Breaking Down Every Economic Claim From The Second Republican Debate (Yes, Really.)
Lots of claims were made list night. Which were true?
The second Republican presidential debate was full of economic claims that will take a lot of space to cover. With that mind, I’m going to skip my usual preamble and get straight into the topics covered in the debate. The sections below are presented in the following order, roughly corresponding with the development of the debate: The UAW strike, childcare, health care, slavery, unleashing America(n energy), other tidbits, and a conclusion
UAW Strike
The first question of the debate asked the candidates about their opinions on the ongoing UAW strike against the Big 3 automakers and their thoughts about President Biden’s decision to join the workers on the picket line. The first response came from Senator Tim Scott, who earlier summed up his thoughts on unions with the pithy (and possibly illegal) line: “you strike, you’re fired.” Last night, Scott continued has salvo against unions, claiming they:
“want four-day French work weeks but more money. They want more benefits working fewer hours. That is simply not going to stand.”
He also lamented the “$86 billion for union pensions” that was part of the American Rescue Plan. These funds did not bail out the unions themselves, but the multi-employer pension plans that unions and employers together negotiated. So, it’s not, as Scott claims, an instance where unions “continue to over-promise yet under-deliver”. It’s an instance where the mutually-agreed-upon pension funds are underperforming, in large part due to COVID’s impact on the stock market. The $86 billion will not go directly to the union, but to the workers who spent decades paying into plans, the benefits of which they were promised (both by the union and by their employers) several years back. Don’t worry, this is the only bailout you’ll hear Scott (or anyone else on stage) take issue with. Scott concludes by proclaiming that “Joe Biden should not be on the picket line, he should be on the southern border”.
We then hear from Vivek Ramaswamy who “likes the spirit” of Scott’s anti-union rhetoric, but also needs to stress that he sympathizes with workers (though not the “union bosses” they elect). To show he’s a real man of the people, he then tells us about the “hardship” he faced growing up. (His wealthy parents sent him to a private school with a five-figure tuition fee). Ramaswamy says that If the workers are really upset, they shouldn’t picket their plants, they should “picket in front of the White House”. This continues a trend from the first debate: no candidate on stage is willing to utter a single substantive criticism of bosses or America’s ultra-rich.
When posed with a question about the great disparity between the pay of the Big Three’s CEOs and the UAW rank-and-file, Mike Pence does his first (of many) not-so-skillful pivots of the night:
“While the union bosses are talking about class warfare and talking about disparity in wages, I have to tell you I really believe what’s driving that is that Bidenomics has failed… Joe Biden’s Green New Deal is good for Beijing and bad for Detroit… repeal the Green New Deal.”
To begin, the Green New Deal never passed congress, and thus cannot be repealed. But I think in this instance Pence is calling anything even slightly climate-related a Green New Deal policy. This runs contrary to what the UAW has been asking for. We quoted UAW President Shawn Fain in a previous post, but his words on this topic bear repeating:
“The UAW supports and is ready for the transition to a clean auto industry. But the EV transition must be a just transition that ensures auto workers have a place in the new economy…We are glad to see the Biden Administration doing its part to reject the false choice between a good job and a green job.”
And this makes sense when you consider that many of the automobile plants that are becoming part of the green transition were previously shuttered in previous waves of corporate downsizing and outsourcing. One example comes from Lordstown, Ohio, where Trump promised the town’s autoworkers that he’d protect their jobs. After the UAW gave General Motors over $100 million in concessions, the plant closed a year later, and Trump took to attacking the local union president. Now, the old Lordstown plant is reopening to manufacture electric vehicles and a nearby EV battery factory is opening up too. The transition isn’t perfect (There are less jobs than there were before, but there are more than the zero that were left when the plant originally closed). The UAW local is still fighting for its right to be recognized as the workers’ representative for these plants, but they shouldn’t expect an ally in Mike Pence. He made sure to state his support for “Right to Work” laws, an industry favorite used to crush unions.
Nikki Haley similarly blames Biden’s policy for the strike, arguing that it happened
“because of all of the spending that he has pushed through in the economy that has raised the inflation.”
