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Presidential Debate #1 – Governor Romney

Welcome to VoteFacts. We're taking a look at this statement from Mitt Romney durring the first presidential debate,

"This deficit could crush future generations."

(Quote begins at 1 hour, 23 minutes, 50 seconds)

We want to see if you agree. Before you vote, let's look at some of the things that the Congressional Budget Office says about deficits and the debt that they leave behind.

Some of the consequences of mounting debt would arise gradually: A growing portion of peoples savings would go to purchase government debt rather than toward investments in productive capital goods such as factories and computers; that crowding out of investment would lead to lower economic output and incomes than would otherwise occur. CBO

A rising level of government debt would have another significant negative consequence. Combined with an unfavorable long-term budget outlook, it would increase the probability of a fiscal crisis for the United States. But all else being equal, the higher the debt, the greater the risk of such a crisis. CBO, Page 4

In addition, if the payment of interest on the extra debt was financed by imposing higher marginal tax rates, those rates would discourage work and saving and further reduce economic output. Rising interest costs might also force reductions in spending on important government programs. CBO

If federal debt continues to expand faster than the economy - as it has since 2007 - the growth of people's income will slow, the share of federal spending devoted to paying interest on the debt will rise more quickly, and the risk of a fiscal crisis will increase. CBO, Page 1

If debt continued to rise rapidly relative to GDP, investors at some point would begin to doubt the government's willingness to pay interest on it, and the government would need to cut spending, raise taxes, or pursue some combination of the two approaches. CBO, Page 19

Combined with an unfavorable long-term budget outlook, high debt would increase the probability of a fiscal crisis for the United States. In such a crisis, investors become unwilling to finance all of a government's borrowing needs unless they are compensated with very high interest rates; as a result, the interest rates on government debt rise suddenly and sharply relative to rates of return on other assets. Unfortunately, there is no way to predict with any confidence whether and when such a crisis might occur in the United States. CBO, Page 34

Large debt will put America at risk by exposing it to foreign creditors. They currently own more than half our public debt, and the interest we pay them reduces our own standard of living. The single largest foreign holder of our debt is China, a nation that may not share our country's aspirations and strategic interests. In a worst-case scenario, investors could lose confidence that our nation is able or willing to repay its loans - possibly triggering a debt crisis that would force the government to implement the most stringent of austerity measures. Debt Commission, Page 11

If a fiscal crisis occurred in the United States, policymakers would have only limited and unattractive options for responding to it. Thus, such a crisis would confront policymakers with extremely difficult choices and probably have a very significant negative impact on the country. CBO, Page 34

You've heard Mitt's claim, you've focused on CBO data, now how do you vote. Do you agree with him that the deficit could crush future generations?

Vote on this post

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Former Massachusetts Governor Mitt Romney has told Americans that,

"Middle income Americans have seen their income come down..."

(Quote begins at 10 minutes, 8 seconds)

Let's focus on those facts. For that, we will turn to the U.S. Census Bureau. Here is their data (click table to enlarge):

The real median household income in 2009 was $49,777, not statistically different from the 2008 median. Census, Page 4

• Real median household income was $49,445 in 2010, a 2.3 percent decline from 2009. Census, Page 5

Median household income was $50,054 in 2011, a 1.5 percent decline in real terms from 2010. This was the second consecutive annual decline in household income. Real median income declined for family households between 2010 and 2011, by 1.7 percent to $62,273. This was the fourth consecutive annual decline. The change between 2010 and 2011 in the median income of nonfamily households was not statistically significant. Census, Page 5

And a quick look at income inequality shows us that,

• Income inequality between 2010 and 2011 increased as measured by changes in the shares of aggregate household income by quintiles, the Gini index, the Theil index, and the Atkinson measures. The Gini index showed a 1.6 percent increase from 2010. This is the first time the Gini index has shown an annual increase since 1993, the earliest year available for comparable measures of income inequality. Census, Page 7

• The number of people in poverty rose for 4 consecutive years. Census

Does the data support it as fact that median incomes have gone down since president Obama has been in office? You know what to do...

Media Resources

Bloomberg

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According to Mitt Romney,

"We have four million people on Medicare Advantage that will lose Medicare Advantage because of those $716 billion dollars in cuts."

