FactCheck.Org stories from The Center for Public Integrity

FACT CHECK: Conservative Political Action Conference

2013-03-20T14:26:15-04:00

In Sen. Ted Cruz’s twisted vision of economic history, Ronald Reagan cured double-digit unemployment by cutting spending and reducing the federal debt, and Jimmy Carter was guilty of “out-of-control regulation.”

In the real world:

Total federal spending soared during Reagan’s deficit-plagued first term, and the national debt nearly doubled. His budget director later resigned and wrote a book criticizing Reagan’s failure to cut spending.
And Carter signed landmark bills freeing airline, railroad and trucking rates from federal regulation, easing regulation of natural gas prices and eliminating federal regulation of interest rates paid by banks to small savers.

These are only a few of the disconnects between economic reality and Cruz’s oversimplified, often inaccurate attempt to paint President Obama’s record as the “exact opposite” of Reagan’s. The freshman Texas Republican said during his March 16 keynote address at the Conservative Political Action Conference (starting about 22 minutes and 20 seconds into the recording):

Cruz: [Obama is] one of only two presidents, post-World War II, to face double-digit unemployment. And for the last four years economic growth under President Barack Obama has averaged 0.8 percent, less than 1 percent. There is only one other period post-1950 where we have had four years of less than 1 percent economic growth. That’s from 1979 to 1983. Coming out of Jimmy Carter following the same policies of out of control spending, out of control debt, out of control taxes, out of control regulation. That’s the only other period. President Reagan came in facing that stagnation and he implemented policies the exact opposite of Barack Obama’s.

In fact, it’s interesting: 79 to 83, economic growth was 0.8 percent. Today, it’s 0.8 percent for the exact same period because Obama didn’t learn the lesson from Reagan that if you want to turn the economy around you cut taxes, you reduce spending, you reduce the debt, and you don’t send regulators like locusts to destroy small businesses and jobs.

It’s true that the unemployment rate peaked higher and dropped faster during Reagan’s first term than it did during Obama’s. Under Reagan, it hit a high of 10.8 percent and had come down to 7.3 percent by the time he started his second term. Under Obama, the rate hit 10 percent and only drifted down to 7.9 percent as of his second inauguration.

It’s also true that economic growth was better during Reagan’s first term than it has been under Obama. In the last year of Reagan’s first term (calendar year 1984) the nation’s gross domestic product (adjusted for inflation) was 13 percent higher than it was four years earlier. In 2012, GDP was only 3 percent above where it had been the year before Obama first took office.

But Cruz is simply wrong to claim that the “lesson from Reagan” was that “you reduce spending, you reduce the debt” to turn the economy around. Reagan increased both. Historical budget figures from the Congressional Budget Office show that clearly.

Federal outlays (total spending) rose by 40 percent under Reagan’s first four budgets (fiscal year 1985 vs. Carter’s last budget for fiscal 1981). That was two-and-a-half times faster than the rate of inflation, which rose 16 percent during the same period, as measured by the Consumer Price Index.
And far from cutting debt, Reagan borrowed more heavily than previous presidents. In Reagan’s first term, debt owed to the public increased by nearly 91 percent by the end of fiscal year 1985, compared with what it had been at the end of Carter’s fiscal 1981.

Furthermore, as mentioned, Cruz errs badly when he attempts to blame Carter for “out-of-control regulation.” As mentioned, Carter signed numerous deregulation measures. One free-market-oriented commentator chose the occasion of Reagan’s 100th birthday to praise Carter, not Reagan, as “deregulation’s hero.” Thomas A. Firey, senior fellow as the Maryland Public Policy Institute, wrote: “It was the peanut farmer from Georgia who pushed the United States toward a market economy, not the one-time actor from California.”

On spending, ironically, Obama’s record has indeed been the “exact opposite” of Reagan’s in one little-noticed respect. Under Obama, federal spending is actually falling, something that never happened under Reagan. Total federal outlays went down 1.7 percent last fiscal year. And in the current fiscal year, which ends Sept. 30, the CBO projects a scant rise of 0.4 percent — much less than the projected rate of inflation (see Summary Table 2).

To be sure, despite the recent decline in spending, Obama’s deficits are large compared with Reagan’s, in relation to the size of the economy. Reagan’s biggest deficit was 6 percent of GDP. All of Obama’s have been larger than that, and the smallest was 7 percent in fiscal 2012. The CBO projects a deficit of 5.3 percent of GDP for the current fiscal year, but that would still be higher than in all but one of Reagan’s fiscal years.

(One reason for the larger deficits: Reagan — for all his tax-cutting — still enjoyed larger revenues than Obama, relative to the size of the economy. Under Reagan, revenues were 18.4 percent of GDP during his final fiscal year. Obama inherited revenues of only 15.1 percent in fiscal year 2009. They hit 15.8 percent last fiscal year. After his “fiscal cliff” tax deal, raising rates on upper-income households, the CBO projects they will rise to 16.9 percent in the current fiscal year — still lower than in any of Reagan’s eight years.)

Meanwhile, the total debt owed to the public continues to pile up, causing alarm. Measured as a percentage of GDP, it hit 72.5 percent in the last fiscal year and the CBO projects it will rise to over 76 percent this year. During Reagan’s time, it never exceeded 41 percent (in fiscal 1988). So it’s no wonder that leading economists are urging all sides to do more to cut the deficit through “a combination of spending reductions and tax and entitlement reforms.”

If Cruz and his fans want to argue that the current budget mess is entirely Obama’s fault, they are entitled to that opinion. But claiming that Reagan cut spending and debt or that Carter was an “out-of-control” regulator is simply the exact opposite of historical fact.

– Brooks Jackson

Cruz and His Lizard Boots

Cruz and Rand Paul got laughs at the federal government’s expense at the recent Conservative Political Action Conference, but the facts don’t jibe with the jokes.

Cruz accused the EPA of “trying to use a lizard to shut down oil and gas production” in West Texas to set up a one-liner about lizard boots. But the jab — an old campaign joke — no longer has any basis in fact. The federal government decided against listing the Dunes Sagebrush Lizard as “endangered” in June 2012.
Paul, meanwhile, monkeyed around with the truth when he claimed the federal government is spending $3 million on research “to discover that monkeys, like humans, act crazy on meth.” Paul mischaracterized research that aims to improve prevention and treatment of drug abuse in humans.

We’re not here to throw a wet blanket on the levity, but facts are facts.

Cruz, a Texas Republican, recycled a joke about lizard boots from last year’s campaign (at the 26:53 mark of the video). But in setting up his punch line, Cruz misstates the facts to fit his narrative about an out-of-control Environmental Protection Agency.

Cruz, March 16: We need to rein in the EPA. You know, in West Texas, the EPA is trying to use a lizard to shut down oil and gas production. You know my view of lizards? They make darn fine boots.

Cruz told that same joke at a Feb. 1, 2012, candidate forum. The American-Statesman (of Austin, Texas) quoted Cruz at that forum as saying: “That’s our lizard, and they make darned fine boots.”

But here’s the problem: It’s simply not accurate anymore to say that a lizard is threatening oil production in West Texas.

The U.S. Fish and Wildlife Service (which is in the Interior Department, by the way, not the EPA) proposed listing the Dunes Sagebrush Lizard early last year as “endangered.” At the time, state officials and oil industry representatives warned that such a decision would hurt oil production in the Permian Basin in West Texas. However, the Fish and Wildlife Service determined on June 13, 2012, that it would not put the lizard on the endangered list.

In announcing the decision, Interior Secretary Ken Salazar praised the “voluntary conservation efforts” of state agencies and the oil industry to help protect the lizard. Salazar said the cooperation proved “we don’t have to choose between energy development and the protection of our land and wildlife — we can do both.”

State Comptroller Susan Combs called the decision a “major victory for Texas jobs and our energy economy.” The Texas Oil and Gas Association said it was “pleased” with the decision.

So, for now, oil production in West Texas is safe from the threat of lizards. However, a new threat lurks. The Fish and Wildlife Service is now considering listing the Lesser Prairie Chicken as a “threatened species.”

Texas Railroad Commissioner David Porter warned in a Dec. 5, 2012, op-ed in the Wall Street Journal that such a designation “would make drilling all but impossible” in the Permian Basin. But he remains hopeful. “Since Texas was able to produce a plan for the lizard that would work for environmentalists and operators alike, there is reason to hope that a similar plan being drafted for the Lesser Prairie Chicken will work,” he wrote.

Perhaps Cruz could have used the Lesser Prairie Chicken as a punch line in a joke about federal government overreach. But we doubt the chicken makes for good boots.

Rand Paul: Monkeys on Meth

In his speech, Paul criticized President Obama for canceling White House tours in response to “sequester” budget cuts and instead offered examples of federal spending that should be cut first. (Obama since had said that he is open to resuming White House tours for student groups.)

Paul, March 14: So what I ask the president, if he wants to let the school children back in the White House, what about the $3 million that we spend studying monkeys on meth? Does it really take $3 million to discover that monkeys, like humans, act crazy on meth?

It’s an example the Kentucky Republican has used before, and it is a reliable laugh line, but he misrepresents the research.

Paul’s press office did not return our calls seeking backup for his claim, but it’s true that the National Institute on Drug Abuse has awarded more than $3.8 million in federal grants since 2000 to a research project that studies the effect of methamphetamines and other illicit drugs on rhesus monkeys. But as you might imagine, there’s a lot more to the research than trying to discover if “monkeys, like humans, act crazy on meth,” as Paul described it.

According to a description of the latest research project, “Primate Model of Drug Abuse: Intervention Strategies,” led by Marilyn E. Carroll at the University of Minnesota, “the main objective of this research is to develop nonhuman primate models (rhesus monkeys) of critical aspects of addiction that will yield useful information for the prevention and treatment of drug abuse.”

Specifically, the most recent experiments seek “to evaluate vulnerability factors in drug abuse, such as sex and phase of the menstrual cycle (hormonal status), that are related to the development and persistence of drug abuse.” As part of the research, rhesus monkeys — used because results are very close to those found in humans — are administered oral drugs such as phencyclidine (PCP) and methamphetamine (meth) and smoked drugs such as cocaine, heroin and meth. Then, “behavioral and pharmacological interventions will be applied as treatment models in males and females and in females during different phases of the menstrual cycle.”

Ultimately, researchers wrote, the research is intended to “further our understanding of addiction-prone vulnerability factors and treatment for drug abuse.”

When we asked about Paul’s comments on the primate research, the National Institute on Drug Abuse released the following statement:

National Institute on Drug Abuse, March 18: Drug abuse and addiction are a major burden to society. In economic costs alone, tobacco, alcohol, and illicit drug abuse are estimated to exceed $600 billion dollars annually in the United States related to health care, crime, and losses in productivity—not to mention immeasurable social costs such as those related to child neglect and family dissolution. Behavior therapy is the cornerstone of drug addiction treatments, particularly for those cases where FDA-approved medications do not exist (e.g., cocaine). Unfortunately, such treatments have been only partially successful, calling for additional research to develop more effective treatments.

The researchers in this study are using a primate model to study aspects of addiction that can yield useful information for preventing and treating drug abuse by recognizing critical gender differences in the response to drugs and to treatment, and in the propensity for relapse. Such differences may pertain to hormonal factors that modify the effects of drugs. For example, drug cravings and withdrawal symptoms have been shown to intensify at specific points in the menstrual cycle. This type of research is needed to identify such critical aspects of drug abuse and addiction that could affect the efficacy of drug addiction treatments and thus improve outcomes for both men and women.

One can argue whether it is worthwhile for the federal government to be studying the effects of addictive drugs on monkeys as a way to combat drug addiction for humans. But Paul misrepresents the study by describing it as simply trying to “discover that monkeys, like humans, act crazy on meth.”

– Eugene Kiely and Robert Farley

Palin’s Constitutional Stretch

At the Conservative Political Action Conference, former Alaska Gov. Sarah Palin said that the Senate was “in violation of Article I, Section 9, Clause 7 of our U.S. Constitution” by failing to “pass a budget.” She’s referring to a budget resolution. But that constitutional clause doesn’t mention a budget or a budget resolution, which was not required of the Senate until the 1974 Congressional Budget Act. The responses to Palin’s interpretation from constitutional scholars ranged from “completely invalid” to “kind of a stretch.”

Palin made her comments in a March 16 speech at the annual conservative conference (10:30 mark):

Palin, March 16: .. while we’re breaking [middle-class Americans'] budget, the Democrat-controlled Senate refuses to pass a budget. That was how many years ago that they did? How many trillions-in-debt ago? All in violation of Article I, Section 9, Clause 7 of our U.S. Constitution. No budget for 4 years. No budget for four years is not just bureaucratic bungling. Refusing to pass a budget is government refusing to declare what it intends to do with the people’s money.

Palin made a similar claim in April 2012, but said it was the president who was in violation of the Constitution, not Congress.

Article I, Section 9, Clause 7 doesn’t say anything about a Senate budget resolution, which isn’t surprising since it didn’t exist until the 1974 Budget Act. Here’s what the brief clause does say:

Article I, Section 9, Clause 7: No Money shall be drawn from the Treasury but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

What does that mean? The Congressional Research Service, in its lengthy analysis of the U.S. Constitution, says that the clause “is a limitation upon the power of the Executive Department and does not restrict Congress in appropriating moneys in the Treasury.” The CRS goes on to say that the Supreme Court “has also recognized that Congress has a wide discretion with regard to the extent to which it shall prescribe details of expenditures for which it appropriates funds and has approved the frequent practice of making general appropriations of large amounts to be allotted and expended as directed by designated government agencies.”

In other words, Congress doesn’t have to spell out how every penny should be spent — it can leave some details to federal agencies — and the president can’t spend money without Congress appropriating it. And Congress has appropriated money every year through appropriation bills, which can be found going back to 1998 on the Library of Congress website.

As for budget resolutions, the Senate has indeed failed to pass one since 2009 for fiscal 2010. The 1974 Budget Act, which laid out a timetable for the congressional budget process, isn’t strictly enforced — since the act, Congress has met its budget resolution deadline only six times. And Congress failed to complete action on budget resolutions for fiscal years 1999, 2003, 2005 and 2007, as well as in recent years.

Of course, the Constitution can be interpreted in different ways. Could Palin’s claim — that the Senate violated the Constitution by not passing a budget resolution — be valid?

Not according to Laurence H. Tribe, the Carl M. Loeb university professor and professor of constitutional law at Harvard Law School. Tribe told us via email: “Her interpretation is completely invalid.”

Louis Fisher, a constitutional scholar who worked for the Library of Congress for four decades as a specialist in separation of powers and constitutional law, told us Palin’s claim “seems like a big stretch to me.” Fisher noted that “Congress complies with that clause in Article I by appropriating funds each year, even if the Senate does not produce a ‘budget.’ ” He added, as we explained above, that the budget resolution “did not exist until the Budget Act of 1974.”

Douglas O. Linder, professor of law at the University of Missouri-Kansas City Law School, said, “I think it’s kind of a stretch to be honest to say it’s a violation of that section. … I think most constitutional scholars and most courts would disagree with her.” Linder added that that’s “not to say there’s absolutely nothing to her argument.” There are various interpretations to constitutional matters, after all.

Palin also said that “[r]efusing to pass a budget is refusing to declare what [Congress] intends to do with the people’s money.” But as Fisher said, Congress passes annual appropriations bills. Budget resolutions aren’t laws — they’re outlines for spending, which is actually set in appropriations bills. As the Washington Post explained this year, “A budget isn’t necessary.”

The Democratic-controlled Senate Budget Committee argues that the Budget Control Act is indeed the budget for fiscal 2012 and 2013. It says the act “is even more extensive than a traditional budget resolution,” because it’s the law, can be enforced and requires discretionary caps for 10 years.

We’ll leave it to our readers to decide whether the Senate should have passed a budget resolution in recent years. But Palin’s claim that the legislators violated the Constitution doesn’t square with the relatively short history of budget resolutions — and scholars doubt a court would agree with her.

– Lori Robertson

FACT CHECK: Conservative response to the State of the Union

2013-02-14T16:14:25-05:00

Florida Sen. Marco Rubio and Kentucky Sen. Rand Paul made misleading or exaggerated claims in their responses to President Barack Obama’s State of the Union address. Rubio claimed that the federal health care law was causing people to lose “the health insurance they were happy with,” but that glosses over the fact that 27 million uninsured Americans are expected to gain coverage. Paul claimed the federal government borrows “$50,000 every second,” but the true figure is about $30,000. And he made a reference to an Internet rumor about Obama giving out free phones to the poor.

Rubio Lambasts Health Care Law

Rubio gave the Republican response immediately after Obama’s address, and he criticized the Affordable Care Act.

Rubio, Feb. 12: And because many government programs that claim to help the middle class often end up hurting them. For example, ObamaCare, it was supposed to help middle-class Americans afford health insurance. But now, some people are losing the health insurance they were happy with.

The fact is, the Affordable Care Act is expected to cause tens of millions of uninsured Americans — many of them likely falling under the vague “middle class” label — to gain health insurance, not lose it. In a fact sheet on his speech, Rubio’s office points to a nonpartisan Congressional Budget Office report that said 27 million of the uninsured would have coverage as early as 2017 (as shown in this more detailed CBO chart).

Rubio’s claim about some people losing “the health insurance they were happy with” references the CBO’s estimate that the number with employer-sponsored coverage would decline by 7 million, also as early as 2017. That’s a net reduction, with some workers gaining coverage, some losing it, and others deciding to obtain other insurance on their own.

Again, these are estimates for what the insurance landscape will look like in the future. People aren’t “now … losing the health insurance they were happy with,” as Rubio said. In fact, CBO’s estimates show 2 million uninsured Americans gaining coverage this year. Employer-sponsored insurance is going up by 1 million — not down. Medicaid and CHIP coverage also go up by 1 million. The mandate that individuals have insurance, and subsidies for lower-income persons, don’t go into effect until 2014, but already adult children up to age 26 have been able to stay on their parents’ insurance under the federal law. And while some workers are expected to lose an offer of insurance from their employer in the future, the overall impact of the law is a significant net gain in coverage.

The CBO report does say that it has increased its estimate of the number without employer-sponsored coverage through 2022, up from 4 million in a previous estimate. Why did the number go up? CBO said it was due to the lower marginal tax rates for those earning under $450,000 a year, as enacted by the American Taxpayer Relief Act — which was passed to avert the so-called fiscal cliff. The extension of those lower rates make tax-free employer-provided insurance less valuable, and it “will lead to a greater reduction in such coverage and higher enrollment in insurance exchanges than previously estimated.” So lower taxes would cause more workers to join the subsidized exchanges. CBO also adjusted its estimate of what workers would earn as income, the result being that “slightly more tax filers and their dependents” would qualify for subsidies and Medicaid. Fewer workers would take employer-sponsored coverage as a result.

Paul Overstates Federal Borrowing

In his response to the president — the Tea Party response, not the official GOP response — Paul exaggerated when he claimed the federal government borrows “$50,000 every second.” The U.S. is borrowing a lot of money — but not that much. The actual amount is about $30,000 a second.

Paul: We’re in danger, though, of forgetting what made us great. The president seems to think the country can continue to borrow $50,000 every second.

The nonpartisan Congressional Budget Office in its Feb. 5 budget outlook report (Table 1) projects that the public debt will increase from $11.280 trillion in fiscal 2012 to $12.229 trillion in the current fiscal year, which began Oct. 1, 2012. That’s an additional $949 billion in public debt, which is how much the federal government borrows from individuals, corporations, foreign countries and entities other than the federal government. That comes to $30,093 per second, so the country is not borrowing “$50,000 every second.”

Now, that per-second figure was considerably higher earlier in the Obama administration. In fact, Treasury Secretary Timothy Geithner wrote a letter to Congress on April 4, 2011 that said: “On average, the public debt of the United States increases by approximately $125 billion per month (although there are significant variations from month to month).” That equals $1.5 trillion a year, meaning the U.S. at the time was borrowing $47,564.68 every second.

We went to the Treasury’s “debt to the penny” website to determine how much the public debt had increased in the 12 months prior to Geithner’s letter. We found that it rose from $12.76 trillion on April 1, 2010 to $14.25 trillion on April 1, 2011. That was an increase of roughly $1.49 trillion — or $47,248 every second. So, Geithner’s figure was accurate at the time. (Reuters wrote a story a month after Geithner’s letter that cited the treasurer’s $125 billion monthly figure. “The U.S. government borrows more than $40,000 per second,” the wire service wrote.)

We don’t mean to minimize the scope of the nation’s debt problem. But Paul is wrong to suggest the president will “continue to borrow $50,000 every second,” when CBO projects the U.S. will borrow about 40 percent less than that this fiscal year.

Paul Advances ‘Obama Phone’ Myth

Paul also wrongly suggested that the Obama administration instituted a program to give free cell phones to the poor.

“The president offers you free stuff but his policies keep you poor,” Paul said. He later commented that “for those who are struggling, we want you to have something infinitely more valuable than a free phone, we want you to have a job and a pathway to success.”

While it’s true that the government provides subsidized phone service for low-income persons, such programs were in existence before Obama came into office.

As we wrote most recently in May 2012, Lifeline, a federally mandated program that reimburses phone companies with a monthly subsidy of $9.25 for each low-income customer, has been around since 1984, when it began providing landline service to customers. Funded by telecom fees that are part of customers’ monthly phone bills, the program is designed to fulfill FCC policy of providing universal access. The program was then expanded during the George W. Bush administration in 2008 to cover cell phone usage.

And as we originally wrote in 2009 — debunking false Internet claims of an “Obama phone” — TracFone Wireless also started its SafeLink Wireless program, which offers up to 250 free minutes of cell phone use each month, in 2008.

These and similar programs are actually a product of the 1996 Telecommunications Act to “ensure all Americans, including low-income consumers and those who live in rural, insular, high cost areas, shall have affordable service and [to] help to connect eligible schools, libraries, and rural health care providers to the global telecommunications network.”

– Lori Robertson, Eugene Kiely and D’Angelo Gore

FACT CHECK: State of the Union

2013-02-14T16:14:25-05:00

President Obama put a rosy spin on several accomplishments of his administration in his 2013 State of the Union address.

The president claimed that “both parties have worked together to reduce the deficit by more than $2.5 trillion.” But that’s only an estimate of deficit reduction through fiscal year 2022, and it would be lower if the White House used a different starting point.
Obama touted the growth of 500,000 manufacturing jobs over the past three years, but there has been a net loss of 600,000 manufacturing jobs since he took office. The recent growth also has stalled since July 2012.
He claimed that “we have doubled the distance our cars will go on a gallon of gas.” Actual mileage is improving, but Obama’s “doubled” claim refers to a desired miles-per-gallon average for model year 2025.
Obama said the Affordable Care Act “is helping to slow the growth of health care costs.” It may be helping, but the slower growth for health care spending began in 2009, before the law was enacted, and is due at least partly to the down economy.

The president also made an exaggerated claim of bipartisanship. He said that Republican presidential candidate Mitt Romney agreed with him that the minimum wage should be tied to the cost of living. But Romney backed off that view during the campaign.

Analysis

President Barack Obama gave his State of the Union address to Congress Feb. 12, laying out his legislative agenda for the coming year and achievements of his time in office. But Obama puffed up his record.

Deficit Reduction

Obama said the administration and Congress “have worked together to reduce the deficit by more than $2.5 trillion.” A bipartisan group called the estimate “very reasonable.” But it is only an estimate — and a debatable one at that — for deficit reduction from budgets through fiscal year 2022. Exactly how much will be cut will be up to future Congresses.

And, even if Congress meets those deficit-reduction goals, deficit spending will continue and the federal debt will grow larger — unless much more is done.

Obama: Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion — mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans. As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.

Obama has cited the $2.5 trillion figure on numerous occasions, including at a Jan. 14 news conference. It is based largely on two pieces of legislation: the Budget Control Act of 2011, which placed caps on discretionary spending beginning in 2012, and the American Taxpayer Relief Act of 2012, which prevented tax hikes on most Americans in 2013 but allowed rates to go up on the top 1 percent of taxpayers. There was some additional savings from reductions in discretionary spending in the fiscal 2011 appropriations bills.

Republicans challenge the $2.5 trillion figure with some justification, because the amount of savings depends heavily on the baseline — that is, the starting point of comparison. The White House told us it used the Office of Management and Budget’s January 2011 baseline.

In a recent report, the bipartisan Committee for a Responsible Federal Budget estimated the deficit reduction at $2.7 trillion, using the nonpartisan Congressional Budget Office’s August 2010 baseline. But it also acknowledged that “there is no simple answer to the question of how much deficit reduction has been enacted so far.” The report says starting a year earlier or later would reduce the estimated savings.

