Revisiting Our Live Fact-Checking of the Second Presidential Debate

As with the previous two debates (one presidential and one vice presidential), we will take an opportunity to go back and fact check some statements we missed or expand on the things we got to that deserve more than a 140 character explanation.

• Share of Taxes Paid: Governor Romney got more specific this time about his criterion for not lowering taxes on high-income taxpayers. He specifically said, "The top 5 percent of taxpayers will continue to pay 60 percent of the income tax the nation collects. So that'll stay the same. Middle-income people are going to get a tax break." He is correct that the top 5 percent currently pay 60 percent of the income tax, according to Tax Policy Center. This would also be the case next year, assuming that the 2001/2003/2010 tax cuts and the patch to the Alternative Minimum Tax are extended, which Governor Romney supports.
• Tax Rate Reductions: We pointed out last night that President Obama erroneously stated that reducing tax expenditures could only reduce tax rates by 4 percent. Here's the full statement: "And -- and what's at stake here is one of two things, either Candy -- this blows up the deficit because keep in mind, this is just to pay for the additional spending that he's talking about, $7 trillion - $8 trillion before we even get to the deficit we already have. Or, alternatively, it's got to be paid for, not only by closing deductions for wealthy individuals, that -- that will pay for about 4 percent reduction in tax rates." In this case, he conflates Governor Romney's proposed tax cuts and defense increase with the conclusion of a Joint Committee on Taxation study which stated that reducing tax expenditures while raising $4.5 trillion of revenue (compared to current policy) would allow for only a 4 percent reduction in tax rates. We pointed out the flaws with that study in a recent paper (shorter version here), namely that the revenue target is higher than most all other tax reform plans aim for and that the study missed some big tax expenditures. In any case, the JCT conclusion does not apply to Gov. Romney's plan since his revenue target is neutral relative to current policy, rather than $4.5 trillion higher.
• Student Loans: Last night, we confirmed a statement by President Obama that he had "cut out the middleman" with regards to student loans. We were referring to a part of the Health Care and Education Reconciliation Act that eliminated the Federal Family Education Loan program, which made payments to private lenders and guaranteed their loans and replaced it with a direct loan program. CBO scored this change as saving $58 billion from 2010-2019, so he was also correct in stating how much the change on net reduced the deficit.
• Upper Income Tax Cuts: In detailing the cost of Governor Romney's promises, President Obama added up $5 trillion for his proposed tax cuts, $2 trillion for defense spending increases, and $1 trillion for the upper-income tax cuts. We took issue with the inclusion of the latter policy since President Obama also has claimed credit for saving a similar amount by ending the upper-income tax cuts. Obviously, you can't have it both ways. Either the baseline is an extension of all the tax cuts -- in which case President Obama is saving money while Governor Romney is following the status quo -- or the baseline is an extension of the middle-class tax cuts, which means President Obama is following the status quo and Governor Romney is losing revenue.
• Cap on Deductions: Governor Romney once again brought up a proposed cap on tax expenditures that taxpayers could use, which we discussed previously. He has mentioned a $17,000 cap before and said $25,000 in this debate. Last night, we said that this cap would unlikely be large enough to pay for his roughly $5 trillion tax cut. Today, the Tax Policy Center estimated that a $17,000 cap on itemized deductions would raise $1.7 trillion and $25,000 cap would raise about $1.3 trillion after accounting for his other tax changes. However, Governor Romney said that the cap would apply not just to itemized deductions but to exclusions and credits as well. It's unclear how much additional revenue this would raise, but it seems likely the cap would still fall short of the size of the tax cut.
• Employment: Governor Romney repeated his claim that he would create 12 million new jobs in four years. It has been said previously that Moody's Analytics and Macroeconomic Advisors have predicted in their economic baseline that employment would increase by about 12 million over the next four years without any changes other than the lack of a fiscal cliff. CBO predicts that employment will rise by about 9 million between the first quarter of 2013 and the first quarter of 2017, even though it assumes that the fiscal cliff will take place.

The last debate is strictly on foreign policy, so fiscal policy is unlikely to come up. It has had its moments, though, during the debates this fall.