Republican Debate Reality Check Shows Misfires on Regulation, Bailouts

Rick Perry stumbled when he forgot which federal departments he would shut, while Mitt Romney and other rivals for the Republican presidential nomination strayed from the facts on regulation, auto bailouts and health care in a debate focused on the economy.

Texas Governor Perry and former businessman Herman Cain blamed government regulations for the weak economy in last night’s debate co-sponsored by CNBC and the Michigan Republican Party. Former Massachusetts Governor Romney said bailouts of the auto industry were the wrong way to go.

Those and other statements by the White House contenders stretched the truth during the debate at Oakland University in Rochester, Michigan.

Following are examples of gaffes or assertions that didn’t stand up to fact-checking by Bloomberg reporters:

Perry on Agency Cuts

The Claim: Perry said he would shut three government agencies. He named two, the departments of Commerce and Education, and said he couldn’t remember the third: “I can’t. Sorry. Oops.”

Background: Perry’s Republican rivals have also called for eliminating a number of departments, with Representative Michele Bachmann of Minnesota pledging to shut the Environmental Protection Agency and Representative Ron Paul saying he would close the Department of Interior in addition to the ones Perry wants to end.

The Facts: Later in the debate Perry said the third agency he wanted to close was the Department of Energy. Perry, who made expanded oil drilling a cornerstone of his Oct. 14 jobs plan, also named that agency as one he wanted to do away with during an Oct. 1 town hall meeting in Hampton, New Hampshire.

Cain, Perry, Bachmann on Regulations

The Claims: Cain said fixing the housing crisis requires that “you get the regulators off of the backs of the banks.” Perry said “it’s the regulatory world that is killing America,” and Bachmann said, “Our biggest problem right now is our regulatory burden.”

The Background: Perry pledged to review all rules issued during President Barack Obama’s administration and revoke those that kill jobs. Former Senator Rick Santorum of Pennsylvania said he would repeal every Obama-era regulation that cost businesses more than $100 million.

The Facts: Obama’s administration approved 613 rules during his first 33 months in office, fewer than the 643 issued by President George W. Bush’s administration in the same time period, according to Office of Management and Budget statistics. A National Federation of Independent Business survey of small business owners released this month found that 26 percent of respondents cited poor sales as their top problem, compared with 19 percent citing regulations. Of almost 489,000 initial unemployment claims from extended mass layoffs in the first half of this year, 2,085 -- less than 1 percent -- came from people who employers said were fired because of government regulations, according to the Labor Department.

Romney on Bailouts

The Claim: Romney said auto bailouts by Obama and Bush were “the wrong way to go.” General Motors Co. and Chrysler Corp. should have gone through “a private bankruptcy process” instead, he said.

The Background: The Bush administration extended more than $17 billion in loans from the Troubled Asset Relief Program to General Motors and Chrysler in late 2008 to save up to 3 million jobs and the network of industry suppliers. Ford Motor Co. didn’t need government financing because it restructured its debt in 2006. In 2009, the Obama administration provided additional financing for the two car companies as well as their financing arms while an auto-industry task force shepherded them through accelerated bankruptcies. The process allowed them to shed excess facilities, workers and dealers.

The Facts: Private financing for a traditional debtor-in- possession bankruptcy for GM and Chrysler wasn’t available during the 2008-2009 credit crisis, according to Steven Rattner, who headed the Obama administration’s auto rescue, economist Mark Zandi of Moody’s Analytics Inc. and David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Michigan. Michigan’s economy is recovering from the recession at the second-fastest pace in the U.S., lifted by reviving carmakers and local manufacturers, according to a Bloomberg index that tracks the pace of states’ growth. Michigan’s 11.1 percent unemployment rate in September was down from the crisis peak of 14.1 percent in August 2009, and still higher than the national 9 percent figure. The state has added 92,500 nonfarm jobs since employment bottomed in December 2009.

Perry on Medicaid

The Claim: Perry said if the federal government let states run Medicaid, the health program for the poor, “I guarantee you we will do it safely, we will do it appropriately and we will save a ton of money.”

The Background: Republican candidates have urged the federal government to send money to the states for the joint federal-state program and let them figure out how best to spend it.

The Facts: Since Perry became governor, the number of Texas Medicaid beneficiaries covered by managed-care plans has more than doubled, from 29 percent in 2000 to 72 percent in 2009, the latest year for which the state released enrollment figures. That’s a faster shift to managed care than the country as a whole. The state contracts with the Institute for Child Health Policy at the University of Florida to review the quality of its Medicaid managed-care program. The institute said in 2009 that the 1.2 million Texans covered by the state’s largest managed- care program, called STAR, fared worse than Medicaid beneficiaries nationwide on several indicators. STAR adult beneficiaries were almost three times more likely to be admitted to the hospital for hypertension, more than twice as likely to be admitted for uncontrolled diabetes and 71 percent more likely to be admitted for urinary-tract infections.

Bachmann on Taxes

The Claim: Bachmann said the effective corporate tax rate is about 40 percent.

The Background: Republicans generally maintain that corporations need a lower federal tax rate to compete globally.

The Facts: The current top corporate rate is 35 percent. Corporations also pay state taxes that vary from zero to almost 10 percent. Many companies avoid paying the top federal rate because of the availability of tax breaks and the effects of losses. Citizens for Tax Justice, a labor-funded research group in Washington, published a study this month showing that the average effective federal corporate income tax rate for 280 Fortune 500 companies from 2008 through 2010 was 18.5 percent. Thirty companies including General Electric Co., Verizon Communications Inc. and Boeing Co., didn’t pay any federal income tax between 2008 and 2010 though they earned a combined $160.3 billion in pretax U.S. profits in that period, the study found.

Gingrich on Loans

The Claim: Former House Speaker Newt Gingrich, criticizing the federal student loan program, cited the College of the Ozarks, a work-study college where most students graduate debt- free. “You cannot apply to it unless you need student aid, and they have no student aid. You have to work 20 hours a week during the year to pay tuition and books. You work 40 hours a week during the summer to pay for room and board.”

The Background: Gingrich is seeking to depict federal student loans as helping foster dependency and debt.

The Facts: The College of the Ozarks website says that 90 percent of each entering class must show financial need and 10 percent have the need requirement waived. Each student participates in the on-campus work-study program 15 hours each week, and two 40-hour work weeks. While the Christian college in Point Lookout, Missouri, doesn’t participate in the student loan program, the website says any federal and/or state aid for which students qualify, combined with on-campus work earnings plus a college scholarship ranging from $5,090 to $13,540, meets each student’s tuition charge.

Romney on the Economy

The Claim: Romney said “median incomes have dropped 10 percent in the last three years.” He made the same claim at the Oct. 11 Republican debate in Hanover, New Hampshire.

The Background: Republican presidential candidates have tried to outdo each other with their criticism of Obama for his handling of the economy.

The Facts: Figures from the U.S. Census Bureau show that median household income fell by 2.9 percent from the end of 2008 to the end of 2010 after taking inflation into account. A report released several weeks ago by two former census officials who made their own estimates put the drop at 9.8 percent from December 2007 to June 2011. That covers a period before Obama took office in January 2009 and also takes inflation into account, something Romney didn’t mention.

To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net

To contact the editor responsible for this story: Timothy Franklin at tfranklin14@bloomberg.net

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