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How the presidential ads add up

Where candidates’ competing depictions of the economy get it right—and where they play loose

Former President Bill Clinton is featured in an ad for President Obama.

Youtube.com screen grab

Former President Bill Clinton is featured in an ad for President Obama.

As the race for the White House nears its end, voters’ perceptions of the economy are driving the campaign. Economic issues dominated the party conventions and recent debates, and they continue to dominate the speeches, interviews, and talking points of President Obama and his Republican opponent, former Massachusetts governor Mitt Romney.

Obama depicts an economy that is still shaking off the effects of the worst recession in 70 years, but is much improved and getting better. Romney portrays the economy as a basket case beset by weak job growth, high unemployment, and shrinking household incomes.

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As with most political advertising, Obama’s and Romney’s may include hyperbole, selectively chosen facts, and truth-stretching while lacking context. The Globe analyzes the issues and claims in recent ads from both campaigns.

Obama ad: Clinton Explains Romney’s $5 Trillion Tax Cut

SUMMARY: This ad features former President Clinton giving a folksy math lesson about Romney’s promise to cut taxes for all Americans by 20 percent. Clinton says Romney’s promise that he would cut taxes for the middle class is “not true.”

The ad outlines Romney’s tax plan. High-income earners would receive giant tax breaks, Clinton says, adding that he should know — he is “one of those folks.”

Clinton said he would personally qualify for a $250,000 tax cut under Romney’s plan. Others making more that $3 million a year would also get a $250,000 tax cut, he says, while middleincome workers would pay $2,000 more in taxes.

The advertisement then cuts to Clinton speaking to a crowd, imploring them to vote for Obama and choose “arithmetic over illusion.”

ANALYSIS: The ad is based on a report by the Tax Policy Center, a nonpartisan, nonprofit organization that analyzed Romney’s tax plan. The report found that Romney’s plan could not deliver all the tax cuts he promised to the wealthy without raising taxes on the middle class.

In addition to promising to cut all tax rates by 20 percent, Romney has pledged to eliminate taxes that target the wealthy, such as the estate tax, alternative minimum tax, and high income Medicare tax. He said he would pay for the tax cuts partly by closing unspecified loopholes.

The center’s analysis concluded that there are not enough revenues from closing loopholes on high-income earners to offset the cost of paying for the lower rates. And it found that as long as Romney keeps his promise to reduce rates by 20 percent, the proposal would give high-income households large tax cuts and increase the tax burdens on middle- and lower- income taxpayers.

Joseph Rosenberg, a research associate at the center, said the ad was “fully consistent with the study.”

“Much like the speech Bill Clinton gave at the convention, the ad was very carefully worded to be consistent with the study,” Rosenberg said.

Romney’s website says he will cut taxes by a total of $5 trillion over 10 years. What Romney has not articulated is how he would make up the $5 trillion difference to keep the federal budget deficit from growing. Under pressure to release the details of loopholes he might close, Romney has offered only a general outline, saying he will work with Congress to “lower deductions and credits and exemptions so that we keep taking in the same money.”

A Romney spokesman did not offer further details about the plan’s specifics.

To some degree, Romney’s plan relies on the idea that lower taxes will fuel growth. But the idea that reducing taxes, especially for the wealthy and corporations, will help the nation’s economy by unleashing spending and entrepreneurship is disputed.

MIT economist James Poterba, a specialist on tax policy, said predicting how people will respond to tax code changes is complicated. For example, increasing the cigarette tax does not always raise as much revenue as predicted. Some people might stop smoking, others might continue to smoke, and others might buy cigarettes in nearby states with lower taxes. The same uncertainty applies to tax cuts, he said.

“One of the greatest challenges of trying to analyze the revenue consequences of any tax reform where a tax is increased or cut,” he said, “is projecting how the tax base is going to respond.”

Romney ad: Helping the Middle Class

SUMMARY: Romney uses footage of the first presidential debate where he reminds voters that their incomes have shrunk and that they have been “buried” — “just crushed” — by Obama’s leadership during the recession and recovery. Middle-income Americans, he said, have seen their incomes fall by $4,300, describing it as a “tax in and of itself.”

