(This is an expanded version of material that originally appeared in the Oct. 12 print edition of The Washington Post.)
There were lots of feisty words and fishy facts in Thursday's debate between Vice President Biden and Rep. Paul Ryan. Here are some quick highlights.
"We weren't told they wanted more security there. We did not know they wanted more security."
— Biden, speaking of the U.S. diplomatic mission in Libya
Biden's bold statement was directly contradicted by State Department officials just this week, in testimony before a congressional panel and in unclassified cables released by a congressional committee.
"All of us at post were in sync that we wanted these resources," said Eric Nordstrom, the top regional security officer in Libya earlier this year. A Utah National Guardsman who led a security team, Lt. Col. Andrew Wood, said: "We felt great frustration that those requests were ignored or just never met."
Maybe Biden was too busy in debate prep to watch?
UPDATE: In a bit of post-debate clean-up of Biden's remarks, the White House on Friday said Biden was speaking for himself and President Obama, not the administration.
"The congressman here cut embassy security in his budget by $300 million below what we asked for."
— Biden
Ryan, as head of the House Budget Committee, set broad targets for spending in his budget blueprint that would have cut nondefense discretionary spending by 19 percent in 2014.
There were no specific cuts in embassy security, but Democrats have extrapolated the number, across the board, to come up with this statistic. But it is not a real number with true budget impact. Update: The Hill newspaper detailed some back-and-forth rhetoric concerning the negotiations over the funding, noting that the figure also includes money for construction and maintenance, not just security.
By the way, our definitive timeline on shifting administration statements on the Libya terrorist attack can be found here.
"Prior to the election, prior to him being sworn in, Governor Romney was asked the question about how he would proceed. He said, 'I wouldn't move heaven and earth to get bin Laden.'"
— Biden
Romney made this statement in a 2007 interview with the Associated Press: "It's not worth moving heaven and earth and spending billions of dollars just trying to catch one person."
But Biden has ignored the rest of the interview, in which the AP quoted Romney as saying "he supports a broader strategy to defeat the Islamic jihad movement." Just a few days later, Romney expanded on his remarks during a debate:
"We'll move everything to get him. But I don't want to buy into the Democratic pitch that this is all about one person — Osama bin Laden — because after we get him, there's going to be another and another. This is about Shia and Sunni. This is about Hezbollah and Hamas and al-Qaeda and the Muslim Brotherhood. This is a worldwide jihadist effort to try and cause the collapse of all moderate Islamic governments and replace them with a caliphate."
"When Barack Obama was elected, they [Iran] had enough fissile material — nuclear material to make one bomb. Now they have enough for five. They're racing toward a nuclear weapon. They're four years closer toward a nuclear weapons capability. We've had four different sanctions, the U.N. on Iran, three from the Bush administration, one here. And the only reason we got it is because Russia watered it down and prevented the sanctions from hitting the central bank.... In Congress, I've been fighting for these sanctions since 2009. The administration was blocking us every step of the way."
— Ryan
Ryan greatly simplifies things here. Iran has built up its supply of nuclear material, but none of it is usable in a weapon yet. Most experts say the United States and its allies would have ample warning if Iran tried to enrich its nuclear material to weapons grade. (Biden confused matters by asserting that both the Israelis and the United States would know when Iran starts "building a weapon" — that is much more difficult to track.)
Meanwhile, the debate on Iran sanctions is rather familiar. If you go back four years, you will see that it was the Obama campaign that made claims of weakness and fecklessness on Iran. President George W. Bush had considered the building of a multinational coalition seeking to negotiate with Iran as one of his foreign-policy legacies, but Obama officials were critical, saying it offered "weak carrots and weak sticks."
Now, Ryan's critique of the sanctions and the U.N. diplomacy is also missing certain nuances.
