Fact-checking the first Democratic debate

Democratic 2020 presidential candidates before the start of the first Democratic presidential candidates debate in Miami, Florida, June 26, 2019. (Photo: Reuters / Carlo Allegri)

In the initial debate of the Democratic primary season, 10 presidential hopefuls rarely strayed over the factual line. Many were armed with statistics, but only a handful of the stats were stretched past the breaking point. Instead, most ranged from mostly or partly true. Here’s a roundup of 13 statements that caught our attention. As is our practice, we do not award Pinocchios during live events.

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“A two-trillion tax cut that favored corporations.” – former congressman Beto O’Rourke of Texas.

O’Rourke suggests that the bulk of tax cuts in the 2017 tax law went to corporations, but that’s not correct. The $1.5 trillion tax cut – not $2 trillion – was estimated by the Joint Tax Committee to provide $654 billion in business tax cuts and $1.1 trillion to individuals over 10 years.

But O’Rourke carefully used the word “favored.” There are certainly ways the tax cut favored corporations. For instance, the tax cuts for individuals expire by 2025; the corporate tax cuts do not.

The Congressional Research Service said recently that “the effective average tax rate for corporations was 17.2% in calendar year 2017, and fell to 8.8% in calendar year 2018,” while “the individual income tax changes for 2018 were smaller than the corporate tax changes in absolute size and substantially smaller as a percentage of income. The effective individual tax rate for federal income taxes as a percentage of personal income is estimated at 9.6% in 2017 and 9.2% in 2018.”

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“I will single out companies like Halliburton or Amazon that pay nothing in taxes, and our need to change that.” – Sen. Cory Booker of New Jersey.

Booker has a point that large corporations including Amazon and Halliburton use many tools and strategies to substantially cut down their tax bills. But they do pay some taxes.

“Amazon for many years reinvested all its profits into expansion, with the result that it paid little or no taxes because taxes are calculated based on profits,” Joseph Bishop-Henchman, executive vice president of the Tax Foundation, told us in 2018. “However, in the last few years, it has expanded its warehouse footprint and now pays considerable federal taxes as well as state income and property taxes.”

The Wall Street Journal reported this month that it’s not clear whether Amazon paid taxes in 2018. But its tax rate from 2012 through 2018 was 8 percent, according to the Journal. (Amazon founder Jeff Bezos owns The Washington Post.)

“From 2012 through 2018, Amazon reported $25.4 billion in pretax U.S. income and current federal tax provisions totaling $1.9 billion,” the Journal reported. “That is an 8% tax rate – low, but not zero or negative. Looking back further, since 2002, Amazon has earned $27.7 billion in global pretax profits and paid $3.6 billion in global cash income taxes, a 13% tax rate.”

Halliburton was slated to pay “$19 million in U.S. income taxes on $1.6 billion in profit,” according to Axios.

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“The overhead for insurers that they charge is 15 percent, while Medicare, it’s 2 percent.” – Booker

The Medicare figure of 2 percent is artificially reduced because some key functions are undertaken by other agencies – and because Medicare’s patients are unhealthier.

Booker said administrative costs for private insurers are 15 percent. Sen. Bernie Sanders, I-Vt., has claimed that the cost falls between 12 percent to 18 percent, and Booker seems to have picked the midpoint.

But previous estimates of the administrative costs per patient indicate that Medicare is actually more inefficient than private insurance, as we found in an earlier fact check.

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“It is not right that the CEO of McDonald’s makes 2,100 times more than the people slinging hash at McDonald’s.” – Washington Gov. Jay Inslee

It’s unclear exactly whose salary Inslee is comparing the chief executive’s salary to, but here’s a comparison to the average McDonald’s worker.

The chief executive of McDonald’s, Steve Easterbrook, made $21.8 million in 2017, according to the company’s Securities and Exchange Commission filing.

According to PolitiFact, the typical McDonald’s service crew worker makes about $12,200.

That means the chief executive’s 2017 salary was about 1,786 times the average McDonald’s worker.

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“2,500 drugs have gone up in double digits since he [Trump] came into office.” – Sen. Amy Klobuchar of Minnesota.

The source of this statistic is former Centers for Medicare Services administrator Andy Savitt, who in 2018 tweeted a list of 2,500 drugs with such price increases. There have been other, similar reports.

But the big picture is brighter. The consumer price index for prescription drugs fell by 0.6 percent for the 12 months ending in December, according to the Bureau of Labor Statistics. The decline would be the first time in 46 years in the December-to-December time frame, but there have been other 12-month periods with index declines, mostly recently in 2013. The index dropped also in January, February, March and May – a string of monthly declines not seen since 1973.

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“I spent a big chunk of my life studying why families go broke. And one of the number-one reasons is the cost of health care, medical bills. And that’s not just for people who don’t have insurance. It’s for people who have insurance.” – Sen. Elizabeth Warren of Massachusetts.

This is disputed.

Warren was a co-author of a series of papers that determined that medical bills were a leading cause of personal bankruptcy. They found that in 2007, illness and medical bills were linked to at least 62 percent of all personal bankruptcies.

The research by Warren and her co-authors used debtors’ stated reasons in their bankruptcy filing.

But critics have said the research by Warren, et al., overstates the impact of medical bills.

In 2018, the New England Journal of Medicine published a study that found that while hospital bills had an effect on bankruptcy, it often was one factor among several others that led to the bankruptcy. For example, someone may have had large amounts of debt, then lost their job, then had a heart attack.

