Romney’s ‘Gross’ Exaggeration on ‘Obamacare’

Mitt Romney falsely claims government will “constitute … almost 50 percent” of the U.S. economy when the new federal health care law takes full effect. But Romney gets to 50 percent by erroneously counting all health care spending — private and public — as “effectively under government control once Obamacare is fully implemented,” as his spokesman put it.
That’s nonsense — just as it was two years ago, when Rep. Michele Bachmann made a similar bogus claim. The fact is that the nation’s health care system will be no more under federal control than Massachusetts’ fell under state control after Romney signed a similar health care law as governor. Both Obama and Romney expanded the private insurance market by mandating that individuals purchase health care coverage.
Besides, contrary to years of constantly repeated Republican rhetoric, the health care law (if allowed to stand) will constitute a relatively minor expansion of the government’s share of health care spending, which was already large and rising due to the aging population.
All government spending on health care amounted to 43.6 percent of total spending on health care in 2009, before the new law was enacted in March 2010. And by 2020, after several years of full implementation, it will still account for just 49.2 percent — according to the most recent annual projections by the acknowledged authority on the subject, the Office of Actuary in the Centers for Medicare and Medicaid Services. (See table 16.) Furthermore, much of that 5.6 percentage point increase will happen with or without the new law as the post World War II Baby Boom generation reaches age 65 and goes onto Medicare.
Romney’s health care claim was one of a few questionable statements he made during a speech in Lansing, Mich., on May 8. Reiterating claims we have debunked before, Romney also overstated the impact of Obama’s tax plans on small businesses, misrepresented the Independent Payment Advisory Board to be created under the health care law, and falsely accused the administration of refusing to allow Boeing to build in a right-to-work state.

Cost of ‘Obamacare’

In Michigan, Romney said local, state and federal governments consume 38 percent of GDP now and “if Obamacare is installed, it will reach almost 50 percent.” Romney has made such claims on at least three occasions in recent weeks:

Romney, May 8: Government at all levels now constitutes 38 percent of the economy, and if Obamacare is installed, it will reach almost 50 percent.
Romney, April 24: Government is at the center of his vision. It dispenses the benefits, borrows what it cannot take, and consumes a greater and greater share of the economy. With Obamacare fully installed, government will come to control half the economy, and we will have effectively ceased to be a free enterprise society.
Romney, March 30: Today, government at all levels consumes 38 percent of the total economy or G.D.P. If Obamacare is allowed to stand, government will directly control almost half of the American economy.

Strictly speaking, government at all levels last year accounted directly for only 20.1 percent of all the spending for goods, services and investments that are included in the GDP. The Bureau of Economic Analysis measures government spending three different ways. The most expansive measurement is “total government expenditures,” which is what Romney used. But that includes government transfer payments, such as Social Security checks and interest payments, which aren’t counted as part of GDP until they are spent by those who receive them. Total government expenditures in the first quarter of 2012, when adjusted at annual rates, were estimated at $5.6 trillion — or about 36 percent of the $15.5 trillion economy, according to Bureau of Economic Analysis figures (tables 1.1.5 and 3.1).
But that’s just a quibble, and there are respectable arguments for using a 36 percent figure. Where Romney launches into pure partisan fantasy is with his prediction that government spending will reach nearly 50 percent.
Romney’s audience may get the false impression that he is saying Obama’s health care law alone will consume 12 percent of GDP — that government spending will rise from 38 percent to 50 percent, when the new federal law is fully implemented. But that’s not possible. The law will constitute a fraction of GDP, even when fully implemented in 2015. Currently, 12 percent of GDP is equal to $1.9 trillion. But the total cost of the health care law to state and federal governments is estimated at $1.8 trillion over 11 years, from 2012 to 2022. During that time, costs would average $167 billion a year — a fraction of the current $15.5 trillion annual GDP.
So, obviously, the cost of the federal health care law alone cannot account for 12 percent of GDP.
We asked Romney spokesman Eric Fehrnstrom how his boss arrives at 50 percent. In an email, Fehrnstrom said: “The 50% includes total health care expenditures, which will be effectively under government control once Obamacare is fully implemented.”
That’s patently false and misleading. Total health care expenditures include public and private costs — everything from Medicare and Medicaid to private insurance and out-of-pocket expenses for copayments and deductibles. The Centers for Medicare and Medicaid Services says national health expenditures in 2009 reached $2.5 trillion — or 17.6 percent of GDP. About 43 percent of that was local, state and government spending. The rest was private.
It’s true that Obama’s health care law will increase the number of people covered by Medicaid, and it will set a minimum benefit standard for health care plans. But that’s exactly what Massachusetts did under the health care law that Romney signed as governor. Both laws created insurance exchanges and expanded Medicaid eligibility. But both laws also mandated individuals to purchase private health insurance and provided subsidies to help people buy private insurance — expanding the private market. Insurance will still be provided by private companies, and care will still be provided by private doctors.

