In their defense of the administration’s policies Thursday night, President Obama and Vice President Biden sometimes took license with the facts or left out important information. Here are some highlights.
“Independent analysis shows that my plan would cut our deficits by $4 trillion. Last summer, I worked with Republicans in Congress to cut $1 trillion in spending.”
President Obama repeated a claim made by former President Bill Clinton the night before, but even less accurately. Clinton referred to a “plan of $4 trillion in debt reduction over a decade.” Obama leaves off the time line, and makes it sound like the current $1 trillion deficit would be eliminated, resulting in a surplus.
But, while the numbers seem large, the results are unimpressive. At the end of the 10-year budget window, Obama would have the national debt at a 76.5 percent of gross domestic product. That actually would be an increase over the 74.2 percent of GDP in this year. In contrast, the debt reduction plan envisioned by the Simpson-Bowles commission — cited by the president — would reduce the debt-to-GDP ratio close to 60 percent.
Moreover, independent analysts have criticized the administration for claiming some $800 billion in phantom savings from winding down the wars in Iraq and Afghanistan, even though the administration had long made clear those wars would end. (The Bush administration had started the wars on borrowed funds.) Then, the president proposes to spend a good chunk of the nonexistent money on other spending — as he put it in his speech, “rebuilding roads and bridges; schools and runways.”
The $1 trillion in savings negotiated with Republicans, mentioned by the president, actually accounts for the bulk of his proposed reduction in spending. Indeed, much of the president’s debt reduction would come from tax increases on the wealthy, not spending cuts.
Watch highlights of Obama’s speech to the DNC or see the full speech here:
“I’ve signed trade agreements that are helping our companies sell more goods to millions of new customers."
Obama did sign into law new trade agreements with South Korea, Colombia, and Panama — which were negotiated by the George W. Bush administration. The trade deals were held up for months by a bitter dispute between the administration and Congress over restoring aid for workers hurt by free trade.
Obama has not negotiated any other free-trade agreements.
“We will keep the promise of Social Security by taking the responsible steps to strengthen it — not by turning it over to Wall Street.”
This is a bit of straw man. Obama’s rival, Mitt Romney, briefly supported private accounts as part of Social Security in the 2008 campaign but no longer does.
In his 2010 book, “No Apology,” Romney makes it clear that the 2008 stock market turmoil had changed his thinking on the issue. “The 2008 stock market collapse is proof, however, that we can’t always count on positive returns from these investments,” Romney writes. He said individual accounts could still be considered but would need to be phased in over time. Most important, he added, “I would prefer that individual accounts were added to Social Security, not diverted from it, and that they were voluntary.” (See page 160.)
In other words, Romney has concluded that mandatory private accounts won’t work. The plan he supports now is strikingly similar to what then-Vice President Al Gore proposed in the 2000 presidential campaign, what Gore dubbed “Social Security Plus.” Gore said the accounts would be voluntary and “not be the product of any reduction or diversion of Social Security revenues.”
Meanwhile, Obama’s recent budgets have had limited Social Security reforms.
Watch highlights of Biden’s speech to the DNC:
“Barack, as a young man, they had to sit at the end of his mother’s hospital bed, and watch her fight with their insurance company at the very same time that she was fighting for her life.”
This is a carefully worded statement that suggests President Obama’s mother, Stanley Ann Dunham, was fighting for health coverage while she was dying. This is a story that Obama frequently told on the campaign trail, but which was later called into question by Dunham’s biographer. Note that Biden does not specify that Dunham was fighting “health insurance” companies.
During the 2008 campaign, Obama frequently suggested his mother had to fight with her health-insurance company for treatment of her cancer because it considered her disease to be a pre-existing condition.
In one of the presidential debates with GOP rival John McCain, Obama said: “For my mother to die of cancer at the age of 53 and have to spend the last months of her life in the hospital room arguing with insurance companies because they’re saying that this may be a pre-existing condition and they don’t have to pay her treatment, there’s something fundamentally wrong about that.”
But then earlier this year, journalist Janny Scott cast serious doubt on this version of events in her biography, “A Singular Woman: The Untold Story of Barack Obama’s mother.” Scott reviewed letters from Dunham to the CIGNA insurance company, and revealed the dispute was over disability coverage, not health insurance coverage. (See pages 335-339).
Disability coverage will help replace wages lost to an illness. (Dunham received a base pay of $82,500, plus a housing allowance and a car, to work in Indonesia for Development Alternatives Inc. of Bethesda.) But that is different than health insurance coverage denied because of a pre-existing condition, which was a major part of the president’s health care law.
Biden’s remarks were echoed in the film that aired before Obama spoke. The clips were drawn from a film originally narrated by Tom Hanks — this one was by George Clooney — and we had previously given Three Pinocchios to the film for the manipulative way this story is retold.
“He [Romney] was willing to let Detroit go bankrupt.”
This statement is drawn from a headline — “Let Detroit Go Bankrupt” — on an opinion article written by Romney for The New York Times. But he did not say that in the article. (He repeated the line, however, on television.)
Although “bankrupt” often conjures up images of liquidation, Romney called for a “managed bankruptcy.” This is a process in which the company uses the bankruptcy code to discharge its debts, but emerges from the process a leaner, less leveraged company.
Ultimately, along with getting nearly $80 billion in loans and other assistance from the Bush and Obama administrations, GM and Chrysler did go through a managed bankruptcy. But many independent analysts have concluded that taking the approach recommended by Romney would not have worked in 2008, simply because the credit markets were so frozen that a bankruptcy was not a viable option at the time.
“What they didn’t tell you is what they’re [the Romney campaign] proposing would cause Medicare to go bankrupt by 2016.”
It is highly misleading to use the phrase “bankrupt.”
There are different parts of Medicare, much of which is paid from general revenues and premiums. Part A, which pays hospitals, has a “trust fund,” made up of special-issue Treasury bonds, that always seems to be on the edge of running dry, even though it is funded by a payroll tax paid by employees and employers. But even so, the payroll tax could pay most estimated expenditures for decades.
“As a matter of fact, he has a new tax proposal — the territorial tax — that experts say will create 800,000 jobs, all of them overseas.”
Biden is quoting from one disputed study.
At issue is a Romney proposal, as part of a corporate tax reform, to allow foreign profits by corporations to be exempt from domestic tax. The Simpson-Bowles deficit-reduction Commission, frequently cited by Democrats and Republicans, recommended such a system in its report. “A territorial tax system should be adopted to help put the U.S. system in line with other countries, leveling the playing field,” the report said.
The study cited by Biden, which appeared in Tax Notes, did not actually study Romney’s plan. Moreover, it said that such a system would create 800,000 jobs overseas, but not necessarily at the expense of U.S. jobs if unemployment rates are low.
“Governor Romney believes that it’s okay to raise taxes on the middle class by $2,000 in order to pay for over a trillion dollars in tax cuts for the very wealthy.”
The vice president is referring to an estimate of the impact of Romney’s tax plan by the nonpartisan Tax Policy Center. Romney has provided few details of his plan, which he says would lower tax rates while eliminating tax loopholes. The Tax Policy Center calculated that the only way to make the plan revenue neutral would be to eliminate tax preferences that also benefit the middle class, but the Romney campaign has fiercely disputed its findings.
Romney has insisted he would not allow a tax increase on the middle class, so if the findings are correct, he would have to scale back his plan to make the math work.
(As is our practice, we generally do not award Pinocchio ratings in these instant round-ups.)
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