Democratic Sen. Russ Feingold of Wisconsin is attacking his Republican challenger for denouncing taxpayer aid to businesses after accepting a government subsidy for his own firm. GOP challenger Ron Johnson says Feingold’s ad is "wrong" and accuses him of "dirty tricks."
We find both candidates’ ads are misleading.
- Feingold’s ad leaves viewers with an impression that Johnson’s plastics company received direct loans or grants of $4 million from taxpayers. The actual benefit was more modest — a below-market interest rate through a government program, but on funds that originated with private investors, not taxpayers.
- But Johnson’s ad also misleads in claiming that a local TV station called the Feingold ad "wrong." The station’s complaint is that Feingold failed to get permission before using video of its news report — which supported Feingold’s point.
Note: This is the first in an occasional "Toss-ups" series, in which we will focus on ads appearing in the tightest Senate races.
Sen. Feingold is in a tough fight to retain his seat, which he has held for nearly 18 years. The outcome is currently rated as a toss-up both by the Cook Political Report and the Rothenberg Political Report.
Have Some More Rope
Feingold’s was the first of these dueling ads to hit the airwaves. Called "His Own Words," the ad intersperses clips from an Aug. 25 news story on Madison’s WKOW TV station with newspaper headlines.
The point of Feingold’s ad is to make Republican Ron Johnson — who says on his website that "government doesn’t create jobs," private industry does — look like a hypocrite, or even a liar. The ad has no narrator; the media does the work for Feingold.
Feingold TV Ad: "His Own Words"
TV news anchor: "News tonight about Senate candidate Ron Johnson’s Oshkosh plastics factory."
Johnson: "I have never lobbied for some special treatment or for a government, government payment."
Second news anchor: "Johnson’s plastic company, Pacur, got a government loan to expand its business."
Third news anchor: "A railroad line to Pacur was built with the assistance of a federal grant."
Johnson, repeated: "I have never lobbied for some special treatment or for a government, government payment."
News reporter: "Ron Johnson loves to say that government doesn’t create jobs. But in the case of his own business that doesn’t seem to be true."
Russ Feingold: "I’m Russ Feingold and I approve this message." [/TET]
The ad opens with a TV anchor telling viewers there’s news about candidate Johnson’s plastics factory; half of the screen shows a newspaper story with the headline, "Johnson’s business got $4 million in special aid." The ad then cuts to Johnson, who is shown saying:
Johnson: I have never lobbied for some special treatment or for a government payment.
The camera cuts to a different WKOW anchor, who says: "Johnson’s plastic company, Pacur, got a government loan to expand its business." The anchor shares the screen with another newspaper clip headlined, "Pacur received $4M in gov’t aid." Then the ad replays the same clip of Johnson disavowing "special treatment," and finishes with the reporter on the story, Bob Schaper:
Schaper: Ron Johnson loves to say that government doesn’t create jobs. But in the case of his own business, that doesn’t seem to be true.
The ad juxtaposes Schaper with Johnson’s signature on the loan application.
The media reports are accurately portrayed, but the ad gives the false impression that Pacur received $4 million in taxpayer money. Here’s what actually happened. In 1983, Pacur was approved to receive a $1.5 million loan through a state-run program in which tax-free industrial revenue bonds are sold to investors. About two years later, Pacur was approved to receive another $2.5 million in the same way.
Through the program, companies borrow the funds at lower interest rates than they would likely get from a commercial bank — around 1.5 percent to 2.5 percent lower, the Wisconsin Department of Commerce told the Associated Press.
Johnson’s campaign argues that a loan of money that comes from private investors, even if it’s routed through a government program, does not amount to "special treatment, nor a government payment or subsidy." And Pacur paid back the money as promised, according to the campaign.
But without the government program, companies like Pacur would pay higher interest rates, costing them tens, or even hundreds, of thousands of dollars more on loans the size of Pacur’s — assuming they could even get the loans from commercial banks. And investors wouldn’t buy the bonds if they weren’t tax-free, a status that can only be granted by the government.
In our judgment, these loans were subsidized — though perhaps not as heavily as portrayed by the clips shown in Feingold’s ad.
