CHARLOTTE, N.C. — We heard a number of dubious or misleading claims on the first night of the Democratic National Convention:
- The keynote speaker and others claimed the Republican presidential nominee, Mitt Romney, would raise taxes on the “middle class.” He has promised he won’t. Democrats base their claim on a study that doesn’t necessarily lead to that conclusion.
- The keynote speaker, San Antonio Mayor Julian Castro, also said there have been 4.5 million “new jobs” under Obama. The fact is the economy has regained only 4 million of the 4.3 million jobs lost since Obama took office.
- Castro also insisted Romney and Ryan would “gut” Pell Grants for lower-income college students. Actually, the Ryan budget calls only for “limiting the growth” of spending for the program, and Ryan has said the maximum grant of $5,550 would not be decreased.
- A Democratic governor said Romney “left his state 47th out of 50 in job growth.” Actually, Massachusetts went from 50th in job creation during Romney’s first year to 28th in his final year.
- Two advocates of equal-pay legislation said women make 77 cents for every dollar men earn. That’s true on average, but the gap for women doing the same work as men is much less, and not entirely or even mostly the result of job discrimination.
- A union president accused Romney of seeking “a government bailout” for “his company.” Not really. In fact, Romney negotiated a favorable but routine settlement with bank regulators on behalf of a former company, the one he had left to form his own Bain Capital firm. No taxpayer funds were involved.
- Multiple speakers repeated a claim that the Ryan/Romney Medicare plan would cost seniors $6,400 a year. That’s a figure that applied to Ryan’s 2011 budget plan, but his current proposal (the one Romney embraces) is far more generous. The Congressional Budget Office says it “may” lead to higher costs for beneficiaries, but it can’t estimate how much.
- In prepared remarks released to reporters, Rep. James Clyburn engaged in partisan myth-making with the claim “Democrats created Social Security” while Republicans “cursed the darkness.” History records strong bipartisan support in both House and Senate for the measure President Roosevelt signed in 1935.
Note to Readers
Our managing editor, Lori Robertson, is on the scene in Charlotte at the convention center. This story was written with the help of the entire staff, based in Philadelphia and Washington, D.C. We are vetting the major speeches at this convention for factual accuracy, holding Democrats to the same standards we applied in last week’s coverage of the Republican convention.
The keynote speaker, San Antonio Mayor Julian Castro, repeated a frequent but groundless Democratic talking point, warning that Romney would raise taxes on the middle class.
Castro was joined in this by other Democrats including former Virginia Gov. Tim Kaine and Maryland Gov. Martin O’Malley. But they all misrepresented the position Romney has made clearly and repeatedly — that he would somehow lower taxes on those in the middle class. Their claim rests on a distortion of a nonpartisan group’s findings.
Castro: And now we need to make a choice. It’s a choice between a country where the middle class pays more, so that millionaires can pay less or a country where everybody pays their fair share.
Kaine: To pay for their plan, they’d slash middle-class tax breaks, raising taxes on the middle class.
O’Malley: Instead of a balanced, achievable plan to create jobs and reduce the deficit, Mitt Romney says he will cut taxes for millionaires and raise them for the middle class.
Their comments are based on an Aug. 1 report from the Tax Policy Center that concluded it is simply not mathematically possible for Romney to lower tax rates across the board — as he has proposed — without losing revenue, which he has also promised, or shifting the tax burden to the middle class.
Tax Policy Center, Aug. 1: Our major conclusion is that a revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed – including reducing marginal tax rates substantially, eliminating the individual alternative minimum tax (AMT) and maintaining all tax breaks for saving and investment – would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers.
To see our full analysis of the TPC report, and the Romney campaign’s push-back against it as “biased,” see our Aug. 3 article, “Romney’s Impossible Tax Promise.”
For his part, Romney has repeatedly insisted he will not raise taxes on the middle class. He reiterated that promise during his speech accepting the presidential nomination at the Republican National Convention:
Romney, Aug. 30: I will not raise taxes on the middle class.
In a blog post on the TPC analysis, Donald Marron, director of the Tax Policy Center, wrote: “I don’t interpret this [the Aug. 1 study] as evidence that Governor Romney wants to increase taxes on the middle class in order to cut taxes for the rich, as an Obama campaign ad claimed. Instead, I view it as showing that his plan can’t accomplish all his stated objectives. One can charitably view his plan as a combination of political signaling and the opening offer in what would, if he gets elected, become a negotiation.”
In other words, Romney has over-promised. But that’s no reason to assume –as Kaine, O’Malley and Castro have — that Romney would choose the course of breaking a promise not to raise middle-income taxes. He could choose, for example, to renege on his promise to cut rates or to keep the amount of revenue neutral rather than violate his promise not to raise taxes on those in the middle.
