President Obama delivered his third State of the Union address since taking office. As outlined in Article Two, Section 3 of the U.S. Constitution, the purpose of the speech is to come before Congress and the American people to give the state of affairs of the country and his vision for the future. The president gave a lot of numbers and made a lot of statements during his speech and this article looks at the facts of some of those statements.
Statement:
"On the day I took office, our auto industry was on the verge of collapse ... and tonight, the American auto industry is back."
Facts:
This is a true statement. Ford, General Motors, and Chrysler are in better shape now in contrast to 2008. Ford is investing more money into manufacturing; General Motors knocked Toyota out of the top spot in sales, and Chrysler is the fast growing auto company in the U.S.
The Statement:
"Right now, Warren Buffet pays a lower tax rate than his secretary . . . Tax reform should follow the Buffett rule: If you make more than a million dollars a year, you should not pay less than 30 percent in taxes . . . asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense."
The Facts:
According to the Wall Street Journal, the average tax rate for Warren Buffett's office employees is 36% while his tax rate was 17.4% in 2010. This is an exception, not the rule. In a study by the Tax Policy Center, people earning over $1 million pay an average of 29.1% in federal taxes. People earning between $50,000 and $75,000 pay around 15%. The top 400 tax filers pay less than the $1 million average because of a loophole called carried interest, lowering their tax rate to an average of 18.11%.
The Statement:
"We need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes . . . That's how we'll reduce our deficit. That's an America built to last."
The Facts:
Tax professionals do not agree with the president, nor do Alan Simpson and Erskine Bowles, the leaders of the debt commission. According to Simpson and Bowles, "We can't simply cut or tax our way out of this problem. Bringing our debt under control will require tackling the growth of entitlements and reforming the tax code to promote economic growth and generate enough revenue to meet our commitments."
The Statement:
"In the six months before I took office, we lost nearly four million jobs. And we lost another four million before our policies were in full effect. Those are the facts. But so are these. In the last 22 months, businesses have created more than three million jobs. Last year, they created the most jobs since 2005."
The Facts:
The president is a little off in his numbers. On his claim that 4 million jobs were lost six months before he took office, the number is 3.56 million jobs lost. His statement on the loss of 4 million jobs before his policies took effect is true. His statement on more than 3 million (3.16 million) jobs created over 22 months is also true.
The Statement:
"That's why I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low-interest rates. No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won't add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust."
The Facts:
The no more red tape statement is incorrect. According to Yahoo! News, "Only those who signed a mortgage before May 31, 2009, and have not refinanced previously under the Home Affordable Refinance Program are eligible for the new scheme. The loan-to-value ratio has to be greater than 80 percent. Borrowers must also have good credit and must have kept up with their mortgage payments, with no late payment in the past six months and no more than one late payment in the past 12 months." Experts also say the plan only benefits about 1 million homeowners; about 17% of those facing foreclosure on are delinquent.
Conclusion:
The president was right on a couple of his statements and wrong on others. Like every other politician, the president crafts his words to paint the picture he wants people to see. It is always a good thing to check the facts on what politicians are saying to see if the two match up. In this state of the union speech, the president reached his base but it remains to be seen if he made any headway with independents.
(Photo Source: The Grio)
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Comments: 19
I'm hoping Elizabeth Warren is elected to the Senate and then has the support to go for the Presidency in 2016 if there is no one else to carry the banner of justice, and it looks like a void on both sides.
The Auto industry is Back:
The facts, Ford was never lost so it really could not be back… GM and Chrysler may never pay back all the money that they were given and they most certainly did not pay back the stock holders ( you and me and all the other 401K owners) who had the company stolen from us via “Government sponsored bankrupts” and given to the UAW, just so that the tax payer can buy it back again. No real safe guards have been put in place to ensure that this does not happen again. History has shown us that it can repeat itself and must we bail out Chrysler a third time? After the used car market was destroyed by “Cash for Clunkers” some people are choosing new cars because good used cars are still a premium. Thus the market is still artificially influenced by government decisions. I would not admit that it is back until it has paid back what it was given and can stand on its own.
Tax Rate:
My question is, what are the effective tax rates for both Mr. Buffett and his secretary? The secretary, may be paying 36% taxes, but after deductions, the effective rate drops. After Buffett’s corporation pays taxes and then cuts Warren a dividend check that is taxed again, what is the effective rate as it goes up? Just a fun read that may also illustrate my point: http://www.forbes.com/sites/timworstall/2011/08/17/if-warren-buffett-isnt-paying-the-corporate-income-tax-then-we-should-abolish-the-corporate-income-tax/
In the end we are spending way too much time talking about Mitt’s taxes when we really should be looking at the actual returns of Buffett’s and his secretary. We are also spending way too much time talking about bad tax policy when I really do not see the president suggesting any real fixes to the problem. What loopholes need to be closed? Where was the bill that can be given to congress months ago when this subject first came up? We may never know for sure who pays more without looking at the actual returns. We do know that Mr. Buffett pays way more money in taxes that his secretary. We also know that the richest 5% pay well more than 50% of the tax burden. That means that someone else is paying my fare share as I use the same road and infrastructure that Mr. Buffett uses.