The anchor who calls it a "government loan," for instance, likely leaves viewers thinking Johnson borrowed money directly from the government without the interceding step of the bonds being sold to private investors. Similarly, headlines that use the terms "$4 million in special aid" or "$4M in gov’t aid" could leave the impression that Pacur received government grants, which it did not.
One line in the ad is more misleading than the rest. "A railroad line to Pacur was built with the assistance of a government grant," an anchor says. While that is true, it happened in 1979, before Johnson was involved with the company, and before it was even called Pacur.
An Overstated Response
Johnson responded to Feingold’s ad with one of his own. It opens with a shot of the first frame of Feingold’s ad. "Seen this on TV pretending to be a news report?" the narrator says. "This newscaster’s station says Feingold took their report out of context and that ‘it’s just plain wrong.’ "
Johnson TV Ad: "Like the Rest of Them"
Johnson: I’m Ron Johnson and I approve this message.
Narrator: Seen this on TV pretending to be a news report? It’s a Russ Feingold attack ad. This newscaster’s station says Feingold took their report out of context, and that "it’s just plain wrong." The Associated Press says Feingold’s ad is misleading and Ron Johnson’s loans came from private investors. Russ Feingold: Wrong. Misleading. Dirty tricks. After 18 years in Washington, Russ is just like the rest of them.
We’ll have more to say in a moment about whether Feingold used the station’s report out of context, but it’s Johnson’s campaign that is being misleading here. WKOW News Director Perry Boxx wasn’t talking about the facts portrayed in Feingold’s ad when he said, "it’s just plain wrong." He was talking about the Feingold campaign’s use of the station’s footage.
Boxx: [Feingold] did it without any permission. It may be legal, but it’s just plain wrong.
Johnson’s ad goes on to say that "the Associated Press says Feingold’s ad is ‘misleading’ and Ron Johnson’s loans came from private investors."
The AP story does say those things. But it also agrees with a Feingold spokesman’s summation of the point of the incumbent’s ad:
AP, Sept. 13: The main point of the ad, [the Feingold spokesman] said, is to note that Johnson has opposed government assistance for others even though his own business benefited from a government program.
That point is true. However, it’s obscured by the words chosen by the newscaster and headline writers in the ad.
A Context Conundrum?
WKOW asked Feingold to take down his ad, saying that viewers might think they were watching an actual news story. Feingold refused. News Director Boxx objected to the ad’s use of WKOW’s original report:
Boxx: He basically took weeks of investigative work, sliced it, diced it, took out the context, the balance, the other side of the story. He did it without our permission, and it was wrong.
We disagree with at least part of Boxx’s statement. Feingold’s ad didn’t do anything that the news report didn’t do — in fact, the original WKOW segment was arguably more explicit about painting Johnson as a hypocrite:
WKOW reporter Schaper: In the 1980s, [Pacur] expanded through the help of a $2.5 million government bond issued by the city of Oshkosh, a bond that charged below-market interest rates. Today, Johnson rails against government subsidies, saying that they go against the free enterprise system.
Johnson: I’m in business. I have never lobbied for some special treatment or for a government payment.
Schaper is also shown in Feingold’s ad, as we noted earlier, saying, "Ron Johnson loves to say that government doesn’t create jobs. But in the case of his own business, that doesn’t seem to be true."
Whether it was "wrong" for Feingold to use the footage without the station’s permission is a matter of opinion; the station itself says it’s not illegal. But we disagree that the ad "took out the context, the balance, the other side of the story," as Boxx says. The only "other side" presented was the reporter reading a one-sentence response from the Johnson campaign: "An industrial revenue bond is neither special treatment nor a government payment or subsidy."
In our judgment, Feingold’s ad makes the same point, and hits the same tone, as the original news report.
— by Viveca Novak
WKOW. "Feingold’s Campaign Ad Causes Confusion." 14 Sep 2010.
Ramde, Dinesh. "Senate candidate’s business got $4 million in special aid." The Associated Press. 26 Aug 2010.
WKOW. "Johnson’s Company Got Government Loan." 25 Aug 2010.
"Speakers in Feingold ad mislead on Johnson loans." The Associated Press. 13 Sep 2010.
Adams, Kyle. "Johnson Surges Into Lead Over Feingold." RealClearPolitics.com. 17 Sep 2010.