Fact Checking Rep. Ryan's State Of The Union Response

January 25, 2011 10:40 pm ET

In his televised response to President Obama's State of the Union address, House Budget Committee Chairman Paul Ryan (R-WI) repeated a series of debunked Republican talking points and attacks on Democratic policies. Among other things, Ryan absurdly claimed that the Recovery Act "failed" to create jobs, overstated Obama's role in creating the current debt, and stubbornly insisted that the Affordable Care Act will increase the deficit, even though nonpartisan experts say that he's wrong.

Ryan: The Stimulus Failed, And Increased Government Spending By 84 Percent!

RYAN: The facts are clear: Since taking office, President Obama has signed into law spending increases of nearly 25% for domestic government agencies - an 84% increase when you include the failed stimulus. All of this new government spending was sold as 'investment.' Yet after two years, the unemployment rate remains above 9% and government has added over $3 trillion to our debt.

"Failed Stimulus?" When President Obama Took Office The Economy Was Shedding Hundreds Of Thousands Of Jobs Per Month...

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:

[Washington Post8/12/10]

  • From December 2007 Through July 2009, Economy Lost Nearly 400,000 Private Sector Jobs Per Month On Average. According to Bureau of Labor Statistics data on monthly gains and losses in private sector jobs, the private sector added 23,000 jobs in December 2007. In June 2009, the sixth month of the Obama presidency, the private sector shed 452,000 jobs. Over that 19-month span, the private sector shed 393,000 jobs per month on average, the data show.

Dec 07

23,000

Jan 08

-12,000

Feb 08

-85,000

Mar 08

-58,000

Apr 08

-161,000

May 08

-253,000

Jun 08

-230,000

Jul 08

-257,000

Aug 08

-347,000

Sep 08

-456,000

Oct 08

-547,000

Nov 08

-734,000

Dec 08

-667,000

Jan 09

-806,000

Feb 09

-707,000

Mar 09

-744,000

Apr 09

-649,000

May 09

-334,000

Jun 09

-452,000

AVG

    -393,000

[BLS.gov, accessed 1/25/11]

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]

...And That Trend Turned Around After The Stimulus Took Effect

The private sector jobs-per-month chart below, based on Bureau of Labor Statistics data, is shaded red for months before economists say President Obama's policies began to impact the economy, and blue for subsequent months.

The Private Sector Has Added Jobs Every Month Since December 2009. According to Bureau of Labor Statistics data, the private sector shed 83,000 jobs in December 2009. Since then, the lowest monthly job gain was 16,000 in January 2010, and the highest was 241,000 in April 2010; private industries have added jobs for 12 straight months, the data show. [BLS.gov, accessed 1/23/11]

Private Sector Grew By 1.3 MILLION Jobs In 2010. Below is a graph prepared by Minority Leader Pelosi's office showing net private sector job gains or losses per month since December 2007.

 

[DemocraticLeader.gov, 1/7/11]

CBO: The Recovery Act Created Jobs, Lowered Unemployment, And Boosted GDP. According to the nonpartisan Congressional Budget Office:

CBO estimates that ARRA's policies had the following effects in the third quarter of calendar year 2010:

  • They raised real (inflation-adjusted) gross domestic product by between 1.4 percent and 4.1 percent,
  • Lowered the unemployment rate by between 0.8 percentage points and 2.0 percentage points,
  • Increased the number of people employed by between 1.4 million and 3.6 million, and
  • Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 5.2 million compared with what would have occurred otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers). [CBO, November 2010]

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]

"The Facts Are Clear?" Fact Checkers Say Ryan's Cooking The Books To Arrive At "84 Percent" Figure

PolitiFact: Counting Stimulus Spending In 2010 Is "A Nifty Accounting Maneuver." In a November 2010 fact check of Rep. Ryan's "84 percent" claim, PolitiFact.com wrote:

Barely TrueOutside experts that PolitiFact Wisconsin spoke with quibble a bit about the annual budget figures Ryan uses, but the numbers are not really in dispute. And they do show a big jump -- from $434 billion in 2008 to $537 billion in 2010.

But that's a 24 percent increase, not the 84 percent claimed by Ryan and his colleagues.

Is someone's math fuzzy? Let's dig in to find out.

Ryan's calculations also include another number -- the discretionary spending portion of the American Recovery and Reinvestment Act, better known as the economic stimulus package. That adds another $259 million to the total, which brings it to $797 billion (with rounding) and the 84 percent.

One problem, and it's a significant one in terms of Ryan's statement:

The stimulus package was approved in February 2009.

Ryan includes it in the 2010 totals, so the two-year trend under Obama looks like a rocket headed straight up.

If you put it in 2009 -- when it was passed -- the two-year trend under Obama looks more like a roller-coaster ride: Up a lot, and then down some but not all the way. [...]

In illustrating his point about spending increases under President Obama, Ryan says non-defense discretionary spending has risen 84 percent. There is no doubt that spending is up, or that the one-time stimulus package was a major driver. But sliding the stimulus money from 2009 to 2010 -- whether on a chart or in an interview -- skews the picture.

