A State of the Union address generally is a product of many hands and is carefully vetted. But State of the Union addresses often are very political speeches, an argument for the president’s policies, so context is sometimes missing. Here’s a roundup of 13 claims in Tuesday night’s speech that caught our attention, listed in the order Biden made them.
As is our practice, we do not award Pinocchios in speech round-ups.
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“I stand here tonight after we’ve created - with the help of many people in this room - 12 million new jobs, more jobs created in two years than any president has ever created in four years.”
Biden is comparing his jobs record for the first two years of his term to the full four-year terms of the previous presidents. That’s misleading. He has no idea what might happen in the last two years of this term that could affect the final number.
Donald Trump found this out the hard way. In his 2020 State of the Union address, he bragged: “Incredibly, the average unemployment rate under my administration is lower than any administration in the history of our country.” But the coronavirus was already spreading across the globe, and within weeks the U.S. economy was shut down, throwing millions of people out of work. Trump’s record went from great to horrible.
Biden, by contrast, is benefiting from the fading of the pandemic and the rehiring of workers. He can point to bills he passed, such as a massive coronavirus bill early in his term, as helping stabilize the economy. But it’s hard to untangle the impact of that bill from similar pandemic-related bills passed under Trump.
That’s why it’s often misleading to measure job creation by presidential term - an artificial metric beloved by presidents and the public alike. Biden, with this statement, is also limiting the comparison to four-year terms. Over the course of both Bill Clinton’s and Ronald Reagan’s two-term presidencies, more than 12 million jobs were created.
As we have often noted, the number of jobs in the United States rises and falls for reasons that sometimes have little to do with a president’s policies. While Barack Obama had the bad luck to start his presidency during an economic swoon, Trump and Biden had the good fortune to start their presidencies when the economy was moving forward. But as Trump found out, that luck does not always last.
As a technical matter, Biden can claim 12 million jobs because he is citing Bureau of Labor Statistics data from January 2021. A president takes the oath of office Jan. 20. But for the Current Employment Statistics survey, employers report data to the Bureau of Labor Statistics for the pay period that includes the 12th of the month — before the new president takes office. So February, not January, would actually cover the first pay period after the new president took charge.
The BLS says there is no right or wrong way to do this, and economists differ on the best starting point. But if February were the starting point, Biden’s figure would be 11.5 million jobs, not 12.1 million.
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“We’ve already created 800,000 good-paying manufacturing jobs, the fastest growth in 40 years.”
The number of manufacturing jobs has rebounded since the pandemic started, but not until last May did the number of manufacturing jobs exceed the level of February 2020, according to the Bureau of Labor Statistics. The level reached in January, a tad under 13 million, is still below that of 2008, before the Great Recession.
Left unsaid is that overall manufacturing jobs have declined by a third since a peak was reached in 1979, even as the number of available workers has climbed by nearly 60 percent.
As we noted above, it makes a difference in the number of manufacturing jobs created under Biden if you start counting in January or February of 2021. Starting in February, the number of additional manufacturing jobs would be 777,000, instead of 803,000.
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“For too many decades, we imported products and exported jobs. Now, thanks to all we’ve done, we’re exporting American products and creating American jobs.”
Biden is being a bit slippery here because he’s only telling half of the story. Exports are up, which means more U.S. products are being shipped overseas. But that does not necessarily mean jobs are no longer being shipped overseas. Imports are also up - and the trade deficit is at a record high.
According to the Census Bureau, exports in goods and services have climbed from $2.16 trillion in 2020 to $2.56 trillion in 2021, an 18.5 percent increase, to $3.01 trillion in 2022, a 17.6 percent increase. But, unmentioned by Biden, imports have also gone up every year — from $2.81 trillion in 2020 to $3.40 trillion in 2021, a 21 percent increase, and $3.96 trillion in 2022, a 16.5 percent increase.
