The statement
Palin
Obama would "experiment with socialism."
Sarah Palin on Friday, October 24th, 2008 in a speech in Springfield, Mo.
The McCain campaign experiments with dishonesty
Pants on fire!
Sen. John McCain's campaign has seized on Sen. Barack Obama's offhand remark that he wants to "spread the wealth around" to allege Obama is a socialist.
Even in the context of a heated presidential campaign, that's a remarkably incendiary accusation. It's become a standard part of the McCain campaign rhetoric, uttered by surrogates and candidates alike.
Gov. Sarah Palin's remarks in Springfiled, Mo., are a good example: "Senator Obama says that he wants to spread the wealth, which means — you know what that means," she said at a rally on Oct. 24, 2008. "It means that government takes your money, (handed) out however a politician sees fit. Barack Obama calls it spreading the wealth, and Joe Biden calls higher taxes patriotic. And yet to Joe the Plumber, he said it sounded like socialism. And now is not the time to experiment with socialism."
She has repeated the line in Nevada, New Mexico, Colorado and most recently in Leesburg, Va., on Oct. 27, 2008. It consistently evokes boos and jeers from a crowd protective of the American system of government.
But is Palin stoking their anger honestly?
Socialism refers most commonly to a system in which the government owns the means of production and distribution of goods. That is, the state truly is responsible for creating and spreading the wealth. Let's look at the root of Palin's claim — Obama's Oct. 12, 2008, exchange with plumber Samuel J. Wurzelbacher, who has come to be known simply as Joe the Plumber — and see if that's what Obama was suggesting.
Wurzelbacher approached Obama on the street in his Holland, Ohio, neighborhood, and said he was close to buying a plumbing company that makes $250,000 to $280,000 a year. He complained that Obama would tax him more, punishing his success.
Obama responded that he was raising the top tax rate so he could decrease taxes for those who make less than $250,000.
"It's not that I want to punish your success," Obama said. "I just want to make sure that everybody who is behind you, that they've got a chance at success too."
"Seems like you would be welcome to a flat tax then," Wurzelbacher said.
"You know, I would be open to it except for here's the problem with a flat tax," Obama countered. "You'd have to slap on a whole bunch of sales taxes on it. And I do believe that for folks like me who have worked hard but, frankly, also been lucky, I don't mind paying just a little bit more than the waitress who I just met over there who — things are slow, and she can barely make the rent. Because my attitude is if the economy's good for folks from the bottom up, it's going to be good for everybody. If you've got a plumbing business, you're going to be better off if you've got a whole bunch of customers who can afford to hire you. And right now, everybody's so pinched that business is bad for everybody. And I think when you spread the wealth around, it's good for everybody."
So when Wurzelbacher brought up a flat tax, Obama responded by endorsing progressive taxation – the principle of taxing those with higher incomes at a higher percentage than those with lower incomes. And it is in that context that Obama said he wanted to "spread the wealth."
Progressive taxes do indeed spread the wealth a bit. But they do so much more modestly than government owning the means of production.
Few serious policy makers — including McCain — consider progressive taxation socialist. In fact, on the Oct. 26, 2008 edition of NBC's Meet the Press, McCain stood by a comment he made in 2000 that "there's nothing wrong with paying somewhat more" in taxes when you "reach a certain level of comfort."
"You put into different, different categories of wealthier people paying, paying higher taxes into different brackets," McCain told host Tom Brokaw, as if to say progressive taxes are a no-brainer.
Indeed, progressive taxation has been a cornerstone of American tax policy since the federal government first collected an income tax in 1863. It was based on the Tax Act of 1862, which President Abraham Lincoln signed, and which imposed a "duty of three per centum" on all income over $600, and five percent on income over $10,000.
Obama's proposed top tax rate of 39.6 percent, (up from today's 36 percent) is considerably higher than that. But it's not particularly high in the context of modern times; as he pointed out to Wurzelbacher, it's about what top earners paid in the Clinton years. In 1987, the top tax rate was 38.5 percent. In 1944, it was 94 percent for the highest portions of high incomes.
So no, Obama's tax increase on those making more than $250,000 would not represent a transformation of the U.S. system of government. His desire to "spread the wealth" through progressive taxation makes him no less a capitalist than McCain, or Lincoln. Palin's allegation that Obama wants to "experiment with socialism" seems designed less to inform than to inflame. That's Pants on Fire wrong.
There will be three 2008 Constitutional Amendments on the ballot for the November 4th election. The first of these, HR 1276, is designed to give tax credit to owners of forest land over 2000 acres and hold it for 15 years. The loss of revenue to local governments would be reimbursed via state grants.
As Georgia grows and develops, more land will be in demand. This legislation will protect Georgia's forests for wildlife and future generations. However, there is concern that local school districts will lose tax revenue. Although there are provisions by the Georgia General Assembly to provide grants to such districts, it may not be enough to offset the loss in revenue. Also, this Amendment is not a state land purchase for the benefit of all Georgians; the bill is intended to relieve paper companies of property tax burdens.
"Proposed Amendment 1 would allow the state to assess and tax certain privately owned tracts of timberland according to their “current use,” rather than to assess and tax based on a property’s highest-valued use, in order to encourage forest conservation. This “conservation use” is only available to landowners who agree not to develop the land for 15 years. The state has agreed to provide funds for counties whose revenues might decrease significantly as a result. Despite this provision, Amendment 1 could result in a nominal tax cut for certain property owners."(National Taxpayers Union)
2008 Constitutional Amendments for the November 4, 2008 General Election
Amendment in Full
Ballotpedia
Rivals Split, With Joe in the Middle
Debate sees an aggressive McCain and a cool Obama
FactChecking Debate No. 3
FactChecking Debate No. 3
October 16, 2008
Sorting out fact and fiction in the presidential candidates' final debate.
Summary
Spin and hype were apparent, once again, at the third and final debate between McCain and Obama:
* McCain claimed the liberal group ACORN “is now on the verge of maybe perpetrating one of the greatest frauds in voter history ... maybe destroying the fabric of democracy.” In fact, a Republican prosecutor said of the first and biggest ACORN fraud case: “[T]his scheme was not intended to permit illegal voting.” He said $8-an-hour workers turned in made-up voter registration forms rather than doing what ACORN paid them to do.
* McCain said “Joe the plumber” faced “much higher taxes” under Obama’s tax plan and would pay a fine under Obama’s health care plan if he failed to provide coverage for his workers. But Ohio plumber Joe Wurzelbacher would pay higher taxes only if the business he says he wants to buy puts his income over $200,000 a year, and his small business would be exempt from Obama’s requirement to provide coverage for workers.
* Obama repeated a dubious claim that his health care plan will cut the average family’s premiums by $2,500 a year. Experts have found that figure to be overly optimistic.
* McCain claimed that Obama’s real “object” is a government-run, single-payer health insurance system like those in Canada or England. The McCain campaign points to a quote from five years ago, when Obama told a labor gathering that he was “a proponent of a single-payer health care program.” But Obama has since qualified his enthusiasm for Canadian-style health care, and his current proposal is nothing like that.
* Obama incorrectly claimed all of McCain’s ads had been “negative.” That was true for one recent week, but not over the entire campaign. And at times Obama has run a higher percentage of attack ads than McCain.
* McCain described Colombia as the "largest agricultural importer of our products." Actually, Canada imports the most U.S. farm products, and Colombia is far down the list.
* Obama strained to portray himself as willing to break ranks with fellow Democrats. His prime example was his vote for a bill that was supported by 18 Democrats and opposed by 26. Congressional Quarterly rates him as voting with his party 97 percent of the time since becoming a U.S. senator.
For details on these and other misleading claims, please read on to the Analysis section.
Analysis
Sens. John McCain and Barack Obama met for their final debate Oct. 15. The face-to-face was held at Hofstra University in Hempstead, N.Y., and was moderated by CBS News' Bob Schieffer.
ACORN and Vote Fraud
McCain made some dire claims about a liberal group he said was out to steal the election:
McCain: We need to know the full extent of Sen. Obama's relationship with ACORN, who is now on the verge of maybe perpetrating one of the greatest frauds in voter history in this country, maybe destroying the fabric of democracy.
It's true that the voter registration wing of the Association of Community Organizers for Reform Now has run into trouble in several states. ACORN employees have been investigated and in some cases indicted for voter registration fraud. Most recently, more than 2,000 registrations in Lake County, Ind., have turned out to be falsified.
But does this constitute "destroying the fabric of democracy"? More like destroying the fabric of work ethic. There's been no evidence that the ACORN employees who submitted fraudulent forms have been paving the way for illegal voting. Rather, they're trying to get paid for doing no work.
Dan Satterberg, the Republican prosecuting attorney in King County, Wash., where the first ACORN case was prosecuted, said:
Satterberg: [A] joint federal and state investigation has determined that this
scheme was not intended to permit illegal voting.
