Political Correction

Fact Checking The Sunday Shows - October 16, 2011

October 17, 2011 9:37 am ET

Republicans spent their Sunday morning TV appearances blaming Democrats for the economy and trying to convince Wall Street protesters to join them in their scapegoating. Contrary to what Herman Cain and Rep. Eric Cantor (R-VA) claimed, the facts show that private firms, not government entities, inflated the subprime mortgage bubble, and Wall Street, not Democrats, turned those loans into an elaborate casino game that left the entire country on the hook for their bad bets. Similarly, Cantor and Sen. John McCain (R-AZ) were wrong to suggest that Democratic policies on taxes and regulations are hurting the economy, and that Republican proposals will do more to create jobs than President Obama's proposed American Jobs Act. In addition, Cain claimed that his "9-9-9" tax plan won't hurt the poor and implied that Obama has cut defense spending, Gov. Bobby Jindal (R-LA) blamed the credit downgrade on the president, and Sen. McCain said that Obama never spoke up on behalf of Iranian protesters in 2009. In each case, the facts disagree.

CLAIM: Rep. Cantor Suggested Recent Democratic Policies, Rather Than Wall Street, Are Responsible For The Current Economy

REP. ERIC CANTOR: But where I'm most concerned is we have elected leaders in this town who, frankly, are joining in the effort to blame others rather than focus on the policies that have brought about the current situation. I mean, when you hear of the Democrat elected leaders joining in, blaming parts of our economy and society versus, let's take some of the credit or blame here in Washington. I mean, these are policies that they put into place and there's a lot that can be done here in this town to turn the economy around, and promote against income mobility and not go in and excoriate some who have been successful. We want success for everybody. [Fox News Sunday, 10/16/11]

CLAIM: Herman Cain Claimed That Wall Street Protesters Should Instead Blame "The White House And The Democrats" For The Economy

DAVID GREGORY (HOST): You've written about, you've reacted to it. Do you empathize, as the president does, with the message of those Wall Street protesters?

HERMAN CAIN: What is their message? That's what's unclear. If that message is, "Let's punish the rich," I don't empathize with that message. They should be protesting the White House.  The White House has basically enacted failed economic policies. The White House and the Democrats have spent $1 trillion that did not work. Now the president wants to pass another $450 billion. They have their frustrations directed at the wrong group. That's what I'm saying. [Meet the Press, 10/16/11]

FACT: Wall Street, Not President Obama, Crashed The Economy

Read our full fact check of Republican efforts to misdirect blame for the financial crisis.

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]

Financial Fraud Expert Bill Black: Presidents Reagan, Bush, Clinton, And Bush All Aided Deregulation Of Financial Markets Over 30-Year Period. According to fraud expert Bill Black: "Thirty years ago Ronald Reagan was President. Reagan famously claimed that government was always the problem. He was a zealous supporter of deregulation. He appointed regulatory leaders he believed were strong supporters of desupervision. His Vice President, George Herbert Walker Bush, chaired the administration's financial deregulation task force. President Clinton strongly supported financial deregulation. His principal economic advisors, Robert Rubin and Larry Summers, were eager financial deregulators. His Vice President, Al Gore, lead the 'reinventing government' movement that spread the rot of desupervision. Banking regulators were instructed to refer to banks as their 'customers.'" [Benzinga.com, 2/7/11]

President Bush Appointed An SEC Chief Who Believed Government Was "A Service Industry" Rather Than A Strict Regulator. According to fraud expert Bill Black: "George W. Bush was an ardent anti-regulator. He appointed the nation's leading anti-regulators to run the regulatory agencies. Bush appointed Harvey Pitt, for example, to run the SEC because he was the leading opponent of vigorous securities regulation and effective accounting. On October 16, 2001, Enron announce[d] massive losses and accounting restatements. On October 22, 2001, SEC Chairman Pitt addressed the AICPA Governing Council (his former client) and bemoaned the fact that the SEC had not always been a 'kinder and gentler' place for accountants. He called accountants the SEC's 'partners.' (The FBI would later call the Mortgage Bankers Association - the trade association of the mortgage fraud perps - its partner against mortgage fraud.) Pitt blamed the SEC staff for purportedly intimidating accountants and refusing to listen to them. He explained his guiding rule: 'I am committed to the principle that government is and must be a service industry.'" [Benzinga.com, 2/7/11]

