Fact Checking The Sunday Shows - October 24, 2010

October 25, 2010 10:01 am ET

Sunday's political talk shows featured former RNC chairman Ed Gillespie lying to ABC viewers about voter attitudes toward outside groups like his brainchild, American Crossroads, and then misleading about jobs and the economy. In fact, over 70 percent of respondents in this month's NBC/Wall Street Journal poll are concerned about outside spending making lawmakers "beholden" to outside groups. On Face the Nation, Gillespie's colleague Karl Rove claimed conservatives are only just catching up to liberals in outside spending, when it's been a dead heat for a couple cycles now, and studies show conservative groups are less likely to disclose donors than their liberal counterparts. Meanwhile, on Fox News Sunday, Republican senate candidate Pat Toomey (PA) forgot that American companies pay less tax than our statutory corporate tax rates, and forgot that President Reagan raised taxes 11 times between the famous 1981 tax cut and the rampant economic growth for which Reagan is remembered.

This Week

CLAIM: Ed Gillespie Claimed Voters Don't Care About Anonymous Funding For Attack Ads

ED GILLESPIE: Give them credit, because we've just spent a lot of time talking about something most voters care absolutely nothing about and think is nonsense, instead of talking about the fact that under this president we've lost 3.3 million jobs.

FACT: Actually, Polling Shows Voters DO Care About Anonymous Groups Buying Political Ads

NBC/WSJ Poll: 70 Percent Of Registered Voters Concerned About Anonymous Outside Groups Making Politicians "Beholden To Their Interests." In a poll commissioned by NBC and the Wall Street Journal, polling company Hart/McInturff asked voters two questions about the impact of outside groups buying ads in their districts. 72 percent are concerned about groups that don't disclose donors, 71 percent said they are concerned that "a candidate who is helped by these groups could be beholden to their interests," and 55 percent said the groups make a negative contribution, compared to 11 percent who said they make a positive contribution:

[NBC/WSJ poll, 10/14-18/10]

SUSA Poll: 53 Percent Say Candidate Supported By Anonymous Groups Less Likely To Improve Economy. According to Greg Sargent of the Washington Post: "It has become an article of faith among certain Beltway inside-game commentators that there's no way the Dem attack on secret money funding elections could ever have a prayer of working. Surely the issue is too esoteric, too process-y, and too removed from voter concerns about the economy to resonate. But a new poll commissioned by MoveOn, and done by the respected non-partisan firm Survey USA, strongly suggests that the issue may indeed matter a good deal to voters after all. The poll finds that two thirds of registered voters, or 66 percent, are aware that outside groups are behind some of the ads they're seeing...And crucially, the poll also found that the issue is resonant when linked to the economy. A majority, 53 percent, are less likely to think a candidate who is backed by 'anonymous groups' can be trusted to 'improve economic conditions' for them or their families. People don't believe these groups are looking out for their interests." [Washington Post, 10/14/10; emphasis added]

FACT: Since Obama Policies Began To Influence The Economy In Summer 2009, We've Had Nine Consecutive Months Of Private Sector Growth

The Economy Shed Almost 8 Million Jobs Under Republican Policies Before The Recovery Act Took Effect. 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]

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]

Face the Nation

CLAIM:  Karl Rove Falsely Claimed Liberal Outside Money Groups Have Been Outspending Conservative Groups In Recent Elections

KARL ROVE: Suddenly everybody's gotten spun up about it this year when Republicans have started to follow what the Democrats have been doing and create 501(c)4s, which can use less than half their money for express advocacy... Once we copied what liberals did, liberals got upset... In 2008, President Obama received the benefit of over $400 million in outside spending on his behalf, most of whom did not report a single donor.

FACT: Actually, Outside Spending Was Roughly Even In 2008, And TOTALLED $400 Million

Campaign Finance Institute Report: Liberal And Conservative Groups Spent Comparable Amounts In 2008. In a report titled "Soft Money Spending By 501(c) Nonprofits Tripled In 2008 Election," the Campaign Finance Institute wrote: "If Democratic-oriented 527s dominated the soft money system in 2004, the rise of the 501(c)s in 2008 has evened the partisan balance. Democratic-leaning 527s, largely financed by labor unions and wealthy individuals, held more than a 2-1 advantage over Republican-oriented ones. But among 501(c)s, Republican-inclined groups - mainly backed by businesses and wealthy individuals -- maintained the same edge over their pro- Democratic rivals." ["Soft Money Spending By 501(c) Nonprofits Tripled In 2008 Election," Campaign Finance Institute, 2/25/09]

FACT: In 2008, Conservative Outside Groups Favored Anonymous Donors While Most Liberal Groups Disclosed Their Spending To The IRS

