Obamacare: Unemployment You Can Believe In
If Obamacare were a prescription drug, ads for it would say: “Use with extreme caution. Side effects include regulatory headaches, irritated taxpayers, and swollen unemployment.”
That’s right. Serious studies indicate that Obamacare would kill millions of jobs. With 9.4 percent unemployment, this is hardly the time to foul the labor market even further.
The culprit is Obamacare’s proposed tax burden on employers with payrolls exceeding $250,000.
*Section 313 of H.R. 3200, House Democrats’ key bill, concocts a tax of up to 8 percent on the total payrolls of employers who do not give their workers health insurance. This tax would apply to employers who do provide insurance, albeit not plans “qualified” by the new Health Choices Commissioner. Employers would be taxed on personnel who refuse company coverage in favor of their spouses’ policies. Otherwise-generous employers who grant insurance would suffer this tax hike if they paid anything less than 65 percent of premiums for family plans and 72.5 percent for individual coverage.
*Section 1802 empowers the Health and Human Services Secretary to slap a new, still-undetermined tax on every health plan in order to finance a new Comparative Effectiveness Research Trust Fund.
*Section 441 imposes surcharges of 1 percent to 5.4 percent on high-income individuals. Many of these “greedy rich people” are employers who will have less cash available to pay employees.
These and the bill’s other taxes create a $583 billion disincentive to hire people and an equally valuable inducement to distribute pink slips.
According to the Congressional Budget Office’s July 26 letter to Michigan’s Dave Camp, the House Ways and Means Committee’s ranking Republican, “Requiring employers to offer health insurance — or pay a fee if they do not — would be likely to reduce employment, although the effect would probably be small.” Small? Perhaps, but the damage would hit the poorest the hardest. “Nonetheless,” CBO predicts, “such a change would tend to reduce the hiring of workers at or near the minimum wage.” CBO also warns wage-earners to await smaller paychecks. “Employers would be expected to pass the costs of such fees on to workers in the form of lower wages than would otherwise be paid — just as the costs paid by employers for health insurance are generally passed on to workers.”
The National Federation of Independent Business would dispute CBO’s forecast of “small” ObamaCare-fueled job losses. NFIB modeled the impact of an employer-funded health-insurance mandate. In such a scheme’s first five years, NFIB foresees 1.6 million net jobs lost, 1 million of them vanishing from small businesses. It also projects GDP shriveling by $200 billion.
In a July 15 letter to members of Congress, NFIB’s Senior Vice President for Public Policy, Susan Eckerly, observes: “A payroll tax is particularly regressive because employers pay it regardless of whether or not their business is profitable.” NFIB also notes that “minority-owned businesses are currently less likely to provide employee health insurance…Hence, minorities are the most likely group of small business owners to be adversely affected by an employer mandate.”
Two of the President’s closest economic aides should understand how ObamaCare jeopardizes jobs. But their lips are sealed.
National Economic Council Director Lawrence Summers wrote in May 1989’s American Economic Review, “… a payroll tax on employers directed at financing health insurance benefits would have exactly the same employment displacement effects as a mandated health insurance program.”
Christina Romer chairs Obama’s Council of Economic Advisors. While a Berkeley professor, she co-authored a March 2007 study that states, “…tax increases are highly contractionary.” Researchers recently consulted Romer’s academic forecasting model. By 2019, it concluded, Obamacare’s taxes would unplug 5.5 million jobs.
Perhaps most perversely, people who get sacked usually lose their health coverage. Unemployment increases the very same uninsured population who Obama says he wants to help. ObamaCare would eradicate jobs, which exacerbates the uninsured condition it aims to correct. That’s how the federal dog chases its tail, with ever more dizzying speed.