"Enough" Is "Enough" With Club For Growth's Falsehoods

November 01, 2010 6:26 pm ET

In a new version of their "Enough" ad, the Club for Growth (CFG) goes after Rep. Harry Mitchell (D-AZ) with patent falsehoods about the Affordable Care Act as well as the government bailouts of Wall Street banks and Fannie Mae and Freddie Mac. Contrary to the CFG's claims, the Affordable Care Act kept intact the private health system, and government intervention in the financial and mortgage industries brought the economy back from the precipice of disaster. 

Club For Growth: "Enough"

What's happened to Harry Mitchell? After four years in Washington he acts like he's been there forever. Mitchell voted for record spending and national debt. Voted for big-government health care. Voted to use our tax money to bail out Wall Street banks and Fannie Mae and Freddie Mac. How does any of that help Arizona? Harry Mitchell — he's already been in Washington too long. Club for Growth PAC is responsible for the content of this advertising.

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]

...But Rep. Mitchell Voted For The Recovery Act Which Has Helped Turn The Economy Around

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]

PolitiFact: "True" That "Most Job Losses" Happened Before Obama Policies Took Effect. According to PolitiFact.com's analysis of President Obama's statement that "most of the jobs that we lost were lost before the economic policies we put in place had any effect": "Looking at BLS data on seasonally adjusted non-farm employment from December 2007, when the recession officially began, to January 2009, the month before the stimulus was enacted (a 25-month period), the jobs number declined by 4.4 million. ... When [Obama] refers to his economic policies, we presume he is referring to his main economic stimulus, the American Recovery and Reinvestment Act. It passed in February 2009, but it took several months before the impact of its spending was felt in the economy. Job loss didn't stop, but Obama is right that it slowed down. In the 19 months from February 2009 through September 2010, the month of the most recent preliminary data, the overall job decline in the private and public sectors was 2.6 million. And the number of jobs lost per month has declined from around 700,000 a month at the beginning of the administration to months in which there were small net gains. ... 'I watched the president on Stewart's show last night, and I thought his basic point about the timing of the employment losses was correct and ought to be noncontroversial,' Gary Burtless, a labor markets expert at the centrist-to-liberal Brookings Institution said in an e-mail." [PolitiFact.com, 10/27/10, emphasis added]

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.

emp

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

So-Called "Big-Government Health Care" Leaves Private System Intact

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]

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]

Congress Voted To "Bail Out Wall Street" At Insistence Of Bush Administration

Congress Passed Bailout "After Dire Warnings From The Bush Administration." According to the Washington Post: "Congress created the Troubled Asset Relief Program after dire warnings from the Bush administration that panic had seized credit markets and that the global economy was on the verge of meltdown. Barely two weeks later, Congress rushed through a measure giving Treasury Secretary Henry M. Paulson Jr. sweeping authority to spend up to $700 billion to inject cash into troubled financial institutions and buy 'toxic' assets such as those backed by failing mortgages." [Washington Post, 1/13/09]

Bush Administration Urged Passage Of Bank Bailout. As ABC News reported: "The architects of the Bush administration's massive $700 billion bailout for financial firms went to Capitol Hill today to urge lawmakers to act quickly and pass the bill 'cleanly' or risk a recession. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that failing to pass the administration's big-money bailout for the financial industry would stifle consumer spending, bring more home foreclosures and cause job loss." [ABC News, 9/23/08]

President Bush: America Might "Slip Into A Major Panic" Without Bailout. CNN reported:

U.S. President George W. Bush, saying "our entire economy is in danger," urged Congress to approve his administration's $700 billion bailout proposal.

"We're in the midst of a serious financial crisis, and the federal government is responding with decisive actions," Bush said in a televised address Wednesday night from the White House.

Bush pointed out that the collapse of several major lenders was rooted in the subprime mortgage market that thrived over the past decade.

He said passage of the $700 billion bailout proposal was needed to restore confidence in the market.

"I'm a strong believer in free enterprise, so my natural instinct is to oppose government intervention," he said. But "these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence.

"Without immediate action by Congress, America can slip into a major panic." [CNN, 9/24/08]

Government Seized Fannie And Freddie To Prevent Economic Calamity

President Bush: Bailout Was Necessary Because Problems At Fannie And Freddie Posed "An Unacceptable Risk To The Broader Financial System And Our Economy." As reported by Reuters: "U.S. President George W. Bush said the action had been necessary because troubles at Fannie Mae and Freddie Mac, which have $1.6 trillion in debt outstanding, posed 'an unacceptable risk to the broader financial system and our economy.'" [Reuters, 9/8/08]

Treasury Secretary: "Failure Of Either" Fannie Or Freddie "Would Cause Great Turmoil In Our Financial Markets Here At Home And Around The Globe." According to the Wall Street Journal:

With that, the U.S. mortgage crisis entered a new and uncharted phase, potentially saddling American taxpayers with billions of dollars in losses from home loans made by the private sector. Bush administration officials argued that the cost of doing nothing would be far greater because of the toll on the economy of falling home prices and defaults in the $11 trillion U.S. mortgage market.

Mr. Paulson noted that more than $5 trillion of debt and mortgage-backed securities issued by Fannie and Freddie is owned by central banks and other investors world-wide. "Failure of either of them would cause great turmoil in our financial markets here at home and around the globe," Mr. Paulson said.

[Wall Street Journal, 9/8/08]

U.S. Government Took Control Of Fannie And Freddie In September 2008, Pledged Up To $200 Billion To Them. According to the Wall Street Journal:

In its most dramatic market intervention in years, the U.S. government seized two of the nation's largest financial companies, taking direct responsibility for firms that provide funding for around three-quarters of new home mortgages.

Treasury Secretary Henry Paulson announced plans Sunday to take control of troubled mortgage giants Fannie Mae and Freddie Mac and replace the companies' chief executives. The Treasury will acquire $1 billion of preferred shares in each company without providing immediate cash, and has pledged to provide as much as $200 billion to the companies as they cope with heavy losses on mortgage defaults. The Treasury's plan puts the two companies under a conservatorship, giving management control to their regulator, the Federal Housing Finance Agency, or FHFA.

[Wall Street Journal, 9/8/08]

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