SEC Historian: Regulators Had A "Trust The Market" Philosophy. As reported by the Los Angeles Times: "The change in leadership at the SEC is an opportunity to reverse years of a failed 'trust the market' philosophy permeating the agency, said Joel Seligman, an SEC historian. Although SEC division chiefs normally don't depart with an outgoing chairman, Seligman said the new chief should replace them." [Los Angeles Times12/18/08]

CLAIM: Rep. Cantor Claimed Republican Jobs Plan Will Be More Effective Than President Obama's

REP. ERIC CANTOR: We've got our plan here. This is a plan for America's job creators. We have sent -- we've got 12 bills sitting over on the Senate, that there are things that the president says he believes in -- let's work together, let's find some of the things in his plan that we agree with and let's go ahead and do that for the American people. [...] Obviously, his economic plans are not working. That's why we are trying to say we've got to change directions here. We've got to focus on private enterprise and small business. We've got to get the entrepreneurs back in the game. And that's our plan does. [Fox News Sunday, 10/16/11]

CLAIM: Sen. McCain Claimed We Need "Relief From The Burdens" That "Have Caused Us To Be In The Longest Recession Since The Great Depression"

SEN. JOHN MCCAIN: Don't you think it's time that Americans had a relief from regulations, had a relief from taxes, had a relief from the burdens that have been imposed by government which have caused us to be in the longest recession since the Great Depression? [State of the Union, 10/16/11]

FACT: House GOP "Plan For America's Job Creators" Won't Boost Demand, Which Is What Job Creators Say They Need

House GOP Proposal Promises To Spur Job Growth Through A Crack-Down On Government Regulations. From the House GOP's summary document for its jobs plan: "Require congressional review and approval of any government regulations that have a significant impact on the economy or burden small businesses. Audit existing and pending regulations to identify and address those that hinder economic growth." [MajorityLeader.gov, accessed 10/16/11]

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]

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 Journal7/18/11, emphasis added]

Republican Plan Promises "Significant Spending Cuts." From the House GOP's summary document for its jobs plan: "Build upon the House Republicans' Budget by enacting significant spending cuts." [MajorityLeader.gov, accessed 10/16/11]

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]

FACT: Economists Say The American Jobs Act Will Bolster Demand And Create Millions Of Jobs

Macroeconomic Advisers LLC: American Jobs Act Will Boost Employment By 2.1 Million Over 2012-13. From Macroeconomic Advisers LLC's Macroadvisers blog:

We estimate that the American Jobs Act (AJA), if enacted, would give a significant boost to GDP and employment over the near-term.

Economic Policy Institute: American Jobs Act Will Create 2.3 Million New Jobs, Save A Further 1.6 Million. From EPI's Working Economics blog: "Overall the package would increase employment by about 4.3 million jobs over the next couple of years. The new initiatives would boost employment by about 2.6 million jobs, while the continuation of the two temporary provisions (EUI and the payroll tax holiday) would prevent a backslide of over 1.6 million jobs." [EPI.org, 9/8/11]

Moody's: American Jobs Act Will Create 1.9 Million Jobs. As reported by UPI: "President Barack Obama's $447 billion job-creation plan would likely add 1.9 million payroll jobs and grow the U.S. economy 2 percent, a leading economist said. The plan, which Obama outlined before a joint session of Congress Thursday, would likely cut the unemployment rate by a percentage point, Moody's Analytics Chief Economist Mark Zandi said as Obama prepared to tout the plan at Virginia's University of Richmond." [UPI, 9/9/11]

CBO Director: "Most Effective" Policy Would Be Increased Spending In Short Term, Deficit Reduction Over Middle Term. As reported by Talking Points Memo: "'If policymakers want to achieve both a short-term economic boost and long-term fiscal sustainability the combination of policies that would be most effective according to our analysis would be changes in taxes and spending that would widen the deficit today, but narrow it in the coming decade,' Elmendorf told the panel's 12 Democrats and Republicans. 'The combination of fiscal policies that would be most effective would be policies that cut taxes or increase spending in the near-term, but over the medium and longer-term move in the opposite direction.' This is a generalized version of precisely what President Obama is proposing -- a $447 billion jobs bill that will increase spending on hiring programs, and reduce payroll taxes; accompanied by deficit reduction measures that take effect in 2013, to more than cover the cost of the jobs bill." [Talking Points Memo9/13/11, emphasis added]

Fox News Sunday

CLAIM: Rep. Cantor Implied The American Jobs Act Would Increase Taxes On Small Businesses

REP. ERIC CANTOR: Well, the plan in total was one that was met with a lot of resistance frankly on both sides of the aisle when the president unveiled it in September. And so, when the president spoke that night, I said, let's work together, stop the all-or-nothing approach. We're not going to be for tax increases on small businesses. He knows that. 