1. The U.N. Security Council resolution is only the tip of the iceberg. Obama's initial outreach to Iran, which was largely unreciprocated, and the discovery of another secret Iranian nuclear site near Qom, did help build a stronger international coalition against Iran. The U.N. Security Council resolution is always the lowest common denominator, but passage of Resolution 1929 in 2010 provided a diplomatic rationale for other key players, such as the European Union, Japan and Australia, to pass even tougher sanctions on their own. Indeed, the template for the E.U. sanctions was a set of ideas that could not pass muster with the Russians and Chinese at the United Nations.
2. Not all actions are spelled out. As part of the U.N. sanctions, Russia won an exemption that would have permitted an $800 million sale of S-300 air defense missiles to Iran. But then Russia canceled the sale anyway, in what can only be viewed as the outcome of successful, quiet diplomacy.
3. Consequences are sometimes difficult to predict. The Obama administration's willingness to pursue a deal to supply fuel to an Iranian research reactor helped convince Russia and China it was serious about a negotiated end to the standoff. But bungled diplomacy and miscommunication on this issue with Brazil and Turkey led to the loss of a unanimous vote at the Security Council.
4. Congressional action can sometimes be a useful tool for diplomacy, but it can also be an irritant. All administrations try to preserve as much flexibility as possible; no one likes to have their hands tied. George W. Bush was especially aggressive about adding signing statements saying he would not be bound by some of the terms of legislation passed by Congress.
We can't really speak to Biden's claim that "these are the most crippling sanctions in the history of sanctions, period." That certainly might be a subjective assessment, but the effectiveness of sanctions is measured by results. The Iranian economy appears to be suffering, but the Islamic Republic thus far has shown little sign that it plans to slow down its nuclear program in response to these sanctions.
"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."
— Ryan
Ryan is referring to a recent Congressional Budget Office study that gave several scenarios for what could happen to employer-based coverage once the law was implemented. The most positive scenario has 3 million people being added to employer coverage, while "on balance, the number of people obtaining coverage through their employer would be about 3 million lower in 2019 under the legislation than under prior law," the CBO concludes.
The worst-case scenario was 20 million people, which is where Ryan got his number. It's worth noting that the baseline scenario — 3 million fewer people — represents just 2 percent of the people who now get insurance through their employers.
Usually, when Republicans cite this figure, they say "up to 20 million," but Ryan did not even bother with that modifier, making his claim especially alarmist.
The CBO cautions that there is a "tremendous amount of uncertainty" about how employers and employees will respond to the legislation. "One piece of evidence that may be relevant is the experience in Massachusetts, where employment-based health insurance coverage appeared to increase after that state's reforms," the CBO noted. Mitt Romney, as governor, ushered in health-care legislation that served as a model for Obama's health plan
"Romney said, 'No, let Detroit go bankrupt.'"
— Biden
This statement is drawn from a headline — "Let Detroit Go Bankrupt" — on an opinion article written by Romney for The New York Times. But he did not say that in the article. (He repeated the line, however, on television.)
Although "bankrupt" often conjures up images of liquidation, Romney called for a "managed bankruptcy." This is a process in which the company uses the bankruptcy code to discharge its debts, but emerges from the process a leaner, less leveraged company.
Ultimately, along with getting nearly $80 billion in loans and other assistance from the Bush and Obama administrations, GM and Chrysler did go through a managed bankruptcy. But many independent analysts have concluded that taking the approach recommended by Romney would not have worked in 2008, simply because the credit markets were so frozen that a bankruptcy was not a viable option at the time.
Biden also overstated the Obama administration's role in saving the auto industry, glossing over the fact that the outgoing George W. Bush administration first bailed out General Motors and Chrysler.
"They got caught with their hands in the cookie jar, turning Medicare into a piggybank for Obamacare."
— Ryan
"What we did is, we saved $716 billion and put it back, applied it to Medicare."
— Biden
Ryan accused the Obama administration of using Medicare as a "piggy bank" but this is a much more complicated story.
This $716 billion figure comes from the difference over 10 years (2013-2022) between anticipated Medicare spending (what is known as "the baseline") and the changes that the law makes to reduce spending. The savings mostly are wrung from health-care providers, not Medicare beneficiaries — who, as a result of the health-care law, ended up with new benefits for preventive care and prescription drugs. (Some argue that those provider cuts will eventually result in poorer patient care — see next fact check.)
