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Top Five False Claims from Obama's Address to Congress


Posted by John Kartch on Wednesday, February 25th, 2009, 4:01 PM PERMALINK


ATR has put together a press releases debunking the top five false claims made in Obama's address to a joint session of Congress on Tuesday night.

Here is an example of just one of the claims:

CLAIM #1: "...not because I believe in bigger government – I don’t."
 
FACT:   When Obama took the oath of office, federal spending for 2009 was on track to be about 22 percent of GDP, according to the CBO. Now with the passage of the trillion dollar Pelosi-Reid-Obama spending and debt plan, spending could hit 30 percent of GDP this year. That would be the highest level since World War II, and the biggest one year jump since Pearl Harbor. If that's not a belief in bigger government, then what is?

To see the full list, click "Read More"

Top Five False Claims from Obama’s Address to Congress
 Not including the assertion that the “stimulus” bill was free of earmarks
 
 
WASHINGTON, D.C.— Americans for Tax Reform today released the following list of false claims made by President Barack Obama during his first address to a joint session of Congress:
 
CLAIM #1: "...not because I believe in bigger government – I don’t."
 
FACT:   When Obama took the oath of office, federal spending for 2009 was on track to be about 22 percent of GDP, according to the CBO. Now with the passage of the trillion dollar Pelosi-Reid-Obama spending and debt plan, spending could hit 30 percent of GDP this year. That would be the highest level since World War II, and the biggest one year jump since Pearl Harbor. If that's not a belief in bigger government, then what is?
 
CLAIM #2: "A failure to act would have worsened our long-term deficit by assuring weak economic growth for years."
 
FACT:  When the government spends more money, it crowds out the private sector. 30 percent of GDP being spent by the government leaves only 70 percent for the private sector. Over time, it's the private sector--not government--which grows the economy. When the private sector gets crowded out, economic growth gets choked off.
 
CLAIM #3: “Because of this plan, 95 percent of the working households in America will receive a tax cut – a tax cut that you will see in your paychecks beginning on April 1st.”
 
FACT:  This is a mathematical impossibility. According to the IRS, there were over 138 million families filing income tax returns in 2006. Only 93 million returns paid income tax. That means that one-third of households had no income tax liability in 2006 (and this doesn't even account for those households that don't have to file tax returns, like most seniors). You can't cut taxes on 95% of families when one-third of them don't pay income taxes.
 
According to the Joint Tax Committee, 15 percent of families have neither an income tax nor a payroll tax liability.
 
No matter which way you slice it, you can't cut taxes for 95 percent of families. It's impossible. All you have left for the low end of the income spectrum is spending money, using the tax code as the distributor.
 
CLAIM #4: “We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.”
 
FACT: The U.S. is one of the only countries left in the developed world that double-taxes the international income of our companies. In order to ameliorate this double-taxation, a host of credits, deductions, and deferrals have been put into the tax code.
 
It would be far easier to simply conform to Japan, the U.K., Canada, and the rest of our trading partners by taxing only income earned in the United States. But making the double taxation problem worse by "closing loopholes" is a clear path toward outsourcing jobs and companies to friendlier nations.
 
CLAIM #5: “In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest 2% of Americans. But let me perfectly clear, because I know you’ll hear the same old claims that rolling back these tax breaks means a massive tax increase on the American people: if your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime.
 
FACT: To be clear, the top 2 percent is a lot closer than you might think. According to the IRS, a family is in the top 2 percent of income if it makes about $300,000 per year. That's a comfortable family, to be sure, but not exactly the image of the Monopoly man that Obama would seem to imply.
 
Let's take a look at the top 1 percent, the truly "evil" in the Obama-Pelosi-Reid worldview. According to the IRS, they earn about 20 percent of the income in America, but pay 40 percent of the income tax. The top 5 percent pay 60 percent of the income tax. The top 10 percent pay 70 percent of the income tax.
 
Does the term "blood from a rock" mean anything to President Obama?
 
Furthermore, most of the small business profits are earned in these top-two percent households. 40 percent of the sole proprietor profits are earned there. Almost 90 percent of business partnership and Subchapter-S corporation income is earned there. All told, more than $2 out of every $3 in small business profit is earned by families that Obama said he was going to raise taxes on last night. Since small businesses pay their business taxes on their owners' 1040s, to raise their taxes is to raise the tax rate on the lion's share of small business profits in America. 

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