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Breaking: Politicians not always honest


If television commercials and direct mailers are to be believed, the north country's congressional race is a contest between Gordon Gekko, R-Cayman Islands, and the third member of the Barack Obama, Nancy Pelosi Democratic troika.
But those spots often resort to what Mark Twain might call “stretchers” — factual inaccuracies, distorted claims or outright falsehoods. Here are some recent claims in the race between Republican Matthew A. Doheny and Rep. William L. Owens, D-Plattsburgh, and how they stand up to the truth.
Tax breaks for outsourcers
Fliers from the state Democratic Party claim that Mr. Doheny supports keeping tax breaks for companies that ship jobs overseas.
That is unequivocally false.
Rich Horner, the state Democratic Party's executive director, did not respond to messages requesting comment. But a footnote shows that the claim is based on the Americans for Tax Reform pledge. Mr. Doheny is one of many Republicans who signed the pledge. By signing the pledge, the candidate agrees not to support increases in the marginal tax rate for the income tax. But signers can support ending tax breaks for businesses. Here's how: When a tax break is ended, the government will ostensibly take in more money, at least in the short term. But instead of putting that extra money in the budget, the candidate has to support using the added revenue to drive down tax rates.
And that's exactly Mr. Doheny's position. Specifically, Mr. Doheny said he supports eliminating a company's ability to deduct from its taxes the cost of moving people or machinery overseas. It's literally a tax break to move jobs overseas.
“By removing that deduction, you could reduce the actual (corporate tax) rate,” Mr. Doheny said. “That's how we're going to make America competitive.”
Mr. Owens also supports eliminating that tax break. Mr. Owens said he'd go a step further, by providing tax breaks to companies that bring jobs back from overseas to the United States. A Harvard economist questioned the wisdom of that move in a Boston Globe editorial, and Mr. Doheny shared the concerns — specifically, a company could end up getting a tax-break windfall with a few accounting maneuvers to make it seem like it's bringing jobs back to the United States. Mr. Owens said that strict controls could help avoid that.
So Mr. Doheny can and does support eliminating tax loopholes for companies that ship their jobs overseas, just like his opponent, Mr. Owens. Mr. Dohney is able to do so even while staying true to the Americans for Tax Reform pledge.
Business background
The fliers also question Mr. Doheny's business dealings. The two claims: He bought an island, and he worked for a tax-dodging finance firm, Fintech Advisory.
Each of the claims takes a shred of fact and distorts it.
In one case, the facts are literally distorted, or at least the image is. “He bought this island and ran for Congress,” the flier claims above a photograph of a bird is shaded a tropical pink.
The animal appears to be a great blue heron that has been digitally altered. Great blue herons are native to the north country, but they don't look like that. The distortion leaves readers with the impression that Mr. Doheny bought a slice of tropical heaven.
But the island is actually part of the Thousand Islands, a region that gets quite cold in the winter.
“I own a place in Goose Bay, on the St. Lawrence River, in my hometown of Alexandria Bay,” Mr. Doheny said. “This is part of my opponent's tactics, to distort the truth, to lie, and to hide his own record.”
(A fact check within a fact check: It wasn't Mr. Owens who made the claim, but the state Democratic Party, which does support Mr. Owens.)
The fact that Fintech was based in the Caymans, and therefore could avoid United States corporate taxes, requires some context, too, Mr. Doheny says. A legal entity that was part of Fintech was based in the Caymans. But he wasn't involved in the decision to base it there; he also didn't benefit from it, he said, because he didn't have an ownership stake in the company. And he paid at or near 35 percent effective tax rate on his federal income taxes in each of the past five years, he told the Times several months ago.
He was based in New York state, including working out of an office on Washington Street in Watertown.
That won't be enough to placate some critics of offshore tax havens. Robert S. McIntyre, of the Citizens for Tax Justice, said that the primary reason that most companies are based overseas is to lower their tax liabilities and avoid U.S. taxes.
Mr. McIntyre argued that Mr. Doheny may have benefited from the company's offshore status.
