State of the Union fact check: Obama's rhetoric vs. reality

State of the Union fact check: Obama's rhetoric vs. reality

State of the Union fact check: Obama's rhetoric vs. reality

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by ABCNews

WHAS11.com

Posted on January 28, 2014 at 11:43 PM

Updated Wednesday, Jan 29 at 1:10 AM

ABC's Shushannah Walshe, Luis Martinez, Serena Marshall, Betsy Klein, Alexandra Dukakis, MaryAlice Parks report:

FACT CHECK: THE ECONOMY

Obama said: The lowest unemployment rate in over five years. A rebounding housing market. A manufacturing sector that's adding jobs for the first time since the 1990s. More oil produced at home than we buy from the rest of the world - the first time that's happened in nearly twenty years. Our deficits - cut by more than half.

The lowest unemployment rate in over five years.

Fact, with a big caveat. As of December 2013 the national unemployment rate was 6.7 percent, continuing a nearly-continuous downward trend after peaking in 2009, the same year the president assumed office. The last time it was lower was October 2008 at 6.5 percent, according to the Bureau of Labor Statistics.

But it should be noted that the that a large contributor to that falling unemployment rate has been people leaving the workforce altogether, a factor the U.S. government does not include in its calculation. That low 6.7 percent rate in December was helped by 525,000 Americans leaving the labor market, while a lower-than-expected 74,000 jobs were added, according to the Labor Department.

A rebounding housing market.

Fact. The National Association of Realtors and U.S. Department of Commerce say new home sales posted a 16.4 percent increase in 2013 over the previous year, while used-home sales are the highest they've been since 2006. They've credited increased consumer confidence as a contributing factor, as well as low mortgage interest rates and a "pent up demand."

A manufacturing sector that's adding jobs for the first time since the 1990s.

Fact, mostly. It is true that the manufacturing sector has added jobs for the first time since the 1990s. There was an upward tick in manufacturing jobs during the Clinton years, which was mostly driven by the stock market tech bubble.

"The overall economy was experiencing a period of strong growth, driven in large part by the tech bubble. It ended abruptly with the onset of the Asian financial crisis and stock market drop towards the end of the decade," notes Scott Paul, President of the Alliance for American Manufacturing.

However since 2000 manufacturing jobs have sharply declined, reaching a low point in 2010.

According to the Bureau of Labor Statistics, only 77,000 manufacturing jobs were created in the economy in 2013, with 12 million manufacturing jobs existing in the United States today. "77,000 manufacturing jobs in a world of 12 million manufacturing jobs is not moving the needle very much and should not be interpreted as any resurgence," says Paul.

More oil produced at home than we buy from the rest of the world - the first time that's happened in nearly twenty years.

Fact, with context. According to the U.S. Energy Information Administration's November 2013 report, as of October 2013 the country produced an average 7.8 million barrels of oil a day while importing 7.5 million. But increased production is only half the story: Oil demand has fallen, and when demand is down imports are pulled back. Part of this was from more stringent fuel standards in vehicles and more energy-efficient technologies. But the recession itself also contributed, as Americans tightened their belts to make ends meet.

Our deficits - cut by more than half.

Fact. The federal deficit for Fiscal Year 2009, the year President Obama assumed office was $1.41 trillion. Half of that is $705 billion. The non-partisan Congressional Budget Office projected in May that the deficit would shrink to $642 billion for FY 2013.

FACT CHECK: AFGHANISTAN

Obama said: After 2014, we will support a unified Afghanistan as it takes responsibility for its own future. If the Afghan government signs a security agreement that we have negotiated, a small force of Americans could remain in Afghanistan with NATO allies to carry out two narrow missions: training and assisting Afghan forces, and counterterrorism operations to pursue any remnants of al Qaeda. For while our relationship with Afghanistan will change, one thing will not: our resolve that terrorists do not launch attacks against our country.

Mostly Fact. President Obama did not mention that his national security team is considering a proposal that would not leave any troops behind in Afghanistan should Afghanistan President Hamid Karzai not sign the Bilateral Security Agreement negotiated late last year.

There are currently 36,500 U.S. troops in Afghanistan, and NATO will end its combat mission at the end of this year. The expectation is that with an agreement in place the United States could leave behind a smaller force that would continue to train Afghanistan's military and provide them with support. However, President Obama's decision on the size of that force has been delayed because of Karzai's refusal to sign the agreement.

Defense officials confirm to ABC News that the Pentagon has presented the administration with a single proposal to keep an American military force of 10,000 in Afghanistan. They feel this is the minimum number of troops necessary to carry out that mission, and if it is not agreed to, they would support the "zero troop" option. That option would leave no American presence in Afghanistan to assist with security efforts. Vice President Joe Biden has also proposed keeping a small American force of 2,000 to 3,000 that would focus not on training, but on a counterterrorism mission to strike at Taliban or al Qaeda targets inside Afghanistan.