Instead, the defendants cheated their employer. ... It was hardly a sophisticated plan: The defendants simply realized that making up names was easier than actually canvassing the streets looking for unregistered voters. ...
[It] appears that the employees of ACORN were not performing the work that they were being paid for, and to some extent, ACORN is a victim of employee theft.
The $8-an-hour employees were charged with providing false information on a voter registration, and in one case with making a false statement to a public official. ACORN was fined for showing insufficient oversight, but it was not charged with masterminding any kind of fraud.
Meanwhile, on the other side of the table, Obama wasn't entirely forthcoming about his relationship with ACORN:
Obama: The only involvement I've had with ACORN is, I represented them alongside the U.S. Justice Department in making Illinois implement a motor voter law that helped people get registered at DMVs.
He did, but that wasn't his only involvement. He also worked closely with ACORN's Chicago office when he ran a Project Vote registration drive after law school, and Obama did some leadership training for Chicago ACORN. The Woods Fund, where Obama served as a board member, gave grants to ACORN's Chicago branch; both organizations are concerned with disadvantaged populations in that city. And during the primaries of this election, Obama's campaign paid upwards of $800,000 to the ACORN-affiliated Campaign Services Inc. for get-out-the-vote efforts (not voter registration). Those services were initially misrepresented on the campaign's Federal Election Commission reports, an error that some find suspicious and others say is par for the course. ACORN's Chicago office and CSI have not been under investigation.
For more on investigations of ACORN and registration fraud, and Obama's involvement with the group, keep an eye on our home page. A longer article on ACORN is in the works.
all
Joe the Plumber
Ohio plumber Joe Wurzelbacher got a lot of airtime.
McCain first mentioned Joe by saying:
McCain: Joe wants to buy the business that he has been in for all of these years, worked 10, 12 hours a day. And he wanted to buy the business but he looked at your tax plan and he saw that he was going to pay much higher taxes.
Joe’s newfound fame stems from an impromptu encounter Oct. 12, during which Wurzelbacher questioned Obama’s tax plans. Joe has since become a conservative folk hero after telling both Fox News and the conservative Web site Family Security Matters that he thought Obama’s plans sounded “socialist.”
At their encounter, Wurzelbacher told Obama that “I’m getting ready to buy a company that makes 250 to 280 thousand dollars a year,” before asking whether or not Obama would raise his taxes.
If the company is actually that profitable, and depending on how the business is organized legally, Obama’s plan would indeed raise his federal income taxes, and Obama conceded as much during the exchange. As we’ve written before, small businesses commonly are organized in such a way that their owners file business taxes as individuals. So if Joe’s plumbing business earns more than $200,000 per year (or $250,000 if Joe is married and files tax returns jointly) then his taxes would indeed be higher under Obama's plan than under McCain's.
It’s worth noting that while Wurzelbacher told Fox News’ Neil Cavuto that he lives “in a simple, middle class home” and portrayed himself as an ordinary working guy, Wurzelbacher’s $250,000 to $280,000 is a bit higher than "ordinary." In 2007, the last year for which the Census Bureau has figures, the median income for a family in Toledo, Ohio, was $43,553.
But Joe the Plumber wasn’t through yet. He made an encore appearance when McCain recycled a bogus claim that Obama would "fine" small business owners who fail to provide health care coverage for their workers:
McCain: Now, my old buddy, Joe, Joe the plumber, is out there. Now, Joe, Sen. Obama's plan, if you're a small business and . . . you've got employees, and you've got kids, if you don't get – adopt the health care plan that Sen. Obama mandates, he's going to fine you . . . I don't think that Joe right now wants to pay a fine when he is seeing such difficult times in America's economy.
McCain raised a similar charge at the last debate. It's still false. Obama’s plan, which is posted on his Web site, specifically says, “Small businesses will be exempt from this requirement.”
Obama hasn't defined exactly what he means by "small" but he seems to think Joe would qualify; he repeatedly referred to Joe’s “small business” during their exchange.
Obama's health plan does mandate that children have health coverage. If Joe doesn't provide insurance for his kids, he would face some unspecified penalty.
Health Care Hype
Obama and McCain traded boasts and accusations on each other’s health carebob plan. They ran afoul of the facts a few times.
Obama: And we estimate we can cut the average family's premium by about $2,500 per year.
The Obama camp does estimate that. But experts we talked to found that optimistic figure hard to believe.
Then, McCain said:
McCain: Sen. Obama wants to set up health care bureaucracies, take over the health care of America through — as he said, his object is a single payer system. If you like that, you'll love Canada and England.
Obama’s plan is not a single-payer system, which would be one in which everyone has health care provided and paid for by the government. Under Obama’s health care plan, Americans can keep the insurance they have, choose from federally-approved private plans or buy into a new public plan similar to the health care federal employees and members of Congress have.
McCain was referring to comments Obama made at a town hall meeting in Albuquerque in August. But Obama did not say that "his object is a single payer system." He said it would "probably" be his first choice "if" he were starting with a clean slate, which he isn't. He said his object is to "build up the system we got." According to the Wall Street Journal, Obama said:
Obama (as quoted by the Wall Street Journal, Aug. 19): If I were designing a system from scratch, I would probably go ahead with a single-payer system. ... [M]y attitude is let’s build up the system we got, let’s make it more efficient, we may be over time — as we make the system more efficient and everybody’s covered — decide that there are other ways for us to provide care more effectively.
Back in 2003, Obama was much more explicit. At an AFL-CIO forum, he said he was “a proponent of a single-payer health care program,” adding, “that’s what I’d like to see. And as all of you know, we may not get there immediately.”
That was five years ago, however, and recently, Obama has said he’d favor single-payer only if “starting from scratch.” He told The New Yorker in May 2007: “If you're starting from scratch, then a single-payer system ... would probably make sense. But we've got all these legacy systems in place, and managing the transition ... would be difficult to pull off. So we may need a system that's not so disruptive.”
Obama exaggerated a weakness in McCain's health care plan:
Obama: Now, under Sen. McCain's plan there is a strong risk that people would lose their employer-based health care.
Experts see a risk that some would lose their employer-based care, but Obama’s reference to "people" makes it sound as though nearly everyone would. Two independent studies both found that McCain’s plan would lead to a net decline in the number of people with health care through their jobs. (They said Obama’s would result in a net increase.) Both reports show, however, that there’s not a “strong risk” for all, or even a majority, of workers to lose their health care.
Currently, 159 million Americans have health care through their jobs, according to the Kaiser Family Foundation. A study by the Lewin Group shows a net decline in the number with job-provided benefits of 9.4 million people in 2010 for McCain's plan. The Tax Policy Center projected that the net decrease would be 7.7 million in 2010 and 20.3 million people by 2018.
McCain and Obama both said much more that may have confused viewers. For a spin-free look at both of the candidates’ health care plans, see our recent article on this issue.
100% Negative?
Obama falsely claimed all of McCain's ads had been "negative."
Obama: And 100 percent, John, of your ads – 100 percent of them have been negative.
McCain: It's not true.
Obama: It absolutely is true.
It was almost true, for one recent week. Obama was referring to a report by the Wisconsin Advertising Project at the University of Wisconsin that concluded that “nearly 100 percent of the McCain campaign’s advertisements were negative” during the week of Sept. 28 through Oct. 4. During the same week, 34 percent of the Obama campaign’s ads were negative. The Obama campaign was found to have outspent the McCain campaign in nearly all of the competitive states, in some cases by a margin of more than 3-to-1.
McCain’s ads, however, have not been deemed 100 percent negative in other weeks. In fact, in the week after the Republican National Convention, 77 percent of Obama’s ads were negative, according to the advertising project, while 56 percent of McCain’s were negative.
Wrong on Exports to Colombia
McCain was way off when he said that Colombia is "our largest agricultural importer of our products." To be sure, Colombia is an important trade partner. According to statistics from the Department of Agriculture, Colombia imported slightly more than $1.4 million worth of U.S. agricultural products in 2007. But that's not even close to the nearly $1.9 billion worth of agricultural products exported to Canada. And there are dozens of other countries that import more U.S. farm products than Colombia does.
Obama No Maverick
Obama exaggerated his willingness to defy his own party. When McCain asked for an example, Obama offered this:
Obama: First of all, in terms of standing up to the leaders of my party, the first major bill that I voted on in the Senate was in support of tort reform, which wasn't very popular with trial lawyers, a major constituency in the Democratic Party.
obamaThat 2005 bill was S.5, which dealt with class-action lawsuits. Obama was one of 18 Democrats voting for it, while 26 opposed. It's a stretch for Obama to claim that he bolted his party when nearly 41 percent of Democrats voted in favor of the bill.
And as we pointed out before, Obama has a pretty consistent record of voting in stride with his party. According to Congressional Quarterly, in Obama's three years in the Senate, he has voted with his party almost 97 percent of the time.
