Rep. Ryan's Misinformation Tour De Force

June 14, 2011 10:53 am ET

In an op-ed on FoxNews.com titled "Obama's Economic Experiment Has Failed - Time to Get Back to What Works," Budget Committee Chairman Paul Ryan (R-WI) put forward a slew of mischaracterizations and outright falsehoods to attack President Obama's economic record. Ignoring that Obama inherited the worst recession since the Great Depression — and that his Recovery Act helped prevent an even greater economic downturn — Ryan asserted that the Recovery Act has "failed to create jobs." To this end, Ryan also deceptively cited lackluster May jobs numbers and a report that preceded Obama's inauguration. Ryan also attacked the president's signature policies, including financial and health care reform, baselessly asserting that they didn't fix "the problems they were intended to address." He touted his own plan to 'save Medicare' (even though the GOP budget plan would dismantle the Medicare system) and falsely claimed that President Obama doesn't have any plan to address the program. He threw around meaningless catch words like "uncertainty" to attack Obama's tax policy, and misleadingly stated that the U.S.'s corporate tax rate is the highest in the developed world, when in fact the effective tax rate is lower than many other developed countries. And despite the numerous tax cuts Obama and Democrats passed over Republican objections, Ryan attacked the president for tax hikes on job creators.

The Recovery Act Not Only Failed To Create Jobs, It Also "Made Things Worse"

May Jobs Numbers Mean The Stimulus Didn't Work

President Obama Is Responsible For Unemployment That Exceeded Predictions

The Current Recovery Is Lagging Because It's Not "Private-Sector-Led"

"Reasons Why The President's Policies Have Made This Recovery Weaker Than Usual" Revolve Around "Uncertainty"

Financial Reform And Health Care Reform Didn't Fix "The Problems They Were Intended To Address"

President Obama Has Raised Taxes On Job Creators

The U.S. Corporate Tax Rate Is "The Highest In The Developed World"

President Obama Has Offered No Plan To Save Medicare

The GOP Budget Plan 'Clears Out Loopholes And Deductions That Go Primarily To The Well-Off'

The GOP Budget Plan 'Saves Medicare From Bankruptcy'

CLAIM: The Recovery Act Not Only Failed To Create Jobs, It Also "Made Things Worse"

RYAN: This president's leadership deficit has caused a disastrous jobs deficit, and where he has led, his policies have made things worse. [...] The stimulus spending spree failed to create jobs. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: The Economy Shed Millions Of Jobs During The Bush Recession Until President Obama's Policies Began To Turn Things Around

Washington Post Fact Checker: Saying Obama "Made It Worse" Is "Stretching It." According to the Washington Post fact checker's assessment of the following statement by former Gov. Mitt Romney (R-MA):

"When he took office, the economy was in recession, and he made it worse, and he made it last longer." 

With the unemployment rate ticking up in May , to 9.1 percent, the economy is definitely a weak spot for Obama. But Romney is stretching it here when he suggests that Obama has made the recession "worse...and made it last longer."

Part of the problem is that the National Bureau of Economic Research, the nonpartisan research organization that identifies recessions, last year declared that the recession ended in June 2009 — two years ago. So, with NBER saying the economy is now out of a recession, it is difficult to see how Romney can claim that Obama made it worse.

A Romney campaign official, who declined to be identified, argued that the nation now has what he called a "recessionary economy." He said that Obama made the situation worse by pushing through a stimulus bill that did not have enough tax relief. (About one-quarter of the $800 billion stimulus bill was immediate tax relief.) [Washington Post, 6/6/11, emphasis original]

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:

Job losses before and after Obama's policies

[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]

CLAIM: May Jobs Numbers Mean The Stimulus Didn't Work

RYAN: The May jobs report was yet another reminder that the government-knows-best crowd got it wrong. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: Overall Recovery Trends Show May Jobs Numbers Are A Soft Patch, Not A Brick Wall

Economists: Slowed Job Growth Is A Temporary "Soft Patch." From the Huffington Post: "Economists still believe the lull in activity will be temporary. They cite high gasoline prices, bad weather and disruptions to motor vehicle production because of a shortage of parts from Japan as factors weighing on growth. 'It is clear we have temporarily entered a soft patch,' said Christopher Probyn, chief economist at State Street Global Advisors in Boston, before the report. 'Nobody knows how soft and how long, but the best case view is that the fundamentals of the recovery remain intact and the economy will re-accelerate in the second half of the year.'" [Huffington Post6/3/11]

Economist: "Soft Spot" Is "Not Necessarily An Indication That This Economy Is Not Going To Be Able To Create A Whole Lot Of Jobs Going Forward." During a PBS interview, economist Joel Naroff of Naroff Economic Advisors stated:

We had been moving along at a pretty solid pace. Indeed, businesses were adding jobs at a rate that was much more than any of us had expected coming into the year. But the speed bump that the higher gasoline prices has created has caused businesses to ask the question, is this recovery going to pick up the kind of speed that they were hoping it would, and if not, do they really needs the jobs right now?

