News Column

Taxes, Job Gains: A 2nd Look at Claims

October 4, 2012

By Paul Davidson, Tim Mullaney, Gregory Korte and Susan Davis, USA TODAY,

Taxe Tug

In the first presidential debate Wednesday night, President Obama and Republican nominee Mitt Romney packed their responses with accusations about each other's policies and defenses of their own.

Here are a few claims that deserve a deeper look:

Private-sector job gains

Claim: Obama said the U.S. economy has created 5 million private-sector jobs the past 30 months.

Facts: After the economy plummeted in late 2007 and throughout 2009, the United States has gained 4.6 million private-sector jobs since the labor market bottomed in February 2010 -- or 5.1 million under preliminary revisions released last week that are not part of the official tally by the Bureau of Labor Statistics.

Still, that's weak by historical standards. Under President George W. Bush, the private sector also added 5 million jobs in the 30 months after employment hit bottom following the 2001 downturn, and the pace of private-sector gains in the previous two recoveries was far stronger.

Tax cuts

Claim: Obama says Romney's tax plan would cut taxes by $5 trillion over 10 years, inflating the deficit.

Facts: Romney has proposed cutting tax rates by 20% in each bracket, which, the liberal Center for Budget and Policy Priorities says would cost $4.9 trillion over 10 years. Romney said his plan will be paid for by curtailing tax deductions, so middle-class people pay less overall and upper-income people don't see lower taxes. Last month in Ohio, Romney said middle-class people would see little change in their taxes under his plan.

Romney has declined to say what tax deductions he would end. The non-partisan Tax Policy Center has contended that middle-class families would see taxes rise about $2,000 a year under Romney's plan if he keeps his promise to make the tax reform revenue-neutral, arguing that it can't be done without ending popular middle-class deductions on mortgage interest and charitable contributions.

The American Enterprise Institute, a conservative-leaning think tank, has said that the gap can be closed by ending tax breaks targeting the wealthy, including tax exemptions for interest on municipal bonds.

Romney said he would not raise taxes and would not approve any tax cut that would expand the deficit. He argued that tax cuts will increase investment, putting more people to work and increasing the taxpaying population.

The middle class

Claim: Romney said middle-class families' income is down $4,300 since Obama took office.

Facts: According to a March analysis by Maryland-based economic consulting firm Sentier Research, Romney was correct. According to their analysis, based on February's Current Population Data compiled by the U.S. Census Bureau, the median household income was $50,065 in February, compared with $54,481 in December 2007 -- when the recession started, and nearly 11 months before Obama was elected.

The current median household income is $50,678.

What Romney didn't say is that the decline in real median household income has been occurring over the course of the past decade, well before Obama took office. The trend has continued under the Obama administration, but it did not start there.

Taxes for the wealthy

Claim: Romney says he wouldn't cut taxes on the wealthy.

Facts: Romney wants to cut personal taxes by 20% for everyone, including the wealthy. He also wants to cut taxes on interest, dividends and capital gains for Americans with adjusted gross income below $200,000.

Obama, however, wants to return taxes to Clinton-era rates for individuals who make more than $200,000 in annual taxable income and families who make more than $250,000 in taxable income. So Romney wants to maintain tax cuts for the wealthy that Obama would eliminate.

Energy independence

Claim: North America can become energy independent under Romney's plan, creating 4 million jobs.

Facts: This is likely to happen anyway, possibly as soon as the end of the decade, Citigroup said in a book-length report earlier this year. The key factor is not changes in policy, but changes in drilling technology that have let America increase oil production faster than any other nation in the world in the past four years, Citigroup said. Declining crude oil imports, and more exports of natural gas and refined oil products, could reduce the trade deficit by as much as 40%, adding 1% a year to economic growth, Moody's Analytics estimates. Citigroup estimated that the emergence of the United States and Canada as a "new Middle East" could add 3.6 million jobs.

Medicare cuts

Claim: Romney said Obama's health care law cuts $716 billion from Medicare which will hurt current beneficiaries.

Facts: This has been one of Romney's favorite lines of attack, but his claim that Obama's health care law cuts $716 billion in benefits for current Medicare beneficiaries is not true. The health care law will limit payments to health care providers and insurers as part of an effort to rein in costs over the course of the next decade -- it will not limit senior citizens' benefits.

Romney and other opponents of the law, however, contend that the payment cuts would affect seniors' benefits as an unintended consequence because they assert doctors will stop accepting Medicare patients and it could force some health care facilities to close.

The law has not yet been fully implemented, so the cuts' effects on beneficiaries are uncertain. But the law as written does not cut benefits for senior citizens. It is also worth noting that Romney's running mate, Rep. Paul Ryan, R-Wis., included the same spending cuts in his own 2012 budget blueprint that House Republicans supported with near unanimity.

(c) Copyright 2012 USA TODAY, a division of Gannett Co. Inc.



Source: Copyright USA TODAY 2012


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters