THE BLOG
02/11/2014 09:50 am ET | Updated Apr 13, 2014

COB Report: How Both Parties Missed the Point

Last week, the Congressional Budget Office released numbers that allowed both parties to make sure they wouldn't skip a week without sounding like partisan hacks. Before I get into that, a quick recap of what the CBO report actually said.

By 2024, the United States will have a reduction in hours worked that aggregates to 2.5 million full-time jobs. The CBO foolishly boiled it down for people, forgetting that non-partisan groups make the best cannon fodder. To put those numbers another way, 10 million workers could choose to work 10 hours less per week, moving from a 40 hour week to a 30 hour week. It's not good. The last five years of stimulus, jobs bills and shovel-ready projects have been entirely devoted to the opposite of this, putting people to work in full-time jobs. Whether you like President Obama's proposals or Congressional Republicans' proposals, we can all agree that the goal of putting people back into full-time employment is admirable and desirable.

So let's start with the GOP reaction which was a little less objectionable. Immediately, every Republican from John Boehner to Butters Stotch started saying the Patient Protection and Affordable Care Act (Obamacare) was killing 2.5 million jobs. That's simply wrong. There is no debate about the truthfulness of this statement. Reducing worker hours in the aggregate of 2.5 million jobs is simply not as bad as reducing 2.5 million jobs. It's like cutting the top quarter off every tree or cutting down one quarter of all trees -- they're simply not the same.

I get why the GOP did it. In the age of the low information voter -- and yes, they're in great supply on both sides of the aisle -- you need sound bites, not facts. Twenty-eight percent of Americans believe the Illuminati are running the show in the U.S. -- this isn't a group ready for the nuances of forecasting and labor figures. Were they wrong? Yes. But did this go beyond normal politicking? Probably not.

Now, we get to the Democrats. According to the Dems, not only is this loss of 5.2 billion hours of employment (and the tax revenue lost on it) not bad -- it's great. How great? Well, apparently we just freed every single mother and artist from the indentured servitude of "job lock" -- nothing is better to justify an asinine position than obscure economic theories. If the Democrats are to be believed, no child will go untucked and there will be nary a blank canvas not touched by oil paints because of Obamacare.

Here's the problem, 2.5 million people aren't leaving their jobs. More likely, 10 million or so will choose to cut hours to get below the various thresholds for subsidies under Obamacare. The real money subsidy comes at 250 percent of the federal poverty level, or about $50,000 for a family of four. It's a direct subsidy to lower out of pocket costs. What we're likely to see is people intentionally making less money because getting under the $50,000 threshold will provide subsidies that will greatly offset the loss of wages because they're being forced to purchase health insurance or face getting hit with a tax. If you're making $55,000 and the subsidy is $10,000, it's not rocket science to predict consumer behavior; however, what no one in the donkey caucus is talking about is that people will now, in fact, be making less money. Their lower income may trigger other government benefit programs like SNAP. So now we're in a situation where people are paying less in taxes because of diminished income and taking more in government subsidies.

Is everyone getting health insurance a good thing? Yes. Granted there are about 15 assumptions that go into that "yes." But from 40,000 feet, it looks like a good thing.

Is it a good thing to have everyone getting health insurance with close to 5 percent of the labor force intentionally cutting their hours? No.

To say it will lower unemployment because it now will take four workers to work 120 hours instead of three because government subsidies have created a negative incentive is simplistic and wrong. Assuming minimum wage employees exclusively cut their hours, the lower middle class and poor -- and don't kid yourself, those are the only ones who cutting hours will benefit -- will be foregoing $35 billion in wages.

Once you do the math out, you see how this acoustic guitar kumbaya-fest makes very little sense. But it's Monday, and if history has taught us anything, the Republicans will regain the "Dumbest Statement of the Week" title faster than Sage Kotsenburg rocking the "Holy Crail" to gold in Sochi.