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Factchecking Obama’s Osawatomie Speech

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On December 6, 2011, President Barack Obama made a speech in Osawatomie, Kansas. In the speech he said some things that could be considered a stretch, and told some out and out whoppers. For you Obama Kool-Aid drinkers, let’s examine some of the things he said.

According to CNS News, in his Osawatomie speech Obama “…argued that, while a limited government that preserves free markets ‘speaks to our rugged individualism’ as Americans, such a system ‘doesn’t work’ and ‘has never worked’ and that Americans must look to a more activist government that taxes more, spends more and regulates more ….” So, with a little fact checking by The Washington Post (no bastion of conservatism), let’s make this the focus of this article.

In his speech, Obama said, “Some billionaires have a tax rate as low as 1 percent — 1 percent. That is the height of unfairness.” But the only evidence that the White House could offer for this quote was part of a conversation on Bloomberg TV, in which Gigi Stone made this assertion during a discussion about the tax strategies that the very wealthy use to avoid paying taxes. Stone quoted from a Bloomberg News article that reported on tax strategies to defer paying capital gains taxes, but the article never made the 1 percent claim. An administration official conceded that the White House had no actual data to back up Obama’s statement. Of the top 400 taxpayers (in 2008, the latest year available), 30 paid an average tax rate of between zero and 10 percent, 59 paid an average tax rate of 30 to 35 percent, while 238 paid a marginal tax rate of 35 percent and above. Only 17 had a marginal rate of zero to 26 percent. The average tax paid by the top 400 taxpayers was nearly $50 million. Stretch or whopper? Your call.

Obama also said, “…Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class….” Obama blames the Bush tax cuts for “massive deficits.” While it is true that the Bush tax cuts caused deficits, they were not the only reason. Congressional Budget Office (CBO) data show that the largest cause of deficits was increased spending, which accounted for 36.5 percent of the decline in fiscal position. The Bush tax cuts, and some Obama tax cuts, were responsible for just 24 percent. Does anyone remember that Obama and Democrats called for almost $1 trillion for a stimulus? And did that affect job growth? Stretch or whopper? Your call.

Obama continued, saying, “…it’s not as if we haven’t tried this theory [tax cuts]. Remember in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history.” The 2001 tax cuts were marginal rate cuts, which included all taxpayers, not just “for the wealthy” as he said, and the 2003 tax cuts included a reduction in taxes on dividends and capital gains. Stretch or whopper? Your call.

He went on, ” And what did they [tax cuts] get us? The slowest job growth in half a century.” Obama’s claim of the slowest job growth includes the loss of jobs under his own (as well as Bush’s) administration. Further, while the Bush tax cuts have been criticized for being inefficient and poorly designed, it is a stretch for Obama to blame slow job growth on the tax cuts. Still further, it is a stretch to directly link the 10 year old tax cut to the present slow job growth. And it is just as big a stretch to claim that Bill Clinton’s tax increases resulted in a gain of 23 million jobs. Stretch?

According to the Bureau of Labor Statistics (BLS), job growth has been slower under Obama than under Bush: 40,500 jobs a month versus 68,000 jobs per month. 

Obama also said that there is evidence that higher income disparity can affect economic growth, but gave no reference for that statement.

While it is true that Obama inherited an economic mess, and he does not deserve blame for the job losses early in his administration, it is getting very tiring to hear him blame all his problems on the Bush tax cuts, especially three years into his administration.

So if Obama stretched the truth, and told some, ah, stories, how can we believe anything in his speech? I will, of course, be accused of cherry picking. But remember, cherry picking goes both ways. As Ronald Reagan said, “Facts are stubborn things.”

But that’s just my opinion.

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  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    Warren, we do have a Politics feature called “Political Factcheck”. I’m surprised you didn’t ask for your article to be placed there. Or that whoever your editor was didn’t suggest it.

    I guess the librarian in me just likes things to be in their proper categories…!

    BTW, Politifact has also analysed the “1%” claim. In a nutshell, it says that there are so few billionaires anyway, and the stats on how much tax they pay are so vague, that any claim one makes based on them isn’t much good for anything except rhetoric.

  • jamminsue

    Warren, yes, this is an opinion. For instance, you say “such a system ‘doesn’t work’ and ‘has never worked’ and that Americans must look to a more activist government that taxes more, spends more and regulates more ….” You are expanding his statement. He was referring to te fact tht people need some regulation. For definitive analysis on this issue I refer you to Hobbes, Machiavelli and Locke.

  • jamminsue

    It has been proven in many places that higher taxes on the top earners do not have a correlation with employment. Many keep saying the supposed ‘job creators’ would create jobs if taxes were lower. This is not true, and a simple assertion can make this clear. If ‘job creators’ were interested in creating jobs at this time, they would do it, as investment in stock, T-bills, etc is not secure at this point. If they are taking lower return/higher risk on their investment by NOT creating jobs in an attempt to force lowering taxes and that is the ONLY reason for delaying creating jobs, then they are not only irrational, but also at this point, lacking in any social responsibility. Is it the responsibility of ‘job creators’ to be socially responsible? Damn straight! It is EVERYONES responsibility! That is the cost of living in a society, I refer you back to Hobbes, Machiavelli and Locke to support my conclusions.

