By Glenn Kessler and Michelle Ye Hee Lee
August 9, 2016
In an effort to reset his troubled presidential campaign, Donald Trump gave a prepared speech to the Detroit Economic Club, an important venue for major economic addresses. Here’s a guide to 16 of the more fact-challenged assertions made by the GOP nominee. As is our practice, we do not award Pinocchios in speech roundups.
“Hillary Clinton short-circuited again — to use a now famous term — when she accidentally told the truth and said she wanted to raise taxes on the middle class.”
This is ridiculously false — something that earned Trump a “Pants on Fire” from our friends at PolitiFact three days ago. It is appalling that it still turns up in a prepared speech.
On Aug. 4, Clinton gave a speech in which the prepared text had this line: “We aren’t going to raise taxes on the middle class.” When Clinton delivered the speech, she dropped the “t” and so to some ears it might have sounded like an “are,” especially on a videotape. (Reporters at the event heard “aren’t.”)
PolitiFact asked a linguistic professor to run Clinton’s remarks through a phonetics computer program. That effort confirmed that when she said “aren’t,” she hit the “n” but somehow missed the “t.” So it’s rather strange Trump is still making this claim.
“Our current tax code is so burdensome and so complex that we waste 9 billion hours a year in tax code compliance.”
This is a relatively high estimate for a number that is difficult to measure with precision. The IRS’s National Taxpayer Advocate in 2012 pegged the figure at about 6 billion hours. The number includes record-keeping and reading the tax rules, not just filling out tax forms. Whether the time is “wasted” is a matter of opinion; tax revenue of course helps fund the functions of government.
Clinton’s “plan would tax many small businesses by almost 50 percent.”
Trump is referring to companies that file taxes under the individual income code rather than the corporate income tax code, which leads to shareholders being taxed twice (once on the corporation’s earnings, and again on their personal income taxes).
Companies that pay individual income tax include smaller companies like partnerships, sole proprietorships and some limited liability companies. They comprise a range of companies, from self-employed people to law firms. (See more on this in our 2011 fact check.)
Trump adds up to nearly 50 percent by summing three current law individual income tax rates with Clinton’s proposed 4 percent surcharge on income greater than $5 million, according to calculations by the Urban-Brookings Tax Policy Center and footnotes from the Trump campaign.
But the “small businesses” that would be affected by Clinton’s proposed tax increases comprise a small share of taxpayers with these types of business income. According to the 2015 distribution of individual tax returns with business income from the Tax Policy Center, Trump’s statement applies to less than 2 percent of individuals that report at least half of their income from business. About 90 percent of taxpayers with business income make under $200,000, and thus would not be affected by the individual tax increases under Clinton’s plan.
Clinton’s small business plan includes a tax relief proposal for businesses with one to five employees.
“NAFTA, which her husband signed, is a very, very big reason [for economic problems in upstate New York].”
We’ve been over this time and again. Bill Clinton was certainly a supporter of NAFTA who pushed approval through Congress. But it was negotiated and signed by President George H.W. Bush. (Here’s a photo.) Moreover, more Republicans than Democrats voted for the deal, as the trade pact was vehemently opposed by labor unions. One key ally for Clinton was then-House Minority Whip (and later House speaker) Newt Gingrich (R-Ga.), now a Trump supporter.
Clinton did put his political prestige on the line to get it approved by Congress — even as two top Democrats, House Majority Leader Richard Gephardt (Mo.) and House Majority Whip David Bonior (Mich.), opposed it. In the House, NAFTA passed 234-200; 132 Republicans and 102 Democrats voted in favor of it. The Senate approved NAFTA 61-38, with the backing of 34 Republicans and 27 Democrats.
In the House and the Senate, more Democrats voted against NAFTA than for it — a signal that the Bernie Sanders wing of the Democratic Party was strong even then. Clinton held a signing ceremony for the implementing legislation on Dec. 3, 1993, flanked by former presidents and congressional leaders of both parties. But that’s not the same as negotiating and signing the treaty with Mexico and Canada. The trade agreement went into effect on Jan. 1, 1994.
“Their policies produced 1.2 percent growth, the weakest so-called recovery since the Great Depression.”