Budget Ballyhoo
Both candidates got ahead of themselves when it came to balancing the budget and eliminating the deficit. Obama said every one of his spending increases was paid for.
Obama: Now, what I've done throughout this campaign is to propose a net spending cut. ... Every dollar that I've proposed, I've proposed an additional cut so that it matches.
McCain said he could balance the budget within one term.
Schieffer: Do either of you think you can balance the budget in four years? You have said previously you thought you could, Sen. McCain.
McCain: Sure I do. And let me tell you...
Schieffer: You can still do that?
McCain: Yes.
These are pie-in-the-sky predictions. We've looked at McCain's balanced-budget promise before – it's out of reach unless he cuts spending to an unrealistic degree. The Urban-Brookings Tax Policy Center estimates that by 2013, at the end of his first term, McCain's tax plan would have him facing a $662 billion deficit. That could come to more than half of that year's discretionary spending, which the Office of Management and Budget projects to be $1.1 trillion. And we've previously disputed Obama's claim that "every dime" of his proposed spending is covered. The Tax Policy Center estimated that Obama’s plan – and McCain's, too – "would substantially increase the national debt over the next ten years" unless the candidates come up with "substantial cuts in government spending" that they haven't yet specified. More recently, the Committee for a Responsible Federal Budget also estimated that in 2013, Obama’s major budget proposals – including spending cuts – would increase the deficit for that year by $281 billion.
The $42,000, Again.
McCain was on the wrong side of this exchange:
McCain: Sen. Obama talks about voting for budgets. He voted twice for a budget resolution that increases the taxes on individuals making $42,000 a year. . . .
Obama: [T]he notion that I voted for a tax increase for people making $42,000 a year has been disputed by everybody who has looked at this claim.
McCain was wrong to say Obama's March 2008 vote for a budget resolution "increases" anything. Budget resolutions set targets for taxes and spending; actually raising or lowering them requires separate legislation.
mccain The $42,000 figure also would only apply to single taxpayers, not to couples or families. As we’ve reported, a single taxpayer making more than $41,500 would have seen a tax increase, but a couple filing jointly would have seen no increase unless they made at least $83,000, and for a couple with two children the cut-off would have been $90,000. Regardless, the increase that Obama once supported as part of a Democratic budget bill is not part of his own current tax plan. And Obama was right when he said "even FOX News disputes" McCain's $42,000 claim. Chris Wallace of Fox News agreed that it was misleading.
Wrong Justice
McCain said that Obama voted against the confirmations of Supreme Court Justices Stephen Breyer and John Roberts:
McCain: Senator Obama voted against Justice Breyer and Justice Roberts on the grounds that they didn't meet his ideological standards.
McCain probably meant to say that Obama voted against the confirmations of Roberts and Justice Samuel Alito, the most recent additions to the court. Obama did vote against the confirmation of Roberts, but he wasn’t in the Senate when Breyer was nominated to join the Court. Breyer was nominated to the Supreme Court by former President Bill Clinton and confirmed by the Senate in 1994. Obama didn’t become a senator until January 2005.
Charter School Slip-Up
Obama overstated his work on charter schools in Illinois:
Obama: Charter schools, I doubled the number of charter schools in Illinois despite some reservations from teachers unions.
Actually, the bill Obama cosponsored doubled the number of charter schools in Chicago, not in the entire state of Illinois. (And an extra slap on the wrist to Obama for using the personal pronoun in saying that "I doubled the number of charter schools" – as we've pointed out before, it takes a lot more than one politician to get a bill passed.)
Tried But Untrue
And we noted that both candidates continued to recycle bunk that we've heard before:
* McCain said once again, "We have to stop sending $700 billion a year to countries that don't like us very much." As we've noted several times in the past, $700 billion would have been the cost of all annual U.S. oil imports when the price was $140 per barrel. But it's down to about half that now.
* Obama said oil companies have "68 million acres that they currently have leased that they're not drilling." We've previously criticized him for similar statements, and it's still not true. As we've pointed out, there is exploratory drilling being done on much of these lands, which are not yet producing oil. In 2007 there were more than 15,000 holes that were being proposed, started or finished that do not count as "productive" holes.
* Listing some of his running mate's achievements, McCain credited Gov. Sarah Palin with “a $40 billion pipeline of natural gas that's going to relieve the energy needs" of the lower 48 states. We'll just note, again, that the pipeline is still in pre-development and is actually projected to cost $26.5 billion.
Sea Story
Finally, the ears of nautical buffs may have perked up when McCain said, “we've sailed Navy ships around the world for 60 years with nuclear power plants on them.” His naval history is off by a few years. The first nuclear-powered vessel, the submarine USS Nautilus, was actually launched Jan. 21, 1954.
–by Jessica Henig, Joe Miller, Lori Robertson, Justin Bank, D'Angelo Gore, Emi Kolawole and Brooks Jackson
Sources
Congressional Research Service. Oil and Gas Tax Subsidies: Current Status and Analysis. Washington: GPO, 2007.
Burman, Leonard E., et.al. "An Updated Analysis of the 2008 Presidential Candidates’ Tax Plans: Updated September 12, 2008." Tax Policy Center, 12 Sept. 2008.
Committee for a Responsible Federal Budget. "Promises, Promises: A Fiscal Voter Guide to the 2008 Election." U.S. Budget Watch. 15 Sep. 2008.
Satterberg, Dan. "Statement of Interim King County Prosecuting Attorney Dan Satterberg." 26 Jul. 2007.
U.S. Census Bureau. "Toledo City, Ohio Factsheet." U.S. Census Bureau. American Community Survey, 2006, accessed 16 Oct. 2008.
ACORN Responds to Senator McCain’s Desperate Attack. 15 Oct. 2008
Griffin, Drew and Kathleen Johnston . “Thousands of voter registration forms faked, officials say.” 10 Oct. 2008
Robinson, Mike. Obama got start in civil rights practice. Associated Press, 20 Feb. 2007
Tapper, Jake. Spread the Wealth. ABC New Political Punch Blog. 14 Oct. 2008
Brown, David M. “Obama to amend report on $800,000 in spending.” Pittsburgh Tribune-Review, 22 Aug. 2008
CQ member Profiles: Sen. Barack Obama (D-Ill). Congressional Quarterly, 12 June 2008.
Rabinowitz, Steve. “Pres. TV advertising spending continues to grow;
Over $28 million spent from September 28-October 4.” Wisconsin Ad Project. 8 Oct. 2008
Kurtz, Howard. “Recent Obama Ads More Negative Than Rival's, Study Says: Democrat Said to Be Facing Pressure to 'Show Some Spine.'” Washington Post, 18 Sept. 2008
OECD Tax Database. Centre for Tax Policy and Administration.
Hodge, Scott. U.S. States Lead the World in High Corporate Taxes. Tax Foundation, 18 March 2008
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FactChecking Debate No. 2
Nonsense in Nashville
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The candidates were not 100 percent accurate. To say the least.
FactChecking Debate No. 2
FactChecking Debate No. 2
October 8, 2008
Nonsense in Nashville
Summary
McCain and Obama debated for the second time, in Nashville. We noted some misleading statements and mangled facts:
* McCain proposed to write down the amount owed by over-mortgaged homeowners and claimed the idea as his own: “It’s my proposal, it's not Sen. Obama's proposal, it's not President Bush's proposal.” But the idea isn’t new. Obama had endorsed something similar two weeks earlier, and authority for the treasury secretary to grant such relief was included in the recently passed $700 billion financial rescue package.
* Both candidates oversimplified the causes of the financial crisis. McCain blamed it on Democrats who resisted tighter regulation of federal mortgage agencies. Obama blamed it on financial deregulation backed by Republicans. We find both are right, with plenty of blame left over for others, from home buyers to the chairman of the Federal Reserve.
* Obama said his health care plan would lower insurance premiums by up to $2,500 a year. Experts we’ve consulted see little evidence such savings would materialize.
* McCain misstated his own health care plan, saying he’d give a $5,000 tax credit to “every American” His plan actually would provide only $2,500 per individual, or $5,000 for couples and families. He also misstated Obama’s health care plan, claiming it would levy fines on “small businesses” that fail to provide health insurance. Actually, Obama’s plan exempts “small businesses.”
* McCain lamented that the U.S. was forced to “withdraw in humiliation” from Somalia in 1994, but he failed to note that he once proposed to cut off funding for troops to force a faster withdrawal.
* Obama said, “I favor nuclear power.” That’s a stronger statement than we've heard him make before. As recently as last December, he said, “I am not a nuclear energy proponent.”
* McCain claimed “1.3 million people in America make their living off eBay.” Actually, only 724,000 persons in the U.S. have income from eBay, and only some of them rely on it as their primary source.
For full details, and additional quibbles, please read our Analysis section.