Romney’s claim is similar to one made on a Sunday talk show in 2010 by Bachmann, one of his former rivals for the Republican presidential nomination. The Minnesota congresswoman claimed “now we have the federal government … taking over ownership or control of 51 percent of the American economy.” She counted 18 percent of the economy from health care, and the rest from “direct ownership or control of banks, the largest insurance company in the United States, AIG, Freddie and Fannie,” plus direct student loans, Chrysler and GM. But as we said then — and as we’ve said time and again — the federal government isn’t taking “control” of health care.

Taxing the Truth about Small Businesses

In his speech, Romney also restated the misleading Republican claim that taxes on the wealthy are taxes on small businesses.

Romney: President Obama proposes to raise the tax on small business. He wants to increase the marginal tax rate that the most successful small businesses pay from 35 percent to 40 percent. It’s a throwback to the discredited policies of the past, and it’ll kill jobs.

Romney misleads when he says Obama would raise taxes on “small businesses.” It’s true that Obama wants to allow the Bush tax cuts to expire for the top two brackets for individual taxpayers, eliminating the current 33 percent and 35 percent tax rates and restoring the 36 percent and 39.6 percent rates. And some of those individuals own small businesses. But the truth is that the vast majority of small-business owners wouldn’t be affected.
According to the Joint Committee on Taxation, only 3 percent of individual taxpayers with any net business income fall into the top two tax brackets, which are the ones that would increase. It’s true that about half the business income that flows through to individual tax returns is taxed at those top two rates. But an awful lot of those “businesses” are hardly “small.” Many are huge. The JCT said that nearly 20,000 partnerships and so-called “S” corporations — taxed as personal income — had receipts of more than $50 million in 2005.
We’ve talked about this familiar Republican trope on many occasions.

The Boeing Case, Revisited

Romney also attacks the president for taking “marching orders” from unions. But Romney gets his facts wrong with regard to one example: the case of Boeing in South Carolina.

Romney: But like many politicians of the past, the president takes his marching orders from union bosses and rails against the right to work states, fights to win union elections by eliminating the right to vote by secret ballot, and even denies an American company the right to build a factory in the American state of its choice.

Romney is referring to a complaint issued by the National Labor Relations Board against the airplane manufacturer Boeing in April 2011. The complaint alleged that Boeing violated federal labor law by transferring the manufacture of certain airliners to a non-union South Carolina facility from union facilities in Washington state.
But as we’ve written before, Boeing and the union came to an agreement, and the complaint was dropped. Boeing is currently operating a non-union factory in North Charleston, S.C. In fact, the first completed jetliner rolled out of the facility at the end of April.
Boeing was not prevented from either building or operating its South Carolina factory.