Republican-Leaning 501(c) Groups Outspent Democratic-Leaning Ones By Two-To-One Margin In 2008. In a report titled "Soft Money Spending By 501(c) Nonprofits Tripled In 2008 Election," the Campaign Finance Institute wrote: "Breaking 501(c)\ campaign spending down by groups' partisan orientations, Republican leaning groups spent $142 million and Democratic ones $54 million, a more than 2-1 Republican advantage." ["Soft Money Spending By 501(c) Nonprofits Tripled In 2008 Election," Campaign Finance Institute, 2/25/09]

Democratic-Leaning 527 Groups Outspent Republican-Leaning Ones By Two-To-One Margin In 2008. In a report titled "Soft Money Spending By 501(c) Nonprofits Tripled In 2008 Election," the Campaign Finance Institute wrote: "Democratic-oriented groups spent $143 million and Republican-oriented ones $56 million. This was the mirror image, almost to the dollar, of 501(c) spending which favored Republicans." ["Soft Money Spending By 501(c) Nonprofits Tripled In 2008 Election," Campaign Finance Institute, 2/25/09]

Unlike 501(c)s, 527s Disclose Their Donors. In "Fading Disclosure," a report on campaign finance and donor disclosure, Public Citizen wrote: "The loosening of BCRA's disclosure requirements [due to the Citizens United decision] appears to have motivated many Republican oriented electioneering groups to choose to operate under the auspices of Section 501(c) of the tax code, which is reserved for social welfare groups, unions and trade associations, instead of Section 527, which is for political organizations. Whereas 527s must disclose all of their donors quarterly, 501(c)s are not required to disclose their donors at all... Disclosure pursuant to Section 527 is far less useful to the electorate than disclosure pursuant to the electioneering communications statute because 527 disclosure occurs only quarterly while electioneering communications' must be disclosed within 24 hours. Nonetheless, disclosure pertinent to 527 rules is better than nothing." ["Fading Disclosure," Public Citizen, 9/15/10; emphasis added]

FACT: In 2010, Conservative Groups Continue To Avoid Disclosure And Liberal Groups Continue To Disclose

Percentage Of Outside Groups Which Disclose Funding Dropped Sharply After 2006. In "Fading Disclosure," a report on campaign finance and donor disclosure, Public Citizen wrote:

["Fading Disclosure," Public Citizen, 9/15/10; emphasis added]

Public Citizen: This Year, "Disclosure Is Particularly Low Among Entities That Favor Republicans." In "Fading Disclosure," a report on campaign finance and donor disclosure, Public Citizen wrote:



["Fading Disclosure," Public Citizen, 9/15/10; emphasis added]

Fox News Sunday

CLAIM: Pat Toomey Claimed That American Corporations Pay Higher Taxes Than Most Of The Industrial World

PAT TOOMEY (R-PA): What I have said, Chris, is that we do have the second-highest tax rate in the industrial world, 35 percent. Only Japan's is higher, and they're in the process of lowering theirs. I've said we should lower our tax rate, our top business tax rate, from 35 percent to 25 percent.

FACT: Toomey Ignored The Tax Rates U.S. Corporations ACTUALLY Pay, Which Are Much Lower

Effective Tax Rates Are Lower Than Statutory Rates. In its 2009 report on global taxation, the World Bank wrote: "The key point to recognise is that it is not simply the statutory rate of corporate income tax that is important here, but also the effective tax rate for current corporate income tax, taking into account all the additions and deductions to profit before tax that tax rules may require." ["Paying Taxes 2009: The Global Picture," World Bank, 11/10/08]

American Companies Pay Lower Effective Tax Rate Than German, Canadian, Chinese, Italian, And Other Companies. In its 2009 report on global taxation, the World Bank wrote:

Figure 2.7

As noted in Chapter 1, reducing the statutory rate of corporate income tax has been the most popular government tax reform in the period. However in most of the economies, the case study company does not pay corporate income tax at the statutory rate on its profit before tax, since the tax rules require adjustments to be made to this in order to calculate taxable profits. A common example is to substitute tax depreciation for commercial amortisation of assets.

The effective rate of current corporate income tax can be defined as the actual rate of corporate income tax paid as a percentage of profit before tax. Figure 2.7 compares this effective rate with the statutory rate of corporate income tax for the G8 and BRIC (Brazil, Russia, India and China) economies, and shows that the two are often not the same...