As you point out the debt commission says that we must cut and not just reduce the rate of increase in the budget in order to get spending under control. Our debt is the biggest threat facing this country, yet the president said nothing about it in the “State of the Union”. What is his plan? He has no plan to fix the debt. What is his plan to fix taxes? The fact is that the president has no interest in fixing the tax policy, he only wants to increase rates. Another known fact is that the US has the most progressive tax policy in the industrialized world, and raising taxes would impede the fragile if not nonexistent growth that we are experiencing. So by increasing taxes, what is his intensions? Kill the economy and create more dependence? That is not a fix and is very self serving!
Jobs:
The fact is all the job numbers are subject to change and revision. Jobs have been removed from the total quantity of jobs as it is assumed that those job losses are permanent. Thus these numbers are all a bit fictitious. If the government really wanted to look at this statistically, and with some level of intellectual honesty, they would look at the number of people paying into social security as the number of private sectored employees working, anything else is an estimate, and a guess.
You say he reached his base, but I really don’t see that. His statement “No bailouts, no handouts and no cop-outs” would appeal to the right, if they could actually believe he would follow through. History has shown that what he really means is that he wants to stop giving big business handouts in tax breaks and no one is going to be sparred in his tax hikes.
The facts are, our country is in serious trouble. The facts are that we allow corporations to pay little to no taxes. The facts are we allow those same corporations to send jobs overseas to save more money. The facts are we supplement these corporations with extra cash incentives. The facts are that we are no longer the powerhouse country we used to be, because we as citizens have allowed this country and the government to run itself into the ground, but it was ok and no one seemed to mind when they were rolling in the dough and had somewhere to hang their head at night. Things are different now. Not as much money to go around anymore. People who lied about their incomes to get homes they could never really afford, and the lenders were all to happy to hand out are walking away from their homes, leaving the rest who did not, to pay huge increases in mortgages with adjustable loans.
So now what? Well, I have to say that with the lineup the Republicans are offering it would further make me feel as if everyone has lost their minds if anyone of those freaks were voted into office.
Instead of fighting the person in office in order to get hypocrites and tax evaders into office, the people of this country need to continue to force change. Not a little hear and there, it is too late for that. Little changes were 10 years ago, now we have to get serious.
As for communism, you will find parts of each plank following Manifesto incorporated in our government, and several that even Marx did not think of like healthcare.
1. Abolition of private property and the application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all rights of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.
6. Centralization of the means of communications and transportation in the hands of the State.
7. Extension of factories and instruments of production owned by the state, the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal liability of all to labor. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries, gradual abolition of the distinction between town and country, by a more equitable distribution of population over the country.
10. Free education for all children in public schools. Abolition of children's factory labor in its present form. Combination of education with industrial production.
http://www.libertyzone.com/Communist-Manifesto-Planks.html
The Socialist party ran a presidential candidate in 1928 and the following was his platform:
1. “Nationalization of our natural resources, beginning with the coal mines and water sites, particularly at Boulder Dam an Muscle Shoals.”
2. “A publicly owned giant power system under which the federal government shall cooperate with the states and municipalities in the distribution of electrical energy to the people at cost.”
3. “National ownership and democratic management of railroads and other means of transportation and communication.”
4. “An adequate national program for flood control, flood relief, reforestation, irrigation, and reclamation.”
5. “Immediate governmental relief of the unemployed by the extension of all public works and a program of long range planning of public works . . .”
6. “Loans to states and municipalities without interest for the purpose of carrying on public works and the taking of such other measures as will lessen widespread misery.”
7. “A system of unemployment insurance.”
8. “The nation-wide extension of public employment agencies in cooperation with city federations of labor.”
9. “A system of health and accident insurance and of old age pensions as well as unemployment insurance.”
10. “Shortening the workday” and “Securing every worker a rest period of no less than two days in each week.”
11. “Enacting of an adequate federal anti-child labor amendment.”
12. “Abolition of the brutal exploitation of convicts under the contract system and substitution of a cooperative organization of industries in penitentiaries and workshops for the benefit of convicts and their dependents.”
13. “Increase taxation on high income levels, of corporation taxes and inheritance taxes, the proceeds to be used for old age pensions and other forms of social insurance.”
14. “Appropriation by taxation of the annual rental value of all land held for speculation.”
http://bungalowbillscw.blogspot.com/2009/11/14-planks-of-socialism-from-1928-look.html
Ron, I really do not blame Obama for all of our steps toward Socialism and Communism, but clearly he has moved us far closer to those ends than we have traveled an a long time.
Obama’s takeover of GM & Chrysler, the closing of dealerships, the take over of several banks, Obama care and turning off the oil spigot in the Gulf and Canada all could be listed as examples of the above. He has done what he said he was going to do and he has said that he has more to do, thus when he said that he will get things done without congress, then our laws of the land that he has sworn to uphold, will not confine him, as an example of how far he could take this…
What is stopping him from just not stepping down at the end of his term(s)? Communist and Socialist are terms that could apply to a wide spectrum of countries and rulers, with that said he has not yet risen to that of a tyrant but he only needs to start to imprison or kill out spoken critics without due process. The question is, what promises will he act on next?
They will have to restrict every health resource and I will be force to buy a secondary policy in order to ensure my own health. But I will be penalized/taxed on that too.
Even if you only make $5.00 a month, you should pay your 30%...
Actually, Obama said it best "no bailouts, no handouts, no cop-outs".
But I bet his definition of each is different than what most people think!