Politics & Policy

Not a Jobs Bill

The Democrats' health-care legislation will cost up to 700,000 jobs by 2019.

The White House, Nancy Pelosi, and Harry Reid have found themselves increasingly desperate to rationalize their force-feeding our country health-care legislation. The most recent polls show Americans to be overwhelmingly opposed — especially in swing districts, where at least 60 percent of voters want Congress to scrap the bill or move on to the No. 1 issue facing American families: jobs. And a recent Rasmussen poll showed that 81 percent of voters think health-care reform’s costs will be higher than projected.

President Obama has broken almost every high-profile campaign promise he made. First, he imposed taxes on families making less than $250,000 per year, and now, he’s pushing an insurance mandate through Congress, using parliamentary tricks and making deals with the insurance and pharmaceutical industries in the process. Understanding that the No. 1 issue is jobs, the president and Nancy Pelosi have begun peddling perhaps the most outrageous claim of all — that passing the health-care bill will create jobs.

During the health-care “summit,” Speaker Pelosi claimed that the health-care bill will create “400,000 jobs almost immediately.” There’s only one problem: That claim relies on a highly flawed study done for the liberal Center for American Progress (CAP) by David Cutler, a professor of economics at Harvard, and Neeraj Sood, an associate professor of clinical pharmacy and pharmaceutical economics and policy at the University of Southern California School of Pharmacy. Cutler was a paid consultant and senior health-care adviser for the Obama presidential campaign.

Higher taxes and government controls have seldom been associated with job creation anywhere in public discourse, much less in the precincts of academic economists. Yet Cutler and Sood managed to turn health-care reform into a job creator. How? By making guesses about health-care cost savings and then translating those guesses into estimates of job creation.

In order to answer numbers with numbers, the Americans for Tax Reform Foundation asked the Beacon Hill Institute at Suffolk University in Boston to review the Cutler-Sood findings for their economic credibility. What BHI discovered is that Cutler and Sood ignored the cost effects rigorously estimated by the Congressional Budget Office (CBO) and Centers for Medicare and Medicaid Services (CMS) in favor of estimates derived via their own (as Cutler put it) “less formal” methodology — i.e., extrapolating from anecdotes.

What if we choose to believe the cost estimates of the government agencies actually responsible for passing and implementing the legislation? BHI answered this question by applying the Cutler-Sood econometric methodology to the CBO and CMS estimates of cost effects. And voilà! Instead of creating 250,000 to 400,000 jobs per year over the next decade, Obamacare will cost Americans 120,000 to 700,000 jobs cumulatively by 2019.

Forecasting is inherently inexact, and the researchers at BHI present a wide range of estimates based on the range of data available from authoritative sources. What is apparent, however, is that professors Cutler and Sood started with their conclusion and worked backward to ensure that the data fit what they wanted to say. Thus, the administration and Congress have come to misrepresent health reform as a job-creation program.

They’d be better off leaving well enough alone. One in eight Americans now work in the health-care sector — the Bureau of Labor Statistics put the number at 14.3 million workers in 2008, and it has been almost the only sector of the economy to add jobs during the recession.

The Beacon Hill Institute study challenges a basic assumption that appears to be driving the health-care bill’s proponents. Democratic lawmakers are now on the verge of committing serious legislative — and frankly health-care — malpractice. Cherry-picked references may make for good political rhetoric, but if the Democrats succeed, the American people will pay the ultimate price.

– David G. Tuerck is executive director of the Beacon Hill Institute and professor and chairman of the Suffolk University Department of Economics. Grover Norquist is president of Americans for Tax Reform.

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