WSJ Omits Positives In CBO Reports
A Wall Street Journal article omitted the positive economic news in recent Congressional Budget Office (CBO) reports, misleadingly framing the reports as having challenged and "chipped away" at White House economic policies.
In a February 19 post , the Wall Street Journal characterized two recent reports from the CBO on the economic effects of the Affordable Care Act  (ACA) and a proposal  to raise the minimum wage as the "biggest challenges to the Obama administration's economic policy in the past month," which the Journal claimed "chipped away at two pillars of President Barack Obama's economic policy." The Journal failed to report the positive aspects of the CBO findings or describe the reports' many nuances, and made no move to identify the CBO's "complex and layered projections" that supported its thesis beyond this general line:
The budget office calculated earlier this month that the health law would lead some people to leave their jobs or ratchet back their work hours, and it said this week that raising the federal minimum wage to $10.10 an hour from $7.25 could lead 500,000 people to lose their jobs.
Yet the Journal's framing of the reports as 'chipping away' at Obama's economic policies is undermined by the CBO's actual determinations, which contained positive economic news.
In its study  released this week on the effects of a minimum wage increase, the CBO determined that such an increase would lift 900,000 Americans out of poverty, 16.5 million workers would see their wages increased, and notably , "Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion." The New York Times offers some perspective :
Tuesday's report from the budget office, a federal nonpartisan agency, was almost entirely positive about the benefits of raising the minimum wage to $10.10 by 2016, as President Obama and Congressional Democrats have proposed.
More than 16 million low-wage workers, now making as little as $7.25 an hour, would directly benefit from the increase, the report said. Another eight million workers making slightly more than the minimum would probably also get raises, because of the upward "ripple effect" of an increase. That would add $31 billion to the paychecks of families ranging from poverty level to the middle class, significantly increasing their spending power and raising the nation's economic output and overall income.
In fact, the report said, 900,000 people would be lifted from poverty with a wage increase. The income of those below the poverty line would increase by a total of $5 billion, or 3 percent, at no cost to the federal budget.
And in its Budget and Economic Outlook for 2014-2024 , the CBO found that the ACA could free 2.5 million workers from being forced to keep their current jobs because of a need to maintain employer-sponsored health coverage. While the Journal attempts to portray this as a negative, the Economic Policy Institute (EPI) called it "an unambiguously good thing ":
Not surprisingly, the CBO finds that, all else equal, people are less likely to work and will work fewer hours under the ACA. They find, and I quote, "The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in business' demand for labor" (page 117).
These are purely voluntary labor supply decisions, not people being laid off from jobs they'd rather keep, or people looking for work and being unable to find it. Working-age adults can now choose, without regard to their need to secure health insurance, whether they wish to supply labor and how much labor they wish to supply to the labor market. This is unabashedly a good thing for them.
Opponents of the ACA will try to paint these CBO estimates as evidence that the ACA has "killed jobs" or something like it. That's flat wrong. What the ACA has done is expand the menu of options available to Americans about how to obtain decent health insurance without having their income fall to poverty levels. That menu used to include one option--"go to work for a large employer." The fact that it's broader now is an unambiguously good thing.
What's more, the report suggested that the ACA could increase job opportunities for currently unemployed workers. The CBO pointed out  that "[i]f changes in incentives lead some workers to reduce the amount of hours they want to work or to leave the labor force altogether, many unemployed workers will be available to take those jobs," and reported  that the law will have the stimulative effect of "raising overall demand in the economy." In a congressional testimony following the report's release, CBO director Douglas Elmendorf noted  that the ACA "would reduce unemployment over the next few years."