Vice President Joe Biden gave a speech at the Democratic National Convention that made numerous contentious points:
On the Auto Bailout: “The president knew if he didn’t act, there wouldn’t be any [auto] industry to save.”
Rebuttal: The fight was over the best way to restructure the auto industry so as to make it come back stronger, without government help — not to wipe it out entirely. GM has historically destroyed net shareholder capital since the ‘80s, and even lost $10.6 billion at the height of the bubble in 2005. The problem? Too many cars made that consumers didn’t want to buy.
On the Auto Bailout: “Conviction. Resolve. Barack Obama. That’s what saved the automobile industry.”
Rebuttal: And lots of taxpayer money, $80 billion to start. GM still owes U.S. taxpayers $27 billion, and taxpayers still own just under a third of GM, or 500 million shares, which remain underwater. The stock must trade at around $53 a share for taxpayers to breakeven; they currently trade at around $21. This past August, the Treasury Dept. revised higher the cost of the auto bailout by $3.4 billion, up from the prior estimate of $21.7 billion, an old estimate that had also been revised higher over the past year. GM continues to struggle, as the White House has pressured it to manufacture fuel efficient Chevy Volts, a line of cars GM has pulled the plug on.
Not mentioned in the Vice President’s speech, either, was the Administration’s pressure to pull the plug on car dealerships. The Obama Administration pressured GM and Chrysler to halt relations with about 2,200 dealers — each one with roughly 50 employees. That equals to about 110,000 jobs lost. An “auto team” backed by the White House and working at the Treasury Dept. analyzed the car dealer issue, and concluded that cutting them would increase competition, earnings and help the industry recover, according to a TARP inspector general report at the time. TARP watchdog Neil Barofsky criticized the move: “It is clear that tens of thousands of dealership jobs were immediately put in jeopardy as a result of the terminations by GM and Chrysler. Treasury should have taken special care given that the Auto Team’s determination had the potential to contribute to job losses.”
On the GOP’s Plan for Medicare: “What they didn’t tell you is what they’re proposing would cause Medicare to go bankrupt by 2016. And what they really didn’t tell you is, they’re not for preserving Medicare. They’re for a whole new plan. They’re for Vouchercare.”
Rebuttal: Not mentioned here is the new health-reform law has roughly 165 provisions hitting Medicare that seek to reduce costs, among other things, a government trustee report says. The annual report in August 2010 from the Medicare Board of Trustees shows health reform’s dramatic $1.05 trillion in cuts in Medicare over the first decade. As for the GOP plan, if the Vice President is talking about the Ryan plan, it does not get rid of Medicare. Under this plan, people now and in the future can choose to stay in it. Ryan does propose new Medicare enrollees age 65 would get to pick between private insurance plans offered in a new Medicare exchange in 2023, where Medicare would compete with private insurers for their business.
The insurance must cover a base level of benefits, must cover pre-existing conditions, can’t charge higher rates based on health condition or age, plus it must offer a minimum threshold of coverage. The federal Centers for Medicare and Medicaid Services would regulate the plans.
The federal government would pick up the tab for premium support, and pay that subsidy directly to the insurer of their choice, with seniors paying the difference. If the plan is cheaper than Medicare, seniors get a rebate check.
And the more ill or poor the Medicare enrollee is, the more government insurance support they get in the Ryan plan.
On America’s Debt: “Not once, not once, did they [the GOP] tell you they’ve rejected every plan put forward by us, by the bipartisan Simpson-Bowles Commission — by other respected outside groups — to reduce our national debt if it contained even one dollar — one cent — in new taxes for millionaires.”
Rebuttal: No mention of the $16 trillion federal deficit. Remember, the president added about $5 trillion in new spending to the federal budget since taking office, equivalent to adding the GDP of Germany and South Korea combined. That money went towards spending $825 billion on the president’s stimulus, Wall Street bailouts, automaker bailouts, housing bailouts, green energy bailouts, cash for clunkers, cash for white ware, cash for window sealers. And still, the country has lost an estimated net 316,000 jobs. The White House needs to raise taxes to pay interest on that debt — yields on all the bonds the Treasury Dept. sold.
And there was no mention that the White House’s tax hikes on the upper bracket would slam small businesses, which created 65% of the net new jobs in this country over the past 17 years, and employ about half of all workers, says the Small Business Administration.
The president’s tax hikes would hit these businesses very hard. According to the Joint Committee on Taxation (JCT), nearly 750,000 taxpayers who report small business income would see half their earnings hit with higher taxes. The JCT says that “50% of the approximately $1 trillion of aggregate net positive business income will be reported on returns that have a marginal rate of 36 or 39.6%.”
On Mitt Romney’s new “territorial tax”: “He has a new tax proposal -- the territorial tax -- that experts say will create 800,000 jobs, all of them overseas.”
Rebuttal: Simpson Bowles supports Romney’s idea. And so do U.S. companies, which have said they could create more jobs if their foreign profits weren’t taxed twice, as they are now. Reforming the tax code here could help companies bring home more than $1.2 trillion they now have parked overseas due to concerns over double taxation. Under U.S. tax law, companies that earn profits overseas get taxed twice. They must pay taxes to foreign governments. Then they get tax credits for those payments to offset their taxes owed -- at a high 35% corporate tax rate. So companies don’t repatriate overseas cash back home because they get double taxed. Romney wants to stop that, to bring cash back home to create jobs. Under this plan, companies would get taxed once--only in the country where it was earned.
On Americans doing their fair share: “We see a future where everyone rich or poor does their part and has a part.”
Rebuttal: Unusual, as 47% of Americans don’t pay federal income taxes.
On developing America’s energy: “A future where we depend more on clean energy from home and less on oil from abroad.”
Rebuttal: Among other things, President Obama has effectively shut off 85% of America’s offshore areas to new energy production. Plus the Administration has delayed approval of the Keystone XL pipeline, which would create new jobs while bringing an estimated 700,000 barrels a day of Canadian oil to U.S. consumers. China is now moving to cut deals with Canada to purchase its oil.
Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007.
Follow Elizabeth MacDonald on Twitter @LizMacDonaldFOX.