American Crossroads Once Again Says "So Long" To The Truth

October 31, 2010 2:37 pm ET

American Crossroads in on the air in Georgia with a new ad attacking Rep. Sanford Bishop (D) for having "made things worse" for the economy and unemployment. Crossroads blames Bishop for the "trillion dollar deficit" because of his vote for the FY2010 budget proposed by President Obama — though the blame for the huge increase in debt and deficit lies with the fiscal policies pushed by the Bush administration. Crossroads also hits Bishop for supporting the Recovery Act, specifically targeting the legislation for sending Social Security checks to the deceased and the incarcerated, as well as for spending "a billion dollars to create jobs overseas." In fact, Recovery Act spending is limited to U.S.-based projects, and most of the inaccurate Social Security payments that were made were re-collected.

American Crossroads: "So Long"

Not since the 30s has unemployment been so high for so long, but Sanford Bishop made things worse. He voted for Obama's budget with a trillion dollar deficit and Bishop voted for Pelosi's failed stimulus bill that sent $18 million to dead people, $4.3 million to prison inmates, spent over a billion dollars to create jobs overseas. Sanford Bishop: Inexcusable. American Crossroads is responsible for the content of this advertising.

The Federal Budget Deficit DECREASED In 2010

CBO: FY2010 Deficit DECREASED By $125 Billion. According to the Congressional Budget Office: "CBO estimates that the federal budget deficit was slightly less than $1.3 trillion in fiscal year 2010 and $125 billion less than the shortfall recorded in 2009. The 2010 deficit was equal to 8.9 percent of gross domestic product (GDP), CBO estimates, down from 10.0 percent in 2009 (based on the most current estimate of GDP)." [CBO, 10/7/10]

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]

Payments To Inmates And The Deceased Were A Miniscule Percentage Of Total Recovery Act Payments

AP: 99.8 Percent Of Social Security's Recovery Act Payments Were "Accurately Processed"; Majority Of Inaccurate Payments Were "Quickly Collected." According to the Associated Press:

Social Security spokesman Mark Lassiter said, "Inaccurate payments are unacceptable. Social Security's Recovery Act payments were 99.8 percent accurate and we quickly collected the majority of the inaccurate payments. Each year we make payments to a small number of deceased recipients usually because we have not yet received reports of their deaths."

The inspector general for the Social Security Administration has been performing an audit to make sure no checks went to ineligible recipients. The latest report was dated Sept. 24 but was just recently posted to the agency's website.

[...]

The Social Security Administration said that despite tight deadlines, workers accurately processed more than 99.8 percent of the 52 million stimulus payments.

[Associated Press, 10/7/10, emphasis added]

  • President Obama Ordered Federal Agencies To Establish A "Do Not Pay" Database And Signed An Improper Payments Law. The Washington Post reported:

In June, President Obama ordered the establishment of a government-wide "do not pay" database to ensure that agencies no longer send money to dead or incarcerated people and debarred or suspended contracting firms. He also signed a law in July that penalizes agencies for failing to detect and stop such payments. [Washington Post, 10/7/10]

Stimulus Funds Go To U.S.-Based Projects

The claim that the stimulus funded job-creation overseas stems from a study conducted by American University that has been widely distorted. In fact, the author himself states that the Recovery Act provides funding to U.S.-based projects, some of which are American subsidiaries of foreign companies.

Controversy Over Renewable Energy Jobs Originates From Distortion Of American University Study. From a PolitiFact article fact-checking Sarah Palin's claim that "80 percent of $2 billion they spent on alternative energy went to purchase wind turbines in China," which it found to be false: "To support her statement, Palin's Facebook missive links to a Feb. 11, 2010, op-ed in Investor's Business Daily, a conservative news source. The editorial states that, according to the Investigative Reporting Workshop at American University, nearly $2 billion from the stimulus bill has been spent on wind power, and that 80 percent of that has gone to foreign manufacturers of wind turbines. ... The Investigative Reporting Workshop's story on stimulus dollars and the wind industry came in two parts. In October 2009, it published its first analysis. The group found that of the $1.05 billion in clean-energy grants already handed out by the Department of Energy, about 84 percent -- or $849 million -- ended up in the hands of foreign wind companies. ... On Feb. 8, 2010, [the author of the study Russ] Choma updated his original findings, reporting that an additional $1 billion had been handed out in renewable energy grants, bringing the grand total to $2.1 billion. Of that, about 79 percent has gone to overseas firms." [PolitiFact.com, 2/23/10]