So, I think what they're starting to do is basically say: I'm going to hold off a little while, see if the gasoline prices come back, see if people start spending again, and, if we do have that pickup that would come with the lower gas prices, then we can start hiring once again.

I think this is a soft spot, but necessarily -- not necessarily an indication that this economy is not going to be able to create a whole lot of jobs going forward. [PBS, 6/3/11, emphasis added]

New York Times: April Jobs Numbers Show "The Largest Gain In Four Years." According to the New York Times: "The Labor Department's monthly snapshot of the job market, released on Friday, showed that employers added 290,000 jobs in April - the largest gain in four years - and that they did so across a broad swath of industries. The United States has now added jobs for four consecutive months." [New York Times5/7/10]

AP: "The Nation's Economy Posted Its Largest Job Gain In Three Years In March." According to the Associated Press: "The nation's economy posted its largest job gain in three years in March, while the unemployment rate remained at 9.7 percent for the third straight month. The increase is the latest sign that the economic recovery is sustainable and healing in the job market is beginning." [Associated Press4/2/10, via ABC]

CBO: The American Recovery And Reinvestment Act Has Created Up To 2.4 Million American Jobs. According to CNNMoney: "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." [CNNMoney, 1/13/10]

CLAIM: President Obama Is Responsible For Unemployment That Exceeded Predictions

RYAN: When he came into office, the president's economic team predicted that a stimulus bill of unprecedented size and scope would hold unemployment below 8 percent and steadily lower it to 7 percent by the first quarter of this fiscal year.

These estimates weren't just off by a little bit - they completely missed the mark. The jobless rate went all the way up to 10.1 percent, never fell below 8.8 percent, and has now ticked back up to 9.1 percent. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: Those Blaming Obama For Poor Prediction Are Taking A 2009 Report Out Of Context

"Not An Official Government Assessment, Nor Even An Analysis Of An Actual Plan That Had Passed Congress." From a Washington Post fact check of a similar claim by Tim Pawlenty:

Pawlenty is referring to a projection issued on Jan. 9, 2009 - before Obama even took the oath of office - by two aides: Christina Romer, the nominee to head the Council of Economic Advisers, and Jared Bernstein, an incoming economic adviser to Vice President-elect Biden.

The 14-page report thus was not an official government assessment, nor even an analysis of an actual plan that had passed Congress. Instead, it was an attempt to assess the impact of a possible $775 billion stimulus package and what difference it would make compared to doing nothing. The president-elect had articulated a goal of passing a plan that would "save or create 3 million jobs by the end of 2010."

Page 5 of the report included a chart that showed that unemployment would peak at 8 percent in 2009, compared to 9 percent in 2010 if nothing was done. But the report also contained numerous caveats and warnings because, after all, it was merely a projection. At the time, other economists had similar forecasts - Romer and Bernstein were in the mid-range - but the economy turned out to be in deeper trouble than most people thought. [Washington Post, 5/26/11]

Report Included "Heavy Disclaimers" About Unemployment Projections. According to PolitiFact:

But what we saw from the administration in January 2009 was a projection, not a promise. And it was a projection that came with heavy disclaimers.

"It should be understood that all of the estimates presented in this memo are subject to significant margins of error," the report states. "There is the more fundamental uncertainty that comes with any estimate of the effects of a program. Our estimates of economic relationships and rules of thumb are derived from historical experience and so will not apply exactly in any given episode. Furthermore, the uncertainty is surely higher than normal now because the current recession is unusual both in its fundamental causes and its severity."

There's also a footnote that goes with the chart that states: "Forecasts of the unemployment rate without the recovery plan vary substantially. Some private forecasters anticipate unemployment rates as high as 11% in the absence of action." [PolitiFact, 2/28/11]

Higher Unemployment Reflects Economic Conditions That Were Worse Than Were Expected - Not A Failure Of The Stimulus. From a Washington Post fact check of a similar claim by Tim Pawlenty:

Romer, when she left the White House last year, said that the estimate of the impact of the stimulus bill was accurate but the 8-percent "prediction was so far off" because economic conditions were so much worse. "We, like virtually every other forecaster, failed to anticipate just how violent the recession would be in the absence of policy, and the degree to which the usual relationship between GDP [gross domestic product] and unemployment would break down," she said.

Economic projections by their nature are uncertain. It's absurd to claim that this is a presidential "promise," especially when the projection was not even about the stimulus bill that ultimately passed Congress. [Washington Post, 5/26/11]

FactCheck.org: Original Prediction Was "In Line With What Private Economists Were Forecasting." According to FactCheck.org:

Back in July of last year we wrote, "the original projections from President Obama's economic advisers on what would happen with and without the stimulus plan are still off - and significantly so." But nobody "promised" that unemployment would remain below 8 percent.