CRFB, Feb. 11: Although $2.7 trillion is a very reasonable estimate of enacted savings, it is by no means the only way to measure past savings. It is worth noting that the discretionary savings in this number are in fact calculated from the high point of discretionary spending. Measuring either from a year later or from a year earlier would result in a smaller savings number because base discretionary spending (excluding the effects of the stimulus) actually increased between 2009 and 2010 due to larger-than-projected appropriations.

As we have written once before, the vast majority of the deficit reduction has yet to materialize. Congress is supposed to comply with the caps on discretionary spending imposed by the Budget Control Act in future appropriations bills. But whether that happens remains to be seen.

And, even if Congress complies, deficit spending will continue, and the federal debt will rise — just not as quickly as it otherwise would have. The latest CBO figures show the public debt — that is, the amount the federal government owes the public — will approach $20 trillion in 2023, an increase of more than $8 trillion from its current level of $11.6 trillion.

For that reason, most budget experts warn that the president understates the scope of the budget problem when he says, as he did in his speech, that “we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.” The nonpartisan Concord Coalition says the president’s goal of accomplishing $4 trillion in deficit reduction “would hardly mean the ‘job is finished.’ ”

The Committee for a Responsible Federal Budget struck the same cautionary note in its report, saying the progress so far is “notable” but enacting $4 trillion in deficit reduction will not stabilize the debt.

CRFB, Feb. 11: Declaring victory with an additional $1.5 trillion would be dangerous, however, since it would leave no margin for error, would result in slower economic growth, would leave little fiscal flexibility, and would have little chance of stabilizing the debt beyond the ten-year window. For these reasons, we believe the debt must be not only stable, but on a clear downward path by the end of the decade.

Manufacturing Jobs

The president was correct when he said U.S. “manufacturers have added about 500,000 jobs over the past three” years, but that’s not the whole story.

Overall, there has been a net loss of more than 600,000 manufacturing jobs since Obama took office in January 2009, and manufacturing job growth during his tenure has stalled since reaching a peak of nearly 12 million jobs in July 2012.

Obama: After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three.

Over the past three years — since January 2010 — the U.S. economy has added 490,000 manufacturing jobs. According to the Bureau of Labor Statistics, there were 11,950,000 manufacturing jobs in January 2013 — up from the 11,460,000 jobs recorded in January 2010. However, there were 12,556,000 manufacturing jobs in January 2009. So overall, there has been a loss of 606,000 jobs since Obama took office.

More recently, “manufacturing growth has been stuck in neutral,” as the National Association of Manufacturers said in a Feb. 12 press release. During the three-year period cited by Obama, manufacturing jobs peaked at 11,957,000 in July 2012. Since then, the jobs figure has fluctuated, and the economy has lost 7,000 manufacturing jobs.

Invoking Romney on Minimum Wage

Making a pitch to raise the minimum wage to $9 an hour, Obama argued for its bipartisan appeal by invoking his 2012 presidential campaign foe, Republican Mitt Romney, as a kindred spirit when it comes to tying the minimum wage to the cost of living. But Romney actually backpedaled a bit on that position during the campaign.

Obama: Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty and raise the federal minimum wage to $9.00 an hour. … So here’s an idea that Governor Romney and I actually agreed on last year: Let’s tie the minimum wage to the cost of living, so that it finally becomes a wage you can live on.

It’s true that during a campaign event on Jan. 7, 2012, Romney remarked: “My view has been to allow the minimum wage to rise with the [Consumer Price Index] or with another index so that it adjusts automatically over time.”

But just two months later, Romney hedged on that position in an interview with CNBC’s Larry Kudlow, saying that in the midst of a recovery, “right now, there’s probably not a need to raise the minimum wage.”

Kudlow, March 5, 2012: Why do you want to raise the minimum wage? Why do you want to index it for inflation?

Mitt Romney: Well, actually, when I was governor the legislature passed a law raising the minimum wage. I vetoed it. … And I said, “Look, the way to deal with the minimum wage is this. On a regular basis,” I said in the proposal I made, “every two years we should look at the minimum wage, we should look at what’s happened to inflation. We should also look at the jobs level throughout the country, unemployment rate, competitive rates in other states or, in this case, other nations.” So, certainly, the level of inflation is something you should look at and you should identify what’s the right way to keep America competitive. … Yeah, so that would tell you that right now there’s probably not a need to raise the minimum wage.

Car Mileage Double-talk

The president claimed that “we have doubled the distance our cars will go on a gallon of gas” — which isn’t remotely close to being true right now.

In fact, according to the University of Michigan’s Transportation Research Institute, the average EPA city/highway sticker mileage of light duty vehicles sold last month was 24.5 miles per gallon. That’s quite good — a record, in fact. And it’s 17 percent better than the 21.0 mpg for vehicles sold four years earlier, in the month Obama took office. That’s an impressive gain, but it’s a far cry from having “doubled the distance our cars will go on a gallon of gas.”

Obama was referring to his administration’s actions for raising future federal fuel efficiency standards, which call for cars and light trucks to achieve 54.5 mpg by the model year 2025. But it remains to be seen whether automakers can produce — and consumers will buy — vehicles that achieve such a doubling of average mileage a dozen years from now.

Health Care Costs

Obama said the federal health care law was “helping” to reduce the growth of health care costs. It may be helping, but the slower growth of health care spending began before the law was enacted. And experts say the down economy has played a role. It’s not clear how much impact the federal law has had.

Obama: Already, the Affordable Care Act is helping to slow the growth of health care costs.

From 2009 to 2011, the growth in national health care spending was at its lowest rate in 50-plus years, the entire time the National Health Expenditure Accounts reports have been published by the Centers for Medicare & Medicaid Services. Spending grew by 3.9 percent each year for 2009, 2010 and 2011. (The growth in 2008 was 4.7 percent, and 2007′s was 6.2 percent, with higher growth for years previous — see Table 3.)

But the Affordable Care Act wasn’t signed into law until 2010, after the recent slowing began. And the bulk of the law, including the individual mandate and federal subsidies to help Americans buy insurance, has yet to take effect. Experts have mainly blamed the economic slowdown for a corresponding reduction in health care spending. Economists and statisticians at the Centers for Medicare & Medicaid Services reported in 2011: “Job losses caused many people to lose employer-sponsored health insurance and, in some cases, to forgo health-care services they could not afford.”

The New York Times reported this week that the slower growth meant lower deficits, as federal spending also eased. The Congressional Budget Office reduced its projected Medicare and Medicaid spending for 2020 by 15 percent. The federal health care law may be affecting spending, but it’s unclear how much. As the Times said, “Health experts say they do not yet fully understand what is driving the lower spending trajectory.”

The economy is part of the reason, said CBO Director Douglas W. Elmendorf. But the way doctors and hospitals deliver care may be another.

New York Times, Feb. 11: Some insurers have moved away from simply paying per procedure by giving health care providers financial incentives to reduce complications and rehospitalizations, for instance. Doctors, nurses and hospitals have also taken steps to reduce wasteful treatments. Many of the changes predate the 2010 health care overhaul, but the law has also contributed to the changes by offering some financial incentives, health care experts say.

So the health care law gets some credit. It’s “helping” to slow the growth of costs, as Obama said. But the reduced growth began before the law was enacted and is due to forces — such as the economy — beyond the control of the legislation.

Puffing Up Renewable Energy

Obama said wind and solar energy have doubled. True, but they’re still a very small percentage of energy production and consumption in the U.S.

Obama: We have doubled … the amount of renewable energy we generate from sources like wind and solar.

We looked at this claim when Obama made it several times on the presidential campaign trail last fall. We found that wind and solar energy generation had doubled from 2008 to 2011. Consumption for wind also doubled, and it nearly doubled for solar.

But wind and solar were very small portions of energy generated before — and even after — that increase. Wind was 13 percent of all renewable energy generated in 2011. (Renewable includes biomass, such as ethanol, and hydro.) Solar was 1.3 percent of renewable energy generated. Renewable energy altogether accounted for just 9 percent of U.S. energy consumption in 2011.

Frank V. Maisano, an energy expert at the law firm Bracewell & Giuliani, told us: “Making large increases in wind power or solar power is not as big a challenge, let’s say, as making a 50 percent increase in natural gas. … You have to put it into context.”

– by Eugene Kiely, Brooks Jackson, Lori Robertson and Robert Farley

FACT CHECK: Conservative Group Distorts Hagel’s Record

2013-01-30T11:37:54-05:00

American Future Fund distorts Chuck Hagel’s record in its latest TV ad opposing his Senate confirmation for defense secretary:

AFF says Hagel “sits on the board of a private equity firm with investments in Iran.” Hagel sits on an advisory board of Deutsche Bank, which the New York Times says is under investigation for transferring money through U.S. subsidiaries to Iran. However, unnamed U.S. officials told the Times the bank stopped such transactions in 2008 — the year before Hagel joined the board.
The ad also claims “Hagel declined to publicly disclose millions in underlying assets” while he served in the Senate. That’s an exaggeration. The Senate Ethics Committee questioned Hagel about the assets, but did not require him to report them and never accused him of any wrongdoing.

American Future Fund launched its “Hagel No” campaign Jan. 16, claiming the effort signals “a major battle over the controversial nomination.” The group is one of several trying to block President Barack Obama’s pick for defense secretary in an unusual media blitz against a presidential cabinet appointment.

AFF says it plans to spend $500,000 to air the ad on CNN and Fox in an attempt to discredit Hagel, a former two-term Republican senator from Nebraska. His confirmation hearing is scheduled for Jan. 31 before the Senate Armed Services Committee.

AFF, which has its roots in Iowa and the Republican Party, spent more than $20 million during the last election cycle, supporting Republicans and trying to defeat Democrats, including Obama.

Iffy Iran Claim

The ad goes too far when it claims Hagel “sits on the board of a private equity firm with investments in Iran.”

The ad cites a Jan. 14 USA Today article that makes no mention of a private equity firm with investments in Iran. It only cites Hagel’s connection to Deutsche Bank. The ad also refers to a website, United Against Nuclear Iran, which links to an August New York Times article that broke the news — using unnamed sources — that the U.S. is investigating Deutsche Bank for allegedly violating U.S. sanctions against Iran. The article does not mention Hagel.

The fact is there’s no evidence that Hagel had anything to do with Deutsche Bank’s past dealings in Iran. And the bank’s current involvement in Iran is minimal, honoring previous contractual agreements and accepting no new business, according to the company’s latest annual report.

In its 2011 annual report, Deutsche Bank acknowledged having “engaged in a limited amount of business” with Iran. But the bank said it closed its Tehran office in December 2007. The report said the bank’s remaining business there fulfills previous contractual obligations involving European and Asian exporters. The report said Iranian investments represented less than 0.1 percent of the bank’s total assets at the end of 2011.

Hagel joined the bank’s Americas Advisory Board in May 2009 after the bank said it closed its Tehran office and after it made a decision not to engage in new business in Iran. Unnamed U.S. law enforcement sources told the Times that Deutsche Bank stopped violating U.S. sanctions against Iran in 2008, the year before Hagel joined the board.

AFF did not return our phone calls and an email seeking information to substantiate its claim.

Since the 1990s, U.S. sanctions have explicitly prohibited Americans from virtually all investment and trade with Iran because of its support of terrorism and its pursuit of weapons of mass destruction. The unnamed U.S. law enforcement sources told the Times that Deutsche Bank violated those sanctions by using its American branches to transfer money on behalf of Iranian clients.

Deutsche Bank declined to comment to the Times for its article. But its annual report stated that its activities in Iran — and other countries the U.S. designated as state sponsors of terrorism — have not involved U.S. citizens, which the sanctions prohibit.

Deutsche Bank, 2011 annual report: We are a German bank and our activities with respect to such countries have not involved any U.S. person in either a managerial or operational role and have been subject to policies and procedures designed to ensure compliance with United Nations, European Union and German embargoes.

The unnamed U.S. law enforcement sources said they did not suspect the bank violated sanctions beyond 2008.

New York Times, Aug. 17, 2012: The investigation into Deutsche Bank is still in its very early stages, according to the law enforcement officials. So far, there is no suspicion that the bank moved money on behalf of Iranian clients through its American operations after 2008, the officials said.

Disclosure Deception

The ad fails to tell the whole story when it claims that “Hagel declined to publicly disclose millions in underlying assets” while he served in the Senate.

It’s true that Hagel did not report the assets of a private equity firm he used to run — but he wasn’t required to report them. And although the Senate Ethics Committee had questioned his office about one of his financial disclosure forms, the committee never accused him of any wrongdoing. In fact, the committee changed its disclosure rules in a way that allowed the senator to continue to leave out the firm’s underlying assets on his annual disclosure forms.

The ad cites a 2003 article in The Hill newspaper that questioned whether Hagel correctly followed financial disclosure laws. The article also reported that an ethics committee director had requested Hagel’s office to provide “additional, clarifying information” to accompany a 1997 financial disclosure report.

At issue was Hagel’s decision not to disclose the underlying assets of his former private equity firm, the McCarthy Group, in which he had a stake of $1 million to $5 million.

Among the group’s assets Hagel did not disclose was a subsidiary company, Election Systems & Software (ES&S), which at the time supplied nearly half of the country’s voting machines, including those used in Nebraska. Hagel had been chairman of that company and president of McCarthy in the years before he became a senator.

Hagel did not list McCarthy’s underlying assets because he claimed the firm was an “excepted investment fund.” Under the law, funds are exempt from further disclosure if they are widely held, publicly traded or “publicly available.”

The Hill article cast doubt on the public availability of the McCarthy Group’s underlying assets after the newspaper searched through financial databases for the assets and failed to find them. Michael McCarthy, the firm’s chairman, acknowledged to The Hill that the company was not publicly traded or widely diversified (under the committee’s definition). But McCarthy claimed information about the company’s assets was publicly available “by private exchange or private treaty.”

Ultimately it didn’t matter. After The Hill began its inquiry, the ethics committee, which had just changed directors, loosened its definition of a publicly available fund.

The Hill, Jan. 29, 2003: The committee abandoned the more stringent definition of the term, which under the panel’s rules, Hagel apparently failed to meet…

[T]he committee will decide, based on the specific facts of each case, whether an investment has been made in a publicly available firm, a circumstance that would allow it to be listed as an ‘excepted investment fund.’ But the panel will neither discuss any individual case nor offer any concrete standard under which a case may be judged…

The newly weakened definition makes it virtually impossible to determine whether Hagel — or any other lawmaker — must report investments in non-traded private companies.

We were unable to find any official public documents of Hagel’s reported dealings with the Senate Ethics Committee. But in 2004, Wired News reported that Hagel’s chief of staff, Lou Ann Linehan, faxed the magazine a letter Hagel’s office received from the Senate Ethics Committee. The magazine said the ethics committee “concluded that Hagel did not violate its rules.”

– Ben Finley

FACT CHECK: Facing facts on fiscal cliff

2012-12-05T16:04:36-05:00

The U.S. faces the possibility of another recession — the third in 11 years — if President Obama and Congress cannot find a way to avoid the so-called fiscal cliff. The one-two combination of massive tax increases and spending cuts scheduled to take effect, beginning Jan. 1, would push the unemployment rate back above 9 percent, according to the Congressional Budget Office.

There’s a growing consensus in Washington that some combination of spending cuts and increased revenues is needed to reduce annual deficits and slow the federal debt — without going over the fiscal cliff. The disagreement is over the details, particularly over how and how much to increase tax revenues and where to cut spending.

Some Republicans, including House Speaker John Boehner, say the president’s tax proposals would “destroy nearly 700,000 jobs,” which is an exaggeration. Many Democrats would prefer not to cut entitlement programs as part of the negotiations, even though the three largest entitlement programs — Medicare, Medicaid and Social Security — would consume 55 percent of all federal spending by 2022, compared with 43 percent in 2011, according to the CBO.

We take no position on what Congress should do. But we can offer some factual context to help understand the scope of what the CBO calls the nation’s “fundamental budgetary challenges.”

Some facts to consider:

The scheduled tax increases, if allowed to take effect, would net an additional $536 billion in fiscal year 2013, according to the nonpartisan Tax Policy Center, raising more than $5 trillion in 10 years. Nearly 90 percent of Americans would pay more in taxes, TPC says, with the average increase being nearly $3,500.
The automatic spending cuts scheduled to take effect would cut $1.2 trillion over 10 years, split roughly in half between domestic and military spending.
Obama’s plan calls for increasing revenue by $1.6 trillion over 10 years. Republican congressional leaders have not proposed a counter offer for revenues, but during the so-called “grand bargain” negotiations in the summer of 2011, Boehner reportedly had agreed to $800 billion worth of increased revenue.
As a percentage of the nation’s economy, the federal government now spends 22.7 percent and collects in revenue 15.7 percent — a large gap that has persisted for years and has contributed to four straight years of $1 trillion deficits.
A bipartisan fiscal commission created by Obama has proposed capping revenues at 21 percent by the year 2022, and getting spending below 22 percent.

The Analysis below provides details on these and other facts.

Analysis

The fiscal cliff was created by a series of actions by Congress, beginning with the approval of the Bush-era tax cuts in 2001 and 2003.

The Bush tax cuts were extended by the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010. But the 2010 tax legislation did more than that. It also extended some of the tax breaks in President Obama’s 2009 stimulus bill and temporarily reduced the Social Security payroll taxes.

A year later, Congress passed the Budget Control Act of 2011, which Obama signed into law. That law imposed spending caps on discretionary spending through 2021 that are supposed to save $917 billion over 10 years, according to an August 2011 analysis by the nonpartisan Congressional Budget Office.

The law also created a special bipartisan congressional committee charged with reducing the deficit by at least $1.5 trillion over 10 years. But the so-called super committee failed to agree on a deficit-reduction plan and, under the Budget Control Act, $1.2 trillion in automatic budget cuts over 10 years are now scheduled to take effect, beginning in January. At the same time, the temporary tax cuts approved under both Bush and Obama are due to expire.

Tax Increases Looming

In an Oct. 1 report on the fiscal cliff, the nonpartisan Tax Policy Center estimates that the scheduled tax increases, if allowed to take effect, would net an additional $536 billion in fiscal 2013. How significant is that? Federal revenues were about $2.45 trillion in the fiscal year that ended Sept. 30 — meaning the scheduled tax increases alone would raise revenues by about 22 percent.

In its report, TPC lists six reasons why taxes are scheduled to increase by so much:

The Bush-era tax cuts enacted in 2001 and 2003 and extended for two years at the end of 2010 are set to expire. Cost: $254 billion.
Temporary tax breaks that were part of Obama’s stimulus law and extended at the end of 2010 will expire. Cost: $27 billion.
Congress has yet to act on short-term tax breaks, mostly for businesses, that are routinely extended but have yet to be approved. Cost: $75 billion.
A temporary payroll tax cut enacted for 2011 was extended through 2012, but is now set to expire at the end of this year. Cost: $115 billion.
Tax increases contained in the Affordable Care Act on upper-income taxpayers will go into effect: a 3.8 percent tax on unearned income, 0.9 percent increase in Medicare payroll taxes and a higher income threshold for deducting medical expenses. Cost: $24 billion.
The Alternative Minimum Tax, which was designed to make sure wealthy Americans pay a minimum tax, was never indexed to inflation on a permanent basis. As a result, Congress must fix this problem — as it has every year since 2001 — or 28 million more taxpayers will pay higher taxes. Cost: $40 billion.

If all that happened, taxes would increase an average of $3,466 per household, according to the TPC. Middle-income households — those earning nearly $40,000 to about $64,500 a year — would see an average increase of $1,984.

Congressional leaders say they are confident that they will negotiate a deal that will avoid some if not most of these tax increases from taking effect.

What is likely to happen?

Congress is widely expected to “patch” the AMT. In its report on the fiscal cliff, the TPC ranked the AMT tax the least likely to increase among nine categories of pending tax increases. In urging Congress to pass an AMT “patch,” the IRS said 28 million taxpayers, “many of them middle-class families,” would pay more in taxes if Congress fails to act.

On the other hand, the tax increases contained in the Affordable Care Act are expected to take effect next year now that Obama has won reelection. Those taxes would fall most heavily on upper-income taxpayers. TPC says taxpayers earning more than $108,266 would see an average increase of $1,141 a year.

There is less certainty about the other scheduled tax increases — particularly the Bush-era tax cuts, which reduced tax liability on earned income, capital gains and dividends, and the estate tax.

Under current law, the marginal individual income tax rates would all snap back to pre-2001 levels. As the TPC explains, the 10 percent tax bracket will disappear, making the lowest bracket 15 percent, and the “25 percent, 28 percent, 33 percent, and 35 percent rates will revert to 28 percent, 31 percent, 36 percent, and 39.6 percent respectively.”

Allowing the Bush-era tax cuts to expire for individuals earning less than $200,000 and married couples earning less than $250,000 would cost those taxpayers $171 billion, or nearly a third of the total $536 billion “cliff,” according to the TPC.

If Congress does extend the Bush tax cuts for those taxpayers, as the president has proposed, then the total average tax increase for middle-income taxpayers would drop from $1,984 to $1,096, according to the Tax Policy Center. The AMT “patch” would reduce the potential tax hike for those same taxpayers another $104 a year on average — dropping the average tax increase for middle-income taxpayers to less than $1,000 by virtue of those two actions.

The Bush-era tax cuts for the upper-income taxpayers appear to be at a greater risk of expiring — unless the parties can negotiate an agreement to raise revenue elsewhere to keep the lower tax rates in place. TPC estimates that the income tax changes would raise $44 billion from individual taxpayers who earn $200,000 and couples earning $250,000.

In addition to the individual income tax changes, other major changes slated to take place that will affect the wealthy include these:

The estate tax: The current $5.1 million per-person exclusion from the federal estate tax is scheduled to fall to $1 million, and the top tax rate is scheduled to rise to 55 percent in 2013. That would raise an estimated $31 billion in 2013.
Capital gains and dividends: The tax rate is 15 percent on long-term capital gains (assets held at least one year) and qualified dividends for taxpayers in the top four tax brackets (currently ranging from 25 percent to 35 percent). The capital gains rate is scheduled to increase to 20 percent for those taxpayers, while dividends would return to being taxed at regular income tax rates. Estimated impact: $8 billion.

There’s uncertainty for low- and middle-income taxpayers, too.

As we mentioned earlier, the 2010 tax legislation cut the employee portion of the Social Security payroll tax. The rate fell from 6.2 percent to 4.2 percent in 2011 and 2012.

Treasury Secretary Timothy Geithner testified before the election that he did not support extending the payroll tax cut again. The New York Times quoted him as saying: “This has to be a temporary tax cut. I don’t see any reason to consider supporting its extension.” Now, however, the administration is negotiating to “include an extension of the payroll tax cut or an equivalent policy aimed at working-class families,” the Times reported on Nov. 29.

The expiration of the payroll tax cut would mean that middle-income taxpayers would see an average tax increase of $672 per year, according to the TPC.

In addition to the expiration of the payroll tax cut, there were a host of tax credits in the president’s 2009 stimulus legislation that were extended in 2010 and are now due to expire. Obama expanded the earned income tax credit, increased the value of the child tax credit for low-income families, and expanded and increased the college tuition credit.

The Tax Policy Center says the credits benefit about 152 million taxpayers, and more than half of them earn less than $50,000 a year. For example, a taxpayer earning $20,113 or less would pay an average of $209 more in taxes if the credits expire, the TPC analysis shows (Table 6). That’s about half of what that taxpayer’s total increased tax liability would be — $412 — if all of the fiscal cliff tax changes went into effect as scheduled.

Closing the Gap

There is a growing consensus in Washington that there needs to be a combination of increased revenues and spending cuts to close the big gap that has developed in recent years between revenues and outlays.

As a percentage of the nation’s economy, the gap between what Washington spends (22.7 percent) and collects in revenues (15.7 percent) narrowed slightly in the last fiscal year. But the federal government is still a long way from the times when revenues more closely matched spending — as you can see from the chart below. We created the chart using historical budget data from the federal Office of Management and Budget, updated with Treasury Department figures for the fiscal year ending Sept. 30, 2012.

Since fiscal year 1946, a post-World War II federal government has run surpluses in 12 of 68 years — most recently for a period of four straight years, beginning in 1998 under President Bill Clinton.

The government’s checkbook benefited in the Clinton years from the effects of a large tax increase pushed by the Democratic president in 1993, his first year in office. That tax increase fell most heavily on those making more than $200,000 — which is why the tax rates under Clinton are cited frequently (but not entirely accurately) by Obama in his push to allow the marginal individual tax rates to rise in the top two brackets. (We’ll get to Obama’s plan later.)

Clinton’s fiscal 1994 budget also contained limits on spending, particularly in the military following the collapse of the Soviet Union at the end of 1991. When the House passed that budget, the New York Times reported that there was roughly a 1-for-1 ratio between spending reductions and tax increases over a five-year period.

