September 07, 2012
AP did a fact check of President Obama’s speech that went way over the top in finding grounds for criticisms and implying misrepresentations when there were none. To start, it jumped on President Obama for claiming that he would use the savings from winding down the war to pay down the debt and create jobs:
“The idea of taking war savings to pay for other programs is budgetary sleight of hand, given that the wars were paid for with increased debt. Obama can essentially ‘pay down our debt,’ as he said, by borrowing less now that war is ending. But he still must borrow to do the extra “nation-building” he envisions.”
There is not much sleight of hand here. President Obama is working off a baseline set by the Congressional Budget Office (CBO) that assumes war spending continues over the next decade. If he doesn’t intend to continue this spending then he is freeing up money relative to this baseline. AP may not like this method of scoring, but it is absolutely standard in Washington policy debates. Changes are measured against a baseline. President Obama is just doing exactly what figures in both parties routinely do in discussing the budget. It would be more appropriate to make its complaint against CBO than against President Obama’s speech.
The piece then takes issue with President Obama’s claim that the economy has created 500,000 manufacturing jobs over the last 29 months and that we could create 1 million over the next four years.
“Obama has claimed an increase of some 500,000 manufacturing jobs over the past 29 months. But this is cherry picking by the president. From the beginning of Obama’s term 3 1/2 years ago, manufacturing jobs have declined by more than 500,000, according to the Labor Department’s Bureau of Labor Statistics. Manufacturing jobs have been on a steady decline for nearly two decades.
Even though there has been a modest uptick in manufacturing jobs this year, unless there is a major turnaround, it seems unlikely that Obama’s goal of 1 million new manufacturing jobs can be reached by his target date of 2016.”
The 29 months is not exactly cherry picking. The economy was in a free fall losing 700,000 jobs a month when he took office. It eventually bottomed out and has been gradually recovering over the last two and half years. It is hardly cherry picking to refer to the pace of job growth in a recovery. (Does AP think Obama is responsible for the recession?)
In terms of manufacturing job growth going forward, 1 million jobs in four years is a pace of just over 20,000 a month. That is hardly exceptional. Furthermore, if we don’t run trade deficits of $600 billion a year (4 percent of GDP) indefinitely, we will almost certainly close the gap in large part with manufactured goods. Reducing the deficit by 1 percentage point of GDP would imply more than 1 million new manufacturing jobs.
The piece then attacks President Obama and Vice-President Biden for saying that Governor Romney’s support for a territorial tax is a plan for shipping jobs overseas.
“Republican presidential candidate Mitt Romney’s proposal is actually aimed at encouraging investment in the U.S., not overseas.
The U.S. currently has a global tax system that is filled with credits, exemptions and deductions that enable many companies to avoid U.S. taxes and provides an incentive for corporations to keep their profits in other countries. Whether Romney’s plan would spur investment in the U.S. is debatable, but it’s not a plan aimed at dispersing profits abroad.”
To start with, AP doesn’t know what Romney’s policy is “aimed at,” therefore it should not be making assertions it cannot support in what is supposed to be a news piece. As a practical matter, Romney’s territorial tax would mean that U.S. corporations would pay zero U.S. tax on their foreign earnings. While there is an economic argument that can be made for this tax if we thought businesses never cheated on their taxes, since they sometimes do (imagine that!!!!), there is a very large problem with a territorial tax.
Businesses can tinker with their books to have their profits show up in low or no tax countries rather than the United States, even if they were actually earned in the United States. If foreign profits are still subject to U.S. taxes then they have less incentive to do this sort of gaming. Of course, if you think government bureaucrats are much smarter than the bold risk-takers in the private sector, then you would expect the tax officers at the I.R.S. to detect such cheating, but most people would probably not be confident that this would be the case. This means that under Romney’s tax plan businesses would have large incentives to declare earnings abroad and to set up operations overseas so that they can make the claim of foreign earnings at least somewhat plausible.
The piece then criticizes President Obama for claiming that his budget plan would reduce the deficit over the next decade by $4 trillion:
“Obama’s new $4 trillion target over 10 years resets the goalposts with some fancy budget footwork. For one thing, it includes $1 trillion in cuts already signed into law. And it assumes that Congress will pass the administration’s plan to raise the capital gains tax, boost taxes on households earning over $250,000 a year and impose a minimum 30 percent tax on incomes above $1 million. It also assumes a reduction in the amount of interest the government must pay on its debt.”
It’s not fancy footwork, he’s working from the most recent CBO baseline. Again, AP’s complaint is with CBO, not President Obama.
The piece again complains that Biden and others are counting job gains since the economy began to recover:
“THE FACTS: This seems to be a favorite statistic, because many speakers at the convention cited it. But it’s misleading — a figure that counts jobs from when the recession reached its trough and employment began to grow again. It excludes jobs lost earlier in Obama’s term, and masks the fact that joblessness overall has risen over Obama’s term so far.
As well, in the same 29 months that private sector jobs grew by 4.5 million, jobs in the public sector declined by about 500,000, making the net gain in that period about 4 million.
Overall, some 7.5 million jobs were lost during the recession that began in December 2007 in President George W. Bush’s term and ended officially in June 2009 with Obama as president.
Never since World War II has the economy been so slow to recover all the jobs lost in a downturn.”
This is truly incredible. If AP had anyone there old enough to remember, they would recall that President Reagan often counted job growth from January of 1983, when the economy began to recovery, even though the recession actually begin in December of 1981, almost a full year after he took office. Now AP is blaming the Obama administration for not taking responsibility for jobs that were lost before it took office.
The piece next takes issue with Biden for saying:
“What they didn’t tell you is that the plan they’ve put down on paper would immediately cut benefits to more than 30 million seniors already on Medicare.”
AP responds:
“THE FACTS: Biden wasn’t referring to any Medicare plan of Romney or running mate Paul Ryan, but to the consequences of fully repealing Obama’s health care law”
Yes, fully repealing Obama’s health care law is a Medicare plan since it would repeal the benefits for the 30 million seniors already on Medicare that are part of the plan. Both Romney and Ryan seem like reasonably intelligent people. If it is not their intention to eliminate the benefits in this law for people currently receiving Medicare then they would presumably be able to say something like:
“we will repeal Obama’s health care law, except for the benefits that it provides seniors already on Medicare.”
Romney and Ryan have not ever said anything like this, therefore it is reasonable for Biden and others to assume that their plan is to eliminate these benefits for seniors.
I didn’t try a fact check myself of Obama and Biden’s speeches, but my guess is that I could have found a few places where they got things wrong or were at least misleading. By contrast, AP seems to be going after them mostly for things that they got right.
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