“After the stimulus was passed, the White House promised the economy would now be growing at 4.3 percent, over twice as fast.”
--Mitt Romney, Oct. 26, 2012
“New business starts are at a 30-year low because entrepreneurs and investors are sitting on the sidelines, weary from the President’s staggering new regulations and proposed massive tax increases.”
--Mitt Romney, Oct. 26, 2012
These lines from a major economic speech by the Republican presidential contender are interesting examples of how politicians selectively pick and choose data to make their case.
The sentence about gross domestic product growthline—intended to show that Friday’s announcement of 2 percent growth in the third quarter is inadequate-- undercuts another Romney talking point, which he used in the presidential debates: “He said that by now we’d have unemployment at 5.4 percent.”
Meanwhile, the second line is an updated version of a Romney claim that had previously earned Three Pinocchios, but it also has major issues. Let’s examine what’s going on.
When we asked the Romney campaign for evidence of the White House’s “promise” of 4.3 percent economic growth, we were directed to the mid-session 2010 budget review by the Office and Management and Budget. This is a mid-year update issued every year by the White House budget office, and there on page 13 is a list of economic projections, including one for 4.3 percent growth in 2012.
However, this is not a “promise,” as Romney asserted. It is merely a prediction, several years down the line.
In fact, the projection was a reduction from what the White House had predicted earlier in the year (4.6 percent). And 4.3 percent was not necessarily out of the line—the same page shows that the nonpartisan Congressional Budget Office predicted growth of 4.1 percent.
The CBO and White House budget office are required to make such long-term projections because government budgets are set for 10 years. As the page also shows, the Blue Chip consensus of outside economists does not project that far ahead, as it is a bit of fool’s errand. Who can really predict with confidence what economic growth will be in two years?
But scroll down a bit on the page and you also will find projections for the unemployment rate. It turns out the White House budget office projected an unemployment rate of 7.7 percent in 2012--not far off from the current rate of 7.8 percent. (The CBO was much more optimistic with a prediction of 6.6 percent in 2012.)
So how does Romney claim, in his other talking point, that Obama now had promised a 5.4 percent rate?
That’s because he draws on an entirely different document—a 14-page report about a generic stimulus plan written by economic advisors before Obama even took office—to make that claim.
Romney used to note that the document had said it would keep unemployment below 8 percent, but that became inconvenient once the rate dropped below that level.
But if Romney regards the economic growth data in the 2012 mid-session review to be a “promise,” shouldn’t that mean Obama met his “promise” on the unemployment rate?
As for the new business-starts statistic, the Romney campaign decided to use data from the Small Business Administration, and then divide the new business establishment rate by the U.S. population. We had previously dinged Romney for claiming new business start-ups had fallen by 100,000 under Obama because he was using 2008 as his starting point, not 2009, when Obama took office. That claim was based on data from the Bureau of Labor Statistics, and the BLS data actually showed that new business start-ups began to increase from 2010 to 2011, after the recession ended. The preliminary BLS data for 2011 also indicates continued improvement.
In Romney’s new talking point, his math adds up. But the SBA data conveniently ends in 2010, meaning it only reflects business start-ups in the early part of Obama’s administration. Indeed, the Census Bureau, in its own analysis of the data, said the 394,000 new businesses in 2010 created 2.3 million jobs, which it said “reflects substantial job creation in a time of anemic overall economic activity.”
Romney uses this statistic to claim that the rate has fallen because of Obama’s “staggering new regulations and proposed massive tax increases.” But we know from the BLS data previously cited by Romney that the rate of business start-ups began to increase just a year later, completely undermining Romney’s new claim.
The Pinocchio Test
It’s bad enough to turn a routine government projection into a presidential “promise.” But it is especially misleading to cherry-pick a number from one report, while ignoring numbers in the same report that undercut another favorite talking point.
Similarly, Romney relies on data on small business start-ups that barely covers Obama’s term to make a broad claim about Obama’s entire term--while ignoring data he had previously used that disputes his new claim.
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