(Quote begins at 42 minutes, 12 seconds)

Here is what the Center for Medicare and Medicaid Services (CMS) anticipated with the new health care law and Medicare Advantage recipients.

CMS estimates that in 2017, when the Medicare Advantage provisions will be fully phased in, enrollment in MA plans will be lower by about 50 percent (from its projected level of 14.8 million under the prior to law 7.4 million under the new law.) CMS, Page 11

• In 2011, enrollment in private health plans represented over 25 percent of total Medicare beneficiaries, with nearly all such enrollees participating in Medicare Advantage health insurance plans. The Trustees expect enrollment in Medicare Advantage plans to peak in 2012, as a percent of total beneficiaries, because the Affordable Care Act reduces Medicare payments to private plans, which will result in less-generous plan benefit packages and/or higher enrollee premiums. By 2018, after these changes have fully phased in, just over 16 percent of Medicare beneficiaries are estimated to remain in private Part C health plans, with the balance reverting back to traditional “fee-for-service” Medicare. Modest increases are expected in private plan penetration rates between 2019 and 2025. Ultimately, the estimated proportion of beneficiaries in such plans stabilizes at about 17 percent. CMS, Page 208

So Medicare Advantage enrollment is expected to peak in 2012, at which point it is expected to be at least over 25 percent, but that number drops to 17 percent by 2025. Given those numbers, do you think the 4 million claim has any merit? Click your answer, cast your vote. We want to know your thoughts.

Vote on this post

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During the October 3rd presidential debate, Governor Romney said this,

"A study by McKinsey and company of American businesses said 30 percent of them are anticipating dropping people from coverage."

(Quote begins at 1 hour, 54 seconds)

What did this report actually say?  Here are your bullet points and

• Overall, 30 percent of employers will definitely or probably stop offering Employer-Sponsored Insurance (ESI) in the years after 2014.

Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.

•  At least 30 percent of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries.

•  Contrary to what many employers assume, more than 85 percent of employees would remain at their jobs even if their employer stopped offering ESI, although about 60 percent would expect increased compensation.    McKinsey Report, Page 2



There you have the facts of the matter. Was Governor Romney spreading McKinsey report fact or political fiction?  Chime in.

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During the presidential debate, Mitt Romney focused on not raising taxes when the economy is slow and told viewers that,

"Why don't I wanna' raise taxes on people? And, actually, you said it back in 2010, you said look I'm going to extend the tax policies that we have now, I'm not gonna' raise taxes on anyone because when the economy is growing slow like this, when we're in recession, you shouldn't raise taxes on anyone. Well, the economy is still growing slow. As a matter of fact, it's growing much more slowly now than when you made that statement."

(Quote begins at 30 minutes, 42 seconds)

We have two parts to look at here. First, what did president Obama say about raising taxes during a recess? We have this video of President Obama speaking with Chuck Todd of NBC, which is dated August 5, 2009. Here is what the president said about raising taxes in a recession,

"You don't raise taxes in a recession... because that would just suck up, take more demand out of the economy and put businesses in a further hole."





Next, are we in a recession? Well, maybe that is debatable even between those who understand it the best. But let's take a look at how the Bureau of Economic Analysis describes a recession:

The word recession connotes a marked slippage in economic activity. While gross domestic product (GDP) is the broadest measure of economic activity, the often-cited identification of a recession with two consecutive quarters of negative GDP growth is not an official designation. The designation of a recession is the province of a committee of experts at the National Bureau of Economic Research (NBER), a private non-profit research organization that focuses on understanding the U.S. economy. The NBER recession is a monthly concept that takes account of a number of monthly indicators—such as employment, personal income, and industrial production—as well as quarterly GDP growth. Therefore, while negative GDP growth and recessions closely track each other, the consideration by the NBER of the monthly indicators, especially employment, means that the identification of a recession with two consecutive quarters of negative GDP growth does not always hold. BEA

Lastly, let's take a look at the numbers so we can consider the next part of the Romney statement which claims that growth is slower now than it was when Barack Obama made that statement.

According to the BEA, the most recent growth in our nation's gross domestic product (GDP) was 1.3% and has decreased the last two quarters. Similarly that rate is slower than at any time during 2010, and it is slower than in August of 2009 when President Obama made the statement in the video when it was 1.4%. With that, the most recent growth rate is, in fact, lower than when President Obama warned against raising taxes in a recession. BEA Table

Our government needs revenue, and our economy needs growth, it seems like a tough call. Still, we're asking you to make the call right here.