But Biden is completely wrong when he says the money was applied to Medicare. In fact, the anticipated savings from Medicare were used to help offset some of the anticipated costs of expanding health care for all Americans, as Ryan said.
But the transfer does not affect the Medicare trust fund. The Obama health-care law also raised Medicare payroll taxes by $318 billion over the new 10-year time frame, but only a third of that money is credited to the trust fund; the rest goes to general revenues.
Ryan, as House Budget Committee chairman, probably knows he's playing a rhetorical game here. (We're not sure what Biden was thinking.) Federal budget accounting is so complex that it is easy to mislead ordinary Americans — a tactic used by both parties.
Ryan is correct that in the health-care bill, the anticipated savings from Medicare were used to help offset some of the anticipated costs of expanding health care for all Americans. But all government money is fungible.
Under the concept of the unified budget, money that is collected by the federal government for whatever purpose (such as Medicare and Social Security payroll taxes) is spent on whatever bills are coming due at that time. Social Security and Medicare will get a credit for taxes collected that are not immediately spent on Social Security, but those taxes are quickly devoted to other federal spending.
The House Republican budget plan crafted by Ryan retains virtually all of the Medicare "cuts" contained in the health-care law, but diverts them instead to his Medicare overhaul. Republicans argue that that is a more effective use of the savings.
"Their own actuary from the administration came to Congress and said one out of six hospitals and nursing homes are going to go out of business as a result of this."
— Ryan
"That's not what they said."
— Biden
Ryan is right on the figure, and Biden is wrong. But Ryan overstates the case.
"It is doubtful that many [hospitals and other health-care providers] will be able to improve their own productivity to the degree" necessary to accommodate the cuts, Medicare actuary Richard S. Foster has written. "Thus, providers for whom Medicare constitutes a substantial portion of their business could find it difficult to remain profitable, and, absent legislative intervention, might end their participation in the program (possibly jeopardizing care for beneficiaries). [Our] simulations ... suggest that roughly 15 percent of [hospitalization] providers would become unprofitable within the 10-year projection as a result of the [spending cuts]."
Last time we checked, 15 percent is just shy of "one out six" (16.67 percent). Still, "unprofitable" is not the same as "going out of business."
Frankly, if the cuts turn out to be too painful for providers, Congress will likely halt them. That's what has happened in the past. Just about every year Congress passes the so-called "doc fix," which defers cuts set in the 1996 balanced budget plan.
"By the way, that $6,400 number, it was misleading then, it's totally inaccurate now."
— Ryan
Ryan has changed his plan to overhaul Medicare to address some of the loudest complaints. The new version of the plan includes the option for traditional Medicare, as well as a commitment that at least one health-care option would be fully covered by the government.
Indeed, the new plan is much more generous than the original version. The old plan had capped growth at the rate of inflation. Many experts believed that was too low and pushed more costs on beneficiaries, which is where the estimate of an additional $6,400 in premiums came from.
In the updated Ryan plan, Medicare spending would be permitted to grow slightly faster than the nation's economy — in fact, at the same growth rate as Obama's budget for Medicare.
"It's a plan I put together with a prominent Democrat senator from Oregon."
— Ryan
"There's not one Democrat who endorses it."
— Biden
Here, Ryan goes too far. Biden is right — Ryan worked with former White House budget director Alice Rivlin and Sen. Ron Wyden (D-Ore.) on versions of his Medicare plan, but both since have distanced themselves from the final proposal, saying it did not reflect their discussions. BusinessWeek reported that Wyden said that Ryan is "talking nonsense" about their partnership.
After the debate, Wyden posted a note on his Facebook page complaining about Ryan's reference:
The Vice President is right, Romney/Ryan moved the goal post on Medicare and I strongly oppose their plan because I believe it hurts seniors. The Romney/Ryan plan raises the age of eligibility and repeals the ACA leaving millions of seniors with no health coverage. The Romney/Ryan plan on Medicare pulls the safety net out from under the poorest and most vulnerable seniors, taking away the opportunity for nursing home care from seniors who need it and have no other options.