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“Our findings suggest that medical factors play a much smaller role in causing U.S. bankruptcies than has previously been claimed. Overemphasizing ‘medical bankruptcies’ may distract from understanding the true nature of economic hardship arising from high-cost health problems,” wrote researchers of the 2018 study.

“This is one of the reasons why well before I was running for president I said I would not take contributions from pharma companies, not take contributions from corporate PACs or pharma executives because they are part of this problem.” – Booker.

Like most of the other Democratic candidates, Booker vowed not to take corporate PAC contributions for his primary campaign.

His specific pledge regarding the pharmaceutical industry’s contributions came in June 2017, in response to criticisms about his relationship with the industry.

According to the Center for Responsive Politics:

“An issue that may arise in the 2020 Democratic primary is the close relationship between the pharmaceutical industry and Booker. New Jersey hosts the headquarters of many major pharmaceutical companies and they have long had good relations with the New Jersey delegations. Booker said in 2017 that he would put ‘a pause’ on accepting money from the industry. This was after he received heavy progressive criticism for helping kill a bill sponsored by Sanders to lower drug prices. In 2016, pharmaceutical PACs gave $57,500 to Booker. Becton, Dickinson & Co, Bristol-Myers Squibb and Sanofi PACs all contributed $5,000 each in 2016. Before that, in 2014, a cycle he was actually running in, Booker’s campaign took in $161,000 in pharmaceutical PAC money. Pfizer contributed $17,500, Merck & Co gave $12,500 and several more gave $10,000 each.”

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“Seven children will die today from gun violence – children and teenagers.” – Warren.

The average for firearms-related deaths was 7.15 per day when looking at people ages 0 to 19, according to data from the Centers for Disease Control and Prevention’s fatal injury report. The data covers 2013 to 2015. It’s worth noting that about one-third of the deaths are suicides – and that 18- and 19-year-olds are legal adults, though technically still “teenagers.”

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“You have 2.3 million of our fellow Americans behind bars – it’s the largest prison population on the face of the planet. Many are there for nonviolent drug crimes including possession of marijuana at a time that more than half the states have legalized or decriminalized it.” – O’Rourke.

O’Rourke misses some context on people incarcerated for marijuana possession.

The United States does have the largest prison population on the planet. The most recent edition of the World Prison Population List, published by the U.K.-based International Centre for Prison Studies, showed 2.1 million Americans were incarcerated, as of November 2018.

How many people are incarcerated for “nonviolent crimes including possession of marijuana”? Not as many. At the federal level, 47.5 percent of prisoners (81,900) were serving a sentence of any length at the end of September 2016 after being convicted of a drug offense as their most serious crime. But doesn’t just include drug possession, it includes all kinds of drug offenses. “More than 99% of federal drug offenders are sentenced for trafficking,” according to the Bureau of Justice Statistics.

Moreover, separate data from the U.S. Sentencing Commission show that only 92 people were sentenced for marijuana possession in the federal system in 2017, out of a total of nearly 20,000 drug convictions.

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“Despite what Purdue Pharma has done, their connection to the opioid crisis and the overdose deaths that we’re seeing throughout this country, they have been able to act with complete impunity and pay no consequences.” – O’Rourke.

In terms of money, O’Rourke is wrong. Purdue Pharma, the maker of OxyContin, in March agreed to pay a $270 million civil settlement in Oklahoma and faces lawsuits around the country. In 2007, three executives were spared prison time and sentenced to probation after agreeing to plead guilty to charges that they misled federal regulators about the addiction risks of the drug.

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“It matters that we nominate a candidate who saw the destruction wrought by broken health-care system and gave people universal health care.” – New York City Mayor Bill de Blasio.

De Blasio claimed that his administration has achieved “universal health care” in New York. But that’s false.

He unveiled a program called “NYC Care” in January, promising to cover the cost for all medical services by allowing the uninsured to see a primary care doctor at 70 city-run clinics. Patients would be charged for this treatment, though the idea is to keep their costs down.

For the city government, de Blasio’s plan is a costly proposition and some analysts called it a PR stunt from a mayor who was preparing to launch a presidential campaign.

The mayor’s official website is vague on the timeline and specifics. “Sometime in 2019, New York City will begin to guarantee comprehensive health care to all residents, regardless of someone’s ability to pay or immigration status,” it says. And also, “More information about this initiative will be available later this year.”

NYC Care is not an insurance program and, because it hasn’t been implemented, it hasn’t made a dent in reducing the city’s uninsured population of nearly 600,000.

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“The bottom 60 percent haven’t seen a raise since 1980. Meanwhile, the top 1 percent control 90 percent of the wealth.” – Rep. Tim Ryan of Ohio.

Neither of these statements is right.

The Congressional Budget Office in 2018 indicated that the bottom 60 percent had an increase in income of 32 percent since 1980 – and the increase was over 50 percent if the impact of transfers and taxes was included.

Moreover, according to a number of studies, including one by economist Edward N. Wolff, the richest 1 percent of U.S. residents account for about 40 percent of the country’s wealth.

Sens. Bernie Sanders and Elizabeth Warren often claim that the top 0.1 percent have as much wealth as the bottom 90 percent. Some economists say that’s indeed the case, though other studies have suggested the share of wealth controlled by the top one percent is much smaller.

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