FACT: The American Jobs Act Includes $70 Billion In Tax Relief For Businesses

President Obama's Jobs Bill Cuts Payroll Taxes Paid By Employers. From the White House's fact sheet on the American Jobs Act:

[WhiteHouse.gov, 9/8/11]

FACT: President Obama's Proposal To Pay For His Jobs Bill Would Raise Top Tax Rates — But The Businesses That Pay Top Tax Rates Aren't Actually Small

To Offset Cost Of Jobs Bill, President Obama Has Proposed Elimination Of Itemized Tax Deductions For Families Earning Over $250,000. As reported by the Wall Street Journal: "The prospects for President Barack Obama's $447 billion jobs plan grew dimmer Monday as he unveiled the fine print of how it would be paid for-primarily through tax increases that Republicans said would destroy jobs, not create them. Mr. Obama proposed limiting itemized deductions for families with taxable income of $250,000 or more a year, ending tax breaks for oil companies and corporate jet owners, and cutting out a tax break for investment-fund managers. The White House says the tax changes would take effect in 2013 and estimates they would raise $467 billion in additional revenue over 10 years." [Wall Street Journal, 9/13/11]

FactCheck.org: "Only 2 Percent" Of Those Reporting Business Income Would Face Higher Taxes With Increase On Top Earners. 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]

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 Post9/17/10]

Tax Policy Center's Marron: Policymakers Should "Take Care Not To Equate Pass-Throughs With Small Business." From the Washington Post:

Some of these "pass-through" companies are rather large, with revenues of more than $50 million, but they represent just a small proportion of such companies. According to calculations by Donald Marron, director of the Urban-Brookings Tax Policy Center, in 2008 such companies accounted for less than one-tenth of one percent of all returns filed - but they had 40 percent of revenues and 30 percent of all profits.

"Large businesses thus account for a large share of the economic activity pass-through entities undertake," Marron recently told Congress.  "Policymakers should therefore take care not to equate pass-throughs with small business." [Washington Post4/15/11]

By Defining All "Pass-Through" Entities As "Small Businesses," Republicans Are Counting A Wall Street Firm Worth $54 Billion As "Small." 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 Post9/17/10, 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 Post9/17/10, emphasis added]

CLAIM: Rep. Cantor Claimed That Recovery Act Proved That "The Other Way Doesn't Work" While Blaming Every Single Job Lost Since Inauguration On President Obama

REP. ERIC CANTOR: Well we've seen that the other way doesn't work. We've seen that the stimulus bill that the president put forward at the beginning of his term I think certainly did not reach the promises that he made. [...] Look at the facts, Chris. Since the president has taken office, there has been 1.6 million jobs lost in the private sector, net.

FACT: The Economy Was Hemorrhaging Hundreds Of Thousands Of Jobs Every Month At The End Of President Bush's Term, And As President Obama's Policies Took Effect The Bleeding Stopped

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]

Dec 07

23,000

Jan 08

-12,000

Feb 08

-85,000

Mar 08

-58,000

Apr 08

-161,000

May 08

-253,000

Jun 08

-230,000

Jul 08

-257,000

Aug 08

-347,000

Sep 08

-456,000

Oct 08

-547,000

Nov 08

-734,000

Dec 08

-667,000

Jan 09

-806,000

Feb 09

-707,000

Mar 09

-744,000

Apr 09

-649,000

May 09

-334,000

Jun 09

-452,000

AVG

    -393,000

[BLS.gov, accessed 1/25/11]

The Private Sector Has Added Jobs Every Month For The Past 19 Months. Minority Leader Pelosi's office prepared a chart showing monthly job gains and losses in the private sector since January 2008:

[DemocraticLeader.gov, 10/7/11]

FACT: Since Recovery Act Spending Went Into Effect, The Private Sector Has Added Over 1.4 Million Jobs

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]

