Is the Affordable Care Act hurting the economic recovery?

By GRACE MARIE TURNER

The law is discouraging businesses from hiring. According to a recent U.S. Chamber of Commerce survey, 39 percent of small business owners say the law is either their greatest or second-greatest obstacle to new hiring.

The president of the Federal Reserve Bank of Atlanta, Dennis Lockhart, says that “prominent” among the obstacles to hiring is the “lack of clarity about the cost implications” of the legislation.

“We’ve frequently heard strong comments,” Lockhart said, “to the effect of, ‘My company won’t hire a single additional worker until we know what health insurance costs are going to be.’ ”

The law also discourages people from seeking work. The director of the Congressional Budget Office, Douglas Elmendorf, said earlier this year the health law will mean 800,000 fewer workers in the American labor force. He said this is due to provisions in the health law that “will effectively increase marginal tax rates, which will also discourage work.”

James Sherk of The Heritage Foundation compared the rate of job growth before and after the health law was enacted in March of 2009.

His analysis shows that jobs creation came to a screeching halt in the month after the measure was enacted.

In the first 15 months of the Obama administration, there were early signs of an economic recovery with employers hiring workers at an average rate of 67,600 a month. But when the measure was signed into law in late March 2010, the hiring freeze began. In the 15 months after the law passed, the economy added a mere 6,500 jobs each month on average – less than one-tenth the pre-health-care act rate.

Other factors are at work, of course. Companies must see an improvement in the business climate before they need to hire more workers.

But there are enough other data points to strongly indicate that the uncertainty of health costs because of the act’s mandates is depressing hiring.

Starting in 2014, employers will be forced to provide expensive government-approved policies or pay federal fines. Larger companies already are starting to pare back on entry-level jobs, and some are automating to avoid the added cost of employing actual people.

McDonald’s restaurants and CVS drug stores, for example, are replacing some human order-takers and cashiers with electronic ordering and check-out systems.

This especially hurts entry-level employees who need jobs so they can get the skills to enter the workforce. Is it any surprise that teen unemployment has now hit 25 percent? The jobs they need are evaporating.

Another survey by Mercer consultants found that many employers plan to cut part-time employees back to fewer than 30 hours a week so they don’t have to provide them with health insurance.

“Small employers think the consequences of (the law) will almost uniformly be negative,” according to a survey by the National Federation of Independent Business’ Research Foundation.

It found that small business owners “expect the new law will increase taxes, will increase the federal deficit, will not slow health insurance cost increases, will not ease their administrative burdens, and will not improve public health.”

Before the health law passed, former House Speaker Nancy Pelosi promised: “So this bill is not only about the health security of America. It’s about jobs. In its life, it will create 4 million jobs – 400,000 jobs almost immediately.” Clearly, the health law is killing jobs, not creating them, and the best thing that Congress could do to spur jobs creation is to repeal the unpopular health law and lift the heavy cloud of mandates and regulatory burdens threatening employers.

Then Congress must offer a fresh approach to health reform that reduces health costs and frees employers to begin hiring again

Grace-Marie Turner is president and founder of the Galen Institute, which is funded in part by the pharmaceutical and medical industries. Readers may write her at Galen Institute, P.O. Box 320010, Alexandria, Va. 22320.

CON: If given a chance, law ill jump-start economy

By REP. JIM MCDERMOTT

SEATTLE —The newest line of Republican attack on the president is to say that the new health care law is hurting job growth because it creates “uncertainty” for businesses. Nonpartisan research shows this isn’t true, and we should have a responsible debate about creating jobs and dealing with our deficit.

The real economic problem in America is that consumers don’t want to spend and we’re not doing a good job of selling our goods overseas.

Republicans don’t want to address either problem – they just want to downsize government and leave everything to the free market to solve. After yelling their “Where are the jobs?” mantra for the past three years, they have spent nine months in control of the House of Representatives without writing a single jobs-creating bill.

Our sole focus right now should be on the unemployed and employers – retraining, investing, making it easy for workers to get back in the economy and grow business.

Instead of trying to create jobs, the Republican majority has gone on an all-out cutting spree – ending much-needed government programs for women, infants and children; choking off funding to fledgling renewable energy industries; and decreasing investments in education and infrastructure.

Private industry is sitting on more than $2 trillion in cash, waiting for the economy to improve. That money could be spent on jobs, but it’s not. In the absence of job creation in the private sector, the government must step in, just as it did in the mid- and late-1930s.

The Great Depression has numerous telling lessons, especially when it comes to government spending.

President Franklin Delano Roosevelt started large government spending programs in 1933, and by 1936, unemployment had dropped by almost 10 percentage points. Then in 1937, Roosevelt got cold feet about the rising deficits and cut off the spigot of federal funding as the economy was still fragile – and that drove the U.S. back into a recession.

In 1939, as the U.S. government started spending again, in preparation for the war, our economy officially emerged from the Great Depression.

Fast-forward to today. The Republicans’ solution to America’s fragile economy is cutting government spending, a policy they’ve pursued for nine months now. But what has it accomplished? Nothing for jobs, nothing for the economy.

Republicans like to blame the 2010 health care law for creating uncertainty among businesses, which, as their theory goes, discouraged businesses from hiring. There is uncertainty, but it has been created by the Republicans.

The health care law set realistic deadlines and benchmarks for businesses to meet incrementally over the next three to five years. But it is the Republican’s endless efforts to repeal the law that has created uncertainty. Businesses – and some states – are now questioning if they should proceed with implementation or hold off.

Add to this equation the uncertainty that businesses experienced as we veered near a government shutdown in April, not to mention the recent debt-ceiling debacle. Neither of these events had to be handled in an eleventh-hour, dead-of-night manner as they were by the Republicans.

Rather than create further uncertainty by trying to dismantle the existing health care law, we should focus on giving businesses the certainty that the federal government is here to rebuild America through a national infrastructure bank – one that could employ millions of Americans; enable us to compete with China’s high-speed rail and Internet and spur other business-friendly technologies.

More than anything else, businesses want certainty – certainty that America is going to have the infrastructure, technology and trained workforce, in addition to a stable health care system, that will support the development of today’s and tomorrow’s products.

Businesses will hire when America’s infrastructure is fortified and economy stabilized, which will require federal government spending. The “uncertainty” related to the health care law is nothing more than a Republican-manufactured myth.

Rep. Jim McDermott is an 11-term Democrat representing the Seattle area and the only psychiatrist among the 16 medical doctors serving in Congress. Readers may write him at 1035 Longworth House Office Building, Washington, D.C., 20515.