Analysis
Sens. Barack Obama and John McCain met Oct. 7 for the second of three scheduled presidential debates. It was a town-hall-style debate before an audience of 80 uncommitted voters. Questions were submitted by the audience members, and others who sent them by e-mail, and were screened beforehand by moderator Tom Brokaw of NBC News. The event was held at Belmont University in Nashville, Tenn., and was broadcast nationally. We caught several misleading statements and falsehoods, many of which the candidates have said before.
"My" Mortgage Plan?
McCain made what he claimed was a new proposal to rescue over-mortgaged homeowners:
McCain: As president of the United States. ... I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes – at the diminished value of those homes and let people be able to make those – be able to make those payments and stay in their homes.
McCain added: "It's my proposal, it's not Sen. Obama's proposal, it's not President Bush's proposal. But I know how to get America working again..."
But in fact, the recently passed $700 billion rescue package already grants the treasury secretary authority to undertake just such a program. It requires the secretary to buy up troubled mortgages while taking into consideration “the need to help families keep their homes and to stabilize communities.” It also says “the Secretary shall consent, where appropriate (to) loss mitigation measures, including term extensions, rate reductions (or) principal write downs."
Obama himself had urged this as the package was being considered. He said on Sept. 23 that "we should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage-backed securities."
McCain said "his" proposal would be expensive, and his campaign quickly issued a news release giving numbers:
McCain press release: The direct cost of this plan would be roughly $300 billion because the purchase of mortgages would relieve homeowners of “negative equity” in some homes. ... It may be necessary for Congress to raise the overall borrowing limit.
Minutes later, McCain was attacking Obama for proposing what he said was $860 billion in new spending.
Oversimplifying the Financial Crisis. Again.
The finger-pointing was fast and furious during the discussion of the fiscal crisis. McCain blamed lax regulation of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation:
McCain: But you know, one of the real catalysts, really the match that lit this fire was Fannie Mae and Freddie Mac. [T]hey're the ones that, with the encouragement of Sen. Obama and his cronies and his friends in Washington, that went out and made all these risky loans, gave them to people that could never afford to pay back.
Obama blamed deregulation of the banking industry:
Obama: Now, I've got to correct a little bit of Sen. McCain's history, not surprisingly. Let's, first of all, understand that the biggest problem in this whole process was the deregulation of the financial system.
mccainWe’ve been here before. McCain has in fact been in favor of financial deregulation, but President Bill Clinton signed, and a lot of other Democrats supported, much of that same deregulation. And while Democrats really did fight McCain-cosponsored regulations of the FMs, McCain himself signed on to the bill just two months before the housing bubble popped.
In fact, there’s plenty of blame to go around. Experts have blamed everyone from home buyers to mortgage lenders to Alan Greenspan to both the Bush and Clinton administrations.
Furthermore, McCain misspoke when he said Fannie Mae and Freddie Mac "made all these risky loans, gave them to people that could never afford to pay back." Actually those organizations did not make "home loans directly with consumers." Rather, they "work[ed] with mortgage bankers, brokers, and other primary mortgage market partners" and supplied them with the funds to lend to home buyers at affordable rates, as described on their Web sites.
Dubious Health Care Savings
Obama said that his health care plan would cut premium costs substantially:
Obama: We're going to work with your employer to lower the cost of your premiums by up to $2,500 a year.
We contacted health experts about this claim before – when Obama was saying the $2,500 would be the savings per family "on average." Some were quite skeptical. M.I.T.’s Jonathan Gruber told us, “I know zero credible evidence to support that conclusion.” Obama has also said on the campaign trail that more than half of the savings would come from the use of electronic health records, a major part of his plan to cut health costs. When we looked into that claim, experts told us it was wishful thinking.
Adoption of electronic medical records has been slow among doctors and hospitals. Obama could do much to speed it up, but it's not clear that he could bring about widespread adoption or reap such large savings from it. One of his advisers previously told us that the $2,500 figure included savings that would go to government and employers and that could, theoretically, result in lower taxes or higher wages for Americans. It remains to be seen whether savings could trickle down like that, even if Obama could gain the optimistic overall health care savings he touts.
More Health Care Misleads
McCain misstated his own health care plan and Obama’s in one sentence:
McCain: I am in favor of . . . giving every American a $5,000 refundable tax credit and go out and get the health insurance you want rather than mandates and fines for small businesses, as Sen. Obama's plan calls for.
McCain's plan does not call for giving a $5,000 tax credit for "every American." It calls for a tax credit of $2,500. The $5,000 figure would apply to couples or families. And Obama’s plan requires large businesses to provide coverage for their employees or pay into a national plan, not "small businesses," as McCain said. Obama's health care proposal, posted on his Web site, says: “Small businesses will be exempt from this requirement.” McCain previously used this charge in his acceptance speech at the Republican National Convention, and he repeated the claim in the debate, saying, "If you're a small business person and you don't insure your employees, Sen. Obama will fine you. Will fine you." As we said, that's false. Obama countered that he had proposed a refundable tax credit for small businesses of up to 50 percent of the cost of premiums, which is indeed part of his plan. We've noted before that neither man defines what he means by "small business."
Black Hawk Down
McCain lamented having to “withdraw in humiliation” from Somalia in 1993, but failed to mention his own role:
McCain: We went in to Somalia as a peacemaking organization, we ended up trying to be – excuse me, as a peacekeeping organization, we ended up trying to be peacemakers and we ended up having to withdraw in humiliation.
What McCain isn’t saying is that he led an attempt to force the Clintonmccain administration to withdraw more quickly. After the First Battle of Mogadishu (immortalized in the book and film “Black Hawk Down”), Clinton proposed a six-month plan for withdrawing combat troops. Then-Sen. Phil Gramm complained that the plan was an attempt to “save face,” and McCain introduced an amendment to cut off funding for combat in Somalia and force an immediate withdrawal. The amendment was tabled and the Senate backed Clinton’s plan. In his 2002 memoir, “Worth the Fighting For,” McCain called his amendment “hasty” and wrote that he “regretted” what he came to see as “a retreat in the face of aggression from an inferior foe.”
Nuclear Warming
Obama flatly said he favored nuclear energy – embracing it more warmly than in the past:
Obama: Contrary to what Sen. McCain keeps on saying, I favor nuclear power as one component of our overall energy mix.
Previously Obama has been more hesitant. He said at a town hall meeting in Newton, Iowa, on Dec. 30, 2007, when asked if he was "truly comfortable" with the safety of nuclear power:
Obama (Dec. 30, 2007:) I start off with the premise that nuclear energy is not optimal. ... I am not a nuclear energy proponent.
He then went on to say later in the same response that he has "not ruled out nuclear ... but only so far as it is clean and safe." The energy plan Obama released in October 2007 only grudgingly conceded that more nuclear power is probably needed to reduce carbon emissions: "It is unlikely that we can meet our aggressive climate goals if we eliminate nuclear power from the table."
eBay Error
McCain said that "1.3 million people in America make their living off eBay." He's way off. That's the number of people worldwide who have eBay earnings as their primary or secondary income. The online auction site says that of these, 724,000 people are in the U.S. – but it still doesn't say how many of the 724,000 use eBay as their primary source of income.
McCain was touting the founder of the popular Internet auction site, Meg Whitman, as a possible secretary of the treasury in a McCain administration.
Counting Errors
McCain exaggerated Obama's votes to increase taxes.
McCain: Sen. Obama has voted 94 times to either increase your taxes or against tax cuts. That's his record.
He’s getting warmer — the first time we dinged him for this one, he said Obama voted 94 times to increase taxes, which is way off. He's now saying it's 94 votes either for increased taxes or against tax cuts. But that's still misleading. Seven of the votes were for lowering taxes for most people while increasing them on a few, and 11 votes were for increasing taxes only on those making more than $1 million a year (not "your taxes" except for a very few.)
Obama had his own misleading claim about vote counts:
Obama: And during that time, he voted 23 times against alternative fuels, 23 times.
We found that only 11 of those votes would have reduced or eliminated subsidies or tax incentives for alternative energy. The rest were votes McCain cast against the mandatory use of alternative energy, or votes in favor of allowing exemptions from such mandates.
More on that $860 Billion
McCain said that Obama has proposed more than $800 billion in new spending.
McCain: Do you know that Sen. Obama has voted for – is proposing $860
billion of new spending now? New spending.
That’s based on a McCain campaign estimate of how much Obama’s new proposals will cost, without figuring in any savings or reductions in spending. Any increase in funding and any created program counts as "new spending" in this estimate, whether or not it is offset by decreases in spending elsewhere.
The nonpartisan Committee for a Responsible Federal Budget has found that both Obama and McCain are proposing combinations of tax and spending policies that would increase the federal deficit. It found that in 2013, Obama’s proposals would produce a net deficit increase of $286 billion, while McCain's major policies would produce a net deficit increase of between $167 billion and $259 billion. In talking to CNN, CRFB President Maya MacGuineas estimated that McCain's deficit increase would fall midway between the extremes of that range, at $211 billion.
