AAN's Deceptions About Spending Are Truly "Too Much"

October 15, 2010 8:03 pm ET

Norm Coleman's American Action Network has released an ad accusing Reps. Gerry Connolly (D-VA), Tom Perriello (D-VA) and Tim Walz (D-MN) of endangering our children's future with trillions in "wasteful spending." The ad dishonestly casts the Affordable Care Act as adding a trillion dollars to the debt load carried by our children, when in reality, the legislation actually cuts the deficit by hundreds of billions of dollars. AAN also suggests that the stimulus was "wasteful," ignoring completely the fact that the Recovery Act stabilized the economy and created hundreds of thousands of jobs.

American Action Network: "Too Much"

Rep. Gerry Connelly (D-VA)

Rep. Tom Perriello (D-VA)

Rep. Tim Walz (D-MN)

There's a lot on the backs of our kids today, thanks to Congressman [Gerry Connolly/Tom Perriello/Tim Walz]. [Connolly/Perriello/Walz] loaded our kids up with nearly 800 billion in wasteful stimulus spending. Then added nearly a trillion more for Pelosi's health care takeover. A debt of 14 trillion. Now Congress wants to pile on more spending. How much more can our children take? Call Congressman [Connolly/Perriello/Walz]. Tell him to vote to cut spending this November. It's just too much. The American Action Network is responsible for the content of this advertising.

The Recovery Act Boosted The Economy And Prevented Further Job Losses

The Economy Shed Almost 8 Million Jobs Under Republican Policies Before The Recovery Act Was Passed. According to economist Robert J. Shapiro:

From December 2007 to July 2009 - the last year of the Bush second term and the first six months of the Obama presidency, before his policies could affect the economy - private sector employment crashed from 115,574,000 jobs to 107,778,000 jobs. Employment continued to fall, however, for the next six months, reaching a low of 107,107,000 jobs in December of 2009. So, out of 8,467,000 private sector jobs lost in this dismal cycle, 7,796,000 of those jobs or 92 percent were lost on the Republicans' watch or under the sway of their policies. Some 671,000 additional jobs were lost as the stimulus and other moves by the administration kicked in, but 630,000 jobs then came back in the following six months. The tally, to date: Mr. Obama can be held accountable for the net loss of 41,000 jobs (671,000 - 630,000), while the Republicans should be held responsible for the net losses of 7,796,000 jobs. [Sonecon.com, 8/10/10, emphasis added]

Based on Shapiro's research, the Washington Post's Ezra Klein created the following chart showing net job losses before and after the Recovery Act was enacted:

Klein

[Washington Post8/12/10]

CBO: The Recovery Act Created Jobs, Lowered Unemployment, And Boosted GDP.  According to the nonpartisan Congressional Budget Office, through the second quarter of 2010, the American Recovery and Reinvestment Act:

  • Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent,
  • Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points,
  • Increased the number of people employed by between 1.4 million and 3.3 million, and
  • Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 4.8 million compared with what those amounts would have been otherwise.

[CBO, 8/24/10]

Reuters: The Recovery Act May Have "Prevented The Sluggish Economy From Contracting" Between April And June.  According to Reuters

The massive U.S. stimulus package put millions of people to work and boosted national output by hundreds of billions of dollars in the second quarter, the nonpartisan Congressional Budget Office said on Tuesday.

CBO's latest estimate indicates that the stimulus effort, which remains a political hot potato ahead of the November congressional elections, may have prevented the sluggish U.S. economy from contracting between April and June.

CBO said President Barack Obama's stimulus boosted real GDP in the quarter by between 1.7 percent and 4.5 percent, adding at least $200 billion in economic activity. [Reuters via ABC News, 8/24/10]

Job Statistics Trend Shows Recovery Act Is Working. Below is a graph prepared by the Speaker's office showing net private sector job gains or losses per month since December 2007.

[Bureau of Labor Statistics via The Gavel, 10/8/10]

Princeton, Moody's Economists Say "Highly Effective" Government Response To Crisis Saved 8.5 Million Jobs.  According to the New York Times: "Like a mantra, officials from both the Bush and Obama administrations have trumpeted how the government's sweeping interventions to prop up the economy since 2008 helped avert a second Depression. Now, two leading economists wielding complex quantitative models say that assertion can be empirically proved. In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration's fiscal stimulus program, the nation's gross domestic product would be about 6.5 percent lower this year. In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation. The paper, by Alan S. Blinder, a Princeton professor and former vice chairman of the Fed, and Mark Zandi, chief economist at Moody's Analytics, represents a first stab at comprehensively estimating the effects of the economic policy responses of the last few years. 'While the effectiveness of any individual element certainly can be debated, there is little doubt that in total, the policy response was highly effective,' they write." [New York Times7/27/10, emphasis added]

