Friday, January 21, 2011

Administration Official Admits: Health Care Debate Hurt the Economy

In this Sunday’s New York Times Magazine, Peter Baker has another long feature story on the inner workings of the Obama Administration, this one focused on White House debates on economic policy.  The article summarizes both policy debates and bureaucratic gossip, but one quote in particular stands out – this one from Christina Romer, the former Chair of the Council of Economic Advisors:

Where we didn’t do enough [on the economy] was in the fall of ’09.…We never coalesced and never made as strong a push as we should have for some of the things that finally got done last month, like a payroll tax cut.

The answer of course about why the Administration “didn’t do enough” on the economy in the fall of 2009 is simple.  At a time when the economy was sputtering, both the White House and Congress maintained a single-minded focus on passing a massive health care bill – 30 days of Congressional markups, thousands of pages of legislation and amendments, and 25 days spent debating the health care bill on the Senate floor (compared to zero days debating legislation providing permanent tax relief to small businesses).

Granted, had Democrats chosen to pass more badly targeted “stimulus” in the fall of 2009, that legislation may not have helped the economy either, much as the original “stimulus” has fallen well short of Administration projections.  But a payroll tax holiday – a policy suggested by Republicans when debating the “stimulus” in early 2009, and finally enacted into law last month – might have had a significant impact in creating jobs.  So when policy-makers evaluate the economic effects of the health care law, they shouldn’t just examine what the bill does – the employer mandate that “could reduce the hiring of low-wage workers,” or perverse incentives that will reduce the labor supply by discouraging work.  They also need to calculate the jobs NOT created because Congress spent all its time on a controversial health care debate rather than putting Americans back to work.