Breakdown of the “Rocky Mountain Shootout”
Two presidential candidates showed up for a shootout last night, but it seems one either forgot his pistol at home, or forgot to load it. However, I’m not writing to discuss Obama’s lackluster performance, either last night or for the past 4 years. Instead, I’m going to focus on the claims made during the debate and drill down on any creative license (or flat-out lying) made during those claims.
I’ve broken it down into sections: Deficit & Taxes, Economy and Healthcare, which is honestly all anyone should truly be concerned with during this election. Special interests have to take a back seat at some point – this is that point. Even the importance of Healthcare, Medicaid and Social Security are debatable. It doesn’t matter if you’re entitled to ________ when your country is bankrupt – ask Greece. Entitlements mean little when your government doesn’t have the money to make the rubber meet the road. When America is in crisis, the rest is petty BS.
On with the analysis…
Deficit & Taxes:
OBAMA: “I’ve proposed a specific $4 trillion deficit reduction plan. … The way we do it is $2.50 for every cut, we ask for $1 in additional revenue.”
In his $4 trillion promise, Obama is already getting more than $2 trillion from legislation enacted along with Republicans last year that cut agency operating budgets and capped them for 10 years. He also takes credit for more than $800 billion in no-longer spent war savings, which would occur with or without him: the wars are simply over. He also uses creative math to hide spending on Medicare reimbursements to doctors. After removing those fictional “cuts”, Obama’s $2.50/$1 ratio of spending cuts to tax increases become just plain old tax increases.
Obama’s budget would cut deficits over the coming decade by $2 trillion instead of $4 trillion. Of that reduction, tax increases accounted for $1.6 trillion. He promises relatively small spending cuts of $597 billion from big federal benefit programs like Medicare and Medicaid. He also proposed higher spending on infrastructure projects.
OBAMA: “Right now, you can actually take a deduction for moving a plant overseas,” Obama said during an exchange over their tax plans last night’s debate in Denver. “I think most Americans would say that doesn’t make sense.”
ROMNEY: “You said you get a deduction for taking a plant overseas,” Romney responded. “Look, I’ve been in business for 25 years. I have no idea what you’re talking about. I maybe need to get a new accountant.”
The truth is that moving overseas is tax deductible, just the same as moving across the state, or even taking a taxi cab across town. They’re business expenses. Business expenses are tax-deductible. There’s no special tax break for moving your business overseas. Obama’s BS-o-meter was in the red on this one.
ROMNEY: “What would I cut from spending? Well, first of all, I will eliminate all programs by this test, if they pass it: Is the program so critical it’s worth borrowing money from China to pay for it?”
THE TRUTH: China continues to be portrayed by Romney and many other Republicans as the poster child for runaway federal deficits. While it’s true that China is the largest foreign holder of U.S. debt, it only represents about 8% of our debt. Also China has recently been decreasing its holdings, according to the Treasury Department. Some two-thirds of the $16 trillion national debt is owed to the federal government, with the largest single stake the Federal Reserve, as well as American investors and the Social Security Trust Fund. That doesn’t negate Romney’s intent – we really do need to ask ourselves if many things are so important that we should borrow money to pay for them. However, “borrowing money from China” pales in comparison to simply printing more money here in the US.
OBAMA: It’s important “that we take some of the money that we’re saving as we wind down two wars to rebuild America.”
This often-touted claim is based on complete fiscal fantasy. The vast majority of the wars in Iraq and Afghanistan were paid for with borrowed money, so ending them does absolutely nothing create a new pool of available cash that can be used for something else, like rebuilding America; it only slows down the government’s borrowing. While that certainly isn’t a bad thing, there’s not a dime of additional revenue, simply because we stopped borrowing money. Anyone in Jr. High could discern that.
ROMNEY on cutting the deficit: “Obamacare’s on my list. … I’m going to stop the subsidy to PBS. … I’ll make government more efficient.”
Romney has promised to balance the budget in eight years to 10 years, but he hasn’t offered a complete plan. Instead, he’s promised a set of principles, some of which—like increasing Pentagon spending and restoring more than $700 billion in cuts that Democrats made in Medicare over the coming decade—work against his goal. He also has said he will not consider tax increases.
He pledges to shrink the government to 20 percent of the size of the economy, as opposed to more than 23 percent of gross domestic product now, by the end of his first term. The Romney campaign estimates that would require cuts of $500 billion from the 2016 budget alone. He also has pledged to cut tax rates by 20 percent, paying for them by eliminating tax breaks for the wealthiest and through economic growth.
