2011 State of the Union FACT CHECK


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2011 State of the Union FACT CHECK

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FACT CHECK: Obama and his imbalanced ledger

By CALVIN WOODWARD, AP

WASHINGTON — The ledger did not appear to be adding up Tuesday night when President Barack Obama urged more spending on one hand and a spending freeze on the other.

Obama spoke ambitiously of putting money into roads, research, education, efficient cars, high-speed rail and other initiatives in his State of the Union speech. He pointed to the transportation and construction projects of the last two years and proposed "we redouble these efforts." He coupled this with a call to "freeze annual domestic spending for the next five years."

But Obama offered far more examples of where he would spend than where he would cut, and some of the areas he identified for savings are not certain to yield much if anything.

For example, he said he wants to eliminate "billions in taxpayer dollars we currently give to oil companies." Yet he made a similar proposal last year that went nowhere. He sought $36.5 billion in tax increases on oil and gas companies over the next decade, but Congress largely ignored the request, even though Democrats were then in charge of both houses of Congress.

A look at some of Obama's statements Tuesday night and how they compare with the facts:

___

OBAMA: Tackling the deficit "means further reducing health care costs, including programs like Medicare and Medicaid, which are the single biggest contributor to our long-term deficit. Health insurance reform will slow these rising costs, which is part of why nonpartisan economists have said that repealing the health care law would add a quarter of a trillion dollars to our deficit."

THE FACTS: The idea that Obama's health care law saves money for the government is based on some arguable assumptions.

To be sure, the nonpartisan Congressional Budget Office has estimated the law will slightly reduce red ink over 10 years. But the office's analysis assumes that steep cuts in Medicare spending, as called for in the law, will actually take place. Others in the government have concluded it is unrealistic to expect such savings from Medicare.

In recent years, for example, Congress has repeatedly overridden a law that would save the treasury billions by cutting deeply into Medicare pay for doctors. Just last month, the government once again put off the scheduled cuts for another year, at a cost of $19 billion. That money is being taken out of the health care overhaul. Congress has shown itself sensitive to pressure from seniors and their doctors, and there's little reason to think that will change.

___

OBAMA: Vowed to veto any bills sent to him that include "earmarks," pet spending provisions pushed by individual lawmakers. "Both parties in Congress should know this: If a bill comes to my desk with earmarks inside, I will veto it."

THE FACTS: House Speaker John Boehner, R-Ohio, has promised that no bill with earmarks will be sent to Obama in the first place. Republicans have taken the lead in battling earmarks while Obama signed plenty of earmark-laden spending bills when Democrats controlled both houses. As recently as last month, Obama was prepared to sign a catchall spending measure stuffed with earmarks, before it collapsed in the Senate after an outcry from conservatives over the bill's $8 billion-plus in home-state pet projects.

It's a turnabout for the president; in early 2009, Obama sounded like an apologist for the practice: "Done right, earmarks have given legislators the opportunity to direct federal money to worthy projects that benefit people in their districts, and that's why I've opposed their outright elimination," he said then.

___

OBAMA: "I'm willing to look at other ideas to bring down costs, including one that Republicans suggested last year: medical malpractice reform to rein in frivolous lawsuits."

THE FACTS: Republicans may be forgiven if this offer makes them feel like Charlie Brown running up to kick the football, only to have it pulled away, again.

Obama has expressed openness before to this prominent Republican proposal, but it has not come to much. It was one of several GOP ideas that were dropped or diminished in the health care law after Obama endorsed them in a televised bipartisan meeting at the height of the debate.

Republicans want federal action to limit jury awards in medical malpractice cases; what Obama appears to be offering, by supporting state efforts, falls short of that. The president has said he agrees that fear of being sued leads to unnecessary tests and procedures that drive up health care costs. So far the administration has provided grants to test ideas aimed at reducing medical mistakes and resolving malpractice cases by negotiation, but has recommended no change in federal law.

Trial lawyers, major political donors to Democratic candidates, are strongly opposed to caps on jury awards. But the administration has been reluctant to support other approaches, such as the creation of specialized courts where expert judges, not juries, would decide malpractice cases. In October 2009 the Congressional Budget Office estimated that government health care programs could save $41 billion over 10 years if nationwide limits on jury awards for pain and suffering and other similar curbs were enacted.

___

OBAMA: "The bipartisan Fiscal Commission I created last year made this crystal clear. I don't agree with all their proposals, but they made important progress. And their conclusion is that the only way to tackle our deficit is to cut excessive spending wherever we find it — in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes."

THE FACTS: Obama's fiscal commission did not simply recommend cutting excessive spending; it proposed that the deficit could only be tamed by cutting $3 for every $1 of new revenue raised — in other words, a painful mix of spending cuts and tax increases. Instead, Obama proposed an overhaul of the corporate tax system that would eliminate loopholes and tax breaks but also reduce tax rates. The net effect would be neutral; it would not reduce or raise any revenue. Obama has yet to sign on to any of the ideas, even though he promised when creating the panel that it would not be "one of those Washington gimmicks."

___

OBAMA: "To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations."

