Facts of the Union 2008

Summary

Bush pretty much stuck to the facts in his final State of the Union address. But he chose his facts carefully and didn't always tell the whole story.

• He correctly noted that the number of jobs has grown steadily for a record 52 straight months. But the number of jobs gained is a fraction of the gains made during Bill Clinton's years, and wage gains have been eaten up by inflation.
• He claimed his proposal to give tax deductions for those who buy their own health insurance will "put private coverage within reach for millions." Some say that's true, but other experts doubt it. And even the most optimistic say his plan still wouldn't enable the large majority of the uninsured to gain coverage.
• He said "we" foiled a terrorist plot to blow up U.S.-bound airliners over the Atlantic, but the plot was actually uncovered by the British, as Bush himself said in last year's State of the Union address.
• He talked tough about pork-barrel spending, saying he'd issue an executive order for agencies to ignore more Congressional "earmarks." But he delayed the effect until November, rather than making it effective with the current fiscal year.

On other matters, Bush noted that he has begun bringing troops home from Iraq, which is true, though troop levels have been reduced by only a few thousand since the peak of the surge. He said more than 80,000 Iraqis are fighting terrorists, a figure that includes at least 60,000 "concerned local citizens" who are being paid by the U.S. He was mostly correct in describing progress in test scores since his No Child Left Behind Act was passed, but he overlooked some recent backsliding in reading scores and the fact that some test scores were on an upward trend before the new law went into effect.

Analysis

Bush put the best face he could on the weak job growth and stagnant wages plaguing the economy, which many economists fear is on the brink of the second recession to strike his administration.

Bush: America has added jobs for a record 52 straight months, but jobs are now growing at a slower pace. Wages are up, but so are prices for food and gas.

It's true that the number of consecutive months in which the economy has added jobs is the longest on record, but the number of jobs gained is not. The pace of job creation was far stronger during the Clinton administration, when 22.7 million new jobs were added despite seven months that saw slight declines. Since Bush's "record" run began in August 2003, the gain has been 8.3 million. It's true that wages are up: Average weekly earnings for rank-and-file workers were $605.96 in December 2007, compared with $578.67 a year earlier, according to the Bureau of Labor Statistics. But after adjustment for rising prices, the buying power of the average weekly paycheck actually declined by nearly a penny on the dollar during 2007.

It is true that taxes would go up compared with what people pay now should all the tax cuts enacted from 2001 through 2006 be allowed to expire on the schedule Congress originally set.  The independent, nonpartisan Tax Policy Center calculates the average increase at $1,713, not much different from Bush's figure.

But the average increase would not be typical. The increase would be far smaller, $828, for those in the middle 20 percent of the income scale, with earnings between $27,465 and $48,165 a year in today's dollars. And of course, the increase would be lower still for those with lower incomes. Even for the next-highest 20 percent, with incomes between $48,165 and $85,706, the increase would be $1,309, still well below Bush's "average" figure. But for the top 1 percent, with incomes over $434,766, the tax increase would be $64,154. That's what pulls up the average to well above what ordinary taxpayers would experience.

And of course, Bush fails to mention that Democrats don't propose allowing all his tax cuts expire and generally propose cuts for "middle class" taxpayers.

The president repeated his call for a tax deduction for those who buy their own health insurance, saying "millions" would gain coverage:

Bush: So I propose ending the bias in the tax code against those who do not get their health insurance through their employer. This one reform would put private coverage within reach for millions, and I call on the Congress to pass it this year.

Actually, there is a lot of uncertainty as to how many would benefit from Bush’s proposal, which he also made in last year’s State of the Union address. He called for a federal tax deduction of $7,500 for individuals and $15,000 for families who either pay for their own health insurance or get coverage through their employers. The cost of employer-provided health benefits would be taxed as income (a change from current law), and those with employer-sponsored plans that cost more than the deduction would be taxed on the difference. The proposal would give a tax deduction for the first time to those who buy their own coverage but who are not self-employed.

It’s unclear how much such a proposal would affect the number of uninsured, most of whom have low incomes. The nonpartisan Congressional Budget Office said the projected number of uninsured in 2010 – 51 million – would be reduced by about 6.8 million, adding that "significant uncertainty surrounds" these estimates.

