Allentown – What do you do when your candidate is ten points down in the polls and embroiled in his SECOND earmark scandal of the election cycle? Well, if you’re the DSCC, you recycle false attack ads with claims that have already been debunked by multiple independent sources.
“The DSCC might as well stand for Desperation Senatorial Campaign Committee with the kind of false attacks they’re running on television these days,” Toomey Communications Director Nachama Soloveichik said. “If there is one candidate in this race who is doing the bidding of Wall Street and has put Social Security at risk it is Bailout Joe Sestak. Congressman Sestak voted for the Wall Street bailout – not once – but twice, and then took thousands of dollars in contributions from the banks he voted to bail out, while Pat Toomey adamantly opposed the Wall Street bailouts from the very beginning. Congressman Sestak has also voted for $3.5 trillion in deficit spending and has never sponsored or cosponsored legislation to protect Social Security funds from Washington big spenders like himself. In contrast, Pat sponsored and cosponsored multiple pieces of legislation when he was in Congress to protect Social Security from greedy politicians like Congressman Sestak. With a record like that, no wonder the DSCC is desperate.”
Consider the false claims:
Lie #1: “As a Wall Street trader, Toomey pioneered derivatives and derivatives nearly wrecked our economy.”
The Truth: Many outside sources have debunked this claim, but let’s do it one more time. The kind of derivates the DSCC ad is referring to are credit default swaps – the only kind of derivatives tied to the financial crisis. The problem is these derivatives were not created until 1991, after Pat Toomey left the derivatives businesses, and their first transaction did not occur on 1997, long after Toomey left the financial services sector.
- FactCheck.Org: FactCheck.Org did a fact check on the DSCC ad and was unequivocal in declaring the ad “wrong” and “false.” The site declares: “A Democratic Party ad says Republican Senate candidate Pat Toomey of Pennsylvania was a ‘Wall Street wheeler dealer’ trading in financial products that ‘wound up nearly destroying our economy.’ We find that to be false.”
FactCheck.Org goes on to say: “It is true that Toomey worked for about eight years, from 1984 to 1991, for investment banks (Chemical Bank and Morgan Grenfell). But Toomey was dealing at the time in the emerging markets of interest rate and currency derivatives, not the more risky credit default swaps that came later. It’s the over-the-counter credit default swaps (OTC CDS) that have been widely blamed for triggering the economic crisis, as professor Michael Greenberger of the University of Maryland School of Law said in his recent testimony before the Financial Crisis Inquiry Commission . . . Interest and currency swaps were either an aggravating factor in the economic meltdown (as Greenberger also testified) or not a factor at all. Albert “Pete” Kyle, a professor of finance at the University of Maryland’s Robert E. Smith School of Business told us: ‘The role of those kinds of swaps was very minimal.’ Democratic Sen. Arlen Specter, who lost to Rep. Joe Sestak in the Democratic primary, wrongly stated in one of his early TV ads that Toomey ‘sold risky derivatives called credit default swaps.’ And we called him on it. The DSCC avoided making that mistake, but the result is the same. Toomey was not dealing in the kind of derivatives that caused the economic crisis. (Annenberg Political FactCheck Website, 08/17/10)
- WGAL NBC 10: Matt Belanger, a reporter for the NBC affiliate in Lancaster, PA did a fact check on the DSCC ad on August 13, 2010 and found many problems with it. Belanger said: “We found this ad takes advantage of the fact that most people don’t understand complex financial issues . . . Before joining Congress, Toomey did work for several banks doing derivative work, even telling Derivative Strategy Magazine, quote, ‘We were dealing in various currencies, all kinds of interest rate and currency-related derivatives. . .’ But what you may not realize is there are several different types of derivatives and a form called credit default swaps is largely considered to be the most risky and what helped lead to the nation’s economic downturn. But Toomey’s campaign said he never worked with credit default swaps. Toomey left the banking industry in 1991, and this article from 1997 shows credit default swaps weren’t commonly being used by financial firms until several years later. So it’s misleading for the ad to make it seem like Toomey had a hand in the same financial method that led to the economic crisis.” (WGAL NBC, 08/13/10)
- The Pittsburgh Post-Gazette: “The Toomey campaign does bring up some key points. In fact, the DSCC ad mirrors an ad that Specter took out against Toomey last year — pre-party switch — that Factcheck.org lambasted . . . “Credit-default swaps, which have become a four-letter word these days — were not even invented until years after Toomey left the financial industry. Toomey worked in interest and currency rate swaps, which, his campaign notes, none other than Rep. Barney Frank, D-Mass., said wereimportant to protect in the Wall Street reform bill.” (Pittsburgh Post-Gazette, Dan Malloy, “Derivative ad from DSCC,” 08/13/10)
- The Allentown Morning Call: “Factcheck.org had checked out a similar claim made by Arlen Specterand determined it to be a false attack because the types of derivatives Toomey worked on are different than the credit default swaps that led to the financial meltdown.” (The Morning Call, Colby Itkowitz,” 08/13/10)
- The Associated Press: “The ad’s attempt to link Toomey to the troublesome derivatives is questionable . . . In the 1980s, Toomey traded currency and interest-rate swaps for two New York banks, but not the credit default swaps that insured mortgage securities.” (The Associated Press, “Dem Party Ad Targets Toomey in PA Senate Race” 08/13/10)
- FactCheck.Org: FactCheck.Org declared a similar ad against Toomey false back in April of 2009: “According to Forbes’ Investopedia, the first credit default swap contract was introduced in 1997. Derivatives Strategy magazine published an articlethat year that hailed ‘The Long-Awaited Arrival of Credit Derivatives.’ It put the genesis of the financial tool in 1991, with the introduction of ‘collateralized loan obligations,” but said it wasn’t until recently (1997) that credit derivatives “are actually being used in the real world by real financial institutions.’ Toomey’s derivative days ended back in 1991, when he took a leave of absence from his financial job, opened a restaurant with his brothers and then started his foray into politics. He was elected to the House of Representatives in 1999.” (Annenberg Political FactCheck Website, 04/02/09)
Lie #2: “Toomey has fought to privatize Social Security; it would give billions to Wall Street, but put your Social Security in the stock market.