Since June 2009, The Private Sector Has Gained Over 1.4 Million Net Jobs. According to Bureau of Labor Statistics data, there were 107,936,000 private-sector jobs in June 2009. As of September 2011, the most recent report available, the data show that total is up to 109,349,000 — a net gain of 1,413,000 jobs in the private sector. [BLS.gov, accessed 9/18/11]

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:

Public Sector Layoffs Distort The Jobs Picture. Political Correction prepared a chart, based on BLS data, showing cumulative job gains and losses in the private and public sectors since the Recovery Act took effect:

 [BLS.gov, accessed 10/7/11; BLS.gov, accessed 10/7/11]

Meet the Press

CLAIM: Herman Cain Claimed His Tax Plan Would Not Allow The Wealthy To Pay Less While Requiring The Poor And Middle Class To Pay More

DAVID GREGORY (HOST):  The wealthiest Americans would pay less, the poorest Americans and middle class would pay more.  You don't dispute that.

HERMAN CAIN:  I do dispute that.  You are making--you and others are making assumptions about what wealthy Americans would do with their money, and you're making assumptions about what the middle class and the poor.  You can't predict the behavior. 

FACT: Economists And Tax Policy Experts Say Cain's Tax Plan Would Raise Taxes On Low-Income Families While Giving The Wealthy A Big Tax Cut

Former Reagan Adviser Bruce Bartlett: "The Poor Would Pay More While The Rich Would Have Their Taxes Cut." According to former President Reagan adviser Bruce Bartlett: "It's important to understand that the 9 percent rates on personal and business income would apply to very different tax bases than now exist. For individuals, the tax would apply to gross income less only the deduction for charitable contributions. No mention is made of a personal exemption. This means that the 47 percent of tax filers who now pay no federal income taxes will pay 9 percent on their total income. And elimination of the payroll tax won't even help half of them because the earned income tax credit, which Mr. Cain would abolish, offsets both their income tax liability and their payroll tax payment as well. [...] At a minimum, the Cain plan is a distributional monstrosity. The poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase. [New York Times, 10/11/11]

A Family Of Four Making $50,000 Per Year Would Pay More In Federal Taxes Under Cain's Plan. From PolitiFact: "For someone married with dependents, 9-9-9 is worse. The current tax code treats married couples with children differently -- and better -- than people who are single. With dependents, the family of four will pay about $6,515 in income and payroll taxes and even less, about $4,600, if they qualify for a child income tax credit. So the family of four could end up paying anywhere from about $2,080 to $4,000 more in federal taxes under Cain's 9-9-9. These are broad strokes that can vary based on your personal situation -- as well as other credits workers might be able to claim under the current tax system -- but they're a good rough guide in understanding Cain's plan. [...] For families at those income levels, 9-9-9 is even worse, especially when you include potential tax credits and exemptions low-income earners are now getting that they wouldn't under Cain's plan." [PolitiFact, 10/13/11, emphasis original]

Individuals Making $30,000 Per Year Would Pay More In Federal Taxes Under Cain's Plan. From PolitiFact: "A single person who makes $40,000 would still pay about $334 less in federal taxes under 9-9-9. But someone making $30,000 would pay about $212 more under 9-9-9." [PolitiFact, 10/13/11]

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]

Columbia University Professor: "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 Monitor9/30/11]

The Lower A Person's Income, The Worse They Fare Under Cain's Tax Plan. From PolitiFact: "The disparity between 9-9-9 and the current tax code grows as a person's income shrinks. [...] 'It's going to fall very, very heavily on low-income taxpayers to middle-income taxpayers,' Andy Hollander, a retired federal tax agent, who studied the 9-9-9 plan for PolitiFact Florida, told us." [PolitiFact, 10/13/11]

CLAIM: Herman Cain Claimed That We Have Been Cutting The Defense Budget

HERMAN CAIN: The fact that I believe in investing in our military, not continue to cut defense because the world is not safer.

FACT: The Defense Budget Has Risen Constantly Under President Obama

The National Defense Budget Has Increased Every Single Year Since A $2 Billion Cut In 1998. Below is a chart based on the historical budget tables maintained by the White House Office of Management and Budget:

 [Office of Management and Budget, accessed 10/16/11]

CLAIM: Gov. Jindal Blamed President Obama For S&P's Downgrade Of America's Credit Rating

GOV. BOBBY JINDAL: We've got a president we elected who hadn't run anything other than his campaign before he got elected president of the United States.  I think he is in way over his head.  As a result, we have seen the, the unemployment has gone up, America's competitive ranking has gone down.  We used to be number one, now we're number five in the world.  We've seen our credit rating downgraded for the first time.