  • Igor

    Correct, jamminsue.

    NPR interviewed business owners, looking for the relation between jobs and taxes.

    NPR Transcript


    GOP Objects To ‘Millionaires Surtax'; Millionaires We Found? Not So Much

    by TAMARA KEITH

    For the second week in a row, the Senate on Thursday voted down proposals to extend the payroll tax holiday through next year. In the case of the Democrats’ proposal, Republicans objected to the “millionaires surtax” that would be used to pay for it.

    Ever since the idea of the surtax was introduced weeks ago, Republicans in Congress have railed against it, arguing that it is a direct hit on small-business owners and other job creators.

    The argument is that many small-business owners report company profits on their individual taxes because of the way their businesses are structured. Sen. John Thune, R-S.D., says the surtax would hurt their ability to hire.

    Republican Sen. John Thune of South Dakota says the “millionaires surtax” would hurt small-business owners’ ability to hire new workers.
    “It’s just intuitive that, you know, if you’re somebody who’s in business and you get hit with a tax increase, it’s going to be that much harder, I think, to make investments that are going to lead to job creation,” says Thune.

    We wanted to talk to business owners who would be affected. So, NPR requested help from numerous Republican congressional offices, including House and Senate leadership. They were unable to produce a single millionaire job creator for us to interview.

    So we went to the business groups that have been lobbying against the surtax. Again, three days after putting in a request, none of them was able to find someone for us to talk to. A group called the Tax Relief Coalition said the problem was finding someone willing to talk about their personal taxes on national radio.

    So next we put a query on Facebook. And several business owners who said they would be affected by the “millionaires surtax” responded.

    “It’s not in the top 20 things that we think about when we’re making a business hire,” said Ian Yankwitt, who owns Tortoise Investment Management.

    Tortoise is a boutique investment firm in White Plains, N.Y. Yankwitt has 10 employees and in recent years has done a lot of hiring.

    As a result, Yankwitt says he’s had many conversations about hiring, “both with respect to specific people, with respect to whether we should hire one junior person or two, whether we should hire a senior person.”

    He says his ultimate marginal tax rate “didn’t even make it on the agenda.”

    Yankwitt says deciding to bring on another employee is all about return on investment. Will adding another person to the payroll make his company more successful?

    For Jason Burger, the motivation is similar.

    “If my taxes go up, I have slightly less disposable income, yes,” said Burger, co-owner of CSS International Holdings, a global infrastructure contractor. “But that has nothing to do with what my business does. What my business does is based on the contracts that it wins and the demand for its services.”

    Burger says his Michigan-based company is hiring like crazy, and he’d be perfectly willing to pay the surtax.

    “It’s only fair that I put back into the system that is the entire reason for my success,” said Burger.

    For the record, both Burger and Yankwitt have made campaign contributions to Democrats in the past, but they say their views on the surtax are about the economics of their businesses and not their politics.

    And they’re not alone.

    “I, like any other American, especially a business owner, I want to make as much money as I can and I want to keep as much money in my pocket as I can, but I also believe in the greater good,” says Deborah Schwarz, who owns LAC Group, an information management firm with offices nationwide and in London.

    Surtax or no, Schwarz says she hopes to keep hiring.

    “We’re going to keep on writing proposals, going after contracts, hopefully winning them, and when we do we’re going to continue to hire people,” says Schwarz.

    All of this contradicts the arguments about job creators being made by Republicans in Congress.

    “Those I would say were exceptions to the rule,” responds Thune. “I think most small-business owners who are out there right now would argue that raising their taxes has the opposite effect that we would want to have in a down economy.”

    But those small-business owners apparently don’t want to talk.

    “Intuitive”, says Thune. Why intuit something that is so easily available? Is he just lazy? Someone that lazy shouldn’t be in an important job.

  • jamminsue

    Thank you, Igor. I appreciate the link

  • Igor

    I’ve started and operated many small businesses and I, too, can attest that taxes are about the LAST thing you worry about. If you’re liable for taxes it means that you’re a success! You actually made some money! Whooppee! You got more revenue than your payroll plus expenses. And if you can see that you have SALES sufficient to warrant hiring more people, by god you’re going to hire more people!

    By contrast, of the poor people I’ve talked to I’ve never heard one story that went “I used to be CEO of ACME Roadrunner Traps and made billions selling lousy traps to gullible coyotes who kept coming back for more because they never worked (sales were ENDLESS! And they never figured it out!) so they always had to come back for the next model! But when the tax rate went up from 35% to 36% it was just too much burden to bear for my Fellow Citizens, so I sold my $50million estate in Atherton (and put the money in the Herman Cain campaign), sent my gorgeous trophy wife back to Hollywood, and bought this nice zero bedroom refrigerator box that you see here under the hiway 101 overpass, where I cook cup-o-noodles, when I can get them at the Food Pantry, over a sterno stove. You know, I gave and gave and gave, and still it wasn’t enough for that spend and tax commie government of George Bush.”

    YMMV.

  • Arch Conservative

    Was this the speech King Barry gave where he thought he was in Texas?