While inflation has harmed workers across the United States, the UAW workers' pay has been lagging long before COVID happened or Biden took office. A major source of grievance for the union is the massive pay cuts they accepted after the Great Recession to save the automobile industry. Now that the companies are earning large profits again, the UAW wants its fair share, which is why it’s adopted the slogan “Record profits means record contracts”.
To solve this problem, Haley argues that we should eliminate the gas and diesel tax, pass a middle class tax cut, and eliminate the State and Local Income Tax deduction used by wealthy individuals, mostly in blue states. It’s unclear why Haley thinks government spending would be inflationary but tax cuts would not be; both inject cash directly into the economy. Some of these proposals might be inoffensive, but they don’t address the union’s demands. Haley also argues that the small business tax cuts of the Tax Cuts and Jobs Act should be made permanent, bemoaning the fact that “They only made those temporary. They made the corporate taxes permanent.” Though she doesn’t come out and say it, they in that sentence refers to Donald Trump and the at-the-time Republican-controlled congress.
To round out the discussion, Doug Burgum chimes in with the bizarre opening line that the workers are striking because of “Joe Biden’s interference with capital markers and with free markets”. What he’s trying to suggest is that workers are upset with Biden’s subsidies for electric vehicles because they “need two-thirds less workers to build an electric car”. The union itself contends that electric vehicles require 30% less labor, and, again, have voiced support for the sort of subsidies Burgum is criticizing. From the UAW:
“Consumer incentives are a tool to create a robust domestic EV market. This will encourage companies to orient their EV strategies toward the U.S. market. Consumer incentives should also be used to promote high-road domestic EV production. Incentives should be based on where the vehicle and its contents were produced and under what labor conditions.”
Biden’s EV subsidies only partly meet the union’s vision. Joe Manchin, along with Republicans, succeeded in killing the provision within the subsidies that conditioned them on automakers using union labor. Additionally, to cite the Lordstown case again, retaining 70% of existing jobs is far better than retaining none at all.
In summation, when asked why the autoworkers are on strike, not a person on stage cared to mention the grievances held by the workers’ union or the common sentiment among the workers themselves. Instead, half of the candidates bashed unions, while half feigned sympathy in an attempt to graft their own conservative agenda onto the union.
Childcare
The candidates were then given a question about childcare funding, with one of the moderators noting that with the end of pandemic-era assistance upcoming 70,000 daycares could close. With that in mind, what could they do to bring assistance to struggling parents?
Tim Scott begins by noting his support of the Head Start program —a bit ironic, as an hour later Scott will insinuate that Johnson’s Great Society, of which Head Start was a part, was harder for the Black family to survive than slavery—. After that, Scott is finished discussing his plans, and goes on the attack, arguing that under Biden: “cost for day care has gone up to more than $15,000 per child”. This is not exactly true. The Department of Labor reports that the median per-child cost of child care at care facilities for infants was $17,100 in 2022, but it was also above $15,000 under Trump in 2018. The many other types of child care that parents need (for toddlers, preschool children, and school-aged children, not to mention home-based care options) are all more affordable, though still quite expensive. Nonetheless, childcare in this country is absurdly expensive, and has been for several years; the rate of its cost increases has roughly lagged a bit behind inflation, but that’s no cause for celebration. President Biden’s major plan for reducing the cost of childcare —using tax credits to cap families’ child care cost at 7% of income for all but the wealthiest families— did not make it through congress. Scott didn’t comment on this plan, which was part of what he calls Biden’s “Build Back Broker” package.
Source: Department of Labor
Scott then argues that the solution to the high cost of childcare is to “cut taxes and give more Americans their money back”. And again, tax cuts can be nice but they aren’t a salve for everything. Is Tim Scott going to give every American $15,000 worth of tax cuts?
Anyways, Scott then plays up his role in authoring the Tax Cuts and Jobs Act (TCJA) which he contends
“lowered a single mother’s taxes by 70 percent on the federal level…we doubled the Child Tax Credit and made it refundable.” (One might ask why these cuts failed to lower the cost of child care.)
