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Obamacare will push 2 million workers out of labor market: CBO

February 4, 2014

Obamacare will push the equivalent of about 2 million workers out of the labor  market by 2017 as employees decide either to work fewer hours or drop out  altogether, according to the latest estimates Tuesday from the Congressional  Budget Office.

President Barack Obama pauses as he speaks about the new health care law during a White House Youth Summit, Wednesday, Dec. 4, 2013, in the South Court Auditorium in the Eisenhower Executive Office Building on the White House complex in Washington. (AP Photo/Carolyn Kaster)

That’s a major jump in the nonpartisan budget agency’s projections and it  suggests the health care law’s incentives are driving businesses and people  to choose government-sponsored benefits rather than work.

CBO estimates that the  ACA will reduce the total number of hours worked, on net, by about 1.5 to 2  percent during the period from 2017 to 2024, almost entirely because workers  will choose to supply less labor — given the new taxes and other incentives they  will face and the financial benefits  some will receive,” CBO analysts wrote in their new economic outlook.

The scorekeepers also said the rollout problems with the Affordable Care Act  last year will mean only 6 million people sign  up through the  state-based exchanges, rather than the 7 million the CBO had originally projected.

But over the long run, Obamacare will eventually catch up and by 2020 only  about 30 million people will be without insurance coverage — down from 45  million this year. That will mean about 92 percent of legal U.S. residents  without guaranteed access to Medicare will have  insurance coverage.

Taking the budget as a whole, the CBO said Congress has made substantial headway on cutting spending and raising  taxes, which has cut the deficit in 2014 to just $514 billion.

That deficit will continue to drop in 2015, but will then begin to quickly  rise, once again topping $1 trillion in 2022.

The CBO analysis said the  economy isn’t rebounding as fast as usual after such a deep recession, and said  that poor growth means less revenue coming in to the Treasury Department — which  means the cumulative deficit over the next decade will be $1 trillion more than  projected just last year.

Debt, which is  the accumulation of those annual deficits, is already at its highest level since  the aftermath of World War II, and the CBO says debt held by the public will be nearly 80 percent of gross domestic product  by 2024, which is the end of the budget window.

The new report will give ammunition to those who argued that tax increases or  spending cuts should have been delayed while the government pursued more  stimulus spending to boost economic  growth over the  last few years.

But the CBO’s report also  suggests that the problems are more structural, given the aging U.S. population  and women’s participation in the labor force.

CREDIT TO:   Stephen Dinan / The Washington Times
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