Traverse City Record-Eagle

October 6, 2012

Fact Check: Dubious Denver debate declarations

BY FACTCHECK.ORG
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Summary

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

n 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.

n 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.

n 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.

n 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.

n 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.

n Romney accused Obama of doubling the federal deficit. Not true. The annual deficit was already running at $1.2 trillion when Obama took office.

n 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.

n 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.

n 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.

n 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

n $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."

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.

-- By Brooks Jackson, Eugene Kiely, Lori Robertson, Robert Farley, D'Angelo Gore and Ben Finley for FactCheck.org