Co-hosts and guests on Fox & Friends advanced numerous economic falsehoods, including the claims that half of Americans "don't pay any tax"; that President Obama wants to fix the deficit only by increasing taxes; that most Americans do not favor tax increases as part of a deficit deal; and that Obama wants to "use the rich to fix his spending problem."
Trump Claims "Half Of The People [In The U.S.] Don't Pay Any Tax"
Trump: "[We] Do Have A Problem, Because Half Of The People [In The U.S.] Don't Pay Any Tax." On the July 18 edition of Fox News' Fox & Friends, the co-hosts interviewed Donald Trump about the ongoing talks regarding the default crisis. Co-host Steve Doocy claimed that "there are a lot of people in this country, over half, [that] don't even pay any federal taxes." Trump agreed, saying, "[H]alf of the people don't pay any tax." From the broadcast:
DOOCY: When the president, Donald, talks about, there has to be shared sacrifice -- you know, there are a lot of people in this country, over half, don't even pay any federal taxes. So he's really talking about you. You're going to have to sacrifice more.
TRUMP: Well, you know, I don't mind sacrificing for the country, to be honest with you, but you know, you do have a problem, because half of the people don't pay any tax. And when he's talking about that, he's talking about people that aren't also working, that are not contributing to this society, and it's a problem. But we have 50 percent -- it just hit the 50 percent mark -- 50 percent of the people are paying no tax. [Fox News, Fox & Friends, 7/18/11]
But Low-Income Americans Still Pay Sales, Payroll, State, And Local Taxes
AP: "[V]ast Majority Of People Who Escape Federal Income Taxes Still Pay Other Taxes." In an April 7, 2010, article, The Associated Press cited a Tax Policy Center (TPC) statistic finding that "about 47 percent will pay no federal income taxes at all for 2009," but went on to note: "The vast majority of people who escape federal income taxes still pay other taxes, including federal payroll taxes that fund Social Security and Medicare, and excise taxes on gasoline, aviation, alcohol and cigarettes. Many also pay state or local taxes on sales, income and property." [Tax Policy Center, 6/29/09; The Associated Press, 4/7/10]
Perino Suggests Obama Wants To Lower Deficit Only Through Tax Increases
Perino: "President Obama Talks About Millionaires And Billionaires Being Taxed, But You Can't Get To $4 Trillion By Taxing [Them]." Also during the July 18 broadcast, the co-hosts interviewed Fox News contributor and former White House Press Secretary Dana Perino about the debt limit. Perino suggested that Obama wants to lower the deficit solely by raising taxes. From the broadcast:
BRIAN KILMEADE (co-host): I know you are watching the Sunday shows when you're not on them -- even when you're not on them, you watch them all. Everybody was talking about the debt crisis. I was dumbfounded by this -- no one had anything new to add. But the crisis continues. I mean, it's like, the hosts who were flabbergasted as the pundits -- all this stuff has been said. But now people are talking about the president -- Obama maybe wanting a smaller deal to get us over the hump. What do you hear?
PERINO: Well, I agree. I mean, there was really nothing new yesterday morning, and it was sort of -- it was kind of boring, right? You want to advance the ball, but there was no way to do so, until you wake up this morning and there was a story in the New York Post, not -- I haven't seen it reported elsewhere, but this reporter is usually pretty good -- saying that President Obama could be willing to do a smaller deal or either the $4 trillion deal that the Republicans had initially put forward.
The problem that I've heard from leadership this morning on the Republican side is that they don't agree with how President Obama would get to the $4 trillion because of the tax hikes. I mean, President Obama talks about millionaires and billionaires being taxed, but you can't get to $4 trillion by taxing millionaires and billionaires, and so pretty soon, while you're -- Senator McConnell has said, while you're taxing the people in first class, pretty soon you're going to end up taxing the people that are flying coach in the back as well. [Fox News, Fox & Friends, 7/18/11]
But Obama Favors Mix Of Spending Cuts, Revenue Increases
Obama: "You Can't Solve Our Deficit Without Cutting Spending. But You Also Can't Solve It Without Asking The Wealthiest Americans To Pay Their Fair Share." From the president's weekly address on July 16:
For a decade, America has been spending more money than we've taken in. For several decades, our debt has been rising. And let's be honest - neither party in this town is blameless. Both have talked this problem to death without doing enough about it. That's what drives people nuts about Washington. Too often, it's a place more concerned with playing politics and serving special interests than resolving real problems or focusing on what you're facing in your own lives.
