Political Correction

Fact Checking The Sunday Shows - December 18, 2011

December 19, 2011 9:24 am ET

This week on the Sunday political talk shows, topics of discussion ranged far and wide. On Fox News Sunday, GOP presidential candidate Mitt Romney advocated for block granting Medicaid despite the harm that would do to those who rely on the program. On This Week, House Budget Committee Chairman Rep. Paul Ryan (R-WI) distorted the content of a CBO report on income inequality. House Speaker John Boehner (R-OH), appearing on Meet the Press, shared several false claims: that employers are concerned about "uncertainty," and that the Keystone pipeline would create 20,000 jobs. Rep. Michele Bachmann (R-MN), also on Meet the Press, did the same, falsely asserting that there's no evidence the payroll tax holiday created jobs and that Iran has threatened the U.S. and Israel with nuclear weapons.

Fox News Sunday

CLAIM: Romney Claimed "States Can Do A Better Job Caring For Their Own Poor" With Medicaid Block Grants

MITT ROMNEY: Actually, the great news about those programs is that in the Ryan plan and in the plan I've put forward, I take a program — the biggest of those that is Medicaid, I take the Medicaid dollars, send them back to the states without the mandates as to how they have to treat —

CHRIS WALLACE (HOST): You're also cutting the budget by $700 million.

ROMNEY: What I do is I take the money and send it back to the states and say we're going to grow that funding at inflation, the CPI, plus 1 percent. By doing, that you save an enormous amount of money. I happened to believe that states can do a better job caring for their own poor, rooting out the fraud and waste and abuse that exists within their programs.

FACT: Block Grants Would Mean Cuts In Eligibility, Benefits And Provider Payments

Current Medicaid Funding Is Provided On An Open-Ended Basis From The Federal Government. Currently, Medicaid is funded by both the federal government and the individual states.  From CBPP: "Medicaid is jointly financed, with the federal government generally picking up between 50 percent and 75 percent of each state's Medicaid costs (57 percent, on average) and the state responsible for the remainder. Federal Medicaid financing is open-ended:  if state Medicaid expenditures increase, the federal government shares in the increased costs; if state Medicaid expenditures decline, the federal government shares in the savings." [Center on Budget and Policy Priorities, 2/23/11, emphasis added]

Medicaid Block Grants Would Cap Federal Funding. From CBPP: "Under proposals to convert Medicaid to a block grant or otherwise cap federal funding, the federal government would no longer pay a fixed percentage of states' Medicaid costs.  Instead, it would provide each state with a fixed dollar amount, with states responsible for all remaining Medicaid costs. Block-grant proposals vary on how this fixed amount would be determined, but typically a national Medicaid spending allotment would be set each year and a formula would determine each state's share of that allotment...These national or state allotments would be adjusted annually in order to reflect factors like growth in population, economic growth, or inflation; based on past block grant proposals, such adjustments likely would be only partial adjustments." [Center on Budget and Policy Priorities, 2/23/11, emphasis added]

Block Grant Financing Would Mean Restricting Medicaid Enrollment, Eligibility And Benefits. From CBPP:

As a state's block-grant amount became increasingly inadequate over time, states would likely make up for the shortfall, at least in part, by exercising the greater flexibility they would be given to restrict enrollment, eligibility, and benefits. These cuts would likely become deepest at times when individuals and families most need Medicaid, such as during a recession.

Such cuts could be devastating for tens of millions of low-income Medicaid beneficiaries. For example, states might be given flexibility to cap Medicaid enrollment, leaving uninsured a substantial number of people whose low incomes would otherwise qualify them for Medicaid. Many current beneficiaries could also be made ineligible and end up uninsured, as states narrow coverage. [Center on Budget and Policy Priorities, 1/6/11, emphasis added, italics original]

Block Grant Financing Would Also Lead To Reducing Provider Rates. From CBPP: "States facing inadequate block grant funding would also likely have to further scale back provider rates.  These rate reductions likely would apply not only to hospitals, nursing homes, physicians, and pharmacies in Medicaid fee-for-service but also to managed care plans that currently serve low-income children and their parents.  That, in turn, could cause some providers and plans to withdraw from Medicaid, threatening beneficiaries' access to needed care, particularly in communities - such as rural areas - that already are underserved.  It also would place greater pressure on providers such as community health care centers and safety-net hospitals, which rely on Medicaid funding but which would face increased patient needs because of increases in the numbers of uninsured individuals if Medicaid enrollment were capped and eligibility restricted under a block grant." [Center on Budget and Policy Priorities, 2/23/11]

For more on the negative impact of Medicaid block grants, click HERE.