Additional Resources

RCP

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Governor Romney told us that,

"The CBO said we'll have a trillion dollar deficit each of the next 4 years."

(Quote begins at 30 minutes, 17 seconds)

Now we know that the deficit has gotten bigger and bigger and lots of numbers have been bandied about in this campaign season. We thought we would let our friends at Congressional Budget Office (CBO) tell you for themselves. Here's what they had to say... (click the table to enlarge it)

Here is what the CBO projected for the next four years if President Obama's fiscal year 2013 had been passed:

And here is what the Office of Management and Budget (OMB) has projected when it comes to the deficits. OMB Table

• 2012 - $1.3 trillion

• 2013 - $901 billion

• 2014 - $667 billion

• 2015 - $609 billion

• 2016 - $648 billion

You've seen the numbers, now go do what you do and weigh-in.  Is Mittens givin' fictions or has Romney gotten his facts straight?

Resources

CBO, Page iv

CBO, Obama



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In the presidential debate we heard Mitt Romney say this about our economy,

"Economic growth was slower this year than last year, and last year it was slower than the year before."

(Quote begins at 24 minutes, 10 seconds)

Is this true? Let's take some time to focus on the facts. For that we turn to the Bureau of Economic Analysis (BEA).

Last year, 2011, GDP growth was 1.8 percent. That is down from 2.4 percent from 2010.

• GDP growth has been 2 percent for the first quarter and 1.3 percent for the second quarter. BEA Table

So, there you have the statement as well as the facts. Where do you come down on this issue?



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Governor Romney told viewers that a study by the National Federation for Independent Businesses said that President Obama's plan would,

"kill 700,000 jobs."

(Quote begins at 30 minutes, 22 seconds)

Did the National Federal for Independent Businesses actually say that? Let's take a look at what the NFIB report did say. Here is their study:

• President Obama has called for the reinstatement of the higher top tax rates in his budget submission to the Congress, while key Republican members of Congress have called for their extension. The increase in the Medicare tax and its expansion to unearned income for high-income earners under the Patient Protection and Affordable Care Act of 2010 (PPACA) further contributes to the increase in top tax rates.

• The increase in the top two tax rates from 33% to 36% and 35% to 39.6%.

• The reinstatement of the limitation on itemized deductions for high-income taxpayers (the “Pease” provision).

• The taxation of dividends as ordinary income and at a top income tax rate of 39.6% and increase in the top tax rate applied to capital gains to 20%.

• The increase in the 2.9% Medicare tax to 3.8% for high-income taxpayers and the application of the new 3.8 percent tax on investment income including flow-through business income, interest, dividends and capital gains

With the combination of these tax changes at the beginning of 2013 the top tax rate on ordinary income will rise from 35% in 2012 to 40.9%. the top tax rate on dividends will rise from 15% to 44.7% and the top tax rate on capital gains will rise from 15% to 24.7%. This report finds that these higher marginal tax rates result in a smaller economy, fewer jobs, less investment, and lower wages. Specifically, this report finds that the higher tax rates will have significant adverse economic effects in the long-run: lowering output, employment, investment, the capital stock, and real after-tax wages when the resulting revenue is used to finance additional government spending.

Capital investment falls, which reduces labor productivity and means lower output and living standards in the long-run.
  • Output in the long-run would fall by 1.3%, or $200 billion, in today‟s economy.
  • Employment in the long-run would fall by 0.5% or, roughly 710,000 fewer jobs, in today's economy.
  • Capital stock and investment in the long-run would fall by 1.4% and 2.4%, respectively.
  • Real after-tax wages would fall by 1.8%, reflecting a decline in workers‟ living standards relative to what would have occurred otherwise.

Okay, so you have checked out the statement and focused on the facts. Did the NFIB say what Governor Romney claimed they said? Go ahead, vote.

Vote on this post ____________________________________________________________________________

How much more pain are you feeling at the gasoline pump since President Obama took office? Double? According to Governor Romney,

"Gasoline prices have doubled under the president."