“If the company was avoiding taxes and regulations, they might have been able to pay him more,” Mr. McIntyre said. “If he wasn't running the company — at some point, you might not want to work for a company that's based in the Cayman Islands.”
But Mr. Doheny argued that it's a dicey proposition to criticize companies that are based overseas at a time when officials — like Mr. Owens — are trying to get overseas companies to set up shop here.
“The criticism that people who work for entities and companies that are based overseas... it's flat out wrong, and it would hurt our district,” Mr. Doheny said, citing Bombardier, a Canadian-based company that is expanding in Plattsburgh, as an example.
Mr. Owens said he saw a difference between the two approaches.
“If a Canadian company invests money here to build a plant to expand their business, that is different than a U.S. company transferring money to the Caymans for the sole purpose of hiding it in the Caymans,” Mr. Owens said.
Health care claims
The two campaigns also had something of a back and forth on Medicare and President Obama's health care overhaul.
In a National Republican Congressional Committee ad launched last week, Mr. Owens is accused of supporting $716 billion in cuts to the Medicare program. A Doheny ad made a similar accusation, while splicing in menacing photographs of Mr. Owens, House Minority Leader Nancy Pelosi, and President Obama.
The claim has been repeated many times, and the fact-checking website has rated similar claims as “half-true” at best.
President Obama's health care law doesn't actually cut current funding from Medicare; it reduces future spending in the program over 10 years. It takes those reductions to help fund Mr. Obama's health-care law.
Some argue that that's a cut. Others say that it isn't. But at the end of the day, will it hurt beneficiaries? That's a question that straddles an ideological debate. Conservatives tend to say yes; liberals tend to say no.
“It doesn't come out of benefits,” said Igor Volsky, a deputy editor of Think Progress, a production of the liberal Center for American Progress. “You simply lower the rate of growth over 10 years.”
So the law, Mr. Volsky said, cuts spending, but does so by eliminating “waste, fraud and abuse.” In the end, the lifespan of the Medicare program is extended to 2024, he said.
The spending reductions don't touch beneficiaries; instead, they change the way that hospitals and insurance companies are paid for providing services, particularly the Medicare Advantage program, Mr. Volsky said. The government pays 18 to 19 percent more for private Medicare Advantage plans than it does for typical Medicare, Mr. Volsky added.
“Those cuts are there, but the way they're being characterized, that's inaccurate,” he said. "I think the Affordable Care Act is a very good down payment on lowering costs for health care, and particularly Medicare."
Rea Hederman, an official at the conservative, Washington, D.C.-based Heritage Foundation, said that hospitals won't be able to cope with those spending reductions. And he said that Congress will have to come back and make up for a hole in funding to hospitals, meaning that eventually, Mr. Obama's health-care law won't be “deficit-neutral,” as supporters claim. Either that, or 15 percent of hospitals and nursing homes could go bankrupt, Mr. Hederman said.
“It's impossible for (health-care providers) to live up to the cuts in Obamacare,” Mr. Hederman said. “They don't think it's going to happen.”
Democrats are often quick to point out that those same spending reductions are included in the budget put forward by Rep. Paul Ryan, R-Wisc., the No. 2 on the Republican ticket.
Which brings us to...
The Ryan budget
Mr. Doheny's position on the Ryan budget is frequently cited in Democratic ads and news releases.
What, exactly, is his position?
He would have voted against it, because it wouldn't have balanced the budget quickly enough. In the parlance of the Owens campaign, that translates to: “Matt Doheny is the one who wants to cut Medicare. Matt Doheny said the Ryan budget that essentially ends Medicare didn't go far enough.”
That was from a commercial that started airing in the Watertown market in mid-September.
But Mr. Doheny hasn't said that he wants to “cut Medicare.” In fact, he hasn't said anything about Medicare as of Sept. 17, other than to say that the program should remain unchanged for current beneficiaries or those approaching retirement age. The Owens campaign is engaging in a bit of mind-reading on Mr. Doheny's positions.