["Paying Taxes 2009: The Global Picture," World Bank, 11/10/08; in-text citation removed for clarity]

CBPP: U.S. Corporations Pay Lower Taxes Than Average For Developed Economies. According to the Center for Budget and Policy Priorities: "The U.S. corporate tax burden is smaller than average for developed countries.  Corporations in 19 of the member states of the Organization for Economic Co-operation and Development paid 16.1 percent of their profits in taxes between 2000 and 2005, on average, while corporations in the United States paid 13.4 percent." [CBPP.org, 10/27/08; in-text citation removed for clarity]

2009: General Electric Earned A $1.1 Billion Tax CREDIT Despite $10.3 BILLION In Pre-Tax Income. According to Forbes: "As you work on your taxes this month, here's something to raise your hackles: Some of the world's biggest, most profitable corporations enjoy a far lower tax rate than you do--that is, if they pay taxes at all. The most egregious example is General Electric. Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion. Avoiding taxes is nothing new for General Electric. In 2008 its effective tax rate was 5.3%; in 2007 it was 15%. The marginal U.S. corporate rate is 35%." [Forbes, 4/1/10; emphasis added]

CLAIM: Pat Toomey Claimed That Ronald Reagan Proved Tax Cuts Lead To Job Creation

PAT TOOMEY (R-PA): In the 1980s Ronald Reagan cut taxes dramatically, and by the end of the decade revenue coming in to the federal government had doubled. So I think it's incredibly important that we focus on maximizing economic growth. That's where we get the job creation that we need, that's where we get revenue for the government.

FACT: Toomey Forgot That President Reagan RAISED Taxes Repeatedly After His 1981 Tax Cuts

Reagan Increased Business Taxes In 1982, Payroll Taxes In 1983, And Energy Taxes In 1984. Economist Robert Shapiro wrote in Forbes: "Everyone remembers Reagan's 1981 tax cuts. His admirers are less likely to tout the tax hikes he accepted as the 1981 recession and his own tax cuts began to unravel his long-term fiscal picture--a large tax increase on business in 1982, higher payroll taxes enacted in 1983 and higher energy taxes in 1984. A decade later, when a serious recession and higher spending began to upend the fiscal outlook again, the first President Bush similarly raised taxes on higher-income people in 1991; Bill Clinton doubled down and raised them again in 1993." [Forbes, 2/3/10; emphasis added]

After Cutting Taxes In 1981, President Reagan RAISED Taxes 11 Times. According to Bruce Bartlett, an official in the Reagan administration:

It may come as a surprise to some people that once upon a time in the not-too-distant past Republicans actually cared enough about budget deficits that they thought raising taxes was necessary to bring them down. Today, Republicans believe that deficits are nothing more than something to ignore when they are in power and to bludgeon Democrats with when they are out of power.

Legislated Tax Changes by Ronald Reagan as of 1988

Tax Cuts

Billions of Dollars

Economic Recovery Tax Act of 1981


Interest and Dividends Tax Compliance Act of 1983


Federal Employees' Retirement System Act of 1986


Tax Reform Act of 1986


Total cumulative tax cuts


Tax Increases

Billions of Dollars

Tax Equity and Fiscal Responsibility Act of 1982


Highway Revenue Act of 1982


Social Security Amendments of 1983


Railroad Retirement Revenue Act of 1983


Deficit Reduction Act of 1984


Consolidated Omnibus Budget Reconciliation Act of 1985


Omnibus Budget Reconciliation Act of 1985


Superfund Amendments and Reauthorization Act of 1986


Continuing Resolution for 1987


Omnibus Budget Reconciliation Act of 1987


Continuing Resolution for 1988


Total cumulative tax increases


 Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year 1990(Washington: U.S. Government Printing Office, 1989), p. 4-4.

[CapitalGainsAndGames.com, 4/6/10]

Unemployment Shot Up Sharply After 1981 Tax Cuts And Didn't Drop Until Reagan Signed Tax HIKE In 1982. Paul Krugman of the New York Times' wrote:

[T]here were two major tax changes in Reagan's first term, which began in January 1981. ERTA, aka the Reagan tax cut, was signed in August 1981; TEFRA, which raised taxes, was signed in September 1982.

Here's how those tax law changes relate to the unemployment rate:


So unemployment, which had been stable until Reagan cut taxes, soared during the 15 months that followed the tax cut; it didn't start falling until Reagan backtracked and raised taxes.

Of course, I don't believe that correlation was causation: in fact, both job losses in 1981-2 and job gains thereafter were mainly the result of Federal Reserve policy, rather than tax changes. (I have a private bet here: despite this disclaimer, I'm almost certain that some commenters and/or writers on other blogs will accuse me of slandering Reagan, claiming that the 1981 tax cut caused the recession). The point, instead, is to highlight just how long the lag was between those tax cuts and "morning in America". [New York Times, 1/18/10; emphasis added]