A Project of The Annenberg Public Policy Center

Democratic PAC Distorts Facts in Virginia Senate Race

A Democratic super PAC distorts some facts in a TV ad that compares the records of former Sen. George Allen and former Gov. Tim Kaine, who are running against each other for an open Senate seat in Virginia. The Majority PAC ad contains exaggerations on Medicare, federal deficit spending, state spending cuts and Virginia’s business environment:

  • The ad blames Allen for creating “a massive federal deficit.” Actually, he was only one of 100 senators, and spending bills at that time routinely passed with bipartisan support.
  • The ad says Allen “voted to weaken Medicare.” But it cites only votes against two frivolous Democratic amendments aimed at derailing the Bush tax cuts and a third amendment designed to block Medicare premiums from rising.
  • It says Kaine “made Virginia ‘the best state for business’ four years in a row.” But that’s based on ratings of factors in place long before Kaine took office, such as five-year income growth and a low corporate tax rate put in place more than 30 years earlier.
  • The ad also exaggerates when it says Kaine “cut $5 billion in spending.” As governor, Kaine’s spending cuts amounted to about $3.5 billion, not $5 billion.

Surplus to Deficit: Who’s to Blame?

The Majority PAC is a relatively new super PAC formed by Democrats to keep the Senate in Democratic hands. The Democrats now hold 51 seats, although two independents, Bernie Sanders and Joe Lieberman, caucus with the Democrats.

In Virginia, the party now holds both seats. But Sen. Jim Webb is retiring, and the Democrats are in jeopardy of losing his seat. The Cook Political Report says the race between Tim Kaine and George Allen is a toss up.

The Majority PAC already has aired two TV ads in Virginia — including its latest called “Only One,” which began airing June 19. It says that “only one” of the Senate candidates has served in Congress, and then says “look what George Allen did to Virginia” as senator. (Allen served in the 1990s as Virginia governor and a member of the House of Representatives, but the ad focuses on Allen’s years as senator from 2001 to 2007.) The review, however, is one-sided and exaggerated — starting with the claim that “he turned the largest budget surplus into a massive federal deficit.”

The super PAC cites Allen’s votes for bills that raised the debt-ceiling, cut taxes and increased spending. It’s true that Allen voted to raise the debt limit four times and to cut income taxes in 2001 and 2003, and to approve spending bills. But, of course, Allen was just one of 100 senators, and all of these bills were approved by both houses of Congress and signed by the president.

The ad would have been accurate if it said that Allen “helped” turn the surplus into a deficit — although he had a lot of help in spending tax dollars. Allen voted on appropriations bills from fiscal years 2002 to 2007, and every one of them passed with bipartisan support. It may be hard to imagine now, but back then no appropriations bill passed with fewer than 65 votes and some of them received unanimous support:

  • In his first year, Allen voted for 14 appropriations bills for fiscal year 2002. Nine of the 14 received 90 or more votes, and two were approved by unanimous consent. The District of Columbia appropriations bill received the least support, and it passed 79-20.
  • The next three years — fiscal years 2003, 2004 and 2005 — Congress approved a single omnibus and consolidated appropriations bills, receiving 76, 65 and 65 votes, respectively.
  • Allen voted for 11 appropriations bills for fiscal year 2006, and the majority of the bills again received 90 or more votes. The agriculture spending bill got the fewest votes, but comfortably passed 81-18.
  • In Allen’s last year, the Senate voted 100-0 to approve a continuing resolution to keep the government operating on a temporary basis, until a final spending plan could be passed, and extended that CR twice by voice vote and unanimous consent. It wasn’t until after the 2006 elections, when the Democrats took control, that a final bill was passed. But by that time, Allen had been defeated and left office.

It is true that the spending bills and tax cuts Allen supported and Congress passed in those years helped turn a surplus into a deficit. The government ended fiscal year 2001 with a $128 billion surplus, and that hasn’t happened since.

Allen ‘Voted to Weaken Medicare’?

The ad also says that Allen “voted to weaken Medicare,” citing his opposition to three Democratic-sponsored amendments. Let’s start with one that deals with Medicare premiums.

The Senate in 2005 considered a bill that would have, among other things, increased the Medicare reimbursement rate for physicians by 1 percent in 2006. That would have triggered an increase in Medicare premiums in 2007. Sen. Bill Nelson offered an amendment — which failed 49-50 — that would have prevented Medicare premiums from rising as a result of the increase in the physician reimbursement rate, by shifting the cost instead to drug companies.

