What 2010 Can Tell Us about How Accurate the Polls Are a Week from Election Day

With polls showing Republicans in good shape as Election Day approaches, one may wonder: Are these polls accurate? In the battle for control of the U.S. Senate, we can look to the previous midterm election for some empirical data to help answer that question before we actually see the results on election night. It's especially helpful because most of the states with competitive Senate races this year--including New Hampshire, North Carolina, Georgia, Louisiana, Arkansas, Iowa, Kansas, Colorado and Alaska--all had Senate races in 2010 as well. So, how were the Senate candidates in those states doing in the polls one week out from Election Day four years ago?

 

The short answer is: In all of the aforementioned states except Alaska (where incumbent Sen. Lisa Murkowski (R) was campaigning as a write-in candidate against Republican Joe Miller and Democrat Scott McAdams), the Republican candidate for U.S. Senate led his/her Democratic opponent in all or most of the polls heading into the final week of the campaign. Were the polls correct? Well, sort of...

 

In New Hampshire, Republican Kelly Ayotte had a nine-point lead over her Democratic adversary, then-Congressman Paul Hodes, in the RealClearPolitics Average of polls on October 26, 2010 (one week before Election Day 2010). Ayotte continued to expand her lead and ended up routing Hodes, 60% to 37%, in the general election. This year, the Senate race in New Hampshire is much closer: As of today, the incumbent, Sen. Jeanne Shaheen (D), holds a lead of 2.2 percentage points in the RCP Average over her challenger, former Sen. Scott Brown (R-MA). If Brown finishes strong the way Ayotte did in 2010, then he may yet return to the U.S. Senate.

Similarly, in Iowa, the Senate race in 2010 wasn't competitive, unlike the one this year. Four years ago, Sen. Charles Grassley (R) was such a heavy favorite to win re-election that there wasn't much polling of the race, at least not by independent (unaffiliated) outfits. A Des Moines Register poll conducted in late October nailed Grassley's margin of victory over former U.S. Attorney Roxanne Conlin (D): 31 percentage points. This year, the Register's latest poll found state Sen. Joni Ernst (R) ahead of Rep. Bruce Braley (D) by just one percentage point, 47% to 46%. That comports with the current RCP Average of polls, which has Ernst leading Braley by 1.7 percentage points.

Same story in Georgia: The Senate race in 2010 wasn't competitive at all; this year it's a nail-biter. However, there was something unique about the Georgia Senate race four years ago. Sen. Johnny Isakson (R) handily defeated his Democratic challenger, State Labor Commissioner Mike Thurmond, 58% to 39%, but polls overestimated his margin of victory. All the publicly released poll results in late October that year showed Isakson winning by anywhere from 21 to 30 percentage points. This year, the polls are showing a virtual tie between businessman David Perdue (R) and Points of Light CEO Michelle Nunn (D); Perdue's lead over Nunn in the RCP Average today is one-half a percentage point. Because this race will go to a runoff if no candidate wins an outright majority of the vote in the general election, and because all the polls are indicating that is exactly what will happen, further analysis of this race seems premature right now.

Admittedly, the dynamics of an open race are so different from a race with an incumbent in it that trying to use one to predict what will happen in the other may not be empirically sound. So, what races can we look to for an apples-to-apples comparison? Try Arkansas, where Sen. Blanche Lincoln (D) was probably the most vulnerable incumbent in the U.S. Senate in 2010, and she lost in a landslide to then-Congressman John Boozman (R), who won Lincoln's seat with 58% of the vote. (Lincoln received 37%, almost exactly her poll position in the RCP Average--37.8%--on October 26, 2010.) Late deciders must have broken for Boozman, who stood at 54.5% in the RCP average one week out. If history repeats itself this year, then the lone remaining Democrat in Arkansas's congressional delegation, Sen. Mark Pryor (D), will soon be replaced by Rep. Tom Cotton (R), who today leads Prior by five percentage points in the RCP Average, 46.8% to 41.8%.

Colorado was one state where the pollsters really missed the mark in 2010. A week before Election Day that year, Weld County District Attorney Ken Buck (R) led Sen. Michael Bennet (D), who had been appointed to the seat in 2009, by one percentage point in the RCP Average. By Election Day, however, that lead had grown to three percentage points. Buck appeared to have the momentum going into the election, but Bennett managed to pull out one of the tightest victories that year, winning election to a full term by less than 2% of the vote. (Buck received 46.4% of the vote, significantly less than his 49.3% standing in the RCP average on Election Day, while Bennett took 48.08%, slightly more than the 46.3% the RCP average of polls had him winning. What probably happened is that a lot of voters who were going to vote for Buck ended up voting for one of the third-party or "Independent" candidates on the ballot, or maybe they just didn't vote.) This year, Rep. Cory Gardner (R) has a slightly larger lead over incumbent Sen. Mark Udall (D), 3.3 percentage points in the RCP Average, and he hasn't made a lot - or really any - of the stupid mistakes Buck made four years ago. Republicans are also determined this year not to get caught off guard again by the Democrats' ground game. Suppose for a minute, though, that this race plays out from here just like the 2010 contest did. That would mean Gardner would continue to gain in the polls and head into Election Day with a lead of between five and six percentage points in the RCP average. If the actual election results then showed a four-point swing towards Udall, then Gardner would still win. It's also worth noting that Udall is polling much lower than Bennett was four years ago. However, there are also more "undecided" voters than there were at this point in the 2010 race, so while Udall has more ground to make up than Bennett did in the last week of the campaign, there are also more potential late deciders who could swing this race.
 

