Fact Checking The Sunday Shows - July 17, 2011
The looming default crisis dominated the Sunday talk shows, which meant Republicans were busy misrepresenting their own proposals, the polling about their proposals, and the policies that put us in this mess to begin with. On NBC, Sen. Jim DeMint (R-SC) claimed the GOP's balanced budget amendment scheme is the only way to satisfy credit raters about U.S. creditworthiness, which is simply not true. On ABC, Sen. Jon Kyl (R-AZ) and Rep. Raul Labrador (R-ID) pretended that polling supports the GOP's anti-tax zealotry despite at least 21 polls this year that show broad opposition to their ideological stance. On Fox, Rep. Jim Jordan (R-OH) falsely claimed the GOP's scheme doesn't require even steeper cuts to the safety net than the House 2012 budget and unfairly laid the blame for our debt entirely at President Obama's feet, and Herman Cain lied about who pays top-end income tax rates. Meanwhile, Rudy Giuliani misrepresented recent economic history and exaggerated his own budget accomplishments in New York City, and Sen. Marco Rubio (R-FL) misled viewers about Social Security.
Meet the Press
CLAIM: Sen. DeMint Misrepresented Moody's And S&P Reports To Claim They Argue For GOP's Balanced Budget Amendment Scheme
SEN. JIM DEMINT: Well, he's probably right on that, but there's only one plan in Congress right now to do it in a way that the credit agencies say won't turn us towards a negative rating and that's to cut cap and balance plan in the house that gives the president the increase in the debt limit, but it does it with those credible, long-term, deficit-reduction measures that both Moody's and S&P have said we have to do or they will lower our credit rating. [...] I mean Moody's, Standard and Poor, these agencies are telling us if we increase this debt limit without credible and long-term deficit reduction, that they're going to lower our ratings.
FACT: Moody's And S&P Want Decreases In Debt-To-GDP And Debt-To-Revenue Ratios, But Avoid Prescribing How U.S. Should Achieve Reductions
S&P Called For "A Credible Solution To The Rising U.S. Government Debt Burden," But Does Not Prescribe Spending Cuts Alone. From a Standard & Poor's report: "We may lower the long-term rating on the U.S. by one or more notches into the 'AA' category in the next three months, if we conclude that Congress and the Administration have not achieved a credible solution to the rising U.S. government debt burden and are not likely to achieve one in the foreseeable future." [StandardAndPoors.com, 7/14/11]
S&P Sees $4 Trillion Deficit-Reduction Package As Sufficient To Maintain U.S. Credit Rating. From a Standard & Poor's report: "Congress and the Administration are debating various fiscal consolidation proposals. At the high end, budget savings of $4 trillion phased in over 10 to 12 years proposed by the Adminstration [sic], (separately) by Congressional leaders, as well as by the Fiscal Commission in its December 2010 report, if accompanied by growth-enhancing reforms, could slow the deterioration of the U.S. net general government debt-to-GDP ratio, which is currently nearing 75%. Under our baseline macroeconomic scenario, net general government debt would reach 84% of GDP by 2013. (Our baseline scenario assumes near 3% annual real growth and a post-2012 phaseout of the December 2010 extension of the 2001 and 2003 tax cuts.) Such a percentage indicates a relatively weak government debt trajectory compared with those of the U.S.' closest 'AAA' rated peers (France, Germany, the U.K., and Canada). We expect the debt trajectory to continue increasing in the medium term if a medium-term fiscal consolidation plan of $4 trillion is not agreed upon. If Congress and the Administration reach an agreement of about $4 trillion, and if we to conclude that such an agreement would be enacted and maintained throughout the decade, we could, other things unchanged, affirm the 'AAA' long-term rating and A-1+ short-term ratings on the U.S." [StandardAndPoors.com, 7/14/11, emphasis added]
S&P "Takes No Position" On Role Of Spending Cuts, Tax Increases In Achieving Agreement. From a Standard & Poor's report: "Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might agree on. But for any agreement to be credible, we believe it would require support from leaders of both political parties." [StandardAndPoors.com, 7/14/11]
Moody's Review "Prompted By The Possibility That The Debt Limit Will Not Be Raised In Time." From a Moody's report:
RATIONALE FOR REVIEW
The review of the US government's bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes. As such, there is a small but rising risk of a short-lived default.
