Republicans' "Pledge to America" falls short on some of its facts.
The Republican “Pledge to America,” released Sept. 23, contains some dubious factual claims:
It declares that “the only parts of the economy expanding are government and our national debt.” Not true. So far this year government employment has declined slightly, while private sector employment has increased by 763,000 jobs.
It says that “jobless claims continue to soar,” when in fact they are down eight percent from their worst levels.
It repeats a bogus assertion that the Internal Revenue Service may need to expand by 16,500 positions, an inflated estimate based on false assumptions and guesswork.
It claims the stimulus bill is costing $1 trillion, considerably more than the $814 billion, 10-year price tag currently estimated by nonpartisan congressional budget experts.
It says Obama’s tax proposals would raise taxes on “roughly half the small business income in America,” an exaggeration. Much of the income the GOP is counting actually comes from big businesses making over $50 million a year.
For details on these and other examples please read on to the Analysis section.
The document, "A Pledge to America" is posted on the website of the Republicans in Congress.
Portrait or Caricature?
The Pledge is full of high-sounding pronouncements such as "America is an idea" and "an inspiration to those who yearn to be free." We won’t argue with any of that.
It is also full of partisan political opinions. At one point it says that an "unchecked executive, a compliant legislature, and an overreaching judiciary have combined to thwart the will of the people." The GOP is certainly entitled to state those opinions, and it’s not our role to argue for or against them. Nor is it our job to say whether the promises laid out in the document would be good policy or bad policy. That will be debated elsewhere for the remainder of the campaign.
Our role here, as always, is to say when facts cited to support the arguments are false or misleading. And there are plenty of factual claims to check out.
In general the Pledge draws a gloomy picture of the sputtering economy, the horrid state of joblessness, and a federal budget wracked by record deficits and ballooning debt. Many of the claims are true. But as might be expected in a partisan manifesto, this is a lopsided rendering. At times it is more caricature than portrait: any facts that might brighten it are simply left out, and some claims are exaggerated or incorrect.
Pledge, page 5: Our economy has declined and our debt has mushroomed with the loss of millions of jobs.
Fact: It’s true that the economy lost nearly 8.4 million jobs from the peak of employment in December, 2007 to the bottom of the job slump in December of last year. More than half (4.4 million) were lost before Obama took office. The economy has regained 723,000 jobs since hitting bottom, according to data from the Bureau of Labor Statistics.
Pledge, page 14: Private sector unemployment remains at or near 10 percent, jobless claims continue to soar, and the only parts of the economy expanding are government and our national debt.
Fact: It’s true that the unemployment rate is 9.6 percent, but that’s actually down from the peak of 10.1 percent reached last October. It’s also true that new claims for unemployment compensation – “jobless claims” – continue at a high level. But they are actually running eight percent lower than they did at their worst levels, so they are slowly declining, not soaring.
And it’s not the case that only government is growing. The opposite is true — the private sector has gained a net total of 763,000 jobs this year, according to the BLS.
But at the same time, the total number of government jobs has declined by about 40,000, despite a transitory spike in hiring by the Census Bureau to conduct its decennial head count. That spike is now over. The decline in overall government employment is mostly due to public schools shedding 62,000 positions as local property tax rolls decline due to plunging real-estate values.
Pledge, page 26: The Obama Administration has been forced to acknowledge that the new law will force some 87 million Americans to drop their current coverage.
Fact: This is a misrepresentation. It’s true that the president over-promised when he repeatedly told Americans that "if you like your health care plan, you keep your health care plan." As we noted shortly before the bill passed, he can’t make that promise to everyone. It’s also true that after the bill passed, the administration released estimates showing that only about 55 percent of large employers and 34 percent of small employers would be offering the same insurance coverage in 2013 as they do now, under "grandfathering" rules. That works out to about 87 million workers — more or less — whose policies are likely to change in some way.
But it’s deceptive of the GOP to claim that employers of these workers will "drop" their coverage. It would be accurate to say they are expected to change it.
In many cases policies will be replaced by more generous coverage, accompanied by government subsidies to help pay the premiums. Some workers will lose grandfathered status merely because their employers buy substantially similar policies from a different insurance company. In other cases coverage might get worse — plans would lose grandfathered status if they were significantly changed to cut benefits; raise co-insurance payments, copays or deductibles; lower employer contributions; or add or tighten caps on payments. But while the law would allow this, it certainly does not "force" employers to reduce coverage, as many have done in the past.
Pledge, page 27: Skyrocketing medical liability insurance rates have distorted the practice of medicine, routinely forcing doctors to order costly and often unnecessary tests to protect themselves from lawsuits, often referred to as “defensive medicine."