In North Carolina, the polls were much more accurate in 2010. Incumbent Sen. Richard Burr (R) led his Democratic challenger, then-North Carolina Secretary of State Elaine Marshall, by 10.7 percentage points in the RCP Average on October 26th, and he won re-election by a twelve-point margin, 55% to 43%. (One interesting thing to note is that, in that race, undecided voters appear to have split evenly between the two candidates, something we don't usually see in a race where one candidate has a comfortable lead in the polls and is expected to win.) That may be good news for Sen. Kay Hagan (D), who is currently clinging to a one-percentage-point lead over her Republican challenger, State House Speaker Thom Tillis (R). Unlike Marshall in 2010, however, Tillis appears to be chipping away at the incumbent's lead, which was 3.8 percentage points in the RCP Average at the beginning of this month. But Hagan may be helped by the Libertarian candidate in the race, Sean Haugh, who was not a factor in 2010.

In Louisiana four years ago, Democrats tried to pick off incumbent Sen. and probable prostitute patron David Vitter (R) with Rep. Charlie Melancon (D). In another state where a candidate must receive a majority of the vote to win, Vitter avoided a runoff, winning 57% of the vote to Melancon's 38%. One week before Election Day, Vitter led Melancon by exactly sixteen percentage points in the RCP Average. This year, it's Republicans who are trying to pick off a Democratic incumbent, and let's just say it's going to a runoff; the latest polls indicate that Sen. Mary Landrieu (D) will likely receive a plurality of the vote in the "jungle primary" next week but not even close to the 50% needed to avoid a runoff, which would likely be won by Rep. Bill Cassidy (R). In a one-on-one matchup, Cassidy leads Landrieu by 4.5 percentage points in the RCP Average. 

 

Although there were also Senate races in Kansas and Alaska in 2010, those races were so different from the ones in those states this year that I don't think it's useful to look at them. Also, while there was a Senate race in Kentucky four years ago, I don't really consider the race between incumbent Sen. Mitch McConnell (R) and Kentucky Secretary of State Alison Lundergan Grimes (D) to be "competitive" at this point; McConnell has a small but consistent lead, and Grimes is showing no traction whatsoever.

What about the "generic ballot"? Republicans have a six-point advantage among likely voters in the Washington Post/ABC News poll out this week. That's even better than they were doing four years ago, writes FOX News digital politics editor Chris Stirewalt:

Double, double, toil and trouble - Struggling with female voters and young voters, Democrats fare worse in the latest WaPo/ABC poll than they did at the same point ahead of the disastrous 2010 election and at the same level as the punishing 1994 midterm elections that cost them both houses of Congress. Without any significant increase in Democratic intensity since the previous polling cycle, the auguries are getting dire for the president’s party.

Among registered voters, Democrats lead Republicans in the poll, 47% to 44%, but that's "identical to the difference recorded at this point in 2010." That poll may actually be good news for Democrats when compared with the results of a recent Wall Street Journal/NBC News/Annenberg survey, in which 52% of likely voters in the survey said they wanted the election to produce a Republican-led Congress, while 41% favored Democratic control.

"By historical measures, an 11-point lead on the question of which party should control Congress is large," Janet Hook wrote for the WSJ. "Republicans held a seven-point lead on the question at this point in the 2010 election in a Journal/NBC survey, which used a different method to determine which voters were most likely to cast ballots."

Finally, if you're one of those statistics-mongers who just can't get enough data and analysis, or if you're looking for a number to put on the GOP's odds of taking over the U.S. Senate this cycle, then consider this:

Today, One week out from Election Day 2014, Nate Silver’s infamous FiveThirtyEight gives the GOP a 64.6% chance of winning the Senate, and "the Upshot" (a similar thing affiliated with the New York Times) says there’s a 70% likelihood of the same. The Washington Post’s Election Lab, meanwhile, forecasts that Republicans will see a net gain of seven Senate seats and projects a 93% chance Republicans take the upper chamber. Make of this what you will; I'm going back to running my law practice.

One Reason NOT To Check My E-mail Every Five Minutes

I've gotten burned before for being less than diligent about checking my inbox, but something happened on election night that made me glad I wasn't furiously refreshing my e-mail as often as I was the live election results from the Ohio and Colorado Secretaries' of State web sites. At 8:04 p.m. (according to the time stamp on the message), an email with the following subject appeared in my Yahoo! Mail inbox: 

WSJ NEWS ALERT: Romney Wins Michigan

The error wasn't limited to the subject line, either; the message read, in part: "Mitt Romney wins Michigan, the Associated Press reports." Of course, Mitt Romney did not win Michigan, and the AP did not project that he had. This message was followed by another at 8:10 with the subject, "WSJ NEWS ALERT: CORRECTION: Obama Wins Michigan".

