A Project of The Annenberg Public Policy Center

Mitt and Rudy’s Cherry Orchard

Romney and Giuliani harvest figures selectively. Watch out for the pits.


Summary

During the Oct. 9 Republican debate, moderator Chris Matthews unleashed a mini-brawl between former Massachusetts Gov. Mitt Romney and former New York Mayor Rudy Giuliani over their respective fiscal records. Both men spewed statistics that sometimes seemed to contradict each other. We find that each man was cherry-picking his numbers, sometimes in misleading ways.

Among the transgressions:

  • Giuliani used a questionable calculation to make it sound as though Romney raised taxes significantly while he was governor; he didn’t.
  • Giuliani once again claimed he cut taxes 23 times in New York City, a claim that we’ve previously found to be misleading. Eight of those were cuts initiated by others, and one large cut he fought for months before deciding to support.
  • The two cited radically different, and utterly confusing, numbers when describing their spending records while in office.

Analysis

Chris Matthews posed the question to Rudy Giuliani and Mitt Romney at Tuesday’s GOP debate: “You’ve been having a tit for tat on tax cutting. What’s the difference between the two of you?”

The two responded with figures that would mislead many voters. In fact, the ensuing back-and-forth left heads spinning even among fiscal experts. “I have watched campaigns for decades and, even by the standards of statistics being misused, [Tuesday] night was excessive,” said Michael Widmer, executive director of the nonpartisan Massachusetts Tax Foundation, when called by our bewildered fellow fact-checkers at washingtonpost.com. Giuliani was particularly guilty of this when he accused Romney of raising taxes significantly in Massachusetts:

Giuliani: [T]he point is that you’ve got to control taxes. But I did it; he didn’t. I controlled taxes. I brought taxes down by 17 percent. Under him, taxes went up 11 percent per capita. I led; he lagged.

Hearing this, one could be forgiven for thinking that Romney had raised tax rates substantially during his four-year term as Massachusetts governor. Not true – he tried to lower state income-tax rates three times but was stopped by the Democratic-controlled Legislature.

What the mayor is actually talking about is his own calculation of “tax burden,” which he defines as the percentage of total personal income paid to the government. New York’s total revenues amounted to 8.73 percent of all personal income in the city during the year Giuliani took office, and that figure declined to 7.24 percent in his final year. In Massachusetts, the tax burden figure went up under Romney, from 5.93 percent to 6.57 percent.

The New York decline amounted to just under 1.5 percent of total income, and the Massachusetts increase was a bit more than 0.6 percent of income. Giuliani gets his double-digit figures by calculating the percentage change in the tax-burden figure, which itself is a percentage. Figured that way, the Massachusetts rate did increase by 11 percent under Romney and the New York rate decreased by 17 percent under Giuliani. But journalists generally avoid using such figures because they are confusing and easily misunderstood.

Tax burdens, of course, are going to vary significantly depending on what’s happening to average incomes, which are in turn dependent on the general state of the economy. The good times rolled for most of Giuliani’s tenure: He took office in January 1993, just as the longest economic boom in U.S. history was gathering steam. Romney, who became governor in January 2003, wasn’t so fortunate. Personal income grew 49 percent under Giuliani, 23 percent under Romney.

So when Giuliani talks about leading and lagging, he might also mention a third “l”: luck.

Giuliani’s selective use of statistics threw fuel on the fire as far as Romney was concerned, but he then also made a misleading claim:

Romney: It’s baloney. Mayor, you’ve got to check your facts. No taxes – I did not increase taxes in Massachusetts. I lowered taxes.

Romney is correct, as we noted above, that he did not raise anything he called a tax. But as we have pointed out numerous times now, Romney in fact increased fees and “closed loopholes.”

Now for the spending side of the equation:

Giuliani: I mean, the difference is that under Governor Romney, spending went up in Massachusetts, per capita, by 8 percent. Under me, spending went down by 7 percent. 

As it turns out, Giuliani isn’t really talking about actual spending here, but instead he’s referring to budget proposals. To figure that out we had to call the Giuliani campaign, which is a step most citizens shouldn’t have to venture. Looking just at the proposed numbers (adjusted for inflation) Giuliani increased total spending by 2.6 percent, while Romney increased spending by 8.1 percent. Meanwhile the population of New York City grew by around 700,000 over the course of Giuliani’s term, whereas the population of Massachusetts remained almost unchanged under Romney. Relative to the number of people using government services, Giuliani did indeed propose less spending, while Romney proposed more.

Given that both men faced Democratic-controlled legislative bodies, we think it’s reasonable to compare proposals. But Giuliani’s wording was inaccurate. He would have been correct to say, “Governor Romney proposed 8 percent higher spending per person in Massachusetts and I proposed 7 percent less.”

Romney came back with this:

Romney: [T]he Club for Growth looked at our respect to spending record. They said my spending grew 2.2 percent a year. Yours grew 2.8 percent a year.

That sure sounds different from the spending numbers Giuliani mentioned just moments earlier. How can they both be right? Here’s how: The Club for Growth’s assessment of the two spending records measures actual spending – as enacted by the Legislature, in Romney’s case, and the city council, in Giuliani’s. And the assessment is also based on total spending, not on spending per person.

