Newsday (New York)

October 6, 1996

WELL, THE FACT IS... / CAMPAIGN CLAIMS OFTEN

STRETCH TRUTH
By Glenn Kessler. WASHINGTON BUREAU

Washington - Presidential debates usually contain some rhetoric, a dose of humor, a few
zingers - and lots of facts. Presidential candidates love nothing more than to flood the
airwaves with a veritable blizzard of facts, each carefully constructed to present their case in
the best possible light.

The problem is, many of these facts are suspect. They usually contain a grain of reality, but
many are also exaggerated, outlandish or just plain wrong.

When President Bill Clinton and his Republican challenger Bob Dole meet tonight at their
first debate in Hartford, Conn., neither is likely to come armed with many new facts.
Instead, they have been road-testing their claims as they have barnstormed the nation
looking for votes - the political equivalent of an out-of-town tryout for a Broadway show.

Here, then, is a guide to some of the claims Clinton and Dole, or their respective parties,
have made regarding domestic issues in this election year.

Jobs, The Deficit

Most of the economic statistics are pretty good - unemployment is down, job growth is up,
inflation is low - so Clinton has little need to stretch the truth. One of the president's
memorable promises from 1992 was that his economic plan would create 8 million jobs in
four years. Under his watch, 10.5 million new jobs have been created, and Clinton loves to
brag that he exceeded that promise.

Actually, promising 8 million jobs was a pretty safe bet. The country was emerging from a
recession, and one would expect at least 8 million jobs to be created even if the president
didn't do anything to affect the direction of the economy. In fact, most economists argue
that a president has little impact on an economy worth $7 trillion, and so it is silly to give
him credit for creating jobs.

Clinton also claims that he exceeded his promise to reduce the deficit by 50 percent. This is
true: The deficit has fallen from $290 billion in 1992 to an estimated $117 billion this year,
a 60 percent drop.

Some analysts credit Clinton with taking the risk of emphasizing deficit reduction early in his
tenure, which helped spur a bond market rally that brought down interest rates.

But Clinton also has been lucky that in 1993 Congress refused to let him spend $16 billion
on a stimulus package and, once Republicans took control, forced him to accept even
deeper cuts in government spending. Moreover, the growing economy brought in more
government revenue, which also helped bring down the deficit. At the same time, the
Federal Reserve acted skillfully to keep inflation under control even as the economy was
growing.

Economic Growth

Dole, seeking an opening on the economic front, has complained that Clinton has presided
over an anemic recovery. Dole says that the economy, as measured by the Gross Domestic
Product, has grown only 2.4 percent a year under Clinton, compared with 3.9 percent under
President Ronald Reagan. Updated economic figures actually give Clinton a record of 2.5
percent growth for the first 14 quarters of his presidency, compared with 1.2 percent under
George Bush for the same period, 2.8 percent for Reagan, 2.9 percent for Jimmy Carter and
2.9 percent for Richard Nixon, according to the Commerce Department.

With the exception of Bush, the records of recent presidents are all in a similar range, with
Clinton at the low end. But, again, most of that performance depends on the business cycle,
not the president. The figure cited by Dole for Reagan's growth record is misleading - it
covers only the years between 1983 and 1989, after the country emerged from a recession
early in Reagan's first term. A decline in unemployment accounts for much of that growth.
Comparing 1981 with 1992, for instance, when unemployment rates were similar, yields an
annual growth rate of 2.6 percent for that 11-year-period - similar to Clinton's record.

Federal Reserve Chairman Alan Greenspan, a Republican, has suggested that the economy
cannot grow much faster than 2.5 percent without causing inflation. In fact, the Fed has
been so concerned that the economy has being growing too fast - it boomed at a 4.7
percent rate in the second quarter of this year - that in recent months the Fed has seriously
considered raising interest rates to cool down the economy.

Budget and Taxes

The centerpiece of Dole's campaign is his plan to cut taxes across-the-board by 15 percent
and still balance the budget by 2002. Clinton has his own balanced budget plan, which he
offered to GOP congressional leaders during last winter's budget showdown. Clinton's
budget plan includes more than $100 billion in tax cuts, compared with Dole's $550 billion
in tax cuts.