I won't fault the Wall Street Journal for this mistake, but I hope there weren't too many Romney supporters who were made to feel false (if temporary) joy and crushing disappointment because of it.

Ripping Romney's Record

The attacks themselves were nothing new; we've all heard the hits on Mitt Romney's past--the millions he made at Bain & Co. and Bain Capital, the businesses they tried to save but couldn't, the people who were thrown out of work--that have become a familiar rallying cry for political hacks trying to gin up popular opposition to what was in reality a record of leadership and job creation. What was different about this round of attacks was the source(s). The latest round of smears on Romney's private-equity exploits came not from the White House or the Obama re-election campaign, nor from MSNBC or some leftist blog. (I guess it's kind of hard to tell the difference between these different entities though.) Rather, they came from Mitt's fellow Republicans--specifically, his rivals for the GOP nomination, their campaigns, their surrogates in the media and independent groups who run ads on their behalf.

Following a pathetic showing in the Iowa caucuses, Gingrich and Perry had started grumbling about Romney's past in advance of the New Hampshire primary, but things really got heated after Romney himself dropped a catalyst into an already volatile elixir of eleventh-hour barnstorming. On the eve of the critical New Hampshire primary, Romney made an unfortunate statement that, when taken out of context, sounds really, really bad (I'm not going to come up with a colorful way to say everything.):

"I like being able to fire people who provide services to me."

Actually, it's the first seven words of that sentence that stirred up so many talking heads across the political spectrum. Mitt Romney, already under fire for not being able to save every job in every business Bain invested in while he was CEO (and, according to his detractors, thereby "firing" a bunch of workers) and anticipating a similar line of attack in the general election, said that he liked "being able to fire people."

On the surface, that remark wouldn't seem to be problematic for a presidential candidate, but because of Mitt Romney's background and the image of him as a ruthless corporate baron that his enemies are trying so hard to cultivate, his words gave pols, pundits and pettifoggers the world over something to fuss about.

"Mitt Romney likes to fire people," declared the Daily Beast, an online symposium for talentless hacks seeking a repository for their insightful prose that most of us common folk are too stupid/unsophisticated to appreciate.

Loony Larry O'Donnell told his audience that night, "I think Bain Capital is the greatest ... private equity firm in the World ever." (You can never really be sure where that guy is coming from.)

DNC Chairwoman and part-time gargoyle Debbie Wasserman-Schultz said ... well, who cares what she said? The point is, we expected the left to pounce on (and distort) Romney's words, but the most distrubing vitreol spewed from the mouths of those who seek to carry the mantle of a party that is supposed to be pro-capitalist, pro-free enterprise, meritocratic and, above all, honest. Newt Gingrich accused Romney of "looting a company, leaving behind behind broken families and broken neighborhoods and ... a factory that should be there." Rick Perry called the former Massachusetts governor a "vulture capitalist". (His campaign even turned Romney's words into a ring tone.) Even Jon Huntsman, Jr., got off his high horse and said, "Governor Romney enjoys firing people. I enjoy creating jobs."

The above-listed quotes are just a sampling of the many, many shots Mitt Romney took this past week, and the stinging disappointment I felt at seeing so-called conservatives (or "classical liberals", if you'd prefer) attack one of their own for his successful career in the private-equity business was mitigated by the outpouring of support for Romney, not just from the voters of New Hampshire, but from conservative journalists who were rightly disgusted by the Obama-style tripe being peddled by so-called Republicans who for months had been denouncing similar rhetoric by Democrats. Washington Post blogger Jennifer Rubin wrote that the "anti-capitalistic pandering" by Romney's Republican rivals "will likely go down as a text-book example of political stupidity." Michelle Malkin (definitely not a Romney fan, for those of you who didn’t know) blogged that "incompetent non-Romneys have morphed into Michael Moore propagandists — throwing not just Bain Capital under the bus, but wealth creators of all kinds who take risks in the private marketplace." The Wall Street Journal excoriated Gingrich and Perry "for their crude and damaging caricatures of modern business and capitalism." To be fair, Gingrich and Huntsman later walked back their comments lambasting Romney for his work at Bain Capital.

All of this would warrant concern beyond this week if anyone other than Mitt Romney stood a fighting chance of winning the GOP nomination. This is not the case, however, so we must turn our attention to the irritating chatterboxes who we will have to put up with in the general election campaign and who will continue to attack Romney, fairly or unfairly, for anything they can connect him to, no matter how manufactured the tragedy or how tenuous the link.

To the extent that Mitt's business background is a liability, it poses a grave threat largely because most Americans don't know the details of it, and hence it is ripe for distortion. From my vantage point, it appears that most of the people using Bain to attack Romney don't even understand what the company does/did. This is evident in their nonsensical, absurd and often incoherent criticisms of the firm's investment ventures in the 1980s and '90s, while Romney was C.E.O. Most of them pile on Mitt for shuttering unprofitable businesses and laying off workers while drawing a hefty salary for himself. Sometimes, though, whatever reasonable shot his detractors might be able to take at him is clouded by their visceral dislike of the man and everything he stands for. As Matt Bai wrote on his New York Times blog, "the attacks lobbed at Mr. Romney have been disparate and not terribly persuasive."

