FactChecking Obama’s Address

Summary

We found no outright false factual claims in Obama’s State of the Union address, but we did note some that were arguable, and some promises that may prove unrealistic.

• He called his Race to the Top initiative “the most meaningful reform of our public schools in a generation.” That’s debatable. Some independent experts say Bush’s No Child Left Behind program had a greater impact.
• The president set a goal of generating 80 percent of the nation’s electricity from “clean” sources by 2035. That’s ambitious. The first large-scale “clean coal” plant has yet to begin operation. And Obama counts nuclear energy as a “clean” source, despite the unresolved waste issue.
• He set a goal of giving 80 percent of the U.S. population access to high-speed rail in the next 25 years. But the U.S. only has one high-speed rail line in operation now.
• He said his new health care law will slow rising health care costs. But the office of Medicare’s chief actuary estimates the law won’t have much impact on costs, and there will be a slight rise in total spending as more people gain coverage under the law.
• He said “exports are up” since he set a goal of doubling them in five years, which is true. But the rise so far falls short of the pace required to meet his goal.

On other factual matters we found the president’s statements to be accurate, or reasonably so. He said the U.S. subjects businesses to “one of the highest corporate tax rates in the world,” which is borne out by the World Bank and other studies. He said U.S. engineers gave the nation’s infrastructure a grade of “D,” which is true. That rating was issued by the American Society of Civil Engineers. And he said U.S. workers are unexcelled in productivity, which is true according to one ranking and nearly true by other measures.

Analysis

It should come as no surprise that President Barack Obama set some very ambitious goals in his second State of the Union address Jan. 25, calling for bipartisan cooperation to "win the future." Setting the mark high — sometimes impossibly high — is something presidents tend to do. For example, in his 2003 State of the Union address, President George W. Bush said “the first car driven by a child born today could be powered by hydrogen, and pollution-free.” And a year later, Bush backed a return to the moon as early as 2015 and an eventual manned mission to Mars. We can’t say that Obama’s goals for high-speed rail, green energy or export promotion will fare any better or worse than those. But we can give a few facts that will provide context and a basis for our readers to draw their own judgments.

Schools Go Racing

On education, Obama declared his program, Race to the Top, "the most meaningful reform of our public schools in a generation." That is his opinion, of course, but it is debatable. Education experts we consulted said it is premature to judge the law.

Race to the Top is a $4.35 billion competitive grant program for states that seeks to encourage public schools to develop new ways to raise standards and measure achievement for both teachers and students in elementary and secondary schools. Not all states received funding. They had to compete for the money, and, in the end, 11 states and the District of Columbia were the winners in two rounds of competition. The Department of Education has requested an additional $1.35 billion to continue the program, but Congress must approve it.

Although the majority of states did not receive funding, the Obama administration takes the position that the competition for the funding alone resulted in sweeping education changes in most states. In announcing the second phase of funding in August, the Department of Education said in competing for federal funding "35 states and the District of Columbia have adopted rigorous common, college- and career-ready standards in reading and math, and 34 states have changed laws or policies to improve education."

Jack Jennings, president of the nonpartisan Center on Education Policy and a former top aide on the House Committee on Education and Labor, told us that Race to the Top has had an impact, but it’s too early to say just how.

"I think the president is overstating it," said Jennings, who was involved in nearly every national education reform effort from 1967 to 1994. "Race to the Top clearly had an effect and states did change their laws. But we don’t know the full effect yet. We don’t know the effect of the money yet. We don’t know the full effect yet of the changes in those state laws."

Grover “Russ” Whitehurst, director of the Brown Center on Education Policy and a senior fellow at the Brookings Institution, agreed. "You have to have some anchor for a statement like that. He didn’t give one. [Education reforms] have to be tied to some measure of academic achievement and here we don’t have that. We have a bunch of states promising to do things.”

Jennings said President Bush’s No Child Left Behind has had a "greater impact than Race to the Top," and Whitehurst agreed that many education experts would cite No Child Left Behind as the most significant education reform effort of this generation.

‘Clean’ Energy

The president set a goal of obtaining 80 percent of our electricity from renewable sources, plus nuclear, natural gas and "clean" coal, by 2035. That’ll take some work, but with three nonrenewable sources in the mix, the goal isn’t unreachable.

The biggest conundrum is coal. According to the U.S. Energy Information Administration, coal fueled 44.5 percent of electricity production in 2009, far more than any other source. But "clean" coal, which usually refers to coal burned in a way that allows its carbon dioxide emissions to be captured and stored underground, is far from ready to step in and provide such a large share of the mix. The first large-scale "clean" coal plant is still under development by a consortium of companies, with major funding from the Department of Energy. That means renewables like wind, solar and hydro will need to continue to expand their shares of the pie, as well as natural gas, which provided 23.3 percent of U.S. electric power in 2009 and has seen the fastest growth in recent years.

Obama also counts nuclear plants as "clean" — but that’s a point that environmentalists debate. Nuclear power accounted for a little more than 20 percent of electricity generation in 2009, and it produces no carbon emissions as coal plants do. But nuclear’s "clean" credentials are disputed by many including the Sierra Club, particularly since the question of what to do with the resulting highly radioactive waste has yet to be resolved.

Slower-Rising Health Costs?

Obama has frequently promised that the health care law will lower the growth of medical costs, and he said it again last night:

Obama: The health insurance law we passed last year will slow these rising costs …

The truth is that this largely remains to be seen. Many of the cost-saving measures the president has touted are untested, such as changes in the way care is delivered, new payment models and pilot projects that some experts applaud, and others question.

The office of the chief actuary for the Centers for Medicare & Medicaid Services said last fall that the health care law would have only a moderate impact on spending growth. And the nonpartisan Congressional Budget Office expects that for most Americans, who get their insurance through work, health insurance premium costs won’t change significantly from what they would have been without the law.

