Today’s report by the nonpartisan Congressional Budget Office is further evidence the President’s health care law is destroying full-time jobs.
Just as quick was a post on the Eagan Patch
Mr. Kline quotes the report as saying the economy will lose 2.5 million JOBS.
He misquotes the report. It says:
The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024.
With a debate this big, Paul Ryan (R-WI-01) took the opportunity at Wednesday’s House Budget Committee hearing to ask CBO director Doug Elmendorf whether the health care reform law would cost the U.S. economy more than 2 million jobs.
“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.
“So just to understand this: It’s not that employers are laying people off, it’s that … people aren’t working in the workforce, aren’t supplying labor,” he said.
“That is right,” Elmendorf replied.
Not JOBS … but millions of workers voluntarily out of the labor force because they can afford to (remember the ObamaCare legislation is formally known as the Affordable Care Act) and they want the freedom to spend time with their growing children or work in a lower stressed manner.
The FactCheck comment is :
The budget office predicts that over the next several years, there will be plenty of unemployed people available to fill those jobs. But in the long run, as the economy improves, the supply will shrink, and because of that, total employment and the number of hours people work will be less than it would have been without the health-care law.
A smaller workforce means fewer people producing goods and services, which means slower economic growth. The CBO report also forecasts that an aging population will cause more people to retire, further cutting the workforce. That’s the main reason it expects growth to average about 2.5 percent over the next 10 years, below its long-run pace of about 3 percent.
What John Kline did not mention that is also in the CBO report :
CBO and JCT estimate that the insurance coverage provisions of the ACA will markedly increase the number of nonelderly people who have health insurance—by about 13 million in 2014, 20 million in 2015, and 25 million in each of the subsequent years through 2024.
OK … so ObamaCare will expand the number of people being covered … why wasn’t that mentioned.
But, the real omission that Chairman Kline failed was also in the CBO report :
In 2013, lawmakers enacted legislation governing student loans that will set interest rates for new borrowers based on the 10-year Treasury note rate determined by the last auction in May of each year. Before that change, loans were made at a fixed rate stated in the Higher Education Act of 1965, as amended. For the coming decade, CBO’s forecast of rising interest rates will increase the present value cost to the government of outstanding loans for this program
OK, students and parents … in the old days (like Spring quarter 2013), most student loans (Stafford) were set at 3.4% but that program expired on July 1 2013. Chairman Kline offered his OpEd “Let’s take politicians out of the college-cost equation and base student loan interest rates on the free market, rather than the whims of Washington.”
The Kline solution … US Treasury market plus a “fee” to cover administrative costs and losses from defaults and write-offs. President Obama agreed with this concept (with some other provisions to help students) and suggested a 0.91% adder.
The 0.91% adder seems reasonable considering GAO reports that the annual administrative costs on a federal student loan is $25, which translates into about 0.20 percentage points in the form of an interest rate mark-up assuming the average balance on all outstanding loans is constant $12,000 balance. The losses from defaults are, on a per-year basis, 0.30 percentage points (20 percent of the 1.5 percent of loans that default and are uncollected per year). Add those two factors for some amount to cover discharges for death, disability, Public Service Loan Forgiveness and Income-Based Repayment, and President Obama’s proposal would seem fair to students and the taxpayers.
However, Chairman Kline wanted a 2.5% fee … he wanted to ask students to pay down the national debt.
After a summer of concessions by Democrats, Chairman Kline finally agreed to a 2.05 % fee and President Obama signed the Bipartisan Student Loan Certainty Act.
Thus for undergrads, considering the markup of 2.05 percentage points, loans issued for this school year is 3.86 %. On loans issued next year it will probably be about 4.75 %.
On Friday the GAO issued a 50-page report on the student loan program : Borrower Interest Rates Cannot Be Set in Advance to Precisely and Consistently Balance Federal Revenues and Costs which essentially said, the cost of the program fluctuates, but when and by how much is based on what happens to interest rates in the economy in the future. And the future is uncertain.
John Kline’s response to the GAO report :
“The Bipartisan Student Loan Certainty Act cut interest rates for undergraduate loans nearly in half and made all student loans cheaper, simpler and more certain.”
3.40 % Spring 2013
3.86 % Fall 2013
4.75 % Fall 2014
And the future is uncertain.
But in John Kline’s mind “President’s health care law is destroying full-time jobs” and “all student loans cheaper, simpler and more certain.”
Consider that when John Kline tells voters that “entitlement reform” is necessary … what will he do with Social Security and Medicare ?