Case in point: Forbes columnist Robert Lenzner accused Romney of "firing more people than he hired." Not only is this not supported by the facts, Lenzer didn't even try to back it up. Matt Bai's fellow New York Times blogger Paul Krugman made a similarly unsubstantiated (and oversimplified) claim when he wrote that Romney "was a buyer and seller of businesses, often to the detriment of their employees." (This was still less inane than his assertion in an earlier column that “Mr. Romney and those like him ... enrich themselves while helping to destroy the American middle class.”) The aforementioned Debbie Wasserman Schultz took the attacks on Mitt and his work at Bain to a new level of crazy when she claimed that Romney “bankrupted companies deliberately.” (She also echoed a new Democratic talking point that “Mitt Romney said ... that he likes firing people,” a lie so blatant that even Andrea Mitchell called her out on it.)

I’m not sure if Congresswoman Wasserman-Schultz has some mental disorder that just compels her to lie, or if she just doesn’t understand what bankruptcy is or why companies enter Chapter 11, but no matter. This is, again, just a sampling of the left-wing lunacy on display in the media coverage of Romney's past. I've noticed that a lot of Romney's critics cite a recent Wall Street Journal piece in support of their attacks, which they laughably maintain are neither anti-capitalist nor anti-business. I read the entire Journal story, which was written by Mark Maremont, and I was a little surprised at some of the information that no one--not even Romney surrogates--had trumpeted in defense of the candidate and his former employer. Here's the gist of the article: The Journal examined 77 businesses Bain invested in while Mitt Romney led the firm from 1984 until 1999 "to see how they fared during Bain's involvement and shortly afterward." A figure repeated (and distorted) by the haters was that "22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses." Another "8% ran into so much trouble that all of the money Bain invested was lost," according to the Journal, which means that 70% of Bain's ventures during the time frame of the study were successful. If our president had a 70% approval rating, then he'd be viewed as unbeatable.

Another point that those propagating the Romney-got-rich-killing-jobs-and-destroying-lives meme have omitted is something that really should be widely known but doesn't always dawn on your simple, self-styled blue-collar, working-class voter who might be swayed by this rhetoric: companies can emerge from bankruptcy. Often times, bankruptcy is not the end of a business; it's a reorganization. Seeking the protection of a bankruptcy court isn't necessarily a sign of long-term business failure. As Maremont noted: Not only that, but a lot of the businesses that entered bankruptcy despite Bain's involvement went bankrupt after Romney had left the company. One such company, American Pad & Paper (a.k.a. AmPad), has been a favorite of the Left as an example of the ruthless, cutthroat capitalism that is apparently bad. After Bain's initial investment in 1992, two of AmPad's American plants were closed and hundreds of employees were laid off. Bain and its investors made a lot of money. The company went bankrupt.

Many of the Bain companies emerged from reorganization healthier, just as, for instance, General Motors did a few years ago. But while bankruptcy filings aren't a perfect measure of performance, they provide a way to assess a disparate array of target businesses that in many cases weren't required to make public financial filings.

If that doesn't exactly make sense to you, then it's because I've omitted several relevant facts, just like the anti-Romney prattlers have. One of the plants was shut was shut down because of a union strike, not exactly something the Romney-bashers, most of whom carry a lot of water for big labor, would want the public to know. Also, everyone who lost their job was offerred a job at one of the other facilities. Perhaps most importantly, AmPad was acquired out of bankruptcy. It is now owned by Esselte, a Connecticut-based global office supplies manufacturer, and still employs thousands of people.

As for the companies that didn't make it out of bankruptcy, a quote from one of Romney's former co-workers sheds some light on why so many of Bain's business ventures went belly-up. There are two paragraphs in the Journal article that everyone--and I mean everyone--who has heard it referenced in any context ought to read: In other words, Mitt Romney was not a ruthless corporate shark who did whatever he could to make money, as so many pinkoes are trying to make him out to be, but he was the very thing they're trying to convince people he's not, "an excellent CEO."

Marc Wolpow, a former Bain Capital executive, said the frequency of trouble did indeed stem largely from the firm's strategy early on of investing in smaller, troubled firms it hoped to turn around.
"I don't think you can hold Mitt out as a great investor per se," Mr. Wolpow said, "but he was an excellent CEO of an investment firm, and the results speak for themselves."

Others who actually worked with Mitt Romney and got to know him have similar praiseworthy things to say about him. Before I get to my next example, I need to bring up what appears to be a good-faith but still misleading analysis of Romney's business record. Earlier this week, the Washington Post published their "fact check" of Romney's claim that Bain “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.” They called the 100,000 jobs figure "untenable" and gave Romney's comments three pinocchios, which indicates "significant factual error and/or obvious contradictions." While acknowledging that "Romney certainly has a good story to tell about knowing how to manage a business, spotting opportunities and understanding high finance," Glenn Kessler writes that, "if he is to continue to make claims about job creation, [then] the Romney campaign needs to provide a real accounting of how many jobs were gained or lost through Bain Capital investments while the firm managed these companies — and while Romney was chief executive. Any jobs counted after either of those data points simply do not pass the laugh test."

