Fact checking convention claims about Romney’s taxes, Democrats on entitlements
This post has been updated.
First lady Michelle Obama stayed above the fray during her speech Tuesday at the Democratic convention, praising her husband’s values and vision without attacking his opponents directly. Other Democrats weren’t so nice. Here are a few claims that stood out.
“And on [Mitt Romney’s] tax returns, he’s hiding. You know, you have to wonder just what is so embarrassing that he’s going to such great lengths to bury the truth. But whatever he’s doing to avoid taxes, can it possibly be worse than the Ryan-Romney tax plan that would have sliced Mitt’s total tax rate to less than 1 percent?”
— Former Ohio governor Ted Strickland during speech at Democratic convention, Sept. 4, 2012
Strickland here is referring to GOP presidential nominee Mitt Romney’s Swiss bank accounts and investments in the Cayman Islands. The former Ohio governor implied with certainty that Romney avoided taxes with those financial arrangements.
Rep. James E. Clyburn (D-S.C.) alluded to this issue, as well, in his prepared remarks for the convention, but he worded his statement carefully by avoiding assumptions. “Did [Romney] take unusual steps to avoid paying his fair share?” he asked. “Who knows? He refuses to release enough of his tax returns to give a clear picture of his finances.”
We examined the notion that Romney avoided taxes in a previous column. Based on discussions with tax experts, we determined that it is likely but not altogether certain that Romney used offshore investments to shield his individual retirement account from the Unintended Business Income Tax. The reason for doubt: There are reasons for investing in the Caymans besides avoiding taxes — like getting in on the biggest investment game around.
Strickland cannot say with certainty that Romney has reduced his tax burden with special financial arrangements — “whatever he’s doing to avoid taxes.” He earns three Pinocchios.
As for the issue of whether the supposed “Ryan-Romney tax plan” would reduce Romney’s taxes to 1 percent, this claim seems to be based on articles in the Atlantic and Roll Call that analyzed the effect of GOP vice-presidential candidate Paul Ryan’s 2010 “Roadmap for America’s Future.” That proposal, which never made it out of committee, would have eliminated taxes on interest, dividends and long-term capital gains, on top of doing away with the Alternative Minimum Tax.
Romney derives the majority of his income from interest, dividends and long-term capital gains, so there’s no question that the Ryan plan would have significantly reduced his rate, from the 13.9 percent that he paid on $21.7 million worth of income in 2010, according to the single tax return he has made public so far.
The Atlantic calculated that Romney’s rate would have dropped to 0.82 percent under Ryan’s plan. Roll Call came up with a figure of “about 1 percent” in a separate article.
It’s worth noting that Romney criticized a Ryan-plan-like proposal from Newt Gingrich during a January GOP primary debate. “Under that plan, I’d have paid no taxes in the last two years,” Romney said.
The problem for Strickland is that Romney has not endorsed the Ryan plan. In fact, the GOP presidential nominee has a proposal of his own that includes maintaining current tax rates on interest, dividends and capital gains for anyone making more than $200,000 per year. This would not have reduced Romney’s 2010 taxes to the 1 percent range.
The fact of the matter is that the “Romney-Ryan tax plan” that Strickland referred to does not exist. The running mates have pitched separate proposals, and it’s likely that Ryan would defer to Romney on this issue if the former Massachusetts governor becomes president.
Strickland earns Three Pinocchios for pinning Ryan’s tax plan on Romney when the two candidates have made very different proposals.
“When too many of our senior citizens were living their golden years in the darkness of economic insecurity, Franklin Roosevelt and Democrats created Social Security, lighting a candle while Republicans cursed the darkness.
“When too many of our elderly found their lives darkened by unaffordable and inaccessible health care and assistance, Lyndon Johnson and a Democratic Congress lit the twin candles of Medicare and Medicaid while Republicans stood on the sidelines and cursed the darkness.”
— From prepared remarks by Rep. James E. Clyburn (D-S.C.) for the Democratic convention, Sept. 4, 2012
Congressman Clyburn didn’t actually deliver these remarks because of a scheduling change at the convention. But the Democratic National Committee released his prepared comments, so we’ll check them anyway. (Update: Clyburn delivered these remarks as written on the evening of Sept. 6 — even after this Pinocchio rating was published on The Washington Post Web site.)
Clyburn’s speech started with a quote from former president John F. Kennedy, who said during the 1960 Democratic convention: “We are not here to curse the darkness; we are here to light a candle.” He then played off that line, saying the fundamental difference between Democrats and Republicans is that the former party has done all the candle lighting while the latter has just cursed the darkness.
In our roundup of Tuesday’s convention speeches, we covered a similar claim from the DNC Web site, which says, “For more than 200 years, our party has led the fight for civil rights, health care, Social Security, workers’ rights, and women’s rights.”
We noted that 80 percent of the Senate “no” votes against the 1964 Civil Rights Act came from Democrats and that Republican votes were critical in winning passage of the bill. We also pointed out that a book distributed by Democrats at the 1992 convention acknowledged how their party “played both sides of the slavery issue” and “reached out a welcoming hand to returning Confederates, not to blacks” after the Civil War.
As for Clyburn, his prepared remarks gave Democrats essentially all the credit for federal entitlement programs, saying Republicans “stood on the sidelines ” while Democrats lighted the candles of Social Security, Medicare and Medicaid.
Clyburn is ignoring the facts here. Social Security came out of the congressional Committee on Economic Security in 1935, and Democratic President Franklin D. Roosevelt proposed the program as part of the Financial Security Act that same year. The bill passed in the U.S. House and Senate with 20 Republicans and 16 Democrats voting “no.” Ninety-seven Republicans voted in favor of the measure — there were relatively few GOP lawmakers in Congress at that point.
As for Medicare and Medicaid, the programs came as a package deal signed in 1965 by Democratic President Lyndon B. Johnson. But again, the legislation had broad bipartisan support. It passed both chambers of Congress with 83 Republicans and 294 Democrats voting in favor of the bill. Eighty-five Republicans and 55 Democrats voted “no,” so dozens of members of both parties opposed the programs.
Why does it appear the votes were much more bipartisan in the past? For one, voting broke more along regional lines rather than party lines, with southern Democrats in opposition and northern Republicans in support of such federal expansion of benefits. Many of those southern Democrats have since become Republicans, while the Northeast especially has turned largely Democrat.
We should point out that Republican President Richard Nixon lobbied unsuccessfully in 1974 for a health plan that would have included a mandate for employers to provide coverage and an optional health plan from the federal government. Sen. Edward M. Kennedy, a Democrat, opposed that idea, saying it did not go far enough.
And let’s not forget that Republican President George W. Bush approved a prescription-drug benefit for seniors as part of the Medicare Modernization Act that he signed in 2003. The bill passed in the House by a vote of 220 to 215, with 189 out of 205 Democrats voting “no.” It passed in the Senate on a vote of 53 to 44, with 35 out of 46 Democrats voting against the measure.
Democrats did not oppose the prescription-drug benefit in and of itself, but instead wanted more money dedicated to it. They also feared that the bill would undermine Medicare as it existed, particularly because of a provision that promised subsidies for private plans to compete with the fee-for-service Medicare program.
(The Center for Medicare and Medicaid Services has provided a list of the milestones and changes for the two entitlement programs.)
Clyburn earns Four Pinocchios for his fantasy about Democrats deserving all the credit for federal entitlement programs and for suggesting that Republicans alone have opposed those plans.
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