Expanding on Our Live Fact-Checking
- Defense: We said last Thursday that Gov. Romney's proposal to increase base defense spending to four percent of GDP would cost $1.6 trillion. This estimate comes from our "Primary Numbers" report on the budget plans on the Republican presidential candidates. It calculates the increase relative to a baseline that excludes the automatic sequester but includes the initial discretionary spending caps from the Budget Control Act.
- Taxes: Last Thursday, we said Vice President Biden's claim that the extension of the 2001/2003/2010 tax cuts for people making over $1 million would cost $800 billion was wrong. There are a few different ways to look at what he said. The cost of the tax cuts specifically targeted at people making over $1 million is $463 billion, according to the Joint Committee on Taxation (as reported by the Center on Budget and Policy Priorities). But people making over $1 million also benefit from tax provisions that are not targeted towards them--for example, the rate reductions below the top rate. If he meant this, by our best estimate he may have actually been understating the total benefit of the tax cuts to millionaires. Either way, he would have been correct to say that the extension for people making over $250,000 would cost about $800 billion (excluding an extension of the estate tax provision).
- Stimulus: We said last week that total stimulus in response to the Great Recession totaled well over $1 trillion. This counts the $831 billion stimulus in 2009 plus extensions of various policies like unemployment insurance benefits, state fiscal relief, and the homebuyer tax credit. There has also been new stimulus such as the 2010 tax credit for newly hired workers and the 2010 tax cut. If you exclude the extension of the 2001/2003 tax cuts, there has been about $1.6 to $1.7 trillion of stimulus since 2009, according to data on Stimulus.org.
- Insurance Coverage: During the debate, Congressman Ryan said "Look at all the string of broken promises. If you like your health care plan, you can keep it. Try telling that to the 20 million people who are projected to lose their health insurance if Obamacare goes through." We assumed he was referring to the number of people on net projected to lose employer-provided health insurance and said that the number was actually 4 million. Our number comes from CBO's most recent estimate of changed in insurance coverage due to the Affordable Care Act in 2022. Most likely, Congressman Ryan got his number from a March 2012 CBO document showing four alternate coverage estimates based on different behavioral responses. These scenarios show employer coverage dropping by 10, 12 and 20 million people and 3 million people gaining coverage in one scenario. Using the worst alternate scenario instead of CBO's official estimate is misleading at best.
- Medicare Trust Fund: Congressman Ryan said with regards to the health care reform law "Obamacare takes $716 billion from Medicare to spend on Obamacare. Even their own chief actuary at Medicare backs this up. He says you can't spend the same dollar twice. You can't claim that this money goes to Medicare and Obamacare." This is correct. We have said before that it is incorrect to claim that the Medicare savings can both extend the life of the Medicare Part A trust fund and offset the costs in the legislation. CBO assumes that Medicare Part A is fully funded with general revenue, so their analysis implicitly assumes that the former does not happen (since Part A does not go insolvent). Also, Medicare chief actuary Richard Foster has said that claiming credit for both is double-counting at least once. In March 2011 testimony, he said "In practice, the improved HI financing cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions) and to extend the trust fund, despite the appearance of this result from the respective accounting conventions." Finally, we'd note that Foster is not the White House's "own" actuary; in fact, he has been in that position since 1995.
- Medicare Drug Prices: Vice President Biden said that the Administration proposed to save $156 billion by "allow[ing] Medicare to bargain for the cost of drugs like Medicaid can." This is an incomplete description of the policy. The actual Administration policy (page 12 here) is to require drug manufacturers to provide rebates to Medicare for beneficiaries who receive Medicaid or the Low Income Subsidy in Part D--rebates that are currently only required in the Medicaid program. CBO has scored allowing Medicare as a whole--rather than individual prescription drug plans--to negotiate drug prices as saving a negligible amount (see here, here, and here), since they figure the negotiations would not bring drug prices below what they already are. By contrast, the Administration policy includes an explicit rebate (essentially bypassing negotiations), so cost savings materialize to the tune of $156 billion as estimated by OMB and $137 billion as estimated by CBO. Vice President Biden got the number right, but the description of the policy was slightly off.
- Small Businesses: Vice President Biden claimed last night that 97 percent of small businesses have income below $250,000, which we said was true. That statistic comes from a JCT report here.
There wasn't as much discussion of fiscal issues in last night's debate compared to the first debate, probably due to both foreign policy and domestic policy needing to be covered. We hope this next Presidential debate, with its town hall format, allows Romney and Obama to give more details about their fiscal plans and how they are going to take on our debt problem.