Among other examples, Kessler points to Staples, one of Bain's most successful ventures, which has added 89,000 jobs since Bain's initial investment. Says Kessler, "Bain may have provided management expertise or money when others would not, but a company such as Staples — one of the biggest contributors to Romney’s job figures — was largely the brainchild of entrepreneur Tom Stemberg." I'm sure Stemberg appreciated that backhanded shout-out, but I know he would dispute the implication that Romney doesn't deserve some credit for Staples's growth and success. How do I know that? Let's just say I can see the future.

I realize that, no matter how much research I do or how many sound, logical arguments I make, there are some people I just won't get through to because I have no credibility with him. So, if you're a Lefty who still thinks Mitt Romney made a fortune as the head of a heartless, avaricious corporate raider that lined its investors' pockets with the gains it reaped from slashing and burning companies, then you ought to read an opinion piece written for POLITICO by none other than Steven Rattner, the investment banker/financier and big-government booster who recently served as the Obama administration's "car czar". While making it clear that he's "all in favor of piling on Mitt Romney for any number of reasons," Rattner makes it clear that, "with modest exceptions (keep reading to learn more about these), Bain Capital was a thoroughly respectable — nay, eminent — investment manager that successfully discharged its responsibility of earning high returns for its investors by deploying capital in companies privately rather than by buying shares in the public market."

In addition to providing an accurate (and, impressively, concise) explanation of what the private-equity business is all about, Rattner's article chronicles the early history of Bain & Co. He provides specific examples of Bain's successes and failures, with objectively verifiable facts and figures detailing what investments the company made, the human cost of saving businesses that would otherwise have gone under, what "success" and "failure" meant in dollars and cents, and, perhaps most importantly, how Bain did right by its investors: So, to recap: Bain Capital, under the leadership of Mitt Romney, sought out struggling companies that needed saving (like AmPad), promising start-ups in need of seed money (think Staples) and older, more developed businesses ripe for leveraged buyouts (e.g., Domino’s Pizza). Some of the ventures were more successful than others, and a handful went into bankruptcy (though I've yet to learn of one that did while Romney was still at the helm). It's beyond dispute that, however incalculable the actual number of jobs created or saved by Bain during Romney's tenure, the net increase of jobs at the companies Bain invested in far exceeds the job losses at all those companies. Finally, and again most importantly, "Bain Capital more than fulfilled its responsibility to a gaggle of investors, who were mostly foundations, endowments, pension funds and the like."

Overall, Bain Capital’s record was extraordinary, among the best in the business. According to a Bain placement document, through the end of 1999 (effectively, when Romney left), the firm had achieved annual returns of 88 percent per year.
That is not only wildly more than the single-digit returns most investors achieve by buying stocks or bonds, it is far higher than those of typical private equity or venture capital firms.

Romney was the CEO of Bain Capital, not of the individual enterprises that Bain invested in, managed and tried to save. But if his critics won't give him credit for any of the jobs that were created in these companies after Romney left Bain, then they can't fairly blame him for anything that happened to these businesses or their employees after 1999, either. The key word there is, of course, "fairly." There's no doubt in my mind that Mitt Romney will win the nomination and the presidency this year if his opponents play fair, which is why they won't.

Five Left-Wing Myths About the Economy

The recent debate over the debt ceiling and fiscal issues in general provided ample opportunities for politicians and pundits alike to flood the airwaves/blogosphere/print media with their rhetoric. A few relied on objectively verifiable facts to bolster/support their arguments, but most stuck to their trusty talking points. I thought this would be as good a time as any to list, analyze and debunk some of the most salient (and, when believed, dangerous) falsehoods I've seen/heard propagated repeatedly.

1. The Bush tax cuts are the largest contributor to our deficit/debt.

I'm not sure where this one has its roots or when the Left first started chanting it, but it's demonstrably false. The number I keep hearing cited as the "cost" of the "Bush tax cuts" is $1.6 trillion. Simply put, that was the initial number used by the Bush Administration (!) when it pitched its proposal to a skeptical Congress and the American public. Before I go any further, it's important to recognize that there were actually two rounds of "Bush tax cuts," one enacted in 2001 (EGTRRA) and another in 2003 (JGTRRA). After the first round of tax cuts, which primarily benifitted middle- and lower-income Americans, was enacted in 2001, the CBO issued a report stating that the Economic Growth & Tax Relief Reconciliation Act of 2001 ("EGTRRA") would "reduce surpluses by a total of almost $1.4 trillion from 2001 to 2011." (In the same report, it projected that real GDP would grow at average annual rate of 3.2% for 2003 through 2011. Nominal GDP was projected to grow by an average of 5.3% annually during the same period.)

