Fact Checking The Sunday Shows - October 9, 2011
Sunday's political talk shows were chock full of the misinformation that we've come to expect from conservatives. On CBS' Face The Nation, presidential hopeful Herman Cain told viewers that his 9-9-9 economic plan was revenue neutral and disputed the charge that it is regressive. However, his plan would cut taxes for the very wealthy and "disproportionately tax lower and middle income earners." Cain also appeared on CNN's State of the Union, where he claimed that 50 percent of taxpayers account for just 3 percent of all taxes. On NBC's Meet the Press, Rep. Paul Ryan (R-WI) claimed that businesses are not hiring because of regulatory uncertainty. That is not supported by the facts, however: Economists and business owners point to weak consumer demand, not uncertainty. And finally, Rick Santorum, another presidential contender, continued his homophobic ways by telling Fox News host Chris Wallace that being gay is a choice.
Face the Nation
HERMAN CAIN: Here's the other thing about 9-9-9. 9-9-9 will grow this economy. It's definitely going to create jobs. It's revenue neutral. This means people that are underemployed will be able to find a job that they are more qualified for. It also means that in those cases where people are low-wage earners, they can find a second job, so it has some growth opportunities as well as getting the lowest possible tax rate for everybody.
BOB SCHIEFFER (HOST): Let me ask you, one certainty is that poor people are going to have to pay more taxes.
CAIN: No, no. Let's start with the payroll tax. It's 15.3 percent. Everybody pays that. So instead of paying 15.3 percent they're going to be paying 9 percent. That's a 6 percentage point difference. If you work that out for various income levels, they will have extra cash from that differential to pay the sales tax.
SCHIEFFER: Aren't poor people also going to get to pay a tax on food and a tax on medicine?
CAIN: We all will. We all will. You have to work—
SCHIEFFER: Do you think that's fair?
CAIN: Yes, because you give poor people more opportunity to stretch their dollar and leverage their income based upon their decisions whether to buy new or used goods.
FACT: Cain's "9-9-9 Plan" Would Cut Federal Revenues In Half, Increase Taxes On Low-Income Families, And Cut Taxes For The Wealthy
The 9-9-9 Plan Is Not Revenue Neutral. As the Center for American Progress' Michal Linden explains: "[T]he 9-9-9 plan would have generated a bit less than $1.3 trillion in total federal tax revenue. That may sound like a lot, but it's only 9.2 percent of GDP. In 2007, we actually collected 18.5 percent of GDP in tax revenue. In other words, the 9-9-9 plan would cut federal revenue in half!" [Center for American Progress, 10/5/11]
Cain's Plan Would "Disproportionately Tax Lower and Middle Income Earners." As reported by ABC News: "Lawrence Mishel, president of the center-left Economic Policy Institute, took issue with Cain's plan, saying it would disproportionately tax lower and middle income earners because they tend to spend a higher percentage of their incomes than wealthy people. And with a national sales tax, the more you buy, the more taxes you pay." [ABC News, 9/27/11]
PolitiFact: "Most Economists Agree That A National Sales Tax Would Raise The Relative Tax Burden On Low- And Middle-Income Earning Taxpayers." According to PolitiFact: "Cain's national sales tax, in effect, would attempt to make up for the reduction of federal revenue by creating the 9 percent income tax. The national sales tax, which would help fund the federal government, would be on top of state and local sales taxes, which fund state and local government. In Florida, that would create a hypothetical tax rate of 15 percent in most parts of the state. In the Wall Street Journal, Cain said the national sales tax would be levied 'on all new goods.' (A good question to ask would be whether services are exempted.) Most economists agree that a national sales tax would raise the relative tax burden on low- and middle-income earning taxpayers. 'The main reason is that low- and middle-income households consume more of their income than high-income households do,' said William Gale, senior fellow for economic studies at the Brookings Institution. 'Another way of saying that is high-income households save more of their income than low-income households do.'" [PolitiFact.com, 9/26/11]
"It's A Huge Tax Reduction On The Very Top And A Huge Tax Increase For Moderate And Low Income People." According to the Christian Science Monitor:
But probably the largest economic impact would be shifting the tax burden. "It's a huge tax reduction on the very top and a huge tax increase for moderate and low income people," says Michael Graetz, a professor at Columbia University who has testified before Congress on taxes.
For example, economists have a measure called marginal propensity to consume. Low income people tend to spend about 98 percent of their income, middle income people spend 97 percent and high income people spend 90 percent.
