The recently passed health care “reform” noted by James below is going to have another impact some have noted, but many have not given much thought too. It will, in effect, make labor more expensive. When something becomes more expensive for firms then tend to use less of it. They will substitute away from it if possible, or failing that hire fewer workers, and in some cases simply shut down. Other firms might relocate to other countries. The bottom line effect is to make employing labor more costly. Not exactly a brilliant move when the unemployment rate has just hit 10.2%.
This will also have a further adverse impact on the fiscal situation. To the extent that the labor market takes longer to recover because of this legislation tax revenues will be lower, and thus the deficit higher and the public debt will grow faster. This kind of effect is probably not included in the CBO’s $1.1 trillion dollar cost of health care “reform”.
