In Romney and Obama Speeches, Selective Truths
In attacking Mr. Obama’s stewardship of the economy, Mr. Romney has engaged in hyperbole at times — as with this claim. He has also contended that Mr. Obama made the recession “worse” and “last longer” and said that the president’s health care law would increase government spending to nearly half of the American economy.
There is plenty of debate over how effective Mr. Obama’s economic policies have been, especially given the painfully slow recovery, but economists do not generally claim that Mr. Obama’s policies worsened the recession or made it longer.
The 18-month recession officially ended in June 2009, five months into Mr. Obama’s term, as measured by the National Bureau of Economic Research. And even critics who consider the president’s stimulus package a missed opportunity — from liberals who say it was too small to conservatives who say it was wasteful and poorly targeted — tend to acknowledge what the Congressional Budget Office has found: it did save and create jobs, lower unemployment and help the economy grow in the short term.
Despite Mr. Romney’s claim, the new health care law will not drive government spending up to half of the economy, unless all health care spending in the country is reclassified as government spending. Given that the new law still relies heavily on private insurance provided by employers, it is a stretch to treat all of that as if it were government expenditures.
Experts predict the new health care law will drive up health spending, as more people will be covered, but not by a huge share of the economy. The chief actuary for the Centers for Medicare and Medicaid Services estimated that with the new law, health care spending will rise to 21 percent of the economy in 2019. Without the new law, it estimated, it would have risen to 20.8 percent of the economy.
The Congressional Budget Officerecently estimated what would happen to federal spending under a number of different situations, taking the new health care law into account. The projection showing the biggest jump found that assuming that a number of current tax cuts are extended and several budget cuts currently scheduled to take effect next year are averted, federal spending will rise to 29 percent of the economy in 2030 from 24 percent in 2011. But that rise is attributable in large part to rising interest payments required by ballooning debt.
And the idea that the United States has almost ceased to be a free-market economy was labeled “ridiculously false” by PolitiFact, which cited an economic freedom index (from the Heritage Foundation, a conservative research group, which ranks the United States the world’s 10th freest economy of 179 judged.
“A record surplus was squandered on tax cuts for people who didn’t need them and weren’t even asking for them.” — Mr. Obama
Mr. Obama makes it sound as if the surpluses projected at the end of President Bill Clinton’s tenure disappeared entirely because of Mr. Bush’s tax cuts. In fact, tax cuts for the wealthy were responsible for a small fraction of the disappearing surpluses.
An analysis by the Congressional Budget Office last year showed that of $5.6 trillion in surpluses projected over 10 years when Mr. Bush took office, $1.6 trillion went to the tax cuts passed in 2001 and 2003, or 29 percent. The rest of the anticipated surpluses vanished because of increased spending and lower-than-expected revenues stemming from economic downturns.
Mr. Obama supports keeping the tax cuts for all but the wealthiest 2 percent of Americans, or roughly 18 percent of the total cost. Extrapolated, that means the tax cuts “for people who didn’t need them” would have accounted for just 5 percent of the disappearing surpluses.