Says U.S. Rep. Martin Heinrich "spent a trillion of our tax dollars on a stimulus for failed companies here and jobs overseas."
American Future Fund on Thursday, August 9th, 2012 in an advertisement
Did a New Mexico Rep. spend $1 trillion in tax dollars on a stimulus for "failed companies here and jobs overseas"?
The American Future Fund, a group that advocates "conservative and free-market" principles, is targeting U.S. Rep. Martin Heinrich of New Mexico, the Democratic nominee for a Senate seat being vacated later this year by Jeff Bingaman.
In the ad, titled "Frustrating," a narrator says, "The past few years have been frustrating and disappointing. Washington says the economy is better, but we sure don't see it. We're tightening our belts, but Washington is spending more and delivering less. Martin Heinrich told New Mexico he would fight unemployment, but he spent a trillion of our tax dollars on a stimulus for failed companies here and jobs overseas. So thousands of New Mexicans remain jobless, and unemployment got worse. Tell Martin Heinrich to stop the wasteful spending that's hurting our economy."
It’s correct that Heinrich voted for the stimulus bill known as the American Recovery and Reinvestment Act. But did that bill spend "a trillion of our tax dollars on a stimulus for failed companies here and jobs overseas"? (We tried to reach the American Future Fund but the group did not return our inquiries.)
First, we should note that while the bill was huge, its pricetag was not as big as the $1 trillion cited in the ad. The measure was passed with an estimated cost of $787 billion, and the Congressional Budget Office later revised that upward to $814 billion. Still, generous rounding isn’t the biggest problem with the ad’s claim.
The most significant problem is that the claim suggests that the stimulus bill spent that much money on "failed companies here and jobs overseas." Even allowing for some hyperbole, as we do the ad’s charge is way off base because it distorts how the stimulus was spent.
By our count, the overwhelming majority of the stimulus couldn't have possibly been spent on "failed companies here and jobs overseas." Here are just a few of the bigger examples of spending categories in the bill that don’t have anything to do with failed companies or jobs overseas. (It comes from a breakdown of stimulus-bill spending by recovery.gov, the federal government’s stimulus website, which uses a higher measurement of the bill’s cost -- $840 billion.)
• Individual tax credits for homebuyers, commuting, education and the Earned Income Tax Credit: $135.9 billion
• Making Work Pay tax credit for working individuals and families: $104.6 billion
• Medicaid and Medicare spending: $92.5 billion
• One-time payments to Social Security recipients: $13.8 billion
• Aid for public and Indian housing and homelessness prevention: $13.3 billion
• Science, research and development, including National Science Foundation and National Institutes of Health: $13.2 billion
So what aspects of the bill might conceivably have led to aid for "failed companies" and supported "jobs overseas"?
• Transportation spending, $35.3 billion
• Tax incentives for business, $33.5 billion
• Infrastructure spending, $28.6 billion
• Energy and environment spending, $26.3 billion
• Energy entitlements, $14.2 billion
• Energy tax incentives, $10.8 billion
• Manufacturing and economic recovery, infrastructure refinancing tax free bonds, $9.2 billion
If you add up all of these categories, the maximum you’d get is $158 billion. And that assumes that every penny spent by these portions of the bill -- which collectively account for 19 percent of the bill’s total cost -- would have been frittered away on failed companies and overseas jobs.
"The stimulus was basically one-third increased spending for existing programs, which could go to failed companies and jobs overseas, one-third for tax provisions that really can’t be guided that much and many of which were not going to companies at all, and one-third in payments to the states, which clearly was not going to failed companies here and jobs overseas," said Steve Ellis, vice president of Taxpayers for Common Sense.
Republicans are correct that some recipients of stimulus money failed, such as Solyndra, a solar manufacturer that received a $535 million federal loan guarantee in 2009 from the stimulus. The company got special attention from the Obama administration, which relished the idea of supporting manufacturing jobs and homegrown green energy. But the company collapsed spectacularly less than two years later, followed by an FBI raid and Chapter 11 bankruptcy. Taxpayers were on the hook for hundreds of millions of dollars in losses.
Still, we've found Republicans' claims about Solyndra have often been exaggerated and given them mediocre ratings. And while $500 million is hardly chump change, it’s an exaggeration to say that any large percentage of the stimulus was spent on such failures.
For instance, we have noted serious problems with the claim in one ad that "President Obama wasted $34 billion on risky investments." While the Energy Department has committed $34.7 billion in low-interest loans to nearly 40 green projects, only Solyndra and one other company has filed for bankruptcy. Our friends at FactCheck.org calculated that the government could lose as much as $578 million on those two deals -- less than 2 percent of the total program, which itself is a small part of the stimulus as a whole.
Ads that claim the stimulus supported job creation overseas haven’t fared very well in our ratings, either.
A charitable interpretation of the ad would be that it was sloppily worded. That may be, but we think a viewer unfamiliar with the stimulus would come away with the idea that $1 trillion in tax dollars were spent on "failed companies" and "jobs overseas."
People are free to disagree with the wisdom of passing a stimulus and criticize the way Washington spent the money, but it’s flat wrong to suggest that any large percentage of stimulus spending ended up going to failed companies and jobs overseas. About four-fifths of the total spent was allocated to items that literally couldn’t go for those purposes. We rate the claim False.