This Week

CLAIM: Rep. Ryan Claimed A CBO Study Concludes "The Best Thing You Can Have To Reduce Income Inequality" Is "More Recessions"

REP. PAUL RYAN: [W]e have to keep an eye on what is necessary to grow the economy so we can have more broadly shared prosperity by giving people income mobility, let people rise up. And that means, take the barriers away from allowing people to rise in society, don't have a society where we say this is enough, we're going to cap it, and we're going to try and equalize the differences.

Because what ends up happening, if you look at that new CBO study that's about income inequality, the best thing you can have to reduce income inequality is to have more recessions. I mean, that's basically what their conclusion is. And so you're going to have different outcomes of different people's lives.

The focus on our government ought to be to respect people's rights so that they can make the most of their lives. And the difference in our philosophies is not equalizing the outcome of people's lives, but giving equal opportunities so people can make the most of their lives.

FACT: The CBO Study Notes That Rising Income Inequality Slowed During Recessions But Points To Different Causes

CBO: Income Inequality Rose Over 30-Year Period, Except During Recessions. From the Congressional Budget Office's report, "Trends in the distribution of Household Income Between 1979 and 2007": "The dispersion of household income rose almost continually throughout the nearly 30-year period spanning 1979 through 2007 except during the 1990-1991 and 2001 recessions. The recent turmoil in financial markets, the prolonged recession that began in December 2007, and the ongoing slow recovery may have caused a pause in that upward trend, but the present analysis does not extend beyond 2007." [Congressional Budget Office, October 2011]

CBO Report Measures Change In Income Inequality From 1979 To 2007 Because Those Years Both Preceded Recessions And Therefore Had "Similar Overall Economic Activity." From the Congressional Budget Office's report, "Trends in the distribution of Household Income Between 1979 and 2007": "To assess trends in the distribution of household income, the Congressional Budget Office (CBO) examined the span from 1979 to 2007 because those endpoints allow comparisons between periods of similar overall economic activity (they were both years before recessions)." [Congressional Budget Office, October 2011]

Despite Similar Economic Forces In Both Years, Income Inequality Has Risen "Substantially." From the Congressional Budget Office's report, "Trends in the distribution of Household Income Between 1979 and 2007": "The distribution of after-tax income (including government transfer payments) became substantially more unequal from 1979 to 2007 as a result of a rapid rise in income for the highest-income households, sluggish income growth for the middle 60 percent of the population, and an even smaller increase in after-tax income for the 20 percent of the population with the lowest income."

The Congressional Budget Office also included in its report the following chart showing the share of after-tax income enjoyed by each quintile in 1979 and in 2007:

CBO share of income

[Congressional Budget Office, October 2011]

CBO: "Major Reason" For Rising Income Inequality Between 1979 And 2007 Was Wealthier Households' Share Of Market Income Increased. From the Congressional Budget Office's report, "Trends in the distribution of Household Income Between 1979 and 2007":

The major reason for the growing unevenness in the distribution of after-tax income was an increase in the concentration of market income (income measured before government transfers and taxes) in favor of higher income households; that is, such households' share of market income was greater in 2007 than in 1979. Specifically, over that period, the highest income quintile's share of market income increased from 50 percent to 60 percent (see Summary Figure 2). The share of market income for every other quintile declined. (Each quintile contains one-fifth of the population, ranked by adjusted household income.) In fact, the distribution of market income became more unequal almost continuously between 1979 and 2007 except during the recessions in 1990-1991 and 2001. [Congressional Budget Office, October 2011]

CBO: Change In Market Income Occurred Because Sources Of Income Became More Concentrated With The Wealthy And Because Capital Gains, Which Are Skewed Toward The Wealthy, Grew. From the Congressional Budget Office's report, "Trends in the distribution of Household Income Between 1979 and 2007":

The market income of households can become more unequally distributed over time if individual components of income become more highly concentrated or if the composition of income shifts so that a greater share of total income comes from components that are more highly concentrated.

Over the 1979-2007 period, the first of those factors was the primary reason overall market income became less evenly distributed: All major sources of market income became more highly concentrated in favor of higher-income households. Labor income was the biggest contributor because it is by far the largest source of income, even though the increase in the concentration of labor income was smaller than the increase in concentration for other sources.

A shift in the composition of income also contributed to the growing concentration. A decrease in the share of total market income from wages and other labor compensation and an increase in the share from capital gains contributed to the increase in market income inequality because capital gains are much more concentrated among higher-income households than is labor income. [Congressional Budget Office, October 2011, emphasis added]

Meet the Press

CLAIM: Speaker Boehner Claimed The Senate's Two-Month Payroll Tax Bill Is Untenable Because Employers Are Concerned About "Uncertainty"

REP. JOHN BOEHNER:  Well, it's pretty clear that I and our members oppose the Senate bill.  It's only for two months.  You know, the president said we shouldn't go on vacation until we get our work done; and, frankly, House Republicans agree.  We passed a one-year extension of the payroll tax credit, unemployment insurance with reforms, making sure that those doctors who treat Medicare patients are not going to see their reimbursements cut.  We had a reasonable, responsible bill that we sent over to the Senate.  And, you know, if you talk to employers, they talk about the uncertainty.  How can you do tax policy for two months? 

