Americans are worried about money – the government’s as well as their own – and the Sunday talk shows reflected that concern. We had a few bones to pick with their guests when it came to discussion of earmarks, the housing market and Social Security. And however one defines that murky term "middle class," we’re confident it doesn’t include 98 percent of the population.
Did Dems Cut Earmarks in Half?
On "Fox News Sunday," White House senior adviser David Axelrod overstated how much earmarks have declined under the Democrats. The number of earmarks — projects inserted into annual spending bills by individual members of Congress — did go down under the Democrats, but not by half, as Axelrod claimed.
Axelrod, Nov. 14: When the Republicans were last in charge, earmarks exploded to 16,000 in one year alone. Democrats have cut that in half. But we should go the final step here, because they’ve become a symbol of waste.
Steve Ellis, vice president of Taxpayers for Common Sense, a nonpartisan group that tracks earmarks, told us that the number of earmarks peaked in fiscal year 2005, when the Republicans controlled both the House and Senate. Two other nonpartisan organizations agree: the Congressional Research Service, which conducts research for Congress, and Citizens Against Government Waste, a watchdog group that, like Taxpayers for Common Sense, keeps tabs on earmarks.
A CRS report issued in January 2006 found a sharp increase in earmarks from fiscal year 1994 through fiscal year 2005 — reaching 16,072 in 2005. CAGW, which has published an annual Pig Book on earmarks every year since 1991, did a chart showing that the number of earmarks reached a high of 13,997 in 2005. The numbers differ because, as CRS says in its report: "There is not a single definition of the term earmark accepted by all practitioners and observers of the appropriations process." But both agree that 2005 was a record year for the number of earmarks.
Using 2005 as the benchmark, we looked at the latest figures from a government agency and from a watchdog group. The White House Office of Management and Budget figures show a 32 percent decline in the number of earmarks from 13,492 in 2005 to 9,192 in 2010. CAGW’s chart shows a 35 percent decline, from 13,997 in 2005 to 9,129 in 2010. (CRS has not provided an updated earmark analysis.)
As Low as They’ll Go?
On NBC’s "Meet the Press," former Federal Reserve Chairman Alan Greenspan painted a somewhat more dire picture of the housing market than really exists:
Greenspan, Nov. 14: Well, let me just say this, that unless the housing market begins to move back, we’re not going to have any significant cuts in the unemployment rate generally. But at the moment, housing starts are as low as they can get and really just replace the number of units we need.
Not to be overly chirpy about the market, we nevertheless feel obliged to point out that it’s been worse. According to the Census Bureau, 610,000 new privately owned housing units were started in September. That’s the highest number since April, and in fact is higher than any month in 2009. The lowest number in the last decade was 477,000 in April 2009, while the highest was 2,273,000 in January 2006.
Social Security’s Insecure Funding
Over on ABC’s "This Week," Sen. Kent Conrad had this to say about the future of the Social Security system:
Conrad, Nov. 14: And are we going to have to make some changes to Social Security? Certainly we are. Social Security is going to go cash negative in five years. It’s going to go broke in 2037.
Actually, program costs are projected to exceed tax revenues this year and in 2011, according to the 2010 report from the Social Security and Medicare Boards of Trustees. The 2009 report had projected that wouldn’t happen until at least 2016. Tax revenues are predicted to once again exceed program costs in 2012 through 2014 before permanently falling below costs in 2015.
A Senate Budget Committee spokesman said that Conrad, a Democrat from North Dakota, was emphasizing the negative balance over the long term rather than the temporary effects in 2010 and 2011 caused by the recession.
The 2010 trustees report also says that Social Security’s combined trust funds, or reserves, will in fact be exhausted in 2037. But the Social Security system won’t be completely "broke" as Conrad claimed. The program is currently projected to still be able to pay at least 75 percent of benefits in 2037 and subsequent years from Social Security taxes alone.
And More Faulty Retirement Figures
Speaking of Social Security, Democratic Sen. Mark Warner of Virginia mixed up some statistics on CNN’s "State of the Union." Discussing the debt commission’s draft report, Warner veered off track when he noted the ratio of covered workers to Social Security beneficiaries:
Warner, Nov. 14: I actually give the budget commission a lot of credit for, you know, putting out some hard choices. It’s kind of where the reality meets the campaign rhetoric about deficit reduction. And I think there’s a lot in the plan that I could be supportive of. Listen, some of this stuff is not Democrat or Republican. Some of its just math. For example, 50 years ago, eight retirees for every worker, now only two.
Warner’s wrong when he says there are only two workers paying taxes to cover the payments of one Social Security recipient. He’s also wrong when he says that the ratio 50 years ago was 8 to 1. The ratio was 5 to 1 in 1960 and it is now 3 to 1, according to Table IV-B2 of the 2010 trustee report.
The 2-to-1 ratio is a projection, assuming that the current system stays in place. According to the Social Security Administration in 2009, "The number of retired workers is projected to grow rapidly starting in 2008 … and will double in less than 30 years. People are also living longer, and the birth rate is low. As a result, the ratio of workers paying Social Security taxes to people collecting benefits will fall from 3.2 to 1 in 2008 to 2.1 to 1 by 2034." The 2010 trustee report shows the ratio won’t drop to 2 to 1 until between 2065 and 2070.
For sure, Social Security is headed in the wrong direction. But Warner made the situation seem better than it was in 1960 and worse than it is now.
Who’s Middle Class?
Also on "State of the Union," Warner misspoke when repeating a favorite talking point of Democrats who oppose extending the Bush tax cuts for the top 2 percent of income earners — those families earning more than $250,000 and individuals making more than $200,000. Warner said, "First of all I think we all agree our middle class, the 98% of Americans, their tax cuts ought to be extended."
There is no accepted definition of middle class, but we’re certain that whatever it is, it doesn’t encompass 98 percent of Americans.
As we reported in 2008, there are statistical measures you can use to attempt to define the middle class. One measure is the median household income, which the U.S. Census Bureau reported was $49,777 in 2009. The Census Bureau also divides household income into quintiles — so the "middle quintile" could be considered the middle class. By that measure, the household income for the "middle quintile" in 2009 ranged from $38,530 to $61,799.
In any event, you can expect to hear more about "middle class tax cuts" as the debate on the Bush tax cuts comes to a conclusion in the lame-duck session that begins this week.
– Viveca Novak, Eugene Kiely, Joshua Goldman and D’Angelo Gore