Obamacare is Contributing to Jobs Leaving America

One major defect (there are many) of the Affordable Care Act (Obamacare) is the provision of the law which institutes an excise tax on medical device manufacturers.  Totaling a paltry $29 billion (in relation to what Obamacare will cost overall) over the next decade, the purpose of the new tax is to finance some of the subsidies the federal government will pay to expand Medicaid coverage to the uninsured.

Now on the surface, this sounds like an admirable goal, namely, providing health care coverage for those who can’t afford it on their own.  But, upon closer inspection, this is another example of what the famous French political economist Frederic Bastiat wrote about in his 1850 essay, “Ce qu’on voit et ce qu’on ne voit pas” (“What is Seen and What is Unseen”).

You see while the president and other advocates of Obamacare boast that they will expand coverage for more Americans through provisions like the medical-device excise tax, they fail to realize or refuse to acknowledge that other Americans will lose their jobs on account of the same provision.

Consider just two of the bigger players in the medical device industry.  Minneapolis based, Medtronic (NYSE: MDT), the world’s largest spinal device maker, announced it would soon hire 1,500 new workers, but because of Obamacare most of those hires will be overseas.  Then there is Massachusetts based Boston Scientific (NYSE: BSX).  The large cardiovascular device maker announced it would lay-off between 1,200 and 1,400 workers worldwide with a majority being American workers while at the same time announcing a $150 million investment in China that would create 1,000 new jobs there.  So, while Obama claims that more Americans will have health coverage under Obamacare, others will lose their jobs or not be hired because of it.

To be sure, companies do not move their operations overseas without careful consideration.  It is expensive and even risky for them to relocate all or the bulk of their workforce outside the United States.  There are a lot of costs involved with moving facilities and setting up shop abroad.  Corruption, political instability, and unskilled labor forces in most developing countries provide an enormous amount of risk for American companies.  Yet many of them make the move anyway.  And that is the question which has baffled Obama and his ilk for some time now. Why have American companies and the jobs they provide gone overseas these last several decades?  The answer is simple:  because the money saved in taxes, many times in the hundreds of millions of dollars annually, more than compensates them for their relocations abroad.  Medtronic and Boston Scientific are just the latest examples.

If Republicans Love America They Must Keep the Government Closed Down

The current government shutdown has statists all in a tizzy.  Democratic congressmen and mainstream media pundits have been blabbering all week about how we are doomed because Republicans in the House of Representatives refuse to approve more wasteful federal spending thereby allowing the government to continue to function.  For these folks, it is the end of the world if Washington is not the center of decision making and the purveyor of all of life’s provisions for the American people.  The incessant chatter of how a small group of “extremists” in the House is holding the whole country hostage got old pretty darn quick and I found myself reaching for the remote to quell the noise on more than one occasion.

I mean what is so extreme about attempting to change the disastrous course the country is currently on?  Can the federal government continue to rack up enormous deficits each month with no end in sight?  Are we able to take on another massive entitlement program?  Finally, after five years of managing the economy and producing no economic recovery, is it not time to admit failure and try something new?  If Republicans love America, they must stick to their guns and demand changes before any budget deal is agreed to.

For one thing, it is no secret that Washington wastes billions of dollars each year and a lot of the spending has nothing to do with the welfare of the American people.  It includes everything from $10 million  to create a version of “Sesame Street” for Pakistani television to $2.6 million to train Chinese prostitutes to drink responsibly.  None of it is constitutional and none of it enriches the lives of ordinary Americans.

But, that spending is just the tip of the iceberg.  The national debt is quickly approaching $17 trillion and unfunded future liabilities for Social Security and Medicare equals another $84 trillion.

Then there is Obamacare – the president’s signature legislative accomplishment.  The increased costs that come with that scheme will be enormous.  Much of the costs will be covered by federal subsidies which will further exacerbate the national debt.  Because it is another entitlement program, future lobbying for protection of the system and increased benefits will rival that of Social Security and Medicare thereby causing huge unfunded liabilities of its own.  Yet, Democrats refuse to even consider delaying the law for one year.

In the final analysis, the way to get America back on the path to economic prosperity is not through big government programs supported with huge budget deficits.  That has been proven over the last five years.  The road to a bright economic future is through small government and balanced federal budgets.  The greatest period of economic growth in our nation’s history came when deficits were low and the largest federal program was the U.S. Postal Service.  Between 1869 and 1879 America’s economy grew 6.8 percent (NNP equals GDP minus capital depreciation) per year.  When the 20^th Century began, America was the world’s leader in per capita income and industrial production.  Real wages increased greatly and prices of goods and services remained steady.

We have spent over $7 trillion in the last 5 years and what has it gotten us?  Lagging wages, continued high unemployment, and higher prices are the result.

An immense fiscal and monetary crisis is eventually going to engulf America. It is already too late to prevent it.  Over 40 years of profligate federal spending and monetary recklessness is quickly coming to a head.  If Republicans back down to the big spenders and pass a budget which increases the debt ceiling and funds Obamacare the collapse will be that much worse.  If they really love America, they must keep the government closed down.  Maybe we can salvage some of our doomed economy?