Reality Check Last Presidential Debate

By the CBS News Reality Check team.

What Would Joe Pay?

To be clear on Joe Wurzelbacher, the plumber from Ohio: He would not be fined by Obama for not providing health care to workers. Obama says he will exempt small businesses. That said, he has not defined what a small business is. Obama has also promised a small tax credit to help offset small business health care costs.

Eliminating Dependence on Foreign Oil

McCain says the United States can eliminate dependence on oil imports from the Middle East and Venezuela in his first term. Those imports now total 3.6 billion barrels a day.

New drilling, according to the Energy Information Administration (EIA) would add an estimated 200,000 barrels of oil per day, but that wouldn't happen until 20 years from now. McCain's drilling plan, in other words, won't come close to replacing Middle Eastern and Venezulean imports anytime in his first term, unless a gasless automobile appears tomorrow.

McCain Running 100% Negative Ads?

Both candidates challenged each other's ads. Obama said 100 percent of McCain's ads are negative.

This is true for the first week in October, according to the Wisconsin Ad Project. However, over the entire campaign, McCain did run some positive ads. The same study found that for the previous month, Obama's campaign ran more negative ads than McCain.

McCain said: "It's a matter of fact that Senator Obama has spent more money on negative ads than any political campaign in history and I can prove it."

A McCain campaign analysis shows that from Sept. 12 to Oct. 11 Obama spent $42 million on negative ads compared to $27 Million by McCain. But over the same period, Obama spent $29 million on positive ads compared with only $5 million by McCain. So during this time period, Obama outspent McCain more on positive messages than on negative ones.

Will Obama Pay As He Goes?

One of the biggest issues in the debate was spending, and how the candidates would cut spending to reduce the deficit. Here's what Sen. Obama said on the issue: "I have been a strong proponent of pay as you go. Every dollar that I have proposed, I've proposed an additional cut so that it matches."

Fact: Not so fast. If Obama has identified cuts to off-set his new spending, he hasn't made those clear. Most non-partisan experts say Obama would spend more than he takes in with taxes or saves with budget cuts. The nonpartisan Committee for a Responsible Federal Budget says Obama hikes the deficit by $281 billion in four years. McCain is also a big spender; $215 billion in the red.

Note: The below portion of this Reality Check was written prior to the completion of Wednesday night's debate.

Obama's "tax cuts" really credits?

Expect a new McCain claim that almost all of Obama's "tax cuts" are actually "refundable tax credits," which will result in the IRS writing checks to millions of taxpayers who don't owe taxes, adding to the deficit.

Fact: This is true. Obama is proposing a laundry list of tax credits: for college tuition, qualified pension savings, mortgage interest, expansions of the earned income tax credit, a "making work pay" tax credit, a tax credit for savers, and for child and dependent care - all of which are refundable tax credits.

When a tax credit is refundable, it means taxpayers with no tax liability get a check from the IRS for the value of the credits. The four year cost of all these credits, according the non partisan Tax Policy Center, is $966 billion dollars. Obama's critics are calling this a back door form of welfare.

The Obama campaign responds that McCain is highly misleading here, because Obama's leading proposal, the Making Work Pay (MWP)tax credit, will only apply to workers who pay payroll taxes (Social Security and Medicare) and that "none will receive a tax cut from the MWP cut that is greater than their payroll tax liabilities."

McCain rebate will go "directly to insurance company"?

One of Obama's most highly used TV ads claims that McCain's $5,000 tax rebate - for health insurance - will "go directly to the insurance company."

Fact: This is half true, but nothing about this is sinister. Under McCain's health plan, families buying health insurance on the open market would indeed see that rebate go to their insurance company - but so what? The rebate is only good for the purchase of insurance. Obama's ad makes an efficient idea sound underhanded, when it isn't.

All other families, including the 160 million Americans who will still buy insurance through employers, will have to set up a Health Savings Account (an HSA), and your employer will be required to deposit the rebate there.

Expect McCain to again accuse Obama of being the most liberal and highest spending Senator.

Fact: Close, but not precise.

Lets start with "Most Liberal." According to the National Journal, which does these rankings Obama was the most liberal in 2007, 10th in 2006 - and 16th in 2005.

How about biggest spender? According to the group that tracks abusive spending, Citizens Against Government Waste, Obama is tied for the Senate's 15th biggest spender in lifetime rankings. In requests for federal pork, the group ranked Obama as number 70 in 2008, meaning 69 Senators ranked higher than Obama in their requests.

Expect both candidates to argue they have the best plan to help real people through the fiscal crisis. Obama's main new idea promises a 3000 tax credit for every (net) new employee added by a business in 2009 and 2010.

