Sober CBO Putting Democrats on the Defensive

Reports on the job impact of Obamacare and a minimum-wage hike are making life very hard for the Left.

President Obama makes his way to board Marine One last month on the South Lawn of the White House.
National Journal
Catherine Hollander Sarah Mimms
Feb. 18, 2014, 3:06 p.m.

The non­par­tis­an Con­gres­sion­al Budget Of­fice has been mak­ing life hard for Demo­crats lately.

While CBO’s ana­lys­is on the Af­ford­able Care Act and the im­pact of rais­ing the fed­er­al min­im­um wage offered plenty of good news for those on the left who sup­port the policies, they of­fer harder-to-sell news about their im­pact on the labor mar­ket, too. With its re­port on the min­im­um wage, re­leased Tues­day, CBO has left Demo­crats fight­ing eco­nom­ic battles rather than tout­ing the easy-to-di­gest num­bers their Re­pub­lic­an op­pon­ents are ham­mer­ing home.

“With un­em­ploy­ment Amer­ic­ans’ top con­cern, our fo­cus should be cre­at­ing — not des­troy­ing — jobs for those who need them most,” Brendan Buck, a spokes­man for House Speak­er John Boehner, said in an emailed state­ment.

What CBO really did was lay out a scen­ario in which the eco­nomy had 500,000 few­er work­ers in 2016, thanks to a three-step in­crease in the min­im­um wage to $10.10 from its cur­rent level of $7.25, but where there were also 900,000 few­er people in poverty, and at least 16.5 mil­lion with high­er wages. The bot­tom line, if you read the re­port, was that rais­ing the min­im­um wage of­fers a trade-off: High­er wages for many, or few­er jobs for some.

And so, as Re­pub­lic­ans point to a high­er min­im­um wage as a job killer, Demo­crats found them­selves fight­ing back against the worst find­ing.

CBO “goes out­side the con­sensus view of eco­nom­ists when it comes to the im­pact of the min­im­um wage on em­ploy­ment,” Jason Fur­man, head of the White House Coun­cil of Eco­nom­ic Ad­visers, said in a call with re­port­ers Tues­day.

In a state­ment shortly after the CBO re­port was re­leased, the pro­gress­ive group Amer­ic­ans United for Change termed the re­port an “out­lier.” The group has already re­leased a Web video de­fend­ing the Demo­crat­ic plan, en­titled: “Earth to CBO.”

Sen. Tom Har­kin, D-Iowa, who sponsored le­gis­la­tion along with Rep. George Miller, D-Cal­if., that would raise the min­im­um wage to $10.10 in three steps and then in­dex it to in­fla­tion, said the no­tion of job losses stem­ming from a high­er min­im­um wage was “a myth.”

“Since the first min­im­um wage was en­acted more than 75 years ago, op­pon­ents have ar­gued that a wage floor would cause job loss. But this is a myth. Our own his­tor­ic­al ex­per­i­ence shows that noth­ing could be fur­ther from the truth,” Har­kin said in a state­ment. “In­deed, the new­est eco­nom­ic re­search us­ing the most soph­ist­ic­ated meth­od­o­lo­gies has demon­strated that mod­est in­creases in the min­im­um wage do not cause job loss.”

A sim­il­ar scene played out when CBO re­leased its ana­lys­is of Obama­care two weeks earli­er. The budget of­fice said the health re­form law would re­duce the num­ber of hours worked by the equi­val­ent of 2 mil­lion full-time work­ers in 2017. “The middle class is get­ting squeezed in this eco­nomy, and this CBO re­port con­firms that Obama­care is mak­ing it worse,” Boehner said in a state­ment after that re­port was re­leased.

Demo­crats didn’t dis­pute the CBO find­ings on Obama­care, al­though they did of­fer cla­ri­fic­a­tions. “It doesn’t say ‘los­ing jobs.’ It says [full-time equi­val­ents],” said the White House’s Fur­man. “So to some de­gree, this might be some­body who used to work 60 hours be­cause they needed health in­sur­ance and that was the only job that offered it, and now they can get a dif­fer­ent job at 35 hours that doesn’t of­fer health in­sur­ance, but they’re get­ting it through this and they’re switch­ing from one to the oth­er.”

And, as with Obama­care, while Demo­crats can em­phas­ize the pos­it­ives in the CBO re­port on the min­im­um wage — and there are plenty — it can be a hard sell over the “job-killer” monik­er.

Fur­man said he’s not wor­ried the new CBO ana­lys­is will change the pub­lic’s per­cep­tion of the min­im­um wage; he’s con­fid­ent they’ll see the be­ne­fit in high­er wages for many over the pos­sib­il­ity that there will be less work avail­able.

The pub­lic has been firmly on the White House’s side on the is­sue. Last month, a poll con­duc­ted by Quin­nipi­ac Uni­versity found that 71 per­cent of voters sup­port rais­ing the min­im­um wage from its cur­rent level. Twenty states and the Dis­trict of Columbia have in­creased their min­im­um wages high­er than the cur­rent fed­er­al rate.

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