Health Care Bill and Minimum Wage Increases Both Face Tough Analysis
June 27, 2017
The Senate Healthcare bill is facing criticism from the right and left following a CBO report anticipating 22 million fewer Americans would have insurance under the law. Seattle’s minimum wage increase also received some damning analysis. The IMF has also downgraded its expectations for the U.S. economy. In better news, ECB President Mario Draghi has implied optimism about European economic growth.
- Conservative advocacy groups that provide much of the political capital to current Republican lawmakers and candidates are coming out against the Senate healthcare reform bill, panning it as a disappointment. These critics on the right say the legislation falls well short of the Republican promise to repeal the ACA. However, the opposition from the right is not unanimous. Heritage Action, one prominent group, favors passage, while Americans for Prosperity wants lawmakers to make improvements. [The Hill]
- A study commissioned by the city of Seattle finds recent increases in the metro area’s minimum wage may have backfired, reducing the pay of workers because their hours were cut by employers in response to the requirement their hourly pay rise. The Seattle Minimum Wage Study looked at Seattle’s two-step increase in the minimum wage—the first step from $9.47 to $11 took place in 2015 and the second increase to $13 in 2016—and found the second step caused employers to cut worker hours. Using a unique set of data, the economists found the first increase had little effect, but the step to a $13-an-hour minimum wage resulted in a 9% reduction in hours for lower-wage jobs, while only raising hourly wages by about 3%. Combining these two effects, they found that workers in lower-wage jobs saw an average drop of $125 in monthly income. [WSJ]
Economic Indicators & News
- The International Monetary Fund lowered its forecast for the U.S. economy, saying it could no longer assume the Trump administration will be able to deliver pledged tax cuts and higher infrastructure spending. The IMF, in its annual review of the American economy, questioned the White House’s plan to accelerate output and said it was skeptical the administration would be able to rev up the world’s largest growth engine to a sustained 3% annual rate. Instead, the Fund forecasts the growth rate will steadily fall over the next five years to around 1.7%, assuming no major policy changes. [WSJ]
- European Central Bank President Mario Draghi hinted on that the ECB might start winding down its large monetary stimulus as the eurozone economy picks up speed, even as he warned against an abrupt end to years of easy money. The comments, at the ECB’s annual economic-policy conference in Portugal, come as investors watch closely for a sign that the world’s second most powerful central bank is preparing to withdraw controversial policies such as its €60 billion ($67.52 billion) a month bond-buying program. [WSJ]