Thus, Cain's proposal would result in an individual who makes $20,000 per year, paying $1,800 in income taxes, plus another $1,605 in sales taxes, assuming they spend 98 percent of their income. The combined income and sales taxes would amount to 17 percent of income. [Christian Science Monitor, 9/30/11]
Retailers Fear Consumption Tax Would Lower Demand. As reported by the Wall Street Journal: "Retailers likely would fight a big federal sales tax, known as a consumption tax, out of concern that it could slow consumer spending. "We think this is going to hurt demand and is not going to be good for our industry," said Rachelle Bernstein, vice president of the National Retail Federation." [Wall Street Journal, 10/3/11]
State Of The Union
HERMAN CAIN: The American people are being deceived with this class warfare stuff. And I'm not going to perpetuate it because that poll says it. The same people that took that survey, I challenge them to tell me what's in that jobs bill. I challenge them to tell me what percentage of the taxes are currently being paid by 50 percent of the taxpayers: 97 percent.
You see, D.C. has a definition of fairness and Webster has a definition of fairness and the president keeps talking about, well, in all fairness — when he's not sharing with the American people. If the American people knew the facts about how the taxes are being paid I think they might have a different opinion.
And one other thing on this note, here's the other thing, to talk about the millionaire's tax is just fanning class warfare because the people don't have the facts about how the tax structure breaks down in terms of who pays what.
FACT: The Top Half Pay 97 Percent Of Income Tax, But The Poor Pay Many Other Taxes
The Top 50 Percent Pay 97 Percent Of Federal Income Taxes. According to the Internal Revenue Service: "The top 50-percent group (reporting AGI [adjusted gross income] of $32,879 or more) accounted for 87.7 percent of AGI and paid almost all (97.1 percent) of the income tax for 2007." [Internal Revenue Service, 2007]
The Poor Pay Many Taxes, Including A Payroll Tax. As the New York Times' David Leonhardt explains:
Income taxes aren't the only kind of federal taxes that people pay. There are also payroll taxes and investment taxes, among others. And, of course, people pay state and local taxes, too.
Even if the discussion is restricted to federal taxes (for which the statistics are better), a vast majority of households end up paying federal taxes. Congressional Budget Office data suggests that, at most, about 10 percent of all households pay no net federal taxes. The number 10 is obviously a lot smaller than 47.
The reason is that poor families generally pay more in payroll taxes than they receive through benefits like the Earned Income Tax Credit. It's not just poor families for whom the payroll tax is a big deal, either. About three-quarters of all American households pay more in payroll taxes, which go toward Medicare and Social Security, than in income taxes.
Focusing on the statistical middle class - the middle 20 percent of households, as ranked by income - underlines this point. Households in this group made $35,400 to $52,100 in 2006, the last year for which the Congressional Budget Office has released data. That would describe a household with one full-time worker earning about $17 to $25 an hour. Such hourly pay is typical for firefighters, preschool teachers, computer support specialists, farmers, members of the clergy, mail carriers, secretaries and truck drivers, according to the Bureau of Labor Statistics.
Taking into account both taxes and tax credits, the average household in this group paid a total income tax rate of just 3 percent. A good number of people, in fact, paid no net income taxes. They are among the alleged free riders.
But the picture starts to change when you look not just at income taxes but at all taxes. This average household would have paid 0.8 percent of its income in corporate taxes (through the stocks it owned), 0.9 percent in gas and other federal excise taxes, and 9.5 percent in payroll taxes. Add these up, and the family's total federal tax rate was 14.2 percent. [New York Times, 4/13/10]
Meet The Press
DAVID GREGORY (HOST): What do you do in an economy where there is no demand? When the only ideas are tax cuts and spending cuts, when we have seen— you've seen it in Great Britain. The debate is roiling Europe now. Austerity alone, when there is not demand in the economy, does not appear to be the answer. You know that tax hikes and tax cuts have a neutral effect on economic growth, if you look at the Clinton and the Bush years. Demand has got to come from somewhere.
REP. PAUL RYAN: So, so the idea that we can borrow and spend more in Washington, create more demand in economic growth, has already proven to fail. We just— we've done trillions of dollars of stimulus spending already from both administrations. It hasn't worked. And so what businesses are telling us they need is more certainty. They have no idea how much higher their taxes are going to go in 15 months. We have a slew of new regulations coming out of Washington that's making it really hard for them to create jobs. And so I would say policy certainty from Washington, which is the kind of leadership and the pro-growth agenda we've been trying to pass in the House, is really what is necessary to create jobs.
FACT: Businesses Blame Weak Demand — Not Government Policies — For Weak Hiring
McClatchy: Small Business Owners Not Worried About Regulations. As reported by McClatchy:
Politicians and business groups often blame excessive regulation and fear of higher taxes for tepid hiring in the economy. However, little evidence of that emerged when McClatchy canvassed a random sample of small business owners across the nation.
"Government regulations are not 'choking' our business, the hospitality business," Bernard Wolfson, the president of Hospitality Operations in Miami, told The Miami Herald. "In order to do business in today's environment, government regulations are necessary and we must deal with them. The health and safety of our guests depend on regulations. It is the government regulations that help keep things in order." [...]
