Congressional Budget Office: Affordable Care Act Hurts Economic Growth

Watching the problematic rollout of the ACA and the political jockeying that has accompanied it over the last few months has been fascinating as people on various sides of the political spectrum have rushed to put their spin on each new fact that is revealed. Still, the CBO’s report that the ACA would hurt economic growth and the spin from some quarters that slow economic growth may actually be a good thing appears to have caught many people (on both sides of the political aisle) by surprise.

In many ways, it is surprising that the report was as surprising as it was, because the CBO is still seen as a non-partisan arbiter. Those who have been saying for years that the ACA would damage economic growth should have been expecting a report such as this for some time. However, what is even more surprising was the positive face that the White House tried to put on this news. Stating that people now had the option of more free time on their hands as they don’t have to stay working just for the health benefits (also known as ‘job lock) was part of a unique argument. It is not that this is necessarily untrue (although the verdict is still out on that), but the unique part was the implication that lower economic growth resulting from this is a good thing. If people are losing their jobs or if they are deciding not to work because they don’t need a job for health benefits, this cannot possibly be an economic positive. Economic growth, and the associated higher standards of living, occurs when more people work producing more things. To the extent that people are not working (whether voluntary or involuntary), economic growth, living standards, etc all are lower than what they would otherwise be.

Trying to pretend that this is a good thing, especially when we are currently in a problematic employment environment, is fundamentally dishonest from the standpoint that the White House cannot truly believe this. Whether the ACA ends up ultimately being a drag on economic growth in the long run remains to be seen. However, those of certain political persuasions lose credibility when they try and pretend that slow economic is a good thing, and imply that perhaps that this was what the ACA was intended to produce all along.

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