It's a nifty accounting maneuver. But still a maneuver. We rate Ryan's claim Barely True. [PolitiFact.com, 11/2/10, emphasis added]

The Milwaukee Journal Sentinel produced a graphic demonstrating the difference between Rep. Ryan's methodology and "conventional accounting."

[Milwaukee Journal Sentinel via PolitiFact.com, 11/2/10]

Ryan: Democrats Want High Taxes

RYAN: Whether sold as 'stimulus' or repackaged as 'investment,' their actions show they want a federal government that controls too much; taxes too much; and spends too much in order to do too much. 

"They Want A Government That...Taxes Too Much?" Democrats Passed Hundreds Of Billions Of Dollars In Tax Relief Measures In 2009-10...

PolitiFact: $288 Billion In Tax Relief In Recovery Act Were "Nearly A Third" Of The Spending. According to PolitiFact.com: "Nearly a third of the cost of the stimulus, $288 billion, comes via tax breaks to individuals and businesses. The tax cuts include a refundable credit of up to $400 per individual and $800 for married couples; a temporary increase of the earned income tax credit for disadvantaged families; and an extension of a program that allows businesses to recover the costs of capital expenditures faster than usual. The tax cuts aren't so much spending as money the government won't get -- so it can stay in the economy. Of that $288 billion, the stimulus has resulted in $119 billion worth of tax breaks so far." [PolitiFact.com, 2/17/10]

HIRE Act Provided $8.5 Billion In Tax Credits To Job Creators. According to CNNMoney.com: "Businesses have hired an estimated 4.5 million Americans who have been jobless for at least eight weeks, making these firms eligible for approximately $8.5 billion in tax credits, according to a Treasury report released Monday. The tax credits are part of the $13 billion Hiring Incentives to Restore Employment (HIRE) Act, which Congress passed in March. Under the act, employers who hire workers who have been jobless for at least 60 days are exempt from the 6.2% payroll tax charged per worker -- for the rest year. In addition, companies can claim a tax credit of up to $1,000 for each employee who stays at least a year." [Money.CNN.com, 7/12/10, emphasis added]

House Passed Small Business Aid Bill In Mid-June On Party Lines. According to Reuters: "The U.S. House of Representatives on Thursday approved a small business lending program sought by President Barack Obama to boost economic growth and encourage job creation. The House voted 241-182, mostly along party lines, for a bill which would authorize a $30 billion fund the Treasury Department would use to provide capital to small community banks, allowing increased lending to small businesses...[T]he $30 billion fund could be leveraged into as much as $300 billion in new credit to small businesses. The legislation is being combined with another bill earlier passed by the House that would provide $3.5 billion in small business tax breaks before it is sent over to the Senate for a vote." [Reuters, 6/17/10, emphasis added]

...Over Republican Objections

PolitiFact: "True" That "Democrats Passed 25 Tax Cuts [In 2009] Without The Help Of Republicans." PolitiFact.com analyzed a claim by senior White House adviser David Axelrod that Democrats passed 25 tax cuts in 2009 without Republican help:

True

We were intrigued by the claim that Democrats passed 25 tax cuts last year, so we contacted the White House press office and asked for a list. And they gave us one, all from the economic stimulus package championed by Obama and signed on Feb. 17, 2009.

We checked them out, provided sections and page numbers in the stimulus for reference, and added a brief explainer for some. If your eyes glaze over midway through, feel free to skip ahead to the bottom of the list where we'll pick up our analysis.[...]

Each of the tax provisions in the stimulus could have been broken into separate bills, said Bob Williams, also of the Tax Policy Center, and on their own could have rightly been billed as separate tax cuts.

"They packed an awful lot into that bill," Williams said. "I think it's fair to say that various tax provisions in the stimulus could be considered tax cuts. I don't think that's being deceptive."

We agree. 

But there's one other element of Axelrod's claim, that the tax cuts were passed without the help of Republicans.

The stimulus passed the House with nary a Republican vote. And it passed the Senate with just three (though we note that one of them, Arlen Specter of Pennsylvania, is now a Democrat).

So it's certainly fair to say the stimulus passed without the help of the Republican caucus. We find Axelrod's statement True. [PolitiFact.com, 1/31/10]

Ryan Implied That "The Last Two Years" Of Spending Are Forcing An Increase In The Debt Ceiling

RYAN: Whether sold as 'stimulus' or repackaged as 'investment,' their actions show they want a federal government that controls too much; taxes too much; and spends too much in order to do too much. And during the last two years, that is exactly what we have gotten - along with record deficits and debt - to the point where the President is now urging Congress to increase the debt limit. We believe the days of business as usual must come to an end. We hold to a couple of simple convictions: Endless borrowing is not a strategy; spending cuts have to come first.

