A State of the Union address generally is a product of many hands and is carefully vetted. But State of the Union addresses often are very political speeches, an argument for the president’s policies, so context is sometimes missing. Last year, President Biden got in trouble when he ad-libbed some lines in a speech to Congress that stretched the truth. He stuck to the script more closely in his first State of the Union address. Here’s a roundup of seven claims that caught our attention.
As is our practice with live events, we do not award Pinocchio ratings, which are reserved for complete columns.
“Our economy created over 6.5 million new jobs just last year, more jobs created in one year than ever before in the history of America.”
“The only president ever to cut the deficit by more than 1 trillion dollars in a single year.”
Both of these figures are misleading because of the context — the impact the once-in-a-century pandemic had on jobs and federal finances. Jobs plunged and deficits soared in 2020 when the coronavirus struck and shuttered the worldwide economy.
Now, the United States is emerging from a pandemic that caused huge job losses in 2020 — 9 million jobs, in fact. The rounds of stimulus bills — passed under President Donald Trump and Biden — certainly had an impact. But they also increased the deficit. As the economy recovers, government finances are also returning to normal, with receipts growing rapidly. In the first four months of fiscal 2022, which began last October, the federal government ran a deficit of $259 billion, $477 billion (65 percent) less than at this point in fiscal 2021.
“America used to have the best roads, bridges, and airports on Earth. And now our infrastructure is ranked 13th in the world.”
Biden is citing rankings from the World Economic Forum that cover 140 countries from all economic tiers. According to the 2019 rankings, Singapore had the best infrastructure and most competitive economy overall. While the United States placed second for its economy and 13th for infrastructure, the infrastructure ranking crumbles a bit when you look closely at it.
Of the 12 economies the WEF ranked ahead of the United States, three — Singapore, Hong Kong and the United Arab Emirates — are tiny coastal city-states. That’s not a relevant comparison.
Moreover, as our colleague Charles Lane noted, while the United States trailed the Netherlands, Switzerland, Japan, Korea, Spain, Germany, France, Austria and the United Kingdom, “it’s more realistic to treat the six continental European countries in this group as a unit, since goods and people move through them freely, via the borderless Schengen area.”
Among the 10 geographically largest countries, including Canada, Australia, China and Russia, the United States places first, based on WEF criteria. The United States is also top among the 10 most populous countries — and has risen about 10 spots since the 2011-2012 WEF survey.
“Look, repeal the liability shield. It makes gun manufacturers the only industry in America that can’t be sued.”
Biden’s language is too sweeping. Gun manufacturers can certainly be sued — and some other industries have some liability protections. But he has a point that Congress gave the gun industry some unique protections — which may be eroding.
Biden appears to be referring to the 2005 Protection of Lawful Commerce in Arms Act, which was passed after a wave of lawsuits filed against gun manufacturers by municipalities and gun-control advocates.
The 2005 law does not guarantee blanket immunity, and it has some exceptions. Manufacturers or dealers can be sued if they knowingly sold a product that would be used to commit a crime. They can be sued if they were negligent in selling the product to someone they knew was unfit (such as a child or someone who was drunk). They can be sued for another technical negligence claim (“negligence per se”) that relates to the violation of a safety statute.
The Connecticut Supreme Court had ruled two years ago that the laws did not protect manufacturers from claims that wrongful advertising resulted in injury or death. That led the way to a $73 million settlement between family members of those killed in the 2012 Sandy Hook shooting and insurers for the now-bankrupt Remington Arms, manufacturer of the Bushmaster rifle used in the killings. The families’ lawsuit argued that Remington marketed the semiautomatic weapon specifically to young and at-risk men with suggestive advertising and product placement in violent video games.
Before this ruling, the law appeared to provide a relatively unique federal legal shield. Negligence claims in tort law generally allow consumers to sue for negligence caused by carelessness, which doesn’t always involve a violation of the law or knowingly entrusting someone unfit to handle the product.
