Fox's Megyn Kelly and former Bush speechwriter Marc Thiessen decided to double-down on the latest set of debunked talking points on the CBO report and what it said about Obamacare and its affect on our economy. Apparently neither of them are familiar with the definition of the word aggregate, since Thiessen does his best to conflate the total cost of labor being reduced with individual workers taking a pay cut.
Here's now Fox breathlessly reported on this over at their blog: Mark Thiessen: U.S. Workers Face $70B Pay Cut Due to ObamaCare:
Mark Thiessen says American workers are getting a $70 billion pay cut due to ObamaCare.
“I dug through the CBO report and on page 118, appendix C, there’s this nugget, this little bombshell,” Thiessen said.
The report reads: “CBO estimates that the ACA will cause a reduction of roughly 1 percent in aggregate labor compensation over the 2017-2024 period, compared with what it would have been otherwise.”
That means that Americans will face a 1 percent pay cut due to the law.
Except that's not what it says. They're playing the same game they did with the supposed job losses and conflating that with a reduction in the labor pool. Here's what the report actually says:
CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive.
Because the largest declines in labor supply will probably occur among lower-wage workers, the reduction in aggregate compensation (wages, salaries, and fringe benefits) and the impact on the overall economy will be proportionally smaller than the reduction in hours worked. Specifically, CBO estimates that the ACA will cause a reduction of roughly 1 percent in aggregate labor compensation over the 2017–2024 period, compared with what it would have been otherwise.
Although such effects are likely to continue after 2024 (the end of the current 10-year budget window), CBO has not estimated their magnitude or duration over a longer period.
Meet the new talking point. Same as the old talking point.
UPDATE: And it gets worse. Here's more from Dean Baker: Marc Thiessen Says Last Year's Stock Market Run-Up Led to a Huge Cut in Pay:
Many people who have retirement funds in the stock market are able to retire this year as a result of the big run-up in the stock market last year. According to Washington Post columnist Marc Thiessen this means that these people will see a big cut in their pay. After all, retired people won't be collecting paychecks. I'm not making this up, that is the argument in Marc Thiessen's latest column, cleverly titled, "Obamacare's $70 billion pay cut." [...]
Well first let's go back to the CBO report cited by Thiessen.
"According to CBO’s more detailed analysis, the 1 percent reduction in aggregate compensation that will occur as a result of the ACA corresponds to a reduction of about 1.5 percent to 2.0 percent in hours worked. (p 127)"
We checked with Mr. Arithmetic and he pointed out that if hours fall by 1.5 to 2.0 percent, but compensation only falls by 1.0 percent, then compensation per hour rises by 0.5-1.0 percent due to the ACA. In other words, CBO is telling us that for each hour worked, people will be seeing higher, not lower wages. That is the opposite of a pay cut.
However because people may now be able to afford health insurance either without working or by working fewer hours than they had previously, many people will choose to work less. That is worth repeating since it seems many folks are confused. Because people may be able to afford health insurance either without working or perhaps by working less than they had previously, many people will choose to work less.
Yes, just like people will opt to retire because they have more money in their retirement accounts, some people will opt to work less because Obamacare has made it easier to afford health care insurance. This is a voluntary decision that CBO is calculating people will make.
Now Mr. Thiessen is apparently convinced that the decision to work less will be the wrong decision for these people:
"most of that $70 billion in lost wages will come from the paychecks of working-class Americans — those who can afford it least"
but apparently the working-class Americans making the decision believe otherwise. Obviously the answer here is for Mr. Thiessen to go around to all the people who quit their jobs or cut back their hours because of Obamacare and explain to them why they have made a bad choice. Maybe he will change some minds and get people to work harder, but on its face, it seems likely that these working class people would be better positioned to judge how much they need to work than Mr. Thiessen.