Dealing With a New World

America may never recover from this year’s Super Bowl. The game itself was what it wasn’t supposed to be – the Denver guys, with the best offense anyone had seen in twenty or more years, led by that gimpy old guy who had set all sorts of new passing and touchdown records this year, was blown out by the Seattle guys, with the best defense in the league. Denver’s Peyton Manning couldn’t figure them out. Seattle didn’t run any tricky defensive schemes at all – they were just young and fast and brutally efficient, and happy-go-lucky and, as everyone saw, a bit goofy. Peyton Manning was serious, and damn it, they were having fun, and so a lot of people lost money on that game, even those who bet that Seattle would win. Gamblers bet the spread, and no one expected a thirty-five point spread. Now sports fans will have to account for teams coached by guys like Seattle’s Pete Carroll, who doesn’t scream and yell with awesome intensity like Vince Lombardi or that Madden fellow. He just lets his players do their thing and work out their own ways to cooperate with each other to take care of whatever big bad meanies they have to face. They’re professionals. They’re adults. He trusts them, and they trust him right back. It’s a new model. Things will be different now.

Then there were this year’s Super Bowl ads – this year with that reclusive counterculture icon of the sixties, Bob Dylan, telling us to buy a new Chrysler, because what’s more American than America, and Coca-Cola outraging every conservative in America with that ad that featured all sorts of people singing “America the Beautiful” – in English of course, and then in Arabic and Spanish and whatnot, with a gay couple in there somewhere too. That didn’t seem very American to many on the right. Glenn Beck argued that it was incredibly divisive of Coca-Cola to be so inclusive. Well, that made sense to him. It also didn’t help that the folks who make Cheerios, that most banal of breakfast cereals, which are the most banal of all foods, keep running that series of ads with that interracial couple and their impossibly cute mixed-race little girl. Discussion of that ad campaign still rages – with the right still talking about Real Americans, as opposed to the fake ones.

It’s what they do. It’s just that things are different now. They may be able to block any sort of immigration reform for a few more years, but things really are different now. Everyone else seems to know now, at last, that all sorts of people are actually quite thoroughly American, even poor people, even those who don’t own their own business, even gay people, even those who aren’t white-bread evangelical Christians living in a small town in the middle of Iowa. Maybe they’ll get over it. Or maybe they’ll have to get blown out like the Denver Broncos before it sinks in.

Then there was the third unsettling Super Bowl oddity and a recent tradition, the president sitting down for a one-on-one interview before that game, with a big-gun television journalist – and this time that was Bill O’Reilly from Fox News. That didn’t go well. O’Reilly trying every way he could to get Obama to admit that he, as president, was a lying sack of shit, and this was the most corrupt presidency in history, but in a pointed but respectful way:

When Mr. O’Reilly asked if the broken promise on keeping health plans was “the biggest mistake of your presidency,” Mr. Obama responded, “Oh, Bill, you’ve got a long list of my mistakes of my presidency.”

When Mr. O’Reilly interrupted an answer to press Mr. Obama on why Susan E. Rice, now the president’s national security adviser, first characterized the Benghazi attack as a spontaneous response to an anti-Muslim video, Mr. Obama said, “And I’m trying to explain it to you if you want to listen.”

Mr. O’Reilly went on to say that Mr. Obama’s detractors believe the administration tried to mislead the public about what really happened in Benghazi because it was in the middle of his re-election campaign.

“They believe it because folks like you are telling them,” Mr. Obama responded. …

When Mr. O’Reilly asked if the IRS scandal involving tax scrutiny of political groups exposed corruption in the agency, Mr. Obama blamed Fox for spreading what he called incorrect information. “That’s not what happened,” Mr. Obama said. “Folks have, again, had multiple hearings on this. I mean, these kinds of things keep on surfacing in part because you and your TV station will promote them.”

Mr. O’Reilly responded that there were “unanswered questions” and asked again if there was corruption in the IRS.

“There were some boneheaded decisions,” the president said.

“But no mass corruption?”

“Not even mass corruption – not even a smidgen of corruption,” Mr. Obama said.

It was a painful ten minutes, but the Fox News angry right, having been spitting angry for almost six years now, was sure O’Reilly cleaned Obama’s clock by pointing out the obvious on national television, and everyone else saw it the other way. Everything has been investigated. There’s nothing there, save for a few dumb mistakes, since corrected. In fact, this interview went well. Everyone saw the Main Man at Roger Ailes’ Fox News sputtering on about outrages they made up and can’t let go. Why not expose them for what they are? It was fitting that shortly after the interview, the awesome Denver Broncos, on their first play from scrimmage, got all confused – the center hiked the ball early and it flew over the head of the surprised Peyton Manning into the end zone for a safety – and it was 2-0 Seattle after twelve seconds of play. Lots flew right by Bill O’Reilly too.