The Facts on the ‘Unelected Board’

Romney also recycles an old claim when attacking Obama’s health care law for creating “an unelected board [that] will tell seniors what treatments Medicare’s gonna cover.” The reference is to the Independent Payment Advisory Board, a 15-member panel of doctors and medical professionals, economists and health care management experts, and representatives for consumers and seniors established under the Patient Protection and Affordable Care Act. Its purpose is to find ways to slow the growth in Medicare spending.
Though it feels like we are beating a dead horse with this one, we will continue to reiterate that IPAB is not going to “tell seniors what treatments Medicare’s gonna cover.” The health care law explicitly states that IPAB “shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums … increase Medicare beneficiary cost sharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria.” (See page 490.) The board’s recommendations, furthermore, will go before Congress, where they can be replaced with alternative cuts or rejected outright by a three-fifths majority.
And while the panel is unelected, the law says the president will appoint the members in consultation with Congress and with consent of the Senate. All three elected bodies of government will have a say in who is on the board.
– Eugene Kiely and Scott Blackburn

Posted by Eugene Kiely on Thursday, May 10, 2012 at 2:04 pm Filed under The FactCheck Wire. tagged with health care, Mitt Romney, President Obama, small businesses, taxes, unions

http://factcheck.org/2012/05/romneys-gross-exaggeration-on-obamacare/

Romney’s Shaky Job Claims:The FactCheck Wire

Mitt Romney has taken to saying that he created more than 100,000 net jobs through his work in the private sector, and more jobs as governor than President Obama has created since taking office. But the first claim is unproven, and the second is misleading.
It’s true that the private equity firm Bain Capital, which Romney headed from 1984 to 1999, invested in many companies that went on to add jobs. But there’s no thorough count of the jobs gained and lost in all the companies in which Bain invested. And it’s highly debatable whether Bain, and Romney, deserve credit for all of the jobs created, particularly when there were other investors, executives who launched or ran the companies, and new owners in later years.
As for his time as governor, Romney’s claim is true as far as it goes. But he’s comparing his full four years in office with fewer than three years for Obama. Furthermore, he governed Massachusetts at a time of economic improvement. And he didn’t do that well when compared with other states. Obama took office when the economy was tanking.

100,000 Jobs Created?

Romney long has touted his job-creation credentials. In recent weeks, he has claimed credit for more than 100,000 net jobs.
In a Time magazine interview on Dec. 21, Romney said:

Romney, Dec. 21: And so I’ll compare my experience in the private sector where, net-net, we created over 100,000 jobs. We created over 100,000 jobs.

He repeated the claim in a Jan. 3 appearance on Fox News’ “Fox and Friends,” but that time said he “helped” create them.

Romney, Jan. 3: And I’m very happy in my former life; we helped create over 100,000 new jobs.

When we asked the Romney camp for support, spokesman Eric Fehrnstrom sent us a list of jobs added at three companies in which Bain had invested, saying that these three examples alone created over 100,000 jobs: Staples, which had 89,000 employees as of Dec. 31, 2010; The Sports Authority, which had 15,000 employees as of July 2011; and Domino’s, which has added 7,900 jobs since 1999.
That’s hardly a rigorous analysis of jobs gained and lost at companies Bain backed. And does Romney deserve credit for all of those jobs? Bain was but one of several investors in The Sports Authority, which was launched with the monetary help of William Blair Venture Partners, Phillips-Smith and Marquette Venture Partners. Not to mention the work of founding executives at the company, such as CEO Jack A. Smith.
Plus, Kmart owned the company for about five years starting in 1990. Does Kmart get credit for whatever job growth occurred then? In 2006, the private equity firm Leonard Green & Partners acquired Sports Authority. Does Bain, and Romney, still get credit for jobs created after the company is bought or sold years later?
Staples, too, was launched with money from William Blair and Bessemer Venture Partners, two firms mentioned by Staples founder and former CEO Tom Stemberg, who, it could be argued, deserves the most credit for jobs added by the office-supply store. In comments published by CNN Money in 2002, Stemberg said that Bain “gave us a boost” by talking them up to Avery Dennison, an office-supply wholesaler.
Determining who gets credit for how many jobs is challenging, to say the least.
As we reported before, Bain managers told the Los Angeles Times that they weren’t focused on creating jobs; they were trying to make money.

Los Angeles Times, Dec. 3: “I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. “The primary goal of private equity is to create wealth for your investors.”