Fact: The claim that "defensive medicine" contributes to high medical costs is true — but it doesn’t add much. For years the majority of economic studies consistently failed to validate the claim that fear of lawsuits drove up costs by any measurable amount, as we reported extensively in 2004. But last year, the nonpartisan Congressional Budget Office revised its thinking based on new studies, and concluded that limiting malpractice liability would reduce total national health care spending by about one-half of 1 percent, or about $11 billion in 2009.
The new health care law addresses that by giving five-year demonstration grants to states to come up with alternatives to malpractice lawsuits. The Pledge promises "common sense" reforms to "rein in junk lawsuits." Just don’t expect them to lower health costs by much.
Pledge, page 28: Roughly 16,500 IRS auditors, agents, and other employees may be needed to collect the hundreds of billions of dollars in new taxes levied on the American people by the new health care law.
Fact: This is simply not true. As we reported last March, this figure "stems from a partisan analysis based on guesswork and false assumptions, and compounded by outright misrepresentation." For an eye-opening account of how Republican staff members of the House Ways and Means committee came up with this inflated figure, see our Ask FactCheck item posted March 30. Most of what the IRS will do under the law is hand out tax credits, not collect penalties.
Pledge, page 14: The trillion-dollar “stimulus” spending bill
Pledge, page 15: . . .the trillion-dollar ‘stimulus’ was signed into law
Fact: The stimulus bill is a big one, but CBO says it won’t cost $1 trillion, even spread over 10 years. CBO’s most recent estimate puts the price tag to $814 billion. That’s higher than originally estimated at the time of passage, but still well short of $1 trillion.
Pledge, page 15: Despite the ‘stimulus’ and Democrats’ promises the unemployment rate would remain below eight percent, the unemployment rate climbed from 7.7 percent in January 2009 to 9.5 percent in August 2010.
Republicans have a point here, as we noted some time ago. Back in July of last year we wrote, “the original projections from President Obama’s economic advisers on what would happen with and without the stimulus plan are still off — and significantly so.” But nobody “promised” that unemployment would remain below 8 percent.
As we also wrote in June of last year, the White House explanation was simple: “They say President George Bush left them a worse mess than they realized" when Obama’s advisers came up with their predictions. And that’s true. The original chart – produced Jan. 9, 2009 — was based on economic projections that were in line with what private economists were forecasting. Those forecasts were being revised for the worse even before any stimulus money was spent.
And for the record, CBO’s experts calculate that the stimulus has had a positive effect on employment. In its most recent report on the measure, the agency estimated that in the second quarter of 2010, stimulus spending lowered the unemployment rate between 0.7 and 1.8 percentage points and increased the number of people working between 1.4 million and 3.3 million.
Pledge, page 14: [Obama] also wants to raise taxes on roughly half of small business income in America.
Fact: This is an exaggeration. Republicans are equating "net positive business income" reported on individual returns with "small business income," which isn’t correct. They rely on a report from the nonpartisan staff of the Joint Committee on Taxation (p. 12), which estimated that about 3 percent of taxpayers who have any business income on their personal returns would see a tax increase under Obama’s proposal, and that those 750,000 taxpayers account for about half of all the business income reported.
But some of that income is from big businesses raking in tens of millions of dollars a year. The JCT stated quite clearly that "These figures for net positive business income do not imply that all of the income is from entities that might be considered ’small.’" Some in fact are quite large, and those big businesses account for a good chunk of that income.
The JCT said: "For example, in 2005, 12,862 S corporations and 6,658 partnerships had receipts of more than $50 million."
Republicans do have a point here. Many small businesses and some large fraction of small-business income will be adversely impacted by raising the top rate on individual taxpayers.
The fact is, though, that the JCT couldn’t estimate how much of the total business income was accounted for by "small" businesses, or how many of the 750,000 individuals affected own "small" busineses. What we do know is that a good deal less than half the small business income, and something less than three percent of small business owners, would be subject to higher taxes.
Pledge, page 14: Unless action is taken, a $3.8 trillion tax hike will go into effect on January 1, 2011 that will unravel these policies. A family of four with a household income of $50,000 a year will have to pay $2,900 more in taxes in 2011.
Fact: True, but misleading. What the Pledge fails to note is that Obama and Democratic leaders in Congress have consistently promised to extend the Bush tax cuts for all families making less than $250,000 a year, and singles making less than $200,000. It’s true that hasn’t happened yet, but the reason is that several House and Senate Democrats are agitating to extend the cuts for everybody, even those with the highest incomes.
Congress might yet fail to extend most or all the cuts before they are scheduled to expire next year. As we reported in a Sept. 3 Ask FactCheck item on this issue, there’s always a possibility that Congress will grind to a halt in a stalemate. And sure enough, on Sept. 23 Senate Democrats announced they would put off any vote on extending the cuts until after the election. A spokesman for Democratic leader Harry Reid of Nevada said, "Democrats believe we must permanently extend tax cuts for the middle-class before they expire at the end of the year, and we will."
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