Then-Sen. Judd Gregg, a Republican, said on the Senate floor during debate that premiums would increase $1.68 a month, calling it “reasonable,” while Nelson said it was “more like $3 per month.” Either way, Nelson’s amendment wasn’t an attempt to strengthen Medicare, and, conversely, Allen’s vote wasn’t an attempt to weaken it. In both cases, the additional cost of increasing physician payments would have been offset, keeping the system funded.

The Majority PAC also cites Allen’s votes against two amendments to President Bush’s 2001 tax cut legislation. Both were intended to derail or delay the bill. In a May 24, 2001, article, the Las Vegas Review Journal wrote: “Democrats offered a string of amendments, some that had nothing to do with tax cuts, in an attempt to stall the bill from passage.” The Chicago Tribune on May 23, 2001, also wrote that Democrats were trying to “stall” the bill with a “barrage” of amendments.

In a bit of foreshadowing, the Tribune wrote: “Sen. Gordon Smith (R-Ore.) accused Democrats of crafting amendments in order to run attack ads in future elections.”

Let’s go back to the future. Here’s what the amendments would have done:

  • Sen. Tom Harkin offered an amendment that would have delayed implementation of the Bush tax cuts “until the enactment of legislation that ensures the long-term solvency of the Social Security and Medicare trust funds.” It was defeated 45-54.
  • Sen. Debbie Stabenow drafted an amendment that she described on the Senate floor this way: “It says we will not use the Medicare Part A trust funds in order to pay for this tax cut.” GOP Sen. Chuck Grassley responded that the amendment was “not needed,” because “we fully protect Part A” in the budget resolution that already had been adopted. He said Congress was committed “to only use Medicare money for Medicare, nothing else.” The measure failed 46-54.

Kaine ‘Made’ Virginia Best for Business?

In turning to Kaine’s record, Majority PAC also exaggerates. It says that Kaine “made Virginia ‘the best state for business’ four years in a row.” The ad refers to Forbes magazine, which ranks states based on their business environments.

But Forbes only started its rating system in 2006 — the same year Kaine took office. In fact, the first article appeared Aug. 16, 2006. Kaine took office Jan. 14, 2006. So, he had been in office for seven months – hardly enough time to make such an impact.

The ratings were based on criteria such as high-school attainment, five-year income growth, historically low corporate taxes, cost of living, location and infrastructure — all things that would take more than seven months to accomplish. The article cited, for instance, the state’s low corporate taxes — noting that “the corporate income tax has remained unchanged at 6% for more than 30 years.” It also noted the state’s busy ports and airports, and said one of the state’s “strongest attributes is its two highly ranked institutions of higher education,” the University of Virginia and William & Mary.

Kaine took no credit for any of this at the time. In fact, he told the magazine that the state benefits from “a real bipartisan tradition in Virginia of wanting to have a strong business climate.”

Six years later, Kaine perhaps can take credit for maintaining that pro-business tradition — but then again so can Republican Gov. Bob McDonnell. Virginia remained No. 1 in all four of Kaine’s years, including 2007, 2008 and 2009. But it has ranked second in McDonnell’s first two years in office (2010 and 2011).

Kaine ‘Cut $5 Billion in Spending’

In this age of austerity, the ad promotes Kaine’s cost-cutting abilities. It says that Kaine “cut $5 billion in spending” as governor. It’s true that Kaine faced shortfalls of roughly $6.4 billion in the 2008-2010 biennial budget, and nearly $1 billion in the 2006-2008 budget — totaling more than $7 billion. And he did make significant spending cuts to help close those gaps. But not $5 billion.

Here are the facts: A June 23, 2008, legislative summary of Virginia’s adopted budget for 2008-2010 shows the state started with a two-year $76 billion spending plan, an increase of nearly $5 billion from spending in the previous two years. But the Great Recession forced numerous revisions to the budget over the next two years.

In fiscal year 2009, the state collected $3.7 billion less in revenues than anticipated and had “additional spending requirements of $612 million, resulting in a biennial budget shortfall totaling approximately $4.3 billion shortfall.” That’s according to the May 2009 legislative summary of the budget adjustments that had to be made to get the budget back in balance.

The legislative summary shows the state enacted nearly $2 billion in spending cuts through May 2009: Budget cuts first initiated in October 2007 were continued in the 2008-2010 budget at a savings of $592.3 million; the elimination of scheduled 2 percent salary increases saved $242.3 million; and “other targeted budget reductions” saved nearly $1.1 billion. To avoid further cuts, the governor and Legislature also agreed to withdraw $490 million in rainy day funds, make $137.9 million in transfers and balances, and institute tax policy changes and other revenue actions that brought in more than $250 million in new revenues.

But the biggest single piece of funding came from the newly enacted federal stimulus act.

