The House of Representatives will soon vote on full repeal of Obamacare. In an attempt to defend the health care overhaul, Treasury Secretary Timothy Geithner writes this morning that, in light of continued unacceptably high unemployment, “Given where we are, we must do things that help bolster the recovery, and repealing the Affordable Care Act would be a step in the wrong direction.”
Geithner is right that Congress should act to improve the economy, but leaving Obamacare in place would do the opposite. Repeal of Obamacare is the only way to restore economic prosperity in the United States, according to the 200 economists who signed a letter addressed to House and Senate leadership in support of overturning the new health law. The letter stresses that “the Patient Protection and Affordable Care Act is a threat to U.S. businesses and will place a crushing debt burden on future generations of Americans.”
Of the several provisions that will cause detriment to the economy, the letter highlights expensive mandates and penalties, higher taxes, and massive new spending.
Mandates that require employers to purchase insurance for their workers or pay a penalty will reduce businesses’ resources to grow and create new jobs. John C. Goodman, president of the National Center for Policy Analysis, explains how, by increasing the overall cost of labor, Americans can “expect huge labor market upheaval and high unemployment” as a result of the new law.
The law also creates several new taxes and increases existing rates. Taxes on drug and medical device manufacturers will not only raise the cost of medical services but create incentives for businesses in those industries to move jobs overseas. Obamacare increases the Medicare payroll tax for high earners and expands the tax to apply to investment income, hurting small businesses and reducing investment in the American economy.
Heritage’s Center for Data Analysis (CDA) conducted a dynamic analysis of the new law that, unlike the static model used by the Congressional Budge Office (CBO), accounts for how policy changes will impact behavior and the overall performance of the economy. The results show that “the bill’s taxes, penalties, and fees on investors and businesses will decrease the amount of investment in the economy. This reduced investment will in turn lead to a decline in productivity, causing the economy to produce $706 billion less worth of goods and services.”
Finally, the 200 economists supporting repeal write that “a more comprehensive and realistic projection suggests that the Affordable Care Act could potentially raise the budget deficit by more than $500 billion during the first ten years and by nearly $1.5 trillion in the following decade,” when budget gimmicks and omitted costs unaccounted for by the CBO estimate are considered. CDA predicts that Obamacare will increase annual federal deficits by, on average, $75 billion. In 2020, this would result in an increase in the publicly held debt of $753 billion. This unsustainable level of new government spending spells disaster for the economy.
According to CDA economists, Obamacare will result in the lost of 670,000 job opportunities per year. If jobs are Americans’ primary concern, Congress should take notice of these economists’ warning and repeal Obamacare. This is the only way to reduce federal deficits and start rebuilding the economy.