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The Fact Checker: Obama's 2011 State of the Union address

The Fact Checker
Wednesday, January 26, 2011; A07

"I'm willing to look at other ideas to bring down [health-care] costs, including one that Republicans suggested last year: medical malpractice reform to rein in frivolous lawsuits."

Since his time in the Senate, President Obama has favored certain ways of trying to lower costs related to malpractice.

Essentially, he has been a proponent of reducing the number of such cases that reach the courts. In September 2009, he announced that the Department of Health and Human Services would start to give out $25 million in grants to encourage states to experiment with ways to deter such lawsuits. These demonstration projects, underway in 21 states, have built on hospital programs in which doctors who make a mistake apologize early and try to negotiate a payment. They also include screening systems in which states have formed panels of medical experts who must rule that patients' complaints have merit before they may sue.

But Obama does not like all ideas for changing the medical malpractice system. Even though the president said in his speech that he wants to work with Republicans, he has never supported one step that the GOP has long said would control malpractice costs: creating federal limits on the size of damage awards.

So both Obama and the GOP favor lowering medical malpractice costs. They just disagree sharply over how to do it.

- Amy Goldstein

"Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world."

Big companies often complain that the top U.S. corporate tax rate, 35 percent, is one of the highest in the world. But a recent University of North Carolina study of the period from 2003 to 2007, spotlighted in Bloomberg BusinessWeek, suggests that the effective tax rate - what multinationals pay after credits, deductions and tax strategies - in the United States is really not much different than in the rest of the world.

U.S. multinational corporations paid about 26 percent on average, compared with a global average of 25 percent. Some companies fared rather well, such as General Electric, with an effective tax rate of 11.5 percent, and Pfizer, with a tax rate of 18.7 percent.

- Glenn Kessler

"To help businesses sell more products abroad, we set a goal of doubling our exports by 2014 - because the more we export, the more jobs we create at home. Already, our exports are up. Recently, we signed agreements with India and China that will support more than 250,000 jobs in the United States. And last month, we finalized a trade agreement with South Korea that will support at least 70,000 American jobs."

The administration has made the doubling of exports a top goal of its economic policy, and, as a general rule, it contends that each additional $1 billion worth of exports supports about 6,000 jobs. That figure is based on complicated models of the U.S. economy, but it also rests on assumptions that are in steady flux.

During the recession, for example, companies pared their workforces and found ways to increase output during the recovery with fewer employees. This increased productivity is a good thing in some ways - it means American goods are being produced more efficiently - but it also is one reason why the unemployment rate remains "sticky."

The dynamic holds true for exporters as well: If big international companies are able to rely on idle capacity or underused workers to fill new orders, the employment impact of increased exports may be muted, at least until companies are sure that their investment in new employees is necessary to meet rising demand.

- Howard Schneider

"The secretary of defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without."

By evoking Defense Secretary Robert M. Gates with this line, Obama was hoping for some inoculation against Republican claims that the Pentagon budget is being cut too much. This month, Gates surprised some in Congress when he said the Pentagon would contribute $78 billion in deficit reduction.

About $6 billion comes from reducing the size of the active Army and Marine Corps starting in fiscal 2015, when the war in Afghanistan is supposed to be over, and an additional $4 billion comes from a new production schedule for the joint strike fighter program.

The biggest chunk of savings - $54 billion - comes from what Gates called "overhead reductions and efficiencies . . . which include a freeze on all government civilian salaries." Obama had already announced the freeze in civilian pay, so Gates in effect pocketed that savings. Pentagon spokesman Geoff Morrell said the pay freeze is worth about $12.5 billion. The rest comes from such items as a freeze on the number of civilian positions.

An additional $14 billion comes from changes in economic assumptions, such as a lower rate of projected inflation in later years. . . . Some might view this shift as a budget gimmick, since it involved changing a few variables - and no one really knows what inflation will be five years from now.

- Glenn Kessler

"Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik, we had no idea how we would beat them to the moon."

Obama wasn't born yet when Sputnik was launched in 1957, so maybe the details are hazy for him. But the race to the moon was not really on the priority list at the time for the United States - and certainly not for the Eisenhower administration.

A moon landing became a U.S. priority only in 1961, when President John F. Kennedy - under the prodding of his vice president, Lyndon Johnson - announced the goal of "before this decade is out, . . . landing a man on the moon and returning him safely to the Earth." The announcement followed a different Soviet accomplishment: launching a man into Earth orbit.

- Glenn Kessler

"Race to the Top is the most meaningful reform of our public schools in a generation."

President Obama made expansive claims in his speech about the impact of Race to the Top, his $4.35 billion grant program. Launched in 2009, it is at the core of his education agenda.

Is Race to the Top "the most meaningful reform" of schools in a generation? Some might argue that the 2002 No Child Left Behind law enacted under President George W. Bush should get such a nod. That law required for the first time that public schools test all students in reading and math every year in grades three through eight and once in high school.

Parents and teachers across America have strong opinions about all of that standardized testing and what it has done to public education. It marked a huge expansion in assessment and the birth of a culture of school accountability.

What is certain is that the Bush-era law set in motion a cascade of actions to close student achievement gaps that the test scores revealed in greater detail than ever before.

- Nick Anderson

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