CHART: Economic recovery stopped the instant ObamaCare passed

BEN SAYS: Here’s another thing this chart shows. The economic recovery was well under way before any of Obama’s policies took effect. The economic recovery we were having in 2009 was a “Bush Recovery” that was then killed by Obama. More accurately, it was a normal recovery that happens as part of the normal business cycle if politicians don’t get in the way and mess it up. Had Obama done absolutely nothing but play golf, the economy would be booming by now.


JAMES SHERK-HERITAGE FOUNDATION: Private-sector job creation initially recovered from the recession at a normal rate, leading to predictions last year of a “Recovery Summer.” Since April 2010, however, net private-sector job creation has stalled. Within two months of the passage of Obamacare, the job market stopped improving. This suggests that businesses are not exaggerating when they tell pollsters that the new health care law is holding back hiring. The law significantly raises business costs and creates considerable uncertainty about the future. To encourage hiring, Congress should repeal Obamacare.

Initially Solid Job Growth

The economy is recovering at an unusually slow pace. Typically, employment grows strongly after a severe recession.[1] In the year and a half following the last comparable recession (1981–1982), the unemployment rate fell by 3.3 percentage points.[2]

Initially the economy appeared on track for a steady recovery. In August 2009, the White House projected the unemployment rate would fall to 8 percent by the end of 2011 and 7.5 percent by the end of 2012.[3] This would represent a recovery roughly one-third slower than after the 1981–1982 recession.[4]

Job creation data supported these forecasts. The economy went from losing 841,000 jobs in January 2009—the recession’s low point—to gaining 229,000 jobs in April 2010.[5] By the spring of 2010, the Administration confidently predicted a “Recovery Summer.”[6]

Obamacare Discourages Hiring

In March 2010, Congress passed President Obama’s health care reform legislation. The bill had appeared in serious jeopardy, and after the upset special election victory of Senator Scott Brown (R–MA), many analysts expected the bill to fail. Instead, it became law.

The law discourages employers from hiring in several ways:

  • Businesses with fewer than 50 workers have a strong incentive to maintain this size, which allows them to avoid the mandate to provide government-approved health coverage or face a penalty;
  • Businesses with more than 50 workers will see their costs for health coverage rise—they must purchase more expensive government-approved insurance or pay a penalty; and
  • Employers face considerable uncertainty about what constitutes qualifying health coverage and what it will cost. They also do not know what the health care market or their health care costs will look like in four years. This makes planning for the future difficult.

Recovery Stalls Post–Obamacare

Within two months of Obamacare’s passing, the recovery stalled. Figure 1 shows net private-sector job creation from January 2009 onward. The red line shows the trend in job creation before and after April 2010. Private-sector job creation improved by an average of 67,600 jobs per month before April 2010.[7]That month, private-sector employers added 229,000 net jobs.

SOURCE: Heritage Foundation >>>


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