The "Status Quo" For The NRSC Is Deceiving Voters

October 28, 2010 2:51 pm ET

The NRSC piles as many falsehoods as it can into its latest 30-second ad attacking Pennsylvania Senate candidate Joe Sestak. The NRSC attempts to label Sestak "Status Quo Joe," claiming his votes for "big Wall Street bailouts" and the "failed stimulus" are evidence that Washington hurts the economy. However, both TARP and the Recovery Act were instrumental in stabilizing the economy — in fact, TARP could actually earn taxpayers a profit, while the Recovery Act created millions of jobs. The NRSC's claims about Medicare are just as misleading — the Affordable Care Act doesn't cut the program, but strengthens it by adding benefits and eliminating wasteful spending. In addition, the Affordable Care Act reduces the deficit — a clear departure from the "status quo" of Bush-era policies that skyrocketed the debt and deficit.

NRSC: "Status Quo Joe"

Like the status quo in Washington? Then Joe Sestak's your guy. Big Wall Street bailouts, higher taxes, more debt, failed stimulus — Sestak voted for it all. Status Quo Joe even voted for Obamacare which gutted $500 billion from Medicare, and since then our country's unemployment rate hit its highest point in 26 years. Thanks, Joe. Like the status quo? Then Status Quo Joe is your guy. The National Republican Senatorial Committee is responsible for the content of this advertising.

Wall Street "Bailout" Helped Stabilize Industry, Economy

In The Midst Of A Downward Spiral, TARP Helped Stabilize The Financial System. As reported by Reuters: "The U.S. government's $700 billion financial rescue program has helped to stabilize the system, but may be creating systemic problems by fueling a belief banks will always be bailed out, a watchdog for the program said on Wednesday. 'Compared to where we were last October there is no question that the system if far more stable. We were on the precipice and I think the (Troubled Asset Relief Program) contributed with the other programs to pull us back,' Neil Barofsky, the special inspector general for the program, told CNBC." [Reuters, 10/21/09]

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]

Ignatius: Bailouts "Almost Surely Saved The Country From Another Great Depression." According to the Washington Post's David Ignatius: "Constant repetition of anti-government rhetoric in our political echo chamber has dulled Americans into overlooking an important and perhaps surprising fact: We have just lived through one of the more notable successes of government intervention in modern times -- the auto and bank rescues that almost surely saved the country from another Great Depression. [...] A similar success story seems likely with most of the rest of the money spent for TARP, the acronym that is a dirty word this political season. The Troubled Assets Relief Program, coupled with emergency facilities at the Fed, allowed a "work-out" for a financial system that was on the verge of freezing up. Most of the TARP investments, it seems, will be recovered, too, including loans made to the notorious insurance behemoth AIG." [Washington Post, 10/14/10, emphasis added]

Taxpayers Could Actually Earn A Profit On TARP

NYT: Government Bailouts To Banks, Auto Companies, "Could Conceivably Earn Taxpayers A Profit." According to the New York Times:

Even as voters rage and candidates put up ads against government bailouts, the reviled mother of them all - the $700 billion lifeline to banks, insurance and auto companies - will expire after Sunday at a fraction of that cost, and could conceivably earn taxpayers a profit.

A final accounting of the government's full range of interventions in the economy, including the bailouts of the mortgage finance giants Fannie Mae and Freddie Mac, is years off and will most likely remain controversial and potentially costly.

But the once-unthinkable possibility that the $700 billion Troubled Asset Relief Program could end up costing far less, or even nothing, became more likely on Thursday with the news that the government had negotiated a plan with the American International Group to begin repaying taxpayers.

tarp

[New York Times, 9/30/10, emphasis added]

The Exploding Debt And Deficit Are The Result Of Bush-Era Policies And The Recession

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 Times1/8/09, emphasis added]

CBPP: Deficit Grew By $3 TRILLION Because Of Policies Passed From 2001 To 2007. 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.org, accessed 1/31/10, 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:

CBPP

[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 publicly and foreign-held debt during the years Bush was in office:

bushpublicdebt

bushforeigndebt

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

The "Failed Stimulus" Actually Created Millions Of Jobs And Boosted The Economy

The Economy Shed Almost 8 Million Jobs Under Republican Policies Before The Recovery Act Could Affect The Economy. 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]

The Affordable Care Act Strengthens Medicare Without Cutting Benefits

FactCheck.org: Cost Saving Provisions "Not A Slashing Of The Current Medicare Budget Or Benefits." According to FactCheck.org, "Whatever you want to call them, it's a $500 billion reduction in the growth of future spending over 10 years, not a slashing of the current Medicare budget or benefits. It's true that those who get their coverage through Medicare Advantage's private plans (about 22 percent of Medicare enrollees) would see fewer add-on benefits; the bill aims to reduce the heftier payments made by the government to Medicare Advantage plans, compared with regular fee-for-service Medicare. The Democrats' bill also boosts certain benefits: It makes preventive care free and closes the 'doughnut hole,' a current gap in prescription drug coverage for seniors." [FactCheck.org, 3/19/10]