FACT: Senior S&P Official Said Decision Spurred In Part By The "Kind Of Rhetoric" Used By Republicans

S&P Senior Director On Default Talk: "This Kind Of Rhetoric Is Not Common Amongst AAA Sovereigns." As reported by Talking Points Memo: "Standard & Poors has a specific justification for downgrading the U.S. bond rating, and it's deadly for Republicans. It wasn't just that Congress showed itself to be reckless and dysfunctional, or that the GOP shows no sign of ever ending their anti-tax jihad. It's that for a period of weeks, some lawmakers (read: Republicans) were quite literally shrugging off the risks of blowing past the August 2 deadline, running out of borrowing authority, and missing payment obligations. '[P]eople in the political arena were even talking about a potential default,' said Joydeep Mukherji, senior director at S&P. 'That a country even has such voices, albeit a minority, is something notable,' he added. 'This kind of rhetoric is not common amongst AAA sovereigns.' This is unambiguous, and leaves little room for obfuscation. S&P's original, lengthy statement explaining the downgrade cited political dysfunction in Congress quite broadly, but did not mention this specific element of the debate. For weeks, high-profile conservative lawmakers practically welcomed the notion of exhausting the country's borrowing authority, or even technically defaulting. Others brazenly dismissed the risks of doing so. And for a period of days, in an earlier stage of the debate, Republican leaders said technical default would be an acceptable consequence, if it meant the GOP walked away with massive entitlement cuts in the end." [Talking Points Memo, 8/12/11]

FACT: S&P Downgrade Report Singles Out Republicans' Actions

S&P: "We Lowered Our Long-Term Rating" Because Of "The Prolonged Controversy Over Raising The Statutory Debt Ceiling." From Standard & Poor's: "We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. [...] The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy." [Standard & Poor's, 8/5/11, emphasis added]

National Journal: "It's Hard To Read The S&P Analysis As Anything Other Than A Blast At Republicans." From the National Journal: "To be sure, S&P didn't specifically single out Republicans. It criticized the overall $2.4 trillion deal as too limited, and it implicitly criticized both political parties for refusing to tackle their sacred cows - entitlements, in the case of Democrats; tax increases in the case of Republicans. But it's hard to read the S&P analysis as anything other than a blast at Republicans.  In denouncing the threat of default as a 'bargaining chip,' the agency was saying that the GOP strategy had shaken its confidence.  Though S&P didn't mention it, the agency must have been unnerved by the number of Republicans who insisted that it would be fine to blow through the debt ceiling and provoke a default." [National Journal8/6/11, emphasis added]

S&P's "Rationale" Section Cites Failure Of Long Public Debate To Produce Comprehensive Plan That Includes New Revenues. From the "Rationale" section of the Standard & Poor's report: "Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability." [Standard & Poor's, 8/5/11, emphasis added]

S&P: Republican Intransigence On Taxes Makes Permanent Extension Of Bush Tax Cuts More Likely, Which Would Be "Consistent With" Downgraded Rating. From S&P: "Under our revised base case fiscal scenario--which we consider to be consistent with a 'AA+' long-term rating and a negative outlook--we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act's revised policy settings. Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act." [Standard & Poor's, 8/5/11, emphasis added]

National Journal: Downgrade Based "On The Political Game Of Chicken...That Republicans Initiated And Pushed To The Limit." From the National Journal: "The big new element on Friday was an official outside recognition that U.S. creditworthiness is being undermined by a new factor: political insanity. S&P didn't base its downgrade on a change in the U.S. fiscal and economic outlook. It based it on the political game of chicken over the debt ceiling, a game that Republicans initiated and pushed to the limit, and on a growing gloom about the partisan deadlock. Part of S&P's gloom, moreover, stemmed explicitly from what a new assessment of the GOP's ability to block any and all tax increases. S&P was remarkably blunt that its downgrade was mostly about heightened political risks:  'The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed,' it said." [National Journal8/6/11, emphasis added]

State of the Union

CLAIM: Sen. McCain Claimed That President Obama "Failed To Acknowledge Or Support The Demonstrators Back In Early 2009" In Iran

SEN. JOHN MCCAIN: Well I think his policy of engagement with Iran has clearly been a failure, beginning when he failed to acknowledge or support the demonstrators back in early 2009 who were chanting in the streets, "Obama! Obama! Are you with us or are you with them?"