As we also wrote in June of last year, the White House explanation was simple: "They say President George Bush left them a worse mess than they realized" when Obama's advisers came up with their predictions. And that's true. The original chart - produced Jan. 9, 2009 - was based on economic projections that were in line with what private economists were forecasting. Those forecasts were being revised for the worse even before any stimulus money was spent. [FactCheck.org, 9/24/10]

PolitiFact: "There Is An Inherent Uncertainty In Economic Forecasting." According to PolitiFact: "But there is an inherent uncertainty in economic forecasting. And how can you ever prove that if the unemployment rate got to X percent, it would or would not have gotten a point or two higher if not for the stimulus? The implication of Allen's comment is that a rising unemployment rate in 2009 proves the stimulus didn't work. Many economists don't agree -- and argue that without the stimulus, unemployment would have been worse -- but it's difficult to empirically prove one way or the other. [PolitiFact, 2/28/11]

CLAIM: The Current Recovery Is Lagging Because It's Not "Private-Sector-Led"

RYAN: This recovery pales in comparison to past, private-sector-led recoveries. Unemployment today has fallen by just 1 percentage point from its recessionary peak. By contrast, unemployment at the same point in the past ten recoveries dropped by an average of 5 percentage points in past recoveries. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: Recovery Is Lagging Because The Recession Was The Worst Since The Great Depression

"Longest And Deepest U.S. Recession Since The Great Depression." From Bloomberg: "The longest and deepest U.S. recession since the Great Depression ended in June 2009, lasting 18 months, the National Bureau of Economic Research said. ... Marked by a collapse in housing and sub-prime mortgage lending that triggered a global meltdown in financial markets, the downturn trailed the 43-month Great Depression that lasted from 1929 to 1933, surpassing the 16-month contractions of 1973- 75 and 1981-82. More than 8 million workers lost their jobs as a result of the recession, a slump that may take years to fix." [Bloomberg, 9/20/10]

FACT: The Recovery Act Helped Turn Private-Sector Growth Around, Even While The Public Sector Sheds Jobs

Since Summer 2009, The Private Sector Has Added Jobs While The Public Sector Has Shrunk. Political Correction prepared a chart based on Bureau of Labor Statistics data showing cumulative job gains and losses in the public and private sectors since summer 2009 (click to enlarge):

Public- and private-sector jobs

Since July 2009, The Private Sector Has Gained Over 1.2 MILLION Net Jobs. According to Bureau of Labor Statistics data, there were 107,649,000 private-sector jobs in July 2009. As of May 2011, the most recent report available, the data show that total is up to 108,916,000 - a net gain of 1,267,000 jobs in the private sector. [BLS.gov, accessed 6/12/11]

Since July 2009, The Public Sector Has Lost 417,000 Net Jobs. According to Bureau of Labor Statistics data, there were 22,544,000 jobs in the government sector in July 2009. As of May 2011, the most recent report available, the data show 22,127,000 government jobs - a net loss of 417,000. [BLS.gov, accessed 6/12/11]

BLS: The Private Sector Added 2.1 Million Jobs From February 2010 To April 2011. According to the Bureau of Labor Statistics: "Total nonfarm payroll employment increased by 244,000 in April, and the private sector added 268,000 jobs. Employment rose in a number of service-providing industries, manufacturing, and mining. Since a recent low in February 2010, total payroll employment has grown by 1.8 million. Private sector employment has increased by 2.1 million over the same period." [BLS.gov, 5/6/11]

There Have Been 15 Consecutive Months Of Private-Sector Job Growth. Below is a graph prepared by the Office of the Democratic Leader showing monthly private-sector job gains and losses:

15 months of private-sector job growth

[Office of the Democratic Leader, 6/3/11, via Flickr]

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

On that basis, CBO estimates that ARRA's policies had the following effects in the fourth quarter of calendar year 2010:

  • They raised real (inflation-adjusted) gross domestic product (GDP) by between 1.1 percent and 3.5 percent,
  • Lowered the unemployment rate by between 0.7 percentage points and 1.9 percentage points,
  • Increased the number of people employed by between 1.3 million and 3.5 million, and
  • Increased the number of full-time-equivalent jobs by 1.8 million to 5.0 million compared with what would have occurred otherwise, as shown in Table 1. (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,February 2011]

CLAIM: "Reasons Why The President's Policies Have Made This Recovery Weaker Than Usual" Revolve Around "Uncertainty"

RYAN: There are three main reasons why the president's policies have made this recovery weaker than usual: Regulatory uncertainty [...] Tax uncertainty [...] Debt uncertainty. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: Businesses Are Much More Worried About Weak Consumer Spending Than Government Actions

Study By "The Most Right Wing Of The Major Business Groups" Shows Businesses Much More Afraid Of Weak Demand Than Taxes And Regulations. As Ezra Klein of the Washington Post reported:

The National Federation of Independent Businesses -- a small-business trade association that is considered the most right wing of the major business groups -- continually polls its members and releases the results. Here's what they say is their single most important problem:

selected single most important problem

As you can see, sales -- that is to say, demand for their products -- dominate the chart, while fear of taxes is lower than in the '90s. The concern over sales is understandable. Not only is the economy bad. But as the next chart shows, it keeps underperforming what the businesses assume will happen.