Few industries have federal liability immunity, but Biden is wrong to say gun manufacturers are alone. Vaccine manufacturers have limited protection from lawsuits if their vaccine led to an injury. The federal government enacted this immunity to encourage companies to produce more vaccines without the fear of lawsuits, for their benefit to public health. Another example is federal protection for the airline industry from lawsuits arising from the 9/11 terrorist attacks. But unlike the gun law, both cases established a compensation plan for victims to recover money for damages.
“Just last year, 55 Fortune 500 corporations earned $40 billion in profits and paid zero dollars in federal tax.”
This is one of Biden’s favorite statistics. According to factba.se, which tracks his statements, the president has used it in speeches or interviews 18 times since April. It’s not necessarily wrong, but there are some limitations — the number is not based on actual tax returns but instead is an estimate of taxes paid based on corporate reports.
The number comes from a report issued in April by the left-leaning Institute on Taxation and Economic Policy. The group studied the corporate filings with the Securities and Exchange Commission of companies listed in the Fortune 500, zeroing in on companies that posted profits.
In 2020, ITEP found, 55 profitable companies indicated that they paid no federal income tax even though they collectively earned almost $40.5 billion in pretax income. ITEP previously had reported that 91 companies paid no federal income tax in 2018, so the situation has improved.
Company tax returns generally are not made public, so ITEP’s numbers are the product of its own research and analysis of public filings.
But it is an imperfect measure. A company’s annual 10-K filing in March generally will only have estimated numbers, as the actual tax return generally is not filed until later in the year. Total tax numbers may be determined from looking at cash flow statements, but there is no guarantee that the calculations reflect the actual tax liability.
Nevertheless, the notion that 10 to 20 percent of Fortune 500 companies do not pay federal income taxes is consistent with a 2020 report by the nonpartisan Joint Committee of Taxation. The JCT was able to examine the actual tax filings but could not reveal the names of the companies. It found that about 20 percent of the 50 corporations reported no tax liability on their tax returns. That mirrors ITEP’s examination of the Fortune 500.
(In his delivery, Biden dropped a word from the text before tax — “income” — which made the claim less accurate. The companies in question pay billions of dollars in federal payroll taxes.)
“Seventeen Nobel laureates in economics say my plan will ease long-term inflationary pressures.”
Biden referred to a letter signed by 17 Nobel Prize-winning economists, claiming that his spending plan would reduce inflation over time. The letter was released in September, when Biden’s Build Back Better plan called for $3.5 trillion in spending on top of a bipartisan infrastructure plan. It included this line: “Because this agenda invests in long-term economic capacity and will enhance the ability of more Americans to participate productively in the economy, it will ease longer-term inflationary pressures.”
But Biden’s plan has changed significantly since then. The bipartisan infrastructure plan became law, but the rest of the spending proposal has been pared back to $1.75 trillion. The tax changes lauded in the letter — higher taxes on the wealthy and corporations — have largely been dropped.
In November, we asked the signers if their minds had changed, and some indicated that the proposed changes have lessened the potential impact on inflationary pressures.
Moreover, it’s misleading for Biden to suggest that the bill would have an impact on current inflation, as he did by prefacing this line with this statement: “My plan to fight inflation will lower your costs and lower the deficit.”
“The single biggest investment in history was a bipartisan effort.”
While certainly the largest package of infrastructure spending in decades, the infrastructure bill passed in 2021 would not qualify as the largest in U.S. history, according to a variety of analyses.
The New Deal between 1933 and 1937 spent outlays that averaged 1.36 percent of gross domestic product, according to a Brookings Institution analysis. That compares with about 1.25 percent for the Biden bill, which authorized about $566 billion of gross budget authority (and tax cuts) that will be spent mostly but not entirely over five years.
(Biden’s prepared text had different language, but in his telling, Biden made the claim more specific and less factual.)
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