Real estate developer Donald Trump’s speech announcing he is running for the Republican nomination for president contained a number of false and misleading statements on the economy, trade, health care and terrorism:
- Trump claimed that economic growth has “never” been below zero until last quarter’s drop, which is far from true. It has been below zero 42 times since 1946.
- He said “there are no jobs” to be had. In fact, there were 5.4 million job openings recorded at the end of April, the most in 15 years.
- He said the “real” unemployment rate is “anywhere from 18 to 20 percent” and “maybe even 21 percent.” We see no factual basis for this opinion.
- He boasted he would have blocked new Ford plants in Mexico by threatening to impose a 35 percent tax on vehicles and parts made in Mexico and shipped to the U.S. But only Congress can impose taxes and such a tax would violate the North American Free Trade Agreement.
- Trump claimed the five Taliban leaders exchanged for Sgt. Bowe Bergdahl “are now back on the battlefield trying to kill us.” But all five remain in Qatar, where they continue to be monitored and are subject to a travel ban, according to the State Department.
- He also made the misleading claim that health care premium costs are going “up 29, 39, 49 and even 55 percent.” He’s talking about some proposed rate increases on the individual market that still need regulatory approval. There are also proposed rate decreases or single-digit increases that did not have to be submitted for review.
On the Economy
Trump, who gave his speech in the lobby of Trump Tower in New York City, becomes the 12th Republican to officially join the race. The billionaire developer promised strong leadership and savvy economic stewardship. But he went too far in talking down the present state of the economy.
GDP: Trump said, “Last quarter, it was just announced, our gross domestic product – a sign of strength, right? But not for us. It was below zero. Who ever heard of this? It’s never below zero.” That’s pure nonsense.
Actually, the quarterly change in real GDP has been below zero 42 times since 1946, including a drop exactly one year before the most recent one.
Trump was referring to the 0.7 percent drop in the annualized rate of real (inflation-adjusted) GDP growth that Commerce Department statisticians reported on May 29. The drop came as no surprise, given the record snowfall that paralyzed Boston and much of the Northeast in February, and the near-record snow that covered the Chicago area and much of the Midwest. There had been an even bigger, 2.1 percent drop in the January-March quarter of 2014, also attributed partly to bad weather.
Currently, all indications are that growth has resumed at a modest pace. The Federal Reserve Bank of Atlanta estimated on June 16 that real GDP is increasing this quarter at an annual rate of 1.9 percent, while the “Blue Chip” consensus of private economists falls in the 2 percent to 4 percent range.
Opinions can differ on whether the current growth rate represents “strength” or not. And we’re not sure how seriously Trump meant his “never” comment to be taken, even though he repeated it for emphasis. In any case, it’s not true.
“No jobs”: Trump said, “A lot of people up there can’t get jobs. They can’t get jobs. Because there are no jobs.”
Actually, the Bureau of Labor Statistics reported on June 9 that the number of job openings at the end of April had increased to 5.4 million, the most job openings since the bureau began tracking them in December 2000.
The previous record came in January 2001. The new record is 1.1 million higher than the number of job openings recorded in November 2007, the month before the Great Recession of 2007-2009 began. And the number of openings has more than doubled — increasing by 3.2 million — since hitting the low point in July 2009.
“Real” Unemployment: Trump said, “[O]ur real unemployment [rate] is anywhere from 18 to 20 percent. Don’t believe the 5.6. Don’t believe it. … The real number is anywhere from 18 to 19 and maybe even 21 percent.”
We see no factual basis for this claim. Trump is going well beyond the exaggeration that Mitt Romney made during the 2012 campaign that the “real” unemployment rate was 15 percent. And back then, the official rate was 8.3 percent, compared with the current rate — which is actually 5.5 percent, not the 5.6 percent Trump cited.
Romney was referring to an alternative measure that is meant as the broadest measure of under-employment. That measure — called “U-6″ — adds in people who have part-time jobs but are looking for full-time work, “discouraged workers” who aren’t looking for work because they don’t believe jobs are available, and all others “marginally attached” to the workforce, meaning those who say they want to work and would work if offered a job, and who have looked for work sometime within the past year but not within the last four weeks. (Only those who say they have looked for work in the last four weeks are officially counted as unemployed.)
Currently, that U-6 rate stands at 10.8 percent, well below where it was in 2012, though still not down to the 8.4 percent rate of November 2007, the month before the Great Recession of 2007-2009 began.