Sales

So, if anything, businesses have been too optimistic over the past few years. [Washington Post7/22/10]

Companies Anticipate Years Of Debt Reduction Instead Of Increased Spending. According to the Washington Post: "Many Democrats say the economy needs more stimulus. Business lobbyists and their Republican allies say it needs less regulation and lower taxes. But here in the heartland of America, senior executives say neither side's assessment fits. They blame their profound caution on their view that U.S. consumers are destined to disappoint for many years. As a result, they say, the economy is unlikely to see the kind of almost unbroken prosperity of the quarter-century that preceded the financial crisis. Across the industrial parks and office towers of the Chicago region, in a more than a dozen interviews, senior executives said they see Americans for years ahead paying down debts incurred during the now-ended credit boom and adjusting spending to match their often-reduced incomes." [Washington Post8/21/10, emphasis added]

  • Washington Post: Executives Can't Draw Specific Link Between Government Actions And Hiring Decisions.According to theWashington Post: "Fundamentally, executives objected to Obama's policies on the grounds they would make the United States a less competitive place to operate in the long run. But when [manufacturing CEO Jason] Speer and other executives were pressed on the role that tax and regulatory policies play in hiring, they drew only vague connections. Speer said his decision whether to hire is driven primarily by demand for his products. Orders are coming in strong enough that he is running about 20 hours a week of overtime. So he is weighing whether to hire two or three additional manufacturing workers.None of the executives interviewed linked a specific new government initiative with a specific decision to refrain from hiring." [Washington Post,8/21/10, emphasis added]

CLAIM: Financial Reform And Health Care Reform Didn't Fix "The Problems They Were Intended To Address"

RYAN: After the stimulus passed, the president turned his attention immediately to costly overhauls of the nation's financial and health-care sectors. These overhauls needlessly transferred more control over America's economy to government bureaucrats in Washington, without fixing the problems they were intended to address. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: Health Care Reform Extends Medicare Solvency By Eight Years

Medicare Trustees Report Shows Affordable Care Act Extends The Life Of Medicare Through 2024. According to the Huffington Post:

The Medicare trust fund will last eight years longer than it would have without the passage of last year's health care law, the program's trustees announced Friday in a report.

The nonpartisan lead actuary for Medicare, Rick Foster, estimated that without the health care overhaul, the program's trust fund would have run dry by 2016. With the law in effect, Foster projected, the trust fund will last through 2024. [...]

Health and Human Services Secretary Kathleen Sebelius highlighted the boost reform gave to Medicare. "Over the next 75 years, Medicare's Hospital Insurance costs are projected to be about 25 percent lower due to the new law," she said in a statement. "And without the historic deficit reduction in the Affordable Care Act, Medicare would have gone bankrupt in 2016 -- only five years from now." [Huffington Post5/13/11, emphasis added]

Foster: Affordable Care Act Extends The Life Of Medicare By Eight Years. In an interview with Slate's David Weigel, Richard Foster, the chief actuary of the Centers for Medicare & Medicaid said: "Under current law...including the Affordable Care Act, we're estimating that the trust fund would be exhausted in 2024. In the absence of the savings under the Affordable Care Act, a corresponding date of exhaustion would be 2016. So the Affordable Care Act, in the new projection, postpones the exhaustion by eight years. That's down from 12 years in last year's projection." [Slate5/16/11]

FACT: Affordable Care Act Expands Health Care Coverage While Helping To Contain Costs

Affordable Care Act Insures 34 Million New People With 1 Percent 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]

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:

Cost curve

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 Post9/10/10, emphasis added]

For all of our work on the Patient Protection and Affordable Care Act, click HERE.

FACT: Financial Reform Creates A Fund To Keep Taxpayers From Having To Pay For Future Bailouts

Dodd-Frank Reform Bill Ended The Bailout Culture By Creating An "Orderly Liquidation Authority" To Dismantle Failed Financial Entities. According to Section 204 of the Dodd-Frank Wall Street Reform and Consumer Protection Act:

Dodd-Frank text

[Dodd-Frank Wall Street Reform And Consumer Protection Act via GPO.gov, accessed 1/12/11]

  • Dodd-Frank Bill's "Orderly Liquidation Authority" Uses Funds From Banks, Not From Taxpayers. As reported by Ezra Klein of theWashington Post: "Here's how the liquidation fund works: A year after the bill is signed, the secretary of the Treasury begins taxing banks based on the risk they pose to the financial system. This tax must raise $50 billion and last for at least five years but no more than 10 years.So first, that's where the fund comes from: a tax on too-big-to-fail banks, which has the added bonus of giving a slight advantage to smaller banks that won't be laboring under this tax." [Washington Post,4/20/10, emphasis added;Note: Klein's piece references "Section 210, subsection (n)" of the bill; inthe final law signed by President Obama, this language can be found in Section 210, subsection (o).]

