(This is an expanded version of material that originally appeared in the Oct. 17 print edition of The Washington Post.)
“He said that I said we should take Detroit bankrupt. And that’s right. My plan was to have the company go through bankruptcy like 7-Eleven did and Macy’s and Continental Airlines and come out stronger. And I know he keeps saying, you want to take Detroit bankrupt. Well, the president took Detroit bankrupt. You took General Motors bankrupt. You took Chrysler bankrupt. So when you say that I wanted to take the auto industry bankrupt, you actually did.”
“What Governor Romney said just isn’t true. He wanted to take them into bankruptcy without providing them any way to stay open. And we would have lost a million jobs.”
This interesting exchange is drawn from a headline — “Let Detroit Go Bankrupt” — on an opinion article written by Romney for the New York Times. But he did not say that in the article. (He repeated the line, however, on television.)
Although “bankrupt” often conjures up images of liquidation, Romney is correct in that he called for a “managed bankruptcy.” This is a process in which the company uses the bankruptcy code to discharge its debts, but emerges from the process a leaner, less leveraged company.
Ultimately, along with getting nearly $80 billion in loans and other assistance from the Bush and Obama administrations, GM and Chrysler did go through a managed bankruptcy.
But many independent analysts have concluded that taking the approach recommended by Romney would not have worked in 2008, simply because the credit markets were so frozen that a bankruptcy was not a viable option at the time.
Here’s how the bipartisan Congressional Oversight Panel, in a unanimous finding, framed the issue in a January 2011 report: “The circumstances in the global credit markets in November and December 2008 were unlike any the financial markets had seen in decades. U.S. domestic credit markets were frozen in the wake of the Lehman bankruptcy, and international sources of funding were extremely limited.”
Obama’s claim of 1 million jobs being saved is based on a Bush administration estimate when it extended loans to the automakers. The Bush administration’s Council of Economic Advisers said that “the direct costs of American automakers failing and laying off their workers in the near term would result in a more than 1 percent reduction in real GDP [gross domestic product] growth and about 1.1 million workers losing their jobs, including workers for automotive suppliers and dealers.”
“That’s why I put out a five-point plan that gets America 12 million new jobs in four years.”
This number is less impressive than it sounds. This pledge amounts to an average of 250,000 jobs a month; in recent months, the economy has averaged about 150,000 jobs a month.
Moody’s Analytics, in an August forecast, predicts 12 million jobs will be created by 2016, no matter who is president. And Macroeconomic Advisors in April also predicted a gain of 12.3 million jobs.
In other words, this is a fairly safe bet by Romney, even if he has a somewhat fuzzy plan for action. We have often noted that presidents are often at the mercy — or are the beneficiary — of broad economic trends, and Romney’s pledge appears to be an effort to take advantage of that.
“We’ve built enough pipeline to wrap around the entire Earth once.”
This “fact” is kind of meaningless — and it’s missing some important context.
The circumference of the Earth at the equator is just over 24,091 miles.
The president is making this claim based on two years of data posted on the Web site of the Pipeline and Hazardous Material Safety Administration. The data show that from 2008 to 2010, total oil and gas pipelines have increased by 27,899 miles. So that’s certainly circling the globe.
But the total number of pipelines in 2008 was about 2.38 million miles. So that means that Obama’s gain over two years amounts to a little over 1 percent of that total. That sounds much less impressive than “wrap around the entire Earth.”
Indeed, the bulk of Obama’s gain — 19,500 miles — came from gas transmission lines, essentially natural gas piped into homes and buildings. By and large, these pipelines require approvals from states and municipalities, as well as the Federal Energy Regulatory Commission, an independent agency.
“A recent study has shown the people in the middle-class will see $4,000 per year in higher taxes as a result of the spending and borrowing of this administration.”
Romney’s claim that Obama would raise taxes on the middle class by $4,000 has earned him three Pinocchios in the past.
The figure is drawn from a dry report from the American Enterprise Institute, titled “A Simple Measure of the Distributional Burden of Debt Accumulation.” The study tries to calculate the burden of servicing the national debt by various income groups, examining what would happen under current law, current policies and Obama’s budget.
(Current law refers to policies that are supposed to happen, such as expiring tax cuts; current policy reflects the fact that Congress has said it will not let certain tax cuts expire.)
Among the three scenarios, there’s actually not much difference, and the Obama administration’s budget falls right in the middle. In other words, the study shows how much lower taxes could be if the nation did not keep adding to the debt load; it does not show, as Romney suggests, that Obama has some sort of secret plan to raise taxes.
Presumably, a Romney budget would fall in the same range, but he has not provided detailed plans.
“I said I would cut taxes for middle- class families, and that’s what I’ve done, by $3,600.”
Obama makes it sound like this is one big tax cut, every year.
The $3,600 figure is actually over four years — $800 in each of 2009 and 2010 due to the Making Work Pay tax credit and $1,000 in each of 2011 and 2012 due to a Social Security payroll tax cut.
But the Making Work Pay tax credit has expired, and Obama has not promised to extend the payroll tax cut, meaning that people’s taxes will go up next year.
