Republicans Stretch Truth in Debate Salvos on Jobs, Taxes

Republicans Stretch Truth in Debate Salvos
Former Utah governor Jon Huntsman, Jr., left, speaks during the presidential debate sponsored by The Washington Post and Bloomberg at Dartmouth College in Hanover, New Hampshire, October 11, 2011. Photographer: Toni Sandys/The Washington Post

Mitt Romney, Rick Perry and the other Republican presidential candidates stretched the truth on health care, job creation and the deficit in a debate last night as they attacked each other and President Barack Obama.

Romney, a former Massachusetts governor, said Obama’s health-care law would increase spending by $1 trillion, while Texas Governor Perry said he would make America energy independent. Former Godfather’s Pizza chief executive Herman Cain argued that his “9-9-9” tax plan is revenue neutral.

Those are among the statements by the White House contenders that strayed from the truth as the candidates sought to distinguish themselves on jobs and the economy, the focus of the debate at Dartmouth College in Hanover, New Hampshire, sponsored by Bloomberg News and The Washington Post.

Following are examples of assertions that didn’t stand up to fact-checking by Bloomberg and Post reporters and analysts.

Romney on Economy

The Claim: Romney said “median income in America has declined by 10 percent during the Obama years.”

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 to 2010 after taking inflation into account. A report released this week 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.

Romney on Health

The Claim: Romney said Obama’s health-care law raised spending by $1 trillion.

The Background: The 2010 legislation that Obama signed included a mix of spending increases and cuts.

The Facts: The law increases spending by $788 billion over 10 years, while achieving $931 billion in savings over the same time for a net deficit reduction of $143 billion, the Congressional Budget Office estimated in March 2010.

Perry on Jobs

The Claim: Perry said taxpayer-funded programs to lure employers have created 54,600 jobs in Texas. He said 75 percent of the dollars went to recipients that didn’t contribute to his campaign.

The Background: As governor, Perry oversees the Texas Enterprise Fund and Texas Emerging Technology Fund. The programs provided about $633 million to companies such as Washington Mutual, now a JPMorgan Chase & Co. unit, and Countrywide Financial, now owned by Bank of America Corp. Perry’s campaigns received contributions from political action committees and individuals tied to both companies.

The Facts: Assessing job creation has been difficult because the funds haven’t had to report the number of new positions produced, according to Texans for Public Justice, a nonprofit political watchdog group in Austin. Only 11 of 50 recipients of Enterprise Fund money had met goals promised by 2009, the group said in a September 2010 report.

By the end of 2009, companies receiving enterprise fund money listed 22,544 jobs created in Texas, according to the report. An additional 8,147 were tied to three projects that also got cash from the program.

Cain on Deficit

The Claim: Cain pledged to present a balanced budget a year after taking office. He said the only way to bring down the national debt is “the first year that I’m president and I oversee a fiscal-year budget, make sure that revenues equals spending. If we stop adding to the national debt, we can bring it down.”

The Background: Cain, who has no experience in elective office, is seeking to demonstrate a command on the economy and fiscal issues to compete with Romney.

The Facts: A proposal by the heads of Obama’s debt commission to cut the budget by $4 trillion wouldn’t wipe out the deficit for more than 25 years. According to a research group, the Bipartisan Policy Center, there will be an $830 billion deficit in fiscal year 2013 assuming current policy such as the extension of tax rates. To balance the budget in fiscal year 2013 through spending cuts alone would require a reduction equal to 25 percent of all spending, the policy center said, citing Conngressional Budget Office projections. That would be more cuts than it would take to eliminate one year of spending on Medicare and Medicaid.

Cain on Taxes

The Claim: Cain said Bloomberg News’ analysis of his 9-9-9 tax plan is incorrect. “The reason it’s incorrect is because they start with assumptions we don’t make,” he said.

The Background: Cain’s proposal would eliminate the current U.S. tax code. Instead, he would tax sales transactions and gross income for individuals and businesses at 9 percent while eliminating levies on capital gains. He also would end the payroll tax that funds Social Security, and corporations wouldn’t pay a tax on dividends. “It expands the base,” he said. “When you expand the base, we can arrive at the lowest possible rate, which is 9-9-9. The difference between the 9-9-9 plan and the other plans that are being proposed is that they pivot off the existing tax code.”

The Facts: Cain said his campaign has received an independent revenue analysis of his plan, though it hasn’t been publicly released. He also hasn’t detailed the specific assumptions his campaign is using. Working with the only data publicly available, Bloomberg News calculated that the 9-9-9 plan would have generated about $2 trillion if it were in place in 2010, compared with the $2.2 trillion the government collected that year. Cain’s plan would generate $922.1 billion from the sales tax, $912 billion from the individual income tax and $127.7 billion from the tax on corporations. Cain said his plan would win passage in Congress. Congress has been reluctant to eliminate some of the most popular tax benefits currently in the code, such as the mortgage interest deduction, which survived the 1986 tax code overhaul.