This is half true. The TCJA doubled the Child Tax Credit (CTC) from $1,000 to $2,000 and made the credit partially refundable. Taxpayers could receive up to a $1,400 refund from the credit. However, there’s no evidence that this reduced single mothers’ taxes by 70 percent. Tim Scott’s been making this claim since the tax cut first passed in 2017. At that time it must have been a prediction (based on unknown data), but six years later it hasn’t been vindicated. Under TCJA, the average single-parent family received a tax cut of just over $1,000, a less than 14% reduction in their total tax bill. Perhaps the CTC alone could have saved single-parent families that much (who knows), but single-parent families were also often hurt from other changes the TCJA wrought on the tax code, including the elimination of personal exemptions for dependents.
The elephant in the room during this discussion is Biden’s own expansion of the CTC under the American Rescue Plan to $3,600 per child for children under 6 and $3,000 for children aged 6+. Biden also made the credit fully-refundable. However, all of these changes to the CTC were not renewed in 2022 because they faced heavy opposition from Republicans and centrist Democrats. For a single year, parents were allowed to take home more of their own money, as Scott advocates, and the results were pretty great, including a record-breaking reduction in child poverty. Since the CTC-expansion was not renewed, levels of child poverty have rebounded upward. I cannot find an instance of Tim Scott commenting on this.
Despite this issue being of paramount importance to American families, nobody aside from Tim Scott got a chance to respond.
Source: Peterson G. Peterson Foundation
Source: Institute on Taxation and Economic Policy
Health Care
Eventually, the debate turns to the topic of health care. A moderator notes that 26 million Americans don’t have health insurance in the United States and a disproportionate number of them live in Florida. The moderators ask Ron DeSantis why.
After a failed dodge and having the question repeated to him, DeSantis musters the following:
“Our state is a dynamic state. We’ve got a lot of folks that come… of course, we’ve had a population boom. We also don’t have a lot of welfare benefits in Florida. We basically say this is a field of dreams, you can do well in this state, but we’re not gonna be like California and have massive numbers of people on government programs without work requirements. We believe you work. So that goes for all the welfare benefits, and you know what that’s done Stewart, our unemployment rate is the lowest amongst any big state. We have the highest GDP growth amongst any big state.”
But there are some problems. First, Florida has the second largest proportion of seniors in its population in the whole country. This should give it a crucial advantage with respect to this metric as all of these seniors are covered by Medicare. Additionally, the recent migrants to Florida are overwhelmingly old (and on Medicare) and remote workers who are overwhelmingly insured. They aren’t the reason that a disproportionate number of Floridians are uninsured.
In his comment about welfare programs, DeSantis is likely referencing the fact that Florida is one of only eleven states in the country that has failed to participate in Medicaid expansion under the Affordable Care Act. (Expanding Medicaid is so popular that even the citizens of deep-red South Dakota voted to do so by a margin of more than 10% during the 2022 midterms). I guess this could be called welfare, as it’s expanding a government benefit, but it’s hardly helping those who don’t work. The expansion only covers people between the poverty line and whatever the new threshold for benefits is pushed up to.
Lastly, Florida’s unemployment rate is the 14th lowest in the country. And if you don’t count Massachusetts and Virginia as “big states,” DeSantis is right. But this tells half the story. The labor force participation rate in Florida is below average at only 59.7%. If labor force participation is included, Florida actually underperforms California, which boasts a participation rate of 62.2%. Given Florida’s large retiree population, this isn’t a perfect apples-to-apples comparison, but Florida's labor force participation also underperforms relative to other states with similarly high shares of retirees like Maine and Vermont. I’m not in Florida, so I can’t tell you if Floridians take solace in the fact that millions of them remain uninsured so that the state’s unemployment figure can possibly tick down a tenth of a percentage point.
In his critique of the healthcare system, DeSantis blames “Big Pharma, Big Insurance [and] Big Government,” advocating “more power for the people and the doctor-patient relationship.” Actually, DeSantis has a pretty cozy relationship with insurers in his state, but since this is all we hear from DeSantis about healthcare, we’ll have to leave it there.
Confronted with the fact that health care accounts for two-thirds of all bankruptcies in America, Nikki Haley gets to provide her solution to fix America’s medical system. She begins by asking:
“How can we be the best country in the world and have the most expensive health care?”
That’s a great question, not that anyone on stage is really going to answer it. Haley’s reform is supposed to sound comprehensive:
“We will break all of it. From the insurance company to the hospitals to the doctors officers to the PBMs to the pharmaceutical companies. We will make it all transparent.”