To fulfill his promise, then, Romney would require cuts to other programs so deep—under one calculation requiring cutting many areas of the domestic budget by one-third within four years—that they could never get through Congress. Cuts to domestic agencies would have to be particularly deep.
But he’s offered only a few modest examples of government programs he’d be willing to squeeze, like subsidies to PBS and Amtrak. He does want to repeal Obama’s big health care law, but that law is actually forecast to reduce the deficit.
OBAMA: “Independent studies looking at this said the only way to meet Gov. Romney’s pledge of not … adding to the deficit is by burdening middle-class families. The average middle-class family with children would pay about $2,000 more.”
That’s just one scenario. Obama’s claim relies on a study by the Tax Policy Center, a Washington research group. A study which the Tax Policy Center later admitted was incomplete.
The early study results concluded that it would be impossible for Romney to meet all of his stated goals without shifting some of the tax burden from people who make more than $200,000 to people who make less. They later recanted that statement, saying that it was indeed possible; they just didn’t have the details.
In one scenario, the study says, Romney’s proposal could result in a $2,000 tax increase for families who make less than $200,000 and have children.
Romney says his plan wouldn’t raise taxes on anyone, and his campaign points to several studies that dispute the Tax Policy Center’s findings. Most of the studies argue that Romney’s tax plan would stimulate economic growth, generating additional tax revenue without shifting any of the tax burden to the middle class. Congress, however, doesn’t use those kinds of projections when it estimates the effect of tax legislation. Possibly because they’re lawyers, rather than economists.
OBAMA: “Gov. Romney’s central economic plan calls for a $5 trillion tax cut—on top of the extension of the Bush tax cuts, that’s another trillion dollars—and $2 trillion in additional military spending that the military hasn’t asked for. That’s $8 trillion. How we pay for that, reduce the deficit, and make the investments that we need to make, without dumping those costs onto middle-class Americans, I think is one of the central questions of this campaign.”
Obama’s claim that Romney wants to cut taxes by $5 trillion doesn’t add up. Presumably, Obama was talking about the effect of Romney’s tax plan over 10 years, which is common in Washington. But Obama’s math doesn’t take into account Romney’s entire plan.
Romney proposes to reduce income tax rates by 20 percent and eliminate the estate tax and the alternative minimum tax. The Tax Policy Center, a Washington research group, says that would reduce federal tax revenues by $465 billion in 2015, which would add up to about $5 trillion over 10 years.
However, Romney says he wants to pay for the tax cuts by reducing or eliminating tax credits, deductions and exemptions. The goal is a simpler tax code that raises the same amount of money as the current system but does it in a more efficient manner.
The knock on Romney’s plan, which Obama accurately cited, is that Romney has refused to say which tax breaks he would eliminate to pay for the lower rates. Then again, Obama did the very same thing in 2008.
ROMNEY: “Simpson-Bowles, the president should have grabbed that.”
OBAMA: “That’s what we’ve done, made some adjustments to it, and we’re putting it before Congress right now, a $4 trillion plan.”
THE TRUTH: At first, the president did largely ignore the recommendations made by his deficit commission headed by Democrat Erskine Bowles and Republican Alan Simpson. He later incorporated some of the proposals, largely the less controversial ones. He did not endorse some of the politically troublesome recommendations, such as trimming popular tax deductions like the one for home mortgage interest.
ROMNEY on the failure of Obama’s economic policy: “And the proof of that is 23 million people out of work. The proof of that is 1 out of 6 people in poverty. The proof of that is we’ve gone from 32 million on food stamps to 47 million on food stamps. The proof of that is that 50 percent of college graduates this year can’t find work.”
Technically, the number of unemployed is 12.5 million, not 23 million; the others are just “not working”, according to Washington. In addition to the officially unemployed, Romney was also counting 8 million people who are working part time but would like a full-time job and 2.6 million who have stopped looking for work, either because they are discouraged or because they are going back to school or for other reasons.
He was more technically correct earlier in the debate, when he left out the part-time workers and said the U.S. has “23 million people out of work or stopped looking for work.” But he was wrong in asserting that Obama came into office “facing 23 million people out of work.” At the start of Obama’s presidency, 12 million were officially out of work.