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.org, 6/28/10]

Debt Skyrocketed While Bush Was In Office. Below is a graph prepared by Minority Leader Pelosi's office showing the increase of public debt during the years Bush was in office:

 [U.S. Treasury via Flickr.com, accessed 1/25/11]

Far From Unprecedented, Congress Has Raised The Debt Limit Nearly A Dozen Times Since 1997

In March 2006, Congress Raised Debt Limit "For The Fourth Time In Five Years." As reported by NPR: "Faced with a potential government shutdown, the Senate votes to raise the nation's debt limit for the fourth time in five years. The bill passed by a 52-48 vote, increasing the ceiling to $9 trillion. The bill now goes to the president. The debt now stands at more than $8.2 trillion. Like many cash-strapped Americans who have maxed-out credit cards, the federal government has hit its limit for borrowing funds to keep operating. If the limit isn't raised, the government likely will run out of borrowing authority within days, risking a shutdown. When President Bush took office five years ago, the national debt was at $5.6 trillion; since then, big budget surpluses have collapsed into huge deficits, and the debt has shot up nearly 50 percent." [NPR, 3/16/06]

OpenCongress.org: 11 Debt Limit Votes Since 1997 Alone. OpenCongress.org prepared a chart showing the last 11 votes to raise the debt limit:

[OpenCongress.org, 1/28/10]

Rep. Ryan: Affordable Care Act Grows Health Care Spending And National Debt

RYAN: Health care spending is driving the explosive growth of our debt. And the President's law is accelerating our country toward bankruptcy.

Affordable Care Act Reduces The Growth Of Health Care Spending

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 Post4/23/10, emphasis added]

After One-Time Spending Increase In 2014, Costs Grow More Slowly Than They Would Without Reform. According to the Washington Post's Ezra Klein:

[W]e're covering about 10 percent of the country and increasing spending growth by 0.2 percent. Seems like a good deal to me. But it's actually a better deal than that. Here's what the cost curve -- or maybe I should say cost line -- looks like:

What you're seeing here isn't the cost curve bending up. It's a one-time increase in the level of spending. That's the big jump in 2014, the year the exchanges and subsidies come online. So when you compare 2014 to 2013, spending growth seems like it's gone up a bunch. But by 2016, we're back to normal. In fact, we're better than normal [according to a September CMS report]: "For 2015-19, national health spending is now projected to increase 6.7 percent per year, on average -- slightly less than the 6.8 percent average annual growth rate projected in February 2010."

In other words, 2014 is a one-time increase in spending level as we get 30 million new people covered. After 2014, costs grow more slowly than they would without the health-care reform bill. [Washington Post, 9/10/10, emphasis added, parentheses added]

Affordable Care Act Reduces The Debt

For a more detailed look at Rep. Ryan's erroneous debt analysis of the Affordable Care Act, read our comprehensive fact check.

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: Affordable Care Act Reduces Deficits By $1.1 Trillion By 2030. According to Office of Management and former 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: Republican Repeal Bill Would Add $230 Billion To The Debt. According to the Congressional Budget Office:

Because CBO and JCT estimated that the March 2010 health care legislation would reduce budget deficits over the 2010-2019 period and in subsequent years, we expect that repealing that legislation would increase budget deficits. The resulting increase in deficits projected for fiscal years 2012 through 2019 is likely to be similar in size to-but not exactly the same as-the reduction in deficits that was originally estimated to result from the enacted legislation.[...]

As a result of changes in direct spending and revenues, CBO expects that enacting H.R. 2 would probably increase federal budget deficits over the 2012-2019 period by a total of roughly $145 billion (on the basis of the original estimate), plus or minus the effects of technical and economic changes that CBO and JCT will include in the forthcoming estimate.Adding two more years (through 2021) brings the projected increase in deficits to something in the vicinity of $230 billion, plus or minus the effects of technical and economic changes. [CBO, 1/6/11]

Ryan Claims The Affordable Care Act Is Stifling Job Creation

RYAN: What we already know about the President's health care law is this: Costs are going up, premiums are rising, and millions of people will lose the coverage they currently have. Job creation is being stifled by all of its taxes, penalties, mandates and fees.

"Stifled?" The Private Sector Has Grown By 1.1 Million Jobs Since Reform Bill Passed

1.1  Million New Private Sector Jobs Since Affordable Care Act Became Law. As reported by Washington Monthly: "Just at the surface level, the charge is transparently false. Since the Affordable Care Act was signed into law, the private sector has added 1.1 million jobs. Roughly a fifth of that total -- more than 200,000 -- were jobs created in the health care industry. If GOP rhetoric were true, these jobs wouldn't have been created." [Washington Monthly, 1/18/11]

Minority Leader Pelosi's office prepared a graph showing job gains and losses per month since the Affordable Care Act passed.

Associated Press: GOP Claim About Job Losses From Health Care Reform Is Misleading. According to the Associated Press: "[The GOP] cites the 650,000 lost jobs as Exhibit A, and the nonpartisan Congressional Budget Office as the source of the original analysis behind that estimate. But the budget office, which referees the costs and consequences of legislation, never produced the number. What follows is a story of how statistics get used and abused in Washington. What CBO actually said is that the impact of the health care law on supply and demand for labor would be small. Most of it would come from people who no longer have to work, or can downshift to less demanding employment, because insurance will be available outside the job." [Associated Press, 1/18/11; emphasis added]

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 Care, January 2010]

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