The surpluses evaporated as the nation went through two wars and two recessions — the first triggered by the dot-com bust, which began in mid-2000. Deficit spending returned in fiscal 2002 and worsened after the second recession. The federal government has now posted four straight years of $1 trillion deficits.

In March, the Congressional Budget Office projected that under the president’s proposed budget for 2013, spending would equal 23.4 percent of GDP while revenues would be 17.2 percent. The deficit, CBO said, would equal 6.1 percent of the economy that year and average 3.2 percent over the 10-year period ending in 2022. But the CBO currently projects that a continuation of current policies — including the Bush-era tax cuts and an AMT “patch” — would push the deficit to 6.5 percent of GDP in 2013, with spending and revenues equal to 22.8 percent and 16.3 percent, respectively.

In an op-ed piece, Warren Buffett, the chairman and chief executive of Berkshire Hathaway, wrote that the government should aim to raise revenues to 18.5 percent of GDP while keeping spending to around 21 percent. Acknowledging that this wouldn’t eliminate deficits, he wrote that “this ratio of revenue to spending will keep America’s debt stable in relation to the country’s economic output.”

The president’s bipartisan fiscal commission, on the other hand, called for more revenues in a report issued back in December 2010. As part of its “six-part plan to put our nation back on a path to fiscal health, promote economic growth, and protect the most vulnerable among us,” the commission proposed capping revenues at 21 percent by the year 2022, and getting spending below 22 percent and eventually to 21 percent by 2035.

And the CBO issued a report in November saying that there are many options for reducing our deficits. But continuing on the current path, CBO said, was not one of them.

The Opening Proposals

Both Democrats and Republicans have been talking about the need to compromise on the fiscal cliff. But what is their starting position in these negotiations?

Obama laid out his vision in his 2013 budget proposal. Overall, his plan calls for increasing revenues by $1.6 trillion over 10 years. (During the “grand bargain” negotiations between Obama and House Speaker Boehner in the summer of 2011, Boehner had agreed to $800 billion worth of increased revenue.)

There are a number of corporate tax implications in Obama’s plan, but here are the major parts affecting individual taxpayers:

Allow the Bush tax cuts to expire for couples making over $250,000. Specifically, that would increase the top tax rate from 35 to 39.6 percent. That’s expected to generate $442 billion over 10 years. (page 219)
Reduce the value of itemized deductions and other tax preferences to 28 percent for families with incomes over $250,000. That is expected to generate $584 billion over 10 years. (page 220)
Increase capital gains tax rates from 15 percent to 20 percent, raising $36 billion over 10 years.
Increase taxes on dividends from 15 percent to 39.6 percent. That’s expected to raise $206 billion over 10 years.

That’s the meat of Obama’s plan, but as he said in a news conference on Nov. 9, “I’m not wedded to every detail of my plan. I’m open to compromise. I’m open to new ideas.”

There has been no consensus plan yet proffered by Republicans, though last year the House passed a bill to extend the Bush tax cuts for everyone for another year.

More recently a number of Republican leaders have floated the idea of capping itemized deductions as a way to raise revenue without raising tax rates.

For example, on ABC’s “This Week” on Nov. 25, Sen. Lindsey Graham said:

Graham, Nov. 25: I’m willing to generate revenue. It’s fair to ask my party to put revenue on the table. We’re below historic averages. I will not raise tax rates to do it. I will cap deductions. If you cap deductions around the $30,000, $40,000 range, you can raise $1 trillion in revenue, and the people who lose their deductions are the upper-income Americans.

During the presidential campaign, GOP nominee Mitt Romney floated a proposal during the second debate to cap itemized deductions at $25,000.

Romney, Oct. 16: And so in terms of bringing down deductions, one way of doing that would be to say everybody gets — I’ll pick a number — $25,000 of deductions and credits. And you can decide which ones to use, your home mortgage interest deduction, charity, child tax credit and so forth.

The Tax Foundation analyzed a $25,000 cap and concluded it would raise about $1.3 trillion over 10 years.

So why do some Republicans prefer caps on itemized deductions to higher tax rates? Mark Duggan, professor of business economics and public policy at the Wharton School of Business at the University of Pennsylvania, said a higher rate “hurts incentive to work.” Second, he said to us in an email, “when you exclude some things from the tax base you introduce distortions. By excluding health insurance, mortgage interest, etc. you subsidize certain goods (health care and housing) but not others. Furthermore the subsidies are bigger for those with high incomes where rates are highest.”

One option not being considered is doing nothing — thus allowing the spending cuts and the tax increases to take effect. What’s the consequence of that? CBO projects that the nation will most likely slide into a recession and the unemployment rate, which was 7.9 percent in October, would rise to 9.1 percent.

But short-term pain would be followed by long-term gain, the CBO says.

CBO, Nov. 8: CBO projects that the significant tax increases and spending cuts that are due to occur in January will probably cause the economy to fall back into a recession next year, but they will make the economy stronger later in the decade and beyond. In contrast, continuing current policies would lead to faster economic growth in the near term but a weaker economy in later years.

On the spending side of the equation, Obama’s position has not budged much from the position he outlined in September 2011 in his President’s Plan for Economic Growth and Deficit Reduction.

The president’s plan boasts of $4 trillion in “savings” from spending over 10 years. To get to that figure, the president included roughly $1 trillion in spending cuts that he had already signed into law in the Budget Control Act; savings from drawing down the wars in Iraq and Afghanistan; and $580 billion in “cuts and reforms” to an array of mandatory programs — everything from agricultural subsidies to federal civilian worker retirement plans. Also included in that figure is $248 billion in reduced spending on Medicare and $73 billion on Medicaid.

The Spin

There are an awful lot of numbers and scenarios being thrown around by politicians regarding the fiscal cliff. We find that some are false and misleading, while others are accurate, but show an incomplete picture.

For example, Obama several times has stated that if the Bush tax cuts are not extended for families making under $250,000, “A typical middle-class family of four would see its taxes rise by $2,200.” The White House has even launched a campaign asking Americans to, “Tell us what $2,000 means to you and your family.” The White House is also encouraging people to “keep the conversation going online” on Facebook and Twitter using the hashtag #My2K.

The White House construction is accurate, but very specific. Note that in the online appeal, Obama is pictured at a table with two parents and their two children. According to a White House fact sheet, a married couple with two children with income between about $50,000 and $85,000 would see a tax increase of $1,000 because of a Child Tax Credit reduction; a tax increase of $890 due to the merging of the 10 percent tax bracket into the 15 percent tax bracket; and a tax increase of $310 because of the expiration of marriage penalty relief that provides a larger standard deduction for married couples. In total, that comes to $2,200.

As this breakdown makes clear, the biggest part of the tax increase comes from the fact that they are married and have two kids. The tax impact is much less for unmarried people without children, or even married people with one or no children.

According to calculations by the Tax Policy Center, those in the middle-income quintile, who earn roughly between $40,000 and $64,000 would see — on average — a $961 tax increase next year if the Bush tax cuts are not extended. (It comes to about $1,100 for those earning between $50,000 and $75,000 — which is closer to Obama’s parameters.)

The Tax Policy Center has created a tax calculator with which taxpayers can determine how much various fiscal cliff scenarios may affect them.

Other claims from politicians include:

Raising taxes on upper-income earners would “destroy nearly 700,000 jobs in our country.” We looked at this when Boehner said it recently. It’s based on a report from the accounting firm Ernst & Young that assumed revenue from the taxes would be used “to finance a higher level of government spending,” even though Obama would use the added revenue to reduce the deficit.
Among wealthy taxpayers who would be hit with an increase under Obama’s proposal, Boehner said, “more than half of them are small-business owners.” According to a 2011 report from the Treasury Department’s Office of Tax Analysis, more than 90 percent of small-business owners wouldn’t be affected by Obama’s proposal. But upper-income taxpayers do account for 57 percent of the income of small-business owners, which is what Boehner’s spokesman says he meant to say.
“Social Security does not add one penny to our debt.” We fact-checked that claim when Democratic Sen. Richard Durbin said it on ABC’s “This Week” on Nov. 25. It’s false. The federal government for the first time in its history had to borrow money in 2010 to cover Social Security benefits to retired and disabled workers — a trend that worsened in 2011 and will not change at any point in the future unless changes are made.

– by Eugene Kiely, Robert Farley and D’Angelo Gore

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U.S. Department of Treasury. “Joint Statement of Secretary Geithner and OMB Deputy Director for Management Jeffrey Zients on Budget Results for Fiscal Year 2012.” 12 Oct 2012.

Jackson, Brooks. “Fiscal FactCheck.” FactCheck.org. 15 Jul 2011.

Office of Management and Budget. “Fiscal year 2013 Mid-Session Review: Budget of the U.S. Government. Table S-6 Proposed Budget by Category as a Percent of GDP.” 27 Jul 2012.

Congressional Budget Office. “An Analysis of the President’s 2013 Budget: Table 1. Comparison of Projected Revenues, Outlays, and Deficits under CBO’s March 2012 Baseline and in CBO’s Estimate of the President’s Budget.” Mar 2012.

Congressional Budget Office. “Choice for Deficit Reduction.” Nov 2012.

Aggressive Romney spars with Obama in first debate

2012-10-04T12:25:34-04:00

We found exaggerations and false claims flying thick and fast during the first debate between President Obama and his Republican challenger, Mitt Romney.

Obama accused Romney of proposing a $5 trillion tax cut. Not true. Romney proposes to offset his rate cuts and promises he won’t add to the deficit.
Romney again promised to “not reduce the taxes paid by high-income Americans” and also to “lower taxes on middle-income families,” but didn’t say how he could possibly accomplish that without also increasing the deficit.
Obama oversold his health care law, claiming that health care premiums have “gone up slower than any time in the last 50 years.” That’s true of health care spending, but not premiums. And the health care law had little to do with the slowdown in overall spending.
Romney claimed a new board established by the Affordable Care Act is “going to tell people ultimately what kind of treatments they can have.” Not true. The board only recommends cost-saving measures for Medicare, and is legally forbidden to ration care or reduce benefits.
Obama said 5 million private-sector jobs had been created in the past 30 months. Perhaps so, but that counts jobs that the Bureau of Labor Statistics won’t add to the official monthly tallies until next year. For now, the official tally is a bit over 4.6 million.
Romney accused Obama of doubling the federal deficit. Not true. The annual deficit was already running at $1.2 trillion when Obama took office.
Obama again said he’d raise taxes on upper-income persons only to the “rates that we had when Bill Clinton was president.” Actually, many high-income persons would pay more than they did then, because of new taxes in Obama’s health care law.
Romney claimed that middle-income Americans have “seen their income come down by $4,300.” That’s too high. Census figures show the decline in median household income during Obama’s first three years was $2,492, even after adjusting for inflation.
Obama again touted his “$4 trillion” deficit reduction plan, which includes $1 trillion from winding down wars that are coming to an end in any event.

Romney sometimes came off as a serial exaggerator. He said “up to” 20 million might lose health insurance under the new law, citing a Congressional Budget Office study that actually put the likely number who would lose employer-sponsored coverage at between 3 million and 5 million. He said 23 million Americans are “out of work” when the actual number of jobless is much lower. He claimed half of all college grads this year can’t find work, when, in fact, an AP story said half either were jobless or underemployed. And he again said Obama “cut” $716 billion from Medicare, a figure that actually reflects a 10-year target for slowing Medicare spending, which will continue to grow.

Analysis

The debate was held Oct. 3 inside a huge sports center at the University of Denver. It was the first of three scheduled debates between President Barack Obama and his Republican challenger, Mitt Romney. It was carried live on national TV networks and radio.

$5 Trillion Tax Cut

The president said Romney was proposing a $5 trillion tax cut and Romney said he wasn’t. The president is off base here — Romney says his rate cuts and tax eliminations would be offset and the deficit wouldn’t increase.

Obama: Governor Romney’s central economic plan calls for a $5 trillion tax cut — on top of the extension of the Bush tax cuts.
Romney: First of all, I don’t have a $5 trillion tax cut. I don’t have a tax cut of a scale that you’re talking about.

To be clear, Romney has proposed cutting personal federal income tax rates across the board by 20 percent, in addition to extending the tax cuts enacted early in the Bush administration. He also proposes to eliminate the estate tax permanently, repeal the Alternative Minimum Tax, and eliminate taxes on interest, capital gains and dividends for taxpayers making under $200,000 a year in adjusted gross income.

By themselves, those cuts would, according to the nonpartisan Tax Policy Center, lower federal tax liability by “about $480 billion in calendar year 2015” compared with current tax policy, with Bush cuts left in place. The Obama campaign has extrapolated that figure out over 10 years, coming up with a $5 trillion figure over a decade.

However, Romney always has said he planned to offset that massive cut with equally massive reductions in tax preferences to broaden the tax base, thus losing no revenue and not increasing the deficit. So to that extent, the president is incorrect: Romney is not proposing a $5 trillion reduction in taxes.

The Impossible Plan

However, Romney continued to struggle to explain how he could possibly offset such a large loss of revenue without shifting the burden away from upper-income taxpayers, who benefit disproportionately from across-the-board rate cuts and especially from elimination of the estate tax (which falls only on estates exceeding $5.1 million left by any who die this year). The Tax Policy Center concluded earlier this year that it wasn’t mathematically possible for a plan such as Romney’s to cut rates as he promised without either favoring the wealthy or increasing the federal deficit.

Except for saying that his plan would bring in the same amount of money “when you account for growth,” Romney offered no new explanation for how he might accomplish all he’s promised. He just repeated those promises in some of the strongest terms yet.

Romney: My number one principal is, there will be no tax cut that adds to the deficit. … I will not reduce the taxes paid by high-income Americans. … I will lower taxes on middle-income families.

But he didn’t say how he’d pull off all those things at once.

‘Six Other Studies’

When the president referred to the Tax Policy Center’s criticisms, Romney claimed it was contradicted by several others.

Romney: There are six other studies that looked at the study you describe and say it’s completely wrong.

That’s not quite true, as we previously reported when the count was at five. We found that two of those “studies” were blog items by Romney backers, and none was nonpartisan.

The only one of those “studies” by someone not advising Romney was done by Harvey Rosen, a Princeton economics professor who once served as chairman of President George W. Bush’s Council of Economic Advisers.

Rosen concluded that Romney could pull off his tax plan without losing revenue assuming an extra 3 percent “growth effect” to the economy resulting from Romney’s rate cuts. That’s an extremely aggressive assumption, and in conflict with recent experience. Despite Bush’s large tax cuts in 2001 and 2003, for example, real GDP grew by 3 percent or more for only two of his eight years in office. The average of the year-to-year changes was just over 2 percent.

Furthermore, Bush’s cuts reduced the total tax burden on the economy because they were not offset by base-broadening measures. In theory, at least, Romney’s revenue-neutral rate cuts would have even less of a stimulative effect than Bush’s cuts did.

Overselling the Health Care Law

Obama wrongly said that over the last two years, health care premiums have “gone up slower than any time in the last 50 years.” That’s true of health care spending, not premiums. But even if Obama had worded the claim correctly, he still would have been off in suggesting the Affordable Care Act had caused the slower growth in spending.

Obama: And the fact of the matter is that, when Obamacare is fully implemented, we’re going to be in a position to show that costs are going down. And over the last two years, health care premiums have gone up — it’s true — but they’ve gone up slower than any time in the last 50 years. So we’re already beginning to see progress.

The growth in employer-sponsored family premiums has fluctuated in recent years. It went up just 4 percent from 2011 to 2012, according to an annual survey by the Kaiser Family Foundation, but it increased 9 percent the year before, a big jump from the mere 3 percent increase between 2009 and 2010. Clearly the growth rate over the last two years isn’t a 50-year low — it was sitting around 5 percent from 2007 to 2009. However, the growth of health care costs is at a 50-year low for the past two years.

President Bill Clinton used this statistic, correctly, in his speech at the Democratic National Convention, also implying that the federal health care law deserved credit. But as we said then, most of the law hasn’t even been implemented yet. And experts say it’s the sluggish economy that’s mainly responsible for the slower rate of spending. As the Washington Post reported, experts with the Centers for Medicare and Medicaid Services said that many lost employer-sponsored insurance when they lost their jobs, and other individuals chose to “forgo health-care services they could not afford.”

The New York Times quoted experts saying that consumers’ and medical professionals’ behavior could be changing in anticipation of the law, but it was still the economy that was the leading factor.

As for that increase in health care premiums, experts told us the federal health care law has had a limited impact on those, too, but the impact was to increase costs. They said the law was responsible for a 1 percent to 3 percent increase last year because of more generous coverage requirements.

Treatment Denied?

Romney repeatedly claimed that a new government board was “going to tell people ultimately what kind of treatments they can have.” Not true. It could make some binding recommendations about such things as what drugs or medical devices would be paid for by Medicare, but it has no legal power to dictate treatment or ration care.

The board is a 15-member panel that’s tasked with finding ways to slow the growth of Medicare spending. So, its work concerns Medicare, not everyone seeking health care. And, according to the law, the board can’t touch treatments or otherwise “ration” care, or restrict benefits.

What’s officially called the Independent Payment Advisory Board, made up of appointed health care experts, medical professionals, and consumer representatives, would make binding recommendations to reduce the growth of spending. Congress could override them with a three-fifths majority in each house.

An analysis by the Kaiser Family Foundation determined that the IPAB was limited to finding savings from “Medicare Advantage, the Part D prescription drug program, skilled nursing facility, home health, dialysis, ambulance and ambulatory surgical center services, and durable medical equipment.”

5 million jobs?

Obama claimed that “over the last 30 months, we’ve seen 5 million jobs in the private sector created.”

Obama’s figure is nearly half a million jobs short, according to current Bureau of Labor Statistics figures. But he’s including in his count a preliminary revision of jobs figures that BLS will not finalize until next year.

The current BLS numbers are based on monthly surveys of businesses and government entities and count how many workers are on the payroll. Those figures show that the number of private-sector jobs grew by 4.63 million between February 2010 and August of this year.

But BLS often revises those figures. Each year, the agency looks over companies’ tax records in an effort to get a more accurate number, a process that takes several months. In late September, BLS released a preliminary estimate for its revised numbers, adding 453,000 private-sector jobs to its count for the time period between April 2011 and March 2012. BLS will release its final numbers in February.

The addition of the preliminary estimate brings the number of private-sectors jobs to more than 5 million.

Obama ‘Doubled’ Deficit?

Romney: The president said he’d cut the deficit in half. Unfortunately, he doubled it. Trillion-dollar deficits for the last four years.

It’s not true that Obama “doubled” the deficit. He inherited a $1.2 trillion deficit and deficits have remained at or above that level, as Romney said, every year since then. Romney is right, however, that Obama has not kept his promise to cut the deficit in half.

Here’s the budget history in brief: The 2009 fiscal year began Oct. 1, 2008, when George W. Bush was president, and ended Sept. 30, 2009 with Obama as president. By the time Obama took office in January 2009, the nonpartisan Congressional Budget Office had already estimated that the federal government would end fiscal 2009 with a $1.2 trillion deficit because of higher spending and lower revenues.

Obama added to the 2009 deficit, but not by much. We found that Obama was responsible at most for an additional $203 billion. The government ended $1.4 trillion in the red that year. The deficits were about $1.3 trillion each year for the next two years, and this fiscal year just ended with a shortfall of nearly $1.2 trillion.

So, Obama didn’t double the deficits. But the president did pledge to cut them in half by the end of his first term during his State of the Union address on Feb. 24, 2009. A Congressional Budget Office analysis of the president’s latest budget plan doesn’t show the deficit being cut in half until 2014.

Same Rates as Under Clinton?

Obama repeated a favorite talking point, saying that his tax plan would return rates for the wealthy back to where they were during economically prosperous times under President Bill Clinton. But those making over $250,000 a year would actually pay more than they did under Clinton due to new taxes imposed on upper-income people to pay for the health care law.

Obama: But I have said that for incomes over $250,000 a year, that we should go back to the rates that we had when Bill Clinton was president, when we created 23 million new jobs, went from deficit to surplus, and created a whole lot of millionaires to boot.

Obama is referring to his plan to allow the Bush tax cuts to expire for higher-income taxpayers. The top federal income-tax rate would be allowed to rise from the current 35 percent to 39.6 percent, which was the rate that prevailed after Clinton’s 1993 tax increase, and before Bush’s tax cuts. The next-highest rate would go back to the Clinton-era 36 percent, starting with family income over $250,000 (or $200,000 for singles), up from the Bush rate of 33 percent.

But Obama did not account for the new taxes on those same upper-income taxpayers included in his Affordable Care Act. Starting next year, there will be a new 3.8 percent tax on “unearned” net investment income — such as capital gains from the sale of stocks or real estate, dividends, interest income, annuities, rents and royalties. Also starting Jan. 1 is a new 0.9 percent Medicare surcharge on top of the current Medicare payroll tax. Both taxes apply to taxable compensation that exceeds $200,000 for singles, or $250,000 for couples filing jointly. Those two taxes combined are projected to bring in nearly $210 billion over the next seven years, according to the nonpartisan Joint Committee on Taxation.

Income Loss

As he has done a number of times recently, Romney inflated the loss of income for middle-income Americans under Obama.

Romney: Middle-income Americans have seen their income come down by $4,300. This is a — this is a tax in and of itself. I’ll call it the economy tax. It’s been crushing.

Romney didn’t clarify whether he was talking about household or family income, but either way, the number is inflated.

The latest figures from the Census Bureau for 2011 show that real household income (inflation-adjusted) fell by $2,492 during Obama’s first three years in office. Real family income (again, inflation-adjusted) fell by $3,290.

There’s also some reason to think the income decline bottomed out a year ago. Sentier Research, which Romney has in the past cited as his source, says in its latest report — issued Sept. 10, that household income rose in the year since September 2011, when Sentier’s Seasonally Adjusted Household Income Index hit its lowest point. (See Figure 1, Page 10.)

As part of the same riff on the hardships facing middle-income Americans, Romney also noted that “gasoline prices have doubled under the president.” That’s true, but as we have noted before, the price of gasoline was unusually low when Obama took office due to the recession and financial crisis.

The average price for regular gasoline was $3.80 last week, according to the U.S. Energy Information Administration, a bit more than double the $1.84 average the week Obama took office. But the average exceeded $4 a gallon for seven weeks during the summer of 2008, and it has never reached $4 under Obama.

Obama’s $4 Trillion Reduction Plan

Obama: I’ve put forward a specific $4 trillion deficit reduction plan. It’s on a website. You can look at all the numbers, what cuts we make and what revenue we raise.

Nonpartisan and bipartisan budget analysts have been critical of the methodology Obama employed to get to the $4 trillion in cuts outlined in “The President’s Plan for Economic Growth and Deficit Reduction.” Specifically, the plan’s inclusion of “more than $1 trillion in savings over the next 10 years from our drawdowns in Afghanistan and Iraq,” was criticized by Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, as a “gimmick.”

“Drawing down spending on wars that were already set to wind down and that were deficit financed in the first place should not be considered savings,” MacGuineas said. “When you finish college, you don’t suddenly have thousands of dollars a year to spend elsewhere – in fact, you have to find a way to pay back your loans.”

And as we have noted, even if you accept Obama’s $4 trillion claim, the president’s own Office of Management and Budget projected annual federal deficits would never be lower than $476 billion. That’s higher than any year of the Bush administration except for the $1.4 trillion shortfall for fiscal 2009, for which Obama himself bears some responsibility. And under Obama’s plan, deficits would again rise during the last three years of the 10-year period, reaching $565 billion in 2021 (see table S-1).

20 Million ‘Lose Their Insurance’?

Romney said “the CBO says up to 20 million people will lose their insurance as Obamacare goes into effect next year.” The Congressional Budget Office said that may happen under a very pessimistic scenario. But the agency said it is more likely that about 3 million to 5 million fewer people, on net, would obtain health insurance from their employer under the law. The CBO also said that it was possible that more people would be covered by employers, not fewer, under a more optimistic scenario.

What’s more, these individuals wouldn’t necessarily “lose … insurance” entirely. Many would qualify for federal subsidies to buy policies offered through the new state exchanges established by the law, or qualify for Medicaid.

23 Million ‘Out of Work’?

Romney overstated the number of unemployed Americans when he said that there were “23 million people out of work.” There were 12.5 million unemployed Americans in August, the most recent figures from the Bureau of Labor Statistics.

Romney meant to refer to the unemployed, plus those working part-time who want full-time work (8 million) and those who are considered “marginally attached” to the labor force because they have not looked for work in the past four weeks (2.6 million). All of that adds up to 23.1 million. Romney got his talking point closer to the truth when he said, “We’ve got 23 million people out of work or stopped looking for work in this country.” But he still left out the 8 million who are working part-time for economic reasons.

