A study conducted by a former director of the Congressional Budget Office (CBO) has determined that a price control provision of Barack Obama's jobs bill would actually destroy 238,000 jobs.
Obama's bill contains a provision requiring drug manufacturers to pay rebates to the government on prescription drugs for Medicaid/Medicare dual-eligible participants and other low income seniors. Douglas Holtz-Eakin, President of American Action Forum and a former Director of the CBO, says that these price controls "would put people out of work, increase costs for seniors and privately-insured patients, and slow research and development for new drugs." The net effect would be a loss of 238,000 jobs in pharmaceutical and related employment industries according to the newly released report co-authored by Holtz-Eakin.
Obama consistently claims that his bill would create 1.9 million jobs. That's a number generated by Mark Zandi, chief economist at Moody's, and a cheerleader for the Administration. Zandi generated the estimate before even knowing that the White House planned to "pay for" the legislation with a $1.5 trillion permanent tax increase. After getting the rest-of-the-story, Zandi amended his analysis. In a letter to Congress, Zandi stood by his rosy jobs prediction, but noted that the tax increases would create a "drag on the economy" within a year of implementation, and by 2015 the economy would be in "the same place" as now.
The same place, Mr. Zandi? Not exactly – don't forget half a trillion more spending of money we don't have and $1.5 trillion more in permanent taxes.
Bloomberg doubted Zandi and the President's projections, too. They surveyed 34 other economists. Not one was as optimistic as Zandi. In fact the average job creation estimate by the group was a paltry 288,000. Five said the legislation would produce zero new jobs. Since Obama's wants to spend $447 billion to get there, if the average estimate were to come true that works out to $1.6 million per job.
No one should need further evidence that Obama and the Administration don't have a clue about how to create jobs and get the economy moving. Virtually everything they have tried and every idea they float is a jobs killer instead of creator. The consequences of this latest idea to implement price controls on prescription drugs would be immediate and significant. The rebates "could either constitute a direct, dollar-for-dollar reduction in revenue to the pharmaceutical industry, and could make some medicines too costly to produce," says Holtz-Eakin. "As a result, these drugs would be withdrawn from the market and the revenue reduction would be even larger than the rebates paid to the government. This loss in revenue to the pharmaceutical industry could both reduce employment and create higher prices for consumers," the former CBO director concluded. The untold part of the story would be in loss of quality of life and health care if drugs are not available, and because of stifled research, new advancements are not made.
For the time being, the good news is that Obama's jobs bill doesn't look to be going anywhere but in the trash bin on Capitol Hill.
Tip of the Hat: So, God made a Farmer
It is that time of year when the last of the harvest is being completed by America's farmers. Soon, farm families and the rest of the nation will pause to once again give thanks.
Not so very long ago, a majority of the population was engaged in providing the food to sustain their immediate families and the rest of the nation. The first Americans were largely a nation of farmers. Today, less than 1 percent of the population lists farming as their occupation according to government statistics. Yet, this small group of hard working people provides an unprecedented abundance for the other 99 percent – and much of the rest of the world, as well.
With so few farmers, the vast majority of people have little if any personal contact with farm life, and as a result the once intimate appreciation of the work ethic, the life style, and the products becomes less top-of-mind; less familiar.
Recently a good friend forwarded the following tribute from some years ago by the great Paul Harvey. I'll confess that as one who spent most of my life working on our family dairy farm and now am blessed to be back on the land raising buffalo with my wife and son, Mr. Harvey managed to bring a tear to my eye.
So, as the last of the sugar beets and corn are being harvested and the calves are being weaned – and, we all look forward to another Happy Thanksgiving – we thought it is a perfect time to also offer a Tip-of-the-Hat and remember why "God made a Farmer" as Paul Harvey explained.