Monday, October 6, 2008

Drilling Down on the Facts in McCain’s Speech

October 6, 2008

Speaking in Albuquerque on Monday, Senator John McCain attacked Senator Barack Obama on several fronts that by now have become familiar. But many of his charges relating to the economic meltdown, taxation and health care contained inaccuracies or exaggerations of his own position or Mr. Obama’s.

For instance, Mr. McCain claimed that “as recently as September of last year,” Mr. Obama “said that subprime loans had been, quote ‘a good idea.’” But that quote is taken out of context and reverses the intent of Mr. Obama’s remarks, which were clearly meant primarily as a criticism of practices on Wall Street.

“Subprime lending started off as a good idea helping Americans buy homes who couldn’t previously afford to,” Mr. Obama said in a speech to NASDAQ in September 2007. But, he added, “as certain lenders and brokers began to see how much money could be made, they began to lower their standards. Some appraisers began inflating their estimates to get the deals done. Some borrowers started claiming income they didn’t have just to qualify for the loans, and some were engaging in irresponsible speculation. But many borrowers were tricked into glossing over the fine print.”

Mr. McCain also said that Mr. Obama “was silent on the regulation of Fannie Mae and Freddie Mac, and his Democratic allies in Congress opposed every effort to rein them in.” That oversimplifies a complicated situation that was the subject of partisan wrangling dating back to the 1990s, long before Mr. Obama arrived in the Senate in 2005.

From his remarks, it would appear that Mr. McCain is referring in part to the Federal Housing Enterprise Regulatory Reform Act, which Democrats did oppose when it was introduced in 2005. But they did so vocally, not silently, because they saw the proposal as fundamentally flawed.

But Republicans controlled the Senate and its agenda then. That suggests that Mr. McCain’s Republican colleagues, some of whom opposed regulation of markets on purely philosophical grounds, had at least in part a hand in the bill’s failure to come to a final vote.

In addition, Mr. McCain exaggerates his own role in efforts to prevent abuses at the federally-chartered companies. “I was the one who called at the time for tighter restrictions on Fannie Mae and Freddie Mac that could have helped prevent this crisis from happening in the first place,” he said. In reality, Mr. McCain signed on to the 2005 bill in May 2006 and was not one of its original sponsors.

Mr. McCain also criticized Mr. Obama’s policies on taxes, in language similar to last month’s first debate, with a few new fillips. But fact-checking organizations have already repeatedly dismissed the bulk of the accusations he made as inaccurate or exaggerated.

Just as in the debate, for example, Mr. McCain accused Mr. Obama of voting to raise taxes on people making as little as $42,000 a year. But that vote was in favor of a non-binding budget resolution that would have allowed the tax cuts President Bush pushed through Congress in 2001 and 2003, which mainly benefitted the wealthy, to expire. It was not a tax increase and as a resolution, it did not have force of law. In addition, it was meant to be supplemented by other legislation which would include middle-class tax breaks.

Mr. McCain was absent from the Senate, out on the campaign trail, when both votes were taken. But the Obama campaign has noted in e-mailings to reporters that he, like Mr. Obama, voted for another, related piece of legislation, an amendment that contained essentially the same budget projections that Mr. Obama had earlier endorsed.

According to Mr. McCain, Mr. Obama also has “promised to double taxes on every American with a dividend or an investment.” This too is false: Mr. Obama has said he favors raising the capital gains tax rate from its present 15 percent to somewhere between 20 and 28 percent, and that “my guess would be it would be significantly lower than that” 28 percent ceiling.

More importantly, however, Mr. Obama’s planned increase would apply only to couples making $250,000 a year or more, or less than two percent of the population. It would not, therefore, double taxes on every American. The same applies to any increase in the Social Security payroll tax, which Mr. McCain also included in his list of taxes that would supposedly rise for the middle class if Mr. Obama were elected.

Finally, Mr. McCain said that Mr. Obama has “promised higher taxes on electricity.” This is apparently a reference to Mr. Obama’s support for a cap-and-trade system to reduce carbon emissions. But Mr. McCain has also endorsed the same concept, albeit with less detail, which would impose new levies on the consumption of coal, gas and oil in order to encourage a shift to clean and renewable sources of energy. So by that definition, Mr. McCain too wants higher taxes on electricity.

On health care, Mr. McCain repeated accusations he made in his acceptance speech at the Republican convention, which fact-checking organizations criticized then. “He has said his goal is a single payer system where government is in charge of health care and bureaucrats stand between you and your doctor,” Mr. McCain claimed Monday.

Each of those statements is misleading or distorts Mr. Obama’s position in one way or another. First of all, Mr. Obama does not say his “goal” is a single-payer system, under which one entity would handle all health care insurance for the population.

Mr. Obama has in the past said that such a system, variations of which are in use in some European countries as well as in Australia and Canada, would probably have been his preferred option “if I were designing a system from scratch.” But he has qualified that by saying that Americans “don’t want to wait for that perfect system,” and the health care program that he offers on his campaign website is not in fact a single-payer system.

Secondly, the health care system that Mr. Obama favors is not one that would place government “in charge of health care.” Adults would be allowed to keep the health insurance that they have now, to choose from competing private plans or, as Mr. Obama has repeatedly said on the campaign trail, sign up for a new public plan that will offer much the same coverage that members of Congress have. Again, it offers multiple options.

It is true that Mr. Obama’s health care plan envisions more of a role for government than does Mr. McCain’s, which focuses on individual or family credits and a larger role for the private sector in the name of deregulation. Mr. Obama would, for example, expand Medicaid and the State Children’s Health Insurance Program, which Mr. McCain has opposed.

But that is a far cry from the kind of government-run system Mr. McCain portrays. Also, while Mr. Obama has said he would eventually like to see a universal health care plan enacted, the program he supports only mandates health care for children. In the Democratic primaries, that was an important difference between him and Sen. Hillary Rodham Clinton.

In addition, Mr. McCain’s statement that Mr. Obama would allow “bureaucrats to stand between you and your doctor” is misleading. That statement implies that the government would have a role in individuals or families choosing a doctor, which is not correct. With the possible exception of Medicaid and SCHIP, Mr. Obama’s health care plan would allow people to retain physician choice.

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