ROMNEY: “At the same time, gasoline prices have doubled under the president. Electric rates are up.”
He’s right that the average price has doubled. Possibly even understated, since they’ve more than doubled since Obama was sworn in. But presidents have almost no influence on gasoline prices, and certainly not in the near term. Gasoline prices are set on financial exchanges around the world and are based on a host of factors, most importantly the price of crude oil used to make gasoline, the amount of finished gasoline ready to be shipped and the capacity of refiners to make enough to meet market demand.
Drilling our own oil and increasing domestic production, of course, is one area where presidents could make an impact.
Retail electricity prices have risen slightly since Obama took office. They’ve grown by an average of 1 percent per year, less than the rate of inflation and slower than the historical growth in electricity prices. The unexpectedly modest rise in electricity prices is because of the plummeting cost of natural gas, which is used to generate electricity. He should have left electricity prices out of it.
ROMNEY: Obama’s health care plan “puts in place an unelected board that’s going to tell people ultimately what kind of treatments they can have. I don’t like that idea.”
Romney is referring to the “Independent Payment Advisory Board”, a panel of experts that would have the power to force Medicare cuts if costs rise beyond certain levels and Congress fails to act. But Obama’s health care law explicitly prohibits the board from rationing care, shifting costs to retirees, restricting benefits or raising the Medicare eligibility age. So, the board doesn’t have the power to dictate to doctors what treatments they can prescribe. That said, being a free country, healthcare providers do have the option of opting out of any Medicare work… and about 25% of them have said they would.
Romney seems to be resurrecting the assertion that Obama’s law would eventually lead to rationing, made famous by former Alaska Gov. Sarah Palin’s widely debunked allegation that it would create “death panels.” While such a thing certainly wouldn’t occur on day 1, rationing among socialist healthcare systems, is very real. Of all the people who die each year under care at UK government-run healthcare system, a full 1/3 of those aged and terminally ill are in fact euthanized in order to reduce costs and make more room. Even the almighty government can’t afford unlimited costs and space… and ultimately, this is the type of policy socialist healthcare ends up with in order to remain afloat.
OBAMA: “Over the last two years, health care premiums have gone up—it’s true—but they’ve gone up slower than any time in the last 50 years. So we’re already beginning to see progress. In the meantime, folks out there with insurance, you’re already getting a rebate.”
Not true, concerning premiums. Obama is mixing up overall health care spending, which has been growing at historically low levels, and health insurance premiums, which have continued to rise faster than wages and overall economic growth. Premiums for job-based family coverage have risen by about $2,400 since 2009 when Obama took office, according to the nonpartisan Kaiser Family Foundation. In 2011, premiums jumped by 9 percent. This year’s 4 percent increase was more manageable, but the price tag for family coverage stands at $15,745, with employees paying more than $4,300 of that. That’s about the fastest they’ve risen in 50 years, not the slowest.
When it comes to insurance rebates under Obama’s health care law, less than 10 percent of people with private health insurance are benefitting.
More than 160 million Americans under the age of 65 have private insurance through their jobs and by buying their own policies. According to the administration, about 13(4%) million people will benefit from rebates. And nearly two-thirds of that number(2.7%) will only be entitled to a share of it, since they are covered under job-based plans where their employer pays most of the premium and will get most of the rebate. So, ultimately, we’re left with just 1.3 % of Americans.
ROMNEY: “Right now, the CBO says up to 20 million people will lose their insurance as Obamacare goes into effect next year.”
Romney is making selective use of the Congressional Budget Office’s March findings on how employers might adjust to the new health law. The neutral Washington scorekeeper actually gave Congress four scenarios—ranging from a net increase in employer-provided coverage for 3 million people to the decrease of 20 million that Romney cited.
Here’s why: The law offers tax incentives for companies with more than 50 workers that provide coverage and penalties for those that don’t. The analysis says it’s difficult to say how companies will behave, with some making a purely economic calculation and others concluding that continuing coverage may be essential to pleasing workers in a competitive environment. “As a result, any projections of those effects are clearly quite uncertain,” the study’s authors concluded.
Oh, and there’s one more absolute truth: despite any errant claims from the candidates or Big Bird jokes, Mitt Romney absolutely mopped the floor with Barack Obama last night. That’s one claim which is utterly indisputable.
Even the Obamanites won’t deny it. Here are some humorous tweeted concessions from them, along with some other celeb non-worshippers.