Jobless Grads

Romney said that “50 percent of college graduates this year can’t find work.” That’s not correct. Romney is likely referring to an analysis of government data conducted for the Associated Press that found that — in 2011 — 53.6 percent of bachelor’s degree-holders under the age of 25 were unemployed or underemployed that year. But it’s not correct to say that a person who is underemployed — meaning that they have a part-time job, or a job for which they were overqualified — can’t find work. It’s also a figure that applies to last year, not “this year” as Romney said.

Romney continued to repeat his misleading claim that Obama’s Affordable Care Act “cut Medicare $716 billion for current recipients.” That’s a reduction in the future growth of Medicare spending over 10 years, not a $716 billion slashing of the current budget.

$716 Billion, Again

Romney went on to say, “I want to take that $716 billion you’ve cut and put it back into Medicare.” But the fact is, the money isn’t being taken away from Medicare. Instead, Medicare would spend it, but over a longer period of time than was expected before the health care law. The law extends the solvency of the Medicare Part A trust fund.

As we’ve explained before, most of this reduction in spending comes in Medicare Part A, or hospital coverage, through a reduction in the growth of payments to hospitals. Medicare payroll taxes, which fund Part A, are either immediately spent by Medicare as they come in, or they’re put in a trust fund. Medicare gets a bond for that tax money from Treasury. And any time Medicare wants to cash in that bond, it can. Treasury has to pay it — even if Treasury already spent the original money on something else.

Cutting the growth of Medicare spending is a good thing — without these $716 billion cuts, Part A’s trust fund is expected to be depleted in 2016. But with them, that date is pushed back to 2024. At that point, Medicare’s payroll tax revenue would only be enough to cover 87 percent of benefits.

That’s if the reductions in spending growth are actually instituted as the law envisions. Medicare’s actuaries are skeptical. They have said that many experts believe the “price constraints would become unworkable and that Congress would likely override them.”

Romney said: “Some 15 percent of hospitals and nursing homes say they won’t take any more Medicare patients under that scenario.” That’s close to what Medicare’s chief actuary, Richard Foster, said in congressional testimony in January 2011. Foster said that his office’s economic simulations “suggest that roughly 15 percent of Part A providers would become unprofitable within the 10-year projection period as a result of the productivity adjustments.” He added: “Although this policy could be monitored over time to avoid such an outcome, changes would likely result in smaller actual savings than described here for these provisions.”

– by Brooks Jackson, Eugene Kiely, Lori Robertson, Robert Farley, D’Angelo Gore and Ben Finley

Sources

Romney for President. “Tax. Fairer, Flatter, and Simpler.” Undated, accessed 4 Oct 2012.

Tax Policy Center. “The Romney Plan (Updated).” 1 Mar 2012.

Brown, Samuel et al. “On the Distributional Effects of Base-Broadening Income Tax Reform.” Tax Policy Center. 1 Aug 2012.

Press release. “In 2012, Many Tax Benefits Increase Due to Inflation Adjustments.” IRS. 20 Oct 2011.

Kiely, Eugene and Brooks Jackson. “Romney’s Impossible Tax Promise.” FactCheck.org. 3 Aug 2012.

Robertson, Lori and Eugene Kiely. “Romney’s Economic Exaggerations.” FactCheck.org. 14 Sep 2012.

Bureau of Economic Analysis. “National Income and Product Accounts Tables.” Undated, accessed 4 Oct 2012.

Congressional Budget Office, “The Budget and Economic Outlook: Fiscal Years 2009 to 2019.” 7 Jan 2009.

Jackson, Brooks. “Obama’s Spending: ‘Inferno’ or Not?” FactCheck.org. 4 Jun 2012.

Office of Management and Budget. “Table 1.1, Summary of Receipts, Outlays, and Surpluses or Deficits: 1789-2017.” Undated, accessed 4 Oct 2012.

Press release. “Federal Budget Deficit Totaled $1.17 Trillion for the First 11 Months of 2012, CBO Estimates.” Congressional Budget Office. 10 Sep 2012.

White House. “Remarks of President Barack Obama — As Prepared for Delivery. Address to Joint Session of Congress.” 24 Feb 2009.

Congressional Budget Office. “An Analysis of the President’s 2013 Budget, Table 1.” Mar 2012.

Yen, Hope. “1 in 2 new graduates are jobless or underemployed.” Associated Press. 23 Apr 2012.

Gore, D’Angelo. “Chamber Continues to Mislead on Health Care Law.” FactCheck.org. 1 May 2012.

Congressional Budget Office. “CBO and JCT’s Estimates of the Effects of the Affordable Care Act on the Number of People Obtaining Employment-Based Health Insurance.” Mar 2012.

U.S. Treasury Department. The Debt to the Penny and Who Holds It. TreasuryDirect.gov. Accessed 3 Oct 2012.

Bureau of Labor Statistics. Employment Situation Summary Table A. Household data, seasonally adjusted. 7 Sep 2012.

Foster, Richard. “The Estimated Effect of the Affordable Care Act on Medicare and Medicaid Outlays and Total National Health Care Expenditures.” Testimony before the House Committee on the Budget. 26 Jan 2011.

Robertson, Lori. “A Campaign Full of Mediscare.” FactCheck.org. 22 Aug 2012.

Plumer, Brad. “U.S. economy added 386,000 more jobs in past year than we thought.” Washington Post. 27 Sept 2012.

U.S. Bureau of Labor Statistics. “CES Preliminary Benchmark Announcement.” 27 Sept 2012.

U.S. Bureau of Labor Statistics. Current Employment Statistics — CES (National). Total private jobs, seasonably adjusted, Feb. 2010 vs. Aug. 2o12. Accessed 3 Oct 2012.

Ebeler, Jack, et. al. “The Independent Payment Advisory Board: A New Approach to Controlling Medicare Spending.” Kaiser Family Foundation. Apr 2011.

Government Printing Office. The Patient Protection and Affordable Care Act. 23 Mar 2010.

Green, Gordon and Coder, John. “Household Income Trends: June 2012.” Sentier Research. Jul 2012.

White House blog. Annual Census Data on Income, Poverty, and Health Insurance for 2011. 12 Sep 2012.

Tax Policy Center. 2013 Budget Tax Proposals.

Fava, Karl L. and Kenneth L. Rubin. “Planning for the New 3.8% Medicare Tax on Unearned Income.” American Institute of CPAs. 1 Jul 2011.

Internal Revenue Service. “Questions and Answers for the Additional Medicare Tax.” 4 Aug 2012.

U.S. Congress, Joint Committee on Taxation. “Estimated Revenue Effects Of The Amendment In The Nature Of A Substitute To H.R. 4872, The ‘Reconciliation Act Of 2010,’ As Amended, In Combination With The Revenue Effects Of H.R. 3590, The ‘Patient Protection And Affordable Care Act (‘PPACA’),’ As Passed By The Senate, And Scheduled For Consideration By The House Committee On Rules On March 20, 2010.” 20 Mar 2010.

DeNavas-Walt, Carmen; Proctor, Bernadette D. and Smith, Jessica C. “Income, Poverty, and Health Insurance Coverage in the United States: 2011 Current Population Reports.” U.S. Census. Sep 2012.

U.S. Energy Information Administration. Weekly U. S. Regular All Formations Retail Gasoline Prices. 1 Oct 2012.

The White House; Office of Management and Budget. “Living Within Our Means and Investing in the Future; The President’s Plan for Economic Growth and Deficit Reduction.” Sep 2011.

Committee for a Responsible Federal Budget. “CRFB Reacts to the President’s FY 2013 Budget” 13 Feb 2012.

Kaiser Family Foundation. “Family Health Premiums Rise 4 Percent to Average $15,745 in 2012, National Benchmark Employer Survey Finds.” Press release. 11 Sep 2012.

Robertson, Lori. “FactChecking Health Insurance Premiums.” FactCheck.org. 24 Oct 2011.

Martin, Anne B., et. al. “Growth In US Health Spending Remained Slow In 2010; Health Share Of Gross Domestic Product Was Unchanged From 2009.” Health Affairs. Jan 2012.

Goldstein, Amy. “U.S. health-care expenditures up only 4 percent in 2009, suggesting effects of recession.” Washington Post. 5 Jan 2011.

Lowrey, Annie. “In Hopeful Sign, Health Spending Is Flattening Out.” New York Times. 28 Apr 2012.

Aggressive Romney spars with Obama in first debate

2012-10-04T10:03:26-04:00

Summary

We found exaggerations and false claims flying thick and fast during the first debate between President Obama and his Republican challenger, Mitt Romney.

Obama accused Romney of proposing a $5 trillion tax cut. Not true. Romney proposes to offset his rate cuts and promises he won’t add to the deficit.
Romney again promised to “not reduce the taxes paid by high-income Americans” and also to “lower taxes on middle-income families,” but didn’t say how he could possibly accomplish that without also increasing the deficit.
Obama oversold his health care law, claiming that health care premiums have “gone up slower than any time in the last 50 years.” That’s true of health care spending, but not premiums. And the health care law had little to do with the slowdown in overall spending.
Romney claimed a new board established by the Affordable Care Act is “going to tell people ultimately what kind of treatments they can have.” Not true. The board only recommends cost-saving measures for Medicare, and is legally forbidden to ration care or reduce benefits.
Obama said 5 million private-sector jobs had been created in the past 30 months. Perhaps so, but that counts jobs that the Bureau of Labor Statistics won’t add to the official monthly tallies until next year. For now, the official tally is a bit over 4.6 million.
Romney accused Obama of doubling the federal deficit. Not true. The annual deficit was already running at $1.2 trillion when Obama took office.
Obama again said he’d raise taxes on upper-income persons only to the “rates that we had when Bill Clinton was president.” Actually, many high-income persons would pay more than they did then, because of new taxes in Obama’s health care law.
Romney claimed that middle-income Americans have “seen their income come down by $4,300.” That’s too high. Census figures show the decline in median household income during Obama’s first three years was $2,492, even after adjusting for inflation.
Obama again touted his “$4 trillion” deficit reduction plan, which includes $1 trillion from winding down wars that are coming to an end in any event.

Analysis

$5 Trillion Tax Cut

Obama: Governor Romney’s central economic plan calls for a $5 trillion tax cut — on top of the extension of the Bush tax cuts.
Romney: First of all, I don’t have a $5 trillion tax cut. I don’t have a tax cut of a scale that you’re talking about.

The Impossible Plan

Romney: My number one principal is, there will be no tax cut that adds to the deficit. … I will not reduce the taxes paid by high-income Americans. … I will lower taxes on middle-income families.

But he didn’t say how he’d pull off all those things at once.

‘Six Other Studies’

When the president referred to the Tax Policy Center’s criticisms, Romney claimed it was contradicted by several others.

Romney: There are six other studies that looked at the study you describe and say it’s completely wrong.

That’s not quite true, as we previously reported when the count was at five. We found that two of those “studies” were blog items by Romney backers, and none was nonpartisan.

Overselling the Health Care Law

Obama: And the fact of the matter is that, when Obamacare is fully implemented, we’re going to be in a position to show that costs are going down. And over the last two years, health care premiums have gone up — it’s true — but they’ve gone up slower than any time in the last 50 years. So we’re already beginning to see progress.

Treatment Denied?

5 million jobs?

Obama claimed that “over the last 30 months, we’ve seen 5 million jobs in the private sector created.”

The addition of the preliminary estimate brings the number of private-sectors jobs to more than 5 million.

Obama ‘Doubled’ Deficit?

Romney: The president said he’d cut the deficit in half. Unfortunately, he doubled it. Trillion-dollar deficits for the last four years.

Same Rates as Under Clinton?

Obama: But I have said that for incomes over $250,000 a year, that we should go back to the rates that we had when Bill Clinton was president, when we created 23 million new jobs, went from deficit to surplus, and created a whole lot of millionaires to boot.

Income Loss

As he has done a number of times recently, Romney inflated the loss of income for middle-income Americans under Obama.

Romney: Middle-income Americans have seen their income come down by $4,300. This is a — this is a tax in and of itself. I’ll call it the economy tax. It’s been crushing.

Romney didn’t clarify whether he was talking about household or family income, but either way, the number is inflated.

Obama’s $4 Trillion Reduction Plan

Obama: I’ve put forward a specific $4 trillion deficit reduction plan. It’s on a website. You can look at all the numbers, what cuts we make and what revenue we raise.

20 Million ‘Lose Their Insurance’?

23 Million ‘Out of Work’?

Jobless Grads

$716 Billion, Again

– by Brooks Jackson, Eugene Kiely, Lori Robertson, Robert Farley, D’Angelo Gore and Ben Finley

Sources

Romney for President. “Tax. Fairer, Flatter, and Simpler.” Undated, accessed 4 Oct 2012.

Tax Policy Center. “The Romney Plan (Updated).” 1 Mar 2012.

Brown, Samuel et al. “On the Distributional Effects of Base-Broadening Income Tax Reform.” Tax Policy Center. 1 Aug 2012.

Press release. “In 2012, Many Tax Benefits Increase Due to Inflation Adjustments.” IRS. 20 Oct 2011.

Kiely, Eugene and Brooks Jackson. “Romney’s Impossible Tax Promise.” FactCheck.org. 3 Aug 2012.

Robertson, Lori and Eugene Kiely. “Romney’s Economic Exaggerations.” FactCheck.org. 14 Sep 2012.

Bureau of Economic Analysis. “National Income and Product Accounts Tables.” Undated, accessed 4 Oct 2012.

Congressional Budget Office, “The Budget and Economic Outlook: Fiscal Years 2009 to 2019.” 7 Jan 2009.

Jackson, Brooks. “Obama’s Spending: ‘Inferno’ or Not?” FactCheck.org. 4 Jun 2012.

Office of Management and Budget. “Table 1.1, Summary of Receipts, Outlays, and Surpluses or Deficits: 1789-2017.” Undated, accessed 4 Oct 2012.

Press release. “Federal Budget Deficit Totaled $1.17 Trillion for the First 11 Months of 2012, CBO Estimates.” Congressional Budget Office. 10 Sep 2012.

White House. “Remarks of President Barack Obama — As Prepared for Delivery. Address to Joint Session of Congress.” 24 Feb 2009.

Congressional Budget Office. “An Analysis of the President’s 2013 Budget, Table 1.” Mar 2012.

Yen, Hope. “1 in 2 new graduates are jobless or underemployed.” Associated Press. 23 Apr 2012.

Gore, D’Angelo. “Chamber Continues to Mislead on Health Care Law.” FactCheck.org. 1 May 2012.

Congressional Budget Office. “CBO and JCT’s Estimates of the Effects of the Affordable Care Act on the Number of People Obtaining Employment-Based Health Insurance.” Mar 2012.

U.S. Treasury Department. The Debt to the Penny and Who Holds It. TreasuryDirect.gov. Accessed 3 Oct 2012.

Bureau of Labor Statistics. Employment Situation Summary Table A. Household data, seasonally adjusted. 7 Sep 2012.

Robertson, Lori. “A Campaign Full of Mediscare.” FactCheck.org. 22 Aug 2012.

Plumer, Brad. “U.S. economy added 386,000 more jobs in past year than we thought.” Washington Post. 27 Sept 2012.

U.S. Bureau of Labor Statistics. “CES Preliminary Benchmark Announcement.” 27 Sept 2012.

U.S. Bureau of Labor Statistics. Current Employment Statistics — CES (National). Total private jobs, seasonably adjusted, Feb. 2010 vs. Aug. 2o12. Accessed 3 Oct 2012.

Ebeler, Jack, et. al. “The Independent Payment Advisory Board: A New Approach to Controlling Medicare Spending.” Kaiser Family Foundation. Apr 2011.

Government Printing Office. The Patient Protection and Affordable Care Act. 23 Mar 2010.

Green, Gordon and Coder, John. “Household Income Trends: June 2012.” Sentier Research. Jul 2012.

White House blog. Annual Census Data on Income, Poverty, and Health Insurance for 2011. 12 Sep 2012.

Tax Policy Center. 2013 Budget Tax Proposals.

Fava, Karl L. and Kenneth L. Rubin. “Planning for the New 3.8% Medicare Tax on Unearned Income.” American Institute of CPAs. 1 Jul 2011.

Internal Revenue Service. “Questions and Answers for the Additional Medicare Tax.” 4 Aug 2012.

DeNavas-Walt, Carmen; Proctor, Bernadette D. and Smith, Jessica C. “Income, Poverty, and Health Insurance Coverage in the United States: 2011 Current Population Reports.” U.S. Census. Sep 2012.

U.S. Energy Information Administration. Weekly U. S. Regular All Formations Retail Gasoline Prices. 1 Oct 2012.

The White House; Office of Management and Budget. “Living Within Our Means and Investing in the Future; The President’s Plan for Economic Growth and Deficit Reduction.” Sep 2011.

Committee for a Responsible Federal Budget. “CRFB Reacts to the President’s FY 2013 Budget” 13 Feb 2012.

Kaiser Family Foundation. “Family Health Premiums Rise 4 Percent to Average $15,745 in 2012, National Benchmark Employer Survey Finds.” Press release. 11 Sep 2012.

Robertson, Lori. “FactChecking Health Insurance Premiums.” FactCheck.org. 24 Oct 2011.

Martin, Anne B., et. al. “Growth In US Health Spending Remained Slow In 2010; Health Share Of Gross Domestic Product Was Unchanged From 2009.” Health Affairs. Jan 2012.

Goldstein, Amy. “U.S. health-care expenditures up only 4 percent in 2009, suggesting effects of recession.” Washington Post. 5 Jan 2011.

Lowrey, Annie. “In Hopeful Sign, Health Spending Is Flattening Out.” New York Times. 28 Apr 2012.

FACT CHECK: Social Security scare tactics

2012-10-03T11:21:30-04:00

Seniors beware: The Obama and Romney campaigns are making false claims about taxing Social Security benefits:

Vice President Joe Biden told seniors in Florida that Romney’s tax plan “would raise taxes on your Social Security.” But that’s not part of Romney’s tax plan. It’s the Obama-Biden campaign’s latest misrepresentation of a nonpartisan study. The group that did the analysis disputes the campaign’s interpretation of its work.
The Romney campaign and the National Republican Committee falsely claim that Biden “repeatedly voted for higher taxes on Social Security benefits.” Obama and Biden repeatedly opposed attempts to cut the tax on Social Security benefits for higher-income seniors, but that’s not a vote for raising taxes higher than they are now.

Scaring Senior Citizens

This back-and-forth with the campaigns started with President Obama’s speech to the AARP on Sept. 21. Obama said Romney’s tax plan “could mean higher taxes for seniors on Social Security, including taxing benefits for seniors who make less than $32,000 a year for the first time ever. Nearly 30 million seniors could see their taxes go up by hundreds of dollars.”

The campaign, a week later, raised the stakes.

In Florida, a battleground state that has the highest share of seniors among all states, Biden toldelderly voters at a retirement community in Boca Raton that the Romney-Ryan “plan on Social Security -– the one they have now -– would raise taxes on your Social Security.”

Biden, Sept. 28: And, as the president pointed out, their plan on Social Security -– the one they have now -– would raise taxes on your Social Security. … Well, Governor Romney’s plan goes into effect, it could mean that everyone, every one of you, could be paying more taxes on your Social Security. The average senior would have to pay $460 a year more in taxes for their Social Security.

That same day, the Obama “truth team” posted a Web video that provides an accounting of how seniors could spend $460 — including $20 on “a birthday present for your grandson” — if seniors didn’t have to pay higher taxes.

The campaign also posted a chart with the headline, “The Romney-Ryan plan: Raise Taxes on Middle-Class Seniors.” The chart purports to show how much more in taxes seniors, depending on their income, could pay under the Romney plan.

One problem: It’s all fiction.

The Obama campaign told us that the tax hike figures in the chart — including the $460 average used by Biden — are based on the assumption that Romney would reduce the partial tax exclusion for Social Security benefits by 58 percent. That comes from an analysis by the nonpartisan Tax Policy Center of “a revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed.” Romney has proposed cutting income tax rates across the board by 20 percent and reducing or eliminating tax deductions, credits and exclusions in order to make up for the lost revenue.

TPC, Aug. 1: In practice, revenue-neutrality requires a net tax increase on taxpayers with income below $200,000, which we assume is implemented so that those taxpayers all experience an equal reduction in after-tax income. “Average percent change in after-tax income in revenue-neutral case” assumes equal across-the-board reductions in tax expenditures for taxpayers below $200,000 of 58 percent, the reduction required to achieve revenue neutrality.

Romney, however, hasn’t said which tax exclusions he would eliminate or reduce. So, the Tax Policy Center made some assumptions. Its analysis listed the partial exclusion for Social Security benefits among the “tax expenditures we are assuming are ‘on the table.’ ”

That assumption may be wrong and TPC knows it. That’s why the center’s director has said it would be wrong to “interpret this [study] as evidence that Governor Romney wants to increase taxes on the middle class in order to cut taxes for the rich.” Romney could pursue other options, such as breaking his promise to make the tax plan revenue neutral.

The Obama campaign repeatedly ignores the TPC’s warning, and continues to mislead different voting blocs — such as in a recent ad targeting young mothers that claimed Romney “could take away middle-class deductions for child care, home mortgages and college tuition.”

Romney Response

The Romney campaign responded by correctly noting that Biden voted in 1993 as a senator to raise the taxable portion of Social Security benefits for individuals earning above $34,000 and married couples making more than $44,000. The Romney campaign fails to mention, however, that the additional tax revenue goes into the Medicare hospital insurance trust fund — which is rapidly depleting and could be exhausted by 2024.

Also, the Romney campaign goes too far when it says that “as senators, President Obama and Vice President Biden repeatedly voted for higher taxes on Social Security benefits.”

The Romney campaign notes that Biden and Obama voted against Republican-backed amendments in 2005 and 2007 that would have returned the tax on Social Security benefits to the 1983 level, as established by President Ronald Reagan. But that would have cut taxes for higher-income seniors; it would not have resulted in “higher taxes” for anyone.

The Republican National Committee has spread the misinformation. The RNC tweeted to its 147,000-plus followers on the day of the vice president’s speech in Florida: “Biden Has Repeatedly Voted For Higher Taxes On Social Security Benefits,” with a link to the RNC website that lists six times when Biden voted against repealing the 1993 tax hike.

– Eugene Kiely

FACT CHECK: Obama’s stump speech

2012-09-26T12:45:51-04:00

It’s the oldest form of political communication. Before there was Twitter or Facebook, before there were 30-second television ads, or super PACs, or even radio or newspapers — there was the stump speech. Ancient Greek politicians spoke directly to citizens in the Agora in Athens 2,500 years ago; 19th-century American politicians stood on tree stumps to deliver their direct pitches to voters. And today’s politicians are still at it.

Day after day, sometimes several times a day, President Barack Obama and Mitt Romney make their case directly to voters. Most of what they say doesn’t make the news, because they’ve said it before, over and over, and reporters are seeking whatever is new.

But voters should take a few minutes to pay attention. Each man is making his best case for why he deserves to be elected. Voters, however, should also beware. The claims candidates make don’t always square with the facts.

In this article, part one of a two-part series, we examine examples of Obama’s factually exaggerated or misleading claims from two of his recent campaign speeches. We’ll go through Romney’s stump speech at a later time.

There’s plenty here to criticize. Like any candidate, Obama is not pretending to give a detached or balanced picture to his audience. He’s making a sales pitch, leaving out or glossing over inconvenient facts, twisting others and sometimes stating things that aren’t so. To cite just a few examples:

Obama correctly states that manufacturing jobs have increased by more than half a million since hitting bottom, but he fails to mention that the number regained is less than half the total lost since he took office.
He claims that “renewable” energy production has doubled on his watch, which isn’t true (only wind and solar have doubled).
He claims he’d increase the tax rate on high-income earners to no more than they paid under Bill Clinton, when the truth is they’d pay more because of new taxes imposed to pay for the Affordable Care Act.
He says “independent analysis” validates that his plan would cut $4 trillion from the deficit. But that total is inflated by $1 trillion in “savings” from winding down wars that he has promised to end anyway.
He accuses Romney of proposing to raise taxes by $2,000 on middle-income taxpayers, when Romney has stated clearly that he wouldn’t do any such thing.
He attacks Romney’s plan for Medicare as a “voucher” system that would leave seniors “at the mercy of insurance companies,” when the fact is, it’s structured the same as the system Obama’s health care law sets up for subsidizing private insurance for persons under age 65.

There’s more — on automobile fuel efficiency, on imports and on exports. The president even complains of “all the cynicism that’s being fed to you through these negative ads,” as though his own campaign wasn’t spending 69 percent of its own millions on ads attacking Romney.

Full quotes — and our dissections of the misleading claims in the president’s current stump speech — are contained in the Analysis section that follows.

