Fact Checking The Sunday Shows - August 29, 2010

August 30, 2010 9:59 am ET

Sunday on Face The Nation, Republican Senate hopeful Joe Miller (AK) stoked fears about Social Security's finances and Gov. Haley Barbour (R-MS) wrapped his sugary drawl around a variety of sour attacks on Democrats' economic policies. Miller claimed "the trust fund is empty," but in reality Social Security holds assets of $2.5 trillion and is solvent through the Baby Boomers' golden years. Later, Gov. Barbour dissembled about the cost-cutting Affordable Care Act — the bill actually reigns in health care spending while expanding coverage dramatically and cutting the deficit — and suggested Democrats aren't creating jobs despite the expert consensus that the Recovery Act and other measures saved millions of jobs and turned the economy around.

Face the Nation

CLAIM: Republican Senate Candidate Joe Miller (AK) Falsely Claimed The Social Security "Trust Fund Is Empty"

JOE MILLER (R-AK): With respect to social security, what we've said consistently throughout this race is that uh if you've paid into the system, if you're dependent on the system, we've got to get the fiscal house in order at the national level so that we can continue to pay those benefits but to suggest that there is nothing that can be done, that we have to continue as the way things are, ignores the fact that the trust fund is empty, it's full of IOUs. It ignores the fact that as of April of this year, there are more expenditures or there are more outlays coming out from social security than inlays and it would be incredibly irresponsible for us to sit back and say that this is something that shouldn't be addressed. There are a lot of different options out there. We have to look at all the options that are out there, including privatization.

FACT: 2010 Report From Social Security Trustees Shows The Trust Fund Is Solvent For Over 25 Years Despite Economic Downturn

Social Security Trust Fund Is Big Enough To Finance Benefits For Baby Boomers. According to the Economic Policy Institute:

The retirement of the large Baby Boomer generation will cause Social Security spending to increase from 4.8% of GDP in 2010 to 6.1% of GDP in 2035. The Baby Boomer retirement was fully anticipated by Social Security's actuaries and the members of the National Commission on Social Security Reform ("the Greenspan Commission") appointed by President Reagan. As a result of reforms enacted by Congress in 1983 following the commission's report, Social Security is in the process of building up a trust fund that will be large enough to cover benefits through the peak Baby Boomer retirement years.

Though the oldest Baby Boomers became eligible for retirement benefits in 2008, most Baby Boomers are still in the workforce. Around 2025, when the younger Baby Boomers reach retirement age, Social Security will begin drawing down the trust fund. At that point, Social Security's outlays will start to exceed its tax revenues and interest from the trust fund, though the balance of the trust fund will ensure that full benefits can be paid through 2036 or so.

The Social Security trust fund will run out of assets around 2037. If Congress does not act before then to shore up the program's finances, Social Security benefits would have to be cut by an estimated 22% to allow revenues to fully cover benefits. Though such an abrupt cut in benefits should certainly be avoided, the inflation-adjusted value of these benefits would still be larger than current benefits due to economic growth, though they would replace a smaller share of pre-retirement earnings (CBO 2009).

[EPI.org, 8/6/10, parentheses original, emphasis added]

Social Security Trustees: Trust Fund Sufficient To Pay Full Benefits Through 2036, 78 Percent Of Benefits Thereafter. According to the Social Security Board of Trustees: "The projected point at which the combined Trust Funds will be exhausted comes in 2037 - the same as the estimate in last year's report. At that time, there will be sufficient tax revenue coming in to pay about 78 percent of benefits." [SSA.gov, 8/5/10]

FACT: Long-Term Funding Shortfall Is Not As Great As Miller Implies

The Post-2037 Funding Shortfall Is Predicted To Be Less Than 1% Of GDP. According to the Economic Policy Institute: "Social Security spending as a share of the economy is projected to decline after the Baby Boomer retirement, leveling off at around 6% of GDP; this is a little more than 1 percentage point above current revenues as a share of GDP. The Social Security actuaries have projected that an increase in revenues equal to just 0.6% of GDP will be sufficient to cover promised benefits over the 75-year planning period because of the savings built up in the trust fund." [EPI.org, 8/6/10, citations removed for clarity]

If Congress Does Nothing, Benefits Would Be Cut By 22% After 2037 — But Would Still Be Paid. According to the Economic Policy Institute: "The Social Security trust fund will run out of assets around 2037. If Congress does not act before then to shore up the program's finances, Social Security benefits would have to be cut by an estimated 22% to allow revenues to fully cover benefits. Though such an abrupt cut in benefits should certainly be avoided, the inflation-adjusted value of these benefits would still be larger than current benefits due to economic growth, though they would replace a smaller share of pre-retirement earnings." [EPI.org, 8/6/10, citations removed for clarity]

CLAIM: Mississippi Governor Haley Barbour Falsely Suggested That Democrats Have Not Focused On Job Creation

GOV. HALEY BARBOUR: In an economy like this, we don't need to be raising anybody's taxes. And if you wanna know why there was this outpouring yesterday, and why the numbers are so bad for the Democrats, you ask what's the issue? The issue is jobs, jobs, jobs, jobs. Yet for more than a year, the Democrats in congress and the administration were totally focused on a health care reform bill that's gonna increase the cost of our health care, and the American people wanted to be talking about jobs.