“Every middle-income taxpayer no longer will pay any tax on interest, dividends or capital gains.”
The nonpartisan Tax Policy Center says that such a tax cut will not greatly benefit middle-income Americans, who typically do not have large stock investments.
For an income range of 50,000 to $75,000 — roughly equivalent to the median income figure in Census Bureau data — the result would be an average tax cut of $167. The people who really make money on capital gains earn far more than $200,000, but Romney’s proposal would only be for people earning less than that.
Still, the Tax Policy Center study does show that Romney’s proposal would not be a bad deal for the elderly who get most of their income from capital appreciation. Their average tax cut would be three times greater than it would for the rest of the tax-paying population.
“There were many days that passed before we knew whether this was a spontaneous demonstration, or actually whether it was a terrorist attack [in Libya].”
“The day after the attack, governor, I stood in the Rose Garden and I told the American people and the world that we are going to find out exactly what happened, that this was an act of terror, and I also said that we’re going to hunt down those who committed this crime.”
“I think it’s interesting the president just said something, which is that on the day after the attack he went into the Rose Garden and said that this was an attack of terror…. I want to make sure we get that for the record, because it took the president 14 days before he called the attack in Benghazi an act of terror.”
What did Obama say in the Rose Garden a day after the attack in Libya? We covered this previously in our extensive timeline of administration statements on Libya.
“No acts of terror will ever shake the resolve of this nation, alter that character, or eclipse the light of the values that we stand for,” Obama said.
But the president did not say “terrorism”— and Romney got tripped up when he repeated the “act of terror” phrasing.
Otherwise, Romney’s broader point is accurate — that it took the administration days to concede that the assault on the U.S. mission in Benghazi was an “act of terrorism” that appears unrelated to initial reports of anger at a video that defamed the prophet Muhammad. (The reporting is contradictory on whether there was indeed a demonstration outside the mission.) By our count, it took eight days for an administration official to concede that the deaths in Libya were the result of a “terrorist attack.”
More to Romney’s point, Obama continued to resist saying the “T” word, instead repeatedly bringing up the video, even in a speech to the U.N. General Assembly on Sept. 25. On Sept. 26 — 15 days after the attack — the White House spokesman felt compelled to assert “it is certainly the case that it is our view as an administration, the president’s view, that it was a terrorist attack.”
“The unemployment rate was 7.8 percent when he took office, it’s 7.8 percent now. But if you calculated that unemployment rate, taking back the people who dropped out of the workforce, it would be 10.7 percent.”
On the surface, Romney’s point seems reasonable, but ultimately this is a misleading metric.
The labor force participation rate in January 2009 was 65.7, according to Bureau of Labor Statistics data. Had the rate remained the same, the labor force would be about 160,158,000. At the current employment level, the unemployment rate would be 10.7 percent.
But this assumes all things are equal in the labor force, when in fact it is constantly churning and evolving. In particular, besides the aftermath of the Great Recession, the composition of the labor force has been affected by the retirement of the leading edge of the Baby Boom generation.
Our colleagues at WonkBlog explored this issue earlier this year, showing that the peak of the labor force participation rate, or LFPR, was reached during the end of President Bill Clinton’s term and that since then it has been on a downward track. “If the same percentage of adults were in the workforce today as when Barack Obama took office, the unemployment rate would be 11.1 percent,” the column noted. “If the percentage was where it was when George W. Bush took office, the unemployment rate would be 13.1 percent.”
The Federal Reserve Bank of Chicago in March estimated that just over half of the post-1999 decline in the labor force participation rate was explained by long-running demographic patterns, such as the retirement of the baby boomers. “These patterns are expected to continue, offsetting LFPR improvements due to economic recovery,” the study said.
In other words, all things did not remain equal.
“He said when he was running for office, he would cut the deficit in half. Instead he’s doubled it.”
Obama did say he would cut the deficit in half but Romney’s math is wrong. The federal budget deficit in 2009 — which started four months before Obama became president — was $1.4 trillion, when it was about 10 percent of the gross domestic product. For the fiscal year just ended, the deficit was $1.1 trillion, or about 7 percent of GDP.
The budget deficit in 2008 was $438 billion, but it hardly seems fair to compare Obama’s record to that fiscal year, which ended just as the economic crisis erupted.
“The president’s policies throughout the Middle East began with an apology tour.”
This Four-Pinocchio claim rears its head again. Readers can refer back to our lengthy look at this issue back in early 2011. The apology tour never happened.
“He called the Arizona law a model for the nation.”
The president loves this line, but it simply is not correct. As Romney later pointed out out, he was speaking of “E-Verify,” which is a federal electronic verification system that checks the immigration status of new hires — not the controversial immigration enforcement law known as Senate Bill 1070
This is Romney’s full quote, which came during GOP debate held in Arizona in February:
“You know, I think you see a model here in Arizona. They passed a law here that says, that says that people who come here and try and find work, that the employer is required to look them up on E-Verify. This E-Verify system allows employers in Arizona to know who’s here legally and who’s not here legally. And as a result of E-Verify being put in place, the number of people in Arizona that are here illegally has dropped by some 14 percent, where the national average has only gone down 7 percent.”
