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Battling economists and columnists: Affordable Care Act and jobs

Rep. Chris Van Hollen (D-MD) questions CBO Director Douglas Elmendorf during a hearing in Congress, February 5, 2014 in Washington, DC. CBO projected the Affordable Care Act will reduce labor supply by zero point eight percent by 2024.
Chip Somodevilla/Getty Images)

Take the recent Congressional Budget Office report on the Affordable Care Act's effect on the total number of hours worked by Americans. In an appendix to the report, the CBO estimated that because of government provided subsidies for health insurance and their structure (phasing out as income rises) under the ACA, Americans will work from 1.5 to 2.0 percent fewer hours for the whole of the period 2017 - 2024. The report then goes on to translate the fewer hours worked into the equivalent of 2.0 to 2.5 million full time workers, about a one percent reduction in the size of the labor force over that time period.

About this estimate a Wall Street Journal editorial said " For years liberals have lamented the jobs crisis and underemployment to castigate Republicans as mean-spirited for opposing more "stimulus" and more weeks of unemployment benefits. But if pervasive joblessness is an economic and social scourge, why celebrate a program that is creating more of it?"

Well maybe because it is allowing many more Americans to get affordable health care coverage. It's a trade off that you the reader and voter should think about in deciding whether the ACA is worth it.

But more to the point is that the CBO report did not say that the ACA is creating more joblessness.

To its credit the WSJ did publish a rejoinder Op-ed by liberal economist Alan Blinder that is particularly good at explaining the economics of what the CBO estimate is all about. It is not about joblessness. In the Op-ed, Blinder says, "... the decline in work does not mean jobs being destroyed but rather that some people are choosing to work less—or not at all. That doesn't sound so bad."

Columnist Charles Krauthammer thinks it bad. In a column that appeared in The Washington Post titled "Obamacare’s war on jobs," Krauthhammer says, " In the traditional opportunity society, government provides the tools — education, training and various incentives — to achieve the dignity of work [bold added] and its promise of self-improvement and social mobility. In the new opportunity society, you are given the opportunity for idleness while living parasitically off everyone else."

Krugman doesn't think it so bad. In a New York Times column, Krugman says about the CBO report , "... voluntary reductions in work hours are nothing like involuntary job loss. Oh, and because labor supply will be reduced, wages will go up, not down." Krugman also manages to use what is apparently one of his favorite words, "And now you know everything you need to know about the latest falsehood in the ever-mendacious campaign against health reform."

In another NYT column Krugman takes a crack at Krauthammer's reference to the dignity of work. He concludes the column with these words, "And you should, in particular, support and celebrate health reform. Never mind all those claims that Obamacare is slavery; the reality is that the Affordable Care Act will empower millions of Americans, giving them exactly the kind of dignity and freedom politicians only pretend to love."

The debate over economic policy is serious.

While many of the arguments have been civil and professional, in at least a few instances they have bordered on nastiness. Paul Krugman once labeled a rival's argument as 'boneheaded.'

The battle is fought in print, and electronically. It is fought on newspaper web pages, on cable networks, on talk radio and in blogs. Each side has their economists, some with Nobel Prizes. Each has their columnists and pundits.

Central battle grounds are the Op-ed pages of major newspapers, including The New York Times, The Wall Street Journal and The Washington Post. Battles have been fought in academic papers and in books, some of them reaching the best seller lists.

If it weren't so important to the lives of so many, if there weren't so many without a job for so long and so many jobs that pay so little, the battle among professional economists and economic columnists would be amusing. But economic policy has consequences that are too serious to be amusing.

Krugman, a major contributor to the debates and one who has been accused of name calling, says "Look, economic policy matters. It matters for real people who suffer real consequences when we get it wrong.”