There’s also been some dispute about the Tax Policy Center’s findings. Republican economist Martin Feldstein wrote an Aug. 28 piece for the Wall Street Journal‘s opinion pages saying that Romney could lower rates across the board as promised without losing revenue — if he eliminated most deductions for those making $100,000 or more.
In a rebuttal, Democratic tax expert Len Burman — a former director of the Tax Policy Center — said “such a plan would make no sense as policy,” because eliminating deductions for family income above $100,000 would cause an effective tax rate as high as 62.5 percent on income just above that level.
Romney has yet to provide details of just how he would manage to avoid either losing revenues (and thus increasing the deficit) or shifting the tax burden onto middle-income taxpayers. But as things stand, he’s promised that neither will happen, and Democrats who accuse him of proposing a middle-income tax increase are misrepresenting what he’s said.
Keynoter’s Jobs Spin
Keynote speaker Castro also put a misleading spin on employment data. He claimed “we’ve seen 4.5 million new jobs” under President Obama. In fact, the nation has regained 4.5 million jobs that had been lost, but employment is still below where it was when the president took office.
Castro: Four years ago, America stood on the brink of a depression. Despite incredible odds and united Republican opposition, our president took action. And now we’ve seen 4.5 million new jobs.
Although he didn’t say so, Castro is referring only to private-sector jobs — which have fared better than government jobs — and he is using February 2010 as the starting point, because that was the low point for private-sector jobs. There were 106,773,000 jobs then, and the number has been rising ever since. In July, there were 111,317,000 private-sector jobs, according to the Bureau of Labor Statistics. That’s an increase of 4,544,000.
The picture changes dramatically, however, when starting from the beginning of Obama’s presidency. Between January 2009 and the most recently reported figures, there has been a net increase of just 332,000 private-sector jobs.
Moreover, if you include all jobs — including the hard-hit government job sector — there remains a net decrease of 316,000 jobs since the start of Obama’s presidency. Total employment has gained about 4 million since February 2010, not 4.5 million. It’s all in how you slice the data.
Pell Grant Piffle
Castro also went too far in saying the Republican ticket “guts Pell Grants.” The Ryan budget plan would limit the growth, but maintain the maximum award of $5,550.
Castro: It’s a choice between a nation that slashes funding for our schools and guts Pell Grants — or a nation that invests more in education.
Ryan has called for changes in the Pell Grant program. His fiscal year 2013 budget proposal, known as “Path to Prosperity,” says that Obama’s budget “pushes Pell Grant spending toward unsustainable rates.” Ryan’s budget plan proposes “limiting the growth of financial aid and focusing it on low-income students who need it the most.”
He does not, however, set specific funding levels for the program, so we don’t know — and neither does Castro — how much Ryan would limit the program’s growth. However, Ryan said in April that his plan “maintains the maximum Pell award of $5,550,” so for those who do receive the grants, they will continue to get the same level as this year.
Castro could have said that Ryan’s plan would result in fewer students receiving Pell Grants, since the Wisconsin Republican does want to tighten eligibility requirements and limit the growth of the program. But Castro went too far in saying that the Republican plan “guts Pell Grants.”
Massachusetts 47th? Or 28th?
Illinois Gov. Pat Quinn went on the offensive, saying Romney had failed to deliver on campaign promises he made while running to become governor of Massachusetts. But some of Quinn’s talking points were a stretch.
Quinn: Mitt Romney promised Massachusetts three things: more jobs, less debt and smaller government. Then he left his state 47th out of 50 in job growth, added $2.6 billion in debt and on his watch, government jobs grew six times faster than private-sector jobs. What does Romney promise today? More jobs, less debt and smaller government. But he didn’t do it then, and he won’t do it now.
We’ve covered some similar claims before. Let’s start with the claim that Romney “left his state 47th out of 50 in job growth.” That’s a slightly different twist on a recurring Democratic attack line. It’s true that over Romney’s entire four years as governor, the state ranked 47th out of 50 states in percentage of job growth. But that’s a four-year, cumulative number. The state’s ranking actually improved while Romney was in office.
In the 12 months before Romney took office, the state ranked 50th in job creation, and by his final year, the state ranked 28th. Quinn would have been more accurate to say Romney “left his state” in 28th place, not 47th.
Quinn also made the misleading claim that Romney “added $2.6 billion in debt.” That’s a reference to long-term bond debt, used for capital improvements, such as paving roads, building bridges and repairing public college buildings and courthouses.
To be sure, long-term debt increased by $2.7 billion during Romney’s tenure. But that’s nothing out of the ordinary. It increased by $4 billion in the four years before Romney took office. State debt rose under Romney, but more slowly than before.