Iraqi Surplus
Obama repeated a stale talking point when he said, "We're spending $10 billion a month in Iraq at a time when the Iraqis have a $79 billion surplus, $79 billion."
obama As we’ve pointed out when Obama said it on the campaign trail, when he repeated it at the last debate, and even when Biden mentioned the figure in the vice presidential debate, that number is wrong. The Iraqis actually “have” $29.4 billion in the bank. The Government Accountability Office projected in August that Iraq’s 2008 budget surplus could range anywhere from $38.2 billion to $50.3 billion, depending on oil revenue, price and volume. Then, in early August, the Iraqi legislature passed a $21 billion supplemental spending bill. The supplemental will be completely funded by this year’s surplus, and that means that the Iraqi’s will not have $79 billion in the bank. They could have about $59 billion.
$6.8 Million Boast
McCain repeated a questionable boast when he said, “I've taken on some of the defense contractors. I saved the taxpayers $6.8 billion in a deal for an Air Force tanker that was done in a corrupt fashion."
As we mentioned in our analysis of the first debate, there is more to the story. McCain certainly did lead a fight to kill the contract, and the effort ended in prison sentences for defense contractors. The contract is still up in the air, however, and questions have been raised about the role McCain played in helping a Boeing rival secure the new contract.
After the original Boeing contract to supply refueling airliners was nixed in 2003, the bidding process was reopened. And in early 2007, Boeing rival EADS/Airbus won the bid the second time around. But Boeing filed a protest about the way the bids were processed, and the Government Accountability Office released a report that found “significant errors” with the bid process.
Further, the New York Times reported that “McCain’s top advisers, including a cochairman of his presidential campaign, were lobbyists for EADS. And Mr. McCain had written to the Defense Department, urging it to ignore a trade dispute between the United States and Europe over whether Airbus received improper subsidies.”
68 Million Acres
Obama was off the mark when he said that oil companies “currently have 68 million acres that they're not using.”
As we’ve pointed out previously, those 68 million leased acres are not producing oil, but they are not necessarily untouched. In fact, in 2006, the last year for which figures are available, there were a total of more than 15,000 holes that were being proposed, started or finished, according to the Bureau of Land Management. These acres of land that these holes sit on are not counted as being “producing,” but they are certainly far from untouched.
The Return of the Oil Slick
McCain recycled a misleading claim from Sen. Hillary Clinton’s primary campaign,
charging Obama with voting to give “billions” to oil companies:
McCain: By the way, my friends, I know you grow a little weary with this back-and-forth. It was an energy bill on the floor of the Senate loaded down with goodies, billions for the oil companies, and it was sponsored by Bush and Cheney. You know who voted for it? You might never know. That one. You know who voted against it? Me.
McCain is referring to the Energy Policy Act of 2005, which Obama did in fact vote for. Clinton raised this same charge against Obama during the Democratic primaries. It was misleading then and it’s equally misleading now.
In fact, according to a Congressional Research Service report, more tax breaks were taken away from oil companies than were given. Overall, the act resulted in a small net tax increase on the oil industry:
Congressional Research Service: The Energy Policy Act of 2005 (EPACT05, P.L. 109-58) included several oil and gas tax incentives, providing about $2.6 billion of tax cuts for the oil and gas industry. In addition, EPACT05 provided for $2.9 billion of tax increases on the oil and gas industry, for a net tax increase on the industry of nearly $300 million over 11 years.
As we said last year, the bill did contain $14.3 billion in tax breaks, but most of those went to electric utilities, and nuclear, and also to alternative fuels research
and subsidies for energy-efficient cars, homes and buildings – not to the oil industry.
Computer Error
Obama moved the invention of the computer up by more than a century:
Obama: The same way the computer was originally invented by a bunch of government scientists who were trying to figure out, for defense purposes, how to communicate, we've got to understand that this is a national security issue, as well.
It’s true that the first electronic computer, ENIAC, or the Electronic Numerical Integrator And Computer, was developed at the University of Pennsylvania with funding from the War Department.
But ENIAC was not actually the first computer. That distinction belongs to the difference engine, a mechanical computer invented in 1822 by the British mathematician Charles Babbage. And even Babbage was drawing on earlier work, such as the calculating machine built in 1671 by the German philosopher Gottfried Liebniz.
all
Other quibbles
* Obama said: "When George Bush came into office, our debt – national debt
was around $5 trillion. It's now over $10 trillion." Actually, it was closer to $6 trillion when Bush took office. On Jan. 22, 2001 (two days after Bush was sworn in) the debt stood at $5.728 trillion. On Sept. 30, 2008, it was $10.025 trillion.
* McCain said it again: "We've got to stop sending $700 billion a year to countries that don't want us very – like us very much" (He actually used the figure three times in the debate.) He's talking about what we spend importing oil, and he's said the same thing at the last debate and numerous other times. At current oil prices, the correct figure is about $493 billion. About a third of that goes to Canada, Mexico and the United Kingdom, which were still on the friendly side of the ledger last time we looked.
* Obama was right about the amount of earmarks, when he said they "account for about $18 billion of our budget." According to the budget watchdog group, Taxpayers for Common Sense, earmarks totaled just $18.3 billion in 2008. Citizens Against Government Waste came in with a slightly smaller number of $17.2 billion, and the Office of Management and Budget smaller still at $16.9 billion.
* McCain repeated an error he made in the last debate when he said, "In Lebanon, I stood up to President Reagan, my hero, and said, if we send Marines in there, how can we possibly beneficially affect this situation? And said we shouldn't. Unfortunately, almost 300 brave young Marines were killed." In fact, as we noted previously, McCain wasn't elected until three months after the Marines had been deployed. He did vote against the post-hoc War Powers Act authorization of the deployment; Reagan signed it into law in October 1983, 11 days before a suicide bomber set off a blast that killed 241 servicemembers in their barracks.
–by Brooks Jackson, Viveca Novak, Lori Robertson, Joe Miller, Jessica Henig and Justin Bank
Sources
Committee for a Responsible Federal Budget. "Promises, Promises: A Fiscal Voter Guide to the 2008 Election." U.S. Budget Watch. 15 Sep. 2008.
CNN Political Ticker. "Fact Check: Is Obama proposing $860 billion+ in new spending?" 29 Sep. 2008.
JohnMcCain.com. "Straight Talk on Health System Reform." accessed 8 Oct. 2008.
Transcript, “Barack Obama Sept. 23 press conference,” Lynn Sweet's blog, Chicago Sun Times 24 Sept 2008.
Obama, Barack. "Plan for a Healthy America." BarackObama.com, accessed 8 Oct. 2008.
"U.S. Imports by Country of Origin." U.S. Energy Information Administration, accessed 8 Oct. 2008.
"Spot Prices, Crude Oil in Dollars per Barrel." U.S. Energy Information Administration, accessed 8 Oct. 2008.
"Statement Regarding the Bid Protest Decision Resolving the Aerial Refueling Tanker Protest by The Boeing Company" Government Accountability Office. 18 June 2008.
Isikoff, Michael, "McCain’s Boeing Battle Boomerangs," Newsweek. 30 June 2008.
Laurent, Lionel, "Boeing Boomerangs on McCain," Forbers Magazine. 4 March 2008.
Wayne, Leslie, "Audit Says Tanker Deal Is Flawed," New York Times. 19 June 2008.
Majority Staff, "The Truth About America’s Energy:Big Oil Stockpiles Supplies and Pockets Profits," House Committe on Natural Resources. June 2008.
"Total Producing and Non-Producing Leases: Fiscal Year 2007," Mineral Management Service. Accessed 2 July 2008.
Van Wagener, Dana, "Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf," Energy Information Administration. Accessed 2 July 2008.
"Inventory of Onshore Federal Oil and Natural Gas Resources and Restrictions to Their Development," U.S. Departments of the Interior, Agriculture, and Energy. 2008.
Krauss, Clifford. "Backing Clinton, Senate Rejects Bid to Speed Somalia
Pullout," New York Times, 15 October 1993.
Winegrad, Dilys and Atsushi Akera. "A Short History of the Second American Revolution," University of Pennsylvania Almanac, 30 January 1996.
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"...the bill as it now stands gives the U.S. Treasury Secretary basically unchecked power to deal with $700 billion in taxpayer funds. According to Section 8 of the proposal, the decisions are "non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
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FactChecking Biden-Palin Debate
October 3, 2008
The candidates were not 100 percent accurate. To say the least.
Summary
Biden and Palin debated, and both mangled some facts.
* Palin mistakenly claimed that troop levels in Iraq had returned to “pre-surge” levels. Levels are gradually coming down but current plans would have levels higher than pre-surge numbers through early next year, at least.
* Biden incorrectly said “John McCain voted the exact same way” as Obama on a controversial troop funding bill. The two were actually on opposite sides.
* Palin repeated a false claim that Obama once voted in favor of higher taxes on “families” making as little as $42,000 a year. He did not. The budget bill in question called for an increase only on singles making that amount, but a family of four would not have been affected unless they made at least $90,000 a year.
