I was going to start this post by saying that I can understand economic policy differences between Republicans and Democrats but, well, actually, no I can’t, considering where we’ve found ourselves after the last eight years of tax cuts and non-existent regulation of financial services.
And, as if the last eight years were a figment of our collective imagination, House and Senate Republicans have created, with the help of flacks Rush Limbaugh, Sean Hannity, and Tennessee’s own Steve Gill, an echo chamber of misinformation criticizing President Obama’s economic recovery plan. Most egregiously, is that the misinformation in this particular echo chamber is getting bounced around to a mainstream media that refuses to fact check instead choosing only to regurgitate talking points :
During the Senate debate, between Feb. 2 and Feb. 5, Republican lawmakers outnumbered Democratic lawmakers 75 to 41 in interviews. During the House debate the week earlier, cable outlets hosted a 2 to 1 ratio of GOP to Democratic lawmakers.
Media Matters is on the case, however, offering red meat to those of us in the reality-based community:
CLAIM: Recovery package is “spending,” not “stimulus”
REALITY: The notion that “spending” is distinct from “stimulus” and the claim that the bill is not “stimulus” have been challenged by economists. CBO director Douglas Elmendorf stated in congressional testimony that the House legislation, H.R. 1, “would provide massive fiscal stimulus” and that the CBO, along with “most economists,” believes that all of the spending in the bill “provides some stimulative effect.” Additionally, Dean Baker, co-director of the Center for Economic and Policy Research, has said, “[S]pending is stimulus. Any spending will generate jobs. It is that simple.”
CLAIM: Spending after beginning of recovery is ineffective stimulus
REALITY: In his January 27 written testimony, CBO’s Elmendorf said: “Because most periods of economic weakness are fairly short-lived, it is generally preferable that stimulus policies be short-lived. Currently, however, CBO projects that economic output will remain significantly below its potential for several more years, so policies that provide stimulus for an extended period of time may be appropriate. Indeed, a fiscal stimulus that ends before the economy has started to regain its footing runs the risk of exacerbating economic weakness when the stimulus ends.”
CLAIM: Illegal immigrants receive tax credits under stimulus plan
REALITY: A January 29 Associated Press article cited a single anonymous “top Republican congressional official” in reporting that the stimulus bill “could steer government checks to illegal immigrants,” as it “would allow people who don’t have Social Security numbers to be eligible for” tax credits. The claim, however, is false. In fact, the recovery bill specifically precludes from eligibility for the Making Work Pay tax credit of $500 per individual and $1,000 per family “any individual unless the requirements of section 32(c)(1)(E) are met with respect to such individual.” Section 32(c)(1)(E) of the Internal Revenue Code specifies requirements for individuals to qualify for the Earned Income Tax Credit which include having a social security number issued by the Social Security Administration. The AP later revised its January 29 article to make that clear.
CLAIM: The New Deal failed, prolonged Great Depression
REALITY: Such claims have been flatly rejected by prominent economists, including Nobel laureate Paul Krugman, who has said that President Franklin Delano Roosevelt did not go far enough to end the crisis and that it was actually Roosevelt’s reversal of New Deal policies — in an attempt to balance the budget — that hindered recovery.
CLAIM: Fiscal stimulus in Japan failed during the “lost decade” of the 1990s
REALITY: Prominent economists have stated that economic conditions did improve when Japan undertook fiscal stimulus policies but that reversals of those policies hindered Japan’s recovery. On February 6, for example, Krugman said: “[I]t’s clear. The Japanese — when they were really pushing hard, when they had strong programs, when they spent a lot on trying to buck-up their economy — it actually did grow. What happened was they chickened out very early in the process, said, ‘OK, let’s cut back, let’s raise interest rates, let’s raise taxes, let’s cut back on those public works.’ And they lost momentum, and they never got it back.”
CLAIM: Economic recovery bill amounts to spending more than $200K per job created
REALITY: By calculating the per-job cost by dividing the estimated total cost of the recovery bill by the estimated number of jobs created or saved — and thus suggesting that the sole purpose of that package is to create jobs — Hannity and Limbaugh joined other media figures in ignoring other tangible benefits stemming from the package, such as infrastructure improvements and investments in education, health, and public safety.
