Beck's Radio Chatter About The Budget Is Nothing But Hot Air
Research ››› ››› FAE JENCKS & DAVID SHERE
Glenn Beck and his radio sidekicks ripped into President Obama's recently released budget proposal, as well as Obama's remarks about the proposal at a press conference, but many of their criticisms were based on falsehoods and misleading framing.
Beck Falsely Claims Social Security Is A "Huge Contributor" To Deficit
Beck Claim: It's "Not True" That Social Security Isn't A "Huge Contributor" To The Deficit. From Beck's February 15 radio show:
BECK: Then he is asked this question. I have not heard the answers, but here we go. Roll the tape.
REPORTER [audio clip]: Thank you very much, Mr. President. You've been talking a lot about the need for tough choices in your budget, but your plan does not address the long-term crushing costs of Social Security, Medicare, Medicaid -- the real drivers of long-term debt. Can you explain that? Where is your leadership on that issue? When are we going to see your plan? And if I may, sir, on the foreign front, the uprising in Egypt has helped prompt protests in Bahrain, in Yemen, and Iran. I'm wondering how you balance your push for freedoms in those places against the instability that could really endanger U.S. interests.
OBAMA [audio clip]: At the same time, we're going to be making some key investments in places like education, and science and technology, research and development that the American people understand is required to win the future. So what we've done is we've taken a scalpel to the discretionary budget rather than a machete.
BECK: I need a machete, please. Or an ax.
OBAMA [audio clip]: Now, I said in the State of the Union and I'll repeat: That side of the ledger only accounts for about 12 percent of our budget. So we've got a whole bunch of other stuff that we're going to have to do, including dealing with entitlements. Now, you talked about Social Security, Medicare, and Medicaid. The truth is Social Security is not the huge contributor to the deficit that the other two entitlements are.
STU BURGUIERE: It's huge, it's just not as huge.
BECK: And it's not true. [Premiere Radio Networks, The Glenn Beck Program, 2/15/11]
EPI: Social Security Is Financed Through Dedicated Taxes; Law Prohibits It From Borrowing. From a report by the Economic Policy Institute:
Social Security can only spend what it receives in tax revenues and has accumulated in its trust fund from past surpluses and interest earnings. It cannot add to the deficit if the trust fund is exhausted because the law prohibits it from borrowing (if current revenues and savings in the trust fund are not sufficient to pay promised benefits, these have to be cut).
The Social Security trust fund is projected to grow to a peak of about $4.2 trillion by 2024. At that point, Social Security will begin tapping its trust fund to help pay promised benefits. The trust fund itself is projected to run out around 2037. If Congress does not act to shore up Social Security's finances before the trust fund runs out, then benefits would have to be cut by an estimated 22% because payroll taxes would be lower than benefit outlays, and Social Security would not be allowed to make up the shortfall by borrowing. As a result, Social Security cannot and would not add to the federal deficit when its trust fund is exhausted.
Social Security is financed through dedicated payroll and benefit taxes and interest earned on previous surpluses. The biggest source of funds is a 12.4% payroll tax on earnings up to a cap (currently $106,800), split equally between employers and workers.
Social Security is primarily a pay-as-you-go (pay-go) system, meaning that benefits for current retirees are paid for mostly through taxes on current workers. [Social Security and the Federal Deficit: Not Cause and Effect, Economic Policy Institute, 8/6/10, in-text citations deleted for clarity]
Largest Contributors To Projected Deficits Include Bush-Era Tax Cuts, Economic Downturn, Wars In Iraq And Afghanistan. From a report by the Center on Budget and Policy Priorities:
Some critics continue to assert that President George W. Bush's policies bear little responsibility for the deficits the nation faces over the coming decade -- that, instead, the new policies of President Barack Obama and the 111th Congress are to blame. Most recently, a Heritage Foundation paper downplayed the role of Bush-era policies (for more on that paper, see p. 4). Nevertheless, the fact remains: Together with the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years (see Figure 1).
Beck Claims Reagan Didn't Solve Social Security Problems; Social Security Admin., Economists Disagree
Beck Claim: Reagan And Tip O'Neill Weren't Successful In Fixing Social Security. From the February 15 show:
OBAMA [audio clip]: I'm confident we can get Social Security done in the same way that Ronald Reagan and Tip O'Neill were able to get it done, by parties coming together --
BECK: They didn't.
OBAMA [audio clip]: -- making some modest adjustments.