Moody's considers the probability of a default on interest payments to be low but no longer to be de minimis. An actual default, regardless of duration, would fundamentally alter Moody's assessment of the timeliness of future payments, and a Aaa rating would likely no longer be appropriate. [Moodys.com, 7/13/11, emphasis added]
"Moody's Does Not Take A Position" On How To Do It But Wants "Debt To Revenue" Ratio Lowered. From a Moody's report:
While the debt limit has been raised numerous times in the past, and sometimes the issue has been contentious, bond interest and principal have always been paid on time. If the debt limit is raised again and a default avoided, the Aaa rating would likely be confirmed. However, the outlook assigned at that time to the government bond rating would very likely be changed to negative at the conclusion of the review unless substantial and credible agreement is achieved on a budget that includes long-term deficit reduction. To retain a stable outlook, such an agreement should include a deficit trajectory that leads to stabilization and then decline in the ratios of federal government debt to GDP and debt to revenue beginning within the next few years.
Moody's does not take a position on what measures should be included in any deficit reduction package. Instead, it is the resultant deficit and debt trajectories that are relevant to the rating and its outlook. [Moodys.com, 7/13/11, emphasis added]
SEN. JON KYL: What we're looking at is what's good for the country. We know that raising taxes on a weak economy is not good for economic recovery and for job creation. And our first thought is, first, let's do no harm to economic growth and to putting Americans back to work again.
FACT: The GOP's Spending Cuts Would Destroy Nearly 7 MILLION Jobs
CLAIM: Sen. Kyl Claimed He Couldn't "Find Any" Polls Showing Support For Higher Taxes To Address The Debt
SEN. JON KYL: Christiane, I haven't seen the polls you're referring to. The last poll — in fact, I looked for polls that backed up the president, didn't find any. The last poll, if I could, just three days ago — this is the Rasmussen poll — the question was do you think that a tax hike should be included in any legislation to raise the debt ceiling; 55 percent say no, 34 percent say yes. And even independents, a majority of independents, say no.
CLAIM: Rep. Labrador Claimed The Gallup Poll Supports GOP's Obstinacy On Taxes
REP. RAUL LABRADOR: And I don't agree that there's been a lot of polls that say that the majority of Americans — actually, most of the polls have said that the majority of Americans don't want to increase taxes. If you look at the Gallup poll, it said that 51 percent of people do not want to increase taxes. So I actually disagree with you there.
FACT: Gallup Found Only One In Five Support GOP's No-Taxes Position On Deficit Reduction
Gallup: 20 Percent Of U.S. Adults Prefer Deficit Reduction Through Spending Cuts Alone. From the July 7-10, 2011, Gallup poll:
Gallup: Only 26 Percent Of Republicans Prefer Deficit Reduction Through Spending Cuts Alone. From the July 7-10, 2011, Gallup poll:
FACT: At Least 20 Other Polls From This Year Alone Show Support For Higher Taxes To Address Deficits
July Quinnipiac Poll: 67 Percent Say "Agreement To Raise The Debt Ceiling Should Include Tax Hikes For The Wealthy And Corporations, Not Just Spending Cuts." From the July 5-11, 2011, Quinnipiac poll: "Voters say 67 - 25 percent that an agreement to raise the debt ceiling should include tax hikes for the wealthy and corporations, not just spending cuts." [Quinnipiac, 7/14/11]
At Least 19 Polls From January To June Show Support For Higher Taxes. Former Reagan adviser Bruce Bartlett compiled a list of 19 separate polls conducted this year showing support for higher taxes. According to Bartlett: "Contrary to Republican dogma, polls show that the American people strongly support higher taxes to reduce the deficit and improve income inequality." [CapitalGainsAndGames.com, 6/29/11]
Fox News Sunday
CLAIM: Rep. Jordan Claimed The GOP's Balanced Budget Amendment Scheme Would Not Cut Entitlements More Drastically Than The "Path To Prosperity"
CHRIS WALLACE (host): Congressman Jordan, you're a big sponsor of this. President Obama says that it would cut Medicare and Social Security much more deeply than Paul Ryan's budget plan.
REP. JIM JORDAN: It doesn't do that. And basically, it mirrors the budget proposal that House passed earlier this year.
