Affordable Care Act and Economic Growth - Essay Example

Dynamic scoring is influenced by overall government spending and tax cuts. The Director of CBO gave detailed testimony to outline how many government programs can impede economic growth by increasing the marginal tax rate. An increase in the marginal tax rate affects the amount of money that households can use for savings and investments. The effect of low savings and investments is slow economic growth. The impact of increasing marginal tax rates can be explained using a case example of a single mother who makes approximately $20,000 in a year.

The mother will be forced to pay an additional 15 cents as a tax because of the income raise (Jacobs). Furthermore, her eligibility to support programs like food stamps, Earned Income Credit tax, and Medicaid can be eliminated or slightly reduced. The situation creates a poverty trap for an average modest family in America. The CBO estimates the Obamacare law will discourage work and lead to an increased rate of unemployment. The effect of the Obamacare law on employment is clarified by Patton in his Forbes article “Is Obamacare an Economic Disaster?

” According to Patton, the heavy demands placed on employers by the law will prompt them to cut down the number of employees (Patton). They have to consider firing some employees for them to afford to pay the cost of healthcare. Employers can also reduce the number of hours covered by employees to avoid increasing the cost by paying health insurance. It would also increase the price of products and services to cover the additional cost of providing health insurance. All these actions result in loss of income for many families.

It reduces the amount of money available for saving and investments. Some people might lack the means to take care of their families. Reducing the number of hours worked, increasing operating costs and loss of employees creates a business environment that makes forecasting impossible. Therefore, businesses will fear to invest and save. They would cut on additional workers and find ways to weather the storm of low sales due to low income. The negative impact of the Affordable Care Act on economic growth can affect the competitive nature of American companies in the global market.

It increases the operating costs, which will make it difficult for American corporations to sell products and services at competitive prices. The implementation of Obamacare should be done with caution if anything explained by both CBO and Patton can happen. A poverty trap would only widen the gap between the rich and the poor. It does not help the nation to grow.