In a January 24 post on The American Prospect’s Beat the Press blog, Baker wrote: “The Republicans have become fond of saying that President Obama’s stimulus package will cost $275,000 for every job created. The media have been typically derelict in simply reporting this number without making any assessment to evaluate it — as though readers in their spare time are supposed to determine whether it is accurate or not.” So Baker did their work for them:
“First, where do the Republicans get this number? They divide the the $825 billion cost of the stimulus by 3 million jobs that President Obama had originally pledged. Their arithmetic is right but both numbers are wrong. First, the projections from the Obama team is that their package will create 4 million jobs, not 3 million. Furthermore, it is important to note that this over 2 years, not one year. The cost is also wrong, or at least misleading. If we assume that the stimulus will work as planned, then it will boost GDP by approximately 1.5 times the amount of spending or $620 billion a year. If GDP rises by this amount, then it will translate into roughly $155 billion a year in higher taxes/lower spending than if we didn’t do the stimulus. This is money that should be subtracted from the cost to the taxpayers. So, if net out the increased revenue from the growth generated by the stimulus we end up with a 2-year cost of $515 billion which will generate roughly 8 million job-years. That comes to about $65k per job year, less than one-fourth of the Republicans’ number.
CLAIM: $4 billion for ACORN
REALITY: The bill does not mention ACORN or otherwise single it out for funding, and it requires that the $4.19 billion it allocates for “neighborhood stabilization activities” be distributed through competitive processes. Moreover, ACORN CEO Bertha Lewis wrote on The Huffington Post that “ACORN isn’t getting any of this money” because “we aren’t eligible for it in the first place.”
CLAIM: Corporate tax rate cuts and capital gains tax rate cuts would provide substantial stimulus
REALITY: Many economists do not view corporate tax rate cuts and capital gains tax rate cuts as particularly effective methods for stimulating the economy. Mark Zandi — the chief economist and co-founder of Moody’s Economy.com, who was reportedly a McCain campaign economic adviser — included in 2008 written congressional testimony a table stating that every dollar spent through a “Cut in [the] Corporate Tax Rate” produces a GDP increase of only $0.30 — the third least-efficient provision of the 13 he studied. A 2003 Congressional Research Service (CRS) report stated that a “capital gains tax cut appears the least likely of any permanent tax cut to stimulate the economy in the short run; a temporary capital gains tax cut is unlikely to provide any stimulus.”
CLAIM: Bloomberg’s Betsy McCaughey, falsely claimed that under provisions in the economic recovery bill passed by House Democrats, “[o]ne new bureaucracy, the National Coordinator of Health Information Technology, will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective. The goal is to reduce costs and ‘guide’ your doctor’s decisions.”
REALITY: The language in the House bill that McCaughey, a former lieutenant governor of New York, referenced does not establish authority to “monitor treatments” or restrict what “your doctor is doing” with regard to patient care, but rather addresses establishing an electronic records system such that doctors would have complete, accurate information about their patients “to help guide medical decisions at the time and place of care.”
And then there’s my personal favorite:
CLAIM: On this morning’s Steve Gill show, Steve and a listener had a grand old time comparing President Obama to Hitler because, like Hitler, President Obama and his economic stimulus plan want to kill old people.
REALITY: It’s beyond time for us to stop comparing our elected officials to Hitler. That, and both the House and Senate versions of the bill have kept in $87 billion to help states with Medicaid, the joint federal/state program that covers medical services for the elderly and the needy.
Additional misinformation that’s being spouted by national media is also of a more general kind: that the President is “losing [the] stimulus message war.” They get that from the wishful thinking of El Rushbo. The reality is much different.
As a Gallup poll released yesterday noted, “The American public gives President Barack Obama a strong 67% approval rating for the way in which he is handling the government’s efforts to pass an economic stimulus bill.” Despite conservatives’ vocal opposition to the recovery bill, 52 percent favor a roughly $800 billion package, while 38 percent are opposed. Independent voters favor the progressive priorities set forth by Obama: 50 percent independents favor “increased government funding of projects” in the recovery package, compared to only 36 percent who favor “tax cuts for individuals/businesses” promulgated by conservatives. Congressional Republicans, who see political gain from their “party of no” status, have a “staggeringly high” disapproval of 58 percent. Their approval rating is at 44 percent compared to 60 percent for Democrats.
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