Fact check: Obama and the phantom peace dividend

By Calvin Woodward and Tom Raum

Associated Press

Published: Thursday, Sept. 6 2012 10:42 p.m. MDT

THE FACTS: Republican presidential candidate Mitt Romney's proposal is actually aimed at encouraging investment in the U.S., not overseas.

The U.S. currently has a global tax system that is filled with credits, exemptions and deductions that enable many companies to avoid U.S. taxes and provides an incentive for corporations to keep their profits in other countries. Whether Romney's plan would spur investment in the U.S. is debatable, but it's not a plan aimed at dispersing profits abroad.

Experts differ on the impact of a territorial system on employment in the U.S. But Biden's implication that Romney's plan sends jobs abroad is not supported by the expert opinion he cites.

Kimberly Clausing, an economics professor at Reed College in Portland, Ore., said a pure territorial tax system could increase employment in low-tax countries by 800,000. But that did not mean U.S. jobs moving overseas. Clausing later wrote: "My analysis does not speak to the effects on jobs in the United States."

OBAMA: "You can choose a future where we reduce our deficit without wrecking our middle class. Independent analysis shows that my plan would cut our deficits by $4 trillion."

THE FACTS: Three years ago, Obama pledged to cut in half the deficit "we inherited" by the end of his first term, a mark he's set to miss by a wide margin. The deficit when he took office was $1.2 trillion, and the $800 billion stimulus bill Obama signed soon afterward increased the shortfall to over $1.4 trillion. The White House predicts this year's federal budget deficit will end up at $1.2 trillion, marking the fourth consecutive year of trillion dollar-plus red ink.

Obama's new $4 trillion target over 10 years resets the goalposts with some fancy budget footwork. For one thing, it includes $1 trillion in cuts already signed into law. And it assumes that Congress will pass the administration's plan to raise the capital gains tax, boost taxes on households earning over $250,000 a year and impose a minimum 30 percent tax on incomes above $1 million. It also assumes a reduction in the amount of interest the government must pay on its debt.

BIDEN: "After the worst job loss since the Great Depression, we've created 4.5 million private sector jobs in the past 29 months."

THE FACTS: This seems to be a favorite statistic, because many speakers at the convention cited it. But it's misleading — a figure that counts jobs from when the recession reached its trough and employment began to grow again. It excludes jobs lost earlier in Obama's term, and masks the fact that joblessness overall has risen over Obama's term so far.

As well, in the same 29 months that private sector jobs grew by 4.5 million, jobs in the public sector declined by about 500,000, making the net gain in that period about 4 million.

Overall, some 7.5 million jobs were lost during the recession that began in December 2007 in President George W. Bush's term and ended officially in June 2009 with Obama as president.

Never since World War II has the economy been so slow to recover all the jobs lost in a downturn.

OBAMA: "Millions of students are paying less for college today because we finally took on a system that wasted billions of taxpayer dollars on banks and lenders."

THE FACTS: "Technically it is true," said Bryan Cook, director of the Center for Policy Analysis at the American Council on Education. "How much of a savings is not clear."

Large increases in federal Pell Grants, GI Bill benefits and the 2009 American Opportunity Tax Credit led to a significant increase in the amount of aid provided to students who qualify for these benefits. The current per year maximum Pell Grant is $5,550 — $900 higher than it was in 2008 for a program that serves more than 9 million students.

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