Almost all of the misinformation coming from politicians on the Sunday shows this week had to do with the expiring Bush tax cuts, which Congress is expected to vote on this week. Coming in second was the military’s "don’t ask, don’t tell" policy for gay servicemembers — we’ll post Tuesday on an exchange that took place on that topic on ABC’s "This Week."
On CBS’ “Face the Nation,” Republican Sen. Jon Kyl of Arizona gave a misleading description of public opinion on the Bush tax cuts. After host Bob Schieffer cited a CBS News poll that found 53 percent of respondents wanted the tax cuts to be extended only for households earning less than $250,000 a year, Kyl said: “There’s a Gallup poll of — a week ago, that had 80 percent of Americans saying don’t increase taxes.”
Kyl gave the impression that the Gallup poll showed a large majority favoring the extension of all tax cuts, even for the wealthy, contradicting the CBS survey. But that’s not the case. Instead, the USA Today/Gallup poll, conducted Nov. 19-21, found that 44 percent wanted to extend the tax cuts but set limits for wealthy Americans. Another 40 percent wanted to keep all the cuts for all income groups. That’s a total of 84 percent wanting to keep the tax cuts in some form – but not for everyone.
Other recent polls similarly have found that Americans are divided on whether to extend the cuts for everyone or only for those earning under $250,000.
Blame the Bush Tax Cuts
Also on “Face the Nation,” Democratic Sen. Richard Durbin of Illinois made the hyperbolic claim that the Bush tax cuts for the wealthy “led us into this recession.”
Durbin: And the Bush economic policies of tax cuts for the wealthiest individuals have led us into this recession, cost us 15 million jobs, have utterly failed. You can’t point to those policies as successful.
Really? It was the tax cuts for the upper-income brackets that single-handedly caused the recession? Kyl rightly questioned that theory, saying:
Kyl: They did not create the problem that we have today. That was a problem created, as you know, by the crash of Fannie Mae and Freddie Mac and the housing market, the so-called bubble. It had nothing to do with these tax rates.
We looked into the causes of the financial crisis in 2008 and found there was plenty of blame to go around. Those at fault included the Bush and Clinton administrations, homebuyers, Congress, mortgage brokers, Wall Street firms and the Federal Reserve. As we wrote: “The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding.”
Kyl went on to offer some grandstanding of his own, saying that “without the taxes being where they are the situation would have been much worse.” That’s highly debatable.
When the Congressional Research Service looked into the impact on the economy of extending the Bush tax cuts, it found that the economy performed worse according to several indicators after the tax cuts were enacted than it had before. That lends some credence to Durbin’s belief that the tax cuts hurt the economy — but certainly not that they caused the recession. CRS wrote that another interpretation is that the cuts didn’t have much of an impact at a time when other factors were negatively affecting the economy. So it’s not at all clear that the cuts helped the economy, as Kyl claimed.
CRS, Oct. 2010 report: By almost any economic indicator, the economy performed better in the period before the tax cuts than after the tax cuts were enacted, regardless of whether recession years are omitted from the comparison. GDP growth, median real household income growth, weekly hours worked, the employment-population ratio, personal saving, and business investment growth were all lower in the period after the tax cuts were enacted. … One interpretation is that the tax cuts contributed to the deterioration in economic performance, because income effects on work and saving dominated or because of the negative economic effects of the higher budget deficits. An alternative interpretation is that the tax cuts did not have significant enough effects to show up in the data at a time when other factors were causing the economy to perform relatively poorly. In this interpretation, the tax cuts could have small positive, small negative, or no effects on the economy.
That’s Not All They Said
In a conversation about Senate approval of the New START treaty — the nuclear weapons agreement with Russia — Kyl said that he hasn’t “held it up” and selectively cited a Washington Post editorial to back up his view that approving the treaty wasn’t an urgent matter.
Kyl: I haven’t held it up. Leader Reid can bring it to the floor any time he wants to. I have no ability to hold it up. I haven’t even said whether I’m for it or against it.
He went on to say that the “Washington Post editorialized saying no calamity will befall the United States, if this treaty isn’t done in a lame duck session.” It’s true that Sen. Harry Reid can bring the matter to the floor whenever he wants, and that a Post editorial said that “no calamity will befall the United States if the Senate does not act this year.” But there’s more to it than that.
Kyl surprised the White House in November by saying that there wasn’t enough time in the lame duck session to consider the New START treaty. In theory, Reid could bring the pact to a vote, but in reality, without the support of Kyl, who is a Republican leader on this issue, approval is unlikely. And while the Post said that President Barack Obama was overstating matters “more than a little” by claiming passage was "a national security imperative," the Post also had critical words for Kyl, saying he had "blindsided the administration" in claiming there wasn’t enough time to approve the treaty this year.
Washington Post editorial, Nov. 19: Sen. Jon Kyl (R-Ariz.), who has been representing the Republican side, acknowledged months ago that the treaty is "relatively benign"; his concern has been obtaining a parallel commitment from the administration to modernize the remaining U.S. weapons stockpile and its related industrial infrastructure. The White House has gone a long way to meet his concerns, promising to spend $7 billion this year and larger amounts in subsequent years as part of a 10-year, $85 billion plan.
The Post said both sides should stop playing politics and pass the treaty: “Both sides would do well to stop maneuvering for political advantage and return to the negotiations that appeared close to winning the necessary support for the treaty before the midterm elections.”
A $100 Billion Here, a $100 Billion There
On NBC’s "Meet the Press," Democratic Sen. John Kerry slightly exaggerated the cost of extending the Bush tax cuts. In discussing the Senate’s rejection Dec. 4 of the Democratic plan to extend the cuts on income below $250,000 for families and $200,000 for individuals, Kerry said extending the tax cuts for those upper-income levels would add $800 billion to the deficit.
Kerry: We’re — we want to extend the tax cuts for every single American, but up to a level that makes sense in terms of our economy. You talk about uncertainty of the economy, how much uncertainty is there to our economy when you add $800 billion to the deficit.
The cost would be $700 billion, not $800 billion, and it would be over 10 years — from 2011 to 2020, according to an August 2010 report by the nonpartisan Congressional Budget Office. The CBO says the cost of extending the Bush tax cuts for all income levels would be about $2.7 trillion over that 10-year period, including $700 billion for income above $200,000 for individuals and $250,000 for families.
Also on "Meet the Press," Senate Minority Leader Mitch McConnell repeated a claim about the expiring tax cuts and small businesses that we’ve seen, and shot holes in, before.
McConnell: Over 700,000 small businesses pay taxes as individuals. They would be hit by raising the top rate above $250,000; 700,000 of our most productive and effective small businesses. That’s 50 percent of small business income and 25 percent of the work force in the middle of a recession.
An analysis by the congressional Joint Committee on Taxation reported that 3 percent of all taxpayers with net positive business income would be affected by raising tax rates for households making more than $250,000 ($200,000 for individuals), or about 750,000 taxpayers in 2011. Fifty percent of the $1 trillion in net positive business income would be subject to the increased tax rate.
But the JCT also says that not all of these taxpayers are entities that would be considered "small" businesses. The committee doesn’t know how many fall under that rubric; neither does McConnell, and neither do we.
We’ll have more on this issue soon.
– Lori Robertson, Eugene Kiely and Viveca Novak