FACT: The GOP Plan Would Make Deep Cuts To Medicare And Social Security Inevitable — Deeper Even Than The House GOP Budget
CBPP: GOP Plan's Spending Caps Would Force Congress "To Institute Deep Cuts" To "Social Security, Medicare, And Medicaid." From the Center on Budget and Policy Priorities:
The measure does not cut Social Security or Medicare in 2012. And it does not subject them to automatic cuts if its global spending caps are missed. It is inconceivable, however, that policymakers would meet the bill's severe annual spending caps through automatic across-theboard cuts year after year; if they did, key government functions would be crippled.
Policymakers would have little alternative but to institute deep cuts in specific programs. And as noted elsewhere in this statement, before the debt limit could be raised, Congress would have to approve a constitutional balanced budget amendment that essentially requires cuts even deeper than those in the Ryan budget. Reaching and maintaining a balanced budget in the decade ahead while barring any tax increases would necessitate deep cuts in Social Security, Medicare, and Medicaid. After all, by 2021, total expenditures for these three programs will be nearly 45 percent greater than expenditures for all other programs (except interest payments) combined. Big cuts in these programs would be inevitable.
Moreover, because taxes - including payroll taxes - would be virtually impossible to raise as a result of the new constitutional barrier, Social Security solvency would have to be restored entirely through benefit cuts. Balanced Social Security packages that include measures to raise Social Security's $106,000 payroll tax cap, so that higher-income Americans do not escape the tax on much of their earnings, would effectively be ruled out. [CBPP.org, 7/16/11, emphasis added]
CBPP: Balanced Budget Amendment Would Require Steeper Cuts Than House GOP Budget Which Doesn't Balance Until "Sometime In The 2030s." From the Center on Budget and Policy Priorities: "Under the amendment, the first year in which the federal budget would have to be balanced would likely be fiscal year 2018. The Congressional Budget Office estimates that the Ryan plan, even with its deep cuts, would not achieve balance until sometime in the 2030s. When asked at a recent hearing what steps he would recommend beyond the House-passed budget to meet the amendment's time frame, the amendment's chief sponsor, Rep. Bob Goodlatte (R-VA), pointed to the RSC budget. The RSC says its plan would achieve balance in 2020. The RSC budget secures all of its deficit reduction through spending cuts and none through revenues; it cuts federal expenditures by more than $9 trillion over the coming decade, relative to a continuation of current policies." [CBPP.org, 6/6/11, internal citations removed for clarity]
CLAIM: Rep. Jordan Claimed That The Debt Ceiling Has To Be Increased Because Of Democratic Spending, Not GOP Spending
REP. JIM JORDAN: The president now is asking us, hey, Republicans, vote for a debt ceiling increase, even though you campaigned against it and the voters elected you to be against. Vote for debt ceiling increase to pay for all that spending.
FACT: The Bush Tax Cuts And The Recession Are The Primary Drivers Of Current Deficits
The Bush Tax Cuts Are The Primary Driver Of Federal Budget Deficits Over The Next Decade. Below is a chart from Below is a chart from Center on Budget and Policy Priorities showing the deficit impacts of war spending, financial recovery spending, the recession itself, and the Bush tax cuts:
CHRIS WALLACE (host): What about the issue of tax fairness? I mean, the people who are going to benefit primarily if you reduce capital gain tax rate to zero are wealthy people.
HERMAN CAIN: Nope, it's small businesses. Remember, small business people have organized subchapter S corporations. There are more of them than there are Warren Buffetts.