Trump is mixing up two facts here. The growth in the gross domestic product in second quarter was 1.2 percent. The annual average growth rate in the recovery has been 2.1 percent, which is the weakest pace of any expansion since at least 1949. Yet, at the same time, it is now the fourth longest expansion since 1949 — and in fact is the longest expansion under a single president.
“There are now 94.3 million Americans outside of the labor force. It was 80.5 million when President Obama took office, an increase of 14 million people.”
This is a misleading juxtaposition of accurate numbers. Trump makes it sound as if 14 million fewer people are working, when in fact the size of the labor force has increased by 5 million people since Obama took office.
The 94.3 million figure includes retirees, students, stay-at-home spouses and the like — people who choose not to work. As for the increase in people who have stopped working, about 50 percent of the shift between 2007 and 2013 stems from the retirement of the baby boom generation, according to a Congressional Budget Office estimate. So that’s a long-term historical trend that cannot be pinned on Obama.
The other half stems from “weakness in employment prospects and wages” and because potential workers became frustrated by the slow recovery and drooped out of the labor force.
“The 5 percent [unemployment] figure is one of the biggest hoaxes in American modern politics.”
Trump has given fairly absurd estimates for the unemployment rate in the past, ranging up to 42 percent, but also 23 percent. Neither is correct, so he’s earned Four Pinocchios for these wild claims.
Trump suggests this official employment rate is rife with politics, but that’s false. The most commonly reported unemployment rate from the Bureau of Labor Statistics is officially known as the “U-3” rate. This is one of six different “labor utilization” rates issued every month by the agency. The U-3 rate reflects people who are actively seeking jobs but cannot find one. As of July, that was 4.9 percent of the labor force above the age of 16.
The estimate of unemployment is based on a monthly sample survey of 60,000 households. The BLS did not come up with this definition of unemployment willy-nilly; it actually reflects an internationally embraced definition set by the International Labor Organization — that the “unemployed” are people who are not working but have actively searched for work, are available to work and are willing and able to work for pay.
But you can also look at other rates, such as the “U-6,” which include people who are employed part-time — but want and are available for full-time work — as well as discouraged workers and workers “marginally attached” to the labor force. Some economists might argue that the U-6 rate provides a more accurate picture of the unemployment rate. As of July, that number was 9.7 percent.
“Fifty-eight percent of African American youth are either outside the labor force or not employed.”
Trump is referring to the labor force participation rate of black youth 16 to 24 years old, which combines the number of people who are unemployed or not in the labor force. Those not in the labor force include people who are not looking for jobs because they are students, have given up looking, or are just not looking for work. Not everyone who is outside the labor force is looking to work.
The labor force participation shows a less positive picture than the official unemployment rate by the Bureau of Labor Statistics. The BLS unemployment rate for black youth ages 16 to 24 is 20.6 percent as of July 2016. The unemployment rate reflects people who are not working but are available to work, and are looking for work.
Trump’s campaign has said that looking at the labor force participation rate “is a more comprehensive reflection of disengagement from the labor force than the unemployment rate,” as it includes those who are not finding work because they are discouraged from previous attempts at employment.
“Nearly 12 million people have been added to the food stamp rolls, and these people are growing and growing so rapidly since President Obama took office.”
Trump right on the number of enrollees increased under President Obama, and incorrect that the number is “growing so rapidly.”
There were 43.5 million people enrolled in the Supplemental Nutrition Assistance Program (SNAP), the official name for food stamps, in May 2016. That is an increase of 11.5 million people from when President Obama took office in January 2009, when there were 32 million enrollees. [Update: We have corrected an earlier version of this fact check, which miscalculated the enrollee growth under Obama.]
This is actually the lowest number of people receiving food stamps since it reached its peak in 2013, a sign that the economy is finally improving enough that the delayed impact of economic recovery has reached families who depend on them.
The number of SNAP enrollees increased under Obama in part because of the Great Recession, and also because of the changes in the food stamp program under President George W. Bush, when Congress overrode his veto of the 2008 Farm Bill. That law boosted the buying power of food stamps by indexing key elements to inflation.
At the same time, Obama’s stimulus bill also temporarily boosted benefits even more. The Obama administration also announced that it was pushing to expand eligibility, in part on the theory that expanding the food stamp program is also good for the economy because the money is quickly spent. We explored the reasons for the SNAP enrollment increase under Obama in a 2011 fact check.
