DENVER — There they go again.
Both President Barack Obama and former Massachusetts governor Mitt Romney tossed out a blizzard of statistics and facts, often of dubious origin. Here are some highlights.
"Governor Romney's central economic plan calls for a $5 trillion tax cut — on top of the extension of the Bush tax cuts — that's another trillion dollars." — Obama
"I don't have a $5 trillion tax cut." — Romney
How can both facts be true? The $5 trillion figure comes from the fact that Romney has proposed to cut tax rates by 20 percent and other provisions. The nonpartisan Tax Policy Center says that would reduce tax revenue by nearly $500 billion in 2015, or about $5 trillion over 10 years.
But Romney also has said he will make his plan "revenue neutral" by eliminating tax loopholes and deductions, although he has not provided the details.
The Tax Policy Center has analyzed the specifics of Romney's plan thus far released and concluded the numbers aren't there to make it revenue neutral.
In the debate, Romney countered that "six other studies" have found that not to be the case, but he's wrong about that. Those studies actually do not provide much evidence that Romney's proposal — as sketchy as it is — would be revenue neutral without making unrealistic assumptions.
Given the uncertainty, the Obama campaign has assumed the worst about Romney's plan_ that it would mean higher taxes for middle-class Americans — even though, as Romney stated, there is no chance he would try to implement such a plan as president.
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"I've put forward a specific $4 trillion deficit reduction plan. . . . And the way we do it is $2.50 for every cut, we ask for $1 of additional revenue. . . . That's how the bipartisan commission that talked about how we should move forward suggested." — Obama
Obama often claims that his deficit-reduction plan has the "balanced approach" of the Simpson-Bowles deficit commission proposal; the Simpson-Bowles plan is actually quite different.
For instance, Simpson-Bowles envisioned $4 trillion in debt reduction over nine years; the president's plan would spread the cuts over 10 years. A good chunk of the savings from deficit reduction piles up in that last year. When the two plans are compared apples to apples, Simpson-Bowles yields about $6.6 trillion in deficit reduction — 50 percent more than Obama's plan.
By Obama's math, you have nearly $3.8 trillion in spending cuts, compared with $1.5 trillion in tax increases (letting the Bush tax cuts expire for high-income Americans). That's how he claims $1 of tax increases for every $2.50 of spending cuts.
But virtually no serious budget analyst agreed with this accounting. Obama's $4 trillion figure, for instance, includes counting some $1 trillion in cuts reached a year ago in budget negotiations with Congress. So no matter who is the president, the savings are already in the bank.
Moreover, the administration is also counting $848 billion in phantom savings from winding down the wars in Iraq and Afghanistan, even though the administration had long made clear those wars would end.
In other words, by projecting war spending far in the future, the administration is able to claim credit for saving money it never intended to spend. (Imagine someone borrowing $50,000 a year for college — and then declaring that they have an extra $500,000 to spend over the next decade once they graduate.)
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"On Medicare, for current retirees, he's cutting $716 billion from the program. . . . The idea of cutting $716 billion from Medicare to be able to balance the additional cost of Obamacare is, in my opinion, a mistake." — Romney
Romney accused Obama of taking $716 billion from Medicare. This $700 billion figure comes from the difference over 10 years (2013-2022) between anticipated Medicare spending (what is known as "the baseline") and the changes that the law makes to reduce spending.
Under the health-care law, spending does not decrease in Medicare year after year; the reduction is from anticipated levels of spending in future years. In fact, the savings mostly are wrung from health-care providers, not Medicare beneficiaries — who, as a result of the health-care law, ended up with new benefits for preventive care and prescription drugs. But Romney argued that was a "bad trade," and the Medicare actuary also has raised concerns about whether the cuts to providers were sustainable.
While it is correct that anticipated savings from Medicare were used to help offset some of the anticipated costs of expanding health care for all Americans, it does not affect the Medicare trust fund. In fact, the Obama health-care law also raised Medicare payroll taxes by $318 billion over the new 10-year time frame, further strengthening the program's financial condition.
Moreover, under the concept of the unified budget, money that is collected by the federal government for whatever purpose (such as Medicare and Social Security payroll taxes) is spent on whatever bills are coming due at that time. Social Security and Medicare will get a credit for taxes collected that are not immediately spent on Social Security, but those taxes are quickly devoted to other federal spending.
Indeed, the House Republican budget plan crafted by Romney's running mate, Paul Ryan, retains virtually all of the Medicare "cuts" contained in the health-care law, but diverts them instead to his Medicare overhaul. Republicans argue that that is a more effective use of the savings.
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"I also want to close those loopholes that are giving incentives for companies that are shipping jobs overseas." — Obama
"You said you get a deduction for taking a plant overseas. Look, I've been in business for 25 years. I have no idea what you're talking about. I maybe need to get a new accountant." — Romney
Romney said he was unaware of any provision that gives companies a tax deduction for moving operations overseas. But Obama is right, there is such a provision.
Yet it is pretty small beer given the attention Democrats pay to it. The nonpartisan Joint Committee on Taxation estimated that ending the deduction for moving operations overseas would raise just $168 million over a decade.
In the federal government with an annual budget deficit of more than $1 trillion, that's what you call a rounding error.
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"And over the last two years, health-care premiums have gone up — it's true — but they've gone up slower than any time in the last 50 years." — Obama
Obama tried to attribute a 50-year decline in health costs to the health-care law, but much of it has not yet been implemented. Most economists say the slowdown is more likely because of the lousy economy.
"It's tempting to think that provider initiatives are truly denting costs, but it's hard for changes in provider behavior to influence costs before they occur," said a recent article in Modern Healthcare magazine. "Instead, the drop in healthcare cost growth is primarily attributable to the Great Recession's impact on employment, private health insurance, government revenues and budgets."
Meanwhile, Romney blamed a rise in insurance premiums on the health-care law. This is also overstated, since much of the health-care law has not been implemented yet.