* Biden wrongly claimed that McCain “voted the exact same way” as Obama on the budget bill that contained an increase on singles making as little as $42,000 a year. McCain voted against it. Biden was referring to an amendment that didn't address taxes at that income level.
* Palin claimed McCain’s health care plan would be “budget neutral,” costing the government nothing. Independent budget experts estimate McCain's plan would cost tens of billions each year, though details are too fuzzy to allow for exact estimates.
* Biden wrongly claimed that McCain had said "he wouldn't even sit down" with the president of Spain. Actually, McCain didn't reject a meeting, but simply refused to commit himself one way or the other during an interview.
* Palin wrongly claimed that “millions of small businesses” would see tax increases under Obama’s tax proposals. At most, several hundred thousand business owners would see increases.
For full details on these misstatements, and on additional factual disputes and dubious claims, please read on to the Analysis section.
Analysis
Vice presidential candidates Joe Biden and Sarah Palin met for their one and only debate Oct. 2 in St. Louis, Missouri. The event was broadcast nationally. Gwen Ifill of PBS was the debate moderator.
We noted the following:
Palin Trips Up on Troop Levels
Palin got her numbers wrong on troop levels when she said "and with the surge that has worked, we're now down to pre-surge numbers in Iraq."
The surge was announced in January 2007, at which point there were 132,000 troops in Iraq, according to the Brookings Institute Iraq Index. As of September 2008, that number was 146,000. President Bush recently announced that another 8,000 would be coming home by February of next year. But even then, there still would be 6,000 more troops in Iraq than there were when the surge began.
Biden Fudges on Troop Funding
Biden defended Obama's vote against a troop-funding bill, claiming that McCain voted "the exact same way."
Palin: Barack Obama voted against funding troops there after promising that he would not do so…He turned around under political pressure and he voted against funding the troops. ...
Biden: John McCain voted the exact same way. John McCain voted against
funding the troops because of an amendment he voted against had a timeline
in it to draw down American troops. And John said I'm not going to fund
the troops if in fact there's a time line.
biden.palin.1As we've pointed out before, the squabble refers to a pair of 2007 votes on war funding. Obama voted for a version of the bill that included language calling for withdrawing troops from Iraq. Biden is simply wrong to say that McCain voted against that bill; he was absent and didn’t vote at all. McCain did oppose the bill, and he urged President Bush to veto it. Bush did. Obama then voted against the same bill without withdrawal language. He had voted yes on at least 10 other war funding bills prior to that single 2007 no vote.
Palin's False Tax Claims
Palin repeated a false claim about Barack Obama's tax proposal:
Palin: Barack Obama even supported increasing taxes as late as last year for those families making only $42,000 a year. That's a lot of middle income average American families to increase taxes on them. I think that is the way to kill jobs and to continue to harm our economy.
Obama did not in fact vote to increase taxes on "families" making as little as $42,000 per year. What Obama actually voted for was a budget resolution that called for returning the 25 percent tax bracket to its pre-Bush tax cut level of 28 percent. That could have affected an individual with no children making as little as $42,000. But a couple would have had to earn $83,000 to be affected and a family of four at least $90,000. The resolution would not have raised taxes on its own, without additional legislation, and, as we've noted before, there is no such tax increase in Obama's tax plan. (The vote took place on March 14 of this year, not last year as Palin said.)
Palin also repeated the exaggeration that Obama voted 94 times to increase taxes. That number includes seven votes that would have lowered taxes for many, while raising them on corporations or affluent individuals; 23 votes that were against tax cuts; and 17 that came on just 7 different bills. She also claimed that Biden and Obama voted for "the largest tax increase in history." Palin is referring here to the Democrats' 2008 budget proposal, which would indeed have resulted in about $217 billion in higher taxes over two years. That's a significant increase. But measured as a percentage of the nation's economic output, or gross domestic product, the yardstick that most economists prefer, the 2008 budget proposal would have been the third-largest since 1968, and it's not even in the top 10 since 1940.
Biden's False Defense
Biden denied that Obama supported increasing taxes for families making $42,000 a year – but then falsely claimed that McCain had cast an identical vote.
Biden: Barack Obama did not vote to raise taxes. The vote she's referring to, John McCain voted the exact same way. It was a budget procedural vote. John McCain voted the same way. It did not raise taxes. joe
Biden was correct only to the extent that the resolution Obama supported would not by itself have increased taxes; it was a vote on a budget resolution that set revenue and spending targets. But he's wrong to say McCain voted the same way. The Obama campaign attempted to justify Biden's remark by pointing to a different vote, on a Senate amendment, that took place March 13. The amendment passed 99-1, with only Democratic Sen. Russ Feingold dissenting. It would have preserved some of Bush's tax cuts for lower-income people. The vote on the budget resolution in question, however, came in the wee hours of March 14 and was a mostly party-line tally, 51-44, with Obama in favor and McCain not voting.
Palin's Health Care Hooey
Palin claimed that McCain's health care plan would be "budget-neutral," costing the government nothing.
Palin: He's proposing a $5,000 tax credit for families so that they can get out there and they can purchase their own health care coverage. That's a smart thing to do. That's budget neutral. That doesn't cost the government anything ... a $5,000 health care credit through our income tax, that's budget neutral.
palinThe McCain campaign hasn't released an estimate of how much the plan would cost, but independent experts contradict Palin's claim of a cost-free program.
The Urban-Brookings Tax Policy Center estimates that McCain's plan, which at its peak would cover 5 million of the uninsured, would increase the deficit by $1.3 trillion over 10 years. Obama's plan, which would cover 34 million of the uninsured, would cost $1.6 trillion over that time period.
The nonpartisan U.S. Budget Watch's fiscal voter guide estimates that McCain's tax credit would increase the deficit by somewhere between $288 billion to $364 billion by the year 2013, and that making employer health benefits taxable would bring in between $201 billion to $274 billion in revenue. That nets out to a shortfall of somewhere between $14 billion to $163 billion – for that year alone.
Palin also said that Obama’s plan would be "universal government run" health care and that health care would be "taken over by the feds." That's not the case at all. As we’ve said before, Obama’s plan would not replace or remove private insurance, or require people to enroll in a public plan. It would increase the offerings of publicly funded health care.
McCain in Spain?
Biden said that McCain had refused to meet with the president of Spain,
but McCain made no such definite statement.
Biden: The last point I'll make, John McCain said as recently as a couple of weeks ago he wouldn't even sit down with the government of Spain, a NATO ally that has troops in Afghanistan with us now. I find that incredible.
In a September 17 interview on Radio Caracol Miami, McCain appeared confused when asked whether he would meet with President Zapatero of Spain. He responded that "I would be willing to meet with those leaders who are our friends and want to work with us in a cooperative fashion," but then started talking about leaders in Latin America. He did not commit to meeting with Zapatero, but it wasn't clear he'd understood the question.
But the McCain campaign denied that their candidate was confused.
According to our colleagues at PolitiFact.com, campaign adviser Randy Scheunemann e-mailed CNN and the Washington Post the next day, saying that McCain's reluctance to commit to a meeting with Zapatero was a policy decision.
Scheunemann, September 2008: The questioner asked several times about Senator McCain's willingness to meet Zapatero — and id'd him in the question so there is no doubt Senator McCain knew exactly to whom the question referred. Senator McCain refused to commit to a White House meeting with President Zapatero in this interview.
That's not a refusal to meet with Zapatero, as Biden said. It's simply a refusal to commit himself one way or the other.
Palin's Small Business Balderdash
Palin repeated a falsehood that the McCain campaign has peddled, off and on, for some time:
Palin: But when you talk about Barack's plan to tax increase affecting only those making $250,000 a year or more, you're forgetting millions of small businesses that are going to fit into that category. So they're going to be the ones paying higher taxes thus resulting in fewer jobs being created and less productivity.
As we reported June 23, it's simply untrue that "millions" of small business owners will pay higher federal income taxes under Obama's proposal. According to an analysis by the independent Urban-Brookings Tax Policy Center, several hundred thousand small business owners, at most, would have incomes high enough to be affected by the higher rates on income, capital gains and dividends that Obama proposes. That counts as "small business owners" even those who merely have some sideline income from such endeavors as freelance writing, speaking or running rental properties, and who get the bulk of their income from employment elsewhere.
Defense Disagreements
Biden and Palin got into a tussle about military recommendations in Afghanistan:
Biden: The fact is that our commanding general in Afghanistan said today that a surge – the surge principles used in Iraq will not – well, let me say this again now – our commanding general in Afghanistan said the surge principle in Iraq will not work in Afghanistan, not Joe Biden, our commanding general in Afghanistan. He said we need more troops. We need government-building. We need to spend more money on the infrastructure in Afghanistan.
