Fact check: Sanders on 1 percent; Clinton on health law
Washington — Bernie Sanders persisted in using shopworn stats on income inequality and Hillary Rodham Clinton went a bit overboard in describing Republican zeal to dismantle the health care law in the latest Democratic presidential debate.
Some of the claims in the debate Saturday night and how they compare with the facts:
SANDERS: “People are working longer hours for lower wages, and almost all of the new income and wealth goes to the top 1 percent.”
THE FACTS: As he did in the last debate, Sanders leaned on outdated data.
In the first five years of the economic recovery, 2009-2014, the richest 1 percent captured 58 percent of income growth. That’s according to Emmanuel Saez, a University of California economist whose research Sanders uses. That’s a hefty share, but far short of “almost all.”
In the first three years of the recovery, 2009-2012, the richest 1 percent did capture 91 percent of the growth in income. But part of that gain was an accounting maneuver as the wealthiest pulled income forward to 2012 in advance of tax increases that took effect in 2013 on the biggest earners.
Many companies paid out greater bonuses to their highest-paid employees in 2012 before the higher tax rates took effect. Those bonuses then fell back in 2013. And in 2014, the bottom 99 percent finally saw their incomes rise 3.3 percent, the biggest gain in 15 years.
MARTIN O’MALLEY: “Under Ronald Reagan’s first term, the highest marginal rate was 70 percent.”
THE FACTS: O’Malley’s comment suggests that the economic recovery of 1983-84 occurred with a 70 percent tax rate on the richest Americans. Actually, one of President Ronald Reagan’s first tax-cut bills, enacted into law in 1981, lowered the top tax rate from 70 percent to 50 percent. And in 1986, Reagan worked with Congress on a bipartisan bill to further lower the top rate to 28 percent.
CLINTON on the health care law: “The Republicans have voted to repeal it nearly 60 times.”
THE FACTS: As much as Republicans wish to dismantle President Barack Obama’s health care law, they haven’t beaten their heads against the wall quite that often.
Many of the votes she is counting were to change or repeal specific parts of the sprawling law, a fine-tuning that Obama acquiesced to at times and some Democrats voted for. In June, the House voted to abolish one part of the law, a tax on medical device makers, with the support of 46 Democrats.
SANDERS: Break-up the big banks “and re-establish Glass-Steagall.”
O’MALLEY: “We should have reinstated a modern version of Glass-Steagall.”
CLINTON: “I just don’t think it will get the job done” of preventing future financial crises.
THE FACTS: Economists tend to side with Clinton on this one.
The Glass-Steagall legislation was passed in the midst of the Great Depression and separated commercial from investment banking, among other things. The idea was to keep risky Wall Street business apart from retail banking, particularly since retail deposits are guaranteed by the federal government.
President Bill Clinton signed a law repealing Glass-Steagall in 1999, and many commentators argue that his move was an early example of a trend toward financial deregulation that made the 2008 financial crisis worse.
Yet many economists note that nearly all the large financial institutions that failed in the crisis, including Lehman Brothers, AIG, and Bear Stearns, were investment banks or insurance companies, and their failure wouldn’t have been prevented if Glass-Steagall had still been in effect.
SANDERS: Speaking of calls to raise the minimum wage to $15 an hour: “You’re seeing cities like Seattle. You’re seeing cities like San Francisco, cities like Los Angeles doing it, and they are doing it well and workers are able to have more disposable income.”
THE FACTS: The jury is still out on whether a $15 minimum wage will cause job losses in those big cities. Even some economists who argue that modest increases in the minimum don’t cost jobs point out there is little research on the impact of such a large increase, which is more than double the current $7.25.
Outside high-cost urban areas, a $15 minimum would be a heavier lift for many businesses. The median hourly wage in eight states is below $15. (The median is the midpoint between the highest and lowest pay levels.)
Still, there is no consensus. The University of Chicago’s Booth School of Business asked more than 40 economists if raising the minimum to $15 an hour by 2020 would “substantially” eliminate jobs for low-wage workers. About 40 percent said they were uncertain, while the rest were split between yes and no.
EDITOR’S NOTE — A look at political claims that take shortcuts with the facts or don’t tell the full story.