Presidential debate: Dueling half-truths

Weary of contradicting President Obama’s repeated attacks on his tax plan, GOP presidential candidate Mitt Romney offered a homespun version of a truism often ascribed to Soviet strongman Vladimir Lenin.

“Look, I’ve got five boys,” Romney said. “I’m used to people saying something that’s not always true but just keep on repeating it and ultimately hoping I’ll believe it. But that is not the case, all right? I will not reduce the taxes paid by high-income Americans.”

Yet both candidates played the repeat-it-often-enough-maybe-people-will-believe-it game on a big issue: for Obama, it was Romney’s tax plan, and for Romney, it was how the 2010 healthcare law will affect Medicare and doctor-patient relationships. They weren’t exactly lying, but their critiques weren’t completely honest either.

TRANSCRIPT: First presidential debate

The $5-trillion price tag

The debate had barely begun before Obama started criticizing Romney for proposing “a $5-trillion tax cut on top of the extension of the Bush tax cuts.” He repeated the $5-trillion figure three more times, despite Romney saying several times that he had proposed no such thing.

There are two things wrong with Obama’s statement. The first, as Romney pointed out, is that it ignores Romney’s pledge to offset the cut in rates by curtailing unspecified tax breaks, particularly for high-income Americans. What Obama was doing, in other words, was looking at the gross cost, not the net. It’s the same tactic Obama’s critics use when talking about the “$1.7-trillion cost” of Obamacare -- they look only at one side of the ledger.

The second problem is that the $5-trillion number, which Obama presented unequivocally, is just a ballpark estimate of the gross cost of Romney’s plan.

Although he hasn’t filled in some crucial blanks, Romney has been quite clear about these things: He wants to slash personal income tax rates by 20% across the board, to eliminate taxes on investment income for couples with taxable incomes of less than $200,000, and end both estate taxes and the Alternative Minimum Tax. In addition, he’s proposed to cut corporate taxes to 25% and end the taxation of income earned overseas.

How much these cuts would reduce projected revenue depends in large part on how fast the economy grows. As Obama knows all too well, projecting the growth of the economy is a very tricky business. Even predicting the cost of the changes for one year is dicey, given how much people’s behavior changes in response to new tax breaks. Cutting the tax on capital gains, for example, tends to cause a brief surge in revenue because it prompts a spike in asset sales.

Obama came up with his $5-trillion figure by taking an estimate by the centrist Tax Policy Center of the one-year cost of Romney’s tax cuts -- $480 billion in 2015 -- and multiplying it by 10. The center has already revised its estimate down, to $456 billion, to account for some of the behavioral changes that the tax cuts would produce.

The more conservative Tax Foundation, on the other hand, contends that the tax cuts would reduce revenue by $231 billion, based on 2008 data, but generate enough economic growth to offset almost 60% of that loss. The gross 10-year cost would thus be less than a third of the $5 trillion that Obama cited.

The $716-billion Medicare cut

Obama actually brought up the $716-billion figure first, saying that amount was “saved” by “no longer overpaying insurance companies, [and] by making sure that we weren’t overpaying providers.” Romney then accused Obama nine times of cutting $716 billion from Medicare. According to Romney, these cuts would “lower” payments to healthcare providers, making it harder for seniors to obtain care, and cause insurers to curtail some Medicare Advantage plans.

But the 2010 Patient Protection and Affordable Care Act, which included those changes, doesn’t reduce payments to doctors or hospitals -- it slows the rate at which they will grow. It will reduce the subsidies private insurers receive for Medicare Advantage, and that means those plans may provide fewer benefits to seniors beyond what Medicare itself provides. But the program, which was designed to lower costs through competition among private insurers, has proved less efficient than traditional Medicare. The 2010 law forces insurers in the Medicare Advantage program gradually to match the efficiency of traditional Medicare. That’s such a sound approach that Romney’s running mate, Rep. Paul Ryan (R-Wis.), has included it in his annual budget proposals.

Bureaucrats dictating medical treatments
When asked why he wanted to repeal Obamacare, Romney said one reason was that “it puts in place an unelected board that’s going to tell people ultimately what kind of treatments they can have.” He repeated that assertion five times as the evening went on.

Romney was referring to the Independent Payment Advisory Board, which the law requires to propose changes to Medicare if the cost per beneficiary exceeds economic growth per capita by more than 1%. Those changes will go into effect automatically unless Congress enacts an alternative to achieve the same amount of savings.

However, the law constrains the board in a way that seems to preclude dictating which medical procedures are and are not available. “The proposal shall not include any recommendation to ration healthcare,” the act states. According to Obama, that means the board is “explicitly prohibited” from making decisions about treatments.

This point is hotly disputed by critics of the Affordable Care Act. Supporters say the board could and should promote the best administrative practices developed by Medicare providers around the country, as well as measures that cut costs by improving patients’ care. A good example is finding ways to protect beneficiaries from acquiring infections while in the hospital.

Critics, however, say that the administration’s not-so-secret agenda is to require Medicare doctors and hospitals to provide only the treatments that the government finds to be cost-effective. That’s a familiar practice from the private insurance industry, but the government’s standard has been different: Medicare pays for any treatments that are shown to be effective, without considering the cost.

The 2010 law tries to improve the quality of care by making available more information about “comparative effectiveness,” or research into which treatments work best. But even there, the comparison being done by researchers isn’t based on cost but on patient outcomes.

Romney’s assertion is based on the assumption that the “unelected board” will abandon Medicare’s traditional approach to coverage in its search for savings. But there’s little or no basis for that in the law, and little reason to believe that Congress would countenance the board going further than Medicare already does to limit which treatments are available.

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