FACT: Employers Are Worried About Demand, Not "Uncertainty"

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 Journal7/18/11, 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 Post8/21/10, emphasis added]

CLAIM: Speaker Boehner Claimed The Keystone Pipeline Would Result In 20,000 Direct Jobs

REP. JOHN BOEHNER: That's nonsense. David, it's been going on for three years. All the studies are done.  It's gone through every part of the regulatory process. The only issue here is that the president doesn't want to have to make this decision until after his election. Twenty thousand direct jobs, 100,000 indirect jobs, to build a pipeline from Canada down to the Gulf that would help our energy security, help produce more energy here in North America. This is the right thing to do, the American people support it, and the president shouldn't continue just to put this off for his own election convenience.

FACT: Pipeline Job Creation Numbers Are Inflated

Cornell University Global Labor Institute: "Claim That KXL Will Create 20,000 Direct Construction And Manufacturing Jobs In The US Is Unsubstantiated" And Has The "Potential To Destroy Jobs." From a section of a report by Cornell University Global Labor Institute:

Put simplyKXL's job creation potential is relatively small, and could be completely outweighed by the project's potential to destroy jobs through rising fuel costs, spill damage and clean up operations, air pollution and increased GHG emissions. [Cornell University Global Labor Institute, September 2011]

TransCanada Claimed 13,000 "Shovel-Ready" Jobs Would Result From Keystone Pipeline Legislation. From a 2010 press release from TransCanada:

TransCanada Corporation (TransCanada) (TSX, NYSE: TRP) today is pleased to announce a Project Labor Agreement for a significant portion of U.S. construction of the proposed US$7 billion Keystone Gulf Coast Expansion Pipeline Project (Keystone XL). The agreement will provide TransCanada with a capable, well-trained and ready workforce in the U.S. to construct Keystone XL. During construction, the project is expected to create over seven million hours of labor and over 13,000 new jobs for American workers. [...]

"The proposed Keystone XL pipeline will have a significant impact on the North American economy through the thousands of manufacturing and construction jobs it is creating," says Russ Girling, TransCanada president and chief executive officer. "This project is entirely paid for with private sector dollars and is shovel ready." [TransCanada, 9/14/10]

13,000 Jobs Estimate Is "One Person, One Year," Meaning Number Of People Employed Over Two-Year Construction Project Would Be Closer To 6,500 Per Year. From the Washington Post:

A key question for the administration is how many jobs the Keystone XL project would create. TransCanada's initial estimate of 20,000 - which it said includes 13,000 direct construction jobs and 7,000 jobs among supply manufacturers - has been widely quoted by lawmakers and presidential candidates.

Girling said Friday that the 13,000 figure was "one person, one year," meaning that if the construction jobs lasted two years, the number of people employed in each of the two years would be 6,500. That brings the company's number closer to the State Department's; State says the project would create 5,000 to 6,000 construction jobs, a figure that was calculated by its contractor Cardno Entrix.

As for the 7,000 indirect supply chain jobs, the $1.9 billion already spent by TransCanada would reduce the number of jobs that would be created in the future. The Brixton Group, a firm working with opponents of the project, has argued that many of the indirect supply jobs would be outside the United States because about $1.7 billion worth of steel will be purchased from a Russian-owned mill in Canada. [Washington Post11/5/11, emphasis added]

CLAIM: Rep. Bachmann Claimed "There Isn't One Shred Of Evidence" The Payroll Tax Holiday "Created Jobs"

REP. MICHELE BACHMANN: And remember, the reason why President Obama proposed it in the first place was to create jobs. There isn't one shred of evidence that that created jobs. So it defeated its purpose, plus it's put senior citizens at risk by denying the $111 billion to the Social Security trust fund.

FACT: Economists Tout Economic Benefits Of Payroll Tax Holiday, Warn A Failure To Extend It Would Cost Jobs

Zandi: "Without That Payroll Tax Cut This Year, I Think We'd Be Skirting Recession Now." During a June 26, 2011, appearance on CNN's State of the Union, Moody's Analytics economist Mark Zandi stated: "On the other side of that, there are a few things I think that can be done that would make a difference in the very short term if we need it. So extending the payroll tax holiday for another year seems like a reasonable thing to do. I think that can get done politically. Without that payroll tax cut this year, I think we'd be skirting recession now because of the higher energy prices." [CNN'sState of the Union6/26/11, emphasis added]

CBO Director In 2010: A Payroll Tax Cut Would Add Jobs And Spur The Economy. From Congressional Budget Office Director Douglas Elmendorf's February 23, 2010, testimony before the Joint Economic Committee:

A temporary reduction in employees' portion of the payroll tax would not immediately affect employers' costs. Instead, it would have initial effects similar to those of reducing other taxes for people below the 2010 income cap. The increase in take-home pay would spur additional spending by the households receiving the higher income, and that higher spending would, in turn, increase production and employment. Those effects would be spread over time, however, and the majority of the increased take-home pay would be saved rather than spent.