FACT: A Tiny Minority Of The People In The Top Income Tax Brackets Are Employers, Let Alone "Small" Businesses
Only 3 Percent Of People In Top Brackets Have Any Business Income At All. From the Center for American Progress: "But according to the Joint Committee on Taxation, just 3 percent of people with any business income at all - from an enterprise large or small - face either of the top two income tax brackets, which are the ones in question. Conservatives eventually conceded this point, but pivoted to the literal number of 'small businesses' that they claim will be affected if the tax cuts for the rich expire." [Center for American Progress, 11/15/10]
FactCheck.org: "Only 2 Percent" Of Those Reporting Business Income Face Higher Taxes Under Democratic Proposal. According to FactCheck.org: "[O]nly 27 percent of all upper-income tax filers report business income that accounts for more than half of their wages. It's likely that a small-business owner would make most of his or her income from the small business... In the end, it's unclear exactly what percentage of these top earners are truly small businesses. What is clear, however, is that we're not talking about all that many small businesses in the first place. The vast majority of individuals who report business income or losses are not making upwards of $200,000 a year. In fact, only 2 percent of all those reporting business income in 2009 will earn enough to fall in the top two brackets. As we explained back when Obama's tax plan was attacked on the campaign trail, the overwhelming majority of these mom-and-pop shops we hear about would not see their taxes go up under Obama's proposal." [FactCheck.org, 3/6/09, emphasis added]
Bush Economist: Businesses Republicans Define As "Small" Are Actually "Very Large." According to the Washington Post: "Alan Viard, an economist in the Bush White House who is now at the American Enterprise Institute, agreed that many firms represented in the top tax brackets are hardly small. Economically, that doesn't matter, he said: Obama would still be raising taxes on a significant source of jobs and economic activity. Politically, however, it's a very different matter to raise taxes on a Wall Street hedge fund than it is to tax your neighborhood dry cleaner. Which is why Republicans continually define pass-through entities of all sizes as small businesses, a position Viard called a 'fallacy.' 'How can it be that 3 percent of owners are accounting for 50 percent of small business income? Those firms they're owning can't be all that small,' Viard said. 'And that's true. They're very large.'" [Washington Post, 9/17/10; emphasis added]
- Just 12 Percent Of Money Raised By Increasing Top Rates Comes From "Small Businesses With Actual Workers." As reported by Businessweek: "The nonpartisan Congressional Research Service, which analyzes issues for lawmakers, largely agreed with Obama in a Sept. 3 report that considered only taxpayers with employees. Its conclusion: Small businesses with actual workers would pay only about 12 percent of the higher taxes.' Across-the-board tax cuts for high-income individuals are not efficiently targeted to small businesses,' wrote author Jane G. Gravelle." [Businessweek,9/23/10; emphasis added]
Republican Definition Of Small Businesses Includes Athletes, Authors, And Other Non-Employer Tax Filers. According to Businessweek:
McConnell's 50-percent-of-income figure is based on a July 12 finding by the Joint Committee on Taxation, a House-Senate panel that analyzes tax issues, that half of about $1 trillion of business income in 2011 will be reported on some 750,000 personal tax returns filed by people who pay the top marginal rates. He calls those small businesses. Yet the report says the data 'do not imply that all of the income is from entities that might be considered "small.'' Almost 20,000 of those businesses, for example, had receipts of more than $50 million, it says.
Besides Obama, McConnell's 50 percent figure includes authors, actors, athletes, and others who employ few if any workers, as well as hedge fund firms and major law partnerships most people wouldn't consider small. "We are being over-inclusive in our use of small business income," says Edward D. Kleinbard, a former staff director of the Joint Committee on Taxation who is now a University of Southern California law professor. [Businessweek, 9/23/10; emphasis added]
Republicans Define All "Pass-Through" Entities As Small Businesses. As reported by the Washington Post:"Republicans continually define pass-through entities of all sizes as small businesses." [Washington Post, 9/17/10, emphasis added]
"Pass-Through" Entities Republicans Count As "Small Businesses" Include A Wall Street Firm Worth $54 Billion. As reported by the Washington Post:
The thing is, some of those businesses are not particularly small. In fact, they're quite large.
Among the firms Republicans want to protect from new taxes, according to research by House Democrats: The management team at Wall Street buyout firm Kohlberg, Kravis and Roberts (KKR), which recently reported more than $54 billion in assets managed by 14 offices around the world. Auditing firm PricewaterhouseCoopers, a household name with operations in more than 150 countries. And the Tribune Corp., which owns the Chicago Tribune, the Los Angeles Times and the Baltimore Sun.
KKR, PricewaterhouseCoopers and the Tribune, it turns out, are organized as "pass-through" entities - companies that typically avoid corporate taxes by reporting profits on the individual tax returns of their owners, managers or shareholders. [Washington Post, 9/17/10, emphasis added]
State of the Union
CLAIM: Rudy Giuliani Bent Statistics To Claim He Turned New York City From A Multi-Billion-Dollar Deficit To A Multi-Billion-Dollar Surplus In His Tenure As Mayor
RUDY GIULIANI: I look at the other candidates, they've all done some very impressive things, but none of them really had to take over a city, one of the largest economies in the country, one of the most complex, one that was in terrible trouble, and turn it around and have definable results that I can point to. It isn't just my saying it or believing it or thinking it, I can show, we started with 10 percent unemployment, got it down to 5, we started with a million-one on welfare, we got it down to 500,000. We started with a $2.3 billion deficit, turned it into a $3 billion surplus.