“No family will have to pay the death tax. American workers have paid taxes their whole lives, and they should not be taxed again at death.”
Actually, very few families ever pay the estate tax, as Congress has lifted the amount that is initially exempt from tax from $675,000 ($1.35 million for couples) in 2001 to $5.43 million (nearly $11 million for couples). The top tax rate also fell from 55 percent to 40 percent. As a result, there were 52,000 taxable estate tax returns filed in 2000 and fewer than 5,000 in 2013.
Trump is also wrong when he suggests that taxes have been already paid on the assets left to heirs. Many assets of the very wealthy — such as securities holdings — have not been previously taxed. And although in rare instances, a tax may have to be paid by the estate, a person who inherits appreciated stock is not required to pay any capital gains tax on the increase in value.
“Homeownership is at its lowest rate in 51 years.”
Trump correctly cites the most recent Census Bureau statistics. The homeownership rate in second quarter 2016 was 62.9 percent — the lowest rate since 1965, when the Census Bureau began tracking the data. The rate reached an all-time high around the height of the housing boom in 2005, at 69.2 percent.
While Trump blamed low homeownership rates on how the “Obama-Clinton agenda” has hurt the U.S. economy, this figure doesn’t tell the full picture.
The declining rate indicates that younger households are not yet ready to buy homes, and are struggling to save, according to the Wall Street Journal. But it also reflects an increase in the number of renters, likely due to the number of younger renters who now feel stable enough to leave their parents’ homes and get a place on their own.
Socio-demographic changes, such as lower rates of marriage and increased focus on education and career development, have led to delays in homeownership among younger households, according to the Harvard Joint Center for Housing Studies.
Federal Reserve data show today’s homeowners have the same equity in their properties as their cohorts did in late 2004, Washington Post opinion writer Charles Lane wrote, arguing that the rate decline is actually a good thing. “To put it another way: The United States actually has more homeownership, in economic terms, than it did when the homeownership rate, a measure of mere legal ownership, was higher. Accordingly, the economy should also be less vulnerable to another real estate shock,” Lane wrote.
“According to the Bureau of Labor Statistics, before NAFTA went into effect, there were 285,000 auto workers in Michigan. Today, that number is only 160,000 auto workers.”
Trump’s campaign cited Michigan jobs numbers from motor vehicle manufacturing and parts manufacturing. But Trump makes it sound like all of the jobs lost were due to NAFTA. But not all these jobs were lost because of trade; the manufacturing sector has declined as a source of jobs in the United States as productivity has risen. The Congressional Research Service found it is difficult to measure the exact impact of trade, compared to other variables that can affect the economy, such as inflation and economic growth.
There were many factors contributing to Detroit’s economic decline, including the decline of the auto industry. Strikes relating to union negotiations, automation and increased labor costs all contributed, according to a New York Times analysis of Detroit’s economic decline.
“The next betrayal will be the Trans-Pacific Partnership. Hillary Clinton’s closest friend, Terry McAuliffe, confirmed what I have said on this from the beginning: If sent to the Oval Office, Hillary Clinton will enact the TPP.”
Democratic Virginia Gov. Terry McAuliffe did say Clinton will flip on the Trans-Pacific Partnership if elected president, but he has clarified that he was saying what he hoped Clinton would do as president.
Republicans seized on McAuliffe’s comments, which contradicted what Clinton has promised on the campaign trail (that she opposes TPP) and reinforced one of Trump’s favorite attack lines against Clinton (that she would change her mind and support TPP).
McAuliffe made the remark during an interview after his speech at the Democratic National Convention. The Clinton campaign pushed back immediately, and campaign chairman John Podesta told Politico that Clinton never told McAuliffe she is open to changing her position on TPP. McAuliffe’s spokesman clarified that the governor was expressing what he hopes Clinton would do: “While Governor McAuliffe is a supporter of the TPP, he has no expectation Secretary Clinton would change her position on the legislation and she has never told him anything to that effect.”
Days after making the claim, McAuliffe told The Washington Post that Clinton would not support TPP as president, and that he disagrees with her stance against it: “I disagree with her. I think she is wrong. But I look at it through the prism of being governor, I have to do what’s right for Virginia.” McAuliffe said “it’s not going to happen. She’s already made up her mind. This is going to ride on the president’s shoulders.”
