Just The Facts, Ma’am

Nine Republicans Myths
that Every Progressive Should Be Able to Counter:

U.C. Berkeley economist Brad DeLong has been daily bumping and updating a post on his blog that provides counter-arguments to a growing list of Republican talking points. He keeps the list so he won’t be caught off guard by an unexpected question the next time he’s asked to appear on TV alongside a conservative opponent. Personally, I think it’s a great idea that progressives be familiar with counter-arguments to common conservative talking points, and develop some talking points of our own. To that end, I am presenting a list of rebuttals to nine very common, but very misleading, or outright false, GOP talking points.

THE HOUSING BUBBLE AND THE ECONOMIC DOWNTURN

MYTH #1: The current recession was caused by government intervention in the economy, most importantly, government efforts to promote minority home ownership through the Community Reinvestment Act of 1977.

FACT: America is a diverse, multi-ethnic society, and this fact is a source of much of our strength as a nation. What would our music, our sports, our literature film tradition look like if we stripped them of their non anglo-Saxon contributors? Yet this same diversity is an appealing target for demagogues who would seek political advantage by stoking racist resentment. The attempt to blame the housing bubble on the Community Reinvestment Act, a 30 year old law that sought to increase bank lending in minority neighborhoods, is typical of GOP efforts to deflect blame for their misguided anti-regulatory policies by instead blaming minorities for our nation’s ills. The claim is insidious and ubiquitous, though it is rarely couched in so explicitly racial terms as when Fox News anchor Neil Cavuto warned a guest that: “Loaning to minorities and risky folks is a disaster.”

But such claims are more than just racist, they are also simply false. The fact that the housing crisis arose 30 years after the CRA, when the first housing loans made under that program were starting to be paid off in full should raise the first red flag in this regard. Couple that with the additional fact that the housing bubble burst and home owners started mass-defaulting on their loans at about the time the 5 year teaser rates on the exotic loan vehicles so favored by Alan Greenspan began to re-adjust, and a true picture of the collapse of the housing bubble begins to emerge. The bubble was caused by greed, speculation, and lax regulation not minority lending. Indeed, a fact seemingly overlooked by proponents of the “minorities caused the recession” theory is that of the top 25 lenders in the sub-prime mortgage market, only one was actually subject to the CRA. That is because, while the CRA applies to banks, the Act does not apply to institutions such as Ameriquest or New Century Financial that made up the largest share of subprime lenders.

MYTH #2: Fannie Mae and Freddy Mac caused the housing bubble that precipitated the financial crisis. Being implicitly backed by the government, they had little reason to avoid the risks associated with these sorts of loans and so foolishly dived into the doomed sub-prime market with singular resolve

FACT: Conservatives have always loathed these entities due to their semi-public status and traditional conservative disdain for government institutions that help the poor and middle class. This is why Fannie and Freddy make such attractive targets. Yet the numbers paint a picture that is quite distinct from the portrait that right-wingers paint of Fannie and Freddy as spearheading the housing bubble. In fact, between 2004 and 2006, Fanny and Freddie’s share of the subprime loan market dropped from 48 to 24 percent, with the private sector holding the bulk of such loans.

THE FEDERAL DEFICIT & THE STIMULUS

MYTH #3: Our current, inflated deficit was caused by runaway spending on the part of the Obama Administration.

FACT: Current Deficit levels are largely a result of the collapse of tax receipts and automatic and unavoidable spending increases resulting from the economic downturn. Indeed, there has been no major expansion of government under Obama nor new government agencies or programs that would account for this mythical increase in Federal spending (keep in mind that the president’s health care overhaul does not take effect until 2014). Increased spending on unemployment insurance, food stamps, and Medicaid during the current recession did not result from new Obama Administration initiatives but is automatic and expected given the very nature of those social safety-net programs.

http://krugman.blogs.nytimes.com/2010/10/18/even-more-on-the-origins-of-the-deficit/

http://www.nytimes.com/2010/10/11/opinion/11krugman.html?adxnnl=1&adxnnlx=1307114804-dh0IpGQok/XvB4tiC0heBw

MYTH #4: Under Barack Obama, the deficit more than tripled from what it had been under George Bush.