The Wyden-Ryan white paper strengthened the safety net for these dual eligibles. The Romney/Ryan version shreds it. The Republican ticket knows that neither I, nor any other Democrat, would support these policies.
The Romney/Ryan plan on Medicare is further proof that Mitt Romney is singularly unfit to end gridlock and bring bipartisan solutions to Washington.
"Was it a good idea to spend taxpayer dollars on electric cars in Finland, or on windmills in China?"
— Ryan
We've written repeatedly about such claims, which are exaggerated. There are foreign connections but the stimulus money was generally spent in the United States.
This "cars in Finland" concerns a loan guarantee to Fisker Automotive, which The Washington Post hasidentified as troubled. But the company disputes the RNC's claim that $500 billion in U.S. money (via two loans) is being spent to produce cars overseas. Instead, the company says the money has been spent on design and engineering activities in the United States, and the expenditures have been reviewed by PricewaterhouseCoopers. Ultimately, the company plans to build a lower-priced version of its car in Delaware, using a $359 million loan, but less than $25 million that has been disbursed so far.
Follow the links for more details about that case and the "windmills in China."
"The middle class will pay less, and people making a million dollars or more will begin to contribute slightly more."
— Biden
In describing the administration's tax plan, Biden appeared to have moved the goal posts. The president has consistently said he would roll back Bush-era tax cuts for couples making more than $250,000 and individuals making more than $200,000.
"With regard to the assault on the Catholic Church, let me make it absolutely clear: No religious institution, Catholic or otherwise — including Catholic Social Services, Georgetown Hospital, Mercy, any hospital — none has to either refer contraception, none has to pay for contraception, none has to be a vehicle to get contraception in any insurance policy they provide. That is a fact."
— Biden
Biden went a bit far saying it is "a fact" that religious groups will not pay for contraceptives under the health-care law.
Biden was referring to the so-called contraceptive mandate, which requires insurers to provide coverage for birth control without charging additional co-payments. (We have touched on this issue in two separatecolumns).
Biden was instrumental in brokering that accommodation in an effort to quell an outcry from Catholic leaders otherwise sympathetic to the Obama administration.
The Obama administration made a decision to fully exempt religious institutions such as churches from this rule. It also said it will exempt religiously affiliated organizations such as Catholic schools and hospitals, but their insurance providers must still cover birth control with no out-of-pocket costs for the insured.
But there are still unsettled issues in this matter.
Some church organizations still object to the mandate despite the exemption for religion-affiliated groups, arguing that they could end up paying for birth control indirectly if the mandate causes their health insurance costs to rise. Furthermore, the Obama administration said in March that it will come up with an accommodation for religiously affiliated employers that self-insure, but it has not yet decided how to handle that seven months later.
Ryan pointed out that the accommodations failed to satisfy many religious groups. "If they agree with you … why would they keep suing you?" he asked.
Here are more details on the lawsuits Ryan was referring to, and the legal arguments involved. — Josh Hicks and N.C. Aizenman
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"We should not have called Bashar Assad a reformer."
— Ryan
Ryan brings up some old history here about the hopes the administration originally had about the Syrian leader.
Most famously, as the uprising in Syria began in 2011, Secretary of State Hillary Rodham Clinton said that "many of the members of Congress of both parties who have gone to Syria in recent months have said they believe he's a reformer." She quickly tried to take back her statement, saying two days later: "I referenced opinions of others. That was not speaking either for myself or for the administration."
We actually looked into this question at the time and concluded that Clinton's claim of a bipartisan support for the idea that Assad was a reformer was not credible. She earned Three Pinocchios.
But it is worth remembering this was never stated as an official U.S. policy position, as Ryan suggests.
"We are leaving [Afghanistan] in 2014. Period."
— Biden
Actually, the administration has long discussed having an "enduring presence" of 10,000 to 15,000 troops, mainly as advisers who would reside on military bases. An agreement must still be reached with the government of Afghanistan.