THE FACTS: With that comment, Obama missed another chance to embrace the tough medicine proposed by the commission for bringing down the deficit. For example, he ruled out slashing benefits or partially privatizing the program, and made no reference to raising the retirement age. That left listeners to guess how he plans to do anything to salvage the popular retirement program whose trust funds are expected to run out of money in 2037 without changes.

___

OBAMA: As testament to the fruits of his administration's diplomatic efforts to control the spread of nuclear weapons, he said the Iranian government "faces tougher and tighter sanctions than ever before."

THE FACTS: That is true, and it reflects Obama's promise one year ago that Iran would face "growing consequences" if it failed to heed international demands to constrain its nuclear program. But what Obama didn't say was that U.S. diplomacy has failed to persuade Tehran to negotiate over U.N. demands that it take steps to prove it is not on the path toward a bomb. Preliminary talks with Iran earlier this month broke off after the Iranians demanded U.S. sanctions be lifted.

___

Rep. Paul Ryan of Wisconsin, giving the GOP response: "Whether sold as `stimulus' or repackaged as `investment,' their actions show they want a federal government that controls too much, taxes too much and spends too much in order to do too much."

THE FACTS: The economic stimulus package passed by the Democratic-controlled Congress in February 2009 didn't raise taxes. Instead, about a third of the package — nearly $300 billion — was made up of temporary tax cuts. The biggest was Obama's Making Work Pay credit, which provided up $400 to individuals and $800 to married couples. There were dozens of other tax cuts, including a more generous child tax credit, a tax credit for buying a home and a sales tax deduction for buying a car. Many, but not all, of the tax cuts have since expired.

Obama's health care law imposed new taxes, including a penalty for some people who don't get qualified health insurance, starting in 2014. But Obama extended Bush-era tax cuts that were due to expire at the beginning of the year. He also enacted a new one-year cut in the payroll tax for 2011 for just about every wage earner.

___

Associated Press writers Ricardo Alonso-Zaldivar, Jim Drinkard, Erica Werner, Jim Kuhnhenn, Andrew Taylor, Stephen Ohlemacher and Robert Burns contributed to this report.

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Re: 2011 State of the Union FACT CHECK

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Saw this in the Washington Post last night. You were the first person I thought of.
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Re: 2011 State of the Union FACT CHECK

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I thought it was a pretty good speech, but what is our incentive to innovate when being rich is portayed as evil?

I guess he wan't us to innovate and get rich so he can tax the hell out of us?

Why even work when we can survive on welfare?
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Re: 2011 State of the Union FACT CHECK

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Freakzilla wrote:I thought it was a pretty good speech, but what is our incentive to innovate when being rich is portayed as evil?

I guess he wan't us to innovate and get rich so he can tax the hell out of us?

Why even work when we can survive on welfare?
Not sure about your questions here - but being rich is not portrayed as evil - being FILTHY rich and paying less % of taxes than the rest of us have to is portrayed as evil. Not sure I agree in all cases, but the vast majority of filthy rich people should be taxed at the same or higher rates than the rest of us, imho. Not only can they afford it, but mostly they'd barely feel it (there are exceptions), regardless of the stupendous absolute dollar amounts (that's what we'd see - a whole bunch of $$$, but it's only a fraction of their total wealth available).

And I'm not sure that Obama is trying to tax the hell out of us - he seems like he's trying to get taxes to be the same across the board, for rich or for middle-class regardless... and quite a bit of evidence from (conservative, liberal and independent, as well as a whole plethora of non-US) sources all say that the stimulus packages that he (and Bush before him, to a slightly lesser degree) implemented helped stave off a US (and potentially global) depression... I lean towards the thinking that stopping the US from sliding into a full-fledged depression actually helped stop the global slide as well. People seem to discount that, mostly because a disaster avoided is "out of sight, out of mind".

And it's not so easy to survive on welfare... I have two friends right now who were doing great their whole lives, and now aren't (job-wise), whose heads are being kept above water solely due to the (woefully inadequate) welfare programs this country has... Even in Canada, where the social safety blanket is much warmer and cozier, it's not exactly a bed of roses... you get just enough money to live, barely, but you need to be actively looking for employment and provide proof, otherwise you get nothing...
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Re: 2011 State of the Union FACT CHECK

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grandmastercrafter wrote:
Freakzilla wrote:I thought it was a pretty good speech, but what is our incentive to innovate when being rich is portayed as evil?

I guess he wan't us to innovate and get rich so he can tax the hell out of us?

