The ink is still drying on the American Reinvestment and Recovery Act, and the government’s corresponding Web site for tracking its progress is still being programmed. But Americans United for Change, a liberal group, already is airing an ad that lauds President Obama for its passage and extols its benefits.
FactCheck.org has reviewed dubious ads from Americans United for Change before, when the group was attacking then-President Bush and other Republicans. This ad repeats the Obama claim that the stimulus will keep or save 3.5 million jobs. Last week we explained how that projection was backed up by several economists, though they said “there is great uncertainty in their estimates.” It’s worth noting that one of the economists who originally supported the 3.5 figure, Mark Zandi, downgraded his projection to 2.2 million jobs because of the smaller size of the final compromise legislation. And we have also previously discussed the limitations of economic projections in this unique circumstance.
The jobs claim may be murky, but the ad makes an error in echoing another of Obama’s claims. The ad shows a clip of Obama saying that the ARRA will give tax cuts to 95 percent of “hard-working” Americans. This is a reference to the so-called “making work pay” refundable tax credit that is a part of the law. The $400 credit is available to all employed tax filers, though it does start to phase out in higher income brackers.
The problem, though, is that the ad’s on-screen text reads “tax cuts for 95% of Americans,” omitting any reference to employment status. That’s wrong. The tax credit is only available to workers — so retirees or those who are unemployed would not realize the benefit. A Tax Policy Center analysis found that a more modest 75.5% of tax filers would benefit.
It is also questionable whether all of the tax refunds can properly be called “tax cuts” at all, since the Making Work Pay credit is refundable and therefore is going to many who currently earn so little that they pay no federal income taxes in the first place. The White House calls them tax cuts, but the nonpartisan Congressional Budget Office officially scores the bill’s refundable credits under “direct spending.”