Romney leaves out something else the Club for Growth noted: that much of his own fiscal discipline took place during the first half of his term as governor, when the state was facing budget deficits. In 2006, with state coffers once again flush, Romney proposed a 10 percent increase in spending.

As for the other claims in their furious exchange, we’ll take them in turn:

Giuliani: I cut taxes 23 times when I was mayor of New York City. I believe in tax cuts. I believe in being a supply sider. I cut the income tax I think it was 24 percent. We got 42 percent more revenues.… I cut taxes by over $9 billion.

We’ve seen – and panned – this film before. As we’ve written, eight of the 23 cuts he takes credit for were initiated at the state level, not by him at all, and a ninth, pushed by the city council, was resisted by Giuliani for some time before he acquiesced. It was the largest income tax cut in history for city residents. So Giuliani can claim personal credit for cutting either 14 or 15 taxes for a total of either $5.4 billion or $8 billion, depending on whether you give him credit for the council-sponsored cut described above – not 23 cuts totaling $9 billion.

During Romney’s next at-bat, he said this:

Romney: But if you want to cut taxes, you’re going to have to cut spending. … Mayor Giuliani took the line item veto that the president had all the way to the Supreme Court and took it away from the president of the United States. … I’m in favor of the line-item veto. I exercised it 844 times.

Giuliani did challenge President Bill Clinton on the line-item veto after he used it to cut a provision that could have helped NYC’s bottom line. It was declared unconstitutional by the Supreme Court in 1998. Romney is also correct to say that he exercised his state-level line-item veto power 844 times. But as we have reported before, Romney doesn’t note that more than 700 of those vetoes were overridden by the overwhelmingly Democratic-controlled Legislature.

The former governor had much more to say:

Romney: He also fought to keep the commuter tax, which was a very substantial tax, a almost $400 million tax on commuters coming into New York.
And when it’s all said and done, if you’re a New York taxpayer, city taxpayer, your state and city tax combined can reach as high as 10 percent. And in our state, if you’re a Boston worker, it’s going to be more like 5.3 percent.

Giuliani indeed fought like a wolverine when state officials moved to eliminate the city’s non-resident income tax. He lost that battle. During 1999, the last year it was in effect, it brought in close to $400 million, according to an estimate by the city’s nonpartisan Independent Budget Office, as Romney says. Romney’s also correct about New York City taxes – in fact, at the end of Giuliani’s term, combined city and state taxes went as high as 10.5 percent for some residents. Of course, as mayor, Giuliani was only responsible for part of that number.

Romney’s figure for Boston is right as well. It’s worth noting that Boston does not have a city tax, so the Boston worker pays only the state’s flat 5.3 percent rate. The top New York City personal income tax rate, by contrast, was 3.648 percent at the end of Giuliani’s term.

We’re going to go pick some apples. After this exchange, the cherry orchard is bare.

– by Viveca Novak and Joe Miller

Sources

State Responses to Budget Crises in 2004: Massachusetts.” Feb. 2004. The Urban Institute. 26 June 2007.

Bureau of Economic Analysis. “Local Area Personal Income.” 7 August 2007. U.S. Department of Commerce: Bureau of Economic Analysis. 12 October 2007.

State Annual Personal Income.” 20 September 2007. U.S. Department of Commerce: Bureau of Economic Analysis. 10 October 2007.

Bureau of Labor Statistics. “Consumer Price Index — All Urban Consumers.” 19 September 2007. Bureau of Labor Statistics. 10 October 2007.

Cardozo, Carol L., et al. State Budget ’04: The Long Road Back. 1 Jan. 2004. The Massachusetts Taxpayer Foundation. 16 May 2007.

City of New York, New York. “Comprehensive Annual Financial Report of the Comptroller for the Fiscal Year Ended June 30, 2003.”

The City of New York, Office of Management and Budget. “Executive Budget Fiscal Year 2002.”

Club for Growth. Mitt Romney’s Record on Economic Issues. 21 August 2007. 11 October 2007.

Rudy Giuliani’s Economic Record. 14 May 2007. 11 October 2007.

The Commonwealth of Massachusetts. The 183rd General Court. FY04–Budget Overrides.

The Commonwealth of Massachusetts. Massachusetts General Court. House & Senate Actions on the Governor’s Vetoes.

The Commonwealth of Massachusetts. The 184th General Court of Massachusetts. Legislative Action on Budget Vetoes.

The Commonwealth of Massachusetts. Massachusetts General Court. Veto Overrides.

Fiscal Affairs Division. “Governor’s Annual Budget Recommendations.” 2003-2007.

Greenberger, Scott S. “Romney Often Casts Himself as Budget Hero.” Boston Globe. 24 Oct. 2005.

Office of Tax Policy Analysis. “Summary of Legislative Changes Enacted in 2001.” 3 January 2002. New York State Department of Taxation and Finance. 11 October 2007.

State Individual Income Taxes. 1 Jan. 2007. Federation of Tax Administrators. 26 June 2007.

U.S. Census Bureau. “National and State Population Estimates.” 22 December 2006. U.S. Census Bureau. 11 October 2007.

U.S. Census Bureau. “States Ranked by Total State Taxes: 2006.” 30 March 2007. U.S. Census Bureau. 10 October 2007.

States Ranked by Total Taxes and Per Capita Amount: 2002.” 4 April 2005. U.S. Census Bureau. 10 October 2007.