Paul on Fed

The Claim: U.S. Representative Ron Paul of Texas said Federal Reserve Chairman Ben S. Bernanke has compounded the problem of inflation in the U.S., and that “he’s inflating twice as fast as Greenspan was,” referring to Bernanke’s predecessor Alan Greenspan.

The Background: The Fed is charged by Congress with maintaining stable prices and maximum employment. The central bank has taken unprecedented steps to ease monetary policy, including lowering the benchmark interest rate to near zero and buying $2.3 trillion in housing and Treasury debt.

The Facts: The Labor Department’s consumer price index, one of the most common inflation measures, has climbed 2.2 percent on average per year during Bernanke’s 5 1/2 years in office, less than the average 3 percent rate during Greenspan’s 18 1/2 years. The M2 money supply, which includes currency, bank deposits and money market mutual funds, rose 4.9 percent a year under Greenspan and has increased an average 6.4 percent annually under Bernanke. By other, less conventional measures of inflation, such as the price of gold in dollars or the amount of monetary base created by the Fed, there would be considerably higher rates of inflation under Bernanke’s chairmanship.

Gingrich on Fed

The Claim: Newt Gingrich, former speaker of the House, said Bernanke has “in secret spent hundreds of billions of dollars” on bailouts of financial institutions and that nobody in the news media has demanded transparency from the central bank.

The Background: The Fed stretched its emergency powers during the financial panic of 2008 to rescue Bear Stearns Cos. and American International Group Inc. It also created lending tools to provide funds to banks, mutual funds and large corporations.

The Facts: The Fed made loans to financial institutions -- it didn’t spend any money, and has said it has incurred no losses. While the central bank kept much of the information on the identity of borrowers confidential at the time, the Dodd-Frank Act and lawsuits by Bloomberg News and Fox News resulted in disclosure of the recipients in late 2010 and early 2011. The Fed has separately spent $2.3 trillion purchasing housing and government debt as part of monetary policy.

Huntsman on Taxes

The Claim: Former Utah Governor Jon Huntsman said “I created a flat tax in the state of Utah. It took that state to the number-one position in terms of job creation.”

The Background: With the U.S. unemployment rate at 9.1 percent and jobs still 5 percent below where they were when the recession started in December 2007, job creation is arguably the most important domestic policy issue today. The three candidates with experience as governors, Romney, Perry and Huntsman, have been touting their credentials as job-generating state executives.

The Facts: The truth of Huntsman’s claim depends on which data you use. Using the figures from employer payrolls, jobs in Utah grew 4.8 percent during Huntsman’s tenure, from January 2005 to August 2009, which placed it fourth behind Wyoming, North Dakota and Texas. If you use the Labor Department’s survey of households, employment grew 5.9 percent during the same period, placing Utah first. That ranking is eroded when you account for population growth, dropping Utah to 35th over the period.

Bachmann on Health

The Claim: U.S. Representative Michele Bachmann of Minnesota said Obama’s health-care law will be run by a board of 15 political appointees who will “make all the major health-care decisions for over 300 million Americans.”

The Background: Bachmann was referring to the independent payment advisory board, a panel of 15 health-care authorities established by the 2010 law to help curb Medicare spending. Beginning in 2015 the panel will begin proposing cuts to Medicare if yearly spending exceeds targets set by the law. Congress could overrule the panel only with a three-fifths majority in the Senate or if it comes up with an alternate plan that saves an equivalent amount.

The Facts: The board only has authority over Medicare, in which about 48 million elderly and disabled Americans are now enrolled, not the 300 million Bachmann mentioned. The law doesn’t grant the panel power to make health-care decisions and prohibits the group from cutting benefits, changing eligibility rules or increasing beneficiaries’ premiums or cost-sharing. Instead, the board’s main tool for cutting spending will be reducing payments to providers.

Bachmann on Medicare

The Claim: Bachmann said “nine years from now the Medicare hospital Part B trust fund is going to be dead flat broke.”

The Background: Medicare Part A pays for inpatient hospital services. Medicare Part B pays for outpatient services such as doctor visits.

The Facts: The hospital trust fund is Part A, not Part B. Part A is estimated to be exhausted in 2024, not in nine years, according to the Medicare trustees’ annual report released this year. Under one set of estimates by the trustees, the Part A trust fund’s expenditures begin to exceed income in nine years, but will not be “broke.” In the report, the trustees said the Part B trust fund is “adequately financed over the next 10 years and beyond.”

Perry on Regulation

The Claim: Perry said he will offer a plan “for getting America independent on the domestic energy side.”

The Background: Presidents since Richard Nixon in 1973 have set a goal of U.S. energy independence. Oil imports have risen since then and accounted for 49 percent of U.S. consumption last year.

The Facts: The U.S. had proven reserves of 19.12 billion barrels of oil, compared with 1.33 trillion barrels in global reserves as of 2008, according to the U.S. Energy Information Administration. The agency forecast in April that the U.S. will rely on imported liquid fuels for 42 percent of consumption in 2035. The U.S. Ranks 13th globally, with 1.4 percent of proven oil reserves, according to the Central Intelligence Agency’s World Factbook.

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