The administration has said that it cannot make a decision on how many troops will be left behind in Afghanistan until after Karzai's government signs the agreement. But that time is slipping away. Karzai first said he would sign the deal after a nationwide conference to gauge support for the deal. Despite overwhelming support, Karzai reneged on his promise and said he would not sign it until he gained further promises from the United States and NATO to reduce the number of counterterrorism missions and to see real progress in peace talks with the Taliban. Karzai has said he would leave a final signature on the agreement to his successor. But that process may take much of this year, as Afghanistan's presidential election will take place in early April. If an expected run-off election takes place in June, a new Afghan president may not be sworn in until August.

FACT CHECK: MINIMUM WAGE

Obama said: Today, the federal minimum wage is worth about 20 percent less than it was when Ronald Reagan first stood here.

Fact. (but overstated) According to the Bureau of Labor Statistics' inflation calculator, the federal minimum wage in 1981 - $3.35 - would have a buying power of $8.59 in today's dollars. Yet, prior to the President's Executive Order, the federal minimum wage is currently $7.25, a drop of about 16 percent.

FACT CHECK: SOLAR POWER

Obama said: It's not just oil and natural gas production that's booming; we're becoming a global leader in solar, too. Every four minutes, another American home or business goes solar; every panel pounded into place by a worker whose job can't be outsourced. Let's continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don't need it, so that we can invest more in fuels of the future that do.

Fact. According to GTM Research's U.S. Solar Market Insight Q3 2013 released last December, The U.S. installed 930 megawatts of photovoltaics (PV) in Q3 2013, up 20 percent over the previous quarter. It was the second-largest quarter in the U.S. market's history and the largest quarter ever for residential PV installations. Most importantly: According to GTM Research's report, 2013 will likely be the first time in more than 15 years that the U.S. installs more solar capacity than world leader Germany.

FACT CHECK: JOB SOURCING

Obama: We know where to start: the best measure of opportunity is access to a good job. With the economy picking up speed, companies say they intend to hire more people this year. And over half of big manufacturers say they're thinking of insourcing jobs from abroad.

Mostly True. The president is most likely referring to the September 2013 Survey by The Boston Consulting Group, which asked companies with sales greater than $1 billion if they are "planning to bring production to the U.S. from China or are actively considering it."

The survey found that 54 percent of respondents are "planning to 'reshore' or are considering" it, compared to a similar 2012 survey that found only 37 percent were.

However, as Scott Paul, President Alliance for American Manufacturing, points out, "considering is a lot a different thing than actually doing."

"When you look at trade floors and number of manufacture created there is no appreciable trend. If you look at trade flows, you can judge based on trade flows that there are still more jobs going out than coming in," he said. "It's one thing to consider something-congress can say they are considering Obama's agenda but whether they do it is another question."

FACT CHECK: IMMIGRATION REFORM

Obama: If we are serious about economic growth, it is time to heed the call of business leaders, labor leaders, faith leaders, and law enforcement - and fix our broken immigration system. Republicans and Democrats in the Senate have acted. I know that members of both parties in the House want to do the same. Independent economists say immigration reform will grow our economy and shrink our deficits by almost $1 trillion in the next two decades.

Fact. (if the Senate bill is signed into law) When the Congressional Budget Office (CBO), a nonpartisan government body, examined the bipartisan Senate immigration bill that passed the Senate in June but was never brought up in the house-and Speaker of the House John Boehner swore would never see the floor - the CBO found that the legislation would reduce the deficit by anywhere from $897 billion to roughly $1.2 trillion in the 20 years after its enactment.

Additionally, the libertarian think tank The Cato Institute found said in a 2012 report that immigration reform would add $1.5 trillion to the GDP (Gross Domestic Product) over the next 10 years.

FACT CHECK: INCOME INEQUALITY

Obama: Today, after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by - let alone get ahead. And too many still aren't working at all.

Fact. (mostly) U.S. corporate profits are at record highs, well beyond levels prior to the 2009 recession, and as a percentage of the national GDP, corporate profits are higher now than they have been in the last 50 years, according to statistics compiled by Thomson Reuters Datastream.

While economists say corporate profits are expected to rise in a period of economic recovery and stimulus, today's unprecedented profit highs are also understood as an indication of cost-cutting and wage stagnation.

"Profits are partly strong because corporations are cutting costs significantly, and stocks are mainly high because the Federal Reserve is pumping a huge amount of money into the economy to try to stimulate the recovery," said economist David M. Jones, President and CEO, DMJ Advisors, LLC.

"We've seen the income inequality developing over a long period of time, but it's become even greater under Obama's watch," Jones continued.

According to the Bureau of Labor Statistics real average hourly earnings fell 0.3 percent from November to December last year, seasonally adjusted. While both real average hourly earnings and annual incomes rose last year, and the year prior, the rate at which they rose was nominal and near a half century low. So, yes, wages have barely risen and as such inequality has deepened.

That said, upward mobility - or a person's ability to climb the economic ladder - has not really stalled. While it is still a lot harder to climb the ladder in the US as compared to other developed countries, a recent Harvard study showed it is not any harder to move from the bottom to the top than it was a generation ago.

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