BECK: They didn't get it done. [Premiere Radio Networks, The Glenn Beck Program, 2/15/11]
SSA: 1983 Legislation Resolved Short-Term Financing Problems, Made "Other Significant Changes." From the "History" section of the Social Security Administration website:
The National Commission on Social Security Reform (informally known as the Greenspan Commission after its Chairman) was appointed by the Congress and the President in 1981 to study and make recommendations regarding the short-term financing crisis that Social Security faced at that time. Estimates were that the Old-Age and Survivors Insurance Trust Fund would run out of money possibly as early as August 1983. This bipartisan Commission was to make recommendations to Congress on how to solve the problems facing Social Security. Their report, issued in January 1983, became the basis for the 1983 Social Security Amendments which resolved the short-term financing problem and made many other significant changes in Social Security law. [SSA.gov, accessed 2/15/11]
EPI: 1983 Changes "Raised Revenues And Cut Benefits" To Build Trust Fund For Baby Boomers' Retirement. From the EPI report:
Though pay-go systems are largely immune to financial shocks, they can run into problems when demographic fluctuations raise the ratio of beneficiaries to covered workers, as with the retirement of the large Baby Boom generation born after World War II. However, Congress approved forward-looking reforms in 1983 that raised revenues and cut benefits in order to build up a large trust fund to help pay for the Baby Boomer retirement. [Social Security and the Federal Deficit: Not Cause and Effect, Economic Policy Institute, 8/6/10, in-text citations deleted for clarity]
Beck Supports Claim That Budget Projections Are "Games" By Falsely Claiming Health Reform Has Only "Five Years Of Benefit"
Beck Claim: We Know Projections Are "Games" Because Health Care Reform Costs Are Spread "Over 10 Years, But You're Only Getting Five Years Of Benefit." From the February 15 show:
BECK: What you have to know is the president only has two more years. He can say that we're gonna -- you know in 10 years -- George Bush said that about 10 years. We're not on the same policy as George Bush. It doesn't matter what the president does because you only have four years to do it.
Now, maybe we don't know something that this president does, that he's going to have 10 years. I don't know.
But it's -- it is ridiculous when they're projecting 10 years. Because first of all, we know the games that they play. When it comes to the health care, it's over -- projected savings of over 10 years. But you pay for it for five years, and it doesn't kick in.
So they've spread the cost over 10 years, but you're only getting five years of benefit. We know the games that they play. [Premiere Radio Networks, The Glenn Beck Program, 2/15/11]
Krugman: Claim That Reform "Front-Loads Revenues And Back-Loads Spending" Is A "Lie." According to Nobel Prize-winning economist Paul Krugman:
OK, I finally got around to reading Douglas Holtz-Eakin's op-ed on health care reform. It's much worse than I thought; time to scratch Holtz-Eakin off my shrinking list of reasonable, reasonably honest conservatives.
How bad is it? Holtz-Eakin declares that
Gimmick No. 1 is the way the bill front-loads revenues and backloads spending. That is, the taxes and fees it calls for are set to begin immediately, but its new subsidies would be deferred so that the first 10 years of revenue would be used to pay for only 6 years of spending.
I think that's what is technically known as a "lie". Holtz-Eakin, of all people, knows how to read a CBO report. So he's perfectly capable of looking at the actual report (pdf) and seeing that the revenues, like the costs, are minimal for the first four years.
His implication that there's funny business going on is totally false, and he knows it.
Wait, it gets worse: Holtz-Eakin implies that there are hidden, delayed costs:
Consider, too, the fate of the $70 billion in premiums expected to be raised in the first 10 years for the legislation's new long-term health care insurance program. This money is counted as deficit reduction, but the benefits it is intended to finance are assumed not to materialize in the first 10 years, so they appear nowhere in the cost of the legislation.
Claims that the plan is window-dressed to look good in its first decade only to go sour later might sound plausible -- except for the fact that the CBO projects bigger deficit-reduction in the second decade of the reform than in the first decade, something that wouldn't happen if lots of costs were being hidden by being pushed off into the future.
That said, we do learn something important from Holtz-Eakin's article. If this is the best critique a conservative budget wonk can come up with -- if deliberately misrepresenting how the legislation works is the only way to make it seem irresponsible -- then the bill must be pretty sound in fiscal terms. [The Conscience of a Liberal, The New York Times, 3/27/10]
CBO Director Tells Deficit Commission That Health Care Reform Slightly Improves Budget Outlook. From The Washington Post:
"Growth in spending on health-care programs remains the central fiscal challenge," CBO Director Douglas W. Elmendorf said in a presentation to Obama's bipartisan deficit commission. "In CBO's judgment, the health-care legislation enacted earlier this year made a dent in the problem, but did not substantially diminish that challenge."
Although more starkly stated, CBO's position has not changed since the health-care legislation was approved. The new forecast simply incorporates CBO's cost estimates from that time, which predicted that the plan to expand coverage, raise taxes and cut Medicare spending would reduce deficits by about $140 billion over the next decade and by more than $1 trillion in the decade after.