Salon’s Joan Walsh adds this:

You couldn’t help thinking of election night, when Karl Rove wouldn’t let Fox declare Obama the winner over Mitt Romney, because he had convinced himself along with the Fox audience that the incompetent and unpopular president could not possibly win. The folks inside the Fox bubble hurt themselves, because they don’t see reality until it bites them in the ass. That’s what gets you Bill O’Reilly babbling to the president about nonexistent controversies and asking questions that were answered months ago.

And yet I found the whole thing profoundly depressing. Maybe the worst part was when O’Reilly asked a viewer’s question: “Why do you feel it’s necessary to fundamentally transform the nation that has afforded you so much opportunity?” O’Reilly presumably got lots of suggestions from viewers, and I’m sure many were uglier than that. But what does it mean that that’s the question he chose?

It means, again, that O’Reilly and Ailes and their viewers see this president as unqualified and ungrateful, an affirmative action baby who won’t thank us for all we’ve done for him and his cohort. The question was, of course, deeply condescending and borderline racist. Obama has been afforded “so much opportunity”? What about O’Reilly, who pretends he’s a working-class son of Levittown, Long Island, when he’s actually the kid of an accountant who grew up in Westbury and went to private high school and university?

This notion that an older generation of white people worked hard for everything they achieved, while a younger generation of folks like Barack Obama had their success handed to them, is a staple of the white backlash that Ailes has been channeling since he helped elect Richard Nixon in 1968.

Yes, but things have changed, even if they haven’t changed over there, which worries Walsh:

A reactionary national minority that controls gerrymandered House districts and a loud conservative cable network, in a political system that gives a lot of power to minorities to begin with, can do an awful lot of harm before it ages into that great retirement community in the sky, where Dwight Eisenhower is still president. I hope I’m wrong, but I don’t think Fox News will stop being a powerful and corrosive force in American politics any time soon.

She may be right about that, and see Ryan Grimm:

The budget deficit is the lowest it has been since President Barack Obama took office, according to a Congressional Budget Office report this week. But don’t expect that to matter to the American people.

In fact, the deficit has been falling steadily since 2009. Yet a new HuffPost/YouGov poll shows that Americans still think the deficit is going up and disapprove of Washington politicians accordingly.

It’s a painful irony for the jobless, whose livelihoods were sacrificed in the pursuit of deficit reduction over the past several years. Beginning in 2010, the White House shifted its focus from growing the economy to reducing the deficit, hoping to win over swing voters thought to be turned off by too much government spending. As public jobs were slashed and government spending slowed, the economy took the predicted hit. But as the survey shows, there was no political gain that came with the pain.

The administration has since pivoted away from talk of belt tightening and shifted back toward economic growth — which, economists have pointed out all along, is the fastest way to reduce the deficit.

According to the new poll, 54 percent of Americans think the budget deficit has increased since Obama took office in 2009, while only 19 percent know it has decreased. Fourteen percent think it has stayed the same since Obama became president.

The White House didn’t win over all that many swing voters, if any. Voters had no idea what was really happening, thanks to Fox News and others. That means that the White House helped ruin the economy by trying to move deficits “off the table” as an issue, and the jobless paid the price for that cold political calculation. That was just stupid. What has come to be known as the Great Recession was a new world, where cutting everything was the worst thing you could do. That’s what you do when you have an overheated economy and massive inflation, because when demand outstrips supply, rather than what we faced, the collapse of demand as in any recession…

Oh, forget it. That’s been argued endlessly. There’s no point in suggesting a better thing to do when the quarterback has no idea what he’s facing – something new. Ask Peyton Manning about that. Oh, and by the way, Donald Trump was outraged that Obama didn’t wear a necktie in that Super Bowl interview – but he didn’t say Manning should have worn a tutu or a Superman cape or something. Advice is easy when you don’t know the situation.

And then it only got worse:

The non-partisan Congressional Budget Office gave new fuel to the debate over the Affordable Care Act Tuesday with its estimate that the law will lead to the eventual loss of about 2.5 million full-time jobs.

In its annual budget and economic forecast the agency also said that the ACA or Obamacare will reduce the total number of hours worked by about 1.5 percent to 2 percent from 2017 to 2024.

Even though total employment will increase over the coming decade, the CBO said, “that increase will be smaller than it would have been in the absence of the ACA.”

CBO director Douglas Elmendorf told reporters that the analysis done by his agency’s experts “led us to conclude that the effect of the Affordable Care Act on labor supply would be a good deal larger than we had thought originally.” In 2011, the CBO estimated the loss of full-time equivalent jobs due to the law would be about 800,000.