FACT: Giuliani Is Comparing Apples To Oranges By Using The Deficit Projection From His Predecessor, But Not The Deficit Projection He Left For His Successor
PolitiFact: Giuliani Claim Uses Budget Written By Previous Outgoing Mayor, But Not Giuliani's Final Budget. From a PolitiFact writeup of the same Giuliani claim in 2007: "What Giuliani has done is include the budget that outgoing Mayor Dinkins wrote as he left office, but doesn't include the budget Giuliani himself wrote as he left office. Including both is closer to a fair comparison of the two changes of administration. It looks at (1) the moment he took office and left, and (2) the out-year projection for the first full fiscal year of the new administration as of the same date." [PolitiFact, 7/1/07]
Apples-To-Apples Comparison Shows Giuliani Actually Faced Smaller Deficit, Left Smaller Surplus Than Claimed. From a PolitiFact writeup of the same Giuliani claim in 2007: "So Giuliani inherited a deficit of about $700-million and left a surplus of $350-million as of the first and last days of his tenure. He also inherited a projected budget gap of $2.3-billion for his next fiscal year, and left his successor, Bloomberg, a projected deficit of $4.7-billion." [PolitiFact, 7/1/07]
FACT: Giuliani Left Office Projecting A Multi-Billion-Dollar Deficit For The Following Year — And A Larger One Than He Faced Upon Taking Office
Giuliani Left Larger Projected Budget Gap For His Successor Than He Inherited From His Predecessor. From the New York Times: "The assertion, which Mr. Giuliani has repeated on the trail as he has promoted his fiscal conservatism, is somewhat misleading, independent fiscal monitors said. In fact, Mr. Giuliani left his successor, Michael R. Bloomberg, with a bigger deficit than the one Mr. Giuliani had to deal with when he arrived in 1994. And that deficit would have been large even if the city had not been attacked on Sept. 11, 2001. 'He inherited a gap, and he left a gap for his successor,' Ronnie Lowenstein, the director of the city's Independent Budget Office, a nonpartisan agency that monitors the city budget, said of Mr. Giuliani. 'The city was budgeting as though the good times were not going to end, but sooner or later they always do.'" [New York Times, 8/25/07, emphasis added]
Giuliani's Second Term Was Marked By Rapid Increases In Spending, Rather Than Fiscal Hawkishness. From the New York Times: "But Mr. Giuliani eased up on the reins of spending during his second term, as the stock market boom pumped tax revenues into the city coffers. An analysis by the Citizens Budget Commission, a business-backed fiscal watchdog group, found that spending rose an average of 6.3 percent a year during Mr. Giuliani's second term - well above the rate of inflation. And Mr. Giuliani went on a hiring spree, in the end leaving the city work force slightly bigger than he found it, but changing its composition by adding more teachers and police officers while shedding jobs in social services agencies." [New York Times, 8/25/07, emphasis added]
- Giuliani Spent $800 Million That Was Scheduled To Be Invested In Pension Fund For City Workers. From the New York Times: "In 2000, near the height of the stock market boom, Mr. Giuliani supported a measure to put less money in the pension funds for the city's retirees. By recognizing the funds' investment gains at once - instead of phasing them in over years to smooth out sharp gains and losses - he was able to spend $800 million over two years that the city otherwise would have had to invest in its pension funds. Fiscal monitors, including the city comptroller's office, warned that the practice was irresponsible, because the money could be needed to cushion the blow of a market downturn." [New York Times, 8/25/07, emphasis added]
2007: Giuliani Campaign Defended Surplus Claim On Technicality That Their Ads Did Not Claim He Left A Surplus Behind Him. From the New York Times: "The Giuliani campaign defended the advertisement, noting that it merely states that Mr. Giuliani created a multibillion-dollar surplus, not that he passed one on to his successor." [New York Times, 8/25/07]
RUDY GIULIANI: The economy is in very, very difficult condition. It's been that way for a long time. President Obama has presided over the longest string of very high unemployment since the Great Depression and hasn't really done much about it. Promised to do things about it, said the things he did would bring unemployment down, like the tremendous stimulus, the tremendous trillion-dollar stimulus was supposed to get us down to 7 percent unemployment, we're at 9 percent unemployment. These are pretty horrendous results.
