The real news from the CBO report: America’s demographic crisis… What the CBO said about jobs and the health-care law… But also don’t forget about the CBO said about jobs and Senate immigration reform bill… CBO director to testify on his office’s latest report at 10:00 am ET… Will House Republicans fight on the debt ceiling -- or punt?... Obama applauds CVS’s decision to stop selling cigarettes… Results from new NBC/Marist poll on the economy and personal finances… And “American Idol” star Clay Aiken is running for Congress.
The real news from the CBO report: America’s demographic crisis
The Congressional Budget Office report released on Monday contained two pieces of news. First were the projections on the health-care law, which Republicans immediately seized on and will put in TV ads this fall (more on that below). But the second story from the CBO report is the more important news that everyone seems to be missing (or avoiding because they aren’t easy talking points): The United States is facing an aging population that is going to be a significant drag on economic growth and increase government spending. While the CBO says that current economic growth will reduce the budget deficit to just $514 billion in 2014 and $478 billion in 2015, here’s more ominous news: “Beyond 2017, CBO expects that economic growth will diminish to a pace that is well below the average seen over the past several decades. That projected slowdown mainly reflects long-term trends—particularly, slower growth in the labor force because of the aging of the population.” Let us repeat that again: The U.S. economy is going to slow down due to all of the Baby Boomers retiring and a shrinking labor force. In addition, the CBO projects the budget deficit will increase back to $1 trillion by 2022 due in large part to spending on Social Security and Medicare. Bottom line: These findings SCREAM the need for immigration reform (to inject younger workers into the population and expand the labor force) and entitlement reform (to lessen the cost of all the retiring Baby Boomers).
What the CBO said about jobs and the health-care law
But yesterday’s top focus in the political world was on the nearly four-year-old health-care law. Republicans naturally seized on the CBO’s projection that the health-care law would shrink the U.S. workforce by some 2.5 million jobs come 2024. “Obamacare to print even more pink slips,” Senate Minority Leader Mitch McConnell’s office blasted out. But it’s not that simple -- or accurate. The CBO report was mostly talking about the labor supply and people’s desire to remain in the workforce, not about whether employers think the law is too costly to hire workers. "CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 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.” Indeed, the CBO adds that labor demand -- that is, businesses' desire to hire workers because of the law -- will mostly be unchanged, though they concede some smaller businesses might be reluctant to cross the 50-worker threshold, but it won’t have near the impact on shrinking the labor force that folks choosing to leave it will. Make no mistake: In the world of soundbites and 30-second TV ads, the CBO’s language here is politically problematic for the Obama White House. But the Washington Post’s fact checker is correct here: The CBO isn’t saying the health-care law is cutting or killing 2.5 million jobs.
But don’t forget about the CBO said about jobs and Senate immigration reform bill
That said, if you want to argue that the health-care law is costing jobs, there’s another analysis that CBO has made that will ADD jobs. Don’t forget CBO’s finding from last year’s “Gang of Eight” Senate immigration bill that the legislation will expand the labor force by about nine million jobs by 2033. "Relative to CBO’s projections under current law, enacting the bill would increase the size of the labor force by about 6 million (about 3½ percent) in 2023 and by about 9 million (about 5 percent) in 2033, CBO and JCT estimate.” So if you subtract the two million from the workforce due to the health-care law, you have net expansion IF you pass the immigration-reform legislation.
What else the CBO report said
The latest CBO report also had other notable findings. One, in 2014, one million fewer folks - from seven million to six million -- will sign up for insurance coverage in the exchanges due to the website problems. "Those changes primarily reflect the significant technical problems that have been encountered in the initial phases of implementing the ACA." Two,the controversial "risk corridors" that Republicans want repealed actually reduce the deficit by $8 billion."CBO now projects that, over the 2015-2017 period, risk corridor payments from the federal government to health insurers will total $8 billion and that the corresponding collections from insurers will amount to $16 billion, yielding net savings for the federal government of $8 billion." And three,average health-insurance premiums are lower than expected. "CBO and JCT lowered their estimate of average premiums for insurance coverage through exchanges in 2014 by about 15 percent on the basis of a preliminary analysis of plans offered through exchanges.
CBO director to testify on his office’s latest report at 10:00 am ET
And for those looking for more discussion on the CBO’s findings, Congressional Budget Office Director Douglas Elmendorf testifies before the House Budget Committee at 10:00 am ET.
Will House Republicans fight on the debt ceiling -- or punt?
Turning to the debt-ceiling debate, some House Republicans seem to be falling into the same trap they made during last October’s government shutdown -- making a demand that the White House would never accept. The Washington Post: “Much of the caucus … seemed to be coalescing around the idea of linking a one-year extension of the debt ceiling to another effort to repeal some provisions of the Affordable Care Act. But there was strong support — even among some of the most conservative members — for avoiding a dramatic partisan standoff on the debt limit, signaling a break from the combative fiscal politics of the recent past.” More from the Post: “The bargaining idea that appears to have the most momentum is a repeal of the provision in the Affordable Care Act known as “risk corridors,” which limit the amount of money that a health-insurance plan can make and lose during the first three years it is sold on the new health-care exchanges.” But if you accept the CBO as gospel, then you also acknowledge that repealing the risk corridors will increase the budget deficit. If the Republicans truly wanted to put the White House and Dems in a mini-political bind, they would have rallied around Keystone, because they might have broken some of the Senate Democrats. Of course, the politically savvy move is not usually one that House GOP conservatives rally around if the other choice is something related to their blind opposition to health care.
Obama applauds CVS’s decision to stop selling cigarettes
Folks, this is a HUGE story. As NBC’s Tom Costello reported on “TODAY” this morning, CVS has decided to stop selling all tobacco-related products, and President Obama applauded the decision. “I applaud this morning's news that CVS Caremark has decided to stop selling cigarettes and other tobacco products in its stores, and begin a national campaign to help millions of Americans quit smoking instead,” said the president, who himself is a former smoker. “As one of the largest retailers and pharmacies in America, CVS Caremark sets a powerful example, and today's decision will help advance my Administration's efforts to reduce tobacco-related deaths, cancer, and heart disease, as well as bring down health care costs - ultimately saving lives and protecting untold numbers of families from pain and heartbreak for years to come.” This is one of those tipping point moments where we now have the best piece of evidence yet that cigarettes have become completely stigmatized. Will be interesting to see what retailers like Wal-Mart and Walgreens do? Also, considering the health risks, we wonder: Does this mean CVS stops selling any alcohol, too?
Results from new NBC/Marist poll
We also have some new poll numbers -- on economic and financial questions -- to share: A new NBC/Marist poll of Americans' view of the national economy and their own finances has uncovered a paradox: While nearly two-thirds think the country is in a recession or going in the wrong direction, the vast majority believe their personal prospects will improve or stay the course. A current of individual optimism — the highest level detected since 2009 — runs through the results of the survey, despite evidence that millions of Americans, especially those in lower income brackets, are struggling to balance their budgets. And yet that individual optimism is trumped by political pessimism of the country’s situation as a whole.
An “American Idol” running for Congress
Finally, we end with this news: “Former ‘American Idol’ star Clay Aiken is officially running for Congress,” NBC’s Mike O’Brien reports. “Aiken made official on Wednesday an upstart bid to unseat second-term Rep. Renee Ellmers in a heavily Republican district in North Carolina. ‘So much of who I am was shaped in those early years," Aiken said in a video announcing his candidacy, in which he recounted a difficult childhood. "And it's part of why I decided to run for Congress.’” Aiken is a Democrat.
First published February 5 2014, 6:15 AM