A somewhat higher estimate was produced by the independent Lewin Group, which put the figure at 9.2 million. But economist Jonathan Gruber at the Massachusetts Institute of Technology calculated that the number of uninsured would actually increase by 1.5 million. And Tax Policy Center, a joint project of the liberal Urban Institute and Brookings Institution, published an evaluation that also found "the plan could actually reduce overall insurance coverage." One thing these reports agree upon is that the proposal gives much greater tax benefits to those with higher incomes. A majority of the uninsured, however, have such low incomes they wouldn’t see a benefit at all: More than 55 percent of the uninsured have so little income that they don’t pay federal income taxes and thus couldn't benefit from Bush's proposed deduction, according to the Commonwealth Fund.

One reason that some may lose coverage and others will gain it is that the deduction could prompt some employers to stop giving health insurance benefits, and not everyone who lost insurance would be able to, or inclined to, buy individual coverage. Healthy workers wouldn’t have a problem picking up an affordable plan, says the Tax Policy Center report, but those with health issues and low incomes won’t be able to do so.

Bush argued for extension of wiretap authority for U.S. officials, but misleadingly claimed "we" broke up a plot to blow up airplanes headed to the U.S. from Europe.

Bush: In the past six years, we have stopped numerous attacks, including a plot to fly a plane into the tallest building in Los Angeles and another to blow up passenger jets bound for America over the Atlantic.

The London plot, however, was actually broken up in August 2006 by British law enforcement, according to news accounts at the time and also according to Bush himself, who said just a year ago in his 2007 State of the Union address that "British authorities uncovered a plot to blow up passenger planes bound for America over the Atlantic Ocean." If wiretaps by U.S. officials played any role, no administration official has yet said so publicly, despite plenty of opportunity.

At the time, White House Homeland Security Adviser Fran Townsend gave credit to the British, saying in an Aug. 14, 2006, interview that "this really was a British investigation for the longest time." Townsend added: "We didn‘t see an American threat. It was only recently we developed the American angle working with our British colleagues, but this was really a British threat, and the British did an extraordinary, extraordinary job in investigating it." And a year later, in August 2007, Homeland Security Secretary Michael Chertoff said that "our British counterparts uncovered" the plot.

To be sure, at other times Chertoff and others have said there was some involvement by the U.S., though they have yet to say what that role was. We find no public claim that the special wiretap program secretly authorized by President Bush after the 2001 terrorist attacks had anything to do with foiling the plot.

An Empty Threat on Earmarks

Bush talked tough about Congressional "earmarks," but don't expect his actions to have any immediate effect on federal spending:

Bush: [I]f you send me an appropriations bill that does not cut the number and cost of earmarks in half, I’ll send it back to you with my veto. And tomorrow I will issue an executive order that directs federal agencies to ignore any future earmark that is not voted on by Congress.

By earmarks that are "not voted on by Congress," Bush means provisions that are specified in committee reports but are never part of the text of a bill. According to Steve Ellis, vice president of the spending watchdog group Taxpayers for Common Sense, the "vast, vast majority" of earmarks are of this type, so Bush is threatening to ignore or veto a fairly significant percentage of potential earmarks. But he's not going to do it until fiscal year 2009. Taxpayers for Common Sense complains that Bush is "passing the buck" by vowing to get tough on next year's bills. "[B]y not including the 2008 spending bills, the Executive Order gives Congress months to finagle their way around these changes," writes the president of the organization, Ryan Alexander.

Even if Bush started his anti-earmark crusade immediately, the actual budget effect would be small. TCS estimates that there are $15.3 billion in earmarks for fiscal year 2008. That amounts to a scant 0.6 percent of federal outlays as projected by the nonpartisan Congressional Budget Office. Whatever the merits or demerits of congressional earmarks – and they certainly have their critics – getting rid of them altogether would barely slow down the growth of federal spending, which is projected to jump more than $100 billion this year, not counting additional war costs or the proposed "stimulus" package now working its way through Congress

Bush was correct when he said that some U.S. troops are returning from Iraq, but so far the drawdown only amounts to a few thousand.