FACT: Once They Took Effect, President Obama's Economic Policies Turned The Private-Sector Job Market Around
The Economy Shed Almost Eight 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]
Since June 2009, The Private Sector Has Gained Over One Million Net Jobs. According to Bureau of Labor Statistics data, there were 107,936,000 private-sector jobs in June 2009. As of June 2011, the most recent report available, the data show that total is up to 108,953,000 — a net gain of 1,017,000 jobs in the private sector. [BLS.gov, accessed 7/10/11]
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):
PolitiFact: "True" That "Most Job Losses" Happened Before Obama Policies Took Effect. According to PolitiFact'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]
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:
[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: Sen. Graham And Rep. Jordan Claimed 49 States Must Balance Their Budgets
SEN. LINDSEY GRAHAM: 49 states have a requirement to balance their budget. [CNN's State of the Union, 7/17/11]
REP. JIM JORDAN: What's wrong with letting the states decide that? Someone's got to tell me — what's wrong with letting the states decide whether we should have a balance — 49 out of 50 states have it. [Fox News Sunday, 7/17/11]
FACT: Not All 49 States Have To Balance Their Budgets Each Year
PolitiFact: Impossible To Say How Many States Have Absolutely Binding Budget Requirements. According to PolitiFact Texas:
The report also shows a tabulation of states' balanced-budget provisions kept by the National Association of State Budget Officers that takes a narrower view of which states require a balanced budget.
According to the NCSL report, the association surveyed balanced-budget requirements in 2008, tallying which states require the governor to submit a balanced budget (43 total) and which require the legislature to pass a balanced budget (40). Thirty-eight states prohibit carrying deficits from one year to the next. We found 41 states have constitutional provisions requiring the governor to submit a balanced budget or the legislature to pass one, and five states that have a statutory requirement.
So that's 46 states, by the National Association of State Budget Officers' count, that have balanced budget requirements as a matter of law. However, as Snell said, "it's almost impossible to say" for how many states the balanced budget mandate is "an absolutely binding requirement."
Where does that leave us?
Only two states - not 49, as Cornyn says - have amended their constitutions to require balanced budgets. Counting amendments plus provisions tucked into original constitutions, however, 45 states have balanced-budget stipulations, according to NCSL's count. NASBO considers 46 states to have constitutional or statutory balanced-budget requirements.
Also, despite the letters of those statutory and constitutional strictures, they aren't universally viewed as mandatory. [PolitiFact.com, 12/25/10]
Face the Nation
SEN. MARCO RUBIO: I do think that people like me, I'm forty, just turned forty a month ago, people like me have to accept the fact that there will not be a Social Security for us, unless we are willing to retire a little bit later. People in my generation are going to have to accept that.
FACT: Without Any Changes, Social Security Trust Fund Can Pay Full Benefits Through 2036 — And It's Not Very Expensive To Fully Fund Benefits Through 2084
Social Security Trustees: Trust Fund Sufficient To Pay Full Benefits Through 2036, 78 Percent Of Benefits Thereafter. According to the Social Security Board of Trustees: "The projected point at which the combined Trust Funds will be exhausted comes in 2037 - the same as the estimate in last year's report. At that time, there will be sufficient tax revenue coming in to pay about 78 percent of benefits." [SSA.gov, 8/5/10]
- CBPP: "Those Who Fear That Social Security Won't Be Around" For Today's Workforce "Misunderstand" Trustees' Report.According to the Center on Budget and Policy Priorities: "Even after 2037, Social Security could pay more than three-fourths of scheduled benefits using its annual tax income.Those who fear that Social Security won't be around when today's young workers retire misunderstand the trustees' projections. The program's shortfall is relatively modest, amounting to 0.7 percent of Gross Domestic Product (GDP) over the next 75 years (and 1.4 percent of GDP in 2084). A mix of tax increases and benefit modifications - carefully crafted to shield recipients of limited means, potentially make benefits more adequate for the neediest beneficiaries, and give ample notice to all participants - could put the program on a sound footing indefinitely." [CBPP.org,8/13/10]
FACT: We Only Need To Increase Social Security Revenues By 0.6 Percent Of GDP To Fully Fund Benefits For The Next 75 Years
The Post-2037 Funding Shortfall Is Predicted To Be Less Than 1 Percent Of GDP. According to the Economic Policy Institute: "Social Security spending as a share of the economy is projected to decline after the Baby Boomer retirement, leveling off at around 6% of GDP; this is a little more than 1 percentage point above current revenues as a share of GDP. The Social Security actuaries have projected that an increase in revenues equal to just 0.6% of GDP will be sufficient to cover promised benefits over the 75-year planning period because of the savings built up in the trust fund." [EPI.org, 8/6/10, citations removed for clarity]
- CBPP: Long-Term Funding Shortfall For Social Security "Is About The Same Size As The Cost" Of Bush's "Tax Cuts For The Richest 2 Percent Of Americans." From the Center on Budget and Policy Priorities:
The 75-year Social Security shortfall is about the same size as the cost, over that period, of extending the 2001 and 2003 tax cuts for the richest 2 percent of Americans (those with incomes above $250,000 a year). Members of Congress cannot simultaneously claim that the tax cuts for people at the top are affordable while the Social Security shortfall constitutes a dire fiscal threat.
