Thursday, October 23rd, 2014

In context: Hovde and the "sob stories" quote

Here is the interview clip with U.S. Senate hopeful Eric Hovde that generated the "sob story" story

Editor's note: "In Context" is a new feature of PolitiFact. It is intended to give readers the context of a statement that has received widespread attention.

Republican U.S. Senate candidate Eric Hovde of Wisconsin made national headlines in June 2012 for saying he "prayed" that reporters would stop writing "sob" stories about people who, in an example he used, "couldn't get their food stamps or this or that."

It was the final comment Hovde made during the question-and-answer part of his visit to a suburban Milwaukee chamber of commerce.

Following is the statement an audience member made to Hovde and Hovde's 4-1/2-minute reply.

The last portion of the audience member's comment was:

"I didn’t see anywhere in your plan -- of those seven points or eight points you brought up -- was raising taxes. And I want to know what you think about, going forward, where some have said perhaps the way to deal with irresponsible spending is irresponsible tax increases to pay for the irresponsible spending. You didn't call for any of that here. I'm assuming you're opposing it."

Hovde's response:

"Yeah, look, what frustrates me is that we know these things because we have so much historical background to understand them. We know that no matter what you do with tax rates, you generally end up somewhere within the same bar, unless you push tax rates too hard, then you actually collect less revenue.

"And I'll just use states as an example of this, because we can see it clearly played out. California -- I have a community bank in California. The only thing that keeps me awake -- because this bank is, like, bulletproof, it's like Fort Knox; if you ever want to have a safe place to put a deposit, this is it. But the only thing that keeps me awake at night is the State of California. They have consistently increased taxes and they have consistently received less revenue. New York -- same thing. Illinois now has moved in that direction.

"It doesn't work. Capital is mobile; capital can go anywhere. Again, when I talk about our corporate tax rate, if you want to know why a lot of jobs have left this country, look at our corporate tax rate.

"If you don't want to use states, go to Europe. Look at what's going on with Greece and with Spain -- oh, we're having a revenue shortfall to meet our pension obligations, oh, let's increase taxes -- and they get less economic output.

"We have a fundamental spending problem. In saying that, I do believe, fundamentally, getting rid of all the corporate welfare. We are losing $151 billion a year on corporate welfare and it distorts the system. But my view is, push the rate down, rip out the corporate welfare and make the system fairer for everybody and create economic growth. We've got to get back to getting economic growth because we cannot get there solely through tax cuts.

"But I just wish, at some point, people would pick up a book and just say, let's look at history. In fact, this debt issue is so profound -- the best book ever written on debt and debt collapse of governments was just done four years ago, or three and a half years ago. It's a great book, if you like economics. Now, it may put you to sleep at night, at times, but "This Time is Different: Eight Centuries of Financial Folly," written by Ken Rogoff and Carmen Reinhart, two of the greatest economists of our time on the issue of debt. They went back for eight centuries and modeled every government that's ever went into default. They have shown empirically that if a government gets more than 90 percent of debt to their economy and it stays that way for three years, you are left with one of two options; both are utterly disastrous: a default, or a massive debasement of your currency, which causes hyper-inflation. Folks, we're at a hundred percent.

"I mean, it's scary; it scares the heck out of me. And I'm not easily frightened: I'm a 6-foot-3 and a half  guy who fights Brazilian jujitsu. I've had a lot of tough things in life. I've lived with a bad disease for 21 years, I've had multiple sclerosis now; fortunately, I've done well. Very few things ever have scared me ever in my life, as my older daughter can tell you. This issue really scares me -- we're not just talking our kids and our grandkids; it'll come in the next four or five years if we don't change course. I mean we've got to do it, like, right now.

"So, I see a reporter here. I just pray that you start writing about these issues. I just pray, you know. Stop always writing about, oh the person couldn't get their food stamps or this or that. I saw something the other day, it's like, another sob story and I'm like, but what about what's happening to the country and the country as a whole? That's going to devastate everybody."