Last, Quinn said that under Romney, “government jobs grew six times faster than private-sector jobs.” Not exactly. Private-sector jobs in Massachusetts climbed by a modest 39,500, a little less than a 1.5 percent jump. Meanwhile state government jobs increased by 3,100 jobs, a 2.8 percent increase (all government jobs, including local, state and federal, increased by 1,300 jobs). That’s a larger percentage increase for government jobs than private-sector ones, but a far smaller number of jobs.
The 77-Cent Exaggeration
Making a pitch for “equal pay for equal work,” Rep. Rosa DeLauro of Connecticut said “America’s women still make just 77 cents for every dollar men earn.” And the equal-pay crusader Lilly Ledbetter used the same figure and added: “[W]hen we lose 23 cents every hour, every day, every paycheck, every job, over the entire lives, what we lose cannot be measured in dollars.”
But that oft-cited 77-cent statistic exaggerates the actual gap between women and men doing the same work.
As we noted back in June, the most recent Census figures show that in 2010, “the earnings of women who worked full time, year-round were 77 percent of that for men working full time, year-round.” But that’s the median (midpoint) for all women in all jobs, not for women doing “the same work” or even necessarily working the same number of hours.
The actual gap for doing the same work varies by occupation but tends to be much less. We cited a study by the Institute for Women’s Policy Research that found, for example, that female registered nurses made nearly 96 percent of male nurses, female elementary and middle school teachers made 91 percent of what their male counterparts earned, secondary school teachers made 94 percent, and police officers made 99 percent.
A senior program analyst wrote recently in the Department of Labor’s official blog: “Economists generally attribute about 40% of the pay gap to discrimination – making about 60% explained by differences between workers or their jobs.” As we noted at the time, women tend to work fewer overtime hours, tend to choose jobs that offer more “family friendly” fringe benefits in lieu of higher pay, and sometimes leave the workforce for years to rear children, for example.
Bain ‘Bailout’ Baloney
A union president claimed that Romney “asked for a government bailout” for his troubled company. That’s not what happened.
First of all, it wasn’t Romney’s company that was troubled; it was the consulting firm he had left — Bain & Co. — in order to form Bain Capital. And while Romney did negotiate a favorable debt settlement with banking regulators for Bain & Co’s partners, they did not receive taxpayer dollars.
Mary Kay Henry, international president of the Service Employees International Union, made the claim.
Henry: We just learned that when his company found itself in trouble, Mitt Romney asked for a government bailout.
Based on their reporting, here’s what happened:
Romney had left Bain & Co. in 1984 to form the spin-off private equity firm Bain Capital. But Romney came back in the early 1990s when Bain & Co. was on the brink of bankruptcy. The company’s founders — Romney wasn’t one of them — had taken $200 million of borrowed money out of the firm for themselves, which led to the firm’s financial problems.
The company owed $38 million to a failed bank, which had been taken over by the Federal Deposit Insurance Corporation, an independent federal agency that insures bank deposits. Romney negotiated with the FDIC a reduction of $10 million in debt, and the FDIC forgave $4 million in interest.
The agreement didn’t amount to a loss for taxpayers. The FDIC is funded by bank insurance premiums and treasury security investments — not congressional appropriations.
In fact, as the Post points out, these kinds of agreements are typical and recover more of the outstanding loan. The FDIC’s own handbook said that restructuring a loan is more productive than spending money on litigation to recover the money.
More Medicare Malarkey
We once again heard misrepresentations of the Medicare plan that Romney and Paul Ryan have proposed. Health and Human Services Secretary Kathleen Sebelius and labor leader Mary Kay Henry both said the plan would cost seniors $6,400, but that’s a reference to an outdated Ryan plan, not the more generous one he, and Romney, now back.
Sebelius also claimed that Medicare was “missing” from the “Romney-Ryan plan.” But that’s wrong. The plan keeps traditional Medicare for current seniors, and as an option for younger workers.
California Rep. Xavier Becerra’s prepared remarks also said that Romney was telling “older Americans after a lifetime of hard work that you’re going to pull the rug out from under them and turn Medicare into a voucher system.” But for “older Americans,” nothing would change under the Romney and Ryan plan. In fact, anyone now 55 or older would stay in the current Medicare system for the rest of their lives — and younger workers could still choose traditional Medicare from among a menu of competing private insurance plans subsidized by federal dollars. Becerra was scheduled to speak on the first night, but did not.