Asked whether he would cut Medicare, Mr. Doheny said the campaign would address specifics on the program at a later date. Fact-checkers have also pilloried the claim that the Ryan budget “essentially ends Medicare.” Similar claims were named the “Lie of the Year” by The "essentially" qualifier might — repeat, might — save the Owens campaign from Politifact's wrath.
The Ryan budget would maintain Medicare for anyone current receiving benefits, and wouldn't change it for anyone over the age of 55. It would provide federal subsidies for future seniors to buy private insurance on a regulated market in the future.
But again, it's important to note that in the year that he's been actively campaigning, Mr. Doheny hasn't taken a position on the matter.
And on his opposition to the Ryan budget, he also doesn't specify how much faster he'd like it to close the budget gap. The Ryan plan could take as long as 50 years, according to Mr. Doheny.
The broader question here isn't factual. It's actuarial. Can one support cutting taxes, not changing Social Security for retirees and those approaching retirement age, not changing Medicare for those who are over 55, and also more limited cuts to the military than the $500 billion that are currently on the table, while also advocating for a budget that eliminates the deficit more quickly than the Ryan budget?
Mr. Doheny said it's possible, because tax cuts could spur the economy. He also said that he's not averse to military cuts per se, but won't put a number on it.
“Things would be different if we had unemployment at 6 percent, wage growth, people are investing, people are growing,” Mr. Doheny said.
But it strikes some liberals as difficult to accomplish.
“That sounds to me like something that's impossible, particularly since a lot of that spending, if you are going to cut spending, is in places like Medicare,” said Mr. Volsky, of the Center for American Progress. “So if you're not touching Medicare for 10 years, not touching Social Security, not making that up with revenue, that's hard to do. We heard that during the Bush years, these magical pro-growth policies that are going to make our economy grow. That's certainly not what happened.”
The Heritage Foundation, meanwhile, has put together a budget that would close the deficit within 10 years, much more quickly than the Ryan plan. But it also cuts Social Security and Medicare for those who are older than 55, which Mr. Doheny said he wouldn't support.
“I think this really illustrates the fact that there are some really really difficult choices to make,” said Alison A. Fraser, the Heritage Foundation's director of economic policy study.
Taxes in Obamacare
A Doheny ad and an Owens ad both oversimplify a complicated story on taxes.
First, the Doheny ad. The ad claims that Mr. Obama's health-care overhaul raised taxes by $1 trillion, and concludes that this means, "Higher taxes."
In fact, according to a report by the Joint Committee on Taxation, the law will raise $675 billion in taxes between 2013 and 2022.
To be sure, that doesn't count penalties that people and companies that don't buy insurance will incur, according to But it still doesn't get to $1 trillion. Taxes, of course, are subject to fluctuation, and these are preliminary estimates. The chairman of the House Ways and Means Committee had a different analysis, which surpassed that $1 trillion threshold.
Also, it's important to note that these aren't broad-based taxes. The biggest increase, which would raise $318 billion over 10 years, is an increase in Medicare payroll taxes of 0.9 percent for those who make more than $200,000. There are also taxes on drug importers and, importantly, medical device manufacturers. Several medical device manufacturers are based in the new part of the congressional district, so it became a parochial concern after redistricting.
And that is a subject on which Mr. Owens is attempting to defend himself. But his campaign went a bit too far in saying: "Bill Owens worked with Republicans to repeal the Obamacare tax increase on businesses."
The campaign based that on Mr. Owens' vote to repeal a tax on medical device manufacturers, which will raise $29 billion in 10 years.
But that's far from the only new tax on businesses, and using the all-inclusive "the tax" instead of what would have been a more accurate "a tax" is misleading. There are hundreds of billions more — surpassing $1 trillion, by one House Republican estimate — that are still going into effect over the next 10 years.
Also, what goes unstated in the ad is that the medical device manufacturers tax repeal didn't actually pass the Senate, which is necessary before it becomes law. The ad doesn't establish that.

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