Fact Checking The Sunday Shows - April 18, 2010
On Sunday's political talk shows, the economy was front and center -- along with plenty of false and misleading statements. On Fox News Sunday, Sen. John McCain claimed that taxes have gone up in the past year. On Face the Nation, Sen. Scott Brown claimed that no one has talked about job creation since he was sworn in -- right after he talked up the jobs bill he voted for way back in February. And Sen. Mitch McConnell used an appearance on State of the Union to reassert falsely that the financial reform bill will bail out Wall Street. Sen. Marsha Blackburn echoed that falsehood on Meet the Press.
FOX NEWS SUNDAY
CLAIM: Sen. John McCain lied about tax rates going up during the Obama administration.
SEN. JOHN MCCAIN: The fact is that taxes have gone up. They're gonna go up, and they are going to violate the President's pledge as far as single people making $250,000 and $200,000. Taxes are going up, we all know that.
FACT: The Recovery Act Cut Taxes For 95% Of Working Families.
Tax Policy Center: 94.3% of workers got a tax cut. According to PolitiFact.com:
Under the stimulus bill, single workers got $400, and working couples got $800. The Internal Revenue Service issued new guidelines to reduce withholdings for income tax, so many workers saw a small increase in their checks in April 2009.
The tax cut was part of Obama's campaign promises. During the campaign, Obama said he wanted $500 for each worker and $1,000 for working couples. Since the final number was a bit less than he promised, we rated his promise a Compromise on our Obameter, where we rate Obama's campaign promises for fulfillment.
During the campaign, the independent Tax Policy Center researched how Obama's tax proposals would affect workers. It concluded 94.3 percent of workers would receive a tax cut under Obama's plan based on the tax credit to offset payroll taxes. According to the analysis, the people who wouldn't get a tax cut are those who make more than $250,000 for couples or $200,000 for a single person. [PolitiFact.com, accessed 2/17/10]
FACT: Federal Taxes Are At Their Lowest Level In 60 Years. According to the Brookings Institution's William Gale: "It is ironic if not bizarre that the TEA party got going during a time when federal taxes were at their LOWEST in about 60 years. So, I am not seeing that people are taxed too much right now. I think the message that government should not take its power to tax lightly is always appropriate. But I don't see any sort of recognition in the TEA party statements that if we don't want to raise taxes we will need to cut spending by enormous amounts and where they are willing to cut spending." [Brookings Institution, 4/14/10]
CBS News: "One Third Of The Recovery Act Was Made Up Of Tax Credits." According to CBS News:
One third of the Recovery Act was made up of tax credits, the White House emphasizes.
"No one I've met is looking for a handout," Mr. Obama said in his address Saturday. "And that's not what these tax cuts are. Instead, they're targeted relief to help middle class families weather the storm, to jumpstart our economy, and to bring the fundamentals of the American Dream -- making an honest living, earning an education, owning a home, and raising a family -- back within reach for millions of Americans."
The credits included:
- An increase in the Earned Income Tax Credit
- An expansion of the Child Tax Credit
- For those who work, the Making Work Pay tax credit offered $400 per individual and $800 per couple
- For those who lost their job, there was a 65 percent tax credit to help cover the cost of health care. The first $2,400 in unemployment benefits went tax-free
- Up to $2,500 under the American Opportunity Credit for students and parents paying for college tuition
- $8,000 for first-time home buyers
- A deduction of state and local taxes paid on a new car
- Up to $1,500 for home improvements to increase energy efficiency
Even conservative advocacy group Americans for Tax Reform, which advocates for a single, national flat tax rate, found some praise for the Recovery Act -- specifically for provisions allowing small businesses to write off a wider range of business expenses. [CBS News, 4/15/10]
FACE THE NATION
CLAIM: Sen. Scott Brown Said There Has Been "Zero Talk" About Job Creation Since His Election -- After Boasting Of His Support For The Jobs Bill Passed In February.
SEN. SCOTT BROWN (R-MA): Since I've been here I've heard zero talk about jobs....I know from what I've seen that we need to focus on jobs and the President should start to do so.
FACT: The President Signed A Jobs Bill In March.
The HIRE Act Could Add 250,000 Private-Sector Jobs. According to The USA Today: "The bill featured four provisions that enjoyed bipartisan support, including a measure exempting businesses hiring the unemployed from Social Security payroll taxes through December and giving them another $1,000 credit if new workers stay on the job a full year. Although employers seldom make hiring decisions based on tax breaks, economist Mark Zandi says the bill could potentially create 250,000 private-sector jobs." [USAToday.com, 2/23/10]
FACT: Sen. Brown voted to end the GOP filibuster of the HIRE Act.
Sen. Brown Was One Of Only Four Republicans To Vote For Cloture On The February Jobs Package. According to the LA Times: "Monday night, Brown announced that he would join four other Republicans in voting to block a GOP filibuster and move forward with a $15-billion jobs bill designed by Senate Majority Leader Harry Reid (D-Nev.)." [LATimes.com, 2/23/10]
Sen. Brown Undermined His Own Claim That There Has Been "Zero Talk" About Job Creation Five Minutes Earlier In His Face The Nation Interview. In talking about his decision-making process, the Massachusetts Republican cited his vote against his party's filibuster of the jobs bill:
"SEN: SCOTT BROWN (R-MA): I look at each bill in an independent manner and vote accordingly, I did it in the first jobs bill." [Face The Nation, 4/18/10, emphasis added]
CLAIM: Sen. Scott Brown Implied That President Obama Has Not Worked To Create Jobs.
SEN. SCOTT BROWN (R-MA): The President should start to focus on jobs and job creation and that hasn't been done....When we were in Pakistan and Afghanistan, the only thing they talked about from the Presidents all the way down to the poorest farmer were jobs. Since I've been here I've heard zero talk about jobs....I know from what I've seen that we need to focus on jobs and the President should start to do so.
