The Republican Governors Association has been on the TV airwaves attacking Democrat Jay Inslee over Congress’ stimulus and health care laws.
What the ad says: The group’s ad accuses Inslee of hurting small businesses.
“Local small businesses struggling to stay open, and Inslee votes them a massive tax increase, making their survival even more difficult. Skyrocketing federal debt slowing our recovery, and Inslee votes for an $800 billion spending program that never delivered the promised jobs.”
What Inslee says: Campaign spokeswoman Jaime Smith said the ad is a distortion.
“Jay supported reforms that take steps to fix a system that is bankrupting businesses, families and governments, and a stimulus package that saved millions of jobs,” she said.
The facts: Inslee, who represented Washington in Congress until resigning to run for governor, voted for two of President Barack Obama’s biggest priorities – the Affordable Care Act, also known as Obamacare, and the law known as the Recovery Act or stimulus.
Much time has been spent arguing whether the stimulus worked and what the effects of the health care law will be, and those debates won’t be settled here. But here are some facts.
The U.S. Supreme Court decision authored by Chief Justice John Roberts upheld the 2010 health care law, but also gave Republicans ammunition to label the law as a major tax increase. The court decided that penalties for individuals who don’t buy health insurance could be construed as a tax.
The law also contains a mandate for employers to provide adequate health insurance for their employees – also backed up by tax penalties. That’s the policy the ad is targeting.
Businesses with at least 50 employees will have to pay a $2,000-per-employee penalty starting in 2014 if they don’t provide what is deemed adequate coverage, according to the National Conference of State Legislatures. The penalty applies if any of a business’s employees obtain a government subsidy through one of the new insurance exchanges created under the law. And employers don’t have to pay it on their first 30 employees.
The nonpartisan Congressional Budget Office projected the penalties would raise $10 billion to $11 billion a year once they fully kick in. Whether that’s a “massive” tax increase might be subjective, but it’s a lot of money.
And some of it will come from businesses that could be considered small – although not as small as the mom-and-pop businesses implied by the footage in the ad. One definition of a small business comes from the U.S. Small Business Administration, which has authority over manufacturing businesses with 500 or fewer employees and nonmanufacturing businesses bringing in $7 million or less.
While their somewhat larger peers will face new costs, the smallest businesses could save money under the law, because of tax credits to help businesses with up to 25 employees afford insurance premiums. Those are estimated to cost an average of $4 billion a year.
What about the 2009 stimulus? It indeed had a price tag of roughly $800 billion – $787 billion, to be exact. It was a spending program to the extent that spending accounted for a majority of the cost – though not all of it. A large minority came in the form of tax breaks.
What was promised? Obama said after proposing the stimulus that it would “save or create over 3 million jobs.”
And his presidential transition team estimated that the proposal would create 3.3 million to 4.1 million jobs in the fourth quarter of 2010 and would keep the unemployment rate from surpassing 8 percent. That was less of a promise than a projection, and it had disclaimers highlighting “obvious uncertainty” and “significant margins of error,” but it puts some specifics behind Obama’s more certain statement.
So what happened by the fourth quarter of 2010?
Employment had started to grow, according to the U.S. Bureau of Labor Statistics, but still was less than when the stimulus aid started to trickle out in the second quarter of 2009. Unemployment had started to drop after hitting 10 percent and remained above 8 percent until now.
Republicans point to that as proof, but it’s impossible to know what would have happened without the stimulus. Economists have largely agreed that unemployment would have been worse.
Estimates of the impact in the fourth quarter of 2010 were made by the Congressional Budget Office, which decided the stimulus had increased the number of people employed by between 1.3 million and 3.5 million. That’s a far cry from a predicted range of 3.3 million to 4.1 million, but there is some overlap.
It’s plausible, then, to say the goal of more than 3 million jobs probably wasn’t reached, but that can’t be stated definitively.
The bottom line: Neither claim tells the full story, but the claim about the tax increase is largely true. The claim about spending is only half true because it overstates the case against the stimulus.
Having trouble sorting out the facts from the spin in political speeches, TV ads and mailers? We’re ready to fact-check this season’s campaign. Send questions to Political Smell Test at firstname.lastname@example.org.