(Quote begins at 10 minutes, 22 seconds)

Let's check that out. Here's your data:

Average gas prices January 19, 2009 - $1.85

Average gas prices October 1, 2012 - $3.80









Go ahead and cast your fact or fiction vote on this statement by Governor Romney. Are you seeing double?



Resources

Consumer Reports 2009

Consumer Reports 2012

Dept of Energy

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Governor Romney made this charge about President Obama's new health care law,

"Right now the CBO says that up to 20 million people will lose their insurance as ObamaCare goes into effect next year."

(Quote begins at 1 hour, 47 seconds)

As our regular readers know, we love the Congressional Budget Office (CBO). So when we heard the Gov. name check our pals we couldn't resist looking into it for ourselves. Here is an excerpt and link to the CBO report:

• In the four alternative scenarios discussed below, the new health care law changes the number of people who will obtain health insurance coverage through their employer in 2019 by an amount that ranges from a reduction of 20 million to a gain of 3 million relative to what would have occurred otherwise. CBO, Pages 2-3

To be sure, they are projecting into 2019 compared to what would have happened without the new law. Here is a little more specifics on people with their own health insurance right now.

• Fifteen million who currently have individual health insurance policies are expected to switch to Exchange plans. CMS, Page 7

So, is Governor Romney's statement, "Right now the CBO says that up to 20 million people will lose their insurance as ObamaCare goes into effect next year." Do you find this statement to be based on CBO facts or is it debate fiction? Let us know.

Vote on this post

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Governor Romney said this of the pending defense cuts due to sequestration,

"The Secretary of Defense said these cuts would be even devastating."

(Quote begins at 1 hour, 29 minutes, 33 seconds)

We thought you might want to hear from Leon Panetta, the Secretary of Defense, for yourself. Here he is in a defense.gov news release, here is what he said,

"If Congress fails to act over the next year, the Department of Defense will face devastating, automatic, across-the-board cuts that will tear a seam in the nation’s defense." defense.gov

Secretary Panetta continued,

"The sequestration approach would virtually double the size of the cuts that we face here at the defense department... A hollow military has the organizational structure lacks the people, the training, and the equipment it needs to actually get the job done... If this nation has brave young men and women who are willing to die and put their lives on the line in order to sacrifice for this country it really shouldn't be too much to ask our leaders to sacrifice the little to provide the leadership essential to solve the problems facing this country."

Here is how the Congressional Research Service (CRS) describes sequestration:

• “Sequestration” is a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals. Sequestration is of current interest because it was included as an enforcement tool in the Budget Control Act of 2011. Sequestration can also occur under the Statutory Pay- As-You-Go Act of 2010. The first automatic spending cuts under the BCA are now scheduled to take effect on January 2, 2013. CRS, Page 1

So, we want to hear your opinion. Some people think one of the best answers for looming budget problems is deep cuts to the military budget. Despite what Secretary Panetta has said, do you think the budget cuts should happen? Chime in, let us know.

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We touched on some food stamp data here yesterday. But thanks to last night's debate, today we're getting into some more specific numbers. This is short and sweet, but here is what Governor Romney told viewers last night in the presidential debate,

"We've gone from 32 million on food stamps to 47 million."

(Quote begins at 1 hour, 15 minutes, 56 seconds)

We're not looking at the policy roots of this claim. That's your job. We are, however, going to see if Romney's claim is fact or fiction. So, here we go, with the help of the US Department of Agriculture (USDA) and the Congressional Budget Office (CBO).

According to the USDA, the current number of people on food stamps equals 46,670,373. When President Obama took office, the number of people on food stamps equaled 31,983,716. USDA





To help you with some policy points, here are some key things from the CBO:

• The increase in the number of people eligible for and receiving benefits between 2007 and 2011 has been driven primarily by the weak economy. That increase was responsible for about 65 percent of the growth in spending on benefits between 2007 and 2011. About 20 percent of the growth in spending can be attributed to temporarily higher benefit amounts enacted in the American Recovery and Reinvestment Act of 2009 (ARRA). The remainder stemmed from other factors, such as higher food prices and lower income among beneficiaries, both of which boost benefits. CBO, Page 1

You have focused on facts and now we're asking you to cast your vote on whether or not this statement by Governor Romney was weighted in fact, or is it just political fiction.  Head on over, cast your vote.

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Fact = 100% - 92% True
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Split = 59% - 50% True
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