And then there are the job losses. Bain took over other companies where layoffs, and even bankruptcies, followed. Romney said that 100,000 figure was “net-net.” So, whatever job creation figure one could use, we’d have to subtract jobs lost, such as 385 jobs cut at American Pad & Paper; 1,900 positions cut or relocated at Dade International; 2,100 workers laid off from DDI Corp.; 2,500 jobs lost at Clear Channel Communications; and 3,400 layoffs at KB Toys. Those examples come from Politico and the New York Times.

Jobs Created as Governor

Romney added a new wrinkle to his jobs claim in that Jan. 3 comment, comparing job creation in Massachusetts when he was governor from 2003 to 2007 to that of the whole nation under Obama:

Romney, Jan. 3: And I’m very happy in my former life; we helped create over 100,000 new jobs. By the way, we created more jobs in Massachusetts than this president’s created in the entire country. So if the President wants to talk about jobs, and I hope he does, we’ll be comparing my record with his record and he comes up very, very short.

According to employment data from the Bureau of Labor Statistics, employment under Romney’s governorship went from 3,224,600 to 3,270,400. That’s an additional 45,800 jobs. And under Obama, despite recent gains, the nation as a whole still has 1.7 million fewer jobs than it did the month he took office.
But that’s a misleading comparison. It gives Romney credit for a full four years in office compared with less than three full years for Obama. And as we have noted before, most economists say market forces outside the control of governors and presidents largely drive employment gains or losses. So while policies of governors or presidents can certainly affect employment, their record of employment will be strongly influenced by the prevailing economy at the time.
Obama took office at a time when the country was hemorrhaging jobs very quickly. Economists say the business recession continued for several more months, ending in June 2009. Since then, the country has added 1.4 million jobs.
And, as usual after recent recessions, businesses (and state and local governments) continued to shed jobs long after the recession ended and business began to turn up. The job slump continued for Obama’s first full year in office and finally hit bottom in February 2010. Since that bottom, the nation has added nearly 2.7 million jobs.
Unlike Obama, Romney took office during an economic uptick. Massachusetts had a net job growth of 1.4 percent under Romney. However, that was far slower growth than the national average of 5.3 percent. As Romney’s opponents have frequently, and correctly, noted, Massachusetts ranked 47th in job growth over the entirety of Romney’s term. The only states that did worse: Louisiana, Michigan and Ohio.
– Lori Robertson and Robert Farley
Update, Jan. 6: Jobs figures for Obama have been updated in this version to reflect the Jan. 6 release by BLS showing that the nation added 200,000 jobs in December. As originally published, our story reflected only jobs figures through November, which were the most recent available at the time.
BLS also revised figures for earlier months slightly to reflect the agency’s annual updating of the statistical formula it uses to adjust jobs figures for normal seasonal variations.

Posted by Lori Robertson on Thursday, January 5, 2012 at 6:32 pm Filed under The FactCheck Wire. tagged with jobs, Mitt Romney, President Obama.

http://www.factcheck.org/2012/01/romneys-shaky-job-claims/

Susan Bradley for State Democratic Executive Committeewoman SD 16

I have known Susan Bradley for several years as a SD 9 Committewoman and a fellow member of Grand Prairie Democrats. When I decided to run for US 24 in 2008, Susan contibuted money, time, expertise, and support that was extemely beneficial to my race. While I did not win, I gathered 111,659 votes in the contest against a 30- year policitican in my initial and only foray into electorial politics.
Susan has a unique ability to stay truthful in her analysis and to project knowledge and insight about the political process that I sorely needed to measure my effectiveness on the stump.
I wholeheartly endorce her bid for this position and I know she will strive to be the best SD Committeewoman ever in SD 16 as she was in SD  9.
Sincerely.
Tom Love

Paul Krugman on How to Fix the Economy - and Why It's Easier Than You Think By Julian Brookes

Four years after the start of the Great Recession, nobody would mistake U.S. economy for a thrumming engine of growth, prosperity, and human flourishing. Sure, we're officially out of "recession." But the recovery is painfully slow and uneven, and 24 million Americans are still unemployed or underemployed. There's a lot of pain out there, and a lot of potential going to waste.