Why even work when we can survive on welfare?
Not sure about your questions here - but being rich is not portrayed as evil - being FILTHY rich and paying less % of taxes than the rest of us have to is portrayed as evil. Not sure I agree in all cases, but the vast majority of filthy rich people should be taxed at the same or higher rates than the rest of us, imho. Not only can they afford it, but mostly they'd barely feel it (there are exceptions), regardless of the stupendous absolute dollar amounts (that's what we'd see - a whole bunch of $$$, but it's only a fraction of their total wealth available).
Ah, so it's the tax bracket you're in that makes you evil. Gotcha.
And I'm not sure that Obama is trying to tax the hell out of us - he seems like he's trying to get taxes to be the same across the board, for rich or for middle-class regardless... and quite a bit of evidence from (conservative, liberal and independent, as well as a whole plethora of non-US) sources all say that the stimulus packages that he (and Bush before him, to a slightly lesser degree) implemented helped stave off a US (and potentially global) depression... I lean towards the thinking that stopping the US from sliding into a full-fledged depression actually helped stop the global slide as well. People seem to discount that, mostly because a disaster avoided is "out of sight, out of mind".
This one's easy. Flat/Fair Tax. Spending money will NEVER get us out of debt. I believe they tried that in Japan and it failed.
And it's not so easy to survive on welfare... I have two friends right now who were doing great their whole lives, and now aren't (job-wise), whose heads are being kept above water solely due to the (woefully inadequate) welfare programs this country has... Even in Canada, where the social safety blanket is much warmer and cozier, it's not exactly a bed of roses... you get just enough money to live, barely, but you need to be actively looking for employment and provide proof, otherwise you get nothing...
Here the more bastard babies you have the more money the government gives you. It's a way of life for many.
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Re: 2011 State of the Union FACT CHECK

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I have to disagree. Unless there are plenty of provisions to prevent/protect certain items from being taxed, the flat/'fair' tax is the equivalent of reintroducing feudalism into our society. It opens as many loopholes as it closes and it taxes people based off the percentage of their income that they spend more than how much they actually make.
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Re: 2011 State of the Union FACT CHECK

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Ampoliros wrote:I have to disagree. Unless there are plenty of provisions to prevent/protect certain items from being taxed, the flat/'fair' tax is the equivalent of reintroducing feudalism into our society. It opens as many loopholes as it closes and it taxes people based off the percentage of their income that they spend more than how much they actually make.
Why should people be penalized for saving money?

SPENDING is what is getting us into trouble.
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Re: 2011 State of the Union FACT CHECK

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The loopholes in the system aren't in the fact that there's more than one tax rate; it's in how deductions are classified and calculated, and in the ability to use the tax rules to hide income.

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Re: 2011 State of the Union FACT CHECK

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Hunchback Jack wrote:The loopholes in the system aren't in the fact that there's more than one tax rate; it's in how deductions are classified and calculated, and in the ability to use the tax rules to hide income.

HBJ
That's why I support abolishing the Internal Revinue Service (that in itself would save us billions) and institute a federal sales tax.

What is the FairTax plan?
The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.

The FairTax Act (HR 25, S 296) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.

The FairTax:

Enables workers to keep their entire paychecks
Enables retirees to keep their entire pensions
Refunds in advance the tax on purchases of basic necessities
Allows American products to compete fairly
Brings transparency and accountability to tax policy
Ensures Social Security and Medicare funding
Closes all loopholes and brings fairness to taxation
Abolishes the IRS
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Re: 2011 State of the Union FACT CHECK

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Well, I think simplifying/eliminating deductions and closing loopholes is the much more important part of that. Whether you have 2,3 or 4 tiers of taxation based on income is less important (and I can see reasons to increase taxation based on income).

Incidentally, a flat tax system is still a tiered system - it has two tiers. If taxation only kicks in at N thousand per year, then people will do whatever they can to show less than N thousand a year. The motivation to find loopholes to reduce declared income is still there.

I'm not saying a multi-tiered system is better or preferable in these ways; I'm saying I doubt whether a flat tax system will solve the problems its proponents claim it will, because those problems aren't caused by having multiple tiers, or solved by eliminating them.

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Re: 2011 State of the Union FACT CHECK

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The problem is that its not an income tax, its a sales tax. It will solidify the need for people already in debt to live off credit, which they won't be able to pay off with prices increased by 23-30%. Even with the income tax reinstated into their paycheck at the same rate, lower income families will be spending most if not all of their income on basic living expenses whereas higher income families will end up paying less of a percentage of their income on cost of living. The fluidity of personal economic status will be practically non existent, hence my feudalism analogy.

I'm no master of economic policy, but everything i understand about the flat tax tells me its a horrible idea in practice. On paper it certainly sounds like a good idea.
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Re: 2011 State of the Union FACT CHECK

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Baraka Bryan wrote:
Ampoliros wrote:The problem is that its not an income tax, its a sales tax. It will solidify the need for people already in debt to live off credit, which they won't be able to pay off with prices increased by 23-30%. Even with the income tax reinstated into their paycheck at the same rate, lower income families will be spending most if not all of their income on basic living expenses whereas higher income families will end up paying less of a percentage of their income on cost of living. The fluidity of personal economic status will be practically non existent, hence my feudalism analogy.

I'm no master of economic policy, but everything i understand about the flat tax tells me its a horrible idea in practice. On paper it certainly sounds like a good idea.
you're referred to the specific flat tax being proposed by certain legislators in the US. I'm talking about a flat income tax. very different.

RE HBJ: a 1-tiered flat tax still encourages people to declare as little as possible. tax fraud will happen. by simplifying the system, you create an equitable tax policy and reduce the number of ways fraud can happen.
With the Fair Tax you get a credit every month for basic living necessities up to the poverty level.
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