Bipartisan Financial Crisis Inquiry Commission Found The Financial Crisis Was Avoidable, Caused By Recklessness On Wall Street. From the Huffington Post: "In a report released today, the Financial Crisis Inquiry Commission found that 'reckless' Wall Street firms, an abundance of cheap credit and 'weak' federal regulators caused the crisis. 'This financial crisis could have been avoided. Let us be clear,' chairman Phil Angelides said at the Washington press conference marking the official release of the report. 'The record is replete with evidence of failures. None of what happened was an act of God.' Former California treasurer Angelides confirmed that the bipartisan panel appointed by Congress to investigate the financial crisis concluded that several financial industry figures appear to have broken the law and has referred multiple cases to state or federal authorities for potential prosecution. The report also revealed that Goldman Sachs collected $2.9 billion from the American International Group as payout on a speculative trade it placed for the benefit of its own account, receiving the bulk of those funds after AIG received an enormous taxpayer rescue, according to the FCIC." [Huffington Post, 1/27/11]

Bush-Appointed FDIC Chair Said Wall Street Reform Will Make Bailouts "Impossible." In an interview with American Banker, FDIC chairman Sheila Bair said: "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.... [This bill] 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." [American Banker4/15/10]

WSJ: Senate Bill "Would Make A Government Bailout Virtually Impossible." As reported by the Wall 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]

CLAIM: President Obama Has Raised Taxes On Job Creators

RYAN: The president's ad hoc tax policies, with a mix of tax hikes on job creators and temporary rebates for others being the hallmarks of his approach, have left businesses in the lurch. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: Democrats Passed Hundreds Of Billions Of Dollars In Tax Relief Measures In 2009-10 Over Republican Objections

PolitiFact: $288 Billion In Tax Relief In Recovery Act Were "Nearly A Third" Of The Spending. According to PolitiFact: "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, 2/17/10]

HIRE Act Provided $8.5 Billion In Tax Credits To Job Creators. According to CNNMoney: "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." [CNNMoney, 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]

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

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, 1/31/10]

FACT: Taxes On The Wealthy Are Already Historically Low

Top Tax Brackets Over Time:

top marginal tax rates

Federal Tax Burden On Typical Family Of Four Is At Lowest Level Since 1955. As reported by the Orange County Register: "While Republican lawmakers appear unified against tax increases and many Tea Party activists want existing rates rolled back, statistics consistently show that federal taxes are at a historic low. For the past two years, a family of four earning the median income has paid less in federal income taxes than at any time since at least 1955, according to the Tax Policy Center. All federal, state and local taxes combined are a lower percentage of per-capita income than at any time since the 1960s, according to the Tax Foundation. The highest income-tax bracket is its lowest since 1992. At 35 percent, it's well below the 50 percent mark of much of the 1980s and the 70 percent bracket of the 1970s." [Orange County Register4/17/11, emphasis added]

Federal Tax Rate As Compared To GDP Is At Lowest Level In Over 60 Years. According to former President Reagan adviser and economist Bruce Bartlett: "Historically, the term "tax rate" has meant the average or effective tax rate - that is, taxes as a share of income. The broadest measure of the tax rate is total federal revenues divided by the gross domestic product. By this measure, federal taxes are at their lowest level in more than 60 years. The Congressional Budget Office estimated that federal taxes would consume just 14.8 percent of G.D.P. this year. The last year in which revenues were lower was 1950, according to the Office of Management and Budget. The postwar annual average is about 18.5 percent of G.D.P. Revenues averaged 18.2 percent of G.D.P. during Ronald Reagan's administration; the lowest percentage during that administration was 17.3 percent of G.D.P. in 1984. In short, by the broadest measure of the tax rate, the current level is unusually low and has been for some time. Revenues were 14.9 percent of G.D.P. in both 2009 and 2010." [Bruce Bartlett column,New York Times5/31/11, emphasis added]

The 400 Richest Americans Paid Average Federal Income Tax Rate Of 18.11 Percent In 2008. According to former President Reagan adviser and economist Bruce Bartlett: "The many adjustments to income permitted by the tax code, plus alternative tax rates on the largest sources of income of the wealthy, explain why the average federal income tax rate on the 400 richest people in America was 18.11 percent in 2008, according to the Internal Revenue Service, down from 26.38 percent when these data were first calculated in 1992. Among the top 400, 7.5 percent had an average tax rate of less than 10 percent, 25 percent paid between 10 and 15 percent, and 28 percent paid between 15 and 20 percent. The truth of the matter is that federal taxes in the United States are very low. There is no reason to believe that reducing them further will do anything to raise growth or reduce unemployment." [Bruce Bartlett column, New York Times5/31/11, emphasis added]

CLAIM: The U.S. Corporate Tax Rate Is "The Highest In The Developed World"

RYAN: Moreover, the president's new health care law imposes a crushing $800 billion tax hike, and he continues to threaten businesses and families with higher rates in the future, even as he dithers on his vague promise to address America's uncompetitive corporate tax rate, which is the highest in the developed world. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: U.S.'s Effective Tax Rate Is Lower Than Many Other Developed Countries

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...