Fact: Most economists doubt this will create many jobs in a downturn. Marty Sullivan, a tax economist with the non partisan Tax Analysts, calls its impact "marginal." Sullivan says because of the economic slowdown, "30-40 per cent of all employers, all the ones worried about holding on to employees, are out of the running." From the start, Sullivan says, "the dollar amount is just not that large. Only those employers already adding employees will benefit."

Sullivan also calls it a largely ineffective "retread" idea from the Carter Administration.

At the right of center Heritage Foundation, tax policy expert Rea Hederman agrees the credit won't have much impact. "It's hard to see how a $3,000 tax credit makes a difference," Hederman says. Employers decide to hire, he says, when "adding that employee adds to profits," and so any business worried about profits in the coming downturn, wont be moved by Obama's tax credit. "$3,000 isn't much of an incentive," he predicts.

McCain's biggest new idea is to buy 14 million "bad" mortgages directly from lenders, and give the homeowner a new FHA backed mortgage at rates the homeowner can afford.

Fact: This idea may help homeowners, but it also bails out lenders McCain promised he would never help. The fine print of McCain's proposal commits taxpayers to buying these loans at face value of the debt, meaning the very lenders who made these bad loans - are made whole.

Yet McCain has resolutely promised not to reward predatory lenders with bailout money. "I will begin by making certain that the 700 billion dollars already committed to economic recovery is not used to further enrich the very people and institutions that invited these troubles with their own reckless conduct." (McCain, Blue Bell, PA., 10/13) At a minimum, its unclear how his plan squares with that promise.

Obama still claims he can pay for all his promises, even though his new fiscal ideas add $175 billion in new spending over two years. On the campaign trail Obama always cites how he can save $10 billion a month by a "responsible withdrawal" from Iraq.

Fact. No, he can't. Not now, and probably not by the end of his term. The Congressional Budget Office (CBO) says the US government currently spends $12.7 billion per month in Iraq and Afghanistan combined. CBO analysts say that if all but 30,000 troops are brought home from Iraq and Afghanistan, the earliest a President could see savings along the lines of $10 billion a month would be 2011. But this won't happen, because Obama isn't leaving Iraq right away - and he's promised to take troops from Iraq and add them to the war in Afghanistan.

McCain still claims he will balance the budget in his first term - when his new ideas will add $352 billion to the deficit. (300 billion comes from the rescue package for mortgages.)

Fact: He can't. Remember that McCain keeps all of the Bush tax cuts, has quite a few new spending proposals of his own (health care, Katrina rebuilding), and is now saddled with an enormous new deficit. No non-partisan group tracking either campaign sees an end to deficit spending in four years, even those who take McCain at his word that he will aggressively cut the budget.

McCain may repeat the claim that Democrats caused the fiscal crisis by obstructing a Republican attempt to impose new capital reserve requirements on Fannie Mae and Freddie Mac. "My opponent (Obama) was silent and his Democratic buddies opposed every effort to rein them in." (McCain, Lacrosse WI., 10/10)

Fact: It's technically true, but the lack of mortgage reserves didn't cause the crisis. First off, there's an emerging consensus among economists that both parties slept through the derivative and debt swap revolution, leaving these products unregulated - and making the current valuation of mortgage backed securities so difficult. The number of bad subprime loans, estimated at around 4 per cent of the total, could not by itself trigger the crisis we now face.

But how how about the "silent" claim? Republicans base this on the fate of Senate bill 190, the Federal Housing Enterprise Regulatory Reform Act of 2005 sponsored by Senators Hagel, McCain, Dole and Sununu. According to Senate Banking staffers in both parties, the bill made it out of committee but never came to an official vote on the floor because the sponsoring Senator, Republican Richard Shelby of Alabama, concluded he did not have the votes he needed. These staffers recall most Republicans were for the bill and most Democrats against. Was Obama silent? No way to know, he never voted. And if he was, so were most Senators. The bill never reached the floor.

Obama also correctly claims he introduced a bill in 2006 (s 2280) that called for curbs on abusive mortgages, but this was one year into his Senate career, and this bill never made out of committee.

In the same category, look for Obama to blame the crisis on McCain's inclination toward deregulation. Please see our notes from item 8 above. Both parties gave us this crisis.

Fact: The main piece of legislation that allowed banks and insurance companies to dabble in securities was the 1999 Gramm-Leach-Bliley bill and both parties were for it. It was proposed by Republicans during the first Bush term, but was signed by President Bill Clinton, and came with the enthusiastic backing of then Treasury Secretary Bob Rubin, who is now one of Obama's top advisers.
CBS Reality Check Team