Changes To Medicare Advantage Come With Extra Benefits For All Medicare Enrollees. FactCheck.org reported: "The CBO has estimated that the move would change the value of the extra benefits Medicare Advantage participants get, but they would not receive fewer benefits than the rest of seniors who aren't on the Advantage plans. The bill does add some extras for Medicare beneficiaries, eliminating copays and deductibles for preventive services, for example." [FactCheck.org, 12/2/09; emphasis added]

Health Care Reform "Will Keep Paying Medical Bills For Seniors." According to PolitiFact.com: "The government-run Medicare program will keep paying medical bills for seniors, but it will begin implementing cost controls on health care providers, mostly through penalties and incentives. The legislation would reduce payments for hospital-acquired infections or preventable hospital admissions. For Medicare Advantage, the federal government intends to reduce extra payments, taking away subsidies to private insurance companies. Insurers will likely cut benefits in order to not lose profits. The bill does not address the 'doctor's fix,' an expected proposal that Congress usually passes to prevent doctors' Medicare payments from severe cuts." [PolitiFact.com, 3/18/10; emphasis in original]

Health Care Reform Fills The "Doughnut Hole." According to the Kaiser Family Foundation: "In 2010, Part D enrollees with any spending in the coverage gap will receive a $250 rebate. Beginning in 2011, enrollees with spending in the coverage gap will receive a 50 percent discount on brand-name drugs, provided by the pharmaceutical industry. The law phases in Medicare coverage in the gap for generic drugs beginning in 2011, and for brand-name drugs beginning in 2013. By 2020, Part D enrollees will be responsible for 25 percent of the cost of both brands and generics in the gap, down from 100 percent in 2010." [Kaiser Family Foundation, accessed 8/25/10]

Health Care Reform Improves Medicare's Coverage Of Preventive Benefits. According to the Kaiser Family Foundation: "Beginning in 2011, no coinsurance or deductibles will be charged in traditional Medicare for preventive services that are rated A or B by the U.S. Preventive Services Task Force (USPSTF). Medicare will cover a free annual comprehensive wellness visit and personalized prevention plan." [Kaiser Family Foundation, accessed 8/25/10]

Click HERE for details on the trillions of dollars Republicans have voted to cut from Medicare.

Medicare "Cuts" Are Actually Savings From Phasing Out "Substantial Overpayment" To Medicare Advantage

CBO: Cost Changes To Medicare Made From Savings. According to the Congressional Budget Office: "Changes to the Medicare program and changes to Medicaid and CHIP other than those associated directly with expanded insurance coverage: Savings from those provisions are estimated to total $93 billion in 2019, and CBO projects that, in combination, they will increase by 10 percent to 15 percent per year in the next decade." [CBO.gov, 10/7/09]

New England Journal of Medicine: The Affordable Care Act Phases Out "Substantial Overpayments" To Medicare Advantage Plans. From the New England Journal of Medicine:

A phased elimination of the substantial overpayments to Medicare Advantage plans, which now enroll nearly 25% of Medicare beneficiaries, will produce an estimated $132 billion in savings over 10 years.

[...]

The ACA also produces nearly $200 billion in savings by assuming that providers can improve their productivity as firms in other industries have done. On the basis of this presumed improvement, the law reduces Medicare's annual "market basket" updates for most types of providers - a provision that has generated controversy. [New England Journal of Medicine7/8/10]

Cuts Would Only Affect Medicare Advantage Plans. As reported by Kaiser Health News:

The new health law will cut $136 billion in spending on the Advantage program by 2019, which currently pays private plans to administer Medicare benefits and pays them about 14 percent more than the per-patient cost of the traditional Medicare program. Plans use that subsidy to lure members with lower premium costs or extra benefits not normally paid for by Medicare, such as vision care or better prescription drug coverage. Some Democrats and analysts have argued the higher rates are wasteful. 

Even experts who support the change concede that the impact of the cuts could be evident. Robert Berenson, a scholar at the Urban Institute and former Medicare official, said some Advantage plan members will notice skimpier benefits, "but the Republicans have really exaggerated that this will wipe out the Advantage plans." 

Marsha Gold, a health policy analyst for the private research group Mathematica, said, "Over time, there will be less rich benefits or higher premiums, but it's going to be gradual," noting that the largest cuts do not begin until 2015. 

[Kaiser Health News, 4/6/10]

Medicare Advantage Costs Taxpayers 14% More Than Traditional Medicare. As reported by PolitiFact.com:

Let's back-up for a minute and explain Medicare Advantage: There are two basic ways most people get Medicare coverage. They enroll in traditional Medicare and a prescription drug plan through the government and maybe buy a supplemental policy to cover most out-of-pocket costs. Or they enroll in Medicare Advantage programs (they include drug plans), which are run by private insurers. Medicare Advantage programs typically have more generous benefits such as dental and vision coverage. Some plans even pay the patient's monthly Medicare premium, which can amount to about $100.

The Medicare Advantage program was intended to bring more efficiency from the private sector to the Medicare program, but it hasn't worked as planned. A June 2009 analysis from the Medicare Payment Advisory Commission said that the Advantage programs costs taxpayers on average of 14 percent more than the traditional Medicare plan. President Barack Obama has said repeatedly that the Medicare Advantage plan wastes public money that could be put to better use.

[PolitiFact.com, 9/20/10]

Health Care Reform Reduces The Deficit By Billions

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 former 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]

Print