Study's Author: Renewable Energy Stimulus Grants Go To U.S.-Based Projects, Some Built By American Subsidiaries Of Foreign-Owned Companies. From PolitiFact:

We spoke with Russ Choma, the story's author, who explained that these grants are given to U.S.-based wind projects, but that many of these projects are being built by the American subsidiaries of foreign-owned companies. For instance, on Sept. 22, 2009, the DOE awarded $464.2 million to wind projects, and all of it went to local subsidiaries of foreign companies, according to the report. Those companies include Iberdrola, a Spanish company that received $250.9 million; the American subsidiary of Japan's Eurus Energy, which got $91.3 million; and the American subsidiary of Germany's E.ON Group, which received $121.9 million. 

Choma also points out that the wind turbine manufacturing industry in the United States is relatively weak compared to those abroad; of the 1,807 turbines erected in the United States as a result of the stimulus grants, foreign-owned manufacturers made 1,219, according to the report. 

[PolitiFact.com, 2/23/10, emphasis added]

PolitiFact: No Stimulus Money Has Gone To Chinese Turbine Manufacturers. From a PolitiFact article fact-checking Sarah Palin's claim that "80 percent of $2 billion they spent on alternative energy went to purchase wind turbines in China":

Aside from that, Palin -- and the IBD editorial -- misrepresented Choma's story in a number of ways. First, while Choma found that many of the grants given so far have been for wind projects -- and that many of those projects are being developed by the American subsidiaries of foreign companies -- the 79 percent of the $2.1 billion he cites in his story (Palin's rounded that number up to 80 percent) is the amount that has gone overseas for all renewable energy projects, not just wind projects. Choma shared his data with us, and it shows that, as of February 2010, only 73 percent has gone to foreign companies involved in wind projects. The rest of that 79 percent has gone to geothermal projects. And, more importantly, says Choma, none of these American subsidiaries is owned by Chinese companies. While the Texas deal may eventually shuttle some stimulus dollars to China through the purchase of turbines, the deal is still in the works. So, it's incorrect to say that any stimulus money has gone to Chinese turbine manufacturers, let alone 80 percent of the $2 billion spent on renewable energy projects.

[PolitiFact.com, 2/23/10, emphasis added]

Further Confusion Over Study Came From Letter From Senators. From the New York Times:

Four Democratic senators are calling on the Obama administration to halt spending on a renewable energy program in the economic stimulus package until rules are in place to assure that the projects use predominantly American labor and materials.

The senators said that more than three-fourths of $2 billion spent on wind-energy projects supported by the stimulus package had gone to foreign companies. They said that effectively undercut the purpose of the stimulus program - formally known as the American Recovery and Reinvestment Act - which is to jump-start the American economy and create jobs here.

[...]

The senators introduced legislation on Wednesday that would require that stimulus funds go only to clean-energy projects that rely on materials manufactured in the United States and create a majority of jobs here. The current law requires a "Buy American" provision only for government projects, not private enterprises.

[New York Times3/3/10]

Department Of Energy: Funding Only Goes To Projects Built In US. From Politico: "But the Department of Energy responded Wednesday afternoon, saying that the senators' message was misleading and that funding goes only to projects built in the United States and that those projects, in turn, spur economic growth. They say wind turbines built domestically - regardless of where some of the parts are manufactured - will create more demand for clean-energy manufacturing." [Politico3/3/10]

Department of Energy: Wind Energy Program Creates Thousands Of American Jobs And Attracts Billions In Foreign Investment. From the New York Times:

The Treasury Department declined to comment on the senators' letter, but the Energy Department, which administers the clean energy part of the stimulus package, said that the program was creating thousands of jobs in the United States.

"The Recovery Act has doubled the pace of investment in America's wind industry - including helping attract more than $10 billion of foreign investment to create U.S. jobs," Stephanie Mueller, news media secretary at the Energy Department, said. "The best way to stimulate our manufacturing base is to stimulate demand for wind turbines in America, since manufacturers tend to locate where the demand is."

She added that the administration would work with Congress to strengthen the clean-energy grants program, but said that suspending it now would mean immediate layoffs at American manufacturing plants.

[New York Times3/3/10]

The Recovery Act Created Millions Of Jobs In America 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]

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]

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