Palin: Well, first, McClellan did not say definitively the surge principles would not work in Afghanistan. Certainly, accounting for different conditions in that different country and conditions are certainly different. We have NATO allies helping us for one, and even the geographic differences are huge but the counterinsurgency principles could work in Afghanistan. McClellan didn't say anything opposite of that. The counterinsurgency strategy going into Afghanistan, clearing, holding, rebuilding, the civil society and the infrastructure can work in Afghanistan.
bothPoint Biden. To start, Palin got newly appointed Gen. David D. McKiernan's name wrong when she called him McClellan. And, more important, Gen. McKiernan clearly did say that surge principles would not work in Afghanistan. As the Washington Post reported:
Washington Post: "The word I don't use for Afghanistan is 'surge,' " McKiernan stressed, saying that what is required is a "sustained commitment" to a counterinsurgency effort that could last many years and would ultimately require a political, not military, solution.
However, it is worth noting that McKiernan also said that Afghanistan would need an infusion of American troops "as quickly as possible."
Killing Afghan Civilians?
Palin said that Obama had accused American troops of doing nothing but killing civilians, a claim she called "reckless" and "untrue."
Palin: Now, Barack Obama had said that all we're doing in Afghanistan is air-raiding villages and killing civilians. And such a reckless, reckless comment and untrue comment, again, hurts our cause.
Obama did say that troops in Afghanistan were killing civilians. Here’s the whole quote, from a campaign stop in New Hampshire:
Obama (August 2007): We’ve got to get the job done there and that requires us to have enough troops so that we’re not just air-raiding villages and killing civilians, which is causing enormous problems there.
The Associated Press fact-checked this one, and found that in fact U.S troops were killing more civilians at the time than insurgents: "As of Aug. 1, the AP count shows that while militants killed 231 civilians in attacks in 2007, Western forces killed 286. Another 20 were killed in crossfire that can’t be attributed to one party." Afghan President Hamid Karzai had expressed concern about these civilian killings, a concern President Bush said he shared.
Whether Obama said that this was "all we're doing" is debatable. He said that we need to have enough troops so that we're "not just air-raiding villages and killing civilians," but did not say that troops are doing nothing else.
Out of Context?
Biden claimed a comment he made about "clean coal" was taken out of context:
Biden: My record for 25 years has supported clean coal technology. A comment made in a rope line was taken out of context. I was talking about exporting that technology to China so when they burn their dirty coal, it won't be as dirty, it will be clean.
Was it really taken out of context? Here’s the full exchange, which took place while Biden was shaking hands with voters along a rope line in Ohio.
Woman: Wind and solar are flourishing here in Ohio, why are you supporting clean coal?
Biden: We’re not supporting clean coal. Guess what? China’s building two every week, two dirty coal plants, and it’s polluting the United States. It’s causing people to die.
Obama-Biden campaign spokesman David Wade later said that “Biden’s point is that China is building coal plants with outdated technology every day, and the United States needs to lead by developing clean coal technologies.”
Whatever Biden meant or didn’t mean to say on the rope line, he has supported clean coal in the past. When the McCain camp used this one remark from Biden as the basis for a TV ad saying that Obama-Biden oppose clean coal, we said the claim was false. Obama’s position in favor of clean coal has been clear, and pushing for the technology has been part of his energy policy.
McCain in the Vanguard of Mortgage Reform?
Palin said that McCain had sounded the alarm on Fannie Mae and Freddie Mac two years ago.
Palin: We need to look back, even two years ago, and we need to be appreciative of John McCain's call for reform with Fannie Mae, with Freddie Mac, with the mortgage-lenders, too, who were starting to really kind of rear that head of abuse.
Palin is referring to a bill that would have increased oversight on Fannie and Freddie. In our recent article about assigning blame for the crisis, we found that by the time McCain added his name to the bill as a cosponsor, the collapse was well underway. Home prices began falling only two months later. Our colleagues at PolitiFact also questioned this claim.
And There's More...
A few other misleads of note:
* Palin said, "We're circulating about $700 billion a year into foreign countries" for imported oil, repeating an outdated figure often used by McCain. At oil prices current as of Sept. 30, imports are running at a rate of about $493 billion per year.
* Biden claimed that McCain said in a magazine article that he wanted to deregulate the health care industry as the banking industry had been. That’s taking McCain’s words out of context. As we’ve said before, he was talking specifically about his proposal to allow the sale of health insurance across state lines.
* Biden said five times that McCain's tax plan would give oil companies a "$4 billion tax cut." As we’ve noted previously, McCain’s plan would cut the corporate tax rate from 35 percent to 25 percent — for ALL corporations, not just oil companies. Biden uses a Democratic think tank's estimate for what the rate change is worth to the five largest U.S. oil companies.
* Palin threw out an old canard when she criticized Obama for voting for the 2005 energy bill and said, “that’s what gave those oil companies those big tax breaks.” It’s a false attack Sen. Hillary Clinton used against Obama in the primary, and McCain himself has hurled. It’s true that the bill gave some tax breaks to oil companies, but it also took away others. And according to the Congressional Research Service, the bill created a slight net increase in taxes for the oil industry.
* Biden said that Iraq had an "$80 billion surplus." The country was once projected to have as much as a $79 billion surplus, but no more. The Iraqis have $29 billion in the bank, and could have $47 billion to $59 billion by the end of the year, as we noted when Obama used the incorrect figure. A $21 billion supplemental spending bill, passed by the Iraqi legislature in August, knocked down the old projection.
* Biden said four times that McCain had voted 20 times against funding alternative energy. However, in analyzing the Obama campaign's list of votes after the first presidential debate, we found the number was actually 11. In the other instances the Obama-Biden campaign cites, McCain voted not against alternative energy but against mandatory use of alternative energy, or he voted in favor of allowing exemptions from these mandates.
-by Brooks Jackson, Viveca Novak, Lori Robertson, Joe Miller, Jessica Henig and Justin Bank
Sources
Belasco, Amy. "The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11." 14 July 2008. Congressional Research Service. Accessed 2 October 2008.
Pickler, Nedra. "Fact Check: Obama on Afghanistan." The Associated Press. 14 Aug. 2007.
Committee for a Responsible Federal Budget. "Promises, Promises: A Fiscal Voter Guide to the 2008 Election." U.S. Budget Watch. 29 Aug. 2008.
Williams, Roberton and Howard Gleckman. "An Updated Analysis of the 2008 Presidential Candidates' Tax Plans." Urban-Brookings Tax Policy Center. 15 Sep. 2008.
"Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf." 2007. Energy Information Administration. 8 Aug. 2008.
Petroleum Basic Statistics. The Energy Information Administration, 3 Oct. 2008.
NPC Global Oil & Gas Study. “Topic Paper #7, Global Access to Oil and Gas,” 18 July 2007.
Clarke, David and Liriel Higa, "Blueprints Gain Narrow Adoption," Congressional Quarterly Weekly, 15 March 2008.
"Iraq Index," Brookings Iraq Index.
Baldor, Lolita C, "General: Urgent need for troops in Afghanistan now," Associated Press. 2 Oct 2008.
"Bush: 8,000 Troops Coming Home By Feb," CBS/AP. 9 Sept 2008.
Tyson, Ann Scott, "Commander in Afghanistan Wants More Troops," Washington Post. 2 Oct 2008.
Barnes, Julian N., "More U.S. troops needed in Afghanistan 'quickly,' general says," Los Angeles Times. 2 Oct 2008.
Table T08-0164 "Distribution of Tax Units with Business Income by Statutory Marginal Tax Rate, Assuming Extension and Indexation of the 2007 AMT Patch, 2009" Urban-Brookings Tax Policy Center, 20 May 2008.
Who Caused the Economic Crisis?
October 1, 2008
MoveOn.org blames McCain advisers. He blames Obama and Democrats in Congress. Both are wrong.
Summary
A MoveOn.org Political Action ad plays the partisan blame game with the economic crisis, charging that John McCain’s friend and former economic adviser Phil Gramm “stripped safeguards that would have protected us.” The claim is bogus. Gramm’s legislation had broad bipartisan support and was signed into law by President Clinton. Moreover, the bill had nothing to do with causing the crisis, and economists – not to mention President Clinton – praise it for having softened the crisis.
A McCain-Palin ad, in turn, blames Democrats for the mess. The ad says that the crisis “didn’t have to happen,” because legislation McCain cosponsored would have tightened regulations on Fannie Mae and Freddie Mac. But, the ad says, Obama "was notably silent" while Democrats killed the bill. That’s oversimplified. Republicans, who controlled the Senate at the time, did not bring the bill forward for a vote. And it’s unclear how much the legislation would have helped, as McCain signed on just two months before the housing bubble popped.
In fact, there’s ample blame to go around. Experts have cited everyone from home buyers to Wall Street, mortgage brokers to Alan Greenspan.