Then came the devastating attacks of September 11, 2001, which were quickly followed by a rash of corporate scandals and the federal government's ill-conceived response to them (Sarbanes–Oxley). The combined effects of all these events were a prolonged recession and sluggish recovery. Of course, the CBO had not predicted any of this, so when it issued its Cost Estimate for the Jobs & Growth Tax Relief Reconciliation Act of 2003 ("JGTRRA"), many proponents of the new tax law (including yours truly) received it with a few more grains of salt. (To tell you the truth, I didn't even read the damn thing until I sat down to write this article.)

In its May 2003 report, the CBO projected that JGTRRA "would increase deficits by about $350 billion" through Fiscal Year 2013. The bulk of that $350 billion was the anticipated reduction in revenues, but some $39 billion would result from "outlays for refundable tax credits" and something called the "Temporary State Fiscal Relief Fund."

So, what actually ended up happening? Well, the deficit for FY2003 (which we were nearly eight months into when JGTRRA was enacted) came in at $377.6 billion. It peaked the following year at $412.7 billion, then started to come down. This is where the argument that the Bush tax cuts created huge deficits and added over a trillion dollars to our National Debt starts to break down. We all know that Congress and the president spent like drunken sailors during the last decade, and yet the deficit dropped sharply (from $412.7 billion for FY2004 to $160.7 billion in 2007, a 61% reduction in just three years). The manifest explanation is that revenues increased at a faster-than-expected rate. As I explain here, total budget receipts shot up 44% (from a low of $1.78 trillion in 2003 to nearly $2.6 trillion in 2007) after the second round of tax cuts. By comparison, total receipts under the old tax rate structure maxed out at $2.03 trillion in 2000, then plummeted because of the recession.

It's impossible to know what would have happened had the tax code gone unchanged, but it's clear that the original "estimate" of what the tax cuts would "cost" should not be cited as empirical data or anything other than what it was: an estimate based on projections that turned out to be wrong. As the CBO itself now admits:

In January 2001, CBO's baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO's forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimates—a swing of $11.8 trillion from the January 2001 projections.

What is clear is that the federal government ended up collecting vastly more revenue after JGTRRA and EGTRRA were enacted (an average of $2.3 trillion per annum from FY04 through FY08) than it was before (an average of $1.6 trillion per annum from FY94 through FY00). Even adjusted for inflation, that's a BIG difference. Remarkably, some people are so obtuse as to not even acknowledge this when you lay it out for them in the simplest terms possible.

So, if EGTRRA and JGTRRA aren't the largest contributors to our staggering National Debt, then what is? Certainly the War on Terror stands out as the single largest budget-buster of the last decade. Add up all the expenditures on Operation Enduring Freedom and Operation Iraqi Freedom, the cost of veteran benefits for those who had not served prior to 2001, the newly-created Department of Homeland Security, and the additional billions spent on intelligence/counterintelligence after 9/11, and you'll come up with a lot more than $1.6 trillion. Yet, there are other factors worth mentioning here. As Kevin D. Williamson wrote for National Review Online in April:

The Department of Health and Human Services will see more than $900 billion in outlays in FY2011. About $83 billion of that is discretionary spending on things like the Centers for Disease Control. Almost all of the rest is Medicare and Medicaid — the two programs that President Obama has vowed to shield from substantial reform of the sort envisioned by Rep. Paul Ryan. The other big driver of spending, as the president himself acknowledged yesterday, is Social Security, meaningful reform of which he also promises to resist.

2. Spending cuts will have a devastating effect on the economy.

This is a favorite old saw of the Left, and it's been repeated ad nauseum ever since Obama took office and, along with a willing Democratic Congress, kicked federal spending into hyperdrive. I'll refrain from a lengthy critique of Keynesian economics for the time being and stick to a brief rebuttal of this ridiculous argument. First, I must once again point out that it's crucial to distinguish between actual reductions in government spending and reductions in the growth of planned spending. (The latter are often referred to as "reductions in the baseline.") It is a very rare occurrence when total federal spending actually drops from one fiscal year to the next. That happened in 2010 (for the first time in 45 years), but only because we spent so G*d***n much in FY2009. However, when we actually spend less on certain programs/services, it's fair to call the decreases in spending on specific items real spending "cuts."

With that in mind, the most significant federal spending cuts in the last 60 years took place in the 1990s, the early 1980s and the mid-1960s. You'll notice that none of those dates coincides with the beginning of a recession. In fact, the spending cuts in the '60s and '90s took place amid historic economic boom periods that continued for years after the effects of the cuts were felt, if they were even "felt." The country was already in a deep recession when President Reagan took office and persuaded a divided Congress to slash the federal budget in nearly every department, and the economy was no worse for the wear. The last time a recession in this country was precipitated by deep spending cuts was 1945, when World War II ended and government spending appropriately cratered. (To give you an idea of how big the crater was, total outlays dropped from $92.7 billion for FY45, which at that time ended on June 30, to less than $30 billion for FY48.)

Let's pause here for a moment to note what exactly a "recession" is. Traditionally, we have recognized a "recession" in the U.S. as two or more consecutive quarters of economic contraction (meaning a decline in real GDP). Defining when a particular recession begins and ends has proven to be a much more controversial matter. The National Bureau of Economic Research (NBER) has become somewhat of an unofficial authority on the subject; it defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production, and wholesale-retail sales." The definition of GDP is much less disputed. Simply put, our gross domestic product (GDP) is the sum total of all final goods and services produced in the U.S. during a given year. Government spending is part of GDP. So, it's technically possible for a recession to occur just because government spending drops. History reveals, however, that such an occurrence is very rare and usually coincides with the end of a war, which is actually what happened in 1945.