Note to readers: This is the first part of a two-part series examining the factual claims made by both major candidates. We will post our findings about Mitt Romney’s stump-speech claims in a subsequent Featured Article.

Analysis

With one exception, all the examples given here are from a campaign speech President Obama delivered in Las Vegas on Sept. 12. In addition, we’ve included another of his well-worn applause lines from a speech delivered Sept. 17 in Columbus, Ohio, as noted below. All are examples of points he has used before and, we have little doubt, will continue using as the campaign wears on.

Here’s what we found:

Manufacturing Jobs

Obama, Sept. 12: After a decade of decline, this country has created over half a million new manufacturing jobs in the last two-and-a-half years. We reinvented a dying auto industry that’s back on top of the world.

It’s true that manufacturing jobs declined during the Bush administration, and they have rebounded since hitting bottom one yearafter Obama took office. Since that low point, the economy has regained 512,000 of the manufacturing jobs lost since his inauguration in January 2009, according to August figures from the Bureau of Labor Statistics.

But that’s still 582,000 shortof where the total stood when Obama took office. At the current pace, it would take another three years to get back to even.

Also, Obama is incorrect when he claims the U.S. auto industry is “back on top of the world.” As we pointed out when he used that line during his Democratic convention speech, the former world leader, General Motors, has slipped back to No. 2 in global auto sales and is headed for third place for the entire year, behind Toyota and Volkswagen.

Double Exports?

Obama: We can help big factories and small businesses double their exports. We can create a million new manufacturing jobs in the next four years.

Obama first pledged to double exports during his 2010 State of the Union address, and he launched a National Export Initiative to help farmers and small businesses export more goods. But in the two-and-a-half years since then, exports of goods and services (see “Trade in Goods and Services, 1992 to present”) have increased just 28 percent. The most recent figures, released Sept. 11, showed a slight month-to-month decline for July. Even using 2010 as the start date, it will take years for exports to double at the current rate of increase.

And the promise of adding “a million new manufacturing jobs in the next four years” would require a faster rate than we’ve seen so far. It would take five years — not four — for the economy to add 1 million more manufacturing jobs at the average monthly pace since the number of those jobs hit bottom.

Fuel Standards ‘Save You Money’?

Obama: After 30 years of inaction, we raised fuel standards so that by the middle of the next decade, your cars and trucks will go twice as far on a gallon of gas. (Applause.) That will save you money.

Obama overstates matters when he says vehicles will go “twice as far” by 2025. And it’s debatable as to how much or how quickly the new fuel-economy regulations will “save you money.”

It’s true that the administration is pushing forward with a “final rulemaking” that would require model year 2025 autos and light trucks to achieve the equivalent of 54 miles per gallon. That’s actually well short of double the current 29.7 combined average, which is required for the 2012 model year under rules that took effect in 2010.

It’s also debatable how much money this ambitious regulation will save consumers over the long run. In the short run, it will certainly require new car buyers to pay higher prices.

By the government’s own estimate, higher costs for new vehicle technology to meet the standards “are projected to add, on average, about $1,800 for consumers who buy a new vehicle” in model year 2025. That’s compared with the estimated cost of a 2016 vehicle, which in turn will cost $492 more than a 2012 vehicle to meet the rising standards mandated in 2010, under the official estimates given at the time (Table I.C.1–10, page 25346). That’s a total of about $2,300 more than today’s vehicles — plus any sales tax on the added purchase price.

To be sure, the government estimates that fuel savings will eventually offset the higher purchase price — but that will take years. “[F]uel savings will offset the higher vehicle cost in less than 3.5 years,” according to a “fact sheet” by the Environmental Protection Agency.

The official estimate is that fuel savings will produce “a net lifetime savings of $3,400 to $5,000″ for the 2025 vehicle. But that assumes that the cost of gasoline at the pump will average $3.87 per gallon (in 2010 dollars), which is based on the most recent “reference case” projection by the U.S. Energy Information Administration. That projection could turn out to be high, or low.

Such projections are notoriously volatile and uncertain. Under EIA’s “high oil price” scenario, gasoline would average $5.20 in 2025, and the payback period would be faster and lifetime savings would be greater. But under EIA’s “low oil price” scenario, gasoline would fall to $2.19, and it would take longer for fuel savings to offset the added cost.

Renewable Energy Not ‘Doubled’

Obama: We have doubled the amount of renewable energy we generate, including right here in Nevada — solar panels all across this state.

It’s simply not correct that “renewable” energy as a whole has doubled. Obama is referring only to the relatively small portion accounted for by wind and solar generation, which has indeed doubled.

As we’ve noted previously, when the much larger contributions of biomass (such as ethanol) and hydropower are included, the overall category of “renewable” energy produced is up by about 27 percent (see Table 1.1) from 2009 to 2011, according to the most recent figures available. And all renewable energy combined still accounted for only about 9 percent of the nation’s energy production in 2011.

Dependency on Foreign Oil

Obama: Today, the United States of America is less dependent on foreign oil than at any time in nearly two decades.

What the president says is accurate, but he can’t claim exclusive credit. The trend of decreasing dependence on foreign oil began after peaking in 2005, when Obama was a freshman U.S. senator from Illinois. And the trend results from bigger forces than increased wind and solar, or federal mileage standards.

The big picture is shown in this chart, produced by the U.S. Energy Information Administration:

The EIA states that the trend is the result of a variety of factors including the economic downturn (curbing consumption) and new drilling technology (increasing domestic supply).

EIA, July 13: The economic downturn after the financial crisis of 2008, improvements in efficiency, changes in consumer behavior and patterns of economic growth, all contributed to the decline in petroleum consumption. At the same time, increased use of domestic biofuels (ethanol and biodiesel), and strong gains in domestic production of crude oil and natural gas plant liquids expanded domestic supplies and reduced the need for imports.

Cutting Deficit by $4 Trillion?

Obama: Independent analysis shows my plan for reducing the deficit would cut it by $4 trillion.

Actually, nonpartisan and bipartisan budget analysts are quite skeptical of Obama’s $4 trillion claim. He refers to “The President’s Plan for Economic Growth and Deficit Reduction,” released a year ago. But that plan includes “more than $1 trillion in savings over the next 10 years from our drawdowns in Afghanistan and Iraq.” That’s been criticized by Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. “[T]he use of this war gimmick is quite troubling,” she said. “Drawing down spending on wars that were already set to wind down and that were deficit financed in the first place should not be considered savings. When you finish college, you don’t suddenly have thousands of dollars a year to spend elsewhere – in fact, you have to find a way to pay back your loans.”

And even taking Obama’s $4 trillion claim at face value and using projections of his own Office of Management and Budget, the projected annual federal deficits would never be lower than $476 billion, which is higher than any year of the Bush administration except for the $1.4 trillion shortfall for fiscal 2009, for which Obama himself bears some responsibility. And under Obama’s plan, deficits would be rising for the last three years of the 10-year period, reaching $565 billion in 2021 (see table S-1).

Not the ‘Same Rate’

Obama: But I also want to ask the wealthiest households, including my own, to pay a little bit more on incomes over $250,000, the same rate we had when Bill Clinton was President …

This is one of Obama’s favorite points, but it’s not accurate. Tax rates on family income over $250,000 (and on income by single taxpayers exceeding $200,000) will be higher than they were when Clinton was president.

It’s true that the top federal income-tax rate would be allowed to rise from the current 35 percent to39.6 percent, which was the rate that prevailed after Clinton’s 1993 tax increase, and before Bush’s tax cuts. The next-highest rate would go back to the Clinton-era 36 percent, starting with family income over $250,000 (or $200,000 for singles), up from the Bush rate of 33 percent.

But Obama fails to note that his Affordable Care Act loads additional taxes on those same upper-income taxpayers. Taking effect Jan. 1 is a new 3.8 percent tax on “unearned” net investment income — such as capital gains from the sale of stocks or real estate, dividends, interest income, annuities, rents and royalties.

Also starting Jan. 1 is a new 0.9 percent Medicare surcharge on top of the current Medicare payroll tax. It also applies to taxable compensation that exceeds $200,000 for singles, or $250,000 for couples filing jointly.

Together these two new taxes will bring in nearly $209 billion over the next seven fiscal years, asestimated by the nonpartisan Joint Committee on Taxation.

Medicare ‘Voucher System’

Obama: And by the way, I will never turn Medicare into a voucher because no American should have to spend their golden years at the mercy of insurance companies.

Technically, Romney and running mate Paul Ryan are not proposing a “voucher” system for Medicare. Their plan would operate pretty much the same way that new health insurance exchanges will work for those getting subsidized coverage under Obama’s own Affordable Care Act. It’s also the way the Federal Employee Health Benefits system has worked for decades, covering over 9 million civilian federal workers, retirees and their families. That is, the government will pay a portion of the premiums for private insurance coverage chosen by the beneficiaries, and pay it directly without resorting to issuing vouchers.

It is also the way the current Medicare Advantage program works, covering nearly 12 million seniorswho choose private plans over traditional, government-run Medicare coverage. It’s even the way Medicare’s prescription drug benefit works. No vouchers involved.

There’s a long-running debate over the wisdom of moving even more Medicare beneficiaries to private plans, as Romney and Ryan propose. (About 25 percent now choose Medicare Advantage.)

And it’s far from clear that the Republican approach could achieve the level of cost reduction it predicts without also cutting benefits or increasing out-of-pocket expenses for seniors. It’s not even clear how many would choose private coverage, since Romney and Ryan would include traditional Medicare as a choice under their plan.

But claiming that it’s a “voucher” system that would put seniors “at the mercy of insurance companies” is misleading. It ignores the plain fact that Obama supports other, popular health-care programs that work the same way.

$2,000 Middle-Class Tax Hike?

A point he didn’t bring up in his Sept. 12 speech — but has repeated many times in his other stump speeches — came up again a few days later at another campaign appearance, in Columbus, Ohio.

Obama, Sept. 17: I am not going to ask middle-class families with kids to pay over $2,000 more so that millionaires and billionaires get to pay less.

But Romney isn’t asking that, either. In fact, Romney insists: “I will not raise taxes on the middle class.”

Obama’s $2,000 figure comes from an analysis by the Tax Policy Center of “a revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed.” Romney has not provided details on what tax credits and deductions would be eliminated. The TPC calculated whose tax breaks would need to go — starting at the top — to make up for the revenue that would be lost by cutting rates 20 percent for everybody, as Romney has promised. And it concluded that “taxpayers with children who make less than $200,000 would pay, on average, $2,000 more in taxes” if Romney cut rates as promised without losing revenue.

But this does not prove that Romney will increase taxes on those making under $200,000. It’s just evidence that Romney can’t deliver everything he has promised.

Donald Marron, director of the nonpartisan Tax Policy Center, says of his center’s study: “I don’t interpret this as evidence that Governor Romney wants to increase taxes on the middle class in order to cut taxes for the rich, as an Obama campaign ad claimed. Instead, I view it as showing that his plan can’t accomplish all his stated objectives.”

Romney could cut rates less, or let the federal deficit rise more, and still not raise taxes on those making under $200,000. Or he could define the “middle” to be taxpayers much lower down on the income scale.

‘Cynicism’ Fed by ‘Negative Ads’

Obama: If you buy into all the cynicism that’s being fed to you through these negative ads, well, you know what, change won’t happen if you stop fighting for it.

The fact is Obama’s campaign has been feeding the cynicism, too. The president’s campaign hadspent $147 million on TV spots through Sept. 9, of which 69 percent were negative, according to theWashington Post’s “Mad Money” website, which tracks such spending on a weekly basis.

In addition, 100 percent of the $22.6 million spent by the Democratic National Committee on Obama’s behalf also went for ads rated as negative. And 96 percent of the $9.8 million spent by the pro-Obama group Priorities USA has also been rated negative.

To be sure, Romney and his GOP allies also have spent tens of millions running ads attacking Obama, other Democrats and even Romney’s Republican primary foes. But the president can’t pretend that negative ads or political cynicism is their fault alone.

– by Brooks Jackson

Correction, Sept. 25: We originally gave the date of the president’s Las Vegas speech incorrectly as Sept. 13. It was Sept. 12, and a transcript appeared on the White House website until the following day.

Sources

Obama, Barack. “Remarks by the President at a Campaign Event — Las Vegas, NV.” The White House. 13 Sep 2012.

Obama, Barack. “Remarks by the President at a Campaign Event — Columbus, Ohio.” The White House. 17 Sep 2012.

U.S. Bureau of Labor Statistics, Current Employment Statistics survey (National). “Manufacturing, Seasonally Adjusted, All Employees.” Data extracted. 17 Sep 2012.

Robertson, Lori et al. “FactChecking Obama and Biden.” 7 Sep 2011.

Lienert, Paul. “Toyota regains top global auto sales spot, with VW in pursuit.” Reuters. 26 Jul 2012.

Obama, Barack. “Remarks by the President in State of the Union Address.” The White House. 27 Jan 2012.

The White House. “President Obama Provides Progress Report on National Export Initiative, Announces Members of the President’s Export Council.” 7 Jul 2010.

Bureau of Economic Analysis. “U.S. International Trade in Goods and Services, July 2012.” 11 Sep 2012.

Bureau of Economic Analysis. “Trade in Goods and Services, 1992-present.” 11 Sep 2012.

U.S. Environmental Protection Agency. “EPA and NHTSA Set Standards to Reduce Greenhouse Gases and Improve Fuel Economy for Model Years 2017-2025 Cars and Light Trucks.” Aug 2012.

U.S. Environmental Protection Agency & U.S. National Highway Traffic Safety Administration. “Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule.” Federal Register. 7 May 2010.

U.S. Energy Information Administration. “Table 1.1.A. Net Generation by Other Renewables: Total (All Sectors), 2002-June 2012” 24 Aug 2012.

Robertson, Lori. “Renewable Energy ‘Doubled’?” FactCheck.org. 14 Sep 2012.

U.S. Energy Information Administration. “How dependent are we on foreign oil?” 13 Jul 2012.

The White House; Office of Management and Budget. “Living Within Our Means and Investing in the Future; The President’s Plan for Economic Growth and Deficit Reduction.” Sept 2011.

Committee for a Responsible Federal Budget. “CRFB Reacts to the President’s FY 2013 Budget” 13 Feb 2012.

Jackson, Brooks. “Obama’s Spending; ‘Inferno’ or Not?” FactCheck.org. 4 Jun 2012.

Fava, Karl L. and Kenneth L. Rubin. “Planning for the New 3.8% Medicare Tax on Unearned Income.” American Institute of CPAs. 1 Jul 2011.

Internal Revenue Service. “Questions and Answers for the Additional Medicare Tax.” 4 Aug 2012.

U.S. Congress, Joint Committee on Taxation. “Estimated Revenue Effects Of The Amendment In The Nature Of A Substitute To H.R. 4872, The “Reconciliation Act Of 2010,” As Amended, In Combination With The Revenue Effects Of H.R. 3590, The “Patient Protection And Affordable Care Act (‘PPACA’),” As Passed By The Senate, And Scheduled For Consideration By The House Committee On Rules On March 20, 2010.” 20 Mar 2010.

U.S. Department of Health and Human Services, Healthcare.go website. “Affordable Insurance Exchanges.” Accessed 18 Sep 2012.

U.S. Office of Personnel Management. “Insurance Benefits.” Web page accessed 18 Sep 2012.

Kaiser Family Foundation. “Medicare Advantage” fact sheet. Nov 2011.

Romney, Mitt. “Remarks to the Republican National Convention.” 30 Aug 2012.

Brown, Samuel and William G. Gale and Adam Looney. “On the Distributional Effects of Base-Broadening Income Tax Reform.” Tax Policy Center. 1 Aug 2012.

Marron, Donald. “Understanding TPC’s Analysis of Governor Romney’s Tax Plan.” Tax Policy Center. 8 Aug 2012.

FACT CHECK: Romney’s stump speech

2012-09-26T12:45:18-04:00

To the strains of Kid Rock’s “Born Free,” Mitt Romney took to the stage at a minor league baseball park in Nashua, N.H., on Sept. 7 flanked by his wife, Ann, and delivered a standard — albeit slightly longer — version of his stump speech.

But unless you were at Holman Stadium that day, saw it on the local TV news or read about it the next day in the Union Leader, you probably didn’t hear anything about it. That’s true of most stump speeches.

While the Nashua stump speech was very much a local event, presidential candidates tend to deliver very similar versions of the same speech over and over as they make their long-form pitch to audiences around the country. Just as with our previous analysis of Obama’s stump speech, we found numerous instances of candidate spin in what Romney had to say. For example:

Romney says Obama “said by now [unemployment] would be down to 5.4 percent.” But Romney is referring to a speculative report issued at the beginning of Obama’s presidency containing projections — not promises. Those projections relied on prevailing economic models that quickly proved to have underestimated the depths of the recession at that time.
Romney says median family income dropped $5,000 under Obama. That’s an exaggeration. The true loss of inflation-adjusted, median family income was $3,290 during Obama’s first three years. Romney’s figure is based on a report that covers a period that includes 13 months before Obama took office.
Romney says health insurance premiums have gone up $2,500 under Obama. The actual increase has been $1,700, most of which was absorbed by employers and only a small part of which is attributable to the health care law.
Romney blames Obama for the cost of gasoline doubling, but that’s misleading. Gasoline prices happened to be unusually low when Obama took office due to the recession and financial crisis.
Romney cited a Chamber of Commerce survey as evidence that small-business owners are less likely to hire because of the health care law. But experts warn not to place too much weight on the survey because it was an opt-in, online survey.
Romney said Obama “cut Medicare by $716 billion to pay for Obamacare,” but these cuts in the future growth of spending prolong the life of the Medicare trust fund, stretching the program’s finances out longer than they would last otherwise.
Romney said the health care law is “killing jobs in small business.” But CBO says the law would have a “small” impact on jobs, mainly affecting the amount of labor workers choose to supply. Those getting subsidies, for instance, might work less hours since they’re paying less for health care.
Romney said he would bring health care costs down by “finally deal[ing] with malpractice costs,” but experts say medical malpractice doesn’t make much of a dent in health care spending.

There are other misleading claims — including bluster on the Keystone XL pipeline and a claim that Obama has lived up to a “promise” about “skyrocketing” energy costs. And, of course, no Romney speech is complete without a reference to Obama’s comment, “If you’ve got a business, you didn’t build that,” a quote that has been lifted out of context.

Full quotes and our analysis of the accuracy of claims in Romney’s stump speech are contained in the Analysis section that follows.

Note to readers: This is the second part of a two-part series examining the factual claims made by both major candidates. We posted our findings about President Barack Obama’s stump-speech claimsin a previous Featured Article.

Analysis

For the purposes of this story, we focused primarily on Romney’s speech in Nashua, N.H., on Sept. 7. (You can watch an amateur video of Romney’s Nashua speech here.) But Romney doesn’t always deliver the exact same stump speech. He sprinkles particular claims in some speeches but not others. And so we have included a few claims from two other recent Romney speeches — one made the same day in Orange City, Iowa, and another from a campaign event in Mansfield, Ohio, on Sept. 10.

Here’s what we found:

The Unemployment Promise?

Romney: [Obama] said by now [unemployment] would be down to 5.4 percent.

This is a slight variation on an old, frequently cited (and misleading) claim that Obama promised to keep unemployment below 8 percent. Its roots are in a report issued by Christina Romer, then chair of Obama’s Council of Economic Advisers, and Jared Bernstein, who held the title of “chief economist” to Vice President Joe Biden. The Jan. 9, 2009, report sought to forecast the unemployment rate with and without the then-proposed economic stimulus. Romney is correct that the report projected the unemployment rate with the economic stimulus would be 5.4 percent in the third quarter of 2012. The report projected it would be about 6 percent without the stimulus.

Romney, however, has framed these forecasts as Obama promises, and that’s a stretch. For one, the report emphasized in several places that due to the volatility of the economy at the time, there was “substantial uncertainty around all of our estimates.”

As we wrote back in June 2009, the White House explanation was that the economic situation Obama inherited simply turned out to be much worse than most economists realized at the time. Indeed, the original chart was based on economic projections that were in line with what private economists were forecasting in early January 2009, but those forecasts were being revised for the worse even before any stimulus money was spent. Here’s the original chart:

It shows, for example, that the Obama team originally estimated that unless a stimulus plan was enacted, the unemployment rate would reach nearly 9 percent sometime in the first three months of 2010. But as things turned out, even with the big spending package in place, the jobless rate shot up to 9.4 percent in May 2009, according to the U.S. Bureau of Labor Statistics. In short, it was a highly speculative report containing projections — not promises — that relied on prevailing economic models that quickly proved to have underestimated the depths of the recession at that time.

Median Income

Romney: And so the median income in America, instead of going up like the president said it would, has instead come down by $5,000 a family.

This is an exaggeration. Typically, Romney claims family income has fallen by $4,000 (not $5,000) under Obama. But whether $5,000 or $4,000, as we noted in our coverage of the convention speech, the number is inflated. New figures from the Census Bureau for 2011 — released after Romney spoke — show the true loss of real (that is, inflation-adjusted), median family income was $3,290 during Obama’s first three years.

Romney took his $4,000 figure from a study by Sentier Research back in July. But he misrepresents it. Part of that $4,000 loss took place prior to Obama taking office in January 2009. It doesn’t say exactly how much of that $4,000 drop came before Obama took office.

The study measured the drop in household (not “family”) income starting in December 2007, when the recession officially started — which was 13 months before Obama took office — and ending in June 2012.

More recently, Romney has said simply that median household income “is down every year for the last four years,” which is true. But that also exaggerates, since it includes Bush’s last year plus Obama’s three years.

Finally, there’s some reason to think the income decline bottomed out a year ago. Sentier Research, which Romney cites as his source, says in its latest report — issued Sept. 10, just before the official Census figures for 2011 — that household income is higher now that it was in September of 2011, when Sentier’s Seasonally Adjusted Household Income Index hit its lowest point. (See Figure 1, Page 10.)

Health Insurance Premiums

Romney: Health insurance premiums have gone up by $2500 [under Obama].

Romney appears to have mixed up two statistics here: Obama’s promise to reduce health insurance premiums by $2,500 (an optimistic claim we have questioned several times, ever since the soon-to-be president first made the promise on the campaign trail) and the actual rise in insurance premiums. As we reported in March, the average cost of a family policy rose by $1,300 between 2010 and 2011, according to the Kaiser Family Foundation’s annual survey (Exhibit 1.110). (Even if you include the year before — so 2009 to 2011 — the increase was $1,700, not $2,500.)

Moreover, the $1,300 rise in premiums between 2010 and 2011 is the total cost for both employers and employees — not $1,300 out of pocket for the average family. In fact, the Kaiser Family Foundation report said that the increase in what workers contribute wasn’t “a statistically significant increase over the 2010 values.”

Romney often implies that Obama’s health care law is to blame for the rise in premiums, but when we looked into that issue last October, experts told us it was only responsible for a small portion of the increase. Specifically, they said, more generous coverage requirements in the law caused premiums to go up by 1 percent to 3 percent, while all told, premiums went up 9 percent. The bulk of the increase was tied to rising health care costs.

Gasoline Cost Doubled?

Romney: The cost of gasoline doubled [under Obama].

This staple of Romney’s stump speeches is technically correct, but awfully misleading. Gasoline prices when Obama took office were unusually low due to the recession and financial crisis.

The average price for regular gasoline was $3.88 in mid-September, according to the U.S. Energy Information Administration, a bit more than double the $1.84 average on the week Obama was sworn in. But the average exceeded $4 a gallon for seven weeks during the summer of 2008, and it has never reached $4 under Obama.

Skyrocketing Energy Prices

In another stump speech made the same day, this one in Orange City, Iowa, Romney added this frequently cited distortion to his attack on energy prices:

Romney: One promise [Obama] kept, though, he said if his energy policies got put in place, the cost of energy would skyrocket. And that’s happened.

As we have noted previously, Obama’s “skyrocket” quote was part of a discussion about cap-and-trade as a means to reduce greenhouse gases.

Obama, speaking to the editorial board of the San Francisco Chronicle on Jan. 17, 2008, said electricity costs would “necessarily skyrocket” as a result of capping emissions levels, and that his job as president would be to convince the public and Congress that benefits outweigh costs.

But the cap-and-trade plan Obama endorsed — the American Clean Energy and Security Act (H.R. 2454) — included allowances to electric companies to protect consumers from increases in electricity bills. More important, contrary to what Romney said, it didn’t “happen.” The bill died in the Senate.

The Pipeline

Romney: I’m going to get that pipeline from Canada so we can get more oil.

Support for the Keystone XL pipeline has been a reliable applause line in Romney stump speeches for months. But there’s less here than meets the eye.