Health Care Reform Cuts The Deficit By Hundreds Of Billions Of Dollars

CBO: Health Care Reform Package Would Reduce The Deficit By $138 Billion By 2019. According to the Congressional Budget Office: "The reconciliation proposal includes provisions related to health care and revenues, many of which would amend H.R. 3590. It also includes amendments to the Higher Education Act of 1965, which authorizes most federal programs involving postsecondary education. CBO and JCT estimate that enacting both pieces of legislation-H.R. 3590 and the reconciliation proposal- would produce a net reduction in federal deficits of $138 billion over the 2010-2019 period as result of changes in direct spending and revenue." [CBO, 3/18/10]

OMB Director: Affordable Care Act Reduces Deficits By $1.1 Trillion By 2030. According to Office of Management and Budget Director Peter Orszag: "The bottom line remains the same: the Affordable Care Act is the largest deficit reduction package enacted in over a decade according to CBO. It will reduce deficits by more than $100 billion in the current decade and more than $1 trillion in the decade after that - and that will not change." [WhiteHouse.gov, 5/12/10, emphasis added]

CBO To GOP: Repealing Cost-Saving Provisions Of The Affordable Care Act Would Increase Deficit By $455 Billion. In a letter to Sen. Mike Crapo (R-ID), the Congressional Budget Office wrote: "Finally, you asked what the net deficit impact would be if certain provisions of PPACA and the Reconciliation Act that were estimated to generate net savings were eliminated-specifically, those which were originally estimated to generate a net reduction in mandatory outlays of $455 billion over the 2010-2019 period. The estimate of $455 billion mentioned in your letter represents the net effects of many provisions. Some of those provisions generated savings for Medicare, Medicaid, or the Children's Health Insurance Program, and some generated costs. If those provisions were repealed, CBO estimates that there would be an increase in deficits similar to its original estimate of $455 billion in net savings over that period." [CBO, 8/24/10]

In Fact, The Debt Exploded Because Of Bush-Era Republican Policies

Before Obama Took Office, The FY 2009 Deficit Was Projected At $1.2 Trillion. As reported by the Washington Times: "The Congressional Budget Office announced a projected fiscal 2009 deficit of $1.2 trillion even if Congress doesn't enact any new programs. [...] About the only person who was silent on the deficit projection was Mr. Bush, who took office facing a surplus but who saw spending balloon and the country notch the highest deficits on record." [Washington Times, 1/8/09, emphasis added]

CBPP: "Tax Cuts Have Been The Single Largest Contributor To The Reemergence Of Substantial Budget Deficits In Recent Years." According to the Center on Budget and Policy Priorities: "Congressional Budget Office data show that the tax cuts have been the single largest contributor to the reemergence of substantial budget deficits in recent years.  Legislation enacted since 2001 added about $3.0 trillion to deficits between 2001 and 2007, with nearly half of this deterioration in the budget due to the tax cuts (about a third was due to increases in security spending, and about a sixth to increases in domestic spending)." [CBPP, 5/9/08, parentheses original]

The Bush Tax Cuts Are The Primary Driver Of Federal Budget Deficits Over The Next Decade. Below is a chart from CBPP showing the deficit impacts of war spending, financial recovery spending, the recession itself, and the Bush tax cuts:

economicdownturn

[CBPP.org, 6/28/10]

Public And Foreign-Held Debt Skyrocketed While Bush Was In Office. Below are two graphs prepared by the Speaker's office showing the increase of publically and foreign-held debt during the years Bush was in office:

bushpublicdebt

bushforeigndebt

[U.S. Treasury via The Gavel, 6/11/10]

There Was No "Health Care Takeover"

PolitiFact: "Obama's Plan Leaves In Place The Private Health Care System." Analyzing Sen. Tom Coburn's claim that President Obama's health care reform plan amounted to a government takeover of health care, PolitiFact.com wrote:

[H]e's wrong that Obama's plan offers government-run health care.

In fact, Obama's plan leaves in place the private health care system, but seeks to expand it to the uninsured. It increases eligibility for the poor and children to enroll in initiatives like Medicaid and the State Children's Health Insurance Program, and creates pools for individuals to buy their own cheaper insurance. It also outlines strategies to rein in costs for everyone, such as electronic medical records and preventive care.

[...]

That may be Sen. Coburn's opinion on what could happen, but it's definitely not part of Obama's plan. And Coburn was very specific in saying that "under the Obama plan, all the health care in this country is eventually going to be run by the government." That gives the incorrect impression that Obama is promoting a government-run health care system. He's not. We rate Coburn's statement False.

[PolitiFact.com, 3/4/10, emphasis added]

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