On paper, the Recession of 1945 looked to be a mild one. It lasted only eight months, and while GDP declined sharply, the unemployment rate (as it was then calculated) for 1945 ended up at only 5.2% or, as it’s now called, “full employment.” Getting back to the present, this bogus argument that even the mildest spending cuts are a bad idea given the current state of our economy has been advanced by so many individuals that it hardly seems worth it to cite anyone. However, the old saw appears to have spread beyond opinion commentators and politicians to previously objective journalists. Lex Haris of CNNMoney, for example, recently crowed that cutting spending by $111 billion in 2012 (the “Cut” in Republicans' “Cut, cap and balance” plan) was “just too much, too soon without risking another recession.” (For the record, the CBO currently projects outlays of $3.655 trillion for FY2012, so $111 billion would amount to a whopping 3% haircut off the baseline.) If our economy can't handle a 3% reduction in something that constitutes less than 25% of GDP without risking another recession, then we're in real trouble.

Though instances of true fiscal restraint by Washington are few and far between, history shows that austerity in the form of belt-tightening (which is necessary now more than ever) should not hurt our economy very much, if at all. Besides, it's not like the reckless spending of the past three years has created a robust economic recovery.

3. Many wealthy Americans want to pay higher taxes.

Of all the outrageous myths being pushed by the Left in America today, this one is probably the most laughable. It's impossible to know what's going on in someone else's mind, and I can't speak for the likes of Warren Buffett or George Soros, but the reality is that, no matter what these tycoons say, if they really wanted to pay more in taxes, then they would send bigger checks to the government. The fact that they don't is all the proof anyone should need that these proponents of higher taxes on "the rich" do not want to pay more. There is no law (and I've looked) that bars taxpayers from voluntarily paying the government more than they owe in federal taxes, nor is there any statute forbidding the U.S. Treasury from keeping the surplusage if one of these magnanimous fat cats decides to give Uncle Sam a bonus, with express indication that (s)he is aware of it and does not want a refund. In fact, the federal government welcomes contributions to reduce our staggering debt. You can make a contribution online at Pay.gov or write a check to the Bureau of the Public Debt. (Make sure to notate in the memo section that it's "a Gift to reduce the Debt Held by the Public.") These are the facts.

4. Free trade costs American jobs.

Unfortunately, the Left is not alone in propagating this one. There has been a disturbing strain of protectionism spreading throughout the country of late, fueled by a number factors (not the least of which is the understandable anxiety over our economic conditions and the bleak forecast of things to come). Sadly, many on the Right have now jumped on the anti-free trade bandwagon. Some, like Lou Dobbs, have been beating the protectionist drums for a while now. Others, such as a number of Tea Party activists, joined the march more recently.

So, what's the rap on free trade? Well, for starters, there's this growing notion that it's made America less competitive globally. Apparently, more and more Americans are rejecting the general principle that free trade agreements prove mutually beneficial to the countries that enter into them. Sara Murray and Douglas Belkin of the Wall Street Journal report:

The rising hostility seems a delayed reaction to a slow economic recovery and high unemployment. To many, China has replaced Wall Street as the villain du jour. Opposition to trade is fueled by reports that many U.S. multinational companies, sitting on huge stockpiles of cash, are reluctant to invest in the U.S. and are looking overseas, and by the fact that China has pulled out of the global slump much faster than the U.S.

John Wallis, 50 years old, blames imports for the 2001 death of his 12-employee business that made small electronic prototypes for the telecommunications industry and the subsequent loss of his Chicago-area home. "Trade is fine and dandy in a scenario where everybody wins," Mr. Wallis said. But the U.S. isn't winning, he said. Mr. Wallis now works in programming and design for an international manufacturer in Rhode Island, but doubts he'll ever be able to repay debts from his old business. "Financially we've never recovered," he said.

That whiny Chicagan's sob story about losing his business reminded me of something. It took me more than a week to find it (which is why this is the first post on my blog in a week), but I finally came across an old edition of National Review with an article I remember reading more than three years ago. The whole thing is really a pretty good read, but here's a little preview: According to Standard Textile’s Gary Heiman ("the upstart competition in his old-line industry"), the notion that the U.S. has lost jobs due to trade with other countries “is nonsense.” Trade takes the blame when people lose their jobs because it’s an “easy target,” Heiman says, absolving shortsighted industry leaders and labor unions when companies run into financial trouble and jobs are eliminated. Rather than take responsibility for failing to adapt, he says, “it’s much easier to say, ‘It’s their fault. It’s China’s fault. The Chinese are taking away our jobs,’ when in fact, that’s just not the case.”