- If Congress Does Nothing, Benefits Would Be Cut By 22 Percent After 2037 — But Would Still Be Paid. According to the Economic Policy Institute: "The Social Security trust fund will run out of assets around 2037. If Congress does not act before then to shore up the program's finances, Social Security benefits would have to be cut by an estimated 22% to allow revenues to fully cover benefits. Though such an abrupt cut in benefits should certainly be avoided, the inflation-adjusted value of these benefits would still be larger than current benefits due to economic growth, though they would replace a smaller share of pre-retirement earnings." [EPI.org, 8/6/10, citations removed for clarity]
FACT: By Asking High Earners To Pay Social Security Taxes On More Of Their Income, We Can Close The 75-Year Funding Shortfall For Social Security
Currently, Social Security Payroll Taxes Are Capped So That High Earners Only Pay Payroll Tax On First $107,000 Of Pay. From the National Academy of Social Insurance: "Benefits are financed by mandatory contributions paid by workers and matched by their employers, by income taxes paid on Social Security benefits, and by interest on Social Security reserves. The contribution rate for both workers and employers is 6.2 percent of earnings up to a cap ($106,800 in 2009)." [NASI.org, October 2009]
Current Payroll Tax Cap Is Significantly Lower As A Percentage Of Total Earnings Than Its Traditional Level. From the National Academy of Social Insurance: "In 2009, only earnings up to $106,800 are taxed and counted toward workers' future Social Security benefits. About 6 percent of all workers earn more than the cap. The cap is indexed to keep pace with the growth in average earnings of all workers. In the past, Congress set the level of the cap to cover 90 percent of the aggregate wages of all workers. Today, it covers only about 83 percent of such earnings. The decline occurred because those at the top of the economic ladder (who make more than the cap) have enjoyed more rapid growth in earnings than those who make less than the cap." [NASI.org, October 2009, internal citations removed for clarity, emphasis added]
Removing The Payroll Tax Cap Would Eliminate Funding Shortfall Over 75-Year Period. From the National Academy of Social Insurance:
Option #8a: Eliminate the Cap - Do Not Count the Additional Earnings toward Benefits. If all earned income above $106,800 a year were subject to Social Security contributions, but those earnings did not count toward benefits, Social Security would be solvent throughout the long-range projection period. Making this change in 2010 would be more than enough to eliminate the 75-year deficit. With this change, workers who earn far more than the tax cap would pay considerably more in taxes. For example, a person making $400,000 per year would pay $18,178 per year more and his or her employer would pay a matching amount, for a total increase of $36,356. The worker's maximum benefit would be no higher than under current law. Ever since Social Security began, all wages that are taxed have counted toward benefits. This proposal would break that traditional link.
Option #8b: Eliminate the Cap - Count the Earnings toward Benefits. If all wages above $106,800 in 2009 were taxed and counted toward benefits, the change would almost make Social Security solvent through the long-range period, eliminating about 95 percent of the 75-year shortfall. While high earners and their employers would pay considerably more, these top earners would also receive much higher benefits. [NASI.org, October 2009, emphasis original]