Four Pinocchios: Giuliani’s anti-Obama remarks in Florida

at 06:00 AM ET, 08/01/2012


(Saul Loeb/AFP/Getty Images)

“Remember Joe the Plumber? Joe the Plumber asked [then-Sen. Barack Obama]: ‘Would you raise taxes even if it didn’t bring any more money to the government? Like the capital gains tax. If you raise the capital gains tax — the government did this once 20 years ago — if you raise the capital gains tax, you actually make less money for the government, because people stop doing investments, or they’ll do investments overseas.’ He [Obama] said, ‘Well I would do it anyway because it’s only fair.’ ”

— Former New York City mayor Rudy Giuliani during a pro-Mitt Romney speech at the Florida GOP headquarters in Tampa, July 26, 2012

“I don’t think the president of the United States has any idea how much damage he does when he does these ad hominem attacks on business. I mean, he basically destroyed Las Vegas by saying, ‘shouldn’t have junkets to Las Vegas.’ He put a lot of poor people out of work. All of a sudden, conventions are down 20, 30, 40, 50 percent.”

— Giuliani during private meeting with reporters after pro-Romney speech, July 26, 2012

Rudy Giuliani made these comments while stumping for GOP presidential candidate Mitt Romney at Florida’s Republican headquarters in Tampa last week. The former New York City mayor focused largely on the economy, telling the crowd that they could help spark an economic recovery by electing Romney.

Giuliani described President Obama as “anti-business” and “anti-profit,” specifically when it comes to taxes and regulations. He harped on the president for suggesting business owners don’t build successful companies without help from others, such as the government, and he mentioned an old exchange between then-candidate Obama and “Joe the Plumber,” an aspiring business owner the president met on the 2008 campaign trail.

During a private meeting with reporters, Giuliani brought up another example of Obama’s supposed hostility toward business, including the president’s 2009 and 2010 remarks about Las Vegas.

Let’s examine the exchange with Joe the Plumber and find out what’s happened with Las Vegas in recent years to determine whether Giuliani’s comments were accurate.

The Facts

Joe the Plumber

Joe the Plumber is Samuel J. Wurzelbacher, an Ohio resident who asked then-Sen. Obama during a 2008 campaign stop to explain his tax policy and how it would affect him as an aspiring small-business owner. The Tampa Bay Times has provided a full transcript of the exchange, which is also posted on You Tube.

Wurzelbacher, who is running this year as the GOP nominee to represent Ohio’s 9th Congressional District, said he was getting ready to buy a company that makes about $250,000 to $280,000 a year, and he asked, “Your new tax plan’s gonna tax me more, isn’t it?”

To make a long story short, Obama answered in the affirmative, saying he would raise rates for incomes above $250,000, from a 36 percent marginal rate to 39.6 percent, though he also introduced small-business tax cuts. (As president, Obama has not been able to win congressional approval to boost tax rates on the wealthy, though his health-care law did include some higher taxes for this income group.)

Still, Giuliani mentioned the capital gains tax in particular. This indeed represents one type of tax that the president has proposed increasing, but the former mayor seems to have plucked this out of thin air. Neither Obama nor Wurzelbacher talked about the capital gains tax during their discussion.

Wurzelbacher also didn’t say anything about tax hikes ultimately reducing government revenue. This notion relates to the theory, expressed most famously by economist Arthur Laffer, that increasing taxes rates increasingly becomes unproductive for raising further revenue, and that lower rates can actually result in more revenue.

Giuliani would have been safe saying Obama promised to raise Joe the Plumber’s taxes. But he went too far in suggesting that the president doesn’t care whether tax hikes reduce revenue, as he did by claiming that the president said, “Well, I would do it anyway.”

To the best of our knowledge, Obama has never said he subscribes to the theory that tax hikes lead to lower revenue, but that’s beside the point. This topic was not part of the discussion with Wurzelbacher.

Regarding the issue of tax fairness, Giuliani is closer to the mark, but he’s still off. Candidate Obama said one of the goals behind his income-tax plan was to provide a break for individuals and small businesses making less than $250,000 per year. Here’s an excerpt from his exchange with Joe the Plumber:

“The only thing that changes, is I’m gonna cut taxes a little bit more for the folks who are most in need and for the 5 percent of the folks who are doing very well – even though they’ve been working hard and I appreciate that – I just want to make sure they’re paying a little bit more in order to pay for those other tax cuts. Now, I respect the disagreement. I just want you to be clear, it’s not that I want to punish your success. I just want to make sure that everybody who is behind you, that they’ve got a chance at success too.”

