In the Ohio Senate race, Democrat Lee Fisher’s first TV ad of the fall campaign misrepresents Republican Rob Portman’s years in the Bush administration:
- The ad is wrong when it says Portman, as President George W. Bush’s "trade czar," was responsible for "sending 100,000 Ohio jobs overseas." The 100,000 lost jobs occurred over six years, from 2001 to 2007, but Portman was U.S. trade representative for only one year, from May 2005 to May 2006.
- The ad also blames Portman, later Bush’s budget director, for "a spending spree that doubled the deficit." While it is true that the deficit more than doubled in fiscal year 2008, the deficit was largely caused by the recession, which reduced federal revenues, and by spending on mandatory programs, such as Medicare.
‘Exploding’ Charges Backfire
The ad, which first aired Sept. 7, riffs off the "Portman Plan to Create Ohio Jobs." It says that Portman "knows how to grow the economy … in China." It says: "On his watch as Bush’s trade czar, our deficit with China exploded, sending 100,000 Ohio jobs overseas."
That raises two questions: Did the trade deficit with China "explode" when Portman was the U.S. trade representative? And did Ohio lose 100,000 jobs "on his watch"?
First, the jobs claim: It’s false.
The Fisher campaign cites a study by Robert E. Scott of the Economic Policy Institute. Scott studied the growth of U.S. trade with China since China entered the World Trade Organization in 2001. The 100,000 figure represents the estimated number of jobs Ohio lost to China from 2001 to 2007, a six-year period. But Portman was Bush’s trade representative for just one year. He served from May 17, 2005, to May 29, 2006, when he took over as director of the Office of Management and Budget.
Now, the Fisher campaign also correctly points out — not in the ad, but in other material sent to us to support the ad’s claims — that Portman as a congressman voted in May 2000 on a bill to normalize trade relations with China, a critical step in allowing China to join the WTO. Therefore, the campaign concludes, Portman is to blame for the loss of 100,000 Ohio jobs. But the ad doesn’t make that point. The ad says the 100,000 jobs were lost "on his watch as Bush’s trade czar." And that’s just not true.
If Fisher is looking to cast blame, he can talk to the man who will campaign for him on Sunday: Bill Clinton. As president, Clinton reached a trade agreement with China in November 1999 and then convinced Portman and the rest of Congress in May 2000 to normalize trade relations with China – steps that were required for the country to join the WTO. The vote was 237-197, with a majority of Clinton’s party opposing the bill. At the time of the vote, the New York Times called the China trade agreement "a clear Clinton legacy."
Onto the second part of the jobs’ claim: Did the trade deficit with China "explode" on Portman’s watch? We find the word "explode" to be an exaggeration.
The Fisher campaign cites Census data that shows the deficit was $202 billion in 2005, up from $162 billion in 2004. That’s an increase of nearly 25 percent — a high number, to be sure. But the trade deficit rose nearly 31 percent in the prior year, from 2003 to 2004. So, it actually went up less under Portman — if you use the figures from the Fisher campaign. We don’t think you should, though.
The Census also provides monthly trade figures, so you can track the trade deficit from June 2005 to May 2006, when Portman was in charge. During that time, the trade imbalance was $212 billion, up from $180.5 billion from the same 12-month period the previous year. That’s an increase of 17.5 percent. That’s high, too, but not unusually high. Throughout the Clinton years, the trade deficit grew by double digits — topping more than 20 percent annually in five of the eight years.
Portman’s ‘Spending Spree’
The ad also says: "As Bush’s budget chief, Portman oversaw a spending spree that doubled the deficit." The ad is correct in claiming that the federal deficit doubled on his watch, but spending was only one part of what caused the deficit to go up.
Portman served as Bush’s director of the OMB from May 26, 2006, to Aug. 3, 2007, and oversaw the fiscal year 2008 budget. The nonpartisan Government Accountability Office said in a September 2009 report that the budget deficit "more than doubled, from $163 billion in fiscal year 2007 to $455 billion in fiscal year 2008, due in part to the weakening economy in fiscal year 2008."
According to government documents and news accounts at the time, there were three major reasons for the growing deficit: a decline in federal revenues, the administration’s response to the slowing economy, and the continued growth of mandatory entitlement programs. In October 2008, Bloomberg News reported that spending increased sharply in fiscal year 2008, up "9.1 percent to $2.98 trillion from a year earlier, the biggest jump in annual outlays since a 9.6 percent gain in 1990." But also, Bloomberg wrote, "revenue decreased 1.2 percent to $2.52 trillion, the first drop since 2003." Bloomberg explained what was driving the spending:
Bloomberg, Oct. 14, 2008: U.S. military spending in 2008 rose 12.5 percent from the previous year to $594.7 billion, according to the report. Spending by the Department of Health and Human Services, which administers the Medicare and Medicaid health programs, rose 4.2 percent to $700.5 billion. Spending on Social Security totaled $657.8 billion, up 5.8 percent from the previous fiscal year.
"The bipartisan stimulus bill and the slow economy are the primary reasons for the increase in the deficit,” Jim Nussle, director of the White House’s Office of Management and Budget, said in a statement today. "This increase reinforces the need to adopt and maintain policies that promote economic growth and fiscal responsibility, including entitlement reform.”
The economic stimulus bill signed by Bush in February 2008 cost $152 billion.
All that needs to be taken into account before Portman can be accused of a "spending spree." Lastly, we’ll note that the OMB director serves the president and doesn’t set the agenda.
Tax Cuts for Exporting Jobs?
One claim that is true: Portman "voted for billions in tax breaks for companies that export jobs."
The ad cites Portman’s vote on June 17, 2004, in favor of the American Jobs Creation Act. On Oct. 12, 2004, the Washington Post wrote that the bill included "$42.6 billion worth of tax cuts for overseas profits, including a 10-year $3.3 billion temporary tax holiday allowing companies with vast stores of offshore revenue to bring it home under a discount tax rate of 5.25 percent.”
There was much criticism at the time that the bill would not create jobs and instead was a tax giveaway to special interests. Arizona Republican Sen. John McCain, who voted against the bill, said in a floor statement that it was "loaded with corporate pork and special interest tax provisions." Supporters, including GOP Sen. John Ensign of Nevada, said the bill would encourage U.S.-based companies to invest off-shore profits in U.S. operations and create jobs here.
Years after the fact, there is general agreement that the bill did not spur job growth in the U.S. Matthew Jerome Mauntel earlier this year wrote a paper (starting at page 112) for the Boston College International and Comparative Law Review that said the American Jobs Creation Act of 2004 was “not as effective at creating American jobs as Congress had hoped." He wrote that "the cash was used to shore up domestic corporate health … spending to directly increase their stock value rather than invest in the limited domestic market.”
– by Eugene Kiely, with Joshua Goldman and Annie Norbitz