explained in a Wednesday hearing with CBO director Doug Elmendorf that the health care reform law wouldn't cost the U.S. economy more than 2 million jobs, as many of his colleagues alleged, but that Americans would choose to work less."

    "I want to make sure we accurately understand what it is you are saying," Ryan said, before leading Elmendorf through a series of questions to explain the report and its findings.

    "Ryan and Elmendorf combined to explain that Obamacare would lead to a decrease in the number of hours worked by up to 2 percent in 2024. Most of that drop, the CBO said, would be the result of Americans choosing not to work, for various reasons, but not because employers would want to hire fewer workers on account of the law. Translate those lost hours into full-time employment and it equals up to 2.5 million jobs by 2024. But that's not the same as jobs being cut."

    "Just to understand, it is not that employers are laying people off," Ryan said.

    "That is right," Elmendorf said.

     "That's a pretty direct contradiction for the attack adopted by many GOPers following the report's release. Senate Republicans blasted out an email, saying that Obamacare would "print more pink slips." Sen. Lindsey Graham (R-SC) and others alleged that the law would "cost" the country more than 2 million jobs. A number of conservative outlets framed the report as "pushing" Americans out of the workforce, rather than it being of their own volition."

     "To be clear, Ryan wasn't thrilled with the CBO's finding. He said he was "troubled" by the report because it suggested that Obamacare was encouraging Americans "not to get on the ladder of life, to begin working, getting the dignity of work, getting more opportunities, rising the income, joining the middle class."
"This means fewer people will do that," he said.

     http://talkingpointsmemo.com/livewire/paul-ryan-gop-job-losses

     To me this actually opens up what Krugman calls a 'teachable moment.' I mean if it's not that employers are laying off workers but that many workers who are only working extra hours due to naked need for healthcare isn't this a net increase for many Americans? Why not celebrate an increase in 'leisure?'  As Krugman points out:

     "Because I was teaching from 6 to 9 last night, I’m behind on the big wonkverse thing of the day, the new CBO report that, among other things, increases the budget office estimates of labor supply effects; it now says that affordable care will reduce labor supply by the equivalent of 2 million jobs.

That’s a valid point. And CBO, wich has been burned before on this sort of thing, really needs to be more careful in how it states things — a lot of the press ran with the headline “Obamacare costs 2 million jobs”, and it will become part of what everyone on the right “knows”, yet is totally untrue. First of all, we’re mainly talking about reduced hours rather than quitting the work force. Second, as Greg Sargent and Jonathan Cohn try to explain, we’re talking about a voluntary, supply-side response here — people choosing to work less — not about job destruction."

     "Still, don’t we have a problem with incentive effects here? Maybe, but maybe not. I’ll write this up at greater length later, but the basic point here is that we started with a system in which incentives were already strongly distorted by the deductibility of employer-paid health insurance premiums. This was a significant benefit, but one in general available only to full-time workers.

      "The result was to create something like the infamous “notches” sometimes created by welfare state benefits — but in reverse. The traditional notch comes when, say, housing subsidies are available as long as you’re below 150 percent of the poverty line — which means that you have a strong disincentive to move your income from slightly below to slightly above that threshold. What we had here was, instead, a system in which subsidies were available only if you worked more than a certain amount, surely leading some people to work more than they would have wanted to otherwise."

     "And that’s not a hypothetical — I know a fair number of people in just that situation. I also know some people in “job lock” — feeling trapped in their current job because they aren’t sure they could get implicitly subsidized health insurance if they moved."

     "Does the reverse notch plus job lock mean that the CBO’s estimate of work reduction (NOT job loss) actually represents a gain in welfare? It might or might not — the traditional tradeoffs surely apply to many workers too. But you don’t want to assume that it’s obviously a bad thing. Health reform isn’t an intervention in a previously undistorted economy; you might say that it replaces one set of distortions with a different set of distortions."

   "And the one thing that remains clear is that it will be a big plus for the people who most need help.

      http://krugman.blogs.nytimes.com/2014/02/05/obamacare-and-the-reverse-notch/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body

     Of course, conservatives never think that it will in fact help people is even to be factored into the equation. 

     More Krugman:

     "Here FT is the full-time employment level of work effort; workers get a tax-free lump of health insurance if and only if they work at least that many hours. This puts a notch in their budget line right at FT, with a discrete shift to the right as soon as leisure falls to that point. And this in turn could lead to the result shown, an equilibrium in which everyone works MORE than in the efficient equilibrium in order to get that tax break.

    "In this situation, policy changes that subsidize insurance for those not getting it through their employers could lead to lower work hours, not by introducing distortions of incentives, but by reducing the distortion created by the notch; the result could be an economy with less labor input, lower GDP, and higher welfare."

      "How plausible is this? I do know a fair number of people who feel compelled to hold down full-time jobs, not for the pay, but for the insurance. There’s also the related issue of job lock. On the other hand, we have to bear in mind that we have taxes for lots of things, not just health subsidies, and that reducing work effort reduces revenue, creating another distortion."

      http://krugman.blogs.nytimes.com/2014/02/05/reverse-notch-blogging-extremely-wonkish/?_php=true&_type=blogs&module=BlogPost-ReadMore&version=Blog%20Main&action=Click&contentCollection=Opinion&pgtype=Blogs&region=Body&_r=0#more-36456

      This is a great example of why many liberal economists argue that we should look beyond simple GDP. The GDP number here would make it sound like we're poorer when in fact arguable it represents an enrichment of the economy and society. Just like-as Sumner never tires of pointing out-unemployment can be misleading as the cut in UI could make it appear that we've cut unemployment simply because many unable to find work and so giving up would now no longer appear in the statistics. 

     UPDATE: Krugman points out that the real story of the CBO's report has been ignored. 

      http://krugman.blogs.nytimes.com/2014/02/05/cbo-aca-ok/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body