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Post Obamacare Unemployment

Expect unemployment to rise over the next several months. I doubt anyone can predict the future with any certainty. That being said, I think we will see sign that companies are going to start cutting employees rather than pay the stiff fines that Obamacare will make them incur.

  • Caterpillar: $100 million
  • John Deere: $150 million
  • Verizon: Undisclosed, but will make them drop prescription drug coverage, dropping people into Medicare Part D, with the elimination of a subsidy, $665 per person.
  • AK Steele: $37 million
  • Valero: $15-20 million
  • Medtronic: “could force it to lay off a thousand workers.”
  • AT&T: $1 billion, yes that’s with a B.

The common retort is that companies can simply pass off the tax to consumers. I really don’t think so. Firms can’t simply pass these costs onto consumers in a time of recession. Only during times of growth, when incomes are growing will consumers take the kind of rate adjustments needed to fund these costs. People who don’t have a job, will not be able to incur these costs, period.

On the bright-side, Castro loves Obamacare.

“It is really incredible that 234 years after the Declaration of Independence … the government of that country has approved medical attention for the majority of its citizens, something that Cuba was able to do half a century ago,” Castro wrote…

Don’t you feel like your in good hands?

So what will Obama do? Well, more stimulus of course! It has worked so good so far that we can’t call it stimulus this time, it’s a Jobs Bill.

But now, besieged with prolonged high-level unemployment, the President and his congressional allies have put forward yet another deficit-enhancement plan. The “stimulus” tag has been abandoned; this is a jobs bill. And the rhetoric defending last year’s spending binge has been duly adjusted, trumpeting the school teachers and fire fighters who kept their jobs due to credit extended to the states by the Federal Government.

The change is anything but subtle, and is entirely appropriate: massive U.S. deficits aren’t stimulating private sector job gains.

Don’t worry though, don’t underestimate a politicians skill are revising past expectations. Expect Obama to say that he never claimed that Obamacare will create jobs. Actually it’s the Leftist, Center for American Progress; 4 million jobs in the next decade. All government jobs probably.

Either way, expect unemployment to go up, and expect the MSM to keeps saying it’s “unexpected.”

Categories: Health Care, Obama
  1. Woodhull
    March 27, 2010 at 09:15

    And despite what revisionist historians have written about FDR, it took a war to get us out this mess the last time. Problem is, I don’t think there is a conventional war left to fight on the scale it would take this time around.

    • March 27, 2010 at 18:12

      Actually WWII did not end the Great Depression. It did a number to unemployment for sure, but killing millions of prime employment age men will kind of do that.

      In Depression, War, and Cold War, Robert Higgs divides the Great Depression into three phases. The Great Contraction occurred during the Hoover years and went from 1929 to 1933. During this period private investment fell by about 84 percent. This set the stage for the Great Duration, 1933–1945. As Higgs shows, GDP and private investment increased during the early years of the New Deal, but as the 1930s wore on, President Franklin Roosevelt became ever bolder about undermining property rights. This delayed complete recovery. Finally, there was the Great Escape, which occurred after and in spite of World War II, not because of it. Higgs argues that the Great Escape occurred as a result of a partial dismantling of the regulatory infrastructure that had grown up during the Depression and the war; in effect, it was a rediscovery of the market and a new birth of freedom for entrepreneurs and workers.

      In discussing the Great Duration, Higgs introduces the term “regime uncertainty” to argue that the Roosevelt administration’s aggressive interventions produced considerable uncertainty in the entrepreneurial environment. Investors did not know whether they would enjoy the fruits of their investments. One of my mentors in graduate school, a Keynesian, pointed out once that firms will not produce what they do not expect to sell. I would generalize this to say that they will not invest what they do not expect to control. The possibility of incurring the costs of an investment without enjoying any of the benefits made private investment much less attractive.


      • March 27, 2010 at 18:14

        And there is this paper too.

        The results show that the World War II spending had virtually no effect on the growth rates in consumption that we examined. This contrasts with Fishback, Horrace, and Kantor’s (2005) findings of about half a dollar increase in retail sales associated with a dollar of New Deal public works and relief spending. Several factors contributed to this relative lack of impact. World War II spending often required a conversion of plants designed for civilian good production into military factories and back again over the 9 year period. Substantially higher federal tax rates that were paid by the majority of households imposed much stronger fiscal drags on the benefits of the spending. Finally, less of the military spending was earmarked for wages and use of locally produced inputs, which reduced the direct stimulus to the local economy.


  2. Woodhull
    March 28, 2010 at 11:56

    Thanks for the info, ZH. But, isn’t there something here that is missing? I’m thinking of nationalistic sentiment that pulled people together to fight a common enemy. In the depths of depression, those who were affected the most by it were least able to collectively do anything about their plight. I’m imagining that it brought about the same sense of helplessness and hopelessness that will sieze this country (more than it already has). And without that sense of “we’re all in this together (ala 9/12)” I’m not feeling good about a national effort to right what’s happening financially.

    • March 28, 2010 at 21:09

      The nationalism did help the war but I don’t think it did much for the economy. You have to remember there were Massive price controls on everything, rationing was the norm (nylons, meat, gas, etc). The only reason people put up with that level of communism in the US (and honestly it was, hence your “collectively” word choice), was because of the war. I think we all should know by now that, that doesn’t do anything for economic growth, look at Venezuela.

      The regime uncertainty is a very important thing to think about. I think it very important to the story of the Great Depression. Unfortunately, it runs counter to the “FDR is GOD” theme that most Liberals, almost religiously, adhere to. But it helps explain why this recession has gone on for as long as it has. Obamacare will only worsen the problem, now that companies have to worry about all those new taxes as such.

  3. yttik
    March 28, 2010 at 19:04

    “The common retort is that companies can simply pass off the tax to consumers. I really don’t think so.”

    I totally agree, we’re in a recession. Customers simply don’t have any money. If anything, the only way to stay afloat right now is to try and avoid raising your prices.

    • March 28, 2010 at 21:02

      Under a sane economic regime, they’d be allowed to lower prices to find a new equalibira. Unfortunately, we are all Keynesians now and sanity is completely foreign.

  4. Woodhull
    March 28, 2010 at 23:25

    If the aim was to drive more U.S. companies offshore, it’s as though the gov’t has personally delivered each of them a one-way ticket.

    • March 28, 2010 at 23:33

      I know, but thinking about it, it makes sense in the weird perverted logic of Washington.

      Unions get riled up about outsourcing.

      Obama plays lip service to Unions about protectionism to garner the Union vote.

      Obama has Congress pass laws that will force companies to outsource or die.

      Unions get riled up about outsourcing.

      Obama plays lip service to Unions about protectionism to garner the Union vote.

      Repeat ad nauseum.

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