November 07, 2011 10:57 am ET
With much of the airtime on this week's Sunday political talk shows devoted to discussing the Herman Cain scandal and Gov. Rick Perry's (R-TX) antics, the substantive issues took a back seat. Yet a few key Republicans still managed to squeeze in a couple of standard GOP attacks. On This Week, House Speaker John Boehner (R-OH) claimed that the stimulus "has not worked," a falsehood echoed by presidential candidate Jon Huntsman on Meet the Press. Boehner also found time to inflate the effect of a millionaires' surtax on small-business owners, and to deny that congressional Republicans have gone after America's social safety net. In fact, one major Republican initiative — the House-passed GOP budget plan — proposed to upend major safety net programs for children, the poor, and seniors.
REP. JOHN BOEHNER: We have a spending problem. We've done all this stimulus spending the last couple of years, and clearly it has not worked. [This Week, 11/6/11]
DAVID GREGORY (HOST): You've said that the 2009 economic stimulus was too small. Do you think government has to play a role now if it's going to help us get out of this cycle of slow economic growth?
JON HUNTSMAN: We're not going to bail out banks anymore in this country. The quantitative easing programs have been proven not to work. They're proven not to work. We've blown through trillions and trillions of dollars with nothing to show on the balance sheet but additional debt. No uplift in the well being of our people, no improvements in joblessness. I say, you know, the stimulus that I thought was going to work and that we talked about initially was that directed toward more in the way of business tax cuts. That's the way it was talked about initially, at least a significant part of it, and I think that would have been a good step. But, beyond that, we've wasted a whole lot of money in this country. The will of the people is such that we won't do that again. [Meet the Press, 11/6/11]
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]
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]
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 October 2011, the most recent report available, the data show that total is up to 109,537,000 — a net gain of 1,601,000 jobs in the private sector. [BLS.gov, accessed 11/6/11]
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:
- 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]
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 (click to enlarge):
CHRISTIANE AMANPOUR (HOST): Now, you obviously disagree with the idea of paying for this with extra taxes. Some 75 percent of Americans agree with an increase in tax on millionaires as a way to pay for these jobs provisions. Do you not feel that by opposing it you're basically out of step with the American people on this issue?
REP. JOHN BOEHNER: Well, over half of the people who would be taxed under this plan are, in fact, small-business people. And as a result, you're going to basically increase taxes on the very people that we're hoping will reinvest in our economy and create jobs. That's the real crux of the problem.
FactCheck.org: Only 2 Percent Of Individuals Reporting Business Income Make Over $200,000 Per Year. 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]
Many Individuals Reporting Business Income Are Not Employers. 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]
CAP: 96 Percent Of Small Businesses That Are Also Employers Earn Less Than $1 Million. From the Center for American Progress: "A report by the Office of Tax Analysis at the U.S. Treasury reveals just how little overlap exists between millionaires and small-business owners. The authors look at flow-through income reported on an array of tax forms including Schedule C, E-rental, F, and Partnership/S Corp income as reported on Schedule E, Part II. The report defines a "small business" as a flow-through entity that engages in business activity and has income over $10,000 but less than $10 million. A small business is then considered an employer if it has at least $10,000 in labor deductions. ... Millionaires own only 3.3 percent of small businesses. Of the 3,808,000 returns with small-business employer income, only 126,000 were filed by employers with an adjusted gross income of more than $1 million. Adjusted gross income is a taxpayer's yearly gross income minus certain adjustments provided for in the tax code, such as contributions to deductible retirement accounts or alimony paid by the taxpayer. The vast majority (76 percent) of small businesses are owned by individuals who make under $200,000 a year, and most of the rest (21 percent) are owned by individuals who earn between $200,000 and $1 million. For the most part, small-business owners are not millionaires. Most of them aren't even close." [Center for American Progress, 10/20/11, 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]
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]
"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]
CHRISTIANE AMANPOUR (HOST): You talk about fairness. And, of course, obviously, a lot of the conversation in this country over the last year or so has been about spending cuts, getting the deficit under control. But it's sort of shifting, as you know now, to the whole big disparity in income, the income gap, the income inequality that people are talking about.
Latest reports say that something like 1 in 15 Americans live in extreme poverty, which is defined as something like $11,000 per year for a family of four. Are you concerned that these budget cuts are going to hurt the people who can least afford it?
REP. JOHN BOEHNER: No. No one here in this Congress, Democrat or Republican, wants to do anything about putting holes in the safety net for Americans. There are Americans who are poor. And I think it's the responsibility of the rest of us to ensure that they have food in their stomachs and they have a roof over their head.
