Republican gubernatorial candidate Terry Branstad is rolling out two new commercials this week to highlight the campaign’s new applications for Droid, Blackberry, iPad and iPhone. I’m not a smart phone user, so others will have to review the applications.
The main thing I learned from the television ads, which I’ve posted below, is that no amount of fact-checking will deter Terry Branstad from lying about the I-JOBS infrastructure bonding program.
UPDATE: The Iowa Democratic Party produced a web video imagining what a Terry Branstad app would really look like. “Nothing says innovation quite like moving backwards.”
First version of “We’ve got an app for that”:
My transcript:
[Visual shows what looks like an iPad, with person’s hands shifting from one graphic to another] Male voice: Under Terry Branstad, unemployment was the lowest in state history, and nearly 300,000 new jobs were created. Under Chet Culver, unemployment’s nearly doubled, and almost 114,000 Iowans are out of work. Want a brighter future? We’ve got an app for that [Branstad looks up from computer tablet, smiles at camera].
In the mid-1980s, Iowa’s unemployment rate peaked higher than it is today. However, Branstad was fortunate to leave office in 1999, near the height of a nationwide economic boom. Culver’s first term was marked by the worst national recession in 60 years, which has brought unemployment to record levels in most states. Jobs were created during Branstad’s 16 years as governor, but not as many as he had promised to create in his various re-election campaigns. This fact-check appeared in the Sunday Des Moines Register on September 19:
In his 1982 campaign, Branstad laid out the goal of creating 180,000 new jobs, according to press reports from the time. In his first term, the number of employed Iowans grew by 70,000, according to the Iowa Department of Workforce Development.
In 1994, Branstad similarly set a five-year goal of 300,000 jobs. Workforce Development statistics show the number of employed Iowans rose by roughly 66,000 during that period.
Governors have little impact on unemployment and job growth, economists say.
“Unemployment and job growth are factors that go up and down and are outside the control of any one government leader,” said Ernie Goss, an economist at Creighton University in Omaha.
Remember, Branstad’s fourth term coincided with a national economic expansion, but he didn’t even come close to his 300,000-job goal.
Second version of “We’ve got an app for that”:
The visuals are similar; for most of the 15-second commercial, the viewer is looking at a smart phone application on screen. Then Terry Branstad looks up and smiles at the camera toward the end. My transcript:
Terry Branstad has already created nearly 300,000 jobs and plans to create 200,000 more. Chet Culver’s jobs plan will cost taxpayers $1.7 billion and won’t create any new jobs. Want a brighter future? We’ve got an app for that.
Yet again let’s recap the Branstad campaign’s lies about I-JOBS.
The bonding program won’t cost $1.7 billion. That was the original estimate when the legislation was being drafted, but the bonds were eventually sold at lower interest rates, driving down the borrowing costs. Branstad knows this number is exaggerated; it’s been fact-checked many times, most recently in the Register on September 19.
It’s true that as originally projected, the state’s total cost for the program with interest would have been about twice the $875 million being spent on projects. The statement is not correct now, however, because the state obtained a much lower interest rate than was first estimated. Plus, the federal government will pay $118 million of the interest costs. Iowa will take on roughly $780 million of debt for the I-JOBS program and pay an estimated $463 million in interest, according to the Iowa State Treasurer’s records. The final $180 million of I-JOBS borrowing will be done later this year. The treasurer has projected the highest-cost scenario for the total cost of the program at $1.265 billion, depending on the final interest rate the state receives for the last portion of borrowing. The total payments are expected to be less than $55 million a year for 23 years.
Even though the numbers cited by Branstad aren’t correct, the bigger point he makes is that Iowa is getting less for its money in the long term by paying off debt for decades. Debt has become a major issue on the state and national levels. Branstad prefers a “pay-as-you-go” approach.
Culver argues that I-JOBS is an appropriate use of debt because of these factors: 1.) More than a third of the I-JOBS money is going to flood recovery and mitigation projects. Failing to act quickly would jeopardize life and property should the state experience more floods, as it did in 1993, 2008 and this year, Culver has argued. 2.) Interest rates are among the lowest in history, making it cheaper to build now than if building costs and interest rates rise in the future. Inflation from 1987 (23 years ago, which is the length of the I-JOBS loans) increased costs by 192 percent, according to the U.S. Bureau of Labor. At a similar rate of inflation, spending $875 million now would buy more than if the state followed a pay-as-you-go plan, Culver’s staff has argued. 3.) The I-JOBS program so far has allocated $587 million and leveraged another $960 million in federal, local and private contributions or matches, according to a preliminary report from the Iowa Department of Management. Some of that match money, in particular federal stimulus money, would not be available in future years.
Branstad’s commercial also misleads by claiming I-JOBS will cost “taxpayers” $1.7 billion. Gambling revenues will repay the bonds, so the only taxpayers directly paying for the infrastructure program are those who spend money at Iowa casinos. Quite a few of those people come from out of state, by the way.
Furthermore, many of the I-JOBS grants have created and saved jobs. The state Department of Management’s lengthy report on I-JOBS (pdf) has plenty of details on that. That report’s exhibit B (pages 93 through 101) showed how much money private donors and local government contributed to various projects that received I-JOBS grants. Those stakeholders would not invest resources during a recession unless they believed in the long-term economic benefits of the projects.
Before I end this post, here’s one more bonus fact-check from the Register. During last week’s gubernatorial debate and in previous campaign commercials, Branstad has said he left Iowa with a $900 million surplus. That’s not accurate either:
Iowa had a $415.1 million ending balance, plus a balance in reserve accounts of $439.2 million, which totals $854.3 million, when Branstad departed. The true surplus was the ending balance, or $415.1 million, according to the Legislative Services Agency. Restrictions apply to how reserve accounts can be spent, so it’s not entirely accurate to label them as surpluses, said the LSA’s Holly Lyons.
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