The worst part? It doesn't have to be this way. Or so says Paul Krugman. In a new book, End This Depression Now!, the Nobel-winning economist and New York Times columnist makes an urgent, even passionate case that our economic problems are, at root, fairly simple, and we have the knowledge and the tools to solve them. We've been here before, Krugman argues, during the Great Depression, and the actions that got us out of that crisis will get us out of this one, too.

The basic issue, says Krugman, is a lack of demand. American consumers and businesses, aren't spending enough, and efforts to get them to open their wallets have gone nowhere. Krugman's solution: The federal government needs to step in and spend. A lot. On debt relief for struggling homeowners; on infrastructure projects; on aid to states and localities; on safety-net programs. Call it "stimulus" if you like. Call it Keynesian economics, after the great economic thinker (and Krugman idol) John Maynard Keynes, who first championed the idea that government has an essential role in saving the free market from its own excesses. Whatever you call it, it worked in the late nineteen-thirties and forties, when the U.S. government started shelling out on the military in the build-up to World War II, bringing an abrupt end to years of economic misery and laying the foundation for decades of prosperity. Krugman is not calling for an increase in military spending, much less a global war! But the WWII example shows that large-scale government spending can kick-start the economy. It worked then, he says, and it will work now.

Krugman's diagnosis and prescriptions cut sharply against the conventional wisdom in Washington, according to which "austerity," – throttle back on government spending, tackle the budget deficit now – is the way to get the economy back on track. Not only is this wrong, he argues, it's making a bad situation even worse. He writes: "Now is the time for the government to spend more, not less, until the private sector is ready to carry the economy forward again." On the positive side, people are starting to look at the train wreck that is Europe, where austerity has failed – and how – to produce growth, and at our own protracted slump, and concluding that people like Krugman – who, truth be told, has been right about a lot in recent years – might be onto something. "All indications are that the economy will remain weak for a very long time unless our policy makers change course," he writes in his introduction. "And my aim here is to bring pressure, by means of an informed public, to get that course change and bring an end to this depression."

Krugman, who dedicates his book to "the unemployed, who deserve better," spoke to RollingStone.com by phone the other day from his home in Princeton, New Jersey.

Passion isn't something we expect from economists, but this strikes me as a passionate book.
It's easy to become deadened to this depression. But I think it's really important to step back and think and realize that, hey, this is an ongoing terrible thing that does not have to be happening. Everyone, unless they're completely secluded, knows somebody who's suffering terribly. The passion is not always there for me because, like everybody else, I get used to days and weeks going by when nothing much changes. But I need to keep hold of it and I tried to tap into it for this book.

You say we’re in a "depression," but isn’t the economy improving?
A depression is being down for an extended period, even if there are ups and downs along the way. What we call the Great Depression actually contained two recessions and two recoveries. We're technically not in a recession anymore, but things are deeply depressed, and the economy is operating well below its productive capacity.

And the basic problem is a lack of overall demand?
The economy is suffering because there isn't enough spending. Not because there aren't enough resources out there. Not because of hard choices we're refusing to make. But because there isn't enough spending. It's really that simple.

Really?
A lot of people find emotionally unacceptable the idea that economic suffering on this scale could have a relatively trivial cause. But this has happened again and again through history. And it could be fixed fairly easily, by having government step in and spend.

Something else a lot of people find emotionally unacceptable is increased government spending! And anyway, didn't Obama already try to juice the economy with the "stimulus" and come up short?
Well, the Obama administration’s stimulus didn't work as well as many people had hoped – but it didn't work any worse than other people, myself included, predicted. When the stimulus was being promoted and discussed, I was very publicly tearing my hair out, saying this is way inadequate. And sure enough, it was.

Even so, this is tough sell politically.
It is. But you have to keep on hammering on the right argument, even if it appears that it's a political nonstarter right now. Things change. If you give up on making the point that's right, you have no hope at all. Also, I think we're approaching a watershed here – there's been a palpable change in the last seven or eight months in the discussion of deficits and austerity.