The camera cuts to an image of Obama’s downcast face during the same debate, highlighting the president’s lack of responsiveness. Then Romney appears again, promising that he will not raise taxes on an already struggling electorate. A screen appears with the following words: “Mitt Romney’s plan: 20% tax rate cut for middle-class families.”

He concludes: “My plan is to bring down rates to get more people working.”

ANALYSIS: The last five years have been hard on many Americans, including middle-income households, which have seen incomes drop.

The basis of Romney’s ad is a report by Sentier Research, based in Annapolis, Md., which analyzed census data and found the median household incomes, adjusted for inflation, have fallen steadily from $55,198 in January 2009 — the month Obama took office — to $50,678 in August 2012, a difference of $4,520, or an 8 percent drop.

Sentier uses monthly data, which tend to be more volatile than data collected over longer periods. Annual figures from the US census show a less dramatic decline in income, but the same trend — American households took a licking in the recession and its aftermath.

“It’s true household income has been going down: That’s been happening going back to 1995,” said Sung Won Sohn, an economics professor at California State University. “But you could also argue that it didn’t need to drop as much as it had.”

The recovery from the recession has been subject to great debate among economists. Kenneth Rogoff, a Harvard economist who has studied eight centuries of financial crises, said economies rebound much more slowly from recessions resulting from financial crises than from more typical downturns. Other economists have said Obama did not take enough action to jump-start the nation’s housing market.

Sohn said factors largely out of a president’s control, including increases in oil prices and Europe’s economic crisis, have slowed hiring and helped keep wages low.

Another point: The ad, titled, “Helping the Middle Class,” features Romney’s promise to cut taxes for middle-class families by 20 percent. But that’s only part of a plan that pledges to lower taxes by 20 percent for all taxpayers, including the nation’s wealthiest households.

The ad aims to refute Obama’s claims that Romney would raises taxes on the middle class while preserving tax breaks for the richest Americans to prevent busting the budget.

Romney asserts he won’t increase taxes for the middle class, citing an essay by Alex Brill, a research fellow at the American Enterprise Institute, a Washington think tank. If the economy were to grow just 0.1 percentage point faster a year as a result of tax reforms, Brill says, the additional revenue would offset the cost of any middle-class tax cut.

Yet the degree to which the economy would grow as a result of lower taxes remains unproven and controversial. Diane Lim Rogers, an economist and deficit hawk at the Concord Coalition, a think tank in Washington, recently told the Globe:

“To count on this huge private sector response offsetting the negative effects of higher deficits, that has pretty much been proven over the years not to occur.”

Obama ad: “Main Street — Obama for America”

SUMMARY: This advertisement features a commentary from what appear to be average Americans offering their views on improvements they’ve seen under President Obama. It opens with a woman who says directly to the camera: “We’ve gone from pulling into our parking lot. Which was so depressing — there would be two or three cars in this parking lot — to our parking lot being full.”

A second woman says, “We have a whole second shift that we brought in, new employees, and we have a future at our plant now.” A man tells viewers, “When you look at the president’s plan, I don’t think there can be any question that we’re on the right course for today’s economy.”

Other scenes include a man walking through a turnstile into what seems to be an auto plant, a worker assembling a car, and Obama talking to a crowd. It closes with a voice-over: “Stick with this guy. He will move us forward.”

ANALYSIS: It’s a tricky thing for Obama to run an ad about how the economy has fared, and this ad ran in a just handful of states — Colorado, Iowa, Nevada, and Virginia.

The nation continues to struggle after a deep recession that began before Obama took office in January 2009 and officially ended five months later, in June 2009. Yet the recovery has been painfully slow for many Americans.

The nation has been adding jobs for two years — but not fast enough to replace the nearly 9 million jobs lost in the recession or significantly lower the unemployment rate, 7.8 percent last month.

Manufacturing, which is featured in the short ad, was among the sectors hardest hit by the recession. Manufacturing employment has rebounded since hitting bottom in early 2010, adding nearly 500,000 jobs, according to government statistics. But that’s only about one-fifth of the 2.3 millions jobs the sector lost.