The president merely delayed a decision on the controversial northern leg of the project, which would bring oil from Hardisty, Alberta, to Steele City, Neb. The original route through Nebraska’s environmentally sensitive Sandhills area met with bipartisan opposition from the state’s political leaders. The company that wants to build the pipeline– TransCanada Corporation — filed a new proposed route with the Nebraska Department of Environmental Quality in early September. The company expects to get approval in the first quarter of 2013, and place the pipeline in service in 2015. The southern portion of the pipeline is already under construction.

Meanwhile, there’s nothing to prevent more Canadian oil from coming into the U.S. right now, should Canada be able and willing to send it. Existing cross-border pipelines already have much more capacity than they are using, according to a study produced for the U.S. Department of Energy by EnSys Energy & Systems Inc. of Lexington, Mass., in December 2010. And the study predicts that surplus capacity will persist at least until the year 2020, even if the Keystone is never built (see table 3-4).

Unreliable Survey

Romney: Three-quarters of the small businesses in this country that were surveyed by the Chamber of Commerce said they were less likely to hire people because of Obamacare.

When Romney cited this same survey in June, we cautioned not to put too much weight on it because it was an opt-in, online survey.

The survey was conducted online by the U.S. Chamber of Commerce — which opposes the health care law and has run numerous TV ads attacking it — in late March and early April. It queried 1,339 executives at companies with fewer than 500 employees and revenues of less than $25 million. The chamber reported that 73 percent said the health care law is “an obstacle to growing their business and hiring more employees.”

So Romney has accurately cited the survey. The problem is that because it was based on an online, opt-in survey of small-business executives, the chamber can’t be sure it’s a representative sample of small-business executives. A press release from the Chamber of Commerce acknowledges as much: “This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.”

Back in June, we spoke with Scott Keeter, director of survey research at the Pew Research Center and the most recent past president of the American Association for Public Opinion Research. He talked about the limitations of such surveys. “The bottom line is that surveys that have self-selected samples don’t have any known relation to the target group [in this case small-business owners],” Keeter said. “As a result, it is difficult, if not impossible, to know what kind of weight to give this.”

That is why, Keeter noted, major news organizations like the Washington Post, New York Times andABC News have strict policies prohibiting the reporting of such surveys.

Raiding Medicare to Pay for Obamacare?

Romney often says that Obama funneled $716 billion from Medicare to pay for the health care law — as he did at a campaign event in Mansfield, Ohio, on Sept. 10:

Romney: He’s cut Medicare by $716 billion to pay for Obamacare.

Various incarnations of this claim have cropped up in Romney’s campaign speeches — including claims that Obama is “cutting” “funneling” or “raiding” $716 billion from Medicare to pay for the health care law. But Medicare money isn’t being taken away. The Affordable Care Act calls for a$716 billion reduction in the growth of Medicare spending over 10 years, a move that — if successful — would keep the hospital insurance trust fund solvent for an additional eight years. Most of the $716 billion reduction — about $415 billion — comes from a reduction in the future growth of payments to hospitals through Medicare Part A. And Medicare Part A’s trust fund, as we’ve explained before, is in trouble financially. Without the spending reductions, the program is projected to be insolvent — paying out more than is taken in from payroll taxes — in 2016. With the reductions, that insolvency date is projected to be put off until 2024.

Furthermore, as we explained in detail in our story “Medicare’s ‘Piggy Bank,’ “ Medicare doesn’t have $716 billion sitting around that could be “raided.” The president can’t take money out of the trust fund — which had $244.2 billion at the end of 2011. Medicare holds its trust fund bonds and can cash them in as it needs to cover whatever isn’t paid by current payroll taxes. The health care law even increases the amount of tax revenue that will flow into the trust fund by imposing a 0.9 percent Medicare surcharge on certain high-income individuals.

If Part A doesn’t need to spend income it receives from payroll taxes immediately, Treasury issues Medicare a bond and the amount is credited to Medicare’s Part A trust fund. When Medicare wants to cash that bond, Treasury has to pay it, even if Treasury already spent the original money on something else.

And that’s where Romney has a point. The health care law counts those savings as money that can also cover other aspects of the law. But both the Congressional Budget Office and Medicare’s chief actuary have said that in practice, the $716 billion savings can’t cover two things at once.

Killing Jobs?

In the same speech, Romney repeated another frequent attack on “Obamacare”:

Romney: I want to get rid of Obamacare because it’s killing jobs in small business.

This oft-cited claim is based, in part, on a faulty reading of a report from the Congressional Budget Office in August 2010. Here’s what the report says:

CBO: The Congressional Budget Office(CBO) estimates that the legislation, on net, will reduce the amount of labor used in the economy by a small amount—roughly half a percent—primarily by reducing the amount of labor that workers choose to supply. …
The expansion of Medicaid and the availability of subsidies through the exchanges will effectively increase beneficiaries’ financial resources. Those additional resources will encourage some people to work fewer hours or to withdraw from the labor market. …
Changes to the insurance market, including provisions that prohibit insurers from denying coverage to people because of preexisting conditions and that restrict how much prices can vary with an individual’s age or health status, will increase the appeal of health insurance plans offered outside the workplace for older workers. As a result, some older workers will choose to retire earlier than they otherwise would.

CBO Director Douglas Elmendorf estimated in February 2011 that “roughly half a percent” of the labor in the economy would be equal to 800,000 jobs at the end of this decade, a statement that Romney and other Republicans translated into the claim that the healthcare law would kill 800,000 jobs. But CBO didn’t say that 800,000 Americans would be without jobs unwillingly. Rather, as the quote above makes clear, it said there would be a reduction in the amount of labor supplied by workers — many of whom would decide to retire earlier than they normally would, or work fewer hours or fewer jobs, because of the subsidies provided by the law, and greater security for those buying their own coverage outside the workplace. In other words, some folks were keeping jobs they didn’t otherwise want simply because of the insurance benefits.

Medical Malpractice

Romney: I want to focus on getting the cost of health care down. And one way to do that, by the way, is to finally deal with the malpractice costs.

As we have written before, medical malpractice doesn’t have as big an impact on health care spending as Romney implies. The Congressional Budget Office estimated that limiting malpractice liability would reduce the federal deficit by $54 billion over 10 years. That’s a lot of money, to be sure, but in the context of a $2 trillion-plus health care spending market over 10 years, CBO Director Elmendorf noted the savings would “reduce total U.S. health care spending by about 0.5 percent.”

So what are the biggest drivers of health care spending? The nonprofit Kaiser Family Foundation provides a list of the major drivers, which includes prescription drugs and technology, chronic disease (which accounts for more than 75 percent of health care spending), an aging population, and administrative costs.

We Built It

Romney: [Obama] said something that was so contrary to the American experience that shocked people, regardless of their backgrounds, when he said, “If you’ve got a business, you didn’t build that – someone else did that.”

The GOP practically built its convention on the “We Built It” theme, and virtually every Romney campaign speech for the last month has contained some variation of it. The problem with the Romney attack is that it is based on a clumsily worded Obama quote taken a bit out of context.

The full context of Obama’s remarks makes it clear he was saying taxpayer-funded public support — such as education, infrastructure and research — “gave you some help” to succeed in business. He was making an argument to continue funding government programs that help businesses flourish.

Obama, July 13: If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

The Obama campaign contended the word “that” in the phrase “you didn’t build that” referred to roads and bridges. That is not grammatically correct; in strictly proper usage, “that” would refer back to the closest noun, in this case “business.” But given that it was an oral rather than written speech, the Obama camp’s explanation is certainly plausible. The sentence Obama spoke just prior to his now infamous phrase does refer to infrastructure. He said: “Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that.”

More important, Obama concluded his remarks by saying: “The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.”

– by Robert Farley

Sources

Romer, Christina and Bernstein, Jared. “The Job Impact of the American Recovery and Reinvestment Plan.” White House Council of Economic Advisers. 09 Jan 2009.

“Press Briefing by the Press Secretary Robert Gibbs and the Vice President’s Chief Economis, Jared Bernstein.” White House Press Office, 8 June 2009.

“Employment Situation News Release.” Bureau of Labor Statistics, 5 June 2009.

Feldstein, Martin. “The Stimulus Plan We Need Now: The President-Elect Won’t Have to Wait Till January to Act.” Washington Post, 30 Oct. 2008.

Green, Gordon and Coder, John. “Household Income Trends: June 2012.” Sentier Research. July 2012.

White House blog. Annual Census Data on Income, Poverty, and Health Insurance for 2011. 12 Sep 2012.

Claxton, Gary, Rae, Matthew, Panchal, Nirmita, Lundy, Janet and Damico, Anthony. “Employer Health Benefits: 2011 Annual Survey.” The Kaiser Family Foundation.

U.S. Energy Information Administration. Weekly U. S. Regular All Formations Retail Gasoline Prices.Released 17 Sep 2012.

San Francisco Chronicle. An interview with Sen. Barack Obama. 17 Jan 2008.

Open Congress. H.R.2454 – American Clean Energy And Security Act of 2009. Passed the House 26 Jun 2009.

Murphy, Kim. “Keystone pipeline builder proposes changing Nebraska route.” Los Angeles Times. 15 Nov 2011.

Murphy, Kim. “Route is changed for oil pipeline.” Los Angeles Times. 06 Sep 2012.

Keystone XL Assessment. Prepared by Ensys Energy for the U.S. Department of Energy Office of Policy & International Affairs. 23 Dec 2010.

U.S. Chamber of Commerce. Press release: U.S. Chamber Small Business Survey Shows Stalled Hiring Despite Increased Optimism. 16 Apr 2012.

Elmendorf, Douglas W. “Estimated direct spending and revenue effects of H.R. 6079, the Repeal of Obamacare Act, as passed by the House of Representatives on July 11, 2012.” Congressional Budget Office. 24 Jul 2012.

Congressional Budget Office. The Budget and Economic Outlook: An Update. 18 Aug 2010.

Congressional Budget Office. CBO’s Analysis of the Effects of Proposals to Limit Costs Related to Medical Malpractice (“Tort Reform”). 09 Oct 2009.

The Kaiser Family Foundation. “What is driving health care spending?”

White House Website. Remarks by the President at a Campaign Event in Roanoke, Virginia. 13 Jul 2012.

FACT CHECK: Romney ad takes Clinton quote out of context

2012-09-11T12:23:47-04:00

A new Romney ad would have viewers believe that former President Bill Clinton was commenting on President Obama’s handling of the economy when he said, “Give me a break. This whole thing is the biggest fairy tale I’ve ever seen.” That’s false. Clinton’s 2008 comment was aimed at Obama’s portrayal of Hillary Clinton as supporting Iraq war policies.

The ad comes on the heels of Clinton’s rousing endorsement of Obama during the Democratic National Convention, a speech more people considered to be the highlight of the Democratic convention than Obama’s own speech. The Romney ad seeks to remind voters that Clinton hasn’t always been so effusive in his praise of Obama — at least not when Obama was locked in a heated Democratic presidential primary battle with Clinton’s wife, Hillary.

The ad focuses on the economy — arguing that under Obama it has gotten worse — and then says Obama has called on Bill Clinton “to help his failing campaign.” The ad then borrows a clip from a recent Obama campaign ad in which Clinton says, “This election, to me, is about which candidate is more likely to return us to full employment.” Clinton then goes on to endorse Obama.

The Romney ad’s narrator says Clinton is a “good soldier, helping his party’s president,” but adds, “What did Bill Clinton say about Barack Obama in 2008?”

The ad then shows a clip of Clinton saying, “Give me a break. This whole thing is the biggest fairy tale I’ve ever seen.”

The narrator then follows up with two economic statistics. The first is that there are “23 million Americans struggling for work.” According to the U.S. Bureau of Labor Statistics, that’s an accurate count of the number of unemployed (12.5 million) plus those working part time who would like to be working full time (8 million) and those “marginally attached” to the workforce (2.6 million), which includes workers so discouraged by the bad economy that they have stopped looking for work. The ad’s narrator also states that the “middle class [is] falling further behind,” a statement from a CNN Money story about a Pew Research Center report that talks about the “lost decade of the middle class” and spans the presidencies of both Obama and George W. Bush. (In fact, the people surveyed blamed Bush more than Obama for the downturn.)

The ad then follows up with Clinton repeating, “Give me a break.”

Given the context of the ad and its focus on the economy, viewers might assume Clinton was talking about something to do with Obama’s economic policy. He wasn’t.

Rather, while stumping for his wife in 2008, Clinton expressed his frustration with what he viewed as the media giving Obama a free pass regarding Obama’s position on the war in Iraq.

Here’s the fuller quote — you can view it here — in which Clinton takes a moment to talk about Obama’s Iraq war stance:

Clinton, Jan. 8, 2008: It is wrong that Senator Obama got to go through 15 debates trumpeting his superior judgment and how he had been against the war in every year, enumerating the years, and never got asked one time, not once, well, how could you say that when you said in 2004 you didn’t know how you would have voted on the resolution, you said in 2004 there was no difference between you and George Bush on the war. And you took that speech you’re now running on off your website in 2004. And there’s no difference in your voting record and Hillary’s ever since. Give me a break. This whole thing is the biggest fairy tale I’ve ever seen.

Foreign Policy provides a fuller explanation of the issues at play in Clinton’s 2008 remarks, but as is clear from the passage above, his comments had nothing to do with Obama’s economic policy, as the Romney ad implies.

So why do Republicans even care what Clinton thinks of Obama? At least one poll shows that independent voters rated Clinton’s convention speech significantly more positively than Obama’s, leading a Washington Post columnist to opine that “whatever nudge Obama might have gotten [in daily tracking polls] could very well be the Clinton bump, not his own.”

– Robert Farley

FACT CHECK: Breaking down Obama and Biden's convention speeches

Romney Bankshares Inc — 2012-09-10T11:57:07-04:00

CHARLOTTE, N.C. — In a rousing double-header, Democratic delegates heard Barack Obama and Joe Biden both accept renomination on their convention’s final night. And we heard some facts being spun.

President Obama boasted that his plan would cut the deficit by $4 trillion over 10 years, citing “independent experts.” But one such analyst called a key element of the plan a “gimmick.”
Vice President Biden quoted GOP presidential nominee Mitt Romney as saying “it’s not worth moving heaven and earth” to catch Osama bin Laden. Actually, Romney said he’d target more than just “one person.”
The president said U.S. automakers are “back on top of the world.” Nope. GM has slipped back to No. 2 and is headed for third place in global sales this year, behind Toyota and Volkswagen.
Biden said “the experts” concluded Romney’s corporate tax plan would create 800,000 jobs in other countries. One expert said that. She also said the number depends on the details, and foreign jobs could grow without costing U.S. jobs.
Obama quoted Romney as saying it was “tragic” to “end the war in Iraq.” What Romney was criticizing was the pace of Obama’s troop withdrawal, not ending a war.
Biden claimed Romney “believes it’s OK to raise taxes on middle classes by $2,000.” Romney actually promises to lower middle-class taxes.
Biden said Romney and running mate Paul Ryan “are not for preserving Medicare at all.” Actually, the plan they endorse would offer traditional Medicare as one option among many.
Obama said his tax plan would restore “the same rate we had when Bill Clinton was president” for upper-income taxpayers. Not quite. New taxes to finance the health care law also kick in next year, further burdening those same taxpayers.

$4 Trillion Deficit Reduction?

Obama exaggerated when he claimed “independent experts” say his deficit-reduction plan would reduce the federal deficit by $4 trillion over 10 years. Actually, one independent analysis criticized a central part of the president’s plan as a “gimmick.”

In September of last year, Obama released “The President’s Plan for Economic Growth and Deficit Reduction.” The plan purports to generate $4 trillion in deficit reduction over 10 years — including “more than $1 trillion in savings over the next 10 years from our drawdowns in Afghanistan and Iraq.”

In February, when Obama released his fiscal year 2013 budget, the Committee for a Responsible Federal Budget criticized the president’s plan for relying on savings from winding down the two wars. Maya MacGuineas, president of the bipartisan group, called it a “gimmick.”

“There are a number of good policies in this budget, but the use of this war gimmick is quite troubling,” said MacGuineas. “Drawing down spending on wars that were already set to wind down and that were deficit financed in the first place should not be considered savings. When you finish college, you don’t suddenly have thousands of dollars a year to spend elsewhere — in fact, you have to find a way to pay back your loans.”

In addition, the president’s plan includes another $1 trillion in savings from the Budget Control Act that had been agreed to as part of the deal with Congress to raise the debt ceiling. That’s not new savings, but accounts for already agreed-upon savings.

Biden’s bin Laden Baloney

Biden repeated the Obama campaign’s claim — previously made in a Web ad — that Romney said that “it’s not worth moving heaven and earth, and spending billions of dollars” to catch Osama bin Laden.

The claim, which Republicans disputed, fails to include the rest of Romney’s quote from an Associated Press story. Romney said the country’s focus should not be on one person, but it should be a “broader strategy to defeat the Islamic jihad movement.”

Biden: Folks, Governor Romney didn’t see things that way. When he was asked about bin Laden in 2007, here’s what he said. He said, “It’s not worth moving heaven and earth and spending billions of dollars just to catch one person.”

Romney’s quote comes from an interview with the AP in April 2007 — when bin Laden was still alive.

AP: [Romney] said the country would be safer by only “a small percentage” and would see “a very insignificant increase in safety” if al-Qaida leader Osama bin Laden was caught because another terrorist would rise to power. “It’s not worth moving heaven and earth spending billions of dollars just trying to catch one person,” Romney said. Instead, he said he supports a broader strategy to defeat the Islamic jihad movement.

A transcript of Romney’s 2007 interview, which the conservative website Townhall obtained from the Romney campaign, offers more context:

[AP reporter ] Liz Sidoti: Why haven’t we caught bin Laden in your opinion?
Romney: I think, I wouldn’t want to over-concentrate on Bin Laden. He’s one of many, many people who are involved in this global Jihadist effort.
He’s by no means the only leader. It’s a very diverse group – Hamas, Hezbollah, al-Qaeda, Muslim Brotherhood and of course different names throughout the world.
It’s not worth moving heaven and earth and spending billions of dollars just trying to catch one person. It is worth fashioning and executing an effective strategy to defeat global, violent Jihad and I have a plan for doing that.

Not Quite ‘on Top’

The president overstated the strength of the U.S. automotive industry when he said that “we reinvented a dying auto industry that’s back on top of the world.” Not quite. General Motors has currently slipped back to No. 2 in world auto sales, based on sales for the first six months of the year, and Volkswagen is expected to push GM into third place for the full year.

GM has indeed made a comeback: It took back the top spot in global sales in 2011 after being surpassed by Toyota in 2008. Prior to that, GM had been No. 1 for more than 70 years. But for the first six months of 2012, Toyota, with 4.97 million vehicle sales, regained the lead from GM, with 4.67 million sales, for first place in worldwide auto sales. GM is expected to drop to third for all of 2012.

A Disputed Jobs Figure

Biden used a disputed figure to attack Romney’s proposal to overhaul the taxation of multinational corporations:

Biden: It’s called a territorial tax, which the experts have looked at, and they acknowledge it will create 800,000 new jobs — all of them overseas, all of them.

It’s true that one expert — Kimberly Clausing, a professor of economics at Reed College in Portland, Oregon — recently published a study calculating that a “pure” territorial system of international taxation would increase employment in low-tax countries by about 800,000 jobs. But that’s not necessarily what Romney is proposing. The foreign job growth could be smaller, wouldn’t necessarily come at the expense of U.S. workers, and doesn’t take account of any offsetting job gains in the U.S.

Romney has proposed switching taxation of U.S.-based multinational corporations to a territorial system — in which earnings are taxed only in the countries where they are generated — similar to the system used by most other industrial nations. But Romney has not specified details, so we don’t know if his would be a “pure” territorial system or not. Clausing herself said in a recent interview that the actual effect “depends on the details of the territorial system that is adopted.”

She notes in her study that “jobs abroad need not displace jobs at home” — that is, provided that the present economy improves, and U.S. unemployment drops to a low level. So depending on the economic circumstances, creating jobs overseas doesn’t necessarily mean losing jobs in the U.S., as Biden’s listeners might have assumed.

Furthermore, a critique of Clausing’s figure by the Tax Foundation (a group supported in part by corporate donations) says that she based it on current corporate tax rates — not on the lower 25 percent rate that Romney proposes. The lower rate, it is argued, would attract foreign investment and lead to importing jobs.

We won’t attempt to resolve here the merits or demerits of Romney’s embryonic corporate tax plan. The fact is that Biden quoted one study from one expert, but “experts” in general disagree.

Twisting a ‘Tragic’ Quote

Making the case that Romney lacks foreign policy chops, Obama twisted Romney’s words, claiming, “My opponent said it was ‘tragic’ to end the war in Iraq.”

But that’s not quite what Romney said. He was speaking of the speed with which Obama was withdrawing troops, not to ending the war in general.

During a veterans roundtable in South Carolina on Nov. 11, 2011, Romney criticized Obama’s plan to remove troops from Iraq by the end of that year. Here’s the fuller context of his comments, as reported by the New York Times:

Romney, Nov. 11, 2011: It is my view that the withdrawal of all of our troops from Iraq by the end of this year is an enormous mistake, and failing by the Obama administration. The precipitous withdrawal is unfortunate — it’s more than unfortunate, I think it’s tragic. It puts at risk many of the victories that were hard won by the men and women who served there.

A month earlier, when Obama formally announced the withdrawal of tens of thousands of troops from Iraq by year’s end, Romney released a similar statement:

Romney, Oct. 21, 2011: President Obama’s astonishing failure to secure an orderly transition in Iraq has unnecessarily put at risk the victories that were won through the blood and sacrifice of thousands of American men and women. The unavoidable question is whether this decision is the result of a naked political calculation or simply sheer ineptitude in negotiations with the Iraqi government. The American people deserve to hear the recommendations that were made by our military commanders in Iraq.

In December, Romney argued that Obama “has pulled our troops out in a precipitous way” and that he ought to have left a residual force of “10-, 20-, 30-thousand personnel there to help transition to the Iraqi’s own military capabilities.”

Criticizing the “precipitous” pace of withdrawal and the president’s failure to leave a residual force in Iraq is a far cry from calling the end of the war in Iraq “tragic.”

Middle-Class Taxes

Biden joined the chorus of off-key convention speakers who have attacked Romney for wanting to raise taxes on the middle class, even though Romney says he won’t do that.

Biden: Folks, Governor Romney believes it’s OK to raise taxes on middle classes by $2,000 in order to pay for … another trillion-dollar tax cut for the very wealthy.

That’s exactly the opposite of what Romney actually says. In his speech accepting the presidential nomination at the Republican National Convention, he said:

Romney, Aug. 30: I will not raise taxes on the middle class.

Biden refers to an analysis by the Tax Policy Center of a plan that, as Romney also promises, cuts income tax rates across the board by 20 percent and pays for it by eliminating and reducing tax deductions and credits. TPC found that such a plan would “increase the tax burdens on middle- and/or lower-income taxpayers.” Under one scenario, it said that “taxpayers with children who make less than $200,000 would pay, on average, $2,000 more in taxes.”

But that’s not evidence that Romney wants to increase taxes on the middle class. It only proves Romney “can’t accomplish all his stated objectives,” according to the Tax Policy Center’s director, Donald Marron.

Biden Distorts Romney’s Medicare Plan

Biden took aim at Romney’s Medicare plan, saying it would “immediately cut benefits for more than 30 million seniors” and “cause Medicare to go bankrupt by 2016.” In fact, he said, “They’re not for preserving Medicare at all.” All of those claims are misleading.

Biden: You heard them talk so much about how they cared so much about Medicare, how much they wanted to preserve it. That’s what they told you.
But let’s look at what they didn’t tell you. What they didn’t tell you is that the plan they have already put down on paper would immediately cut benefits for more than 30 million seniors already on Medicare. What they didn’t tell you — what they didn’t tell you is the plan they’re proposing would cause Medicare to go bankrupt by 2016. And what they really didn’t tell you is they — if you want to know — if you want to know — they’re not for preserving Medicare at all. They’re for a new plan. It’s called “Vouchercare.”

Let’s unpack these claims one by one. When Biden says the Romney plan “would immediately cut benefits for more than 30 million seniors already on Medicare,” he’s referring to Romney’s promise to dismantle the Affordable Care Act. As part of the health care law, seniors on Medicare are entitled to free annual preventive care and increased prescription drug coverage. But Romney has not advocated cutting any of the traditional benefits provided by Medicare.

And as we wrote Sept. 6 after former President Bill Clinton made a similar claim, the Romney plan will not “cause Medicare to go bankrupt by 2016. ” But a part of Medicare — the hospital insurance trust fund — would not be able to pay full benefits for hospital services if the growth in Medicare spending is not cut, as the health care law prescribes. Physician and prescription drug benefits, financed separately out of general tax revenues and premiums, wouldn’t be affected.