Ah, they were right. Obamacare is a job-killer, or not:

Both sides of the Obamacare debate used the new findings to buttress their arguments, with House Speaker John Boehner saying that Republicans had argued for years that “the president’s health care law creates uncertainty for small businesses, hurts take-home pay, and makes it harder to invest in new workers. The middle class is getting squeezed in this economy, and this CBO report confirms that Obamacare is making it worse.”

But Obama spokesman Jay Carney said the CBO analysis was incomplete. The budget office, he said, did not take into account the beneficial effect of slower health care cost growth due to the ACA, “Experts have estimated that slower growth in health costs due to the ACA will cause the economy to add an additional 250,000 to 400,000 jobs per year by the end of the decade,” he said. “Moreover, CBO does not take into account positive impacts on worker productivity due to the ACA’s role in improving workers’ health, including reduced absenteeism.”

There is, again, the usual problem with the new world:

The Affordable Care Act is killing jobs, or not, depending on which portion of the Washington Post you read on Tuesday.

The paper’s conservative columnist Jennifer Rubin wrote that Obamacare was “killing jobs and squelching growth” based on a newly released CBO report that says the law will likely “decrease the number of full-time equivalent jobs in 2021 by 2.3 million.”

However, the report notes that the reduction in hours worked by Americans will “almost entirely” be due to workers’ choice to leave the work force — not because they lost their jobs or can’t find a full-time job.

Glenn Kessler, the Post’s “Fact Checker,” followed up a few hours later giving the claim made by Rubin and other news organizations three Pinocchios out of four.

Matthew Yglesais frames it this way:

John is 59, has had a good career as a mechanical engineer, has saved pretty diligently his whole life, and also has a chronic heart condition. He’s got the cash to retire early, but he’s not yet eligible for Medicare. So he needs to keep working more than he wants to for a few more years. Or at least he would have if not for the Affordable Care Act, which makes it feasible for him to buy insurance on the private market and get a jump start on his fishing plans.

Mary is 27 and pregnant. She’d like to start working part time once the baby is born. But even though her husband’s company is doing OK it’s too small to provide health insurance to its employees. So the family really needs Mary to put in enough hours to qualify for benefits at her office. That is, they would need her to work full time if not for the Affordable Care Act, whose small-business tax credits are going to let her husband’s boss start offering insurance.

Those are good stories, right?

Well, certainly I framed them as good stories. Today’s Congressional Budget Office update on the state of the labor market frames them as bad stories by estimating that the Affordable Care Act will shrink the size of the American labor force by about 2 million full-time equivalent employees.

This is a matter of recognizing the new world we face:

Obamacare will kill jobs in the same way that Social Security kills jobs – by making it easier for people in certain circumstances to get by without a job. But your mileage may vary on this. The point, however, is that we’re talking about people quitting not about people getting fired.

This has confused major news organizations quite a bit, and David Atkins tries to straighten things out:

So the CBO released a report suggesting that the ACA would, among other impacts, likely cause over two million workers to leave the workforce. The simple reason for that is that there are millions of Americans, many nearing Medicare eligibility, who would prefer not to work but have to work in order to keep their outrageously overpriced health insurance. Meanwhile, there are millions of Americans who are out of work and desperately need jobs.

In any sane world, allowing the people who don’t want to be working anymore just to pad the health insurance companies’ bottom lines to retire, while opening up millions of jobs for new job seekers, would be considered a good thing. In any sane world, giving workers more leverage over employers in a labor market definitively tilted toward management would be a good thing.

But not in Republican land or in a media world that spends so little time covering labor and basic economics that the CBO’s identification of a loss of two million “workers” was interpreted for several hours in many headlines as a loss of 2 million “jobs.”

These aren’t the same things, and Atkins recommends Greg Sargent and Media Matters and a few other on the issue, but strongly recommends the Los Angeles Times’ Michael Hiltzik on the issue:

The Congressional Budget Office is out with its latest report on the Affordable Care Act, and here are a few bottom lines:

The ACA is cheaper than it expected.

It will “markedly increase” the number of Americans with health insurance.

The risk-adjustment provisions, which Congressional Republicans want to overturn as a “bailout” of the insurance industry, will actually turn a profit to the U.S. Treasury.

Given all this, why are the first news headlines on the CBO report depicting it as calling Obamacare a job killer?

You can chalk up some of that to the crudity of headline-writing, and some to basic innumeracy in the press. But it’s important to examine what the CBO actually says about the ACA’s impact on the labor market.

This is pretty simple, and right there in the CBO report:

The CBO projects that the act will reduce the supply of labor, not the availability of jobs. There’s a big difference. In fact, it suggests that aggregate demand for labor (that is, the number of jobs) will increase, not decrease; but that many workers or would-be workers will be prompted by the ACA to leave the labor force, many of them voluntarily.