Several times this year, we have swatted down similar claims from Democrats and the Obama campaign about the Medicare plan Ryan proposed as part of his “Path to Prosperity” budget and Romney has embraced. At the convention, Sebelius said:
Sebelius: What’s missing from the Romney-Ryan plan for Medicare is Medicare. Instead of the Medicare guarantee, Republicans would give seniors a voucher that limits what is covered, costing seniors as much as $6,400 more a year.
Henry, the international president of the Service Employees International Union, said the plan that “would cost the average senior $6,400 a year out of their own pocket.” Both are referring to Ryan’s old plan.
It’s true that a Congressional Budget Office analysis indicated that a 65-year-old in 2022 could pay about $6,400 more per year under the plan Ryan proposed in 2011. Ryan’s latest plan is more generous in terms of the subsidies and choices it provides to seniors.
Ryan’s plan would create a Medicare exchange for new Medicare beneficiaries starting in 2023. They would choose from private plans or traditional Medicare and buy plans with the help of government subsidies. The old Ryan plan tied the growth of those subsidies to the rate of inflation — but health care costs have risen faster than that. The new plan ties the subsidies to the cost of the second-cheapest health care policy on the exchange. And if that policy grows faster than gross domestic product plus 0.5 percentage points, Congress would be required to do something to lower costs.
On the latest Ryan plan, CBO did say that “beneficiaries might face higher costs,” but added that there was plenty of uncertainty. There wasn’t a detailed analysis and no mention of Sebelius’ and Henry’s $6,400 claim.
The comment in Becerra’s prepared remarks about “older Americans,” however, is misleading whether it pertains to Ryan’s 2011 or 2012 plan. He claimed older Americans would be put in a “voucher” system. But, as we said, anyone 55 or older would stay in the traditional Medicare system, under either Ryan proposal.
Becerra: And, Governor Romney, you should know it’s not right to tell older Americans after a lifetime of hard work that you’re going to pull the rug out from under them and turn Medicare into a voucher system — Couponcare!
We should add that there are actually no vouchers or coupons involved. Under Ryan’s plan the federal government would pay insurance companies directly, just as it now pays for most of the cost of health insurance for millions of federal workers and retirees and their families, and just as the government will pay for subsidized policies for lower-income workers under Obama’s Affordable Care Act if it is allowed to take full effect in 2014.
Sebelius’ comment that Medicare is “missing” from the plan is also false. Ryan’s latest plan would keep traditional Medicare as an option even for younger Americans who won’t turn 65 until 2023.
Social Security Mythology
Rep. James Clyburn’s prepared remarks, which were not delivered because of a scheduling change, exaggerated in claiming that “Democrats created Social Security” without Republican support in 1935. The fact is, despite some early Republican opposition, Congress overwhelmingly approved the proposal with strong bipartisan support. And President Franklin D. Roosevelt signed the bill into law within seven months of its introduction — in stark contrast to the protracted partisan battle over Obama’s health care law.
Echoing John F. Kennedy’s 1960 acceptance speech — in which JFK said, “We are not here to curse the darkness; we are here to light a candle” — Clyburn’s prepared remarks said:
Clyburn: When too many of our senior citizens were living their golden years in the darkness of economic insecurity, Franklin Roosevelt and Democrats created Social Security, lighting a candle while Republicans cursed the darkness.
The historical comparison, however, does not hold up.
The Social Security Act of 1935 was a result of the Committee on Economic Security, a Cabinet-level committee created by President Franklin D. Roosevelt on June 29, 1934. On Jan. 17, 1935, two days after the committee issued its final report, Roosevelt proposed the “Financial Security Act of 1935,” and it was introduced in Congress the same day.
For sure, there was opposition to the legislation.
Sen. Daniel Hastings, a Delaware Republican, warned that it would “end the progress of a great country,” as the New York Times reported. But Hastings was in the minority, even within his own party, when it came to voting on the bill — which was renamed the “Social Security Act of 1935″ in committee.
The Social Security Administration website shows that the Social Security Act of 1935 passed with bipartisan support in both chambers — 372-33 in the House and 77-6 in the Senate — in April and June of 1935, respectively.
In the House, 81 Republicans voted for it, and an equal number of Republicans and Democrats – just 15 from each party – voted against it. In the Senate, 16 Republicans voted for it, and only five against, including Hastings.
Both houses gave final approval to the bill by voice vote on Aug. 8, 1935. Roosevelt signed the bill into law Aug. 14, 1935 — just seven months after it was introduced.
Correction, Sept. 5: The Democratic National Committee released prepared remarks for Reps. James Clyburn and Xavier Becerra, but neither of them spoke on Sept. 4, as scheduled. This story has been corrected to reflect the scheduling change.
– Lori Robertson, with Eugene Kiely, Rob Farley, Ben Finley and Brooks Jackson