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In the newest installment of a continuing attack on Mitt Romney’s record as governor of Massachusetts, an ad from the Obama campaign takes aim at the Bay State’s debt load.
The ad, released June 12, 2012, has the ironic title "Number One," claiming that "when Mitt Romney was governor, Massachusetts ... (had) more debt per person than any other state in the country."
First, here's a primer on state debt and how it differs from the national debt.
Because the United States is a sovereign nation that can print its own money, it is able to run annual operating deficits -- that is, an annual shortfall of revenues compared to outlays. The accumulation of all past deficits, minus past surpluses, produces the national debt. States, by contrast, can’t print their own money, so most of them -- including Massachusetts -- require a balanced budget. States can, however, borrow money in order to fund capital improvements -- everything from new roads to new school buildings. That’s the debt we’re talking about here.
We'll also note that despite its heavy debt burden, Massachusetts has remained highly creditworthy. Beginning in January 2000, Massachusetts’ credit rating according to Moody’s has been Aa2, the third-highest category, just behind Aaa and Aa1. In 2010, the ratings were recalibrated for all states, and while Massachusetts creditworthiness didn’t change, the name of its rating was changed to Aa1 -- the second-highest category for states. (Here’s the full list of ratings, down to C.)
Looking at the numbers
The ad attributes the statistic to a report by the credit-rating agency Moody’s. The report -- "2007 State Debt Medians" -- isn’t available online, but Moody’s gave us a copy.
We found that the ad accurately portrays the report’s findings. A table of the states ranked by "net tax-supported debt per capita" shows Massachusetts in the number-one spot, at $4,153 per person.
We should note that this is not the only way to measure debt. Tax-supported debt is defined as long-term indebtedness payable from tax revenues, with long-term typically meaning maturities at least 15 years after issuance. And then there is "self-supporting debt," which is repaid from revenues generated by the enterprise itself.
Annual state fiscal statistics compiled by the U.S. Census Bureau use a more expansive definition of debt than just the tax-supported kind, so we decided to look at this data set as well. As it turns out, in 2007, Massachusetts also ranked number-one in the nation with $10,612 in debt per capita.
So the Obama campaign has some solid grounding for its claim. But the ad glosses over some important context.
Massachusetts’ debt includes local projects
Massachusetts’ statewide debt figure may be larger than other states because it issued debt for some projects that in other states might be covered by counties. In a May 21, 2012, report on Massachusetts, Moody’s specifically noted this factor, saying that "debt levels have been driven upwards in part by the commonwealth's issuance of bonds to finance projects that in other states would be paid for at the local level."
The debt accumulated under Romney often didn’t come from policies he pursued
Many of the infrastructure projects contributing to Massachusetts’ high debt per capita ranking were initiated under prior governors and legislatures.
A good example of this is the "Big Dig" -- the massive, and often controversial, project to transform the highways and tunnels of downtown Boston. It was initially conceived in the 1970s, with construction beginning in 1991 and continuing into Romney’s term as governor. In 2008, the Boston Globe estimated that the project will end up costing $22 billion and will not be paid off until 2038. It’s been called "the largest, most complex, and most technically challenging highway project in American history."
The impact of the Big Dig on the state’s per capita debt totals was significant. According to a 2007 report from the Massachusetts state comptroller, the Big Dig is directly responsible for $4.2 billion in state debt and funding from sources other than the federal government or user fees.
The Obama camp says it’s only fair for Romney to take responsibility for the debt on his watch since he challenged his Democratic opponent in a 2002 gubernatorial debate on the issue: "You said, I will stand up and engage the governor, and the Legislature -- I will use my bond-writing capacity to assure that we do not increase the state debt per person. And yet you didn't follow that promise. You broke that promise. We now have the highest state debt per person of any state in the nation."
We think both attacks -- Romney’s in 2002 and Obama’s 2012 -- gloss over some important details.
Massachusetts ranked high in debt per capita long before Romney became governor
To compare Romney’s tenure to those of previous governors, we looked at the Census Bureau’s debt data every four years going back to 1995 to see where Massachusetts ranked nationally. Here’s what we found:
1995 -- Gov. William Weld (R): Massachusetts ranked 6th, with $4,566 in debt per capita
1999 -- Gov. Paul Celluci (R): Massachusetts ranked 2nd, with $5,797 in debt per capita
2003 -- Govs. Jane Swift (R) / Mitt Romney (R): Massachusetts ranked 2nd, with $7,551 in debt per capita
2007 -- Govs. Romney / Deval Patrick (D): Massachusetts ranked 1st, with $10,612 in debt per capita
Looking at the numbers this way provides fodder for both sides. Obama’s case is bolstered by the fact that debt rose at a faster pace on Romney’s watch than in the previous four-year periods:
1995-1999: Up 27 percent
1999-2003: Up 30 percent
2003-2007: Up 41 percent
However, the data shows that the Bay State ranked high on the national debt rankings well before Romney's inauguration. In 1999 (four years before Romney took office) and 2003 (the year he took office), Massachusetts ranked second in the nation in debt per capita
"Massachusetts has had a high debt burden for decades, so governors are hamstrung to make any meaningful change in that picture in one or even two terms," said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, an independent group that analyzes budget and tax issues in Massachusetts
The Obama campaign has accurately noted that Massachusetts had more debt per capita, by two different measurements, than any state in the country. However, this claim leaves out important context.
Massachusetts ranked high long before Romney took office, in part because some of its debt supported projects that in other states would have been paid for by localities. Meanwhile, any suggestion that Romney’s stewardship on debt was harmful to the state is weakened by the state’s consistently high creditworthiness rating and the fact that Romney, by law, balanced the operating budget every year. Finally, much of the debt was actually initiated under the policies of prior governors and legislatures, and experts say that there was not much Romney could have done unilaterally to dramatically change the debt trajectory, particularly given a strong Democratic majority in the Legislature that regularly overrode his vetoes. The claim leaves out important details or takes things out of context, our definition of Half True.
Barack Obama, "Number One" (ad), June 12, 2012
Moody's Investor's Service, "2007 State Debt Medians," April 2007
U.S. Census Bureau, State Government Finances 2007, accessed June 12, 2012
U.S. Census Bureau, State Government Finances 2003, accessed June 12, 2012
U.S. Census Bureau, State Government Finances 1999, accessed June 12, 2012
U.S. Census Bureau, State Government Finances 1995, accessed June 12, 2012
U.S. Census Bureau, "2007 State Government Finances Methodology," accessed June 12, 2012
Moody’s, "Rating Symbols and Definitions," June 2009
Moody's Investors Service, "Moody's Assigns Aa1 Rating to $350 million of Massachusetts General Obligation Bonds," May 21, 2012
Office of the Massachusetts Comptroller, "Statutory Basis Financial Report For the Fiscal Year Ended June 30, 2007"
Massachusetts Dept. of Transportation, "The Central Artery/Tunnel Project - The Big Dig," accessed June 13, 2012
Boston Globe, "Big Dig's red ink engulfs state," July 17, 2008
NASA, "The Big Dig: Learning from a Mega Project," accessed June 12, 201
FactCheck.org, "Obama Twists Romney’s Economic Record," June 7, 2012
Washington Post Fact Checker, "Tweet-err: The Obama team’s faulty debt comparison," May 23, 2012
Email interview with David Jacobson, communications strategist with the public finance group of Moody's Investors Service, June 12, 2012
Interview with Andrew C. Bagley, director of research and public affairs for the Massachusetts Taxpayers Foundation, June 13, 2012
Interview with Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, June 18, 2012
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