Because of what's happening in Europe?
Yes. In Europe, the failure of austerity, which has been obvious for some time, has suddenly reached the threshold where everybody's saying it. Two years ago, it was, "Slash now, or you'll turn into Greece." Now people are saying, "If you do austerity at a moment like this, you'll turn into Europe." So the background noise has changed.

Even so, Republicans will need to get on board, and they've shown an amazing ability to brush off evidence that calls free-market dogma into question. Not even the apocalyptic financial crisis has shaken their certainty. How do you make sense of that?
Part of it is that if you've been brought up to believe that capitalism is wonderful and perfect then the notion that it could use some help every now and then becomes alien to you, and there are a lot of people who are so deep into that mindset that it's very hard for them to get out. And then, a lot of conventional wisdom is shaped; it doesn't just come from nowhere. It comes from the long-term operation of a lavishly funded propaganda operation. When you've had 40 years of [right-wing mega-donor Richard Mellon] Scaife and the Koch brothers and the Heritage Foundation and so on pushing a line about the perfection of markets and the evil of doing anything that encroaches upon the unfettered right of billionaires to do what they like, that is coloring the way people think about economics, even people who've never heard anything directly from any of these think tanks.

Given that, what are the chances the congressional GOP will come around to your way of thinking?
I don't think John Boehner is going to announce next week that Republicans were wrong and we need more government spending, but I do think that some time next year we might be able to have a discussion that turns around at least some of the mistakes that were made in the past few years.

OK, so where would you start?
You could get a lot of stimulus, about $300 billion, just by providing aid to states and localities so they can reverse their budget cuts. That would create a million jobs, including those 300,000 schoolteachers that were laid off.

Don’t you worry about the impact on the deficit?
The deficit is way overstated as an immediate action-forcing issue. It's something to worry about over the next decade, but not something that should be dictating your policies right now. And the fact of the matter is that austerity, when you're in depression economics, doesn't even work from a fiscal point of view. Slash government spending and the economy contracts and it cuts into the economy's long-run prospects.

You’ve criticized Federal Reserve chairman Ben Bernanke for not doing enough to right the economy. He's lowered interest rates to the basement. What more can he do?
It’s true that the interest rates the Fed controls directly are as low as they can go. But Bernanke could change expectations about the Fed's future behavior and convince people it will hold off on raising rates. If somebody's thinking about borrowing for a project or a business is deciding whether to sit on cash or invest it, it makes a big difference whether you think that money you borrow now will be paid in dollars that have less purchasing power than they have now. If you can convince people they can borrow at 2 percent interest right now and the rate will stay at 2 for 10 years, and inflation will be 4 percent, then borrowing becomes a much more attractive proposition than borrowing at 1 percent with 2 percent inflation. It's just textbook economics applied to a very nonstandard situation, which just happens to be world we live in. The depressing thing is that the Fed has basically said: We wash our hands of this.

You say in the book that higher inflation would be a good thing. That’s not something you hear very often.
There’s nothing in the Fed's charter that says inflation has to be at 2 percent. Back when Ronald Reagan was president they used to consider 4 percent perfectly OK.

You’ve called Obama out on his too-timid approach to the economy. How hopeful are you that he’ll get religion on this?
You never know, but my sense from talking to people in the administration and watching their behavior is that they and he have had something of a defining moment. At some point, they finally appreciated that the people they were negotiating with were not negotiating in good faith. They're looking at the news coming in from Europe and understand that we've had a rather drastic demonstration of the wrongheadedness of the policy approach that's been dominating our discussion. I think the chances that they'll do the right thing are reasonably good.

And the chances they'll play hardball?
Also pretty good. It's going to be rough. We have to expect more scorched-earth politics until something changes about the nature of the modern Republican Party, but I think the notion that a second Obama term would be just like the disappointments of the first is probably wrong.

http://www.rollingstone.com/politics/blogs/national-affairs/paul-krugman-on-how-to-fix-the-economy-and-why-its-easier-than-you-think-20120502