Regarding SB1070, Romney position has been vague; he has not even said whether he agreed with the Supreme Court ruling striking down key parts of the legislation.
“He said that by now we’d have unemployment at 5.4 percent. The difference between where it is and 5.4 percent is 9 million Americans without work. I wasn’t the one that said 5.4 percent. This was the president’s plan. Didn’t get there.”
Republicans like to cite this “promise” by Obama but it is not as simple as that.
Before Obama took the oath of office, two aides, Christina Romer, the nominee to head the Council of Economic Advisers, and Jared Bernstein, an incoming economic adviser to Vice President-elect Biden, wrote a 14-page report that attempted to assess the impact of a possible $775 billion stimulus package and how much of a difference it would make compared to doing nothing.
Thus, it was not an official government assessment or even an analysis of an actual plan that had passed Congress.
Page 4 of the report included a chart that showed that unemployment would peak at 8 percent in 2009, compared to 9 percent in 2010 if nothing was done. For 2012, the report suggested the unemployment rate would be 5.4 percent after stimulus. But the report also contained numerous caveats and warnings because, after all, it was merely a projection.
Still, the administration later cited the report in congressional testimony, giving it an official imprimatur. So, while Obama officials may not have “pledged” such a goal, it was certainly part of the administration’s talking points.
“One of his big ideas when it comes to corporate tax reform would be to say, if you invest overseas, you make profits overseas, you don’t have to pay U.S. taxes…. And it’s estimated that that will create 800,000 new jobs. The problem is they’ll be in China. Or India. Or Germany.”
Obama is quoting from one disputed study.
At issue is a Romney proposal, as part of a corporate tax reform, to allow foreign profits by corporations to be exempt from domestic tax. The Simpson-Bowles deficit-reduction commission, frequently cited by Democrats and Republicans, recommended such a system in its report. “A territorial tax system should be adopted to help put the U.S. system in line with other countries, leveling the playing field,” the report said.
The study cited by Obama, which appeared in Tax Notes, did not actually study Romney’s plan. Moreover, it said that such a system would create 800,000 jobs overseas, but not necessarily at the expense of U.S. jobs if unemployment rates are low.
“He was asked this on Univision the other day. Why, when you said you’d filed legislation in your first year didn’t you do it? And he didn’t answer.”
Romney suggested that the president couldn’t answer during a Univision interview for a failed 2008 campaign promise to overhaul the immigration system during his first year in office. We covered this issue in a previous column.
Obama said on Univision that his administration was preoccupied with resuscitating the economy during his first year in office. We noted that the president was indeed busy with various stimulus and bailout programs, but that most of the heavy legislative lifting was done by the summer of 2009.
The president has blamed Republicans for not working with him to enact immigration reform, but his party held the majority in both chambers of Congress during his first two years, and some Democrats showed a reluctance to work on a bill.
News accounts at the time noted that the Obama administration showed little will to push through a deal. Here’s what the New York Times wrote about the matter:
“Aides to Mr. Obama say he does not intend to get out in front of any [immigration] proposal until there is a strong bipartisan commitment to pass it. That stance has the potential to paralyze the process, since lawmakers are looking to him to use his bully pulpit, and high approval ratings, to help them fend off any political backlash among their constituents.” — Josh Hicks
“Any investments I have over the last eight years have been managed by a blind trust. And I understand they do include investments outside the United States, including in Chinese companies. Mr. President, have you looked at your pension? Have you looked at your pension?”
“I don’t look at my pension. It’s not as big as yours so it doesn’t take as long.”
“Let me give you some advice. Look at your pension. You also have investments in Chinese companies. You also have investments outside the United States.”
We have certainly been skeptical of the Obama campaign’s claims about Romney-related investments in Chinese companies, but this was bit of curve ball by GOP candidate.
Generally, the payout from a pension — in this case, from Obama’s years in the state legislature — is based on years of service and other factors, not necessarily how well the pension does in the stock market. (It certainly is an unusually lucrative pension system, as a Chicago Tribune investigation found.) Obama’s defined-benefit pension is valued at between $50,000 and $100,000 on his financial disclosure form.
To our mind, there’s a qualitative difference between a pension-plan investment portfolio and earning returns from contemporary stock investments.
The Romney campaign explains that his point was that international investments are a crucial part of investing today — and that just as Obama has no control over the investments made by his pension fund, Romney has no control over investments made by funds that are part of his blind trust. The Romney campaign says that 19 percent of the Illinois pension fund’s investments are in foreign companies, including dozens of Chinese companies.
“Obama has a pension, managed by the IL Pension fund. He has no control over how they invest it, and they invest some of it in Chinese companies,” a Romney spokesman said. “Romney has a blind trust. He has no control over how the trustee invests it, and the trustee invests some of it in funds that invest in Chinese companies.”
(As has often been noted, as a Senate candidate in 1994, Romney dismissed a blind trust as an “age-old ruse.” In a blast at Sen. Ted Kennedy’s blind trust, Romney said: “The blind trust is an age-old ruse, if you will. Which is to say you can always tell a blind trust what it can and cannot do. You give a blind trust rules.”)