But right now, we have a responsibility -- and an opportunity -- to reduce our deficit as much as possible and solve this problem in a real and comprehensive way.
Simply put, it will take a balanced approach, shared sacrifice, and a willingness to make unpopular choices on all our parts. That means spending less on domestic programs. It means spending less on defense programs. It means reforming programs like Medicare to reduce costs and strengthen the program for future generations. And it means taking on the tax code, and cutting out certain tax breaks and deductions for the wealthiest Americans.
Now, some of these things don't make folks in my party too happy. And I wouldn't agree to some of these cuts if we were in a better fiscal situation, but we're not. That's why I'm willing to compromise. I'm willing to do what it takes to solve this problem, even if it's not politically popular. And I expect leaders in Congress to show that same willingness to compromise.
The truth is, you can't solve our deficit without cutting spending. But you also can't solve it without asking the wealthiest Americans to pay their fair share - or without taking on loopholes that give special interests and big corporations tax breaks that middle-class Americans don't get. [The White House, 7/16/11]
Obama: Lowering Deficit Would Require "Significant Cuts In Domestic Spending ... And It Would Require Revenues." From Obama's press conference at the White House on July 15:
Now, what is important is that even as we raise the debt ceiling, we also solve the problem of underlying debt and deficits. I'm glad that congressional leaders don't want to default, but I think the American people expect more than that. They expect that we actually try to solve this problem, we get our fiscal house in order.
And so during the course of these discussions with congressional leaders, what I've tried to emphasize is we have a unique opportunity to do something big. We have a chance to stabilize America's finances for a decade, for 15 years, or 20 years, if we're wiling [sic] to seize the moment.
Now, what that would require would be some shared sacrifice and a balanced approach that says we're going to make significant cuts in domestic spending. And I have already said I am willing to take down domestic spending to the lowest percentage of our overall economy since Dwight Eisenhower.
It also requires cuts in defense spending, and I've said that in addition to the $400 billion that we've already cut from defense spending, we're willing to look for hundreds of billions more.
It would require us taking on health care spending. And that includes looking at Medicare and finding ways that we can stabilize the system so that it is available not just for this generation but for future generations.
And it would require revenues. It would require, even as we're asking the person who needs a student loan or the senior citizen or people -- veterans who are trying to get by on a disability check -- even as we're trying to make sure that all those programs are affordable, we're also saying to folks like myself that can afford it that we are able and willing to do a little bit more; that millionaires and billionaires can afford to do a little bit more; that we can close corporate loopholes so that oil companies aren't getting unnecessary tax breaks or that corporate jet owners aren't getting unnecessary tax breaks.
If we take that approach, then I am confident that we can not only impress the financial markets, but more importantly, we can actually impress the American people that this town can actually get something done once in a while. [The White House, 7/15/11, emphasis added]
Fox & Friends Cites Gallup Poll To Claim Most Americans Don't Want Revenue Increases To Reduce Deficit
Doocy Cites Gallup Poll To Claim Only "Something Like 32 Percent" Of The U.S. Wants "A Balanced Approach To the Debt." Later, the co-hosts and Perino discussed the president's recent comment that "80 percent of the American people ... support a balanced approach" to solving the budget. Doocy, Perino, and guest host Molly Line repeatedly suggested Obama was wrong. From the broadcast:
DOOCY: And so that's one of the reasons why when the president said this on Friday at his latest press conference, he said that 80 percent of the country, Dana, wants a balanced approach to the debt. As it turns out, that's not true. It's not 80 percent. It's something like 32 percent. Where do you think the -- I'm sure it's 100 percent inside the White House. But where would he have pulled that number from?