FACT: President Obama's Stimulus Package Has Created Up To 2.4 Million Jobs And Put America On The Road To Recovery.
CBO: The American Recovery And Reinvestment Act Has Created Up To 2.4 Million American Jobs. According to CNN: "The Congressional Budget Office attributes between 800,000 to 2.4 million jobs and 1.2 to 3.1 percentage points of economic growth to stimulus." [CNN, 1/13/10]
- Top Economic Research Firms Agree That The Recovery Act Created Jobs.As reported by theNew York Times, "Just look at the outside evaluations of the stimulus. Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody's Economy.com.They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs.The Congressional Budget Office, an independent agency, considers these estimates to be conservative." [New York Times,2/16/10; emphasis added]
CBO: The Recovery Act "Added Between 1.0 Million and 2.1 Million" Jobs In the Fourth Quarter Of 2009. According to the Congressional Budget Office, "CBO estimates that in the fourth quarter of calendar year 2009, ARRA added between 1.0 million and 2.1 million to the number of workers employed in the United States, and it increased the number of full-time-equivalent jobs by between 1.4 million and 3.0 million." The CBO added that the Recovery Act, "[l]owered the unemployment rate by between 0.5 percentage points and 1.1 percentage points." [Congressional Budget Office, February 2010]
One Year After The Recovery Act, America Is On The Road To Recovery. Below is a graph prepared by the Speaker's office showing job losses per month:
[Office of the Speaker, 4/2/10]
State Of The Union & Meet The Press
CLAIM: Sen. Mitch McConnell and Sen. Marsha Blackburn wrongly claimed that the financial reform bill would bail out failed banks.
SEN. MITCH McCONNELL, State Of The Union: Regardless of where the-- how the money is produced, it's a bailout fund that guarantees in perpetuity that we'll be intervening once again to bail out these big firms.
SEN. MARSHA BLACKBURN, Meet The Press: [The American people] know better than that, they know that this financial regulatory reform bill in its current form that is working its way through is going to institutionalize the bailouts.
FACT: The Bill Mandates Intervention To Dismantle Failed Firms, Not To Bail Them Out.
The Senate's Restoring American Financial Stability Act Ends The Risky Bailout Culture, Liquidates Failed Institutions. Contrary to McConnell's remarks, the bill does NOT reward or bailout firms, but safely dismantles "any failed financial company" that threatens the stability of the entire economy. The costs of dissolving these companies are paid NOT by taxpayers, but by fees levied on financial companies. Additionally, the bill specifically states a fail firm's creditors shall "bear losses." According to Section 204 of the Restoring American Financial Stability Act of 2010:
[Restoring American Financial Stability Act of 2010, accessed 4/7/10]
FDIC Chairwoman: Bill Doesn't Make Bailouts Permanent, "It Makes Them Impossible." In an interview with American Banker, FDIC Chair Sheila Bair said the Dodd bill ends bailouts:
Would this bill perpetuate bailouts?
SHEILA BAIR: The status quo is bailouts. That's what we have now. If you don't do anything, you are going to keep having bailouts. Bankruptcy doesn't work - we saw that with Lehman Brothers.
But does this bill stop them from happening?
BAIR: It makes them impossible and it should. We worked really hard to squeeze bailout language out of this bill. The construct is you can't bail out an individual institution - you just can't do it.
In a true liquidity crisis, the FDIC and the Fed can provide systemwide support in terms of liquidity support - lending and debt guarantees - but even then, a default would trigger resolution or bankruptcy.
[AmericanBanker.com, 4/15/10, emphasis added]
WSJ: Senate Bill "Would Make A Government Bailout Virtually Impossible." As reported by theWall Street Journal: "A spokeswoman for the Connecticut Democrat said Friday he would change a provision that would have allowed the Federal Reserve to use emergency powers to lend to an individual 'financial market utility.' Only payment and clearing firms deemed 'systemically important' by a proposed council of regulators would have been eligible.... The change Mr. Dodd has agreed to would make a government bailout virtually impossible, though the government would be able to seize and dismantle failing firms." [Wall Street Journal via Factiva, 3/19/10]
Kudlow: "Dodd's Financial-Regulation Proposal Raises The Possibility Of Substantial Progress On The Road To Ending 'Too Big To Fail' (TBTF) And Bailout Nation." In a column written forRealClearMarkets, Larry Kudlow wrote, "Sen. Chris Dodd's financial-regulation proposal raises the possibility of substantial progress on the road to ending 'too big to fail' (TBTF) and bailout nation for banks and other financial institutions... First, under the Dodd scheme, large complex companies will have to submit plans for rapid and orderly shutdowns should they go under. These are called 'funeral plans.' Then, in terms of these orderly shutdowns, the bill would create an 'orderly liquidation mechanism for the FDIC to unwind failing systemically significant financial companies. Shareholders and unsecured creditors will bear losses and management will be removed.' Good." [Kudlow, RealClearMarkets,3/16/10]
Washington Post: "The Bill Provides A Way To Rein In The Risks They Take With That Money, And Taxpayers Won't Be On The Hook If They Nevertheless Collapse." In an editorial written after the Senate released its plan to reform the financial system, the Washington Post wrote, "Like the House bill, it would authorize a council of regulators to name systemically risky institutions, limit their leverage and require them to pay into a $50 billion resolution fund that would deal with a big firm's collapse. To be sure, listing 'too big to fail' institutions only encourages the market to offer them artificially easy funding. But at least the bill provides a way to rein in the risks they take with that money, and taxpayers won't be on the hook if they nevertheless collapse." [Washington Post, 3/18/10]