McClatchy reached out to owners of small businesses, many of them mom-and-pop operations, to find out whether they indeed were being choked by regulation, whether uncertainty over taxes affected their hiring plans and whether the health care overhaul was helping or hurting their business.
Their response was surprising.
None of the business owners complained about regulation in their particular industries, and most seemed to welcome it. Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-09 and its grim aftermath. [McClatchy, 9/1/11]
Wall Street Journal: Despite Massive Cash Reserves, Business Not Hiring Because Debt Reduction Stifling Demand. As reported by the Wall Street Journal: "Corporations have a higher share of cash on their balance sheets than at any time in nearly half a century, as businesses build up buffers rather than invest in new plants or hiring. [...] The reduction of debt could place the economy onto firmer footing in the long run. In the short term, however, the effect of consumers paying off debts and companies hoarding cash is less spending, investing and hiring. Economists call this problem the 'paradox of thrift,' when individuals and businesses need to save more to prepare for a downturn, but everyone doing so at the same time makes a downturn more likely. 'For one household or business to save money is a good thing,' said Dana Saporta, an economist with Credit Suisse in New York. 'For everyone to be doing this at the same time could serve to slow economic growth.'" [Wall Street Journal, 9/17/11, emphasis added]
WSJ: "The Main Reason" For Hiring Reluctance Is "Scant Demand, Rather Than Uncertainty Over Government Policies." According to the Wall Street Journal:
The main reason U.S. companies are reluctant to step up hiring is scant demand, rather than uncertainty over government policies, according to a majority of economists in a new Wall Street Journal survey.
"There is no demand," said Paul Ashworth of Capital Economics. "Businesses aren't confident enough, and the longer this goes on the harder it is to convince them that they should be."
In the survey, conducted July 8-13 and released Monday, 53 economists-not all of whom answer every question-were asked the main reason employers aren't hiring more readily. Of the 51 who responded to the question, 31 cited lack of demand (65%) and 14 (27%) cited uncertainty about government policy. The others said hiring overseas was more appealing. [Wall Street Journal, 7/18/11, emphasis added]
Washington Post: Executives Can't Draw Specific Link Between Government Actions And Hiring Decisions. According to the Washington 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]
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:
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.
So, if anything, businesses have been too optimistic over the past few years. [Washington Post, 7/22/10]
Fox News Sunday
CHRIS WALLACE (HOST): I mean, it is a fact that your biology — obviously, it's one thing if somebody is coming on to somebody in a room, but the sheer fact that somebody is a homosexual, are you saying — I mean, these are all volunteers. They are all defending to protect our country, sir.
RICK SANTORUM: That's exactly the point, Chris. They are all volunteers, and they don't have to join in a place where they don't feel comfort serving with people because of that issue. And that is the problem, Chris. And look, the idea that somehow or another, that this is the equivalent, that being black and being gay is simply not true. There are all sorts of studies out there that suggest just the contrary, and there are people who were gay and lived a gay lifestyle and aren't anymore. I don't know if that's a similar situation — I don't think that's the case with anybody that is black. So it's not the same. And I know people try to make it the same, but it is not. It is a behavioral issue, as opposed to a color of the skin issue, and that makes all the difference when it comes to serving in the military.
FACT: Science Does Not Support "Reparative" Therapy
SPLC: "Reparative" Counseling "Has Been Rejected By All The Established And Reputable American Medical, Psychological, Psychiatric, And Professional Counseling Organizations." According to the Southern Poverty Law Center:
"Reparative" or sexual reorientation therapy — the pseudo-scientific foundation of the ex-gay movement — has been rejected by all the established and reputable American medical, psychological, psychiatric, and professional counseling organizations. In 2009, for instance, the American Psychological Association adopted a resolution, accompanied by a 138-page report, that repudiated ex-gay therapy. The report concluded that compelling evidence suggested that cases of individuals going from gay to straight were "rare" and that "many individuals continued to experience same-sex sexual attractions" after reparative therapy. The APA resolution added that "there is insufficient evidence to support the use of psychological interventions to change sexual orientation" and asked "mental health professionals to avoid misrepresenting the efficacy of sexual orientation change efforts by promoting or promising change in sexual orientation." The resolution also affirmed that same-sex sexual and romantic feelings are normal.
Some of the most striking, if anecdotal, evidence of the ineffectiveness of sexual reorientation therapy has been the numerous failures of some of its most ardent advocates. For example, the founder of Exodus International, Michael Bussee, left the organization in 1979 with a fellow male ex-gay counselor because the two had fallen in love. Alan Chambers, current president of Exodus, said in 2007 that with years of therapy, he's mostly conquered his attraction to men, but then admitted, "By no means would we ever say that change can be sudden or complete." [Southern Poverty Law Center, Winter 2010]