That means the trade deficit under Biden increased from $654 billion in 2020 to $845 billion in 2021 - and again to $948 billion in 2022. That’s a record - and a 45 percent jump during his presidency. The trade figures obscure the fact that many manufacturers import goods that they use to manufacture products that are later shipped overseas. Some of those imports represent lost American jobs.
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“America used to make nearly 40 percent of the world’s chips. But in the last few decades, we lost our edge and we’re down to producing only 10 percent.”
This statistic comes from the Semiconductor Industry Association, a trade group, which says the U.S. share of global semiconductor manufacturing capacity has eroded from 37 percent in 1990 to 12 percent today.
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“We used to be number one in the world in infrastructure. We’ve sunk to 13th in the world.”
Biden is citing rankings from the World Economic Forum that cover 140 countries from all economic tiers. According to the 2019 rankings, Singapore had the best infrastructure and most competitive economy overall. While the United States placed second for its economy and 13th for infrastructure, the infrastructure ranking crumbles a bit when you look closely at it.
Of the 12 economies the WEF ranked ahead of the United States, three — Singapore, Hong Kong and the United Arab Emirates — are tiny coastal city-states. That’s not a relevant comparison.
Moreover, as our colleague Charles Lane noted, while the United States trailed the Netherlands, Switzerland, Japan, Korea, Spain, Germany, France, Austria and Britain, “it’s more realistic to treat the six continental European countries in this group as a unit, since goods and people move through them freely, via the borderless Schengen area.”
Among the 10 geographically largest countries, including Canada, Australia, China and Russia, the United States places first, based on WEF criteria. The United States is also top among the 10 most populous countries — and has risen about 10 spots since the 2011-2012 WEF survey.
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“It’s not fair the idea that in 2020, 55 of the biggest companies in America, the Fortune 500, made $40 billion in profits and paid zero in federal income taxes? Zero.”
This is one of Biden’s favorite statistics. According to factba.se, which tracks his statements, the president has used it in speeches or interviews more than two dozen times since the last State of the Union address. It’s not necessarily wrong, but there are some limitations — the number is not based on actual tax returns but instead is an estimate of taxes paid based on corporate reports.
The number comes from a report issued in April 2021 by the left-leaning Institute on Taxation and Economic Policy. The group studied the corporate filings with the Securities and Exchange Commission of companies listed in the Fortune 500, zeroing in on companies that posted profits.
In 2020, ITEP found, 55 profitable companies indicated that they paid no federal income tax even though they collectively earned almost $40.5 billion in pretax income. ITEP previously had reported that 91 companies paid no federal income tax in 2018, so the situation has improved.
Company tax returns generally are not made public, so ITEP’s numbers are the product of its own research and analysis of public filings.
But it is an imperfect measure. A company’s annual 10-K filing in March generally will have only estimated numbers, as the actual tax return generally is not filed until later in the year. Total tax numbers may be determined from looking at cash flow statements, but there is no guarantee that the calculations reflect the actual tax liability.
Nevertheless, the notion that 10 to 20 percent of Fortune 500 companies do not pay federal income taxes is consistent with a 2020 report by the nonpartisan Joint Committee on Taxation. The JCT was able to examine the actual tax filings but could not reveal the names of the companies. It found that about 20 percent of the 50 corporations reported no tax liability on their tax returns. That mirrors ITEP’s examination of the Fortune 500.
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“Because of the law I signed, billion-dollar companies have to pay a minimum of 15 percent. "
As part of the Inflation Reduction Act, Congress included a new 15 percent corporate minimum tax, beginning this year, on large corporations that for three years have an average financial statement income of over $1 billion. The Tax Foundation estimated that would raise $153 billion over 10 years — a relative pittance — and it could be less if companies figure out how to avoid it. The average effective tax rate under the corporate income tax would rise from 18.7 percent under current law to 19.3 percent.