As economist Dean Baker points out, this is, in fact, a beneficial effect of the law, and a sign that it will achieve an important goal. It helps “older workers with serious health conditions who are working now because this is the only way to get health insurance. And (one for the family-values crowd) many young mothers who return to work earlier than they would like because they need health insurance. This is a huge plus.”

The ACA will reduce the total hours worked by about 1.5% to 2% in 2017 to 2024, the CBO forecasts, “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.”

That translates into about 2.5 million full-time equivalents by 2024 – not the number of workers, because some will reduce their number of hours worked rather than leaving the workforce entirely.

The Washington Monthly’s Ed Kilgore adds this:

You could even argue these vacated full-time jobs might provide some opportunity to the younger people who are always being painted as victims of Obamacare.

But before we can have that discussion, the triumphal shrieking of the Right must die down.

Josh Barro – the wayward son of a famous quite conservative economist by the way – sees something else in this CBO report:

Here’s a key implication of that finding that most people are glossing over: Obamacare will drive wages up.

The price of labor – like any good or service – is determined by supply and demand. If producers of labor (workers) become less inclined to sell it, but consumers of labor (firms) are unchanged in their interest in buying, then the price of labor has to rise in order to bring the quantity supplied and the quantity demanded into line. …

This helps explain why so many business owners have been apoplectic about the law.

The usual warning about Obamacare from the right has been that it will “kill jobs” by making firms less inclined to hire. While this warning tends to come from (or on behalf of) business owners, the phenomenon it describes would mostly have negative effects on workers, by increasing unemployment and reducing their ability to command wage increases.

That’s simple enough, and now we’re in a new world:

If (as CBO predicts) the decline in work is driven almost entirely by a decline in labor supply, the upshot will be very different. Employers will be left holding the bag economically. Workers will choose to work fewer hours; since firms won’t be any less interested in hiring, they’ll have to pay more per hour to get those workers in the door.

The positive wage effect should be concentrated among low-skill workers, who will face the greatest discouragement to work from Obamacare, and therefore will be able to command the greatest wage increases in order to keep working.

More broadly, Obamacare alters the employer-employee relationship in a way that empowers employees. When an employee is dependent on his job not just for a wage but for health insurance, he is less able to threaten to leave if he doesn’t get a raise. Severing the work-insurance link strengthens the employee’s hand in bargaining – which is bad for employers and good for workers.

And there’s that other issue:

Over the last few decades, owners of capital have captured a rising share of national income, as wage growth has lagged. By strengthening workers’ hands in negotiation, Obamacare should increase the labor share of GDP and reduce income inequality.

Obamacare will help fix that too? Welcome to the new world. And try not to get blown out like the Denver Broncos, or Bill O’Reilly. America may never recover from this year’s Super Bowl, but it might.

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About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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One Response to Dealing With a New World

  1. Rick says:

    I forgot to mention that I learned something both interesting and important from yesterday’s column (the Republicans having tried to focus on small businesses, instead of big businesses, are now realizing that most Americans don’t identify with small businesses either), and I should not forget to mention that, had I not read today’s, I would not have realized that the just-released CBO report did not say Obamacare is a job killer, but will allow more people to voluntarily quit their jobs if they want — which is a good thing rather than the scary thing that Republicans and some in the media are leading us to believe.

    If people have enough money to retire, that’s good! They can quit and go spend their money, which is just what our economy needs, leaving behind jobs that can be filled by other people who need jobs, which is also just what our economy needs! It’s a win-win! If anything, one could argue, rather than killing jobs, the ACA creates them!

    And yet, like the public not being aware of the deficit dropping under Obama instead of steadily increasing, too many Americans have been only half listening and will file this away in their memory banks as something else the Republicans were right about all along, and will probably continue to make bad decisions based on faulty information.

    I do think part of this is Obama’s fault, first of all by not reminding people over and over that, while they may think otherwise, the deficit has been dropping on his watch, not rising, but second of all, by not coming out as a genuine, Krugman-believing Keynesian from the get-go — that is, showing concern for the economy rather than the deficit, and not being afraid of the word “stimulus”, instead of too often just handing the Republicans the car keys.

    In fact, I’ve often thought that, if I ever got a chance to meet Obama face to face to ask him just one question, it would be, “What exact economic theory is it that you disagree with Paul Krugman on?” Given what he’s done and not done in office, he obviously doesn’t subscribe to everything Krugman says, and for all the interviews he’s given the media over the years, I don’t remember any in which a reporter has tried to pin him down on just what particular economic school of thought he belongs to.

    I do, however, have my doubts about this bright future that Josh Barro is predicting here — that “Workers will choose to work fewer hours; since firms won’t be any less interested in hiring, they’ll have to pay more per hour to get those workers in the door.” I imagine that will depend on whether the present weak job market turns out to be the “new normal”, in which many of those jobs that went away during the recent recession just never come back.

    Rick

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