When Obama took office, auto giants GM and Chrysler were close to bankruptcy with millions of jobs at stake, especially in the Midwest and South. Obama allocated bailout funds that saved both companies, though the effort was politically damaging because of public distaste for corporate bailouts when so many Americans were losing jobs and homes.

“Washington’s auto bailout wasn’t pretty, but it forestalled something much uglier, and was essential to the subsequent revival in US manufacturing,” said economist Mark Zandi, in his book “Ending the Great Recession and Beginning a New American Century.”

But there is still debate whether Obama did enough. Some economists assert that the fight over health care distracted Obama when he should have kept his focus on the economy. Others say he did not move aggressively enough to tackle the foreclosure crisis, the underlying cause of the recession.

And though his $800 billion stimulus plan helped the nation avert a second Great Depression, it did not lower unemployment as fast as the president had promised.

But most economists agree the economy is in better shape than it was at the start of Obama’s term. When he took office in January 2009, than nation lost more than 800,000 jobs in that month alone. Since the job market hit bottom in 2010, the nation has added more than 4 million jobs, and the unemployment rate has dropped more that 2 points from its peak of 10 percent in October 2009.

Last month, the jobless rate fell to 7.8 percent — the same rate as when Obama took ­office.

Romney ad: “Putting Jobs First”

SUMMARY: The advertisement targets jobs, and the lack of them, in the United States, blaming the president for a stalled economy.

“We’ve got 23 million people out of work or stopped looking for work,” Romney says, in footage from the first presidential debate in Denver.

“They’re suffering in this country.”

Text across the screen then flashes: “Under President Obama: $4,000 Tax Hike On Middle- Class Families,” before moving back to more debate footage.

“The president would prefer raising taxes . . . the problem with raising taxes is that it slows down the rate of growth. I’m not going to raise taxes on anyone, because when the economy is growing slow like this, when we’re in recession, you shouldn’t raise taxes on anyone.”

Another screen appears with the words: “Mitt Romney’s Plan: 20% Tax Rate Cut for Middle-Class Families.”

And the ad ends with a final sound bite from Romney at the debate, saying, “My priority is putting people back to work in America.”

ANALYSIS: This ad highlights Romney’s effective performance during the first presidential debate and questions the state of the economy. It also offers flimsy evidence to back up a dramatic claim that Obama’s tax plan will cost a middle-class family $4,000 more a year in taxes.

Romney asserts that 23 million Americans are out of work or have stopped looking for work, and that number is largely accurate.

While the official unemployment rate estimated by the Bureau of Labor Statistics showed that about 12 million Americans were out of work in September, that number measures only Americans who are unemployed and looking for a job. There are legions of others who fall into gray areas, including those who have accepted part-time jobs but want to work full time and workers who have given up looking, but said they would take a job if offered. When those people are included, the unemployment rate climbs to 14.7 percent in September, or about 23 million. This rate is known as the U-6, and it is calculated each month along with the official unemployment rate.

The claim that Obama’s tax plan will mean a $4,000 tax hike for the middle class is more dubious. Ryan Williams, a spokesman for the Romney campaign, attributed the statistic to James Pethokoukis, a blogger at the conservative American Enterprise Institute.

Pethokoukis estimated that a household earning between $100,000 and $200,000 a year “could find its tax liability higher by roughly $2,400 every year” under Obama’s plan. He added another $1,600 to the tax bill for what he described as “the debt already accrued the past four years under President Obama.”

Factcheck.org, a nonprofit, nonpartisan group funded by the Annenberg Public Policy Center at the University of Pennsylvania, determined that Pethokoukis blogged his own analysis of a study by the American Enterprise Institute called, “A Simple Measure of Distributional Burden of Debt Accumulation.” The study does not contain the $4,000 figure used in Romney’s ad. In fact, Factcheck.org’s researchers found the study “doesn’t say Obama will raise taxes on middle income taxpayers. It says his budget could result in a ‘potentially higher tax burden’ over the next 10 years.”

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