While Chris Murphy and Linda McMahon ran away with their respective primary wins in this year’s U.S. Senate race, the general election promises to be much, much closer. And if history is a guide, that means we may see plenty of ads on the airwaves for the next couple months that skate mighty close to – and occasionally over – the edge of accuracy.
That, anyway, is the case with the latest ad from Murphy, the Democratic candidate, which stretches language to make points about McMahon’s business record and political platform.
The ad, titled “McMahon’s WWE Record Exposed,” begins with a pointed look at McMahon’s tenure as CEO of World Wrestling Entertainment, the successful if tacky enterprise that made her a multi-millionaire. But rather than focusing on the crass programming as past political foes have, Murphy takes aim at McMahon’s business decisions, saying her plan for the company included using offshore bank accounts (which the ad illustrates with an image of palm trees on a beach) in order to “shift profits overseas to avoid U.S. taxes.” The ad also says McMahon had a plan to deny employees health and disability insurance coverage to boost profits.
Neither claim is completely accurate.
According to Securities and Exchange Commission documents, WWE’s overseas earnings included $4.1 million that the company said it planned to reinvest in the countries in it which the money was earned, which under I.R.S. rules makes the earnings taxable only in the foreign countries. It is a stretch to describe that as “shifting” profits overseas, a tax-dodging scheme in which companies take profit earned in one country and fiddle with the books in order to credit those earnings to offices – sometimes with no employees – in a different, low-tax country. And given that WWE has authentic operations in foreign countries, it is an even bigger stretch to evoke “offshore bank accounts” – a term universally understood to refer to accounts set up for the purpose of concealing U.S. assets. WWE’s bank accounts in England – it’s largest international market – or Germany are not fairly described as “offshore bank accounts” as that term is commonly used.
There is a far less serious shading in Murphy’s claim on employee health benefits. Critics for years have blasted WWE for failing to provide health and disability insurance to current and former performers (though the company says it covers injuries suffered in the ring). But are those performers “employees”?
On the books, the company’s wrestlers are independent contractors, with negotiated personal-services contracts that set the terms of their compensation, which starts around $100,000 a year and averages $250,000, according to WWE. The company’s traditional full-time employees — secretaries and the like – do receive health benefits, while the wrestlers don’t. WWE defends that disparity saying the performers are paid wages “easily enabling them to afford health insurance.” The Murphy campaign stands by its description of the performers as “employees,” saying at least some contracts include exclusivity clauses barring the wrestlers from working for any other company, and also noting that a broad definition of the word employee includes anyone paid by a firm for work. Nevertheless, while criticizing WWE’s lack of benefits is entirely fair game, given the complexity of the issue, the ad would have been more accurate using a word other than “employees.”
The ad then shifts to McMahon’s current economic proposals, saying her plan includes “tax cuts for the wealthy” that would yield a $7 million tax break for herself, while hurting the middle class with plans to cut Medicare and education.
McMahon has in fact endorsed extending the Bush-era tax cuts for the wealthiest Americans, and under her tax proposal wealthy taxpayers would in fact pay less than they do now. And using McMahon’s 2010 income figures, there is a scenario under which her plan would lead to a tax liability for McMahon that was $7 million lower than her tax liability under a different plan.
But there’s a problem with that $7 million figure that we’ve addressed before in this space. Last month, McMahon ran an ad suggesting her tax plan would cut the average Connecticut family’s federal income taxes by $6,000 a year. Among a number of problems we cited in that ad was the fact that it failed to disclose that the purported savings did not represent a drop from what families currently paid in taxes, but rather was a comparison to what they would pay in future years if the Bush tax cuts were to expire at the end of December, leading to a jump in tax rates.
Although Murphy’s ad is more likely to be understood in the context of the debate over whether the tax cuts should be extended for wealthier taxpayers, it is still problematic to describe McMahon’s plan as giving herself a seven-figure tax cut without specifying that that is based not on what she currently pays, but on one possible scenario for future tax rates.
The ad’s assertions on cuts to education and Medicare were initially based on McMahon’s proposal to cut the federal budget by 1 percent a year – although not an across-the-board cut. McMahon has declined to identify which programs or departments she would favor seeing reduced, and in the absence of those details, it is a stretch for the Murphy campaign to proclaim that she has made certain spending cuts a part of her budget-reduction plan.
That’s especially true with the hot-button issue of Medicare, which the ad cited based on statements McMahon made in 2010 and 2012. Two years ago, McMahon told CNBC’s John Harmon that she supported some but not all of a deficit reduction plan put forth by Paul Ryan, who favors lower spending on Medicaid.
“Not willing to embrace the Medicare cuts?” Harmon asked.
“Well, I’m going to have to take a look at Medicare cuts,” McMahon responded.
Earlier this month, the New Haven Register reported that McMahon “won’t rule out Paul Ryan’s approach to fixing Medicare, only pledging she will not vote to reduce benefits to those seniors currently benefiting from the federal health care program.”
In the article, McMahon is quoted as saying: “I’m not going to vote to cut any benefits to our seniors who are relying on this today. Are we going to have to reform our Medicare? Yes, we are, But I’m not going to vote to cut anything for our seniors who rely and depend on that today.”
It is not uncommon for political campaigns to turn “won’t rule out” into “plans to” – but as unsatisfying as a dodgy answer may be, it’s not the same as expressing support.
But since the ad came out, the Murphy camp has expanded its criticism of McMahon’s stance on Medicare, saying her support for repealing Obamacare would amount to cuts in some Medicare coverage for some recipients – a contention that, while debated, is a legitimate claim and forms a reasonable basis for Murphy’s assertion on Medicare.
There is nothing blatantly false in Murphy’s latest ad, but there are number of areas in which the facts are spun to best effect. That’s not surprising in an adversarial arena like electoral politics. But particularly with respect to the representations of WWE’s taxes, that spinning goes too far. As such, we rate this ad Somewhat Misleading.