But it’s not clear that transparency is enough to limit the power of the healthcare industry. This was essentially Trump’s approach under the No Surprises Act. The Act prevents insurers from charging patients additional sums for receiving emergency treatment from doctors or in facilities that do not have a contract with their insurance company. Under Trump, the Center for Medicaid Services also issued a new rule requiring hospitals to publicly post their chargemaster prices, the prices a patient could expect to pay for medical services if she paid in cash. This regulation was later updated to include some prices typically paid by insurers. But large healthcare companies regularly flouted the law (which Biden has fought to enforce), and it’s done nothing to assuage concerns about the ever-rising cost of care. Creating transparency is lovely, but it’s no replacement for doing something. Haley also argues for tort reform for doctors, which could be inoffensive depending on how it’s written, but will do little to reduce the cost of care. Lastly, she argues there needs to be more competition in the healthcare space. Competition is always great, but it’s not clear how Haley wants to foster it. Would she fight back against large healthcare mergers? (The president she served largely opted not to.)
Slavery
Would it really be a Republican debate if we didn’t talk about slavery? Admittedly, the discussion here is a bit less admirable than the ones promoted by Thaddeus Stephens, but credit for keeping up tradition.
There’s not much to say here on the economic front. DeSantis weathered criticism for his history curriculum that explained “how slaves develop skills, which in some instances could be applied for their personal benefit." The criticism, according to DeSantis, was a “hoax perpetrated by Kamala Harris” (though DeSantis’s curriculum also received the condemnation of the two leading Black Republicans in congress, Tim Scott and Byron Donalds). DeSantis then concluded that the curriculum must be fine because it was “written by [scholars who are] the descendents of slaves”. These scholar-descendents provided a list of Black Americans who supposedly benefited from slavery, most of whom were not enslaved, given the wrong job title, and in one instance was a direct (white) relative of George Washington. Thankfully, Scott lets him off the hook for all this:
“There is not a redeeming quality in slavery… He and Kamala should have just taken the one [controversial] sentence out.”
I’m not sure how Kamala was supposed to change Florida’s state history standards, but okay.
Famous Black Americans Who DeSantis’s Scholars Allege Gained Skills From Slavery
Source: https://twitter.com/etotheipie/status/1682802744095113216
This is all bizarre but necessary preamble, as it allows Tim Scott to give the whopper of the night:
“Black families survived slavery; we survived poll taxes and literacy tests; we survived discrimination being woven into the laws of our country; what was hard to survive was Johnson’s Great Society where they decided to take the Black father out of the household to get a check in the mail.”
The idea that Lyndon Johnson’s Great Society programs are responsible for tearing apart Black families is an old conservative trope. It rests on the assumption that poor Black families are so money-grubbing (or morally loose) that they would split up in order to receive a little extra welfare dough from the government (but for some reason white families wouldn’t). I’ve considered examining the economics behind this claim here, but it deserves its own post, which it will get soon. Consider this a teaser and a good reason to come back later in the week! (By the way, subscribe!).
Unleashing America(n Energy)
Throughout the debate, the topic of energy and the broader sentiment of unleashing the potential of the American economy were tightly bound together, so I’ll keep them together moving forward.
The energy talk began with a rambling Doug Burgum lamenting:
“Kerry… talk about the folly of climate policy making the world less stable and empowering dictators”... “Biden climate policies are the existential threat to America’s future”
He also notes that if :
“[Farmers] have a level playing field they can outcompete anyone in the world.”
I’m all for the American farmer, but it is a bit ironic that Burgum, who has been on his high horse about subsidies all night, is now going to bat for the most subsidized (and probably least competitive) industry in all of America. That said, farmers do important work in this country, but we shouldn’t delude ourselves into thinking that they don’t-need-no-government and that the much-maligned immigrant labor force doesn’t play a critical (though in this forum unmentionable) role in keeping them afloat. After all, Trump didn’t rapidly expand the H2-A visa program —allowing illegal immigrants to temporarily stay in America and work for farmers— for nothing.
Okay, now that we’ve got Doug Burgum out of the way, we can talk about the real candidates. Here’s Mike Pence:
“We achieved energy independence. We became a net exporter of energy for the first time in 75 years… Joe Biden declared a war on energy… said he was going to end fossil fuels… We’re gonna open up federal lands… we’re going to have an all-of-the-above energy strategy.”