The Truth: FactCheck.Org already debunked this ridiculous claim when Arlen Specter tried, unsuccessfully, to use it against Pat.”
- FactCheck.Org wrote: “Finally, the ad charges Toomey ‘even wants to gamble our Social Security … in the stock market,’ a misleading reference to his support for President Bush’s plan to allow younger people to voluntarily put some – not all – of their Social Security taxes in mutual funds . . . The last claim in the ad is a mischaracterization and a variation of an allegation we’ve heard repeatedly in congressional and presidential races. Toomey, the narrator says, ‘even wants to gamble our Social Security accounts in the stock market.’ That’s a reference to Toomey’s support for President George W. Bush’s plan to allow younger workers to invest a portion of their Social Security taxes in mutual funds that would be run by the government. Contrary to the impression given in the ad, though, the plan would have been totally voluntary; individuals could have stuck with the current system. And in any case, only part of anyone’s account could be invested this way.” (Annenberg Political FactCheck Website, 04/02/09)
Fact #1: Joe Sestak voted to bail out Wall Street twice and then took thousands of dollars from companies that he voted to bail out.
- RC #681, 10/03/08: Sestak vote Yes.
- RC #27, 01/22/09: Sestak voted No. CQ Description of the vote: “Passage of the joint resolution that would prevent the release of the second half of the $700 billion provided under the 2008 financial industry bailout law.” A “No” vote was to allow the release of the second half of the bailout money.
- Joe Sestak Received $29,100 from banks that received TARP funds after the vote on TARP on 10/3/2008 (Center for Responsive Politics).
Fact #2: Pat Toomey opposed the Wall Street bailouts from the very beginning.
- “The Treasury’s bailout proposal will likely cause more harm than good. Instead of launching the largest government bailout since the Depression, the government should be implementing policies to stimulate the economy.” (Press release, 09/22/08, Club for Growth Condemns Federal Bailout)
- “‘Such a large takeover by the government will surely be accompanied by adverse, unintended consequences,’ said Pat Toomey, president of the Club for Growth, a conservative advocacy group. ‘Already, other companies and industries are lining up at government’s door asking for their own bailout.’” (Washington Times, 09/23/08)
- “The bailout plan is fundamentally unfair to American taxpayers and responsible borrowers and lenders. The bailout misallocates capital, risks massive inflation, invites political manipulation, and sets a bad precedent for future bailouts down the road. Already we are witnessing other industries lining up for their share of the government’s handouts.” (Press release, 09/24/08, Club for Growth Statement on President Bush Speech”)
Fact #3: Pat Toomey fought to protect Social Security when he was in Congress. Joe Sestak has voted for trillions of dollars in new deficit spending, borrowing money from Social Security.
- The Allentown Morning Call wrote: “The political crosswinds were extra intense for Toomey, who has been a leader in demanding that Uncle Sam stop slipping IOU’s into the Social Security till … The Lehigh Valley freshman described the vote as the toughest of his four-month congressional career. He was among 38 Republicans to break rank with his party on the vote. It came after he tried in two different ways to offset the unbudgeted spending” (Morning Call, 05/07/99).
- Pat led an effort to stop Republicans from using Social Security funds to pay for Pentagon activities in Kosovo, sponsoring an amendment that called for up to 5% cuts in many federal programs to offset the costs of the $12.9 billion military spending bill instead of using Social Security to foot the bill. When Congress rejected his efforts he voted against funding the Pentagons’ activities (RC #117, 05/06/99) (RC #120, 05/06/99) (Morning Call, 05/07/99).
- Pat was a lead sponsor on the Social Security Protection Act of 2002 (HR 3981) to make it out of order in the House of Representatives or the Senate to consider legislation that would reduce Social Security benefits to Social Security beneficiaries.
- Pat played an important role in convincing GOP leaders to end the practice of borrowing surplus Social Security tax revenues and spending them on other federal programs in the GOP’s FY 2000 budget. (Morning Call, 03/25/99, 04/13/99)
- In his first year in Congress, Pat cosponsored the Social Security and Medicare Safe Deposit Box Act of 1999 (HR 1259) to protect Social Security surpluses through strengthened budgetary enforcement mechanisms.
- Pat cosponsored the Social Security Surplus Preservation and Debt Reduction Act (HR 1803, 1999) to preserve and protect the surpluses of the Social Security funds by reaffirming the exclusion of receipts and disbursements from the budget, by setting a limit on the debt held by the public, and by amending the Congressional Budget Act of 1974 to provide a process to reduce the limit on the debt held by the public.
- Pat was an original cosponsor of the Social Security and Medicare Lock-Box Act of 2001 (HR 2), a bipartisan bill to safeguard the combined surpluses of the Social Security and Medicare hospital insurance funds.
- In contrast, Joe Sestak has NEVER sponsored or cosponsored a bill or put himself on the line to fight to protect Social Security. Over his three and a half years in Congress, Congressman Sestak was a prolific sponsor and cosponsor of bills, putting his name on 1,363 pieces for legislation, but he refused to sponsor or cosponsor a single piece of legislation to protect Social Security from Washington big spenders like himself. Even while Democrats and Republicans introduced a variety of measure to protect Social Security, Congressman Sestak was too busy fighting for more deficit spending to sign on to any of those measures.