"Slowing the rate of health care cost growth is the single most important action we can take to reduce our long-term fiscal shortfall," White House budget director Peter Orszag said in a statement. "The report confirms that the enactment and successful implementation of the Affordable Care Act is a key step toward a healthier fiscal future." [The Washington Post, 7/1/10]
CBO Budget Outlook Says Health Care Reform Law Will "Reduce Budget Deficits Over The 2010-2019 Period And In Subsequent Years." From the Congressional Budget Office:
CBO projects that if current laws do not change, federal spending on major mandatory health care programs will grow from roughly 5 percent of GDP today to about 10 percent in 2035 and will continue to increase thereafter. Those projections include all of the effects of the recently enacted health care legislation, which is expected to increase federal spending in the next 10 years and for most of the following decade. By 2030, however, that legislation will slightly reduce federal spending for health care if all of its provisions are fully implemented, CBO projects. [CBO, 6/30/10]
CBO: In Long Term, Health Care Reform "Slow[s] The Accumulation Of Debt Considerably." From the CBO:
The long-term paths for primary spending presented in this report are similar to the ones that CBO published last year, but the paths for revenues differ. In the extended-baseline scenario, the recent enactment of major health care legislation has increased projected revenues, particularly in the 2030s and beyond, thus slowing the accumulation of debt considerably. [CBO, 6/30/10]
HHS: 18 Benefits Of Health Care Reform Have Already Taken Effect. The Department of Health and Human Services website HealthReform.gov lists 18 benefits of the health care reform law that took effect between March 2010 and January 2011. [HealthReform.gov, accessed 2/17/11]
Beck Falsely Suggests Future Of Bush Tax Cuts Was "Already Argued And Already Answered"
Beck Claim: If Obama Believes Health Care Reform Shouldn't Be Reargued, He Shouldn't Drop Bush Tax Cuts Because They Were "Already Argued And Already Answered." From the February 15 show:
BECK: And only the top tax bracket -- remember the Bush tax-cut thing? That has already been argued -- you know, when he talked about the health care -- "I'm not going back in the past. It's already been argued, and we're moving forward."
Well, we passed the Bush tax cuts, they became the Obama tax cuts, and now he is raising the upper bracket from 35 to 39 percent. Wasn't that already argued and already answered? [Premiere Radio Networks, The Glenn Beck Program, 2/15/11]
PBS: December Tax-Cut Deal "Preserves All Bush-Era Income Tax Breaks For Two Years." From the PBS blog The Rundown:
President Obama signed $858 billion tax bill into law Friday afternoon, putting the final touches on a bipartisan compromise to prevent income tax rates from increasing before the new year.
The legislation preserves all Bush-era income tax breaks for two years, extends jobless benefits for 13 months, and cuts Social Security payroll tax rates by 2 percent for one year on income up to $106,800. [The Rundown, PBS.org, 12/17/10]
CBPP Exec. Director: "The Budget Would Allow Various Bush Tax Cuts ... To Expire On Schedule At The End Of 2012." From CBPP executive director Robert Greenstein:
The budget would allow various Bush tax cuts for people making over $250,000 a year to expire on schedule at the end of 2012 (although the budget does not count these savings as part of its estimated $1.1 trillion in total deficit savings), and it proposes to close an array of tax loopholes for special interests such as the oil and gas industries. In addition, the budget would cap the value of itemized deductions at 28 percent and use the savings to extend relief from the Alternative Minimum Tax for three years, so that the AMT doesn't ensnare millions of middle- and upper middle-income households. Until now, Presidents and Congresses of both parties have repeatedly extended AMT relief without paying for it -- that is, by financing the cost through bigger deficits. There is risk that Congress will ignore this proposed reform and simply continue to extend AMT relief without paying for it; we urge lawmakers to resist that temptation. [CBPP.org, 2/14/11]
Beck And Co. Bizarrely Claim That Obama's Tax Proposals Amount To "Hidden Taxes"
Beck Claim: There Are 15 "Hidden Taxes" In Obama Budget. From the February 15 show:
OBAMA [audio clip]:To use an analogy that families are familiar with, we're not going to be running up the credit card any more. That's important.
BECK: How is that possible?
OBAMA [audio clip]: And that's hard to do. But it's necessary to do, and I think the American people understand that.
BECK: Hold on. Just a -- stop. How -- where -- where is that -- where's that plan? 'Cause that doesn't reflect the budget, does it? I --
GRAY): No. No.
BECK: Where is that plan? Other than all of the hidden taxes that are in this budget.
BURGUIERE: Only 15 of them.
BECK: But that's it. [Premiere Radio Networks, The Glenn Beck Program, 2/15/11]
Beck Website TheBlaze.com: "Uncovered: The 15 Tax Hikes Hidden In Obama's New Budget." From a post on The Blaze headlined "Uncovered: The 15 Tax Hikes Hidden In Obama's New Budget":
Over the last two years, the president has regularly touted his fight to lower taxes for Americans. In fact, his latest budget proposal offered up today is being billed as a package of tough cuts. But buried within the budget's rhetoric and numerous pages are actually a healthy amount of increases -- tax increases, that is. 15 of them. [TheBlaze.com, 2/15/11]
FACT: Budget Is Publicly Available On The Internet, Contains Table Of Proposals' Effects On Deficit. Obama's budget proposal includes a list of summary tables, one of which, "Table S-8. Mandatory and Receipt Proposals," details the impacts the budgets' proposals have on the federal deficit. [WhiteHouse.gov, accessed 2/15/11]