The War Over Economic Facts
Lies filled the Long Island air on Oct. 16 at the second debate between President Barack Obama and Republican challenger Mitt Romney. It’s provable by deduction: Either the candidates’ accusations of falsehoods were correct or, if not, the accusations themselves were false. A typical exchange centered on the rate of domestic oil production during the Obama presidency:
ROMNEY: Production on private, on government, land …
OBAMA: Production is up.
ROMNEY: … is down.
OBAMA: No, it isn’t.
ROMNEY: Production on government land of oil is down 14 percent.
OBAMA: It’s just not true.
ROMNEY: It’s absolutely true.
It was Abbott & Costello for angry people. (In this case, PolitiFact.com judged Romney’s claim to be—of course!—“Half True.”) In a presidential campaign dominated by the economy, it’s not surprising that both sides have inundated voters with data supporting their positions. What distinguishes this campaign is the inability of the candidates to agree even on basic facts—from whether Romney would cut taxes on the rich to whether Obama doubled the budget deficit. Says Brooks Jackson, director of FactCheck.org, which has been busy this campaign season ferreting out falsehoods: “My observation is that the higher the stakes and the closer the election, the more likely candidates are to start bending and twisting and making stuff up.”
The war over facts reflects a coarsening of America’s politics. Polarization has undermined civility and fair play. Gallup said on Oct. 12 that the gap between Democrats’ and Republicans’ approval rating for the president is the biggest since it began tracking the statistic in 1984. The ideological gap between parties in the House of Representatives is the widest since at least 1879, calculates University of Georgia political scientist Keith Poole. Suffering from cognitive dissonance, partisans on both sides simply can’t believe information that undermines their cause or supports their opponents’. Parties have become as adept at engineering factoids that favor their cause as they are at drawing bizarre congressional districts to maximize their representation in Congress.
Democracy is at risk when ideology overpowers reality. If lawmakers and the public can’t agree on a set of core facts about how the world works, there’s little chance they’ll be able to devise solutions to problems like rising health-care costs or—to name a more immediate crisis—averting the fiscal cliff of tax hikes and spending cuts on Jan. 1, 2013.
Romney’s refusal to be pinned down on his tax plan exemplifies this political season’s loose attachment to reality. Romney says he will cut taxes by about $5 trillion but will offset those cuts entirely by ending deductions and credits for the wealthy. He says he can do this without adding to the deficit or raising taxes on the middle class, and while retaining tax incentives for savings and investment. Is this possible? The Tax Policy Center, which is a nonpartisan joint venture of the Brookings Institution and the Urban Institute, found in an August report that it’s not possible—even if all other breaks for the wealthy are eliminated and even assuming the boost to growth that’s projected by Romney adviser Gregory Mankiw, a Harvard University economist.
Confronted with this clash between plan and reality, Romney and his running mate, Representative Paul Ryan of Wisconsin, have taken a two-pronged approach. They have denigrated the Tax Policy Center as a Democratic front, even though Romney cited it approvingly last spring when it nailed a tax plan of his GOP rival, Rick Perry. And they have brazened out their $5 trillion arithmetic problem. On Oct. 16, Romney changed the subject when pressed for details of his tax plan, citing his management of the Salt Lake City Olympics and attacking Obama’s budget deficits. With his time expiring, he sputtered, “I just described to you precisely how I’d do it, which is with a single number that people can put—and they can put their deductions and credits—[inaudible].” For his part, Obama claimed he wouldn’t raise taxes above where they were during the Clinton administration, conveniently leaving out new taxes associated with the Affordable Care Act.
In the heat of political combat, “studies” become weapons. Romney and Ryan cite a study by consulting firm Ernst & Young that found restoring higher rates in the top tax brackets, as Obama has proposed, could cost 710,000 jobs in the long run. But that’s only if the proceeds go toward more government spending. Romney and Ryan fail to mention that E&Y said the hikes would create 570,000 jobs if the proceeds went toward reducing rates in the lower brackets.
There was a time when politicians sought ways to come to agreement about economic data. Earlier generations of lawmakers created nonpartisan organizations to be their official truth-tellers on budgetary matters. The key ones are the Government Accountability Office, founded in 1921; the Joint Committee on Taxation, founded in 1926; and the Congressional Budget Office, founded in 1974. Most of the time, Congress and the White House live by the determinations of these organizations even when they dislike them, just as baseball teams agree to abide by the strike calls of the umpire.
The information armistice is now in jeopardy. In the 1990s Democrats were furious with the Congressional Budget Office when its high cost estimates helped bury President Bill Clinton’s health insurance plan. Now it’s Republicans who are angry at the CBO’s projection that the Affordable Care Act—“Obamacare”—will save the federal government money in the long run by reducing the growth rate of health-care costs. During his quixotic run for president, Newt Gingrich called for the abolition of the 230-employee CBO, calling it “a reactionary socialist institution which does not believe in economic growth, does not believe in innovation, and does not believe in data that it has not internally generated.”
The GAO, which frequently makes enemies in Congress by pointing out wasteful spending, is also a target. Due to budget cuts, its staff shrank from more than 5,000 in the early 1990s to 3,200 last year. To fend off even deeper cuts, Republican Senator Tom Coburn of Oklahoma issued a report last year saying, “Quite frankly, the reason the guidance of the GAO is so important at this time is because Congress has increasingly ignored its own duties to oversee the functions of government.” The Joint Committee on Taxation, a 60-employee organization that estimates revenue from tax legislation, is occasionally criticized by tax-cutting Republicans for not taking into account the ability of tax cuts to accelerate growth and thus raise tax revenue.
If the CBO, the JCT, and the GAO didn’t already exist, it’s not clear that today’s Congress would create them. The atmosphere in Washington is that toxic. “Compromise is a dirty word on both sides,” says Rudolph Penner, who was the CBO’s director from 1983 to 1987. Douglas Holtz-Eakin, a conservative Republican who headed the CBO from 2003 to 2005, says he’s “not in the camp that says Washington is fundamentally broken,” but warns in his next breath that rating agencies and global capital markets are approaching the breaking point over politicians’ gamesmanship.
The late Democratic Senator Daniel Patrick Moynihan once said (in a phrase Romney embroidered upon in the first debate), “Everyone is entitled to his own opinion, but not to his own facts.” Whoever wins the White House will be held accountable when the numbers don’t add up.