[World Bank, "Paying Taxes 2009: The Global Picture," 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%." [Forbes4/1/10; emphasis added]

As Percentage Of GDP, U.S. Has "Lowest Corporate Tax Burden Of Any" O.E.C.D. Member Nation. According to Bruce Bartlett's New York Times blog:

The G.O.P. says global competitiveness requires the United States to reduce its corporate tax rate. But the United States actually has the lowest corporate tax burden of any of the member nations of the Organization for Economic Cooperation and Development.

corporate taxes as percentage of gdp

If taxes are low historically and in comparison with our global competitors, how are Republicans able to maintain that taxes are excessively high? They do so by ignoring the effective tax rate and concentrating solely on the statutory tax rate, which is often manipulated to make it appear that rates are much higher than they really are. [New York Times' Economix blog, 5/31/11]

CLAIM: President Obama Has Offered No Plan To Save Medicare

RYAN: The president has not put forward a plan that saves Medicare from bankruptcy, even though nonpartisan experts tell us that this could happen in 9-13 short years unless we act. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: President Obama Has Offered A Plan For Medicare That Aims To Reduce Spending By Making The Program More Efficient

In Debt-Reduction Speech, Pres. Obama Called For Reforms That Cut Medicare And Medicaid Spending By Building On Reforms From Health Care Law. From President Obama's speech at George Washington University on April 13:

The third step in our approach is to further reduce health care spending in our budget.  Now, here, the difference with the House Republican plan could not be clearer.  Their plan essentially lowers the government's health care bills by asking seniors and poor families to pay them instead.  Our approach lowers the government's health care bills by reducing the cost of health care itself.

Already, the reforms we passed in the health care law will reduce our deficit by $1 trillion.  My approach would build on these reforms.  We will reduce wasteful subsidies and erroneous payments.  We will cut spending on prescription drugs by using Medicare's purchasing power to drive greater efficiency and speed generic brands of medicine onto the market.  We will work with governors of both parties to demand more efficiency and accountability from Medicaid.

We will change the way we pay for health care -- not by the procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results.  And we will slow the growth of Medicare costs by strengthening an independent commission of doctors, nurses, medical experts and consumers who will look at all the evidence and recommend the best ways to reduce unnecessary spending while protecting access to the services that seniors need.  

Now, we believe the reforms we've proposed to strengthen Medicare and Medicaid will enable us to keep these commitments to our citizens while saving us $500 billion by 2023, and an additional $1 trillion in the decade after that.  But if we're wrong, and Medicare costs rise faster than we expect, then this approach will give the independent commission the authority to make additional savings by further improving Medicare. [President Obama Remarks, 4/13/11, emphasis added]

Brookings Senior Fellow: President's Plan "Better Than Either The Status Quo Or Ryancare." From Brookings Institution Senior Fellow in Economic Studies Isabel V. Sawhill: "The important point is that we need to improve the efficiency of the system. Almost everyone agrees that we are getting poor value for our health dollar. Medicare's open-ended fee-for-service system does not solve the problem; it exacerbates it. Premium support is one way to put a lid on unsustainable growth rates. The President's proposal is another way to accomplish the same objective. He would not only limit the growth of Medicare but give greater authority to an independent board to change the way in which the delivery system is organized and health care costs are reimbursed. His plan is far from perfect but, in my view, better than either the status quo or Ryancare." [Brookings Institution, 5/31/11]

House Democratic Leader Nancy Pelosi: "We Have A Plan. It's Called Medicare." As reported by Greg Sargent of the Washington Post: "'It is a flag we've planted that we will protect and defend. We have a plan. It's called Medicare.' That's from Nancy Pelosi, who called me from Wisconsin, where she's holding events today defending Medicare in Paul Ryan's back yard. [...] Asked to clarify what she meant, and to detail what sort of changes she'd be open to, Pelosi insisted that any claims she could support cuts in the program are wrong. 'No benefits cuts,' she said flatly. Pelosi added that Dems have already put on the table the type of reform they should continue advocating for: The Affordable Care Act. 'We gave the blueprint for how we strengthen Medicare in the Affordable Care Act,' Pelosi said, a plan which is still 'ripening' and 'which does not reduce benefits. It lowers costs to taxpayers, the deficit, and beneficiaries.' She said the only type of Medicare cuts she's open to are extracting savings via bureaucratic and pharmecutical [sic] reforms that don't touch benefits." [Washington Post5/19/11, emphasis added, italics original]

CLAIM: The GOP Budget Plan 'Clears Out Loopholes And Deductions That Go Primarily To The Well-Off'

RYAN: Our budget, which we call The Path to Prosperity, reduces regulatory uncertainty for businesses by repealing the new health care law. It reduces tax uncertainty by promoting low, stable rates and clearing out loopholes and deductions that go primarily to the well-off. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: Rep. Ryan's Proposal Would Make Bush Tax Cuts Permanent, Then Cut Taxes For The Wealthy Even Further

Rep. Ryan's Proposal Would Make The Bush Tax Cuts Permanent. In his preliminary analysis, Ezra Klein of the Washington Post wrote that Rep. Ryan's plan "[p]revents the Bush tax cuts from expiring in 2013. So the revenue-neutral tax reform locks in today's rates, which is to say it makes the Bush cuts permanent." [Washington Post4/5/11]

Rep. Ryan's Proposal Reduces Top Income Tax Rate From 35 Percent To 25 Percent. According to page six of Rep. Ryan's budget proposal, the plan "[s]implifies the broken tax code, lowering rates and clearing out the burdensome tangle of loopholes that distort economic activity; brings the top rate from 35 to 25 percent to promote growth and job creation." [Rep. Ryan Budget Proposal, 4/5/11, emphasis added]

For more on why cutting taxes for the wealthy will not speed the economic recovery, click here.