As a share of its income, the real estate and rental/leasing industry faces the heaviest burden of the new tax, followed by mining, an analysis by the Tax Foundation said. In dollar terms, the industries that would account for the largest liabilities are manufacturing, at $65.9 billion, followed by finance, insurance and management at $39.4 billion.
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“Pass my proposal for a billionaire minimum tax. . . . Because no billionaire should pay a lower tax rate than a schoolteacher or a firefighter.”
Biden is comparing apples and oranges. The “lower tax rate” refers to a 2021 White House study concluding that the 400 wealthiest taxpayers paid an effective tax rate of 8 percent. But that estimate included unrealized gains in the income calculation. That’s not how the tax laws work currently. People are taxed on capital gains when they sell their stocks or other assets. So this is only a figure for a hypothetical tax system.
According to IRS data on the top 0.001% - 1,475 taxpayers with at least $77 million in adjusted gross income in 2020 - the average tax rate was 23.7 percent. The top 1 percent of taxpayers (income of at least $548,000) paid nearly 26 percent.
As for less-wealthy Americans, few, such as schoolteachers or firefighters, pay even the lowest rate of 10 percent because of deductions, exemptions and the like. According to the Tax Policy Center, about 60 percent of all tax returns are filed by those with income under $50,000 - and about half of those pay no income tax at all; 22 percent paid an effective tax rate of less than 5 percent and another 22 percent paid less than 10 percent.
Among taxpayers with income between $50,000 and $100,000, about 60 percent paid an effective tax rate below 10 percent.
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“In the last two years, my administration cut the deficit by more than $1.7 trillion - the largest deficit reduction in American history.”
Biden misleadingly claims to have lowered the deficit by a huge amount even though his policies have added significantly to the national debt. How is this possible? Welcome to federal budget magic.
Biden gets his $1.7 trillion figure by comparing the deficit in fiscal year 2020 ($3.132 trillion) with the deficit in fiscal year 2022 ($1.375 trillion). Federal fiscal years end in September, so some of fiscal 2021 overlaps with Donald Trump’s term.
But the Congressional Budget Office, the official scorekeeper, in February 2021 already estimated the budget deficit would fall dramatically in fiscal 2021 and 2022 because emergency pandemic spending would lapse. The combined 2021 and 2022 budget deficits were projected by the CBO in 2021 to be $3.31 trillion. In November, the CBO said the combined deficits were in fact $4.15 trillion.
What happened? Biden enacted additional covid relief funds and other new policies, resulting in the more modest decline in the deficit. For instance, the deficit was projected to be about $1 trillion in 2022 and it turned out to be about $1.4 trillion.
All told, Biden has increased the national debt about $850 billion more than originally projected.
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“Under the previous administration, America’s deficit went up four years in a row. Because of those record deficits, no president added more to the national debt in any four years than my predecessor. Nearly 25 percent of the entire national debt, a debt that took 200 years to accumulate, was added by that administration alone.”
This is technically accurate but lacks context. The debt grew about $8 trillion during Donald Trump’s four years as president, or about 25 percent of the nation’s $31 trillion in debt. But a large part of that was debt accumulated to help fund Medicare and Social Security as the baby boom generation began retiring - automatic spending over which Trump had no control.
Massive spending to stabilize the economy during the pandemic also added to the debt - but that was approved with vast bipartisan support. Tax cuts passed by Congress in 2017 helped add to the deficit - and the debt, but not as much as various spending bills approved during his presidency.
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“Some Republicans want Medicare and Social Security to sunset . . . I’m not saying it’s a majority . . . Anybody who doubts it, contact my office. I’ll give you a copy.”
Biden started to get heckled by the GOP side of the aisle as he said “some Republicans want Medicare and Social Security to sunset,” prompting him to add “I’m not saying it’s majority.”
That’s putting it mildly. Not even the person who wrote the plan that Biden referenced says he supports a “sunset” of the old-age programs. “Sunset” is inside-the-Beltway lingo for programs terminating automatically on a periodic basis unless explicitly renewed by law.
