‘Obama’s Promise,’ Part II

FactCheck.org

And now, the rest of the story on that misleading “Obama’s Promise” ad from Crossroads GPS.

Besides the almost totally false claim that we covered earlier, the ad also:

  • Claims the president broke a promise to help homeowners facing foreclosure, when in fact 5.9 million have received assistance.
  • Gives a somewhat darker picture of the mortgage foreclosure situation than the facts warrant.
  • Exaggerates the number of persons likely to lose employer-sponsored health coverage under the new health care law.
  • Uses negative, loaded language to describe how those persons would get alternative coverage.
  • But is right on target when it says the president hasn’t come close to fulfilling his promise to cut the federal deficit in half.

On May 17 we dissected the ad’s claim that the president had increased taxes on families making under $250,000 a year, describing it as the worst of the ad’s distortions, and finding it to be “almost entirely false.” Here we address the other, less egregious claims in the 60-second spot.

Foreclosures

The ad claims Obama broke a promise to “help the millions of homeowners who are facing foreclosure.” The narrator notes that “1 in 5 mortgages are still under water.”

Actually, millions of homeowners have received assistance. But it’s true that the housing crisis is far from over. In fact, the ad’s statistic could be an understatement; the most recent report from the real-estate data firm CoreLogic estimates that as of the end of last year, 22.8 percent of all residential properties with a mortgage were in “negative equity,” meaning the owner owes more than the home’s current estimated market value. That’s closer to 1 in 4 than 1 in 5.

And there’s no question that the administration’s efforts to help distressed homeowners were disappointing, at least at first. The ad cites on screen a New York Times story that led with this sentence:

New York Times, Jan. 1, 2010: The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

But matters have improved since that story from more than two years ago. In a rebuttal video, Obama’s deputy campaign manager, Stephanie Cutter, says it’s “flat out wrong” that Obama “has not helped people who faced foreclosure.” Because of Obama’s policies, she says, “over 5.9 million homeowners were able to modify their mortgages, avoid foreclosure and stay in their homes.”

And that’s backed up by a May 4 report from the U.S. Department of Housing and Urban Development. According to the report, “More than 5.9 million modification arrangements were started between April 2009 and the end of March 2012 – including more than 1.8 million Home Affordable Modification Program (HAMP) trial modification starts and more than 1.3 million FHA loss mitigation and early delinquency interventions.”

And the ad’s statistic, while accurate, gives an excessively gloomy impression. As the Wall Street Journal‘s “Numbers Guy,” Carl Bialik, recently noted, estimates of “underwater” mortgages “seem overblown” and paint a darker picture than is actually warranted. Many of those mortgages are not very far underwater, for one thing.

Only about 1 in 10 residential mortgages exceed the estimated value of the home by 25 percent or more, according to CoreLogic. That’s a troubling figure to be sure, but not as bad as the Crossroads GPS ad would have viewers believe.

More important, even fewer homes are actually facing foreclosure, the subject of Obama’s promise. The most recent foreclosure report from CoreLogic shows 3.4 percent — closer to 1 in 30 than 1 in 5 — were in foreclosure proceedings in March.

And the situation is slowly improving. The CoreLogic report shows that the number of actual foreclosures completed in the first three months of this year was 198,000, a decline of nearly 15 percent compared with the same period a year earlier.

Employer-Sponsored Health Care

The ad also accuses Obama of breaking a promise that “if you like your health care plan, you’ll be able to keep your health care plan” under the new law. The narrator states that “millions could lose their health care coverage and be forced into a government pool.”

That’s largely true, though an on-screen figure exaggerates the likely number affected, and the reference to a “government pool” is loaded and misleading.

Here are the facts. We stated even before the new law was passed that Obama “can’t make that promise to everyone.” It has always been one of the misleading talking points Democrats have used to sell the law. The law will allow employers to drop coverage for their workers if they pay a penalty (they can do so now without a penalty, and many have done so in the past). The law will also require some employers to choose between improving the coverage they offer to meet new standards in the law, or dropping it.

How many will drop coverage is hard to estimate, but the Congressional Budget Office recently projected that by 2019, once the law had been in effect for a number of years,  between 3 million and 5 million fewer workers would be offered health care coverage by their employers than would be the case without the law.

They would still have coverage available. Lower-income workers would qualify for Medicaid, and those with somewhat higher incomes could still qualify for federal subsidies to buy private insurance directly through the competitive new exchanges the law requires states to set up.

But to describe those exchanges as a “government pool” is pejorative and misleading, and invites a negative emotional response. Who wants to be herded into a “government pool”? In fact, the state-run exchanges are to be modeled on the federal exchange through which members of Congress and millions of federal workers have received their coverage for years.

That exchange, the Federal Employees Health Benefits Program, was once lauded by the conservative Heritage Foundation. “These fortunate Americans [federal employees, retirees and their families] can choose among almost 400 health care options, including 35 such health plans in the Washington, D.C., area alone,” Heritage said in 1994, when Republicans were pushing exchanges as an alternative to the Clinton administration’s health care legislation.

The ad also greatly exaggerates the number of workers likely to be affected. On screen it shows a graphic saying “as many as 20 million could lose” employer-sponsored coverage. That’s not at all likely, as we noted in a May 11 item about a U.S. Chamber of Commerce attack ad making a similar claim. The CBO gave that estimate only for a very pessimistic set of assumptions about large, medium and small companies, assumptions that it said “have only rarely been reported in the research literature, and even then only for the behavior of small firms.”

The CBO also said that under another, very optimistic set of assumptions, the number of people obtaining insurance through their employer might increase, on net, by 3 million.

Cutting the Deficit

Finally, the ad says Obama also broke a promise to “cut the deficit we inherited by half by the end of my first term.” The narrator says, “Broken! Because he hasn’t even come close.” And that’s true.

Just before Obama took office, on Jan. 8, 2009, the Congressional Budget Office said “CBO projects that the deficit this year will total $1.2 trillion.” That was based on legislation signed by George W. Bush, including the Wall Street bailout legislation for fiscal year 2009, which had begun Oct. 1, 2008. So Obama inherited a $1.2 trillion annual deficit on his first day in office.

And he has failed to cut it by any appreciable amount. The stimulus bill he signed soon after taking office increased the deficit he inherited — the total deficit ended up being over $1.4 trillion in fiscal 2009. And the deficit was just under $1.3 trillion in both fiscal years 2010 and 2011 — still above the “inherited” level.

And as of the most recent budget projection by CBO in March, the total federal deficit for the current fiscal year is predicted to be $1.171 trillion — right about where it was running when he first took office. Furthermore, CBO projects that the deficit for fiscal year 2013, which starts Oct. 1, will still be $1 trillion. That’s under its “alternative” fiscal scenario that assumes Congress will continue extending certain expiring policies as it has in the past, including many middle-income tax cuts favored by Democrats as well as Republicans.

We’ll let others debate the reasons. The fact is that on this last claim, Crossroads GPS is correct: Obama has failed to deliver on his promise to cut the deficit in half, and there’s no sign he can come close in the remaining months of his term.

– Brooks Jackson and Robert Farley

Here are the facts.
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