Another riff against free trade is that it sucks capital out of the U.S. and into foreign markets, throwing our current account balance out of whack, but the numbers suggest something different. At year’s end 2009, the value of foreign investments in the United States exceeded the value of U.S. investments abroad by some $2.4 trillion, according to the Bureau of Economic Analysis. Granted, we have a huge trade deficit, but we don't seem to have a problem attracting foreign capital; the BEA's preliminary numbers show that, in 2010, net investment in the U.S. continued to increase.

Getting back to the big lie, protectionists want people to think that free trade agreements make it easier for American companies to "ship jobs overseas." There's no truth to this whatsoever. Last fall, I spotted an opinion piece in the New York Times by none other than Robert Lighthizer. Yes, that Robert Lighthizer. The former deputy U.S. trade representative pointed out that, during the last decade, our trade deficit in manufactured goods was “about $4.3 trillion,” and “the country lost some 5.6 million manufacturing jobs.” But don’t confuse correlation with causation. The fact of the matter is that free trade agreements make American goods cheaper overseas, increasing the market for our goods abroad. Ask any devout protectionist to explain how NAFTA and other free trade agreements are responsible for the loss of American jobs in any sector, and all but the most erudite scholars are quickly exposed as hacks.

Back when he was alive, William F. Buckley, Jr. took note of the increasingly conspicuous protectionist rhetoric in America and exposed its absurdity in an online article that doubled as a defense of free trade from a nationalist standpoint (something very few men could pull off). More than two centuries ago, “Adam Smith was resoundingly correct in laying down the law that both parties benefit,” Buckley wrote, “giving us the benefit of exposure to Lou Dobbs, and the freedom to reject his counsel.”

5. We were heading into a depression in 2009, and President Obama's policies saved the economy.

The second half of this conjunction has been bandied about considerably less of late, probably because enough Democrats and their surrogates in the media have realized that Americans don't appreciate being told how the president "saved" the economy when everything seems to be getting worse. Yet, many left-wing apparatchiks are still singing the first half of this tired old song. (As this video shows, some of the people who like to say we were headed for another Great Depression when Obama took office don't know what they're talking about.)

Again, it's impossible to know what would have happened if Obama and the Democrats had taken a hands-off approach in 2009 or if the GOP's alternative stimulus plan had been enacted, but the sobering reality remains: the economy has only gotten worse on President Obama's watch. The unemployment rate for January of 2009 was 7.8%, a far cry from Depression-era levels. That same month, Christina Romer (incoming chair of the president's Council of Economic Advisers) and Jared Bernstein (Joe Biden's "top economic adviser") released this report on the pending stimulus legislation. The report contained this now-infamous graph: Wow. Boy, was that wrong. Then the CBO came out and projected the unemployment rate would climb to 8.3% in 2009 and peak at 9% in 2010. In February, CBO Director Doug Elmendorf sent a letter to Sen. Judd Gregg (R-NH). According to the CBO's revised analysis, the unemployment rate would hit 9% in 2009 without the stimulus, which at that point had already passed both houses of Congress but had yet to be signed into law by President Obama. With the stimulus, the CBO projected the unemployment rate for 2009 would be anywhere from 7.7 to 8.5 percent.

By October of 2009, the unemployment rate had shot up to 10.1%. That may sound like a very steep climb in a very short period of time, and it is. Look, the easiest part of this myth to debunk is the notion that Obama's agenda prevented the economy from getting worse. One thing that economists on the Left and Right agree on is that the Troubled Asset Relief Program (TARP), enacted under President George W. Bush and expanded by the Obama Administration, acctually did more to save us from "a second Great Depression" than any other government action since 2008. As Danielle Kurtzleben of U.S. News & World Report reported a few months ago:

In propping up major financial institutions, TARP provided relief from the immediate problem of frozen credit markets, according to James Gattuso, a senior fellow in regulatory policy at the Heritage Foundation, a conservative think tank: "It served a critical function in terms of providing liquidity at a time that it was needed to counter a panic in financial markets," he says. Doug Elliott, a fellow at the liberal Brookings Institution, believes that without government support of financial institutions, the financial crisis would have taken on far greater proportions. "The recession we had would have been substantially worse; millions of people would have been out of work," he says.

(In fairness, Kurtzleben's article also explained why critics of TARP say it was a flop. Follow this link to read the entire article.) Obama may have voted for TARP, but it was not his brainchild. He also played no integral role in crafting the legislation that created the program, so if you think that TARP rescued the economy, then don't give Obama any credit for averting a worse recession.

I don't expect to convince anybody who thinks otherwise that we were not headed for another Great Depression in 2009. What I can do is present the data and offer my own analysis to explain why I think what I think. If anyone feels my arguments lack cogency or thinks they could be stronger, then please comment below. I realize the preceding list is by no means exhaustive; there is an abundance of left-wing mendacity out there, and it's not just limited to economics. When I sat down to decide what "myths" I would attack in this piece, I purposefully omitted such oft-repeated claims as "the rich aren't paying their fair share of taxes" because those are technically opinions, and "fair" is a relative term. Also, I realize that I could have developed my arguments more thoroughly/extensively, but I didn't want this column's length to discourage people from reading it and actually taking its content to heart. Thank you for reading it, and I look forward to hearing the response, if there is one.