FACT: The Republican Budget Would Bring Taxes On The Rich Down To Rates Not Seen Since Herbert Hoover

The GOP Plan Cuts Income, Capital Gains Taxes On The Rich To Levels Not Seen Since Herbert Hoover Was President. From the Center for American Progress:

top marginal tax rates

There's a nice symmetry to the House Republican budgeteers' idea of cutting the top tax rate for the very wealthy to 25 percent. The spending side of their budget would go a long way to giving us Herbert Hoover's economy, so why not have their tax rate on the rich match Hoover's? In fact, we haven't had a top rate that low since Hoover lost his re-election bid to Franklin Roosevelt in 1932.

Of course, for those today with the very highest incomes, most of their income is taxed as capital gains, which for most of our history has gotten a special low rate. The rate now is 15 percent. It was 12.5 percent under Hoover. Rep. Paul Ryan (R-WI), the chief architect of the House plan, thinks it ought to be zero. [Center for American Progress, 4/13/11]

CLAIM: The GOP Budget Plan 'Saves Medicare From Bankruptcy'

RYAN: And it reduces debt uncertainty by dealing with our long-term unfunded liabilities, saving Medicare from bankruptcy, and putting us on a path to pay off the debt. [Rep. Paul Ryan op-ed, 6/13/11, via FoxNews.com]

FACT: Republican Proposal Would Replace Medicare Program With Vouchers, Doubling Out-Of-Pocket Expenses For Future Seniors

CBO: Under The GOP Budget, "Most Elderly People Would Pay More For Their Health Care Than They Would Pay Under The Current Medicare System." According to the Congressional Budget Office: "Under the proposal, most elderly people would pay more for their health care than they would pay under the current Medicare system. For a typical 65-year-old with average health spending enrolled in a plan with benefits similar to those currently provided by Medicare, CBO estimated the beneficiary's spending on premiums and out-of-pocket expenditures as a share of a benchmark: what total health care spending would be if a private insurer covered the beneficiary. By 2030, the beneficiary's spending would be 68 percent of that benchmark under the proposal, 25 percent under the extended-baseline scenario, and 30 percent under the alternative fiscal scenario." [CBO.gov, 4/5/11]

Wall Street Journal: GOP Plan "Essentially End[s] Medicare" For Americans Under 55 Years Old. As reported by the Wall Street Journal: "The plan would essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills. Mr. Ryan and other conservatives say this is necessary because of the program's soaring costs. Medicare cost $396.5 billion in 2010 and is projected to rise to $502.8 billion in 2016. At that pace, spending on the program would have doubled between 2002 and 2016. Mr. Ryan's proposal would apply to those currently under the age of 55, and for those Americans would convert Medicare into a 'premium support' system." [Wall Street Journal4/4/11]

Currently, Medicare Part A Pays Hospital Bills For Americans 65 And Older Who Paid Social Security Taxes For At Least 10 Years. From CNNMoney: "Medicare Part A provides coverage if you're hospitalized. This coverage is 'free' - meaning you pay no premiums - if you paid into the Social Security pool for at least 10 years [and are over age 65 or disabled]." [CNNMoney, accessed 4/24/11]

  • Medicare Also Gives Seniors The Option To Purchase Additional Coverage For Things Like Doctor Visits And Prescription Drugs. From MarketWatch: "Medicare Part A, which covers hospital stays and services, is premium-free for most people. But that's where the freebies end. Traditional Medicare involves a matrix of premiums, co-payments, coinsurance and deductibles. For instance, you'll have to meet a deductible - $1,132 for 2011 - before Part A coverage kicks in for hospital stays of up to 60 days. For beneficiaries new to Medicare this year, the average premium for Medicare Part B is $115.40 a month. But if you earn more than $85,000 if you're single, or $170,000 for a married couple filing jointly, you'll pay more. And starting this year, high earners with Part D prescription-drug plans will face a surcharge ranging from $12 to $69.10 per month, depending on income." [MarketWatch,4/24/11viaMail Tribune]

The GOP Budget Turns Medicare Into A Voucher System. From "The Path to Prosperity":

Save Medicare for current and future generations while making no changes for those in and near retirement. For younger workers, when they reach eligibility, Medicare will provide a Medicare payment and a list of guaranteed coverage options from which recipients can choose a plan that best suits their needs. These future Medicare beneficiaries will be able to choose a plan the same way members of Congress do. Medicare will provide additional assistance for lower-income beneficiaries and those with greater health risks. [The Path To Prosperity, 4/5/11, emphasis added]