PERINO: Well, I think that this shows that once again that America is way over-polled, and you can -- you could find a poll. I'll bet that they probably did have some sort of internal poll that they paid for out of the campaign, or the DNC, or from the, you know, they don't poll from the White House, but some sort of Democratic poll that said 80 percent. I'm sure he probably didn't pull that out of thin air, or they cobbled together all the numbers and added up to 80 percent. But I think the Gallup poll --
DOOCY: But for it to be off by 50 percent? That's jaw-dropping.
PERINO: Right. Right. And I still think that the Gallup poll, for most people, is kind of the gold -- Good Housekeeping seal of approval when it comes to polls. And I -- one of the problems for President Obama is that their team did not communicate effectively that the debt ceiling issue was separate from other things. And so people across the country are just lumping all of this stuff together.
PERINO: And they want less government spending and more effective government, and the other thing that the White House will tell you is that most people want tax increases. Yeah, but start picking at that scab a little bit, and you don't have a very clear answer on that either.
KILMEADE: Yeah, if it's somebody else's taxes that are increased. That will be fine for anybody who's taken the poll, because if they're not affected, I'm sure they're going to be skewed by the results.
PERINO: Right, if you tell people it's just going to be millionaires and billionaires, 98 percent of the country is like, "Oh, well that's not me, so I don't have to worry about it." But that's not true. You can't make that kind of money on millionaires and billionaires.
LINE: And you mentioned the latest Gallup poll. The latest Rasumessen poll shows that 55 percent disagree that tax hikes should be included in the debt ceiling increase. So, a lot of numbers out there. And it's interesting to see how people essentially take these numbers and what they do with them, because we all know poll numbers can kind of be used depending on what you're trying to get your message across.
During the segment, the following graphic was shown:
[Fox News, Fox & Friends, 7/18/11]
But Gallup Poll Actually Showed 69 Percent Favor Mix Of Spending Cuts And Revenue Increases
Gallup: "On Deficit, Americans Prefer Spending Cuts; Open To Tax Hikes." In an online report about its July 7-10 poll, Gallup said, "Americans' preferences for deficit reduction clearly favor spending cuts to tax increases, but most Americans favor a mix of the two approaches." The results showed that 69 percent of Americans favor reducing the deficit either "mostly with spending cuts," "equally with spending cuts and tax increases," or "mostly with tax increases." A graphic in the report displayed the results:
Quinnpiac Poll Also Found Most Americans Support Balanced Approach
Quinnipiac: "Voters Say 67 - 25 Percent That An Agreement To Raise The Debt Ceiling Should Include Tax Hikes ... Not Just Spending Cuts." Quinnipiac released a poll on July 14 that found that "[v]oters say 67 - 25 percent that an agreement to raise the debt ceiling should include tax hikes for the wealthy and corporations, not just spending cuts." [Quinnipiac, 7/14/11]
Line Claims Obama "Wants To Use The Rich To Fix His Spending Problem"
Line: Obama "Wants To Use The Rich To Fix His Spending Problem." Also during the July 18 broadcast of Fox & Friends, Line said, "The President wants to use the rich to fix his spending problem," before airing a clip of the president saying that we must "[ask] the wealthiest Americans to pay their fair share." [Fox News, Fox & Friends, 7/18/11]
But Most Of Current Deficit Can Be Attributed To Recession, Wars, Bush-Era Policies
CBO Projected $1.2T Deficit In January 2009 Based On Spending Bush Authorized; Actual Deficit Was $1.4T. In a January 7, 2009, report, the Congressional Budget Office (CBO) projected, based on spending authorized under the Bush administration, that the federal deficit in FY2009 would total $1.2 trillion. According to the CBO, the actual federal deficit for FY2009, which began during the Bush's last year in office, was $1.4 trillion. [CBO, January 2009 and January 2010]
CAP: "Single Most Important [Cause Of The Deficit] Is The Legacy Of President George W. Bush's Legislative Agenda." In an August 2009 analysis, the Center for American Progress (CAP) concluded that about two-thirds of the then-projected budget deterioration for 2009 and 2010 could be attributed to either Bush's policies or the economic downturn:
The report explained:
As for the deficit's cause, the single most important factor is the legacy of President George W. Bush's legislative agenda. Overall, changes in federal law during the Bush administration are responsible for 40 percent of the short-term fiscal problem. For example, we estimate that the tax cuts passed during the Bush presidency are reducing government revenue collections by $231 billion in 2009. Also, because of the additions to the federal debt due to Bush administration policies, the government will be paying $218 billion more in interest payments in 2009.
