“Mitt Romney. He made millions off of companies that went bankrupt while workers lost promised health and retirement benefits.

“His own tax return from last year reveals he made $21 million, yet paid a lower tax rate than many middle-class families.

“Now Romney’s proposing a huge new $150,000 tax cut for the wealthiest 1 percent, while cutting Medicare and education for us.

“Mitt Romney. If he wins, we lose.”

— Voiceover of a new television ad by Priorities USA Action

This television ad, by the pro-Obama Super PAC Priorities USA Action, poses a unique challenge for this column because each of the statements uttered within its 30 seconds has a ring of truth. Of course, it paints each of these facts in the most negative light possible, without any balance, but that’s their prerogative.

The ad also repeatedly shows an image of a youthful Romney with dollars stuffed in his pockets — a 27-year-old photo that was shot as part of a promotional effort for a relatively new company, Bain Capital, that Romney headed at the time. The ad at one point even photoshops an image of an older Romney, a rather cheesy maneuver that recently was mocked by our friends over at Flackcheck.org.

Here’s some context for the claims made in the ad.

“He made millions off of companies that went bankrupt while workers lost promised health and retirement benefits.”

That’s the dark side of Romney’s business career at Bain Capital, which he would argue on balance helped create jobs for workers. (We had earlier taken Romney to task for claiming he created 100,000 jobs without mentioning the ones that had been lost.)

As the Los Angeles Times has documented after obtaining a prospectus for potential $1 million investors, Bain was tasked with creating wealth for its investors, not creating jobs. The prospectus put it plainly: “The objective of the fund is to achieve an annual rate of return on invested capital in excess of the returns generated by conventional investments in the public equity market and the private equity market.”

There was no mention of “jobs” in the prospectus. As the newspaper put it: “Romney and his team also maximized returns by firing workers, seeking government subsidies, and flipping companies quickly for large profits. Sometimes Bain investors gained even when companies slid into bankruptcy.”

We have documented several occasions where Romney opponents have exaggerated or taken out of context specific details about various Bain deals, such as the notorious “King of Bain” film released by a pro-Newt Gingrich Super PAC.

But this video avoids those pitfalls by making its accusation much more general. Clearly, some workers were harmed when Bain investments went sour, but whether that is Romney’s fault or the result of broader economic trends and poor business practices is open to question. Meanwhile, other workers gained because Bain decided to invest in their companies.

On balance, the analysis of Bain’s investment record by Steven Rattner, a Democratic fundraiser and former car czar for President Obama, strikes us as about right:

Bain Capital is not now, nor has it ever been, some kind of Gordon Gekko-like, fire-breathing corporate raider that slashed and burned companies, immolating jobs wherever they appear in its path. ... Bain had less than its share of bankruptcies, but it had a few — it appears four — that are particularly troubling. In all those cases, when the portfolio companies initially showed signs of promise, Bain took advantage of their progress to borrow more money, which it took out as a dividend. Later, the fortunes of each company turned down, ultimately into insolvency.

When Bain “releveraged” those companies and took the cash out, the investment managers of course had no idea that the companies would later falter. But with the benefit of hindsight, taking a more conservative approach and refraining from squeezing these dividends out of the companies would certainly have been more prudent.

Let’s be sure to keep these few problem children in perspective. During the Romney years, Bain made 77 significant investments — and a number of smaller ones. It made billions for worthy investors and, yes, doubtless created some incalculable number of net new jobs for the U.S. economy.

“His own tax return from last year reveals he made $21 million, yet paid a lower tax rate than many middle-class families.”

Romney obviously is very wealthy, largely as a result of that business career. His 2010 tax return shows income of $21.6 million, virtually all of it from capital gains and dividends, which under current tax law are taxed at 15 percent for investments of at least a year. He also made substantial charitable contributions, further reducing his tax rate to 13.9 percent.

Is that rate lower than many middle-class families? It depends in part on definitions. Priorities USA is comparing Romney’s effective rate against the effective rate paid by Americans for all federal taxes, as shown in this analysis by the Tax Policy Center, which is nonpartisan. This would include the employer’s share of payroll taxes, which is legitimate since many economists believe that comes out of an employee’s paycheck.

By that measure, many categories of taxpayers on average pay a higher effective tax rate than Romney, and even people in the $40,000 to $50,000 range are only slightly below his rate. The average tax rate for Americans is 18.8 percent, with about half of that from the individual income tax. As a percentage of adjusted gross income, it works out to about 20.4 percent.

There’s little argument that Romney pays a very nice tax rate on his income.

“Now Romney’s proposing a huge new $150,000 tax cut for the wealthiest 1 percent, while cutting Medicare and education for us.”

This contains two broad statements, based on 1) Romney’s campaign tax plan and 2) his public support of the House Republican budget. It is missing a few caveats.

The ad suggests that Romney’s tax plan is aimed just at the wealthy, but actually it would cut taxes for many Americans — though some lower-income workers would see a tax increase because Romney eliminates an Obama tax cut, according to another analysis by the Tax Policy Center. The wealthiest Americans overall pay the most in taxes, so it should be no surprise that in any across-the-board tax cut, they would get the biggest reduction in taxes.

Romney has suggested that he will make up some lost revenue by eliminating unspecified tax breaks, which in theory could reduce the tax cut for wealthier Americans. But since he has not yet spelled out those plans, it’s legitimate to tag him with the higher figure.

The House Republican budget would reduce projected expenditures for Medicare, though actual spending would increase year over year. (It’s worth noting that Republicans have frequently claimed that Obama “cut” $500 billion from Medicare to fund the health-care law.) The Republican budget does not offer many details for spending reductions in non-entitlement programs, but it does target Pell grants, which provide college funding for low-income students.

But as always, the details are much more complicated. Pell grants face a major funding cliff after 2014, and the Republican plan is an effort to address that problem while maintaining a maximum grant of $5,550. We take no position on whether the proposal makes sense or not—here is a good, dispassionate account — but readers should be wary when they hear the word “cut,” as it usually is measured against a perfect world, not reality.

The same holds true for Medicare. The ad carefully does not repeat the claim that the House plan would “end Medicare,” as some Democrats charge. (In a previous ad, this group claimed Medicare would be “dismantled” under Romney.) Republicans would argue they are trying to address problems that are not sustainable under the current path for the program.

Still, this line reminds us of the devastating attacks that Bill Clinton used against Bob Dole in the 1996 election, when he tied the GOP nominee to the House Republican effort at the time to both cut taxes and overhaul Medicare. It is clearly out of the same playbook.

The Pinocchio Test

In many ways, this ad provides an effective template for a political attack on Romney. It is carefully written, so none of the claims, by themselves, are factually inaccurate, though one can quibble with certain phrases (“cuts”). The overall picture is harshly negative and lacking context, but in 30 seconds, what would one expect?

One Pinocchio

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