This shows that Obama did indeed talk about tax fairness with Wurzelbacher. But Giuliani suggested that the president was talking about fairness at the expense of greater revenue, which is not the case.

‘He basically destroyed Las Vegas’

This claim stems from a set of remarks Obama made in 2009 and 2010.

The president held a town hall meeting in Elkhart, Ind., less than one month after his inauguration to answer questions about the American Recovery and Reinvestment Act, better known as the stimulus. During that meeting, he assured audience members that the legislation was necessary and that he would not allow bankers and executives to use stimulus money for junkets or bonuses.

Here’s what Obama said:

“You are not going to be able to give out these big bonuses until you pay taxpayers back. You can’t get corporate jets. You can’t go take a trip to Las Vegas or go down to the Super Bowl on the taxpayers’ dime. There’s got to be some accountability and some responsibility, and that’s something that I intend to impose as president of the United States.”

These comments drew the ire of Las Vegas boosters, who said the remarks undermined the Sin City’s economy.

Obama threw himself in more hot water with the Vegas folks during a February 2010 town hall in Nashua, N.H. During that meeting, he deflected criticism for having raised the deficit by talking about using a priorities-of-government approach to control government spending. Here’s what he said:

“Responsible families don’t do their budgets the way the federal government does. Right? When times are tough, you tighten your belts. You don’t go buying a boat when you can barely pay your mortgage. You don’t blow a bunch of cash on Vegas when you’re trying to save for college. You prioritize. You make tough choices. It’s time your government did the same.”

The president tried to make amends with Las Vegas a few days later, when he told the city’s chamber of commerce, “Let me set the record straight: I love Las Vegas.”

Did Obama’s comments hurt the city? Well, they couldn’t have helped. But tourism and the convention industry are bound to suffer when the economy struggles, so it’s improbable that Las Vegas wouldn’t have experienced trouble during the downturn without the president’s remarks.

Giuliani mentioned conventions, so we consulted data from the Las Vegas Convention and Visitors Authority, which shows that the industry didn’t suffer as much as the former mayor suggested. We ran the numbers using 2008 as the base level, since that’s the year before Obama took office and made his initial remarks about the Sin City.

It ends up that the number of conventions — just the events themselves — dropped 14 percent in 2009, then fell further to 18 percent below the base in 2010, and rebounded back to about 14 percent below the base in 2011. In this regard, the numbers never dipped to the low end of Giuliani’s claim, 20 percent.

As for convention attendance, the worst years were 2009 and 2010, when the numbers fell about 24 percent below the 2008 base. This supports the low end of Giuliani’s claim, but it doesn’t come close to satisfying the higher end of “30, 40, 50 percent.” Attendance improved to 17 percent below the base in 2011, so things seems to be looking up in Vegas.

The lag in convention attendance and event numbers actually started during President George W. Bush’s last year in office, so the issue pre-dates Obama. In 2008, attendance was down about 6 percent, and the number of events had fallen by 5 percent.

We found only anecdotal evidence of a larger drop in business due to Obama’s remarks. For instance, former Las Vegas mayor Oscar Goodman told the Las Vegas Sun in September 2010 that organizers for the International Association of Financial Crimes Investigators complained to him that the president’s comments caused their group to fall about 40 percent short on their attendance goal for a conference.

Anecdotal evidence is compelling, but it doesn’t compare with data for an industry as a whole. Overall, the Las Vegas convention sector is a lot like the overall economy: The problems continue to this day, but they pre-dated the Obama administration, and the trend is positive at the moment.

Pinocchio Test

Giuliani mischaracterized the 2008 exchange between Obama and Joe the Plumber. The topic of capital gains taxes never came up during that discussion, nor did the issue of whether higher taxes ultimately lead to lower revenue. Obama did talk about tax fairness with Wurzelbacher, but, again, not in the context of tax hikes reducing revenue.

As for whether Obama destroyed Las Vegas, it’s impossible to know how much the president’s comments affected business for the city. But we do know that the impact to the convention industry — even if the troubles were all Obama’s fault — couldn’t have been as great as Giuliani made it out to be — the data prove otherwise.

The former New York mayor earns Four Pinocchios for his comments in Tampa.

Four Pinocchios




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    About the Blogger

    Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street.

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