Had President Bush not cut taxes while simultaneously prosecuting two foreign wars and adopting other programs without paying for them, the current deficit would be only 4.7 percent of gross domestic product this year, instead of the eye-catching 11.2 percent--despite the weak economy and the costly efforts taken to restore it. In 2010, the deficit would be 3.2 percent instead of 9.6 percent.
The weak economy also plays a major role in the deficit picture. The failure of Bush economic policies--fiscal irresponsibility, regulatory indifference, fueling of an asset and credit bubble, a failure to focus on jobs and incomes, and inaction as the economy started slipping--contributed mightily to the nation's current economic situation. When the economy contracts, tax revenues decline and outlays increase for programs designed to keep people from falling deep into poverty (with the tax impact much larger than the spending impact). All told, the weak economy is responsible for 20 percent of the fiscal problems we face in 2009 and 2010.
President Obama's policies have also contributed to the federal deficit--but only 16 percent of the projected budget deterioration for 2009 and 2010 are attributable to those policies. The American Recovery and Reinvestment Act, designed to help bring the economy out of the recession is, by far, the largest single additional public spending under this administration. [CAP, 8/25/09]
CBPP: "[V]irtually The Entire Deficit Over The Next Ten Years" Due To Bush Policies, Economic Downturn." The Center on Budget and Policy Priorities (CBPP) published an analysis of federal deficits in December 2009, which was most recently updated on June 28, 2010, titled, "Critics Still Wrong on What's Driving Deficits in Coming Years: Economic Downturn, Financial Rescues, and Bush-Era Policies Drive the Numbers." The report noted:
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.
The report also graphed the effects of Bush's policies and the wars in Iraq and Afghanistan on the deficit. From the report:
[CBPP, updated 6/28/10, emphasis in original]
Harvard Business Review Group Director: "[T]he Giant Deficit Is Mainly The Result Of The Collapse In Tax Receipts Brought On By The Recession." In an October 2010 post on his Reuters blog, Justin Fox, editorial director of the Harvard Business Review Group, analyzed the deficit and concluded that it was "mainly the result of the collapse in tax receipts brought on by the recession":
The Treasury Department reported on Oct. 15 that the deficit in fiscal 2010, which ended Sept. 30, was $1.294 trillion. That's less than FY 2009's $1.416 trillion, but it's still really really big. Why is it so big, though? Is it because of all that stimulus and bailout spending? Or is something else going on?
To find out, I created a fantasy world. I figured out how fast federal spending and revenue grew over the last business cycle, from 2000 through 2007, and calculated where we'd be today if those growth rates had continued through 2010. I was originally motivated to do this for a commentary that's supposed to air tomorrow night on Nightly Business Report. But I'm thinking there's not a huge overlap between Felix Salmon readers and Nightly Business Report viewers, so I'll go ahead and share what I learned.
In my no-financial-crisis, no-bailout, no-recession, no-stimulus scenario, spending kept growing at 6.22% a year, and revenue kept growing at 3.45%. You can see from the difference between the two numbers that this was an unsustainable path. But it clearly could have been sustained for a few more years.
Where would it have left us in fiscal 2010? With $2.843 trillion in federal revenue and $3.270 trillion in spending, leaving a deficit of $427 billion. The actual revenue and spending totals for 2010 were $2.162 trillion and $3.456 trillion. So spending was $186 billion higher than if we'd stuck to the trend, and revenue was $681 billion lower. In other words, the giant deficit is mainly the result of the collapse in tax receipts brought on by the recession, not the increase in spending. Nice to know, huh? [Justin Fox, blogs.reuters.com, 10/25/10, emphasis added]