FACT: Experts, Statistics Agree: Democratic Policy Response To Economic Crisis Saved Millions Of Jobs And Turned The Economy Around

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:

[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, 8/6/10]

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]

CLAIM: Mississippi Governor Haley Barbour Falsely Claimed That The Affordable Care Act Will Increase The Cost Of Health Care

GOV. HALEY BARBOUR: In an economy like this, we don't need to be raising anybody's taxes. And if you wanna know why there was this outpouring yesterday, and why the numbers are so bad for the Democrats, you ask what's the issue? The issue is jobs, jobs, jobs, jobs. Yet for more than a year, the Democrats in congress and the administration were totally focused on a health care reform bill that's gonna increase the cost of our health care, and the American people wanted to be talking about jobs.

FACT: The Affordable Care Act Will Control Health Care Costs While Expanding Coverage To Millions Of Uninsured Americans

PolitiFact: "For Most People, Premiums Would Stay About The Same, Or Slightly Decrease." According to PolitiFact.com: "The CBO reported that, for most people, premiums would stay about the same, or slightly decrease. This was especially true for people who get their insurance through work. (Health policy wonks call these the large group and small group markets.) People who have to go out and buy insurance on their own (the individual market) would see rates increase by 10 to 13 percent. But more than half of those people -- 57 percent, in fact -- would be eligible for subsidies to help them pay for the insurance. People who get subsidies would see their premiums drop by more than half, according to the CBO. So most people would see their premiums stay the same or potentially drop." [PolitiFact.com, 1/27/10; emphasis added]

Affordable Care Act Insures 34 Million New People With 1% Health Care Spending Increase. According to the Washington Post's Ezra Klein: "First, be clear about what's being estimated. The Congressional Budget Office's estimates look at the deficit. CMS is looking at total national health expenditures. This often confuses people into thinking that there's conflict between the two sets of numbers when there isn't: CBO says that federal spending is going to go up to pay for the coverage expansion, but that savings and revenue will go up by even more, leading to a net reduction in the federal deficit. CMS is looking only at the spending side. And here's what it finds: In 2019, implementation of the Affordable Care Act will reduce the ranks of the uninsured by 34 million people and increase nation health expenditures by 1 percent. One percent... So that's the bottom line of the report: We're covering 34 million people and come 2019, spending is expected to be one percentage point -- and falling -- above what it would've been if we'd done nothing." [Washington Post, 4/23/10, emphasis added]

Politico: "Republicans Pounced" On May 11 CBO Letter Saying That Health Care Bill Might Cost More Than Expected. According to Politico: "Congressional Budget Office estimates released Tuesday predict the health care overhaul will likely cost about $115 billion more in discretionary spending over ten years than the original cost projections... Republicans pounced on the news, which they called another sign that the Obama administration makes promises it cannot deliver... The CBO released the estimates in response to a request from California Rep. Jerry Lewis, ranking Republican on the House Appropriations Committee." [Politico5/11/10]

CBO: Much Of The $115 Billion In Discretionary Spending Is In Fact "A Continuation Of Recent Funding Levels." The CBO clarified its letter of May 11: "The May 11 letter identified possible discretionary spending of at least $115 billion over the 2010-2019 period. Whether that spending will ultimately occur will depend on future appropriation actions. The potential discretionary costs identified in both CBO's earlier analysis and the letters provided on May 11 include many items whose funding would be a continuation of recent funding levels for health-related programs or that were previously authorized and that PPACA would authorize for future years." [CBO, 5/12/10, emphasis original]

OMB: "The Bottom Line Remains The Same." According to Office of Management and Budget Director Peter Orszag:

CBO's tally, which is not included in its estimate of the cost of the law, has led some to erroneously conclude that the law includes more spending and less deficit reduction than CBO has previously reported.

As I have said before and independent analysts have echoed, this is incorrect: 

  • Authorizations are just that - they are not spending. That is, they are expressions of what Congress would like to spend money on, not what it will spend money on. This is important since Congress frequently does not fully fund authorizations and many are never funded. As CBO itself says in the letter, authorizations "are subject to future appropriation actions, which could result in greater or smaller costs than the sums authorized by the legislation."
  • The President has made a firm commitment to freezing non-security discretionary funding for the next three years - a commitment he has said would be enforced by his veto pen. As a result, any actual new funding would have tofit within this freeze and so would have to be offset by budget cuts elsewhere.
  • It is also worth noting that a number of these authorizations - including the largest authorization reported in the CBO letter - are simply new authorizations of spending that already exists. In other words, funding such authorizations does not result in new spending.

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]

CLAIM: Mississippi Governor Haley Barbour Implied That The Affordable Care Act Doesn't Create Jobs

GOV. HALEY BARBOUR: The issue is jobs, jobs, jobs, jobs. Yet for more than a year, the Democrats in congress and the administration were totally focused on a health care reform bill that's gonna increase the cost of our health care, and the American people wanted to be talking about jobs.

FACT: The Affordable Care Act Will Create Millions Of Jobs

Health Care Reform Will Create Up To 4 Million American Jobs In The Next Decade. According to the Center for American Progress, "Relative to baseline employment forecasts from the Employment Projections Program at the U.S. Department of Labor, we estimate that moderate medical savings from health care modernization as envisioned under the legislation now before Congress would lead to an average of 250,000 additional jobs created annually. Under the larger assumption about savings due to health care reform, 400,000 new jobs a year would be created on average." [Center for American Progress, New Jobs Through Better Health CareJanuary 2010]

CLAIM: Mississippi Governor Haley Barbour Implied That The Affordable Care Act Adds To The Deficit

GOV. HALEY BARBOUR: We've been on a spending spree that made drunken sailors have a bad name... Yet for more than a year, the Democrats in congress and the administration were totally focused on a health care reform bill that's gonna increase the cost of our health care, and the American people wanted to be talking about jobs.

FACT: The Affordable Care Act Cuts The Deficit

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]

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