This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fact-Stretching in Presidential Debate

NEW YORK ( TheStreet) -- Grab your pizza and popcorn, folks -- it's U.S. presidential debate season!

Every four years, we're treated to the spectacle of two men jockeying for power in the world's most powerful nation -- and predictably, this involves ample fact-stretching and twisting. At Fisher Investments, we're politically agnostic: We prefer neither party over the other, finding much to dislike (and occasionally something to cheer) in both parties' policies and proposals.

Either party is capable of implementing market-friendly reforms, and both have borne responsibility for some rather disruptive regulation throughout history. And during the first debate, both candidates proved adept at painting a rather fuzzy economic picture. Here, Fisher Investments reviews each candidate's portrayal of the U.S. economy.

We start with the challenger: former Massachusetts governor, Republican Mitt Romney.

Statement: Romney described this year's economic growth as "slower than last year, and last year slower than the year before."

Looking purely at percentage-based growth rates, this is true. Real U.S. GDP grew 2.4% in 2010 and 1.8% in 2011, and 2012's first half was slower than 2011's. But much of that slowness comes from higher imports -- a sign of healthy domestic demand -- and falling government investment.

Strip those components out, and the picture looks different. Total household spending and private investment rose $352.6 billion in 2011, higher than 2010's $330 billion increase (measured in 2005 dollars). The GDP components that better reflect the economy's health are more resilient than Romney's general statement would suggest.

Statement: "I'm not going to keep spending money on things to borrow money from China to pay for."

He won't necessarily have to -- China doesn't own a huge share of our debt. In fact, our biggest creditor is, well, ourselves: 66.6% of net public debt is owned either by the federal government or domestic investors. China owns a whopping 7.4%.

According to Fed and Treasury data, U.S. households have purchased significantly more Treasuries than foreigners in recent quarters, and China's purchases have lagged other nations'. One can't exactly say China is financing the U.S. government.

Statement: "Spain spends 42% of their total economy on government. We're now spending 42% of our economy on government. I don't want to be Spain."

Good, because we're not Spain. Not even close.

First, consider Spain's situation isn't all about debt. In fact, Spain's federal debt-to-GDP ratio wasn't high by global standards in 2010, when peripheral debt fears first took hold. Spain's situation is as much or more about economic competitiveness than about debt.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.51 2.00%
FB $117.78 -0.67%
GOOG $695.82 -0.34%
TSLA $233.06 -3.60%
YHOO $36.09 -1.20%


Chart of I:DJI
DOW 17,752.14 -139.02 -0.78%
S&P 500 2,065.06 -16.37 -0.79%
NASDAQ 4,775.9440 -41.65 -0.86%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs