Ryan: ObamaCare a 'poverty trap'

Greg Nash
House Republicans argued Wednesday that a new Congressional Budget Office report shows the healthcare law is making the "poverty trap" worse, while Democrats countered that the GOP is completely misreading the CBO's findings.
 
The two parties sparred at a House Budget Committee hearing the day after the CBO found that over the next decade, ObamaCare will lower full-time employment by the equivalent of 2.5 million workers.
 
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The CBO report said more workers — particularly those with low incomes — will choose to reduce their hours or leave their jobs because they now have health insurance, and that this reduction in the labor supply will lower economic growth, shrink the tax base and raise the deficit. 
 
Republicans seeking to make healthcare the centerpiece of their 2014 midterm strategy seized on the findings. 
 
House Budget Committee Chairman Paul RyanPaul RyanDHS urges states to beef up election security DHS chief: 21 states sought help over election hacking concerns Incomes are rising, but don't trust GOP to make it a trend MORE said the report meant that "Washington is making the poverty trap that much worse" by creating disincentives for people to enter the workforce and escape poverty.
 
“The effect will be severe — as if 2.5 million people had stopped working full time by 2024,” Ryan (R-Wis.) said.
 
By choosing to stay at home or cut back their hours, low-income workers will not get on the "ladder" to economic success and will be stuck in a cycle of poverty, argued Ryan.
 
He acknowledged that these workers will be better off in terms of having health insurance, but said that by taking themselves out of the workforce, they will hurt themselves in the long run. 

House Budget Committee ranking member Rep. Chris Van Hollen (D-Md.), visibly angered by Ryan's argument, said the CBO report really finds that workers will have increased choices after 2017. He said this benefit of more broadly offering people health insurance was an idea once endorsed by the conservative Heritage Foundation.

“That is not a bad thing. It’s a good thing,” he said. “What is bad is the lack of available jobs today.”
 
Van Hollen then attacked House Republicans for not extending federal unemployment benefits that expired late last year. He said Congress should take steps to stimulate the economy, both by extending the benefits and boosting infrastructure spending. 
 
Van Hollen also directed some of his ire at the media, which he said had "confessed" to him that they were hoodwinked by GOP spin after the report came out that ObamaCare was killing jobs.
 
CBO Director Doug Elmendorf said the nonpartisan report does find that the healthcare law creates a disincentive for working.
 
“The act creates a disincentive to work relative to the case were the law not in place,” he said.
 
But Van Hollen said the report does not find that the healthcare law would reduce demand for workers, and that it actually would spur demand in in the near term.
 
Elmendorf emphasized that CBO has not taken a combined new look at the overall economic effects of all the aspects of the Affordable Care Act, and agreed with Van Hollen that the healthcare law is decreasing unemployment in the short term. 
 
Rep. Bill Pascrell (D-N.J.) peppered Elmendorf with questions about what would happen if Social Security were repealed or reduced. The director said that would in fact increase labor supply among senior citizens. 

"This isn't employers cutting jobs, this is workers being empowered," Pascrell said. 

An agitated Ryan shot back at Pascrell that the lower-income workers are less likely to take on more hours because they will fear that higher incomes could deprive them of health insurance.

The CBO is projecting overall significantly weaker growth over the next decade, and labor force participation decreases are a big part of that. Elmendorf made clear that the major reason for this is the long-standing issue of retiring baby boomers not being replaced by enough young workers.