WASHINGTON (AP) — Ron Paul cited a staggering number in the Republican presidential debate Sunday – $15 trillion supposedly spent by the Fed “bailing out their friends.” Like Mitt Romney and his claims about creating jobs in the private sector, Paul came up with that shocker by presenting an unbalanced look at balance sheets.
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A look at some of the claims in a pair of lively GOP debates on the weekend and how they compare with the facts:
PAUL: “I don’t see how we can do well against Obama if we have any candidate that, you know, endorsed, you know, single payer systems and TARP bailouts and don’t challenge the Federal Reserve’s $15 trillion of injection bailing out their friends.”
THE FACTS: First, there are no fans of government-run, single-payer health insurance in the Republican field, despite Paul’s suggestion otherwise Sunday. Newt Gingrich once endorsed the idea of requiring everyone to have health insurance, and Romney introduced a mandate for health coverage as Massachusetts governor. But that’s a far cry from a Canadian-style health system that makes government the primary payer of people’s medical bills.
TARP is the $700 billion Troubled Asset Relief Program that was proposed by President George W. Bush and passed by Congress in 2008 to help rescue imperiled financial institutions. Nearly all of the money has been paid back, with interest.
Paul’s slam against the Fed ignores the fact that most of the $15 trillion he is talking about involved loans that were quickly repaid, sometimes the next day. And that’s if these Fed transactions can even be considered loans in the conventional sense.
When the Fed lends money to banks, it creates the money out of thin air. When the banks pay it back, the money disappears from the system. If a bank borrows $5 billion from the Fed one day, then pays it back the next, and a week later borrows $5 billion more and quickly pays it back, the total would be listed as $10 billion, even though it’s just the same money going back and forth and the treasury is in no sense being emptied.
That’s how a federal report counted a running total of about $15 trillion in emergency Fed loans to domestic banks and their foreign subsidiaries between 2007 and 2010. The actual loan total, once paybacks are accounted for, is estimated at $1.1 trillion.
ROMNEY: “In the business I had, we invested in over 100 different businesses and net … net, taking out the ones where we lost jobs and those that we added, those businesses have now added over 100,000 jobs.”
NEWT GINGRICH: “I’m not nearly as enamored of a Wall Street model where you can flip companies, you can go in and have leveraged buyouts, you can basically take out all the money, leaving behind the workers.”
THE FACTS: Romney has never substantiated his frequent claim that he was a creator of more than 100,000 jobs while leading the Bain Capital private equity company. His campaign merely cites success stories without laying out the other side of the ledger – jobs lost at Bain-acquired or Bain-supported firms that closed, trimmed their workforce or shifted employment overseas.
Moreover, his campaign bases its claims on recent employment figures at three companies – Staples, Domino’s and Sports Authority – even though Romney’s involvement with them ceased years ago.
By that sort of charitable math, President Barack Obama could be credited with creating more than 1 million jobs even though employment overall is down about 2 million since he came to office. But Romney accuses Obama of destroying jobs while using a different standard to judge his own performance – cherry-picked examples that leave everything else out.
By its nature, venture capitalism often results in lost jobs because profitability and efficiency are key to investors, not how many people are on the payroll. Bain Capital profited in cases where employment went both up and down.
Staples, now with close to 90,000 employees, and Sports Authority, with about 15,000, were startups supported by Romney. The direct workforce at Domino’s has grown by nearly 8,000 since Romney’s intervention. But Romney got out of the game in 1999, which has not stopped his campaign from crediting him with jobs created at those companies since then.
Romney toned down the braggadocio in the Saturday debate, saying that of the Bain-supported companies that grew, “we’re only a small part of that, by the way.” But he insisted his claim of more than 100,000 jobs was a “net net” figure that takes into account job losses elsewhere, even though his campaign has defended the assertion only by reporting on the performance of Sports Authority, Domino’s and Staples.
No one has been able to produce a full accounting of job gains and losses from the scores of companies Romney dealt with at Bain. But a Los Angeles Times review of Bain’s 10 largest investments under Romney found that four of the big companies declared bankruptcy within a few years, costing thousands of jobs and often pension and severance benefits.
PAUL about RICK SANTORUM: “So he’s a big government person, along with him being very associated with the lobbyists and taking a lot of funds. And also where did he get – make his living afterward? I mean, he became a high-powered lobbyist in Washington, D.C. And he has done quite well. We checked out Newt, on his income. I think we ought to find out how much money he (Santorum) has made from the lobbyists as well.”
SANTORUM: “When I left the United States Senate, I got involved in causes that I believe in…. I was asked by a health care company to be on their board of directors. Now, I don’t know whether you think boards of directors are lobbyists. They’re not.”
THE FACTS: Santorum was not, as Paul suggested, a registered lobbyist after he left the Senate. But Santorum did trade his Washington experience for lucrative work afterward, not unlike Gingrich, who has faced plenty of tough questions about money he earned from the corridors of power despite never being registered as a lobbyist.
Financial disclosure records show that from January 2010 to August 2011, Santorum earned at least $1.3 million working as a corporate consultant, political pundit and board member. Santorum reported that the American Continental Group, a Washington lobbying group, paid him $65,000 in consulting fees. The firm’s lengthy client list includes Microsoft Corp., Comcast Corp. and the American Gaming Association.
“The senator did general consulting and provided his advice and opinion on which way the Senate may go, based on his record in the Senate and his history in leadership,” said David Urban, president of American Continental Group.
ROMNEY: “I was in a state where the Supreme Court stepped in and said, marriage is a relationship required under the Constitution for – for people of the same sex to be able to marry. And John Adams, who wrote the Constitution, would be surprised.”
THE FACTS: John Adams would be surprised to hear he wrote the Constitution. He was a minister to Britain at the time, after having been minister to France. He was not a delegate to the Constitutional Convention. He was, though, an architect of the Declaration of Independence. And he constructed the Massachusetts Constitution.