Fact-Checking the Final Debate

We did not live fact check the debate last night, but the debate did include a little bit of fiscal policy, which is not surprising considering the intertwinement between the budget and our foreign policy. We will go into a few of the statements below.

• Defense Cuts: Governor Romney made a claim a few times during the debate that he has made in the past, that $1 trillion of budget cuts would hit defense spending. In making that claim, he adds the cuts from the Budget Control Act (BCA) compared to the President's FY 2012 defense request to the cuts from the sequester. The initial cuts are $487 billion (seen at the end of Table S-12 here) and the sequester cuts are $509 billion (Table 1-3 here) over ten years. However, we'd say the total cuts from the initial caps are from an inflated baseline, a defense request that was never fulfilled. A better measure of the cuts from the BCA caps comes from the same document that measures the sequester savings. It shows that compared to a baseline where defense spending grows with inflation (CBO's typical assumption), the BCA caps would save $307 billion, for total cuts of about $800 billion. Governor Romney's claim is not necessarily wrong, but his claim is off an inflated baseline. Also, he does not explicitly blame President Obama for the cuts, but both the initial caps and the sequester were approved by a bipartisan vote to raise the debt ceiling last August.
• Discretionary Cuts: Moderator Bob Schieffer asked Governor Romney how he planned to offset his proposed defense increases, or at least his rolling back of previously enacted defense cuts. He responded by citing his proposed 5 percent cut to non-security discretionary spending, a repeal of the Affordable Care Act, and the block granting of Medicaid. The current score for repealing the ACA is that it would cost $109 billion over ten years. In terms of his other two policies, we estimate the discretionary spending cut as saving $150 billion and the Medicaid block-granting as saving about $700 billion. Combined, those savings would total roughly $750 billion. That would pay for rolling back the defense cuts in the BCA, but it would not offset his proposal to increase base defense spending to four percent of GDP, which would cost about $1.9 trillion by our estimate (extrapolated through 2022 instead of 2021).
• $7 Trillion: President Obama repeated his claim that Governor Romney has proposed $5 trillion of tax cuts and $2 trillion of defense increases. We have addressed the costs before (which are largely correct), although we'd note that in this case no credit is being given for his proposed offsets. We mentioned some of his spending cuts above, and he also has floated a cap on deductions, which could raise between $760 billion and $1.7 trillion (depending on where the cap was set between $17,000 and $50,000). He has also proposed a few other spending cuts, such as reducing federal workforce pay and cutting Amtrak subsidies. In total, the offsets put forward by Governor Romney do not appear to be specific enough or sufficient to pay for the $7 trillion in specific costs over the next ten years.

All of the debates are now over, meaning it's now a two week sprint until Election Day. After that...