FACT: This is a favorite claim of Republicans and their backers in the media. It relies upon dishonestly ascribing the 2009 budget to the Obama Administration. In fact, the 2009 Budget was largely negotiated during the Bush Administration, signed by President Bush, and set in place 4 months before Barack Obama even took office.

http://www.cato-at-liberty.org/dont-blame-obama-for-bushs-2009-deficit/

MYTH #5: The American Recovery and Reinvestment Act was a 1 Trillion Dollar waste of taxpayer money.

FACT: The American Recovery and Reinvestment Act came in at $780 billion dollars, not 1 trillion (but hey, what’s $220 billion, right?). Furthermore, it consisted of nearly equal parts tax breaks, aid to the states, and Federal spending. In fact, when tax breaks are taken out of the picture, one is left with only about $500 million of spending, including direct aid to states. This is equivalent to about two and a half years of the cost of our occupation in Iraq and will be spent over a similar period of time.

http://topics.nytimes.com/top/reference/timestopics/subjects/u/united_states_economy/economic_stimulus/index.html

MYTH #6: The Stimulus failed, proving that the Keynesian theory that government spending should increase during a recession is false.

FACT: When American Recovery and Reinvestment Act spending is balanced against cutbacks in state spending, one finds that there was only a negligible increase in government spending on the economy as a whole, nothing like what a Keynesian economist would prescribe given the underlying economic crisis.

http://www.nytimes.com/2010/10/11/opinion/11krugman.html

SOCIAL SECURITY, MEDICARE & THE PAUL RYAN PLAN

MYTH #7: When Social Security was first enacted, life expectancy was just 63 years, today it is almost 79, so people retirees are drawing from Social Security far longer than the plan’s creators ever envisioned.

FACT: Life expectancy figures for Social Security’s early years are largely a factor of high infant mortality. Individuals who die as children are irrelevant to the SS funding formula, as they neither contribute to nor draw from the program. Indeed, a person who in 1940 lived to age 65, could expect to draw from Social Security for some 13 years, as their life expectancy was nearly 78 years of age. That is very close to what a current retiree can expect.

http://www.huffingtonpost.com/2011/05/06/alan-simpson-aarp-social-security-retirement-program_n_858738.html

MYTH #8: The Ryan plan achieves Medicare savings by relying on market competition to bring down costs.

FACT: During its first year of implementation the money that the government spends on a typical private plan would be only $600 less per recipient under Ryan plan than the cost of Medicare. But the private plan itself would cost some $6000 more than the equivalent Medicare plan, leaving Seniors responsible for nearly $12,000 in insurance premiums rather than the $6000 they would pay under Medicare. This is so because the private sector insurance industry is far less efficient than the government run Medicare program. In subsequent years the Ryan plan saves the government money, but it does so by not keeping pace with the growth in costs of health care spending, thus placing an even greater financial burden on senior citizens who will have to make up these funding shortfalls out of pocket:

http://www.offthechartsblog.org/orszag-ryan-budget-would-increase-total-health-care-spending/

MYTH #9: Barack Obama cut $500 billion from Medicare, thus jeopardizing quality of care for Senior citizens.

FACT: Most of that $500 billion is accounted for by cuts to subsidies to private insurerand plans, not Medicare itself. These so-called “Medicare Advantage” plans were set up by the Bush administration to compete with Medicare in the hope that private insurers could eventually replace the government run Medicare program by offering more extensive coverage at a better price. In fact, insurers showed they could not compete with Medicare unless their plans were heavily subsidized by the government, and it is these subsidies that are cut. Even if these private plans are discontinued as a result, seniors still have the option of enrolling in traditional Medicare. The Ryan plan, by contrast, replaces guaranteed Medicare with a system of gift certificates intended to help seniors buy private insurance. But the level of assistance in the Ryan plan is so low it would make insurance unaffordable to millions who would ordinarily have been covered under Medicare.

http://online.wsj.com/article/SB123905667327594685.html