As we explained in our Aug. 22 article, “A Campaign Full of Mediscare,” the Medicare hospital trust fund is on pace to be exhausted by 2024 — or by 2016 if the Affordable Care Act is repealed. But trustees estimate Medicare would still collect enough payroll taxes to fund 87 percent of the cost of hospital bills that would come due. The funding gap would continue to grow, and by 2050 the fund could cover only 67 percent of its bills. But that doesn’t mean Medicare would be “bankrupt”and would suddenly halt all payments. And if it wished, the government could make up the shortfall with tax dollars.

Biden’s claim that “they’re not for preserving Medicare at all,” is also misleading. Under the Romney/Ryan plan, those 55 and older would remain in traditional Medicare. For those currently under 55, the Romney-Ryan plan would institute a new premium-support plan beginning with new beneficiaries in 2023. Seniors would pick from private plans, or could choose traditional Medicare, all of which would be offered on a new Medicare exchange. So, those 55 and over would still get Medicare, and those under 55 could opt for traditional Medicare.

Not the Same as Clinton

Obama said he proposed a return to the same tax rate on upper-income households that prevailed during the booming economy of the 1990s. But that’s not quite accurate.

Obama: I want to reform the tax code so that it’s simple, fair, and asks the wealthiest households to pay higher taxes on incomes over $250,000 – the same rate we had when Bill Clinton was president; the same rate we had when our economy created nearly 23 million new jobs.

Obama refers to his wish to allow the Bush tax cuts to expire for families with over $250,000 annual income, or for individuals with over $200,000. The top marginal income tax rate would return to 39.6 percent, where it was set by Clinton’s 1993 tax increase, up from 35 percent, where it has been since 2003.

But that’s not the whole story. Obama has signed some new taxes to help finance the Affordable Care Act, increasing the burden on those upper-income taxpayers. Starting Jan. 1 next year, they will pay an additional 0.9 percent of wages for Medicare payroll taxes. And they will also be subject to a 3.8 percent tax on investment income from such things as stocks, bonds and sale of real estate. Those are taxes that didn’t exist when Clinton was president. If Obama succeeds in raising the top income tax rates to Clinton-era levels, total taxes on those making over $250,000 family income are thus likely to be higher than they were under Clinton. (They’ll still benefit from the Bush cuts on their income below $250,000, because Obama wouldn’t restore those lower-bracket rates to Clinton levels. So some upper-income taxpayers could still end up paying less federal tax than they paid under Clinton, depending.)

– Lori Robertson, with Brooks Jackson, Eugene Kiely, Robert Farley and Ben Finley

FACT CHECK: Attack ad backs off its harshest claim

North Dakota,United States — 2013-04-29T14:42:20-04:00

After yanking an ad with a false claim off the air in North Dakota, Crossroads GPS is back with an amended version that is technically accurate, but still grossly misleading.

The original ad claimed that Democratic Senate candidate Heidi Heitkamp “spent taxpayer dollars on private planes” while she was the state’s attorney general. That wasn’t true. The planes were donated by the federal government.

The amended version, which started running Aug. 10, says she “allowed staff to fly a taxpayer-funded plane.” That’s true, as far as it goes. But, of course, the two surplus military aircraft had been paid for by federal taxpayers, not just North Dakotans. One of the two was used for spare parts, and there’s no evidence the staff made personal or improper use of the remaining plane. It was for use in supporting drug enforcement activities, according to the only news account that Crossroads GPS cited as supporting evidence.

In 1993, Heitkamp’s attorney general’s office acquired two T-42 Beechcraft Barons from the U.S. Department of Defense. The department had announced in 1992 that it would be making more than 100 aircraft available to state government agencies.

One of the planes North Dakota obtained was to be used for the state’s drug enforcement initiatives such as identifying marijuana fields from the air and transporting drug and dog teams. The other would be disassembled and used to provide spare parts. The four-seat, 1965 model planes were valued at $102,000 each.

However, the Bismark Tribune article cited in the Crossroads ad noted that Heitkamp and another official from the state’s Bureau of Criminal Investigation said that “little if no state expenditures will be required because the planes are being provided free of charge and federal grant programs are paying for the costs of insurance, fuel and pilot training.”

The paper also reported that the National Guard had agreed to house and service the plane, and that a staffer from the attorney general’s office would serve as the pilot.

“If at some point, we find this is not cost effective, we can divest ourselves of the airplane,” Heitkamp was reported as saying at the time. “Rumors of this being an albatross around the state’s neck are ridiculous.”

Other Attacks

The ad also claims that Heitkamp “supports higher taxes on North Dakota small businesses.” That’s a reference to the federal health care law, also known as the Affordable Care Act.

Heitkamp does support the law, but has said that she doesn’t think that it is perfect. In a statement to the Fargo Forum in March, Heitkamp said that there are “some good things in the health care law that make sense” and that there are some problems with it “like the federal mandate requiring you to buy health insurance and way too much red tape for small businesses.”

The law does require some employers to provide health insurance for their employees or pay a penalty. But as we’ve said before, businesses with fewer than 50 workers are exempt from the requirement to provide coverage. And some small businesses with fewer than 25 employees are already getting tax credits under the new law to help defray the cost of covering workers.

The ad’s other claims — that Heitkamp “supported new taxes on car insurance and energy” and “awarded her staff a 30 percent pay raise” — are technically accurate, but could also use some explanation.

Heitkamp did support a bill that would have taxed car and truck insurance to help fund a trust to support law enforcement training programs that police officers and sheriffs said were inadequate, according to the Bismarck Tribune. The tax would have been 65 cents for every $100 of purchased insurance, but the legislation was voted down by the state House.

And Heitkamp supported a bill that the state Legislature passed in 1999, replacing the state’s tax on the energy value of out-of-state coal with a 75-cent sales tax on every ton of imported coal. Rep. Rick Berg, who is Heitkamp’s Republican opponent for the Senate seat, also supported the legislation. He joined 95 other state House members in voting for the bill, which passed unanimously.

She also raised salaries for some members of her staff by as much as 30 percent, according to a Grand Forks Herald report. The paper reported Heitkamp saying that she had “absolutely no regrets” about the raises which she argued were needed to increase staff retention in the department and close a pay gap between her staff members and other state attorneys.

FACT CHECK: Obama’s ‘Boss’ Baloney

Host Hotels & Resorts, Inc. — 2013-01-23T12:59:46-05:00

The Obama campaign strikes another low blow with a TV spot accusing Mitt Romney of “personally” approving a notoriously abusive tax-avoidance scheme and suggesting he may have paid “zero” tax. That’s badly misleading.

It wasn’t Romney who was avoiding taxes, it was Marriott Corp. And there’s no evidence to support the ad’s speculation that Romney himself paid no income tax, or that he did something illegal.

The ad opens with an unsupported insinuation that Romney isn’t releasing more federal income tax returns because some would show he didn’t pay any income tax in those years. The narrator asks, “Did Romney pay 10 percent in taxes? Five percent? Zero? We don’t know.” And the narrator might add, “We have no evidence to support what I just said.” But he doesn’t.

Instead, the narrator says, “But we do know that Romney personally approved over $70 million in fictional losses to the IRS as part of the notorious ‘Son of Boss’ scandal. One of the largest tax avoidance schemes in history.” On screen, we see similar quotes attributed to CNN, with the cable network’s logo prominently displayed. There’s so much deceit here we hardly know where to start.

The tax scheme didn’t benefit Romney, and the fictional losses were not his. The company involved was Marriott Corp, not Romney or Bain Capital. But the ad gives no hint of this.
CNN didn’t report this. Although the ad prominently features the CNN logo as the source of the printed quotes, they are actually the opinions of two outside tax experts with Democratic leanings.
Marriott isn’t solely responsible for “one of the largest tax avoidance schemes in history.”Viewers may get the mistaken impression that Romney — actually Marriott — is solely to blame for “one of the largest tax avoidance schemes in history.” Not true. It was a strategy used by manytaxpayers that resulted in billions in lost revenue.
“Avoidance” is not illegal. The casual viewer may miss the important distinction between legal avoidance and illegal fraud or tax evasion. Combining “avoidance” with loaded terms like “scheme” and “notorious” and “scandal” and “fictional losses” further suggests possible tax fraud, but there’s no evidence Romney broke any law.

A viewer who squints hard might see that under the CNN logo, the ad attributes the quotes to an “op-ed” opinion piece by “Canellos & Kleinbard.” And as CNN notes on its site, in fine print, “The opinions expressed in this commentary are solely those of Peter C. Canellos and Edward D. Kleinbard.”

Who are they? Both are top-drawer tax experts, no doubt about that. Canellos is head of the tax department at a big New York law firm and former chair of the New York State Bar Association Tax Section. Kleinbard is a professor of law at the University of Southern California and a former chief of staff of the Joint Committee on Taxation of the U.S. Congress.

But both have given to Democratic candidates in the past, though neither is a major donor. Kleinbard’sonly recorded donation to a federal candidate in the past five years is a $250 gift in 2010 to a local Southern California congressman, Democratic Rep. Adam Schiff of Burbank. Canellos gave a total of $6,300 during the same period, including $2,300 to the Obama campaign in 2008, $1,500 to former Democratic Party Chairman Howard Dean’s “Democracy for America” committee and $1,250 to a couple of Democratic Party committees.

In their article, they recap reporting done back in February by Jesse Drucker of Bloomberg News. Drucker said Romney headed the audit committee of Marriott Corp. from 1993 to 1998, during which time the company started using a tax shelter known to attorneys by its nickname: “Son of Boss.” The company claimed $71 million in losses under that shelter, which the IRS challenged. Marriott sued, but lost in court, appealed, and lost again in 2009. The court sided with government lawyers who called the shelter “fictitious,” “artificial,” “spectral,” an “illusion” and a “scheme,” Drucker reported.

In their more recent CNN article, Canellos and Kleinbard argue that the IRS rejection of the shelter was “entirely predictable” and that it is “disingenuous” of Romney’s campaign staff to say that he relied on Marriott’s tax department and advisers. Romney had “the financial sophistication to understand the tax avoidance involved,” they argue.

They call Romney “an executive who was willing to go to the edge, if not beyond, to bend the rules to seek an unfair advantage” for Marriott. And they ask whether the same might be true of his personal taxes: “Did he augment his wealth through highly aggressive tax stratagems of questionable validity?”

But questioning someone’s wisdom or business ethics as a corporate director is one thing, while suggesting scandalous personal behavior is another. Canellos and Kleinbard offer their personal opinions and speculation, but the Obama campaign’s ad condenses all that into an unfair and misleading insinuation. The Son of Boss claims come immediately after the speculation about Romney’s personal income tax payments, and there is no transition to let viewers know the ad is no longer talking about Romney’s personal finances.

Romney’s refusal to release more than two years’ worth of tax returns — far fewer than most presidential candidates in recent history — leaves an opening for his opponents to speculate about what he may be hiding. And the ad is correct that we don’t know if, prior to 2010, Romney paid less than 13.9 percent of his income in taxes, as he did in 2010. But the fact is, Romney didn’t claim $70 million in fictional losses for himself, and there’s no direct evidence that he used abusive or illegal methods to reduce his own taxes to zero, as this ad strains to imply.

– Brooks Jackson

FACT CHECK: Romney Hijacks Credibility

2013-01-23T12:59:45-05:00

A new Mitt Romney campaign ad passes off opinions of a former speechwriter for President George W. Bush as though they were from a newspaper’s reporters or editors. It’s a political trick used by both sides: hijacking a news organization’s credibility.

In this example, the Romney ad attacks President Obama’s mandate requiring employers to provide health insurance that includes free contraception. It attributes to the San Antonio Express-News the words: “Obama’s Insurance Decision Declares War on Religion.”

But the newspaper didn’t say that in any editorial or news article. That headline appeared over anopinion piece by a nationally syndicated columnist who has worked for Republicans in the past. And to make this example worse, the same columnist later softened his “war on religion” opinion after the president modified the mandate.

We’ve seen plenty of this sort of thing, from both parties. For instance, earlier this year, one ad, from a group that says it’s supported by veterans, claimed that the Washington Post said Obama had “shameless gall” to use Osama bin Laden’s death to score political points. But the Post didn’t say that. Instead, the words appeared in a headline over a piece by a long-time Republican operative and lobbyist. A recent Obama ad hijacks CNN’s credibility by attributing the opinions of two outside contributors to the network, using a barely legible disclaimer that it’s from an “op-ed.”

Campaigns also are fond of quoting themselves, but attributing the quote to a newspaper story that included the campaign’s or candidate’s words. For example, in 2008, an Obama campaign ad gave viewers the impression that the Washington Post had found that Obama’s health care plan would save the “typical family” $2,500. But instead of citing the newspaper, the campaign should have cited itself. The Post article simply reported that “[t]he senator’s aides estimated that his plan would save the average family $2,500 per year.”

The Romney ad says that Obama “used his health care plan to declare war on religion, forcing religious institutions to go against their faith.” Romney, it says, “believes that’s wrong,” and the ad goes on to use words and images of Pope John Paul II, and to note an endorsement of Romney by Lech Walesa, the former Polish president who helped defeat communism in the country. The ad doesn’t make clear that it’s talking about a policy, announced in January, requiring most employers to offer their employees insurance that covers birth control for free. The policy exempted churches, but initially still applied to organizations with religious affiliations, including universities and hospitals. That upset the United States Conference of Catholic Bishops, among other groups. In February, the Obama administration changed the mandate to say that religious organizations would be able to opt out, but insurance companies would pick up the cost of the contraception.

Whether any of that amounts to a “war on religion” is opinion. But the Romney campaign implied that it was also the San Antonio Express-News‘ opinion, showing the words “Obama’s Insurance Decision Declares War on Religion” and attributing it to the newspaper. But, as in our other examples of this tactic, the Express-News didn’t say that. Those words were the headline over a piece by conservative columnist Michael Gerson, who writes for the Washington Post. Gerson’s column — which was very critical of Obama not exempting institutions with religious affiliations — ran in the Express-News on Feb. 1 and originally in the Post on Jan. 30. Gerson, who was extremely critical of Obama’s policy, said “the war on religion is now formally declared.” Gerson was a speechwriter and senior aide to President George W. Bush, a speechwriter for Bob Dole’s 1996 presidential campaign, and policy director for Republican Sen. Dan Coats of Indiana.

Obama amended the policy on Feb. 10, after Gerson’s column was published. The revised policy said that organizations with a religious affiliation wouldn’t have to provide or pay for birth control — instead, insurance companies would pick up the cost. Churches, as we said earlier, were already entirely exempt from the policy. That didn’t appease the U.S. Conference of Catholic Bishops and others, who argued that religious employers would ultimately pick up the cost through higher premiums. The Obama administration countered that free contraception coverage is cost neutral. We found conflicting and inconclusive evidence on those claims.

In a Feb. 13 column, after the modified policy was announced, Gerson still was critical of the president, but said that “an indirect requirement is less aggressive and humiliating than a direct one,” and that “Obama has partially defused a crisis of his own creation.”

Again, whether the Obama policy — either initially or after it was modified — amounts to a “war on religion” is a matter of opinion, and voters can make up their own minds about that. But the Romney ad doesn’t reveal exactly what it’s criticizing, and it hijacks the credibility of a newspaper to make its case.

– Lori Robertson

Footnote: This ad was approved by Romney but paid for by the Republican National Committee.

FACT CHECK: Does Obama’s plan ‘gut welfare reform?’

Utah,United States — 2013-01-23T12:59:45-05:00

A Mitt Romney TV ad claims the Obama administration has adopted “a plan to gut welfare reform by dropping work requirements.” The plan does neither of those things.

Work requirements are not simply being “dropped.” States may now change the requirements — revising, adding or eliminating them — as part of a federally approved state-specific plan to increase job placement.
And it won’t “gut” the 1996 law to ease the requirement. Benefits still won’t be paid beyond an allotted time, whether the recipient is working or not.

Romney’s ad also distorts the facts when it says that under President Obama’s plan “you wouldn’t have to work and wouldn’t have to train for a job.” The law never required all welfare recipients to work. Only 29 percent of those receiving cash assistance met the work requirement by the time President Obama took office.

Under the new policy, states can now seek a federal waiver from work-participation rules that, among other things, require welfare recipients to engage in one of 12 specific “work activities,” such as job training. But, in exchange, states must develop a plan that would provide a “more efficient or effective means to promote employment,” which may or may not include some or all of the same work activities. States also must submit an “evaluation plan” that includes “performance measures” that must be met — or the waiver could be revoked.

Ron Haskins, a former Republican House committee aide who was instrumental in the 1996 overhaul of the welfare program, told us the Obama administration should not have unilaterally changed the work-requirement rules. But Haskins said the Romney claim that Obama’s plan will “gut welfare reform” is “very misleading.”

“I do not think it ends welfare reform or strongly undermines welfare reform,” said Haskins, co-director of the Brookings Institution’s Center on Children and Families. “Each state has to say what they will do and how that reform … will either increase employment or lead to better employment” of recipients.

The Obama policy responds to state officials who say they can improve job placement and retention if freed from the time-consuming process of documenting and verifying that recipients are engaged in those work activities.

“In times of reduced funding, waivers may be the best method to allow states to find effective and efficient approaches to assist the unemployed to find and keep work,” the Utah Department of Workforce Services wrote to federal welfare officials last year.

Republicans criticized the new policy shortly after it was implemented on July 12. That prompted Utah Gov. Gary Herbert, a Republican who supports Romney, to issue a July 17 press release “defending Utah’s waiver request for state flexibility to achieve work-related outcomes for Temporary Assistance to Needy Families (TANF) recipients.”

Welfare to Work

The Romney campaign began airing its new TV ad on Aug. 7. Called “Right Choice,” the ad praises the bipartisan cooperation of President Bill Clinton and a Republican-controlled Congress to overhaul welfare. It then turns partisan and attacks President Obama.

It’s simply not true that the administration’s policy will allow states to “just send you your welfare check.” Under the policy, states must meet a whole new set of federal requirements in order to obtain and keep a waiver. Plus, states have an incentive to get people off welfare and into jobs, since that would free TANF funds for other services for low-income families.

“I think — and now remember I’m a Republican — that the ad is very misleading,” Haskins said.

We’ll go into more detail about the new policy later, but first let’s review how we got here — beginning with “The Personal Responsibility and Work Opportunity Reconciliation Act of 1996” that created the Temporary Assistance for Needy Families (TANF) program.

The welfare overhaul was designed to help move unemployed Americans from welfare to work. The federal government strengthened work requirements on families receiving cash assistance, and for the first time imposed lifetime limits (generally up to five years). After two years on TANF, the parent in the household must be engaged in “work activities.”

The law also generally requires states to document that 50 percent of all families receiving cash assistance are participating in such work activities. But work-participation rates peaked at 38 percent in 1999 and started to decline — prompting Congress to attempt to strengthen the rules when itreauthorized TANF as part of the Deficit Reduction Act of 2005.

Still, the work-participation rates remained low. The most recent data available show the rate was 29.4 percent in fiscal year 2009. Many states rely on options in the current law that allow them to be in compliance with requirements even though their rates are below 50 percent.

The new work-participation rules did have one impact on states: They were time-consuming to comply with and counterproductive to helping people find jobs, as documented by the nonpartisan Government Accountability Office in a 2010 report. GAO’s welfare experts were among those questioning the value of the work-participation rates as a measure of success.

“The emphasis on work participation rates as a measure of program performance has helped change the culture of state welfare programs to focus on moving families into employment, but weaknesses in the measure undercut its effectiveness,” Kay E. Brown, the GAO’s director of Education, Workforce and Income Security Issues, testified before a Senate committee on June 5. “Are the work participation rates providing the right incentives to states to engage parents, including those difficult to serve, and help them achieve self-sufficiency?”

Providing Flexibility … or Gutting Welfare?

It was against this backdrop that the Obama administration acted.

On Feb. 28, 2011, the president broadly directed his administration to work with state, local and tribal officials to find ways to provide more flexibility in complying with federal regulations. As a result, the Administration for Children and Families within the Department of Health and Human Services solicitedrecommendations from state officials on how to improve its programs.

One of the responses ACF received was from Kristen Cox, executive director of the Utah Department of Workforce Services. “Utah is especially interested in the development of a waiver authority in the TANF grant,” the Aug. 1, 2011, letter said.

The Utah letter said the federal work-participation rules focused too much on process and not enough on outcome. “The lack of focus on outcomes makes the program less about the need to help parents find and retain work and more about the need to assure that parents are active in prescribed [work] activities,” the letter said.

Utah expressly said it would not use a federal waiver to avoid work requirements. “The expectation to participate fully in specific [work] activities leading to employment is not the issue,” the letter stated. Instead, Utah was seeking the flexibility to overcome the “narrow definitions of what counts [toward work participation] and the burdensome documentation and verification process.”

The Obama administration cited the Utah letter when it announced its new policy on July 12. The policy provides exactly the kind of flexibility Utah was seeking.

Under the new policy, states may receive a waiver if they submit plans for a “demonstration project” (not to exceed five years) that provides a “more efficient or effective means to promote employment.” States also must submit an “evaluation plan” that includes a “set of performance measures that states will track to monitor ongoing performance and outcomes.” States also must set up “interim performance targets” and, if states fail to meet those, they will be “required to develop improvement plans.”

“Repeated failure to meet performance benchmarks may lead to the termination of the waiver demonstration pilot,” the rules state.

Is Obama “dropping work requirements,” as Romney’s ad claims? No. He is allowing states to change the work requirements, but he is not dropping them. The changes could be made to a variety of federal requirements, including “definitions of work activities and engagement, specified limitations, verification procedures, and the calculation of participation rates.”

A lot will depend on what a state proposes and how it is implemented. There is nothing inherent in the waivers that guts work requirements.

In explaining the new policy, George Sheldon, the acting assistant secretary for the Administration for Children and Families, wrote: “Waivers that weaken or undercut welfare reform will not be approved.” Health and Human Services Secretary Kathleen Sebelius wrote a July 18 letter to Republican Sen. Orrin Hatch of Utah saying the department’s “goal is to accelerate job placement,” requiring states to commit to a plan that will “move at least 20% more people from welfare to work compared to the state’s past performance.”

It’s understandable that some Republicans simply may not trust Sebelius and Sheldon. There is a lot of mistrust between the Democrats and Republicans on the issue of welfare — and the way the administration implemented the new policy has not helped.

Ron Haskins was the Republican staff director of the Subcommittee on Human Resources for the House Ways and Means Committee from 1995 to 2000. Now at the Brookings Institution, Haskins’ biographystates that he was “instrumental in the 1996 overhaul of national welfare policy.”

Haskins said Republicans at the time drafted the welfare law so that the executive branch could not waive work-participation rules. Obama’s unilateral action has understandably angered some Republicans who believe the administration lacks the authority to issue waivers, he said.

However, Haskins also said that the new waiver policy does not “gut welfare reform.” He cites two reasons: The federal government will continue to hold states accountable for moving people off welfare and into jobs, and the states have a tremendous financial incentive to use the new waiver authority to improve employment outcomes.

“The idea that the states will use this to bring people back on the welfare rolls … doesn’t make sense to me,” Haskins said. “The states are all about work. All they talk about is work. They agree with welfare reform and they want to figure out how to get everybody they can into the labor force — because it is to their advantage.”

Over the past 15 years, the federal government and states have spent $406 billion on the Temporary Assistance for Needy Families program, and about 40 percent of that came from the states, according to the GAO.

Haskins notes that historically the “Republicans are the ones who talk about giving the states more flexibility. Romney himself talks about giving the states more flexibility.”

“Now all of a sudden the states shouldn’t get the flexibility because they are going to mess it up?” he says. “It doesn’t make sense.”

It makes no sense, either, to Utah Gov. Gary Herbert, a Republican who was caught in the partisan crossfire when the Obama administration singled out his state for recommending that the federal government provide waivers. Herbert sent a July 16 letter to Sebelius to “clarify Utah’s position.”

The governor reiterated that the state was not seeking to avoid work requirements and explained why the state remains interested in obtaining a waiver. “Some of these participation requirements are difficult and costly to verify, while other participation requirements do not lead to meaningful employment outcomes and are overly prescriptive,” he wrote.

However, like Haskins, the Utah governor questioned whether the administration has the authority to issue waivers. Hatch, the state’s senior senator, has asked the GAO to determine if the administration’s policy “qualifies as a regulation that is subject to review — and potential disapproval — under the Congressional Review Act.” The waiver issue is also likely to be addressed as part of the congressional reauthorization of TANF. (The current authorization of TANF expires Sept. 30.)

