Fact Checking the 2014 State of the Union address

Fact Checking the 2014 State of the Union address

• By Glenn Kessler

• January 28 at 11:13 pm

A State of the Union address is often difficult to fact-check, no matter who is president. The speech is a product of many hands and is carefully vetted, so major errors of fact are relatively rare. But State of the Union addresses often are very political speeches, an argument for the president’s policies, so context is sometimes missing.
Here is a guide through some of President Obama’s more fact-challenged claims, in the order in which he made them. At the end, we also examine one fishy fact in the Republican response. As is our practice with live events, we do not award Pinocchio rankings, which are reserved for complete columns.

 State of the Union address

“The more than eight million new jobs our businesses have created over the past four years.”

The president is cherry-picking a number that puts the improvement in the economy in the best possible light. The low point in jobs was reached in February 2010, and there has indeed been a gain of about 8 million jobs since then, according to Bureau of Labor Statistics data. (Obama, saying “businesses,” appears to be referring to private sector growth of 8.2 million; adding government jobs reduces the total to 7.6 million.) But the data also show that since the start of his presidency, about 3.2 million jobs have been created — and the number of jobs in the economy still is about 1.2 million lower than when the recession began in December 2007.

“A manufacturing sector that’s adding jobs for the first time since the 1990s.”

The low point for manufacturing jobs was reached in January 2010, and there has been a gain of 570,000 jobs since then. But BLS data show that the number of manufacturing jobs is still 500,000 fewer than when Obama took office in the depths of the recession — and 1.7 million fewer than when the recession began in December 2007.  The gain in manufacturing actually has begun to stall a bit in the past year.  The only reason Obama can tout a gain in manufacturing jobs “for the first time since the 1990s”  is because, before the recession, manufacturing had been on a slow decline for many years.

“Our deficits — cut by more than half.”

The federal budget deficit has declined in half since 2009, from $1.3 trillion to about $600 billion, but that’s not much to brag about. The 2009 figure was not just a deficit Obama inherited from his predecessor, since it also reflected the impact of decisions, such as the $800 billion stimulus bill, enacted early in the president’s term.
Moreover, the deficit soared in the first place because of the recession, so as the economy has improved, the deficit naturally decreased.  The United States still has a deficit higher than it was in nominal terms and as a percentage of gross domestic product than it was in 2008 and a debt much greater as a percentage of the overall economy than it was prior to the recession.

“Inequality has deepened. Upward mobility has stalled.” 

Close readers of the president’s speeches might have noticed an interesting shift in the president’s rhetoric. Just in December the president gave a speech on economic mobility in which he three times asserted that it was “declining” in the United States. But earlier this month, renowned economists Raj Chetty, Emmanuel Saez and colleagues published a paper based on tens of millions of tax records showing that upward mobility had not changed significantly over time. The rate essentially is the same now as it was 20 years ago.
Still, the same study confirmed that income inequality had increased in the same period. “Hence, the consequences of the ‘birth lottery’ — the parents to whom a child is born — are larger today than in the past,” the paper said, offering the analogy of a ladder in which the rungs have grown farther apart but the children’s chances of moving upward from one rung to another had not changed.
Both Chetty and Saez are recent winners of the biennial John Bates Clark Medal, for distinguished economist under the age of 40, and it’s a mark of their esteem that their paper would lead to such a swift change in presidential rhetoric. Even so, some might argue that Obama is stretching the use of the term “stalled,” since the main point of the research was that the trend was constant, not that it halted.

“Today, women make up about half our workforce. But they still make 77 cents for every dollar a man earns. That is wrong, and in 2014, it’s an embarrassment.”

There is clearly a wage gap, but differences in the life choices of men and women — such as women tending to leave the workforce when they have children — make it difficult to make simple comparisons.
Obama is using a figure (annual wages, from the Census Bureau) that makes the disparity appear the greatest. The Bureau of Labor Statistics, for instance, shows that the gap is 19 cents when looking at weekly wages. The gap is even smaller when you look at hourly wages — it is 14 cents — but then not every wage earner is paid on an hourly basis, so that statistic excludes salaried workers.
In other words, since women in general work fewer hours than men in a year, the statistics used by the White House may be less reliable for examining the key focus of legislation pending in Congress — wage discrimination. The weekly wage is more of an apples-to-apples comparison, but it does not include as many income categories.
Economists at the Federal Reserve Bank of St. Louis surveyed economic literature and concluded that “research suggests that the actual gender wage gap (when female workers are compared with male workers who have similar characteristics) is much lower than the raw wage gap.” They cited one survey, prepared for the Labor Department, which concluded that when such differences are accounted for, much of the hourly wage gap dwindled, to about 5 cents on the dollar.

“More than nine million Americans have signed up for private health insurance or Medicaid coverage.”

Obama carefully does not say these numbers are the result of the Affordable Care Act, but he certainly leaves that impression. But the Medicaid part of this number — 6.3 million from October through December — is very fuzzy and once earned a rating of Three Pinocchios.
The ACA expanded Medicaid to those who earn less than 133 percent of the poverty line — about $15,000 for an individual — to 26 states (and the District) that decided to embrace that element of the law. But no one really knows how many of the 6.3 million are in this expansion pool — or whether they are simply renewing or would have qualified for Medicaid before the new law. Indeed, the number also includes people joining Medicaid in states that chose not accept the expansion.
The private insurance numbers — about 3 million — are also open to question. The troubled federal exchange counts people as enrolled if an individual has selected a plan, but it does not know if a person enrolled and paid a premium because that part of the system has yet to be built.

Republican response

“Last month, more Americans stopped looking for a job than found one. Too many people are falling further and further behind because, right now, the president’s policies are making people’s lives harder.” — Rep. Cathy McMorris Rodgers (R-Wash.)

This has become a familiar theme by Republicans, but as we have noted before, the decline in the labor participation rate is largely due to factors beyond Obama’s control — namely the retirement of the Baby Boom generation. When Obama took office in January 2009, the workforce participation rate was 65.7 percent — and now it is 62.8 percent. So there has certainly been a decline. But the rate had already been on a steady downward track since it hit a high of 67.3 percent in the last year of Bill Clinton’s presidency.
The Federal Reserve Bank of Chicago in 2012 concluded that just over half of the post-1999 decline in the participation rate comes from the retirement of the baby boomers. Critically, the research showed that the problem is only going to get worse in the rest of the decade, with retirements accounting for two-thirds of the decline of participation rate by 2020. In other words, the rate will keep declining, no matter how well the economy does.
Barclays economists, meanwhile, say that just 15 percent of the drop in the labor force stems from people who want a job and are of prime working age (25-54). “We view the possibility of a large and sudden return of previously discouraged job seekers to the labor force as remote,” they wrote.