White House Defense of Obamacare Is 'Such La-La-Land Stuff,' Economist Says
(CNSNews.com) - The Obama White House on Tuesday said it's a good thing that Obamacare subsidies will encourage more Americans to work less -- or work not at all.
But economist Art Laffer disagrees. "It's such la-la land stuff. I've never heard such nonsense in my life," Laffer, a former Reagan adviser, told Fox News on Wednesday. "It's amazing how these people don't understand budgets or economics."
A report released Tuesday by the Congressional Budget Office says Obamacare will cost the economy the equivalent of 2 million full-time workers by 2017 and 2.5 million by 2024, as taxpayer-subsidized health insurance makes work more of a choice than a necessity, particularly for low-wage workers.
Laffer compared the subsidies to a smorgasbord, where people overeat because the food is free: "You can't give away very valuable resources for free and expect people not to overuse them and to have the system go bankrupt. That's the very simple truth," Laffer said.
The solution, Laffer said, is to repeal the Affordable Care Act. "If this law is allowed to continue for the next decade, it will be a catastrophe for the U.S. economy."
Laffer said people do need to work to provide for their families. "That's what work's all about," he said. "Now hopefully, you love your work as well. But if you don't love your work, it doesn't mean you should be paid not to work so you can sit at home and dream. That's just silly.
"And we need to keep production going to provide for the standards of living that we have in this country...We need to get America going and growing again, to lift people out of poverty with good, high-paying jobs, even if they are a little unpleasant."
Appendix C of the CBO report released on Tuesday notes that "subsidies clearly alter recipients’ incentives to work." It further says that Obamacare subsidies "will reduce incentives to work" because those subsidies decline as incomes rise -- "thus making work less attractive."
"As a result," the report said, "some people will choose not to work or will work less -- thus substituting other activities for work."
The law's employer penalty may also discourage workers, CBO said.
Under the Affordable Care Act, employers with 50 or more full-time-equivalent employees will face a penalty starting in 2015 if they do not offer insurance -- or if the insurance they offer doesn't meet federal requirements.
"In CBO’s judgment, the costs of the penalty eventually will be borne primarily by workers in the form of reductions in wages or other compensation." And -- "because the supply of labor is responsive to changes in compensation, the employer penalty will ultimately induce some workers to supply less labor" -- work less, in other words.