For Daily Signal, Romina “Rom Raincloud” Boccia reports: While many reports will focus on the Congressional Budget Office’s (CBO) 2014 deficit and economic forecast released today, a less-told story is what’s driving the growth in government spending over the next decade. Beyond current reporting on the federal government’s balance sheet, CBO reports also serve the important purpose of informing Congressional decision-making.
Today’s report unequivocally communicates: reform entitlement programs or watch government grow.
The Congressional Budget Office’s “Update to the Budget and Economic Outlook: 2014 to 2024” reports a federal deficit of $506 billion for fiscal year 2014 (which ends on September 30), slightly above its April projection of $492 billion. Spending in 2014 will be about $3.5 trillion, growing by about 2 percent compared to the previous year. The debt will rise slightly as a percentage of GDP to 74 percent, staying at a level not seen since World War II. Read the rest of this entry »
How the president’s health reform will harm the working poor
For City Journal,Joel Zinbberg writes: The nonpartisan Congressional Budget Office (CBO) recently projected that the Affordable Care Act (ACA)—better known as Obamacare—will lead Americans to reduce the hours they work by 2 percent. This will reduce the overall labor supply by the equivalent of 2.5 million full-time workers over the next decade. The decrease in labor supply will occur because the ACA mandates that everyone buy health insurance and provides large subsidies to low-income individuals and families to buy insurance on the new exchanges. As CBO director Douglas Elmendorf recently testified, “By providing heavily subsidized health insurance to people with very low income, and then withdrawing those subsidies as income rises, the act creates a disincentive for people to work.” Thanks to this implicit tax on extra work, spending a few more hours on the job will, at the margins, result in minimal or even negative income for those qualifying for the ACA’s subsidies. The CBO reports that some will choose to work fewer hours in order to qualify for a subsidy. Others will choose not to work at all.
Normally, when the well-respected CBO finds that a law will significantly decrease the labor supply and harm economic growth, it becomes a great embarrassment to the law’s authors. But the White House insists that critics have misconstrued the CBO report. It’s not a bad thing if people work less, they say. On the contrary, the law will give workers the flexibility to leave jobs that they’re currently “locked” into because of their health-insurance benefits. According to Jason Furman, Chairman of the Council of Economic Advisors, the law will alleviate such “job lock,” giving workers the freedom to work less, enjoy more family time, or start a new business.
Erik Wasson reports: The new healthcare law will cost the nation the equivalent of 2.3 million workers by 2021, contributing to a $1 trillion increase in projected deficits, the Congressional Budget Office (CBO) estimated in a report released Tuesday.
The nonpartisan agency’s report found the healthcare law’s negative effects on the economy will be “substantially larger” than what it had previously anticipated.
The findings immediately roiled the debate over the healthcare law on Capitol Hill ahead of a midterm election that Republicans hope will be dominated by the fight over ObamaCare.