“American steel, steel — American steel — we will send new skyscrapers soaring all over our country. We will put new American metal into the spine of this nation.”
About 71 percent of steel used in the United States in 2015 was made in the United States, the New York Times recently reported, citing data from the American Iron and Steel Institute. While Trump has bemoaned the loss of American-produced steel and related jobs, particularly in the Midwest, the Times reported that steel mills in such cities “were not replaced by Chinese factories but by smaller, more efficient factories in other parts of the country.”
“One of my first acts as president will be to repeal and replace disastrous Obamacare, saving another 2 million American jobs.”
We’ve dismissed this ridiculous talking point repeatedly since it first emerged. But maybe Trump missed those columns. Let’s try to explain again.
The number comes from a 2014 Congressional Budget Office report. But Trump gets it totally wrong. This is not about jobs offered by employers. It’s about workers — and the choices they make.
The CBO’s estimate is mostly the result of an analysis of the impact of the Affordable Care Act on the supply of labor. That means how many people choose to participate in the work force. In other words, CBO examined whether the law increases or decreases incentives for people to work.
One big issue: the health insurance subsidies in the law. That’s a substantial benefit that decreases as people earn more money, so at a certain point, a person has to choose between earning more money or continuing to get the maximum help with health insurance payments. In other words, people might work longer and harder, but actually earn no more, or earn even less, money. That is a disincentive to work. (The same thing happens when people qualify for food stamps or other social services.)
Thus, some people might decide to work part-time, not full time, in order to keep getting health-care subsidies. Thus, they are reducing their supply of labor to the market. Here’s a simple way to understand this concept: If someone says they decided to leave their job for personal reasons, most people would not say they “lost” their jobs. They simply decided not to work.
The CBO did look at the effect on demand for labor (i.e., jobs) but said the effects of the health-care law are mostly on the margins or are not measurable.
“Hillary Clinton says her plan will put a lot of coal companies and coal miners out of business.”
This statement is taken out of context. During a March 2016 town hall in Ohio, Clinton was asked by a voter: “Make the case to poor whites who live in Tennessee, Mississippi, Alabama, who vote Republican, why they should vote for you based upon economic policies versus voting for a Republican?”
Clinton gave a lengthy response, which included the line, “We’re going to put a lot of coal miners and coal companies out of business.” But that line has been spun out of context since then and used as a soundbite. It was part of her longer answer about helping coal mine workers adjust after they lose their factory jobs. Coal mining jobs have declined in recent years. Many reasons have contributed to this decline, including efficiency improvements and the Obama administration’s decision to reduce coal plant emissions.
Her lengthy answer in March 2016 was consistent with themes in her November 2015 policy proposal for revitalizing coal communities. The proposal says that transitioning away from coal-powered plants has already affected mining communities like in Appalachia. Clinton supports the Obama administration’s clean energy plan, and proposed ideas to help improve coal workers’ health and retirement security, and to help with economic development in coal communities.
This was her full answer. The portion that Trump cited is in bold.
Well, first of all, I was happy to carry those states you mentioned, and I carried the white vote in those states, too, that voted Democratic now, I don’t want to get carried away here.
Look, we have serious economic problems in many parts of our country. And Roland is absolutely right. Instead of dividing people the way Donald Trump does, let’s reunite around policies that will bring jobs and opportunities to all these underserved poor communities.
So for example, I’m the only candidate which has a policy about how to bring economic opportunity using clean renewable energy as the key into coal country. Because we’re going to put a lot of coal miners and coal companies out of business, right, Tim? And we’re going to make it clear that we don’t want to forget those people. Those people labored in those mines for generations, losing their health, often losing their lives to turn on our lights and power our factories.
Now we’ve got to move away from coal and all the other fossil fuels, but I don’t want to move away from the people who did the best they could to produce the energy that we relied on.
So whether it’s coal country or Indian country or poor urban areas, there is a lot of poverty in America. We have gone backwards. We were moving in the right direction. In the ’90s more people were lifted out of poverty than anytime in recent history. Because of the terrible economic policies of the Bush administration, President Obama was left with the worst financial crisis since the Great Depression, and people fell back into poverty because they lost jobs, they lost homes, they lost opportunities, and hope.
So I am passionate about this, which is why I have put forward specific plans about how we incentivize more jobs, more investment in poor communities, and put people to work.
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