"Now, we think that government taking 28 percent of a family and business's income is enough. President Obama thinks that the government ought to be able to take as much as 44.8 percent of a small business's income."
— Ryan
Ryan is mixing up some apples and oranges here. The Romney plan would reduce income tax rates, but it does not affect payroll taxes. But to reach his 44.8 percent top rate, Ryan is including Medicare taxes,as we have previously documented.
"Two-thirds of our jobs come from small businesses. This one tax would actually tax about 53 percent of small-business income."
— Ryan
"97 percent of the small businesses in America pay less — make less than $250,000"
— Biden
This is two sides of the same coin. Higher taxes on individuals would hit 53 percent of business income. But they aren't necessarily "small" businesses.
There are advantages for companies to file corporate income taxes, but there is one big disadvantage — major shareholders are subject to being taxed twice, first on the corporation's earnings and then on personal income taxes after dividends are distributed to the owners.
So smaller companies, as well as partnerships, sole proprietorships and some limited liability companies, organize themselves differently. The companies themselves do not pay taxes; instead, the earnings or losses are passed through to the shareholders, who then are taxed at the individual tax rate.
When Republicans often speak of "small businesses," they are referring to the companies that file under the individual tax code. But not all of them are what most Americans would consider small businesses — and not all of them are that small, either. In fact, a report by the Joint Committee on Taxation — the nonpartisan congressional entity that "scores" tax legislation — found that the number of tax returns by so-called "flow-through entities" has soared in recent years.
As of 2005, the JCT says, retail trade (such as mom-and-pop shops) accounted for about 11 percent of so-called S corporations, holding 12 percent of total assets, and 5 percent of partnerships, with less than 1 percent of total assets. Another 14 percent of S corporations were in construction but the largest category, at 15 percent, were "professional, scientific and technical services."
Some of these "pass-through" companies are rather large, with revenues of more than $50 million, but they represent just a small proportion of such companies. According to calculations by Donald Marron, director of the Urban-Brookings Tax Policy Center, in 2008 such companies accounted for less than one-tenth of one percent of all returns filed — but they had 40 percent of revenues and 30 percent of all profits.
The result, according to the Joint Committee on Taxation, is that only 3 percent of all "small businesses" paying taxes would be affected by Obama's plan to lift marginal tax rates on families making more than $250,000 and individuals making more than $200,000. (See page 25 of the JCT report.) That group — about 750,000 taxpayers — accounts for 50 percent of the estimated $1 trillion in business income reported in 2011. The other 97 percent of "small businesses" shared the rest — and under Obama's plan, they would get to keep their Bush-era tax cuts.
So Biden is correct that the tax hike proposed by President Obama would hit only 3 percent of business owners.
"He'll keep saying this $5 trillion plan, I suppose. It's been discredited by six other studies … Six studies have guaranteed — six studies have verified that this math adds up."
— Ryan
Romney would cut tax rates by 20 percent and eliminate the estate tax, the alternative minimum tax and reduce the corporate tax, which analysts say will reduce revenue by $5 trillion over 10 years. But Romney also has said he will make his plan "revenue neutral" by eliminating tax loopholes and deductions, much as Ronald Reagan did when he passed a tax reform in 1986.
Yet Romney has not provided many details about which deductions he would eliminate. He has suggested the home mortgage deduction, charitable contributions and employer-paid health insurance might be protected; he has also indicated he is thinking of some sort of cap on the amount of deductions a taxpayer could claim.
Moreover, the nonpartisan Tax Policy Center has analyzed the specifics of Romney's plan thus far released and concluded that the numbers aren't there to make it revenue neutral.
In the debate, Ryan twice countered that "six other studies" have found that not to be the case, but those studies actually do not provide much evidence that Romney's proposal — as sketchy as it is — would be revenue neutral without making unrealistic assumptions or changing the parameters of Romney's tax cut. (Some are not even studies but more like opinion articles.) So Ryan is wrong to assert the studies have "verified that this math adds up."
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