“HHS appears to be granting waivers that will provide the flexibility we seek,” Herbert wrote. But, he added, “Our support of the HHS change is contingent on HHS having statutory authority to grant waivers — whether that authority is in the statute as currently written or whether it is granted as part of a TANF reauthorization.”

Either way, the Republican governor is on record as welcoming a rule that his party’s candidate for president says will “gut welfare reform.”

– Eugene Kiely, with Rina Moss, Factcheck.org

FACT CHECK: Is Romney to blame for cancer death?

Bain Capital, LLC. — 2013-01-23T12:59:44-05:00

A grieving widower in a new pro-Obama TV spot says his wife contracted cancer and died “a short time after” Mitt Romney closed the steel plant that employed him and left “my family” without health coverage. That’s not quite so.

We find this ad from Priorities USA Action to be misleading on several counts.

Steelworker Joe Soptic’s wife, Ranae, died in 2006 — five years after the plant closed.
She didn’t lose coverage when the plant closed. Mr. Soptic told CNN that she lost her own employer-sponsored coverage a year or two later. She had no coverage after that.
And as we’ve reported before, when the plant closed Romney was running the 2002 Winter Olympics.

It’s fair to argue that Romney bears some responsibility for the plant’s closing — Bain Capital bought it and loaded it with debt while he was in charge of Bain. But the degree of responsibility is a matter of opinion and debate.

It’s also fair to argue that Mrs. Soptic might have lived longer if she had health coverage. Those who lack it tend to seek treatment later, become sicker, and die earlier than those who have coverage.

We’ll also note that what Romney supporters object to most strenuously about this ad is opinion, not fact. That is Soptic’s apparently heartfelt assertion that “I do not think Mitt Romney is concerned” about what “he’s done.”

We can’t speak to the state of Romney’s personal compassion. Opinions will differ on that. But it strains the facts to the breaking point to imply that this tragic death is Romney’s doing.

This isn’t Soptic’s first appearance in an ad attacking Romney. We wrote about an Obama campaign ad back in May that also featured Soptic. This time around, Soptic goes beyond blaming Romney and Bain for the demise of his job and adds the heartbreaking story of his wife’s death.

Here’s what Soptic says:

Joe Soptic in Priorities USA ad: I don’t think Mitt Romney understands what he’s done to people’s lives by closing the plant. I don’t think he realizes that people’s lives completely changed.
When Mitt Romney and Bain closed the plant, I lost my health care, and my family lost their health care. And a short time after that my wife became ill.
I don’t know how long she was sick, and I think maybe she didn’t say anything because she knew that we couldn’t afford the insurance. And then one day she became ill and I took her up to the Jackson County Hospital and admitted her for pneumonia. And that’s when they found the cancer, and by then it was stage four. It was, there was nothing they could do for her.
And she passed away in 22 days.
I do not think Mitt Romney realizes what he’s done to anyone, and furthermore I do not think Mitt Romney is concerned.

Steel Plant Closing

We first looked into Romney and Bain’s involvement with GS Industries when the company was used in an Obama attack ad in May. We found that assigning blame for the downfall of the company was a tough call.

With Romney at the helm, Bain Capital invested in the small Kansas City steel mill called GST Steel Co. in 1993. It was a company that traced its roots to 1888 but had fallen on hard times. According to theKansas City Star, the company’s ranks had dropped from 4,500 employees in 1970 to just 1,500 employees by 1983.

In addition, the company was beset by aging equipment and faced stiff competition in a specialized market, according to a lengthy Reuters report. Nonetheless, Bain saw potential in the company and, Reuters reported, invested $8 million in it. That initial investment was quickly recouped when, in 1994, the company issued $125 million in bonds and paid out $65 million in dividends — $36.1 million of which went to Bain, according to Reuters. The following year, Bain merged the company with another in Georgetown, S.C., renaming the company GS Industries and issuing another $125 million in bonds.

Bain also reinvested an additional $16.5 million in the company, evidence that Bain intended to keep the firm going. Nevertheless, six years later, the company declared bankruptcy and eliminated 750 jobs — including Soptic’s, the man featured in the Priorities USA Action ad.

The company also reneged on pension and other benefits it had agreed to in 1997. The U.S. Pension Benefit Guaranty Corp. later determined the company had severely underfunded its pension, and the federal agency covered the cost of basic pension payments.

Romney has tried to distance himself from the problems at GS Industries.

“I take personal responsibility for making the investment,” Romney told the Boston Globe in 2002. “But I didn’t manage these companies. Our philosophy at Bain Capital was to support management teams in companies where we saw potential for growth, or in companies that were in financial distress that we thought we might be able to save.”

As we have written repeatedly in the past, Romney left day-to-day operations at Bain Capital in early 1999 to head up the Salt Lake City Organizing Committee, and we have criticized the Obama campaign for blaming Romney for the offshoring of jobs by Bain-controlled companies after that time. But this case is a little different. Although the steel company declared bankruptcy in 2001, the debt was incurred at GS Industries under Romney’s leadership.

Was it the debt load that doomed the company? Some analysts cited by Reuters said it certainly didn’t help. Others blamed the union or competition from Asia. In a 1999 filing with the Securities and Exchange Commission, the company stated, “Distressed economic conditions in other countries, particularly Asia, have resulted in record levels of imported steel products into the domestic market causing dramatic declines in selling prices industry-wide.”

It was a very bad time in general for the steel industry in the United States. A 2003 report from the U.S. International Trade Commission found that between 1999 and 2003, “31 steel companies producing products subject to the safeguard measures [including tariffs on foreign imports] have filed for bankruptcy protection.”

In short, whether Romney or Bain is responsible for the demise of the company is a matter for legitimate debate.

Link to Woman’s Death?

More tenuous, however, are Soptic’s attempts to link Romney to his wife’s death from cancer. In the ad, Soptic says that when he lost his job at GS Industries, “my family lost their health care” and that “a short time after that my wife became ill.”

Soptic says he doesn’t know how long she was sick. And, he says: “I think maybe she didn’t say anything because she knew that we couldn’t afford the insurance. And then one day she became ill and I took her up to the Jackson County Hospital and admitted her for pneumonia. And that’s when they found the cancer, and by then it was stage four. It was, there was nothing they could do for her. And she passed away in 22 days.”

A bit of backstory: After he lost his job at GS Industries, Soptic became a school janitor. The job had a starting salary of $24,000 — about a third of his pay at the steel plant — and did not include a health insurance plan that covered his wife.

But in an interview with CNN, Soptic said that when he lost his job at GS Industries in 2001, his wife still had health insurance through her job as an employee at Savers, a local thrift store. He told CNN that she left her job in 2002 or 2003 because of an injury, and that she then became uninsured because she didn’t have a fall-back insurance option through his employer. According to the Kansas City Star, Ranae Soptic, 55, died in 2006, five years after the GS Industries plant was closed. “She went to the hospital for pneumonia,” the story states, “but doctors found signs of very advanced cancer, and she died two weeks later on June 22.”

It’s possible to argue that if Romney, as head of Bain, hadn’t put the company into such deep debt the company might have survived. And, therefore, Soptic might have had coverage for his wife to fall back on when she lost hers after her injury, and that if she had insurance she might have sought an earlier diagnosis and might have lived longer than she did. That’s a lot of “mights.”

Of course, it’s also possible that if Bain hadn’t stepped in, the company might have closed even earlier than it did, and Soptic would then have lost his job, and his health benefits, earlier.

Officials for Priorities USA Action said it would be “overstating the point of the ad” to suggest that Soptic blames Romney for his wife’s death.

Said Bill Burton of Priorities USA Action: “This is another in a series of ads that demonstrates how long it took for communities and individuals to recover from the closing of these businesses. Families and individuals had to find new jobs, new sources of health insurance and a way to make up for the pensions they lost. Mitt Romney has had an enduring impact on the lives of thousands of men and women and for many of them, that impact has been devastating.”

Despite that explanation, however, Soptic’s comment that Romney doesn’t realize, and isn’t concerned about what “he’s done” — coming as it does immediately after Soptic talks about his wife’s death from cancer — leaves little doubt that that’s the impression the ad seeks to leave with viewers.

– Robert Farley, Factcheck.org

FACT CHECK: Truth about tax rate talking points

2012-07-11T18:28:16-04:00

Politicians talk about the burden of taxes incessantly. Now comes a rare chance to check the facts. And the fact is that federal tax rates had fallen to the lowest in 30 years when President Barack Obama took office — and fell again in his first year in office.

This news comes from the nonpartisan Congressional Budget Office, which just issued the latest update of its invaluable series on “Distribution of Household Income and Federal Taxes,” this time covering 2008 and 2009. The CBO’s statistical series now covers the 30 years since 1979.

The average rate paid by all households for all federal taxes combined — including income taxes, payroll taxes, excise taxes (on such things as gasoline, tobacco and alcoholic beverages) and individuals’ share of corporate income taxes — hit its highest rate during the period in 2000, just before President George W. Bush began signing the tax cuts that are scheduled to expire next year (unless Congress extends them again).

The all-household rate was 22.7 percent the year before Bush took office, then declined to 19.9 percent in 2007 (lower than in any year before he took office) and plunged again to 18 percent in the recession year of 2008. That was the lowest until the following year, Obama’s first, when it dropped again to 17.4 percent.

Much of the decline in 2008 and 2009 was due to the collapsing economy. The worst recession since the Great Depression of the 1930s began in December 2007. There were fewer corporate profits to tax, for one thing. And upper-level households, which pay the highest rates, also saw their incomes plunge along with the stock market and tumbling real-estate prices.

But some of the decline was also due to the tax cuts contained in Obama’s 2009 stimulus package, including a tax credit that benefited nearly all workers. Despite Republican criticisms, and Obama’s own campaign promise to raise taxes on upper-income households, the new president was a tax cutter in 2009.

The Top 1 Percent

The CBO figures show rates have declined substantially for all income levels. In fact, the only group for which rates did not reach a 30-year low in 2009 was households in the top 1 percent of all earners.

Even those affluent households paid an average total federal tax rate of just 28.9 percent in 2009. That was up a little from the previous year but still down sharply from the peak of 35.3 percent for this 30-year period. That was reached in 1995, under President Bill Clinton.

And who are the top 1 percent? The CBO sorts them out as those with incomes starting at $282,900 for a single person, or $565,800 for a family of four in 2009.

Meanwhile, rates for those in the middle dropped to a 30-year low of 11.1 percent in 2009, down from the 19.2 percent peak rate of 1981. That’s for the middle one-fifth of all households, those with incomes between $34,900 and $50,100 for singles, or between $69,800 and $100,200 for a family of four.

As we’ve noted before, the nation’s current string of trillion-dollar deficits results from historically high spending and historically low revenues. We noted in our June 4 article that President Obama’s spending levels are near the highest level since World War II, measured as a percentage of the nation’s gross domestic product. And we also noted that tax receipts were the lowest since 1950, as a percentage of GDP.

There’s much more in the CBO’s new figures, and we may have more to say about them in the future. And we offer no opinion on whether taxes are too high or too low, or just right. That’s a matter of intense national debate.

But Congress must act soon on taxes, or allow a large increase to take effect automatically. And the CBO’s new figures offer further confirmation that as things stand, Washington is taking a smaller slice of the average American’s earnings — at just about every level — than at any time in decades.

– Brooks Jackson

FACT CHECK: Soft glove, same GPS fist in attack ad

2012-05-24T10:00:51-04:00

A new TV ad from Crossroads GPS features an actress playing a downcast mother of two jobless adult children. She says “things changed for the worse” after she supported Barack Obama for president. Her voice is soft, and so is the background music — but her situation is unlikely; her opinions are harsh; and her facts are one-sided and not always accurate.

This 60-second ad is the second in an announced $25 million campaign to soften up the president in key battleground states. It uses a much lighter touch than the first ad — which contained so many factually misleading attacks that it took two articles for us to cover them all.

The New York Times described the latest ad as a “delicately worded story of a struggling family,” with a “relatively low-key tone.” The Times said it was inspired by focus-group testing that revealed that “the harshest anti-Obama jabs backfire with many Americans.”

But make no mistake: Inside the velvet glove there’s still a fist, pounding away with one-sided, sometimes inaccurate statements. The woman blames the president alone for high unemployment, excessive federal spending, soaring debt and rising health insurance premiums. She misrepresents President Obama’s position on taxes, which he has cut repeatedly, and the ad even shows a fake headline saying gasoline prices “continue to rise” when in fact they have been falling for weeks.

The group said it would spend $9.7 million airing the new ad for three weeks in Colorado, Florida, Iowa, Michigan, North Carolina, New Hampshire, Nevada, Ohio, Pennsylvania and Virginia.

An Unlikely Scenario

Titled “Basketball,” the ad shows a mother watching from her kitchen as young children shoot hoops behind the house. All three morph into older versions of themselves as the actress says, “[T]hings have changed. It’s funny; they can’t find jobs to get their careers started, and I can’t afford to retire. And now we’re all living together again.”

That’s an artful bid for viewers’ sympathy, but it’s a very unlikely situation. For young adults of post-college age, 25 through 29, the jobless rate was 10.3 percent last year, and 8.2 percent in April, according to the Bureau of Labor Statistics. That’s higher than usual but still leaves only about a 1 in 10 chance that a single child of that age would be jobless. And to have both adult children unemployed at the same time and forced to live with a parent — while sad, and not impossible — would be much more rare.

The mother says, “I supported President Obama because he spoke so beautifully,” but then “things changed for the worse.” What follows are opinions and claims that hit hard, but don’t always line up with the facts. We’ll take them in order.

Claims vs. Facts

Claim: “Obama started spending like our credit cards have no limit,” says the fictional mom.

Fact: When Obama took office in January 2009, the federal deficit was already running at $1.2 trillion for the fiscal year that had begun nearly four months earlier, according to the nonpartisan Congressional Budget Office. It has risen since then, and Obama has failed to make good on a promise to cut the deficit by half. But it’s misleading to say Obama “started” spending borrowed money.

In fact, the numbers show spending actually has increased far more slowly under Obama’s budgets that it did under Bush’s, and more slowly than under any president in half a century. An analysis by the Wall Street Journal’s “MarketWatch” website on May 22 shows spending under Obama rising at an average rate of just 1.4 percent per year. Spending under Bush rose 7.3 percent per year during his first term, and 8.1 percent per year in his second term.

“[S]pending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s,” wrote MarketWatch’s Rex Nutting. And after adjusting for inflation, Nutting notes, federal spending is actually falling under Obama — the first time that’s happened since the end of the Vietnam war.

Claim: “His health care law made health insurance even more expensive.”

Fact: That’s true, but the main cause of higher premiums is still the rising costs of medical care in general. As we’ve reported before, independent experts say the health care law caused only about a 1 percent to 3 percent increase in premiums last year — just a part of the total 9 percent rise for the year.

And one of the reasons the law has caused a slight rise in premiums is because it requires insurance companies to cover a family’s children until they reach age 26. We’re not told how old the jobless children are, but one or both might have coverage under their mother’s plan, thanks to the new law.

Claim: “We’ve had stimulus and bailouts.”

Fact: That’s true. But the bailout legislation was sought and signed in 2008 by President Bush, and 82 percent of all disbursed funds under that program have now been recovered under Obama, according to the Treasury Department’s Daily TARP Update for May 22.

As for the stimulus that Obama signed in 2009, unemployment would have been significantly worse without it, according to the Congressional Budget Office — though in the longer term, CBO says that spending borrowed funds on the stimulus creates a drag that will lead to “a little lower” economic output at the end of the decade.

Claim: “Obama added almost $16,000 in debt for every American.”

Fact: It’s true that total federal debt (including money the government owes to itself) has risen by nearly $5.1 trillion since the day the president took office. And that’s actually a little more — $16,227 — than the per capita figure the ad uses.

But as noted earlier, Obama inherited a huge deficit. And a president alone cannot cut spending or raise taxes — either of which would reduce deficits and slow the growth of the debt — without cooperation from Congress.

Claim: “Now Obama wants more spending and taxes.”

Fact: Actually, this woman (who tells us she is still working) would have benefited from tax cutssought and signed by Obama. If she’s making $50,000 a year, the most recent cuts in payroll taxes would have been worth $1,000 to her both last year and this year.

And the president has also offered huge spending cuts in exchange for any future tax increase on top-bracket earners. He met for days with House Speaker John Boehner and other Republican leaders during last year’s debt-ceiling negotiations. But so far such a “grand bargain” to slash the deficit has proven elusive, with each side blaming the other.

Claim: “Cutting taxes and debt, and creating jobs. That’s the change we need.”

Fact: Actually, about 3.7 million jobs have already been created since things hit bottom in February 2010. Our fictional mother also glosses over a contradiction: cutting taxes increases debt, unless even bigger cuts are made in spending, which she doesn’t mention.

Claim: “Gas Prices Continue To Rise”

Fact: This false claim is made in a fake newspaper headline that appears on screen. The truth is that gasoline prices have been dropping lately.

In fact, the national average price for regular gasolinehasn’t been as high at any time under Obama as it was briefly under Bush, when it topped $4 a gallon for six weeks in the summer of 2008. That’s still a record, as measured officially by the U.S. Energy Information Administration.

The average price then plunged to $1.59 in the final week of 2008, due to the financial crisis and resulting worldwide economic slowdown — the worst since the Great Depression. From there it started climbing back up even before Obama was sworn in, and reached a peak under Obama of $3.90 in May of last year. This year the highest was nearly $3.88 during the week that ended April 9.

But in each of the six weeks since then it has dropped. As of May 21 — the day before the ad was announced — it was just over $3.62, or about 25 cents a gallon lower than in early April, and 43 cents below the record week recorded in July 2008.

The Times quoted Crossroads GPS president Steven Law as saying this ad is aimed at voters who may like President Obama but are disillusioned. And it called it a “subtler” entry than the group’s previous attack ads.

But it’s an attack ad nonetheless. And it uses factual claims to deceive, not to inform.

–Brooks Jackson

FACT CHECK: An honest look at GPS's false claims on Obama's tax plans

2012-05-24T09:52:14-04:00

And now, the rest of the story on that misleading “Obama’s Promise” ad from Crossroads GPS.

Besides the almost totally false claim that we covered earlier, the ad also:

Claims the president broke a promise to help homeowners facing foreclosure, when in fact 5.9 million have received assistance.
Gives a somewhat darker picture of the mortgage foreclosure situation than the facts warrant.
Exaggerates the number of persons likely to lose employer-sponsored health coverage under the new health care law.
Uses negative, loaded language to describe how those persons would get alternative coverage.
But is right on target when it says the president hasn’t come close to fulfilling his promise to cut the federal deficit in half.

Our first piece dissected the ad’s claim that the president had increased taxes on families making under $250,000 a year, describing it as the worst of the ad’s distortions, and finding it to be “almost entirely false.” Here we address the other, less egregious claims in the 60-second spot.

Foreclosures

The ad claims Obama broke a promise to “help the millions of homeowners who are facing foreclosure.” The narrator notes that “1 in 5 mortgages are still under water.”

Actually, millions of homeowners have received assistance. But it’s true that the housing crisis is far from over. In fact, the ad’s statistic could be an understatement; the most recent report from the real-estate data firm CoreLogic estimates that as of the end of last year, 22.8 percent of all residential properties with a mortgage were in “negative equity,” meaning the owner owes more than the home’s current estimated market value. That’s closer to 1 in 4 than 1 in 5.

And there’s no question that the administration’s efforts to help distressed homeowners were disappointing, at least at first. The ad cites on screen a New York Times story that led with this sentence:

New York Times, Jan. 1, 2010: The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

But matters have improved since that story from more than two years ago. In a rebuttal video, Obama’s deputy campaign manager, Stephanie Cutter, says it’s “flat out wrong” that Obama “has not helped people who faced foreclosure.” Because of Obama’s policies, she says, “over 5.9 million homeowners were able to modify their mortgages, avoid foreclosure and stay in their homes.”

And that’s backed up by a May 4 report from the U.S. Department of Housing and Urban Development. According to the report, “More than 5.9 million modification arrangements were started between April 2009 and the end of March 2012 — including more than 1.8 million Home Affordable Modification Program (HAMP) trial modification starts and more than 1.3 million FHA loss mitigation and early delinquency interventions.”

And the ad’s statistic, while accurate, gives an excessively gloomy impression. As the Wall Street Journal‘s “Numbers Guy,” Carl Bialik, recently noted, estimates of “underwater” mortgages “seem overblown” and paint a darker picture than is actually warranted. Many of those mortgages are not very far underwater, for one thing.

Only about 1 in 10 residential mortgages exceed the estimated value of the home by 25 percent or more, according to CoreLogic. That’s a troubling figure to be sure, but not as bad as the Crossroads GPS ad would have viewers believe.

More important, even fewer homes are actually facing foreclosure, the subject of Obama’s promise. The most recent foreclosure report from CoreLogic shows 3.4 percent — closer to 1 in 30 than 1 in 5 — were in foreclosure proceedings in March.

And the situation is slowly improving. The CoreLogic report shows that the number of actual foreclosures completed in the first three months of this year was 198,000, a decline of nearly 15 percent compared with the same period a year earlier.

Employer-Sponsored Health Care

The ad also accuses Obama of breaking a promise that “if you like your health care plan, you’ll be able to keep your health care plan” under the new law. The narrator states that “millions could lose their health care coverage and be forced into a government pool.”

That’s largely true, though an on-screen figure exaggerates the likely number affected, and the reference to a “government pool” is loaded and misleading.

Here are the facts. We stated even before the new law was passed that Obama “can’t make that promise to everyone.” It has always been one of the misleading talking points Democrats have used to sell the law. The law will allow employers to drop coverage for their workers if they pay a penalty (they can do so now without a penalty, and many have done so in the past). The law will also require some employers to choose between improving the coverage they offer to meet new standards in the law, or dropping it.

How many will drop coverage is hard to estimate, but the Congressional Budget Office recently projected that by 2019, once the law had been in effect for a number of years, between 3 million and 5 million fewer workers would be offered health care coverage by their employers than would be the case without the law.

They would still have coverage available. Lower-income workers would qualify for Medicaid, and those with somewhat higher incomes could still qualify for federal subsidies to buy private insurance directly through the competitive new exchanges the law requires states to set up.

But to describe those exchanges as a “government pool” is pejorative and misleading, and invites a negative emotional response. Who wants to be herded into a “government pool”? In fact, the state-run exchanges are to be modeled on the federal exchange through which members of Congress and millions of federal workers have received their coverage for years.

That exchange, the Federal Employees Health Benefits Program, was once lauded by the conservative Heritage Foundation. “These fortunate Americans [federal employees, retirees and their families] can choose among almost 400 health care options, including 35 such health plans in the Washington, D.C., area alone,” Heritage said in 1994, when Republicans were pushing exchanges as an alternative to the Clinton administration’s health care legislation.

The ad also greatly exaggerates the number of workers likely to be affected. On screen it shows a graphic saying “as many as 20 million could lose” employer-sponsored coverage. That’s not at all likely, as we noted in a May 11 item about a U.S. Chamber of Commerce attack ad making a similar claim. The CBO gave that estimate only for a very pessimistic set of assumptions about large, medium and small companies, assumptions that it said “have only rarely been reported in the research literature, and even then only for the behavior of small firms.”

The CBO also said that under another, very optimistic set of assumptions, the number of people obtaining insurance through their employer might increase, on net, by 3 million.

Cutting the Deficit

Finally, the ad says Obama also broke a promise to “cut the deficit we inherited by half by the end of my first term.” The narrator says, “Broken! Because he hasn’t even come close.” And that’s true.

Just before Obama took office, on Jan. 8, 2009, the Congressional Budget Office said “CBO projects that the deficit this year will total $1.2 trillion.” That was based on legislation signed by George W. Bush, including the Wall Street bailout legislation for fiscal year 2009, which had begun Oct. 1, 2008. So Obama inherited a $1.2 trillion annual deficit on his first day in office.

And he has failed to cut it by any appreciable amount. The stimulus bill he signed soon after taking office increased the deficit he inherited — the total deficit ended up being over $1.4 trillion in fiscal 2009. And the deficit was just under $1.3 trillion in both fiscal years 2010 and 2011 — still above the “inherited” level.

And as of the most recent budget projection by CBO in March, the total federal deficit for the current fiscal year is predicted to be $1.171 trillion — right about where it was running when he first took office. Furthermore, CBO projects that the deficit for fiscal year 2013, which starts Oct. 1, will still be $1 trillion. That’s under its “alternative” fiscal scenario that assumes Congress will continue extending certain expiring policies as it has in the past, including many middle-income tax cuts favored by Democrats as well as Republicans.

We’ll let others debate the reasons. The fact is that on this last claim, Crossroads GPS is correct: Obama has failed to deliver on his promise to cut the deficit in half, and there’s no sign he can come close in the remaining months of his term.

– Brooks Jackson and Robert Farley