So where does Trump get his 18 percent to 21 percent range? The highest number we found from any economist comes from Peter Morici, an economist at the University of Maryland, who has argued that the “real” rate is “at least 18 percent.” In addition to categories included in the U-6 measure, Morici counts what he calls “the effects of immigration.” And he also adds in the “many” students who are being “duped” into applying for “useless programs” at universities and for-profit schools.
“They would likely be in the labor force now but for easy access to federally sponsored loans,” Morici wrote. “Adding in these students, the real unemployment rate among U.S. citizens and permanent residents is at least 18 percent.”
But even that 18 percent estimate is a bit out of date. The U-6 rate has dropped another 1.4 percentage points since his article was published on July 31, 2014. Morici, in a telephone interview, said that if he were to run his calculations again, the “real” rate would likely be “in the range of 15 percent now.”
On Manufacturing Jobs
In April, American automaker Ford announced that it was putting $2.5 billion into building new engine and transmission plants in Mexico. The company said that it expects the deal will bring 3,800 new direct jobs to that country.
But Trump believes this is bad for the U.S., and said that as president, he would impose a huge tax on Ford vehicles and parts manufactured in Mexico and shipped to the U.S.
“Every car and every truck and every part manufactured in this plant that comes across the border, we’re going to charge you a 35 percent tax, and that tax is going to be paid simultaneously with the transaction, and that’s it,” he said.
But only Congress, not the president, can impose taxes. And Trump’s tax proposal would likely run afoul of current international trade agreements.
“Mr. Trump’s tax would violate the current North American Free Trade Agreement, NAFTA, for most cars and car parts sourced from Mexico,” wrote Sean McAlinden, chief economist and executive vice president of research for the Center for Automotive Research, in an email to us.
McAlinden said that under NAFTA, new vehicles and parts containing 60 percent North American manufacturing content are allowed tariff free access to all three countries.
He added that Trump’s proposal “may also violate WTO (World Trade Organization) agreements signed by the U.S. that do not allow an increase in a tariff once it has been lowered except as an anti-dumping fine (which must be proven).”
But McAlinden noted that Congress could possibly vote to revoke NAFTA and vote to withdraw from the WTO. And as president, Trump could sign that legislation into law.
Trump isn’t alone in wanting to make it tougher for U.S. companies to move operations outside the country. The AFL-CIO union has also argued that NAFTA, instead of boosting American jobs, has “made outsourcing to Mexico much more attractive for U.S. companies.”
Even so, Trump’s proposal to tax Ford wouldn’t be as simple as picking up the phone and threatening the CEO with a huge import tax.
On the Taliban Five
Trump claimed the five Taliban leaders exchanged for Sgt. Bowe Bergdahl “are now back on the battlefield trying to kill us.” But all five remain in Qatar, where they continue to be monitored and are subject to a travel ban, according to the State Department. A department spokeswoman says none of them has returned to the battlefield.
Trump argued that President Obama is a “bad negotiator” based on the deal the president approved to swap Bergdahl for five Taliban figures detained at Guantanamo Bay. Bergdahl, who was held captive by the Taliban for five years after wandering away from his base in Afghanistan, was charged on March 25 with desertion and misbehaving before the enemy.
Trump, June 16: He [Obama] is the one that did Bergdahl. We get Bergdahl, they get five killer terrorists that everybody wanted over there. We get Bergdahl. We get a traitor. We get a no-good traitor, and they get the five people that they wanted for years, and those people are now back on the battlefield trying to kill us. That’s the negotiator we have.
As part of the exchange, the five Taliban leaders were taken to Qatar, with the understanding that they would be monitored for a year and would be subject to a travel ban. That yearlong travel ban/monitoring was extended at the end of May, and no date was provided for when those restrictions might be lifted.
In January, CNN reported that according to multiple U.S. military and intelligence officials, one of the so-called Taliban Five “has attempted to return to militant activity from his current location in Qatar by making contact with suspected Taliban associates in Afghanistan.” And on March 25, Fox News, citing an unnamed “government official familiar with the intelligence,” reported that “[a]t least three of the five Taliban leaders traded last year for Sgt. Bowe Bergdahl have tried to plug back into their old terror networks.”
State Department officials, however, have vehemently contested the claim that any of the men have rejoined the battlefield.
