The Magazine

Dependence Day

The corrupting effects of Obamacare.

Feb 24, 2014, Vol. 19, No. 23 • By JAY COST
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On February 4 the Congressional Budget Office dropped a bombshell. Analysts there found that Obamacare’s structure will create an enormous implicit tax on work, such that people on the lower end of the economic scale will have an incentive to quit their jobs or scale back to part time to maximize their premium subsidies. In an earlier study, CBO had estimated that this disincentive to work would destroy the equivalent of less than a million full-time jobs. Now, it projects that an equivalent of more than 2 million jobs will be lost as people voluntarily leave the workforce.

Hey, more time to spend with the kids!

Hey, more time to spend with the kids!

Many liberals celebrated this development. They trumpeted the new possibilities: Parents will have more time to spend with their children, young people more time to go back to school, and so on. As liberal pundit Matthew Yglesias wrote, “If Obamacare really does cause millions of people to voluntarily leave full-time employment, that shows us how much avoidable suffering the earlier system was causing.”

But conservative critics have the better argument. Perhaps the best rejoinder came from Keith Hennessey, former director of the National Economic Council and now a lecturer at Stanford University. At his blog, he finds that the law can trap people just as easily as it can liberate them. A family of four making $35,000 a year would face a steep implicit tax by adding income from a part-time job; in that scenario, the family isn’t working less for the sake of the kids, but “because the government raised [their] marginal effective tax rate and made work less financially rewarding.” This is an excellent point, and speaks to the potential damage that this implicit tax will wreak.

The economic arguments against this disincentive to work, while significant, are not the entirety of the case to be made against it. Indeed, they may not even be the strongest. There are important civic ideals at stake that, while often overlooked, get to the very heart of the nation’s experiment in republican self-government.

What does it mean to be a citizen of a republic? For centuries, philosophers have generally concluded that citizenship has two essential qualities—freedom and equality. In other words, nobody in a republic is your master or lord, and nobody enjoys a higher civic status than you. The state, insofar as it compels you, does so on behalf of everybody. Governmental coercion is legitimate only if it is on behalf of the public good.

In practice, this ideal has been exceedingly difficult to realize. History has shown time and again that republics are often, if not inevitably, corrupted by factional forces who capture the government and twist it toward their own, selfish ends.

The Constitution, with its labyrinthine system of checks and balances, is an effort to mitigate this danger. Importantly, the anti-Federalist insistence on a Bill of Rights was seen as an extra safeguard against corrupting influences. By their reckoning, even if government fell into the “wrong hands,” it would be limited in what it could do to you, and by extension to the republic itself.

Nowadays, we are wont to correlate liberty with dynamism. A free society is one where risk takers can innovate, create new solutions to problems, and make everybody better off. There is no doubt that all of this is true. Even so, it would be anachronistic to see the Founding generation as making the same arguments. Liberty was essential primarily because of its civic benefits, above all as a bulwark for true republicanism against the despotic pretensions of the likes of King George III.

We cannot reconcile these republican notions with Obamacare’s disincentives to work. If we take the Framers’ hard-earned lessons seriously, the sort of clientelistic relationship that exists under Obamacare is incompatible with authentic citizenship. The problem arises from two different directions.

First, a government captured by factions will simply have more power than it previously did. Once people come to depend on those benefits, they will have little choice but to abide by whatever strings the government chooses to attach.

Second, the government will now have less to fear from its opponents. Dependency degrades the capacity of the citizenry to operate as a check on the antirepublican tendencies of the government. As Madison and Jefferson argued toward the end of the 1790s, this was the last, best hope for true republicanism. In their telling, a junto of financial elites from the Northeast had seized control of the government, perverting public policy towards their own, selfish ends. The only recourse was the ballot box, where they hoped to mobilize the people at large to stand up for the public interest. If the government has turned citizens into clients, how will the citizens then stand up to the government should it misbehave?

All of this might sound far-fetched, but these very dangers arose in the 1880s and 1890s, as the government began dispensing pensions to Civil War veterans. The Republican party essentially captured the votes of the pensioners and forced them into an alliance with the manufacturing and financial sectors of the economy, against the agricultural interests with which many pensioners might otherwise have been affiliated. It was, in a word, a massive logroll. The pensioners voted for ever more generous benefits, but they also voted for protective tariffs and the gold standard. These economic policies socked it to the poor farmers in the South and West, and the gold standard probably would never have survived had it not been coupled to the pensions and the tariff. The sum total was an electorally unbeatable coalition that was nevertheless of questionable public utility; yes, the economy developed during this period, but its development was highly uneven, with poor farmers left on the outside looking in. The South in particular would not see any real benefits from economic modernization until after World War II.

There is a similar dynamic today, though it is less pernicious. The entitlement state is unsustainable in the long run. Eventually, it will wreck the public finances of the nation, yet it remains unreformed because a vast array of groups are dependent on the status quo. It is difficult to expect citizens to rebuke the government when supported by it. This makes it harder, not easier, to realize the public good.

This is not to say that we should hold these republican values above all others. In practice, we have rightly made trade-offs; senior citizens who can no longer care for themselves, or vets too sick to work, are tended to. There is a broad consensus that people who cannot depend on themselves for food, shelter, and medical care should depend on the government, concerns about republican citizenship notwithstanding.

But note: This is not what Obamacare does. Its disincentives to work are not geared toward the sick, the elderly, the disabled, but toward working-age, able-bodied adults. These are people who can work, but who will choose to substitute governmental dependence for self-reliance. This runs contrary to the broad consensus about the appropriate boundaries of the welfare state.

Who is to say that some coalition will not gain control of the government to leverage the Obamacare clients for their own political gain, just as the Gilded Age Republicans did with the Civil War vets? And, should that happen, how can these people be expected to do their duty as citizens to stand up for the public good? It is worth noting that the Republican regime of pension benefits, protective tariffs, and the gold standard did not fall apart until after most of the vets had passed away.

On any given policy question, it is easy nowadays to overlook the civic implications. We take our civil society for granted; we can hardly imagine our government turning against its own people, so we just assume that this republic we inherited will be here for generations to come. 

But the Founders understood better, and history shows us differently. Republican government is easier to philosophize about than to maintain. It requires, above all, an active, engaged, and independent citizenry that can be called upon to vindicate the public good when it is threatened by factional designs. While we admit of important exceptions to this principle, Obamacare nevertheless violates it by encouraging dependency among citizens. This is a dangerous development for a republic such as ours.

Jay Cost is a staff writer at The Weekly Standard.

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