Summary
President Barack Obama’s final State of the Union address came up short of the facts on several topics:
- He embellished his record on jobs, citing “more than 14 million new jobs,” without mentioning that’s only private sector jobs and only since the job losses hit bottom in February 2010.
- Obama similarly omitted part of his presidency in boasting of nearly 900,000 manufacturing jobs “in the past six years.” Over his entire time in office, manufacturing jobs have gone down by 230,000.
- And he said he had cut the country’s deficits by “almost three-quarters.” But that’s measured from fiscal 2009, which included some increased spending by Obama.
- He repeated his now years-long claim of crediting the Affordable Care Act for a slowdown in health care spending, which economists have linked mainly to the economy. In fact, the growth rate jumped in 2014, when the law’s coverage provisions were implemented.
- Obama claimed, like he did in 2014, that the U.S. has “cut carbon pollution more than any other country on Earth.” That’s true in terms of total tonnage but not in terms of percentage reductions.
- He said that the U.S. spends “more on our military than the next eight nations combined.” That’s close enough in terms of dollars, but as a share of the nation’s economy, the U.S. is only the fourth highest of the top 15 countries.
Analysis
Obama opened his Jan. 12 State of the Union address with a promise: “Tonight marks the eighth year that I’ve come here to report on the state of the union. And for this final one, I’m going to try to make it a little shorter.” And he sort of succeeded — if we only count the seven, not eight, official SOTU addresses. According to data from The American Presidency Project at the University of California, Santa Barbara, the latest speech clocked in at 58 minutes and 44 seconds, more than a minute shorter than 2013’s 59-minute-51-second address. (And several minutes below Obama’s average of one hour, two minutes and 45 seconds.)
But Obama’s 2009 speech, which the project notes was technically not a State of the Union, was only 51 minutes and 44 seconds.
Now we’ll look at what the president actually said in his 58-plus minutes.
Jobs & the Deficit
As he has done in the past, Obama embellished the statistical record of his presidency by selective omissions.
Jobs — He crowed about “more than 14 million new jobs,” when the net gain in total employment since he first took office is actually just under 9.3 million. What he didn’t spell out is that he was omitting the more than 4 million jobs lost during the first 13 months of his presidency, and ignoring losses of state and local government jobs as well.
Though he did not make it clear, he was actually referring to the change only in private sector jobs, and only since the job losses hit bottom in February 2010. And as of December that gain indeed stood at 14.1 million.
Unemployment rate — The president also referred to “an unemployment rate cut in half.” Actually, the jobless rate when he took office was 7.8 percent, and it has dropped to 5 percent as of December. It’s only “cut in half” if measured from the worst point of his presidency, which was the 10 percent rate recorded in October 2009.
Manufacturing — Obama also cherry-picked when he spoke of manufacturing jobs. The president said, “That’s just part of a manufacturing surge that’s created nearly 900,000 new jobs in the past six years.” The gain was 878,000 to be exact, measured from the low point in his presidency.
But of course, he has been president for seven years, not just six. And over his entire time in office, the U.S. has lost 230,000 manufacturing jobs, dropping from 12,561,000 jobs in January 2009 to 12,331,000 in December 2015, according to the Bureau of Labor Statistics.
Deficit — He also boasted that “we’ve done all this while cutting our deficits by almost three-quarters.” That’s close to true if measured from the $1.4 trillion deficit run up in fiscal 2009. The final figure for FY 2015 — which ended Sept. 30 — was $438.9 billion.
So that’s still 31 percent of the 2009 figure, which is closer to a two-thirds reduction than a three-quarters reduction.
More important, it ignores Obama’s own contribution to that record 2009 deficit. As we’ve shown before, Obama’s early initiatives increased FY 2009 spending — and thus the deficit — by as much as $203 billion. So his claim to have reduced the deficit by three-quarters is akin to a merchant who raises his price one day and declares “75 percent off” the next.
Health Care Inflation
Obama again credited the Affordable Care Act for slow growth in health care inflation that economists have pinned largely on the economy, and that started before the ACA was even passed.
“Nearly 18 million people have gained coverage so far,” Obama said of his health care overhaul. “And in the process, health care inflation has slowed.”
As we have written several times now, health care spending has grown at historically low rates in recent years. From 2009 to 2012, total national health care expenditures rose at rates around 4 percent per year, and dipped as low as 2.9 percent in 2013. For 2014, the latest figure available, health care spending growth jumped up to 5.3 percent (see Table 1 of the Centers for Medicare & Medicaid Services’ health care expenditures data).
The journal Health Affairs noted in 2012 that the growth rates were the lowest since CMS started compiling the National Health Expenditure Accounts data in 1960.
But what impact would the ACA have had on spending growth rates? Note that the slowdown began in 2009, a year before the health care law was enacted. And the latest figure for 2014 — a year in which the major coverage provisions of the law went into effect, including the establishment of the health care exchanges and expansion of Medicaid — actually went up.
In fact, experts have said the lower rates of growth have been largely a reflection of the sluggish economy. A 2013 analysis by the Kaiser Family Foundation said that “much of the decline in health spending growth in recent years was fully expected given what was happening more broadly in the economy.” CMS’ experts said in 2014 that the ACA had had a “minimal impact.”