CBO estimates that reducing employees' payroll taxes would raise output cumulatively between 2010 and 2015 by $0.30 to $0.90 per dollar of total budgetary cost. CBO also estimates that the policy would add 3 to 9 cumulative years of full-time-equivalent employment in 2010 and 2011 per million dollars of total budgetary cost. [Elmendorf Testimony, 2/23/10, emphasis added, via CBO.gov]

EPI/Century Foundation: Failure To Extend Payroll Tax Cut Could Decrease GDP By $128 Billion And Cost Almost 1 Million Jobs. According to an issue brief from the Economic Policy Institute and The Century Foundation: "As part of December's deal to extend the Bush-era tax cuts for two years, Congress enacted a 2 percentage point reduction in the Social Security payroll tax for all workers, and it is set to expire at the end of the year. The cost of failing to extend the payroll tax cut is estimated by adjusting the cost of the 2011 payroll tax cut (JCT 2010) by CBO's projection of wage and salary growth (CBO 2011b), resulting in a cost of $117.8 billion. Applying a fiscal multiplier of 1.09 (Zandi 2010), we estimate that the failure to extend the payroll tax cut would decrease GDP by $128 billion (-0.8%) and lower nonfarm employment by 972,000 jobs. [Economic Policy Institute and The Century Foundation, 8/4/11, emphasis added]

Zandi: Extending Payroll Tax Cut Would Create 750,000 Jobs. From McClatchy: "The biggest contributor to job growth next year under the Obama plan would be extending the payroll tax holiday for workers, which Zandi estimates would add 750,000 jobs. The portion that is waved for employers would add another 300,000 jobs, he said. Infrastructure spending could add 400,000 jobs." [McClatchy, 9/8/11]

To read more about the payroll tax holiday's effects on the economy, click HERE.

CLAIM: Rep. Bachmann Claimed Iran Has "Stated Unequivocally" It Would Use A Nuclear Weapon Against Israel And The United States

REP. MICHELE BACHMANN: I would have every alternative and option on the table because Iran must never have a nuclear weapon because they have stated unequivocally once they gain a nuclear weapon, they will use that weapon to wipe Israel off of the map and they will use it against the United States. As recently as August and September of this year, the president of Iran again declared that sentiment.

FACT: PolitiFact Rated Bachmann's Claim "False"

PolitiFact: "False" That Iran Has Threatened U.S. Or Israel With Nuclear Attack. From a PolitiFact analysis of Rep. Michele Bachmann's statement that Iranian President Mahmoud Ahmadinejad "has said that if he has a nuclear weapon he will use it to wipe Israel off the face of the Earth. He will use it against the United States of America":

Iran and Ahmadinejad have maintained that they are not pursuing nuclear weapons, and that they are only pursuing nuclear energy. [...]

Ahmadinejad has said that he believes the U.S. government orchestrated the Sept. 11, 2001, terrorist attacks to "reverse the declining American economy and its grips on the Middle East in order also to save the Zionist regime." He also has criticized the United States abducting Africans and turning them into slaves, has said some European countries are still using the Holocaust to "pay ransom" to Jews living in Israel and said the United States economy relies on waging wars and selling weapons.

But we're focusing on Bachmann's actual statement during the Nov. 22 debate. She paraphrased Ahmadinejad as saying, "He has said that if he has a nuclear weapon he will use it to wipe Israel off the face of the Earth. He will use it against the United States of America."

Ahmadinejad has said some tough things about the United States and Israel, but we find no evidence that he has said he would use a nuclear weapon against either country. In fact, he has maintained Iran has no interest in building one. We rate this claim False. [PolitiFact.com, 11/23/11]

ThinkProgress: "Bachmann's Assertion Is Patently False." From ThinkProgress:

Bachmann's assertion is patently false. Iran has consistently denied that it has a nuclear weapon or is seeking to build one. Just three weeks ago, ABC's Christiane Amanpour called Bachmann out on her misstating of the same quote, saying:

AMANPOUR: Congresswoman, of course the United States is concerned about the nuclear program. Iran denies that it has one, so it hasn't threatened to use them. 

[ThinkProgress, 11/23/11, emphasis original]

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