Last year, Sen. Rick Scott of Florida, chair of the National Republican Senatorial Committee, released a 60-page “11-point plan to rescue America” that offered 128 proposals. Buried on Page 39, in a section on government restructuring, was one sentence: “All federal legislation sunsets in 5 years. If a law is worth keeping, Congress can pass it again.”
Scott’s write-up - which offered few details and had no proposed legislative language - was almost immediately rejected by most Senate Republicans.
Scott also said he was being misinterpreted. “No one that I know of wants to sunset Medicare or Social Security, but what we’re doing is we don’t even talk about it. Medicare goes bankrupt in four years. Social Security goes bankrupt in 12 years,” Scott said on Fox News last March. “I think we ought to figure out how we preserve those programs. Every program that we care about, we ought to stop and take the time to preserve those programs.”
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“While the virus is not gone, thanks to the resilience of the American people and the ingenuity of medicine, we have broken Covid’s grip on us. Covid deaths are down nearly 90 percent.”
According to The Washington Post coronavirus database, the seven-day average of covid deaths was 3,065 on Jan. 20, 2021, compared with 472 as of Feb. 6. That’s a decline of 85 percent. But the database also shows the seven-day average reached 673 on Jan. 23 — and numbers so far this year are much higher than a low of 168 reached in late October.
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“Ban assault weapons once and for all. We did it before. I led the fight to ban them in 1994. In the 10 years the ban was law, mass shootings went down. After we let it expire in a Republican administration, mass shootings tripled.”
These claim are the subject of dispute. In 1994, President Bill Clinton signed into law a ban on assault weapons and large-capacity magazines (LCMs), defined as those that could hold more than 10 rounds. The law - which grandfathered in an estimated 1.5 million assault weapons and 25 million LCMs already owned by Americans - was in place for 10 years until Congress let it lapse.
Biden claimed that mass shooting deaths tripled after the law expired. He appears to be relying on a study of mass shooting data from 1981 to 2017, published in 2019 in the Journal of Trauma and Acute Care Surgery by a team led by Charles DiMaggio, a professor of surgery at New York University’s Langone Medical Center. That group found that an assault weapons ban would have prevented 314 out of 448, or 70 percent, of the mass shooting deaths during the years when the ban was not in effect. But the data used in that study has come under attack by some analysts.
Louis Klarevas, a research professor at Teachers College at Columbia University, studied high-fatality mass shootings (involving six or more people) for his 2016 book “Rampage Nation.” He said that compared with the 10-year period before the ban, the number of gun massacres during the ban period fell by 37 percent and that the number of people dying because of mass shootings fell by 43 percent. But after the ban lapsed in 2004, the numbers in the next 10-year period rose sharply — a 183 percent increase in mass shootings and a 239 percent increase in deaths. His analysis, however, has been criticized by some experts for relying heavily on the final year of his data series.
Also, correlation does not necessarily equal causation. James Alan Fox of Northeastern University, in a 2016 study co-written with Emma E. Fridel of Northeastern University, noted that “rather than assault weapons, semiautomatic handguns are the weapons of choice for most mass shooters.” (About 70 percent of mass public shootings after 1992 relied exclusively or primarily on semiautomatic handguns.) They wrote that “the frequency of incidents was virtually unchanged during the decade when the ban was in effect” and that “not only were there countless assault weapons already on the street, but also assailants had a variety of other powerful firearms at their disposal.”
While the assault weapons ban may not have reduced the number of mass shootings, there is some evidence that the 1994 law’s restrictions on LCMs may have been effective in reducing the death toll. A number of studies of state-level bans on LCMs, such as those by Mark Gius of Quinnipiac University and by Klarevas indicate that such laws are associated with a significantly lower number of fatalities in mass shootings. Fox co-wrote a 2020 study of state gun laws that concluded that bans on LCMs are associated with 38 percent fewer fatalities and 77 percent fewer nonfatal injuries when a mass shooting occurred.