Don't count on a balanced budget under either plan. Few experts find them credible. Clinton
delays most of his budget cuts to 2001 and 2002 - after he would have finished a second
term. Most of his cuts are targeted at unspecified domestic programs funded annually by
Congress - which could include law enforcement and education - rather than the
government benefits programs like Medicare that are primarily responsible for the growth of
the deficit. He also lets his tax cuts lapse after several years - a highly dubious prospect - if
the economy doesn't perform as well as expected.

Dole faces a higher hurdle in program cuts because his tax cuts are so much bigger. But he
has offered even fewer specifics than Clinton and has promised various groups that he will
protect Social Security or Medicare - the two biggest government benefit programs - and
will increase spending on the military and veterans. That would force cuts as high as 40
percent in all other annually-funded domestic programs - which includes areas like border
control and law enforcement that Dole has promised to bolster.

The Republican-controlled Congress last week flinched when lawmakers realized the political
fallout from making the cuts necessary in domestic programs to keep on a balanced budget
path; to satisfy Clinton, $6 billion was added to programs they had once vowed to terminate
or downsize. Whereas the GOP budget plan last year had called for spending $487 billion on
domestic programs for the fiscal year that started Oct. 1, in the end Republicans allocated
$503 billion.

Also, Dole's tax plan has little chance of passing even a Republican Congress. When Dole led
the Senate in 1995, he was unable to win approval of a House plan to cut taxes by $350
billion over seven years. So a $550 billion tax cut over six years appears even less likely.

Dole says the tax cut is necessary because, he claims, the typical household pays almost 40
percent of its income on taxes. This is inaccurate. Congressional Budget Office data
indicates that the real figure is closer to 29 percent - and that the federal portion of that is
19 percent. In fact, the federal tax burden has been dropping (it was nearly 20 percent in
1969) while state and local taxes have been going up.

Dole also charges that the taxes in Clinton's 1993 deficit-reduction plan - which affected
mostly wealthy Americans - represented the largest tax increase in history. In raw numbers,
this is true. However, a recent analysis by Congressional Quarterly shows that, when
adjusted for inflation, the 1982 tax increase instead was the largest. In 1996 dollars,
Clinton's tax increase raised $316 billion over six years, compared with $359 billion over six
years for the 1982 Tax Equity and Fiscal Responsibility Act, which raised business taxes and
included modest increases for individuals. Dole, then chairman of the Senate Finance
Committee, was the principal author of that tax hike.

Medicare

Democrats accuse Dole and other Republicans of cutting $270 billion from Medicare, the
program that provides health care for the elderly. Dole argues that instead he voted last
year to increase Medicare funding.

Who's right? Technically, both are. But the Democrats have a stronger case.

Republicans, as part of their balanced budget plan, did vote to reduce anticipated spending
for Medicare by $270 billion over seven years. No one really knows how much Medicare will
cost seven years from now, so estimates are made by the Congressional Budget Office
based on educated guesses for future health-care inflation and growth of the elderly
population. The Republican bill proposed far-reaching changes for the Medicare program,
and the Congressional Budget Office calculated that the changes would have reduced
federal spending on the program by $270 billion.

Dole is able to argue that Medicare spending would have increased every year under the
Republican plan because the actual dollars spent each year for the program would go up.
However, this is disingenuous because inflation each year eats up the purchasing power of
the dollar - and inflation in the health-care area is higher than for most other goods and
services. So, adjusted for inflation and growth in the program, the actual spending would be
$270 billion less than under current law, according to the Congressional Budget Office.

Many budget experts believe it is inaccurate to not adjust for inflation. For instance, virtually
everyone agrees defense spending was cut from 1987 to 1994. Technically, however, the
same amount was spent on defense in both years: $282 billion. But those dollars in 1994
bought nearly one-third fewer troops, ships and planes than in 1987.

Republicans are inconsistent when they claim the budget plan cut taxes but only "slowed
the growth of spending" in Medicare. Under the plan, tax revenues would have increased
each year, just like Medicare spending, because of inflation and the growth of the economy.
In other words, the proposed changes in tax law would have merely slowed the growth of
tax revenues. So when Republicans say they cut taxes, they are using the same logic the
Democrats use to claim Republicans cut Medicare.

