Dueling studies in new ads by Romney and Obama
“Who will raise taxes on the middle class? According to an independent, non-partisan study, Barack Obama and the liberals will raise taxes on the middle class by $4,000. The same organization says the plan from Mitt Romney and common-sense conservatives is not a tax hike on the middle class.”
— voiceover from a new Mitt Romney campaign ad
“Why won’t Romney level with us about his tax plan, which gives the wealthy huge new tax breaks? Because according to experts, he’d have to raise taxes on the middle class — or increase the deficit to pay for it.”
— voiceover from new Obama campaign ad
Politicians love nothing more than to point to an “independent” study that backs up their political position. Thus, in the first presidential debate, President Obama could claim that GOP rival Mitt Romney has a plan to cut taxes by $5 trillion, with tax breaks for the wealthy and tax hikes for the middle-class. And Romney could adamantly deny that, citing six studies of his own.
There is usually less to such studies than the claims they are said to support. Let’s explore how such studies are used in new advertisements the campaigns released just hours after the debate ended.
First, the Romney ad. The “independent, nonpartisan” organization cited by the Romney campaign is the American Enterprise Institute, which bills itself as “committed to expanding liberty, increasing individual opportunity and strengthening free enterprise.” A who’s who of Republican heavyweights — such as Richard Cheney, Paul Wolfowitz, Marc Thiessen, Danielle Pletka, John Yoo, and John Bolton — is affiliated with it, but in order to maintain its tax status as a 501(c)3 organization it cannot proclaim any political affiliation.
AEI is one of the top think tanks in Washington, and its scholars are respected and not ideologically consistent. But most people would regard it as right-leaning.
The Romney campaign probably wants to tag AEI as nonpartisan because the group that produced the study that Obama cited, the Tax Policy Center, often is described as nonpartisan. The Tax Policy Center is affiliated with the Urban Institute and the Brookings Institution — and Brookings is frequently seen as the left’s counterpart to AEI. The Tax Policy Center has staff who have served in administrations of both parties. Indeed, the Romney campaign once referred to another Tax Policy Center study as an “objective, third-party analysis.”
The first study mentioned in the Romney ad — supposedly showing “Barack Obama and the liberals will raise taxes on the middle class by $4,000” — is actually a very dry report titled “A Simple Measure of the Distributional Burden of Debt Accumulation.” The study tries to calculate the burden of servicing the national debt by various income groups, examining what would happen under current law, current policies and Obama’s budget. (Current law refers to policies that are supposed to happen, such as expiring tax cuts; current policy reflects the fact that Congress has said it will not let certain tax cuts expire.)
Among the three scenarios, there’s actually not much difference — for households making between $100,000 to $200,000, the burden would be between $2,800 to $5,400 a year through 2022 — and the administration’s budget falls right in the middle. In other words, the study shows how much lower taxes could be if the nation did not keep adding to the debt load; it does not show, as the ad claims, that Obama has some sort of secret plan to raise taxes.
Presumably, a Romney budget would fall in the same range, but he has not provided detailed plans. “We aren’t really able to run the overall numbers for Romney because we were trying to use the plans for which we had good budget projections,” said Matthew Jensen, one of the co-authors.
Indeed, the study also looks how the distributional burden rose under George W. Bush — and he of course cut taxes, repeatedly. So just because the debt burden rises, that is not proof that a president will raise taxes.
“The ad correctly states what was outlined in the American Enterprise Institute’s study,” a Romney spokesman said.
The second study mentioned in the ad is actually an article for AEI’s online magazine, titled “The Romney Tax Plan: Not a Tax Hike on the Middle Class.” Author Alex Brill said he was motivated to write it because he believed “all the ads the Democrats are running are false” because they claim Romney plans to raises taxes on the middle class. In the article, Brill tries to discredit the Tax Policy Center study.
The difficulty is that there is no fully detailed Romney plan that explains how he would reconcile his twin goals of reducing tax rates across the board and then closing enough loopholes to make it revenue neutral. The Tax Policy Center concluded it could not be done without raising taxes on the middle class — hence the Democratic ads — but the head of the Tax Policy Center cautioned: “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.”
This is where the new Obama ad falls short, because it states as a fact that he will “give the wealthy huge new tax breaks.” He says that is not his plan, though he has not shown how he will achieved his claimed goal of not giving large tax cuts to the rich.
Moreover, Romney has been inconsistent in describing the impact of his tax plan on the wealthy. In this week’s debate, he declared, “I will not reduce the taxes paid by high-income Americans.” But in the GOP Arizona debate in February, he said: “We're going to cut taxes on everyone across the country by 20 percent, including the top 1 percent.”
The Pinocchio Test
In this battle of campaign ads, the Obama campaign comes out ahead because it accurately describes the Tax Policy Center study as posing an either-or proposition — raising taxes or boosting the deficit. But it goes too far in claiming that Romney would give the wealthy huge new tax breaks, when he insists that is not the case — and the head of the Tax Policy Center says the study has been misinterpreted. The Obama ad earns One Pinocchio.
By contrast, the Romney campaign really pushes the envelope to claim the AEI study shows that Obama “will raise taxes on the middle class.” That’s not what the study says — by a long shot. The Romney ad earns Three Pinocchios.
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