Analysis
As Congress wrestled with a $700 billion rescue for Wall Street's financial crisis, partisans on both sides got busy – pointing fingers. MoveOn.org Political Action on Sept. 25 released a 60-second TV ad called "My Friends’ Mess," blaming Sen. John McCain and Republican allies who supported banking deregulation. The McCain-Palin campaign released its own 30-second TV spot Sept. 30, saying "Obama was notably silent" while Democrats blocked reforms leaving taxpayers "on the hook for billions." Both ads were to run nationally.
And both ads are far wide of the mark.
MoveOn.org Ad:
"My Friends' Mess"
MoveOn.org Ad, "My Friends"
Narrator: We all know the economy is in crisis, but who's responsible?
McCain: My friends. My friends. My friends.
Narrator: John McCain's friend Phil Gramm wrote the bill that deregulated the banking industry, and stripped the safeguards that would have protected us.
McCain asked Gramm to help write his economic plan.
John McCain's friend Rick Davis lobbied for Fannie and Freddie for years, "defending" them against stricter regulation. And now? He runs McCain's presidential campaign.
And John McCain himself? He's stood by "deregulation" time and time again.
McCain: I think the deregulation was probably helpful to the growth of our economy.
Narrator: And now that the markets are in meltdown? John McCain's friend George Bush wants hardworking Americans to write the biggest blank check in history, bailing out the Wall Street firms and the Washington lobbyists who got us into this mess. Main Street giving Wall Street $700 billion and getting nothing in return? It's outrageous.
Americans shouldn't have to foot the bill for mistakes that John McCain and his friends made.
Narrator: MoveOn.org Political Action is responsible for the content of this advertisement.
Blame the Republicans!
The MoveOn.org Political Action ad blames a banking deregulation bill sponsored by former Sen. Phil Gramm, a friend and one-time adviser to McCain's campaign. It claims the bill "stripped safeguards that would have protected us."
That claim is bunk. When we contacted MoveOn.org spokesman Trevor Fitzgibbons to ask just what "safeguards" the ad was talking about, he came up with not one single example. The only support offered for the ad's claim is one line in one newspaper article that reported the bill "is now being blamed" for the crisis, without saying who is doing the blaming or on what grounds.
The bill in question is the Gramm-Leach-Bliley Act, which was passed in 1999 and repealed portions of the Glass-Steagall Act, a piece of legislation from the era of the Great Depression that imposed a number of regulations on financial institutions. It's true that Gramm authored the act, but what became law was a widely accepted bipartisan compromise. The measure passed the House 362 - 57, with 155 Democrats voting for the bill. The Senate passed the bill by a vote of 90 - 8. Among the Democrats voting for the bill: Obama's running mate, Joe Biden. The bill was signed into law by President Clinton, a Democrat. If this bill really had "stripped the safeguards that would have protected us," then both parties share the blame, not just "John McCain's friend."
The truth is, however, the Gramm-Leach-Bliley Act had little if anything to do with the current crisis. In fact, economists on both sides of the political spectrum have suggested that the act has probably made the crisis less severe than it might otherwise have been.
Last year the liberal writer Robert Kuttner, in a piece in The American Prospect, argued that "this old-fashioned panic is a child of deregulation." But even he didn't lay the blame primarily on Gramm-Leach-Bliley. Instead, he described "serial bouts of financial deregulation" going back to the 1970s. And he laid blame on policies of the Federal Reserve Board under Alan Greenspan, saying "the Fed has become the chief enabler of a dangerously speculative economy."
What Gramm-Leach-Bliley did was to allow commercial banks to get into investment banking. Commercial banks are the type that accept deposits and make loans such as mortgages; investment banks accept money for investment into stocks and commodities. In 1998, regulators had allowed Citicorp, a commercial bank, to acquire Traveler's Group, an insurance company that was partly involved in investment banking, to form Citigroup. That was seen as a signal that Glass-Steagall was a dead letter as a practical matter, and Gramm-Leach-Bliley made its repeal formal. But it had little to do with mortgages.
Actually, deregulated banks were not the major culprits in the current debacle. Bank of America, Citigroup, Wells Fargo and J.P. Morgan Chase have weathered the financial crisis in reasonably good shape, while Bear Stearns collapsed and Lehman Brothers has entered bankruptcy, to name but two of the investment banks which had remained independent despite the repeal of Glass-Steagall.
Observers as diverse as former Clinton Treasury official and current Berkeley economist Brad DeLong and George Mason University's Tyler Cowen, a libertarian, have praised Gramm-Leach-Bliley has having softened the crisis. The deregulation allowed Bank of America and J.P. Morgan Chase to acquire Merrill Lynch and Bear Stearns. And Goldman Sachs and Morgan Stanley have now converted themselves into unified banks to better ride out the storm. That idea is also endorsed by former President Clinton himself, who, in an interview with Maria Bartiromo published in the Sept. 24 issue of Business Week, said he had no regrets about signing the repeal of Glass-Steagall:
Bill Clinton (Sept. 24): Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill. ...You know, Phil Gramm and I disagreed on a lot of things, but he can't possibly be wrong about everything. On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence. But I can't blame [the Republicans]. This wasn't something they forced me into.
No, Blame the Democrats!
McCain-Palin 2008 Ad: "Rein"
McCain Ad, "Rein"
Narrator: John McCain fought to rein in Fannie and Freddie.
The Post says: McCain "pushed for stronger regulation"..."while Mr. Obama was notably silent."
But, Democrats blocked the reforms.
Loans soared. Then, the bubble burst. And, taxpayers are on the hook for billions.
Bill Clinton knows who is responsible.
Clinton: I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was President to put some standards and tighten up a little on Fannie Mae and Freddie Mac.
Narrator: You're right, Mr. President. It didn't have to happen.
McCain: I'm John McCain and I approve this message.
The McCain-Palin campaign fired back with an ad laying blame on Democrats and Obama. Titled "Rein," it highlights McCain's 2006 attempt to "rein in Fannie and Freddie." The ad accurately quotes the Washington Post as saying "Washington failed to rein in" the two government-sponsored entities, the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"), both of which ran into trouble by underwriting too many risky home mortgages to buyers who have been unable to repay them. The ad then blames Democrats for blocking McCain's reforms. As evidence, it even offers a snippet of an interview in which former President Clinton agrees that "the responsibility that the Democrats have" might lie in resisting his own efforts to "tighten up a little on Fannie Mae and Freddie Mac." We're then told that the crisis "didn't have to happen."
It's true that key Democrats opposed the Federal Housing Enterprise Regulatory Reform Act of 2005, which would have established a single, independent regulatory body with jurisdiction over Fannie and Freddie – a move that the Government Accountability Office had recommended in a 2004 report. Current House Banking Committee chairman Rep. Barney Frank of Massachusetts opposed legislation to reorganize oversight in 2000 (when Clinton was still president), 2003 and 2004, saying of the 2000 legislation that concern about Fannie and Freddie was "overblown." Just last summer, Senate Banking Committee chairman Chris Dodd called a Bush proposal for an independent agency to regulate the two entities "ill-advised."
But saying that Democrats killed the 2005 bill "while Mr. Obama was notably silent" oversimplifies things considerably. The bill made it out of committee in the Senate but was never brought up for consideration. At that time, Republicans had a majority in the Senate and controlled the agenda. Democrats never got the chance to vote against it or to mount a filibuster to block it.
By the time McCain signed on to the legislation, it was too late to prevent the crisis anyway. McCain added his name on May 25, 2006, when the housing bubble had already nearly peaked. Standard & Poor's Case-Schiller Home Price Index, which measures residential housing prices in 20 metropolitan regions and then constructs a composite index for the entire United States, shows that housing prices began falling in July 2006, barely two months later.
The Real Deal
So who is to blame? There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here's a partial list of those alleged to be at fault:
* The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
* Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
* Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
* Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
* The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
* Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
* Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
* Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
* The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
* An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
* Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.
The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.
–by Joe Miller and Brooks Jackson
Sources
Benston, George J. The Separation of Commercial and Investment Banking: The Glass-Steagall Act Revisited and Reconsidered. Oxford University Press, 1990.
Tabarrok, Alexander. "The Separation of Commercial and Investment Banking: The Morgans vs. The Rockefellers." The Quarterly Journal of Austrian Economics 1:1 (1998), pp. 1 - 18.
Kuttner, Robert. "The Bubble Economy." The American Prospect, 24 September 2007.
"The Gramm-Leach-Bliley Act of 1999." U.S. Senate Committee on Banking, Housing and Urban Affairs. Accessed 29 September 2008.
Bartiromo, Maria. "Bill Clinton on the Banking Crisis, McCain and Hillary." Business Week, 24 September 2008.
Standard and Poor's. "Case-Schiller Home Price History." Accessed 30 September 2008.
"Understanding the Tax Reform Debate: Background, Criteria and Questions." Government Accountability Office. September 2005.
Bianco, Katalina M. "The Subprime Lending Crisis: Causes and Effects of the Mortgage Meltdown." CCH. Accessed 29 September 2008.
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