Cato Institute Senior Fellow: Republican Plan Replaces Medicare With A Voucher System. In a New York Post op-ed about the "Path to Prosperity," Cato Institute senior fellow Michael Tanner wrote: "Those getting close to retirement will also still go into Medicare, just as they would have before. But beginning in 2022, people who are younger than 55 today will begin to transition to a new system. Instead of going into Medicare at age 65, they will receive a voucher from the US government to help them purchase private health insurance. Initially that voucher is expected to be for roughly $15,000 per recipient. Lower income seniors and those with higher health care costs because of illness will receive a bigger subsidy. Seniors can use these vouchers, combined with whatever they wish to spend of their own money, to choose an insurance plan that has a cost and mix of benefits that best meets their needs. Instead of a one size fits all system, seniors will have many more choices than they have today." [Tanner Op-Ed, 4/10/11, emphasis added, via Cato.org]

In 2022, A Typical 65-Year-Old Would Be Paying Approximately Double Compared To Current Levels. The Center on Budget and Policy Priorities prepared a graphic comparing health care spending for a typical 65-year-old under the current system to the same spending under the Republican budget:

gop budget health care spending

[CBPP.org, 4/7/11]

CEPR: Ryan's Budget Would Force Seniors To Spend Much Of Their Income On Health Insurance. According to Center for Economic Policy Research co-director Dean Baker:

Representative Ryan would replace the current Medicare program with a voucher for people who turn age 65 in 2022 and later. This voucher would be worth $8,000 in for someone turning age 65 in that year. It would rise in step with the consumer price index and also as people age. (Health care expenses are higher for people age 75 than age 65.)

According to the CBO analysis the benefit would cover 32 percent of the cost of a health insurance package equivalent to the current Medicare benefit. This means that the beneficiary would pay 68 percent of the cost of this package. Using the CBO assumption of 2.5 percent annual inflation, the voucher would have grown to $9,750 by 2030. This means that a Medicare type plan for someone age 65 would be $30,460 under Representative Ryan's plan, leaving seniors with a bill of $20,700. (This does not count various out of pocket medical expenditures not covered by Medicare.)

According to the Social Security trustees, the benefit for a medium wage earner who first starts collecting benefits at age 65 in 2030 would be $32,200. (This adjusts the benefit projected by the Social Security trustees [$19,652 in 2010 dollars] for the 2.5 percent annual inflation rate assumed by CBO.) For close to 70 percent of seniors, Social Security is more than half of their retirement income. Most seniors will get a benefit that is less than the medium earners benefit described here since their average earnings are less than that of a medium earner and they start collecting Social Security benefits before age 65. [CEPR.org, 4/6/11, emphasis added, all parentheses original, internal citations removed for clarity]

If Medical Costs Continued To Increase Faster Than Voucher Values, "The Average Retiree Would Be More Than $50,000 In The Hole." According to an op-ed in the Huffington Post by R.J. Eskow, Senior Fellow with The Campaign For America's Future:

Even if the voucher is given full Medicare value in Year One (which we question), things start to get really bad after that. If medical costs continued to increase at 9% each year, which isn't at all impossible, and the voucher's value continued to increase at 5%, here's what would happen 10 years later using my figures:

Medicare costs

By 2031, the cost of Medicare-equivalent coverage would be $73,000, and the voucher would be worth $18,000. By my calculation, the average retiree would be more than $50,000 in the hole. [Eskow Op-Ed, 4/6/11 via Huffington Post, emphasis original]

Republicans Claim Patients' Use Of Vouchers Will "Deny Business To Inefficient Providers," But That Won't Work With Complex Health Care Market. Former White House economist Jared Bernstein explains:

[Rep. Ryan said on Meet the Press that] 'Our plan is to give seniors the power to deny business to inefficient providers...their plan [Affordable Care Act] is to give government the power to deny care to seniors.' [...]

To get why this "market solution" can't work, you have to understand a bit about how Ryan's plan changes Medicare.  As is by now pretty widely appreciated, including by many in his own party, the plan ends guaranteed health care coverage for seniors and replaces it with a voucher for them to shop for insurance on the street.

Importantly, the value of those vouchers start well below where they need to be to enable seniors to afford coverage comparable to Medicare today (in fact, beneficiaries costs would have to double), and their value falls increasing behind coverage costs over time.

Suppose you send me to the grocery store to buy you a gallon of milk.  Milk costs $3.50 a gallon but you give me $2.  I spend the whole day "denying business to inefficient providers"-i.e., grocers who all charge more than that-and at the end of the day, bring you back a pint.

Now, instead of milk, where I've got the information I need to be a smart shopper, suppose you give me the same under-priced voucher but ask me to bring you back a plan for treating that strange pain you've been experiencing on your left side on humid days. [JaredBernsteinBlog.com, 5/22/11, emphasis added]

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