Bush: As part of this transition, one Army brigade combat team and one Marine Expeditionary Unit have already come home and will not be replaced. In the coming months, four additional brigades and two Marine battalions will follow suit. Taken together, this means more than 20,000 of our troops are coming home.

This is accurate. The president actually announced the return in a press conference on Jan. 8, 2007. On Jan. 10, 2007, Secretary of Defense Robert Gates confirmed Bush's statement:

Gates: Based on the latest information available to me, we are on track to carry out the reductions that General Petraeus talked about and that the president approved last September – as the president indicated, I think, just yesterday or today, the one brigade that's already out, the Marine battalions that are out, and then proceeding with the additional brigades.

According to the Defense Department, Petraeus’ September recommendations included removing a Marine Expeditionary Unit in September 2007 and an Army brigade combat team in mid-December, followed by four more brigade combat teams and two Marine battalions during the first seven months of 2008. The total reduction should be about 20,000 troops.

The Pentagon won't say how many troops have come home already, but an MEU generally has about 2,200 Marines, while a BCT can have anywhere between 2,500 and 4,200 members. So, at most, somewhere in the neighborhood of 6,400 troops have come home already. To put that in context, at the peak of the surge  about 162,000 U.S. troops were in Iraq. Prior to the surge, the total was about 130,000, according to The New York Times.

Bush left out a bit of the back story of the sheer numbers of Iraqi Security Forces.

Bush: Today, this grassroots surge includes more than 80,000 Iraqi citizens who are fighting the terrorists. The government in Baghdad has stepped forward as well, adding more than 100,000 new Iraqi soldiers and police during the past year.

It’s certainly worth pointing out that at least 60,000 of the Iraqi citizens to which Bush refers – they’re called "Concerned Local Citizens" by the U.S. military – are under contract with the U.S. military and being paid about $300 a month. That’s according to the latest Brookings Institution Iraq Index report, published in December, which puts the total number of concerned citizens at 72,000.

As for the new Iraqi soldiers and police, many questions remain as to how well those forces are able to provide security for the country. The Independent Commission on the Security Forces of Iraq, headed by retired Marine Gen. James L. Jones, published a cautiously optimistic report on the subject in September, saying that it wasn’t clear that the national police "can contribute to Iraqi security and stability in a meaningful way." As for the Iraqi Army, the report said that the Iraqi Minister of Defense predicted "the Army would be 60 percent capable of independently protecting Iraq from external threats by 2012 and entirely independent in this regard by 2018."

Right on Iran

Bush was accurate in his assessment of Iran.

Bush: Iran is funding and training militia groups in Iraq, supporting Hezbollah terrorists in Lebanon, and backing Hamas’ efforts to undermine peace in the Holy Land. Tehran is also developing ballistic missiles of increasing range and  continues to develop its capability to enrich uranium, which could be used to create a nuclear weapon.

Hezbollah spokesman Hussein Nabulsi freely admitted to the U.N. Office for the Coordination of Humanitarian Affairs that much of Hezbollah’s funding comes from Iran. Iran did offer $50 million in aid to the Hamas-led Palestinian Authority after the U.S. and Europe withdrew funding when Hamas refused to recognize Israel. And according to the State Department’s most recent report on state sponsors of terrorism, Iran has continued to offer funding to Hamas and Hezbollah and has, moreover, "provided guidance and training to select Iraqi Shia political groups, and weapons and training to Shia militant groups to enable anti-Coalition attacks."

Bush is right that Iran continues to develop long-range ballistic missiles. In fact, on Nov. 27, 2007, Iranian Defense Minister Mostafa Mohammad Najjar announced the development of a missile that could reach the entire Middle East as well as southern Europe. And the National Intelligence Council’s National Intelligence Estimate on Iran reported that Iran’s civilian uranium enrichment program was continuing and noted that those technical capabilities could be applied to creating nuclear weapons.

It is worth noting, however, that a civilian enrichment program is not equivalent to a weapons program. And that same NIE reported that Iran halted its nuclear weapons program in 2003 and had not restarted it as of mid-2007.