Fact Checker

Fact Checker: Attack ad accuses Ernst of making Iowans 'squeal'

An Iowa Democratic Party attack ad accused Republican U.S. Sen. Joni Ernst of favoring special interests. (Screenshot of
An Iowa Democratic Party attack ad accused Republican U.S. Sen. Joni Ernst of favoring special interests. (Screenshot of ‘Making Iowans Squeal’)

An Iowa Democratic Party attack ad called “Making Iowans Squeal” launched last month, accusing U.S. Sen. Joni Ernst, a Republican up for reelection this year, of being loyal to special interest backers and not to her constituents. The attack ad is a nod to her viral “Make Washington Squeal” TV ad during her 2014 run for office.

Analysis

We will look at these claims from the minute-and-a-half ad: “Ernst voted for a tax bill that benefited wealthy corporations and added trillions to the debt;’ “Sen. Ernst also voted to repeal the Affordable Care Act and gut protections for the 1.3 million Iowans with a preexisting condition;’ and “experts accuse her of breaking the law.”

The Fact Checker requested sourcing for all of these claims, which the state Democratic Party provided.

The first claim has four parts to evaluate.

How did Ernst vote on the 2017 tax reform bill? Did corporations benefit? Did the bill add trillions to the debt? Finally, the ad features a news clip reporting the fifth round of layoffs at John Deere Iowa facilities within a few months. We will examine how John Deere layoffs relate to the bill.

Ernst was one of 51 senators voting ‘yea’ in December 2017 to pass the Tax Cuts and Jobs Act in a partisan vote in which all but one Republican voted in favor and all Democrats opposed.

The legislation, which has been tweaked since being passed, included reforms for individuals and corporations.

The bill capped the maximum federal corporate tax rate at 21 percent, down from 35, and “greatly expanded first-year depreciation write-offs for business equipment additions,” according to an analysis by MarketWatch.

Many large companies used new revenue to reward shareholders rather than invest in the company and employees, which was supposed to be a key benefit of the law, according to the Associated Press and Harvard Business Review based on a review of S & P 500 Index.

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The Index tallied a combined $806 billion in corporate stock buybacks in 2018, up from a previous record of $590 million in 2007. Buybacks in 2019 were on pace to come in second highest of all time, behind 2018, according to Harvard Business Review.

On the federal debt claim, Treasury Secretary Steven Mnuchin said in 2017, “Not only will this tax plan pay for itself, but it will pay down debt.”

Treasury data shows federal debt has grown from $20 trillion when the law passed to $24 trillion as of this month. The debt was $23.4 trillion on Feb. 28, well before COVID-19 impacts.

The annual deficit is on pace to top $1 trillion beginning in 2022, according to the Congressional Budget Office.

The Iowa Democratic Party said the reference to John Deere is an example of a company that benefited from the tax cuts and used its windfall on dividends and stock buybacks “while leaving workers behind,” which is a line in the ad.

The Center for Public Integrity, based on Securities and Exchange Commission annual filings, found John Deere generated $2.15 billion in U.S. income before taxes in 2018, yet owed no U.S. taxes. Rather, it reported being owed $268 million after taking into consideration various deductions and credits.

The Center identifies itself as a nonprofit investigative journalism organization funded by the Carnegie Corporation, the Leonardo Di Caprio Foundation, the Knight Foundation and other donors,

Reuters reported Deere paid $1.8 billion in dividends and bought back about $950 million of its shares in 2018. Deere’s 2020 annual proxy statement reported returning nearly $2.2 billion to stockholders in the form of dividends and share repurchases in fiscal 2019.

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News reports document 340 worker layoffs between October 2019 and May at five Iowa John Deere factories.

Next, we will check the claims about Ernst’s votes on the Affordable Care Act and to “gut protections for the 1.3 million Iowans with a preexisting condition.”

In a previous Fact Checker, we found Ernst voted for the Better Care Reconciliation Act, the Obamacare Repeal Reconciliation Act and the Health Care Freedom Act — three proposals developed in the Republican-controlled Senate.

These proposals would have repealed the Affordable Care Act in various capacities, according to a July 2017 New York Times article.

Ernst was also among 51 Senate Republicans who voted to begin debate on the American Health Care Act, a repeal and replace option passed by the House in May 2017. Under this, insurers would be allowed to set premiums based on patients’ health status if that patient had allowed coverage to lapse, the Congressional Budget Office reported.

Provisions within the Affordable Care Act prohibit insurance companies from imposing preexisting condition exclusions or imposing increased premiums for customers with these conditions. Repealing the legislation would take away these protections, opponents said.

In August 2018, PolitiFact found under the Better Care Reconciliation Act, “coverage for people with preexisting conditions would have been more expensive and less accessible.”

In its sourcing, the Iowa Democratic Party stated Ernst supported an amendment to the Better Care Reconciliation Act that “would have weakened protections for preexisting conditions.”

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The amendment, put forth by U.S. Sen. Ted Cruz, R-Texas, would allow insurers to sell some policies that would not be required to follow all Affordable Care Act market rules. That means these sellers could turn people down or charge them more or “could exclude coverage for preexisting conditions,” according to the Kaiser Family Foundation, a nonprofit foundation that focuses on major U.S. health care issues.

In a June 2017 interview with the Des Moines radio station WHO-AM, Ernst said she was “generally supportive” of the Cruz amendment to the Better Care Reconciliation Act, which ultimately failed with <URL destination="https://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=115&session=1&vote=00168">Ernst voting for it.

</URL>For numbers of Iowans with preexisting conditions, the Iowa Democratic Party pointed to an October 2019 analysis by the liberal Washington, D.C.-based think tank Center for American Progress. Its data estimated 1.29 Iowans under 65 have a preexisting condition.

And finally, we will check whether “experts accuse her of breaking the law.”

Within its ad, the Iowa Democratic Party references a December 2019 investigative report by the Associated Press that found an outside political nonprofit called Iowa Values worked closely with the Ernst organization to raise money and campaign for her reelection, “a degree of overlap that potentially violates the law.”

The AP quoted two sources identified as experts, including an attorney with the nonpartisan Campaign Legal Center in Washington, D.C., who stated it’s “clear that the goal of Iowa Values is to re-elect Joni Ernst, which may violate its tax-exempt status.”

Watchdog groups filed complaints with the Federal Election Commission, seeking an investigation into Iowa Values. The independent federal agency has not been able to conduct official business after the resignation of a commissioner in August left it without a four-person quorum.

Iowa Values, which states on its website its intention to bring a conservative voice to state policy discussions, describes itself as a nonprofit, nonpartisan forum “not authorized by any candidate or committee.”

In June, Iowa Values announced it had invested “six-figures” in a digital advertising campaign, according to Iowa Starting Line.

Conclusion

The Iowa Democratic Party accurately stated the Iowa senator’s votes in favor of the tax bill that benefited wealthy corporations, including John Deere, but also among other taxpayers.

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The ad accurately portrays how Ernst’s support of repealing the Affordable Care Act would impact those with preexisting conditions, including thousands of Iowans.

The ad also accurately stated “experts accuse her of breaking the law,” although no official ruling has been made on whether election campaign violations occurred. Overall, Fact Checker gives these specific claims contained in the ad an A.

Criteria

The Fact Checker team checks statements made by an Iowa political candidate/officeholder or a national candidate/officeholder about Iowa, or in ads that appear in our market.

Claims must be independently verifiable.

We give statements grades from A to F based on accuracy and context.

If you spot a claim you think needs checking, email us at factchecker@thegazette.com.

This Fact Checker was researched and written by B.A. Morelli and Michaela Ramm of The Gazette.

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We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

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