If Biden is waging a war on energy, he’s losing. American oil production has reached record highs under his administration. The number of permits granted for oil drilling on federal lands has also exploded to levels higher than under Trump (As a candidate, Biden promised to suspend these permits). The oil companies have been burdened with a few extra regulations to protect the environment, prevent drilling in the Gulf of Mexico, and prevent hazardous oil spills, but it’s hard to say these have crippled American oil companies, who have been experiencing record profits.
Mike Pence is correct in saying we reached energy independence under his and Trump’s stewardship, though we got over two-thirds of the way there under Obama. However, in 2023, we’ve achieved record energy independence under Biden. This should raise a few eyebrows given the high price of gasoline, so allow us to explain why “energy independence” is something of a misleading political label. In politics, energy independence is defined as a situation where energy exports exceed imports. We’ve slightly passed that bar a few times, but it doesn’t mean we’re “independent” of producers in other countries. The price of oil is set on global markets. If the price of oil gets high, our oil companies are not patriots that refuse to sell abroad. They’re businesses that sell to the highest bidder. As a result, it doesn’t make much difference if our exports slightly exceed or fall short of our imports. To really attain energy independence, we would want a vast array of suppliers (so that a mere few couldn’t hold us hostage), a diversity of energy sources, or a large nationalized oil industry (like most other large oil-producing countries enjoy) to protect us against supply shocks. Anyways, one can dream.
Source: Energy Information Administration
To promote energy production, Vivek Ramaswamy advocates that we:
“run through the courts and get through the administrative state to make sure we’re using the natural resources here at home.”
But he takes a bizarre turn. He argues that part of the reason for our underutilization of resources is that too many people are sitting on the couch. He says we must:
“Put people back to work… We are using taxpayer money… stay at home rather than go to work.” (In fact, Vivek mentions this point twice throughout the debate and it gets echoed by Doug Burgum).
This is a bizarre case of Republicans being stuck two years in the past. Pandemic-era assistance to the unemployed is long over. Labor force participation has recovered to pre-pandemic levels for all but the oldest Americans and unemployment has been below 4% for more than eighteen months.
Source: FRED
Tim Scott also feels we’re not using our resources at capacity, though his prognosis has a more optimistic spin: We could create between:
“3-3.5 million jobs if we unleashed all of our energy resources. We’re the richest country if you combine coal, gas and oil…We’ve lost 100,000 factories in the last 25 years…We lowered the corporate tax from 35 to 21%, repatriated 1.7 trillion dollars, brought the unemployment rate for African Americans, Hispanics, and Asians to the lowest level in the history of the country.”
I’m not sure over what time period Scott thinks we could create 3-3.5 million jobs, but we’ve created over 13 million since Biden took office. Even if we exclude those resulting from pandemic recovery, we’re up 4 million jobs since the economy’s last peak in March 2020. So, the number doesn’t seem crazy even if we didn’t change much.
Scott’s claim about losing 100,000 factories is technically correct, but could create false impressions. It relies on a very broad definition of the word “factory” that includes almost any manufacturing workplace with at least five employees. Still, the trend he highlights is very concerning.
Scott’s estimated $1.7 trillion in financial repatriation is about right, but Scott overestimates its role in stimulating investment. Most of the funds were simply used for stock buybacks. Here’s the Fed’s take, based on its analyses:
“The analysis detailed here shows that funds repatriated in 2018 have been associated with a sharp increase in share buybacks. The evidence of an effect on investment is not as clear cut. While the data show an increase in investment in 2018 by the top repatriating firms, investment by such firms had already been on an upward trend prior to the TCJA, making it arguably more difficult to know how much of the increase can be attributed specifically to repatriation versus other contemporaneous factors, like other changes in policy or economic conditions.”
That said, it’s not likely that the tax cuts are what temporarily pushed the Black, Hispanic, and Asian unemployment rates to record lows. They had been heading downward since the recovery from the Great Recession began, and that marked the largest major economic recovery many minority groups experienced while facing considerably less labor market discrimination than they historically have. Regardless, Joe Biden now holds the record for the lowest Black and Hispanic unemployment numbers, though Trump still holds the record for Asian Americans.