In a June 2009 report on the impact of stimulus funds on state budgets, the Center on Budget and Policy Priorities said Virginia used nearly $1.5 billion in stimulus funds to help close its budget gap.

Center on Budget and Policy Priorities, June 29, 2009: Virginia enacted a revised budget for 2009-10 just a few weeks after passage of the federal recovery act. The updated plan reflects the state’s decision to use $962 million in new federal Medicaid funding, $491 million from the education portion of the State Fiscal Stabilization Fund, and $24 million in Byrne Grant funds for law enforcement.

The budget problems were not over, however. The state only months later faced a $1.35 billion budget gap. Kaine issued a budget reduction plan in September 2009 that called for using nearly $300 million in “nongeneral fund resources,” such as federal funds and state fees and taxes for specific purposes, to replace “general fund revenues,” come from direct general taxes. But he also instituted $1 billion in spending cuts — including closing two correctional facilities, laying off 593 employees, and reducing pension contributions to public employee retirement funds.

That brought the two-year total in spending cuts to about $3 billion.

A June 2010 legislative report that detailed the final adjustments made to the 2008-2010 budget said the “cumulative general fund revenue reductions for the 2008‐10 biennium total over $6.4 billion.” So, Kaine closed less than half of the $6.4 billion budget gap through spending cuts.

Kaine also had to make some budget adjustments in the 2006-2008 budget, although not as drastic. He acted in October 2007 to close a $641 million budget gap, and then again in February 2008 to address a $339 million shortfall — totaling $980 million for fiscal year 2008. But, again, the shortfall wasn’t closed primarily through spending cuts.

Kaine cut state aid to localities, laid off state workers, and reduced state agency budgets. That’s true. But he also transferred funds, borrowed money, and tapped the rainy day fund. In his largest single action to address the $980 million budget gap, Kaine sought a total of $435 million in rainy day funds, but the Legislature approved about $300 million. That combined with $70 million in new bonds to replace the use of general funds for capital projects and other “revenue enhancements,” as the Kaine administration called them, meant that less than half of the $980 million needed to close the budget gap was raised through spending cuts.

Despite the budget difficulties, however, total state spending went up during Kaine’s tenure — just not as much as the governor and Legislature originally intended. Kaine was governor from January 2006 to January 2010. The operating budget was nearly $32 billion in fiscal year 2006 when he arrived and $37.2 billion in fiscal year 2010 when he left.

General fund appropriations — which the governor and state Legislature have the most discretion to spend — did decline from fiscal years 2008 to 2010 by $2.2 billion, as the Joint Legislative Audit and Review Commission noted in a December 2010 report.

Joint Legislative Audit and Review Commission, Dec. 1, 2010: Virginia has experienced strong long-term budget growth for many years, which has largely been a result of the persistent growth of non-general funds, which include federal funds. Even during the years of national recession and decline in the State’s general fund, the total State budget grew due to the continued growth in non-general funds. From FY 2008 to FY 2010, however, the State’s general fund experienced a $2.2 billion (13 percent) decline (see table), which equates to an average decrease of more than four percent per year.

The accompanying table (page ii) shows that general fund appropriations stood at $15.1 billion in fiscal year 2006, when Kaine came into office, and dropped to $14.8 billion in fiscal year 2010, when he left. That’s a decline of more than $300 million. But those appropriations were nearly $17 billion in 2008, so the decline from 2008 to 2010 was $2.2 billion.

We don’t mean to minimize the budget difficulties faced by Kaine and his successor during the recent recession. But to say that Kaine “cut $5 billion in spending” is an exaggeration.

Update, June 25: The Kaine campaign takes issue with our finding that Kaine cut $3.5 billion in spending as governor, rather than the $5 billion claimed in the TV ad. Brandi Hoffine, Kaine’s communications director, cited the 2010-2012 budget Kaine submitted to the House of Delegates a month before he left office that contained $2.3 billion in proposed spending cuts. Kaine’s successor, Republican Gov. Robert McDonnell accepted Kaine’s $2.3 billion in cuts and made more of his own on top of that, Hoffine told us.

It’s true that Kaine submitted a budget proposal on Dec. 18, 2009, before leaving office on Jan. 16, 2010. But the new governor and the General Assembly were not bound by Kaine’s proposals. McDonnell alone offered nearly 100 budget amendments. The governor and legislature combined changed 430 budget items. On May 17, 2010, McDonnell approved the revised two-year budget, which took effect July 1, 2010. The Majority PAC ad said that Kaine “cut $5 billion in spending,” but we found that as governor Kaine cut about $3.5 billion in spending and proposed another $2 billion or so in cuts.

— Eugene Kiely