(The rhetorical shoe has been on the other foot. In 1993, when Clinton proposed to cut
Medicare spending to help fund his plan for guaranteed health insurance, he said he was
only slowing the growth in Medicare spending; Republicans at the time charged he was
cutting Medicare.)

Any estimates of cuts in programs or taxes are highly suspect, especially over seven years.
The U.S. economy is so big - and future economic performance so uncertain - that even
estimates by a respected organization like the Congressional Budget Office are often wrong.
In fact, during the budget debate, health care inflation slowed and the budget office re-
estimated the $270 billion reduction in Medicare spending as $226 billion.

Both parties agree that pruning of Medicare spending is necessary to help balance the
budget and to keep whole a Medicare fund that pays for hospital expenses. In budget
negotiations with the White House, the GOP reduced the size of their Medicare cuts to $168
billion. Clinton countered with cuts of $128 billion. But the two sides never reached an
agreement.

Government

The first bill Clinton signed after he took office in 1993 was the Family and Medical Leave
Act. Clinton repeatedly claims that 12 million Americans have taken advantage of the act,
which allows family members to take unpaid leave to take care of a new child or a sick
family member. He's way off. The actual figure is between 1.5 million and 3 million,
according to a government commission. Many employers already offered some sort of leave
program, and Clinton is counting companies that already offered leave but were covered
under the act. (The commission did note that as many as 66 percent of companies
expanded their policies after the law was passed.)

Dole, who as senator tried to block passage of the law, has charged that it was an undue
burden on employers. However, the same government commission reported that nine out of
10 employers said complying with the law was easy and it had no noticeable effect on
productivity, profitability or growth.

Clinton also claims that federal government is now the smallest that it has been since the
Kennedy administration. This is true and not true, depending on how you calculate it.
According to the Office of Personnel Management, the total number of federal employees
(1,949,366) is the smallest since 1966 - when Lyndon Johnson, Kennedy's successor, was
president. However, most of Clinton's personnel cuts have been in defense, not the federal
bureaucracy. When only nondefense positions are counted (1,137,043), the federal
government is the smallest since 1988 - the last year of the Reagan administration.

But raw numbers don't tell the whole story. The size of government has grown in part
because the population of the country has ballooned. When federal employees are
measured as a percentage of the nation's population, Clinton's claims are actually too
modest. The federal government - in terms of just nondefense jobs - is the smallest since
Kennedy. And the overall federal employment is the smallest proportionally since before
World War II.

However, the White House greatly inflates how much money it has saved because of its
"reinventing government" efforts. The White House claims savings of $118 billion to date -
but that's an estimate of what actions taken now would save by the year 2000. Total
savings to date amount to just $27 billion.

One of Dole's major complaints about Clinton's tenure is the reported rise in teenage drug
use. In 1992, 5.3 percent of people between age 12 and 17 reported they used marijuana
the month before. By 1995, the figure jumped to 10.9 percent. However, overall drug use
has remained steady since 1992, with about 12.8 million people reporting drug use in the
previous month.

Dole also has offered a melange of charges concerning Clinton's stewardship of the
government that tag the president as a liberal. Dole has claimed that Clinton slashed the
office of the so-called "drug czar" and that Clinton has proposed 484 "spending initiatives"
that would cost $2 trillion.

It is true that in 1993 Clinton cut the staff of the Office of National Drug Control Policy from
112 employees to 27, largely to fulfill a campaign promise to reduce the White House staff
by 25 percent. But the office is less important than it sounds - the head is supposed to
coordinate federal antidrug programs but has little authority to do so.

The Senate Appropriations Committee last year, in fact, voted to terminate all funding for
the office, arguing that it was a waste of money. Funding for the $10-million operation was
later restored after lobbying by the White House. Earlier this year, as the election
approached, Clinton proposed expanding the staff back up to 125 people and nearly
doubling the budget.

Dole's tally of spending initiatives is highly misleading. It includes every dollar Clinton ever
proposed to spend for programs over a total of nine years and ignores cuts he suggested to
help pay for his spending increases. Moreover, the list of spending initiatives includes many
programs that Dole has said he favors - including the drug policy office.

In general, Clinton has made modest budget requests because budget rules adopted before
he became president make it difficult for him to request new spending without identifying
ways to pay for it.