There was also some general griping about government regulations holding back the economy:
“Make sure that every innovator in this country gets the government the hell off its back and out of its pocket so that it can innovate.” - Chris Christie
“reduce federal employee headcount by 75%, rescind 50% of unconstitutional federal regulations that are shackling businesses both large and small.” - Vivek Ramaswamy
And that’s not to mention Nikki Haley’s surprise attack on Ron DeSantis for effectively banning fracking and accepting green subsidies.
Other Tidbits
There are a few notable items that were not major topics of discussion but were interesting.
DeSantis criticized Big Tech, which:
“has a huge amount of power over our society… right now they’re monopolies… We need to reshore and we need to decouple [from China]”.
But his criticism was limited to their supposed crackdown on free speech. It’s not clear what Desantis would do to reduce the power of these monopolies. There’s a major antitrust trial going on right now involving Google; does he support the government’s position? His plan to decouple from China is also unknown. The general plan seems to be showering American corporations with gifts and tax cuts and praying they do what we want. That didn’t work terribly well under Trump, who saw nearly as many workers lose their jobs to trade as happened under Obama’s second term.
There was a little talk about the national debt, with Chris Christie lamenting the $7 trillion added under Trump and the $5 trillion added under Biden. But there wasn’t much excitement around this topic, perhaps because the candidates on stage know that the lingering government shutdown (ostensibly all about the debt) will provide bad optics for their party. Nobody seems sure how to reduce the debt either. They all support Trump’s tax cuts for the rich, which ballooned the debt under Trump, and they know that going after entitlement programs is extremely unpopular. Regardless, don’t get too freaked about the debt. The debt/GDP ratio, a better metric for understanding how sustainable the US debt is, is slowly declining though rising interest rates are driving up the costs of government borrowing.
Source: FRED
There was a lot of talk about immigration, though little of it was directly economic. At one point Ramaswamy was asked about how to prevent fentanyl from getting into the United States. After being told that 90% of fentanyl comes through legal ports of entry and much of it trafficked by US citizens, Ramaswamy ignored the information and babbled on about a wall (which, of course, would not stop fentanyl from coming through ports of entry). Ramaswamy, rightly, noted that drug abuse is also a demand-side problem (excellently explained in Angus Deaton’s famous book on “Deaths of Despair”), but he offers no solution except a tired reference to “faith-based” approaches to mental health and lamenting social media companies (because drug dealers sometimes use them). Ramaswamy also shared his unique interpretation of the 14th amendment which hinges on his misunderstanding of what it means to be “subject to the jurisdiction” of the United States government.
Here’s another unique Vivek idea. We should:
“Put the Federal Reserve back in its place. This is an agency that has gone rogue… [we need a] New chairman that places priority on dollar stability”.
This also feels like a line that should’ve been retired in 2021. Jerome Powell is a creature of Wall Street, but he’s been strictly pronouncing his commitment to prioritizing price stability for years now and has executed the interest rate hikes to back it up. As we’ve explained, Powell’s decisions are not primarily responsible for the declining inflation we’ve seen over the last several months. Ironically, while calling for everyone to get back to work, it seems that Vivek is urging Powell to embrace a tighter monetary policy that will result in millions of Americans being thrown out of work.
Conclusion
Pence warned in this debate about the “siren song of populism.” But that’s the least of the GOP’s concerns. Not a populist could be found on last night’s stage. Every candidate disregarded the UAW’s demands; every candidate stood by climate denial; every candidate opposed the old bogeymen of regulation, government spending, and taxation. When a candidate did have somewhat populist ideas, like promoting competition in industry, expanding access to childcare, or decoupling from China, no path to get there was ever traced out (aside from following Republican orthodoxy on issues like tax cuts). And no path will be. The “populism” among the GOP’s supposed mavericks is all bark and no bite. They use some decent-sounding rhetoric (often conveniently timed for jabs at Biden), but don’t have a sincere interest in fundamentally changing how our economy works. If they did, they’d move beyond their tried-and-failed methods of cutting taxes, regulations, and rules for the wealthy.
Great analysis and crisp, clear writing. Really enjoy your stuff. Although you did benefit greatly from them providing you with so much fodder :). Thank you and great work once again!
Can confirm - infant care is $14,400 a year for us for one (1) child.