Debt Commission Chairmen: Ryan's Budget Cuts To "Safety Net Programs" Would "Disproportionately" Affect "Disadvantaged Populations." In a statement calling the "Path To Prosperity" "a positive step," the leaders of the president's National Commission on Fiscal Responsibility and Reform — former Sen. Alan Simpson and former White House Chief of Staff Erskine Bowles — wrote: "The plan largely exempts defense spending from reductions and would not apply any of the savings from eliminating or reducing tax expenditures as part of tax reform to deficit reduction. As a result, the Chairman's plan relies on much larger reductions in domestic discretionary spending than does the Commission proposal, while also calling for savings in some safety net programs - cuts which would place a disproportionately adverse effect on certain disadvantaged populations." [Simpson-Bowles Statement, 4/5/11 via The Hill]
"The Path To Prosperity" Turns Medicare Into A Voucher System. From the "Path to Prosperity":
Save Medicare for current and future generations while making no changes for those in and near retirement. For younger workers, when they reach eligibility, Medicare will provide a Medicare payment and a list of guaranteed coverage options from which recipients can choose a plan that best suits their needs. These future Medicare beneficiaries will be able to choose a plan the same way members of Congress do. Medicare will provide additional assistance for lower-income beneficiaries and those with greater health risks. [The Path To Prosperity, 4/5/11]
According to the CBO analysis the benefit would cover 32 percent of the cost of a health insurance package equivalent to the current Medicare benefit (Figure 1). This means that the beneficiary would pay 68 percent of the cost of this package. Using the CBO assumption of 2.5 percent annual inflation, the voucher would have grown to $9,750 by 2030. This means that a Medicare type plan for someone age 65 would be $30,460 under Representative Ryan's plan, leaving seniors with a bill of $20,700. (This does not count various out of pocket medical expenditures not covered by Medicare.)
According to the Social Security trustees, the benefit for a medium wage earner who first starts collecting benefits at age 65 in 2030 would be $32,200. (This adjusts the benefit projected by the Social Security trustees [$19,652 in 2010 dollars] for the 2.5 percent annual inflation rate assumed by CBO.) For close to 70 percent of seniors, Social Security is more than half of their retirement income. Most seniors will get a benefit that is less than the medium earners benefit described here since their average earnings are less than that of a medium earner and they start collecting Social Security benefits before age 65. [CEPR.net, 4/6/11]
The "Path To Prosperity" Creates A Block Grant Program For Medicaid. From the "Path to Prosperity":
Secure the Medicaid benefit by converting the federal share of Medicaid spending into a block grant tailored to meet each state's needs, indexed for inflation and population growth. This reform ends the misguided one-size-fits-all approach that has tied the hands of so many state governments. States will no longer be shackled by federally determined program requirements and enrollment criteria. Instead, they will have the freedom and flexibility to tailor a Medicaid program that fits the needs of their unique populations. [The Path To Prosperity, 4/5/11]
The Ryan budget imposes draconian cuts to both Medicaid and the Children's Health Insurance Program (CHIP), jeopardizing health coverage for up to one-third of our nation's children who rely on either Medicaid or CHIP for their health care. Specifically, Chairman Ryan proposes to slash $771 billion out of current Medicaid and another $627 billion out of Medicaid as part of health care reform for a total of $1.4 trillion in federal Medicaid cuts. [...]
As a result, Medicaid and CHIP would see a total combined loss in federal and state funding of more than $2 trillion over the course of the next ten years - an amount that clearly jeopardizes the health and well-being of the more than 30 million children in this country who rely on Medicaid or CHIP for their health coverage. [FirstFocus.net, 4/7/11, emphasis added]
"The Path To Prosperity" Converts Food Stamps To A Block Grant Program. From the "Path to Prosperity":
Convert the Supplemental Nutrition Assistance Program (SNAP) into a block grant tailored for each state's low-income population, indexed for inflation and eligibility beginning in 2015 - after employment has recovered. Make aid contingent on work or job training. [The Path To Prosperity, 4/5/11]
The plan justifies its large food stamp cuts by claiming that the trend in food stamp costs "is one of relentless and unsustainable growth." The claim is false. Food stamp costs have risen sharply in the past few years due mainly to the recession and a temporary food stamp benefit increase of the 2009 Recovery Act. As the economy recovers, food stamp costs will drop and, by the end of the decade, will return to about 2005 levels as a share of Gross Domestic Product (GDP), according to the Congressional Budget Office (CBO)
Finally, the impact of the Ryan plan would be harshest during recessions. Currently, Medicaid as well as SNAP (formerly known as food stamps) respond automatically to assist more people when, during recessions, more people lose their jobs, income, and health insurance. This automatic response both lessens hardship and keeps the economy from plunging deeper into recession, by adding more purchasing power to the economy that replaces part of the loss of demand from consumers and businesses. The Ryan plan would convert both Medicaid and SNAP to block grants, however, which means they would no longer respond automatically to increased need during recessions. That would not only increase hardship and destitution in recessions, but also would further weaken a slumping economy and lead to the loss of many more jobs. [CBPP.org, 4/6/11]
All But Four House Republicans Voted For The "Path To Prosperity." On April 15, 2011, all but four House Republicans voted for the House Republican budget authored by Rep. Paul Ryan (R-WI). [H. Con. Res. 34, Vote #277, 4/15/11]
To read more about the effects of "Path to Prosperity" on the safety net, click HERE.
Copyright © 2010 Media Matters Action Network. All rights reserved.