“Well, what I can say since their release is that none of the five individuals has returned to the battlefield,” State Department spokeswoman Marie Harf said at a June 5 press briefing. “All five men are subject to a travel ban and none have left Qatar. None of the individuals has engaged in physical violence. Many actions have been taken to restrict their activities, of course. And so I know there was a lot of discussion about this earlier about their possible re-engagement, and none of the five have returned to the battlefield.”
Harf told us via email that nothing has changed in the two weeks since she made that statement.
On Health Care
Trump made the misleading claim that health care premium “costs are going for people up 29, 39, 49 and even 55 percent.” He’s talking about proposed rate increases for 2016 for some plans on the individual market, but it’s unclear whether such increases will be approved by state insurance regulators. And other plans have proposed decreases in rates, or single-digit increases that didn’t have to be submitted for review.
The Affordable Care Act requires insurers to submit any proposed rate increase above 10 percent for individual and small-group market plans to state and federal regulators for review. Insurers must publicly disclose the proposed increases and explain why they are necessary.
These plans would be sold on the state and federal exchanges, as well as through insurance brokers for individuals buying their own plans. Most Americans get their insurance coverage through work, and their premiums have been rising at low rates for the past few years.
The average annual family-plan premium for employer-sponsored policies went up 3 percent from 2013 to 2014, according to the latest annual employer survey from the nonprofit Kaiser Family Foundation and Health Research & Educational Trust. The press release on the survey noted: “Premiums increased more slowly over the past five years than the preceding five years (26 percent vs. 34 percent) and well below the annual double-digit increases recorded in the late 1990s and early 2000s.”
But the individual market is different, and how premiums can be priced has changed under the ACA. Insurers must now accept anyone who wants insurance, and they can’t charge policyholders more based on health status. Plans also must cover certain minimum benefit standards.
In early June, as the Associated Press explained, the federal government released the rate increase proposals for the individual market, and indeed, some of them are quite high. “Dozens of health insurers say higher-than-expected care costs and other expenses blindsided them this year, and they’re going to have to hike premiums for individual policies well-beyond 10 percent for 2016,” the AP reported, citing a 26 percent increase sought by Blue Cross and Blue Shield of North Carolina, and about 20 percent increases proposed by plans in Illinois, Florida and other states.
Trump cites a 55 percent increase, and, in fact, there are plans that have requested increases that high, and even above. In New Mexico, one Blue Cross Blue Shield plan is proposing a 65 percent increase; the same plan decreased its premium rate by nearly 2 percent for 2015. Another New Mexico BCBS plan that dropped rates by 2.37 percent for 2015 is seeking a 58.75 percent increase for next year. This information is available on HealthCare.gov, where people can search for their specific health plan to see if their insurer has proposed an increase above 10 percent.
Blue Cross Blue Shield of New Mexico said that “the main driver” of the proposed increase is that the claims were “significantly higher than expected.”
Minnesota is another state in which some plans are requesting very high increases, above 50 percent. Other plans in the state have proposed increases around 20 percent or 10 percent.
The actual rate increases could be lower. As the AP story said, “Regulators in many states have the power to reject price increases, and many who don’t are expected to at least pressure insurers to soften their plans.”
Some states, like New Mexico and Minnesota, also are experiencing more extreme proposals than others. In Ohio, for instance, only two of the 16 rate request increases exceed 20 percent.
And, again, these proposals only include plans that are seeking increases above 10 percent. The Indianapolis Star published a story on June 15, showing that four of the nine insurance companies on the ACA exchange in Indiana are proposing to decrease premiums for 2016, some by double-digit percentages. Anthem of Indianapolis, which does the most business on the exchange for the state, has proposed a 3.8 percent rate increase.
Individuals also can switch to lower-cost plans. As we wrote last year, the New York Times analyzed premium data for the exchanges for 2015 and found that many who stuck with the same plan could see increases, as high as 20 percent. But not if they shopped around. “In a typical county, the price will rise 5 percent for the cheapest silver plan and 4 percent for the second cheapest,” the Times wrote.
— Brooks Jackson, D’Angelo Gore, Robert Farley and Lori Robertson
Correction, June 17: In our original article we identified Peter Morici as a Fox News contributor. He is not a paid Fox News contributor. We also erred in saying Morici had overstated the U-6 measure. He did not. We failed to note that “immigration” was among the factors he was citing in addition to U-6. We regret these errors.