FACT: President Obama Voiced Support For Iranian Protestors In Various Statements And Admonished Regime That "The World Is Watching"

Obama At Press Conference, June 15, 2009: "The Iranian People And Their Voices Should Be Heard And Respected." At a joint press conference with Italian Prime Minister Silvio Berlusconi, President Obama said:

Obviously all of us have been watching the news from Iran.  And I want to start off by being very clear that it is up to Iranians to make decisions about who Iran's leaders will be; that we respect Iranian sovereignty and want to avoid the United States being the issue inside of Iran, which sometimes the United States can be a handy political football -- or discussions with the United States.

Having said all that, I am deeply troubled by the violence that I've been seeing on television.  I think that the democratic process -- free speech, the ability of people to peacefully dissent -- all those are universal values and need to be respected.  And whenever I see violence perpetrated on people who are peacefully dissenting, and whenever the American people see that, I think they're, rightfully, troubled. [...]

We will continue to pursue a tough, direct dialogue between our two countries, and we'll see where it takes us.  But even as we do so, I think it would be wrong for me to be silent about what we've seen on the television over the last few days.  And what I would say to those people who put so much hope and energy and optimism into the political process, I would say to them that the world is watching and inspired by their participation, regardless of what the ultimate outcome of the election was.  And they should know that the world is watching.

And particularly to the youth of Iran, I want them to know that we in the United States do not want to make any decisions for the Iranians, but we do believe that the Iranian people and their voices should be heard and respected. [Obama Statement, 6/15/09, emphasis added]

Obama Statement On Iran, June 20, 2009: "The Iranian Government Must Understand That The World Is Watching." In a statement, President Obama said: "The Iranian government must understand that the world is watching. We mourn each and every innocent life that is lost. We call on the Iranian government to stop all violent and unjust actions against its own people. The universal rights to assembly and free speech must be respected, and the United States stands with all who seek to exercise those rights. As I said in Cairo, suppressing ideas never succeeds in making them go away. The Iranian people will ultimately judge the actions of their own government. If the Iranian government seeks the respect of the international community, it must respect the dignity of its own people and govern through consent, not coercion. Martin Luther King once said - 'The arc of the moral universe is long, but it bends toward justice.' I believe that. The international community believes that. And right now, we are bearing witness to the Iranian peoples' belief in that truth, and we will continue to bear witness." [Obama Statement, 6/20/09]

Obama At Press Conference, June 23, 2009: Iranian Regime Must "Heed The Will" Of Protestors Who "Are On The Right Side Of History." At a press conference, President Obama said:

First, I'd like to say a few words about the situation in Iran. The United States and the international community have been appalled and outraged by the threats, the beatings, and imprisonments of the last few days. I strongly condemn these unjust actions, and I join with the American people in mourning each and every innocent life that is lost.

I've made it clear that the United States respects the sovereignty of the Islamic Republic of Iran, and is not interfering with Iran's affairs. But we must also bear witness to the courage and the dignity of the Iranian people, and to a remarkable opening within Iranian society. And we deplore the violence against innocent civilians anywhere that it takes place. [...]

This is not about the United States or the West; this is about the people of Iran, and the future that they - and only they - will choose.

The Iranian people can speak for themselves. That's precisely what's happened in the last few days. In 2009, no iron fist is strong enough to shut off the world from bearing witness to peaceful protests [sic] of justice. Despite the Iranian government's efforts to expel journalists and isolate itself, powerful images and poignant words have made their way to us through cell phones and computers, and so we've watched what the Iranian people are doing.

This is what we've witnessed. We've seen the timeless dignity of tens of thousands of Iranians marching in silence. We've seen people of all ages risk everything to insist that their votes are counted and that their voices are heard. Above all, we've seen courageous women stand up to the brutality and threats, and we've experienced the searing image of a woman bleeding to death on the streets. While this loss is raw and extraordinarily painful, we also know this: Those who stand up for justice are always on the right side of history.

As I said in Cairo, suppressing ideas never succeeds in making them go away. The Iranian people have a universal right to assembly and free speech. If the Iranian government seeks the respect of the international community, it must respect those rights and heed the will of its own people. It must govern through consent and not coercion. That's what Iran's own people are calling for, and the Iranian people will ultimately judge the actions of their own government. [Obama Statement, 6/23/09, emphasis added]

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