There are others who are more optimistic. A report from the liberal Center for American Progress and The Commonwealth Fund says that "the annual growth rate in national health expenditures could be slowed from 6.3 percent to 5.7 percent." The lead author is former Obama health care adviser David Cutler. But that analysis acknowledges that "[t]he exact amount that will be saved from these provisions collectively is uncertain."

Cutler, et. al., May 21, 2010: Partly as a result of this uncertainty, CBO and the Office of the Actuary assume only minor savings. For example, CBO estimated that the major parts of the law including these provisions will cost $10 billion over the 2010–2019 period, while the Office of the Actuary determined savings of only $2 billion.

The Cutler report, however, estimates savings of $406 billion over 10 years through such measures as increasing the use of electronic medical records and better coordinating the care of patients. That’s a big difference compared with the nonpartisan reports. And it represents optimistic thinking about the impact of the law.

Overall, Medicare’s chief actuary expects total spending on health care to rise over 10 years — but that’s because about 34 million persons will gain health care coverage.

‘Exports Are Up’

The president noted that he had set a goal of doubling exports in five years and said: "Already, our exports are up." They are, quite a bit. Monthly figures from the U.S. Department of Commerce show that, as of November, exports of U.S. goods and services were running 10.5 percent higher than they were when Obama announced the goal last January. 

But that’s still shy of the rate of improvement needed to achieve a doubling within the five years Obama promised, which would require an annual increase of nearly 15 percent, compounded. Furthermore, imports have also increased during the same period by a larger amount, resulting in a larger trade deficit. 

High Corporate Tax Rates

Calling for a lower corporate tax rate, the president said:

Obama: [Corporations] with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change.

Here the president is exactly right. Of 31 industrialized nations tracked by the Organisation for Economic Co-operation and Development (OECD), the combined federal and state tax rate for U.S. corporations is 39.21 percent. (That’s an effective rate on all income after deductions are taken into account, not to be confused with the top marginal rate on the last dollar earned.) The U.S. rate is second among OECD member countries only to Japan’s, which was 39.54 percent.

Other major trading partners have far lower rates. Mexico’s rate is 30 percent; Canada’s is 29.52 percent; and Korea’s is 24.2 percent, for example. Ireland’s was the lowest, at 12.5 percent. A separate ranking by the World Bank — which tracks more than 200 countries — found the top U.S. marginal tax rate of 40 percent on corporations (a combined state-federal rate) was tied for fourth highest, exceeded only by the United Arab Emirates (55 percent), Uganda (45 percent) and Japan (41 percent). The U.S. tied with Libya, which also has a 40 percent top rate. (The World Bank cited among other sources an annual study by KPMG, the big accounting firm.)

Some corporations do manage to pay less. A study by the University of North Carolina, quoted in Bloomberg Businessweek, found that U.S.-based multinational companies paid an average effective rate of 26 percent, only slightly more than the global average of 25 percent. But the same story noted that companies without overseas units pay higher rates. 

The president claimed that the U.S. economy, its workers and companies, were all tops compared with the rest of the world:

Obama: America still has the largest, most prosperous economy in the world. No workers are more productive than ours.

Yes, the U.S. economy, with an estimated gross domestic product of $14.7 trillion in 2010, currently outranks every other country, according to the CIA World Factbook. Only the economy of the European Union, which is actually a group of countries, ranks higher on the CIA’s list. The U.S. may not hold the top spot among individual nations for much longer, though, with some prognosticators saying that China could claim the crown in just 10 years.

We’ve looked into the president’s claim of U.S. superiority in productivity before. We are among the most productive workers in the world, but perhaps not the most productive. In 2008, the U.S. ranked first in labor productivity ahead of places like Hong Kong and Ireland, according to a report issued by the International Labour Organization of the United Nations. But the U.S. Bureau of Labor Statistics placed the U.S. behind Norway as measured by GDP per person in 2009. And the U.S. came in fourth, behind Luxembourg, Norway and Ireland, as measured by the GDP per hour worked, according to an analysis of 2009 economic data by the Organisation for Economic Co-operation and Development. 

The China Card

The president was also right when he said that China is now "home to the world’s largest private solar research facility, and the world’s fastest computer."

NPR reported in late 2009 that Applied Materials, based in Santa Clara, Calif., opened the "world’s largest nongovernmental solar research center" in Xi’an, China. The 400,000 square foot facility reportedly cost more than $250 million. Construction began in 2006.

And the Tianhe-1A system at the National Supercomputer Center in Tianjin, China, recently eclipsed the Cray XT5 “Jaguar” system at the U.S. Department of Energy’s Oak Ridge Leadership Computing Facility in Tennessee as the fastest computer, according to the 36th edition of the TOP500 list, a ranking of the world’s super computers issued last fall.

U.S. Bridges, Falling Down

Obama also claimed that the U.S. was earning bad grades for its infrastructure:

Obama: … when our own engineers graded our nation’s infrastructure, they gave us a “D.”

That’s true. The American Society of Civil Engineers gave the U.S. an overall grade of "D," — a "poor" rating — in its 2009 infrastructure report card. The nation’s grade remained unchanged from the last time ASCE issued its report card in 2005.

ASCE grades the country in 15 different categories. For 2009, the U.S. earned a "D-" — the lowest grade it received — for its drinking water, inland waterways, levees, roads and wastewater. Its highest mark, a "C+," was earned in the category of solid waste. The U.S. hasn’t received an overall grade higher than a "D+" since ASCE began issuing its report card in 1998.

— by Brooks Jackson, Viveca Novak, Eugene Kiely, Lori Robertson and D’Angelo Gore 

Sources

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