The health care law could have had some effect on the slower growth: Drew Altman, CEO of KFF, wrote in 2013 that the law could be having an indirect effect, and the White House Council of Economic Advisers’ November 2013 report said that the ACA’s reductions in Medicare spending would have a “spillover effect” on spending overall.
Obama ties an increase in the number of insured to a slowdown in health spending, but back in 2014 CMS’ experts projected the opposite: a bump up in the growth rate in the future, due to expanded insurance coverage under the ACA. CMS estimated an average growth of 6 percent per year for 2015 through 2023, “largely as a result of the continued implementation of the ACA coverage expansions, faster projected economic growth, and the aging of the population.”
And 2014’s growth rate of 5.3 percent moves health care spending toward that very projection.
As for Obama’s claim that “nearly 18 million have gained coverage so far,” that’s an administration estimate based largely on the Gallup-Healthways Well-Being Index Survey through September 2015. The administration says 15.3 million gained insurance coverage through the individual marketplace, including the state and federal exchanges, and Medicaid, and another 2.3 million young adults have gained coverage due to the ACA’s September 2010 provision requiring insurers to keep them on their parents’ plans until age 26.
These are estimates, and the more robust and official numbers from the CDC’s National Health Interview Survey only go through June 2015. But they show a drop in the uninsured of 17.8 million from 2009, a year before the ACA was enacted (46.3 million), to the first six months of 2015 (28.5 million).
Cutting Carbon Emissions
As he did in his 2014 address, Obama claimed that the U.S. has “cut carbon pollution more than any other country on Earth.” That’s true, at least in terms of the total tonnage of emissions reduced. However, other countries have reduced their emissions by a larger percentage than the U.S.
We most recently checked this claim in December when Secretary of State John Kerry said “the United States of America has already reduced its emissions more than any other country in the world.”
As we pointed out then, the U.S., the second largest emitter of carbon pollution, reduced its emissions by 583 million metric tons between 2003 and 2012. That’s more than any other country, according to Energy Information Administration data. But that’s also a 10 percent reduction, and other nations including France (10.7 percent) and the United Kingdom (12.9 percent), to name a few, saw larger percentage reductions during that time period.
Military Spending
The president said that the U.S. spends “more on our military than the next eight nations combined.” That’s not quite accurate but close enough in terms of raw dollars, based an April 2015 report by the Stockholm International Peace Research Institute on military expenditures of the top 15 spenders.
That report shows that the U.S. spent $610 billion on defense in 2014, while the next eight nations spent a combined total of $646.4 billion. (The spending amounts for three of the eight countries — China, Russia and Germany — are estimates.)
Also, the report makes a couple of points worth noting, including that military spending in the U.S. has been on the decline while “China, Russia and Saudi Arabia continued to make substantial increases in military expenditures” in 2014.
Stockholm International Peace Research Institute, April 2015: While the USA remains clearly the world’s largest military spender, at nearly three times the level of second-placed China, its expenditure dropped by 6.5 percent in 2014, largely as a result of budget deficit control measures put in place by the US legislature under the 2011 Budget Control Act. US military spending is expected to fall again in 2015 but at a slower rate. … In 2014 China, Russia and Saudi Arabia were the second, third and fourth highest military spenders, respectively. China’s expenditure rose by 9.7 percent, Russia’s spending was up 8.1 percent and Saudi Arabia’s by 17 percent.
Also, as a share of the nation’s economy, the U.S. spends 3.5 percent of its gross domestic product — which is only the fourth highest of the top 15 countries. Saudi Arabia (10.4 percent), United Arab Emirates (5.4 percent) and Russia (4.5 percent) spend more on the military as a share of GDP than the United States.
— by Eugene Kiely, Brooks Jackson, Lori Robertson, Robert Farley and D’Angelo Gore
Sources
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Bureau of Labor Statistics. “Employment, Hours, and Earnings from the Current Employment Statistics survey (National); Total Private Employment, Seasonally Adjusted.” Data extracted 12 Jan 2016.
Bureau of Labor Statistics. “Employment, Hours, and Earnings from the Current Employment Statistics survey (National); Total Manufacturing Employment, Seasonally Adjusted.” Data extracted 12 Jan 2016.
Bureau of Labor Statistics. “Labor Force Statistics from the Current Population Survey; Unemployment Rate, Seasonally Adjusted.” Data extracted 12 Jan 2016.
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Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. Table 1: National Health Expenditures, Aggregate and Per Capita Amounts, Annual Percentage Change and Percent Distribution, Selected Calendar Years, 1960-2014. Accessed 13 Jan 2016.
Martin, Anne et. al. “Growth In US Health Spending Remained Slow In 2010; Health Share Of Gross Domestic Product Was Unchanged From 2009.” Health Affairs. Jan 2012.
Kaiser Family Foundation. “Assessing the Effects of the Economy on the Recent Slowdown in Health Spending.” 22 Apr 2013.
Martin, Anne et. al. “National Health Spending In 2012: Rate Of Health Spending Growth Remained Low For The Fourth Consecutive Year.” Health Affairs. Jan 2014.
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Altman, Drew. “How ACA may be holding down costs.” Politico.com. 26 Sep 2013.
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