We did our best to live fact-check the first presidential debate on Twitter, laying out the facts on fiscal issues. Of course, time constraints and the 140-character limit prevented us from getting to all the issues or explaining them all in full. Here's what we missed or want to clarify:
- Medicare: There was plenty of talk on Medicare in both the economy and health care sections of the debate. Some of the talk centered on the Independent Payment Advisory Board, which we pointed out would be tasked with limiting Medicare growth per beneficiary to GDP plus one percent. We said on Twitter that IPAB cannot choose which treatments beneficiaries get, which is true; the Board will not be able to directly make those choices: IPAB may not ration care, make changes to benefits, or increase cost-sharing. However, through provider payments, IPAB can indirectly affect the availability of treatments or care overall, although it is difficult to say exactly how that would happen until proposals are made or put into action. Moreover, Congress has the ability to replace or--with a higher vote threshold--override IPAB's recommendations. In terms of the Affordable Care Act's estimated $716 billion of cuts to the Medicare program, Gov. Romney indicated that he wanted to put those cuts "back into Medicare." It's unclear what he means, as the cuts reduce the amount Medicare spends, not how much it receives in payroll taxes. Putting those cuts back as he had advocated would result in increased spending by the Medicare program, hastening the insolvency of the Part A trust fund.
- Taxes: Taxes were also a hot topic in this debate. On our feed, we pointed out that "in the past several times when the U.S.. had a balanced budget," federal revenues were "above average" as a share of the economy. What we meant is that in the past five balanced budgets--1969 and 1998-2001--federal revenue was at least 19.5 percent of GDP in each of those years, while it has averaged about 18 percent of GDP over the last 40 years. In terms of Gov. Romney's base-broadening, rate-lowering tax reform, we said that a revenue-neutral reform was done before in 1986. One clarification is that while it is true that the 1986 reform was revenue-neutral overall, it was revenue-negative on the individual side and revenue-positive on the corporate side. Gov. Romney, on the other hand, wants to be neutral on both sides.
- $5 Trillion Tax Cut: One point on taxes that kept coming up is Gov. Romney's tax proposal. President Obama called it a $5 trillion tax cut and said that to offset it would require raising taxes on the middle class. Gov. Romney contended that neither would be the case. So far, Gov. Romney has proposed by our count $5.1 trillion of tax cuts, $3.8 trillion for individuals and $1.3 trillion for corporations. To make up for it, he said that he would broaden the tax base in a way that does not raise taxes on people making less than $200,000. Gov. Romney is correct that he could broaden the base to make up for the lost revenue, but it seems unlikely he would be able to avoid tax increases on what he has defined as middle class. A Tax Policy Center study showed that even assuming that preferences could somehow be fully eliminated only for high earners, it would not pay for his individual tax cuts, assuming savings preferences weren't touched. Many responses tried to dispute the claim by either using different assumptions or arguing that TPC excluded certain things that they shouldn't have, which reduced the necessary tax increase but didn't eliminate it. We'd like to point out that it is possible to reduce rates, raise revenue, and make the code more progressive on the individual side, if one is willing to put all tax expenditures on the table, including savings preferences, as the Simpson-Bowles plan did. CRFB Senior Policy Director Marc Goldwein notes that tax reform can only achieve all of these goals when everything is put on the table.
- Budget: President Obama repeated the claim that his plan reduces deficits by $4 trillion. We said before that the way the administration counts this $4 trillion includes about $1 trillion in war savings, which is not consistent with how other plans have generally counted savings. On a related note, his claim of a 2.5 to 1 spending cut-to-tax increase ratio is also based on savings from the war drawdown. Using a more common baseline, his plan includes more tax increases than spending cuts. Gov. Romney made a few claims that we were unable to address on Twitter. One is that CBO is projecting deficits of $1 trillion for each of the next four years. This is not true under either the President's budget or CBO's Alternative Fiscal Scenario, so it is not clear where this comes from. His second claim is that under President Obama's watch, the deficit doubled. This is true if you compare the FY 2008 deficit to this year's deficit ($455 billion against $1.1 trillion). However, President Obama is correct that he "inherited" a $1 trillion plus deficit: the last CBO baseline before he took office in January 2009 showed an FY 2009 deficit of $1.2 trillion, slightly above this year's projected deficit of $1.1 trillion.
- Corporate Tax Reform: Both President Obama and Governor Romney have plans to reduce the corporate tax rate--to 28 and 25 percent, respectively--and to make the research and experimentation tax credit permanent. Both have also said that they would make that reform revenue-neutral through base-broadening. The two preferences President Obama targeted for elimination during the debate were accelerated depreciation for corporate jets and for oil and gas tax expenditures, which would finance a 0.2 percentage point corporate tax rate reduction, according to our tax reform calculator. He has also put out a business tax framework, which includes a combination of proposals and options that would finance the full rate reduction. Governor Romney so far has not specified base-broadening on the corporate side, although his proposal to move to a territorial system--where foreign earnings of U.S. businesses are not taxed--could raise revenue depending on how it was designed. A "pure" territorial system, though, would lose revenue.
Budget-related issues got plenty of airtime in the first debate. However, the candidates will need to break new ground in order to pay for their promises. Each must also be ready to work with Congress, no matter who wins on November 6.