Cruz Tells Another Lie in Presidential Announcement

Cruz Tells Another Lie in Presidential Announcement March 26, 2015

The fact-checking websites have found Ted Cruz to be about as truth-impaired as Michele Bachmann, which is to say that he lies. A lot. He even told a whopper of a lie during the announcement of his run for the Republican presidential nomination, falsely claiming that small businesses are closing “in record numbers.”

“Think just how different the world would be. Imagine instead of economic stagnation, booming economic growth,” Cruz said. “Instead of small businesses going out of business in record numbers, imagine small businesses growing and prospering. Imagine young people coming out of school with four, five, six job offers.”

Let’s leave imagination land and return to the real world to evaluate whether businesses are closing their doors “in record numbers.”…

The Center for Economic Studies at the U.S. Census Bureau surveys private businesses and their administrative records to track the number of firms and establishments over time. We want to look at firms with fewer than 500 employees, not establishments, which would include every single Starbucks across America. Firms are a count of companies no matter the number of locations, which allows us to single out small businesses in the truest sense.

The number of firm “deaths” — meaning every location owned by a business was completely closed down — for businesses with fewer than 500 employees has been trending up since 1984. The peak came in 2009 during the height of the recession, when nearly 500,000 small businesses closed their doors.

However, as of 2012 (the last year available) the number of business deaths had fallen back to where they were in 2005, 1998 and 1988.

Data for the last couple years is not available, but if the trend from 2010 to 2012 holds, those numbers would likely paint an improved picture, said Zoltan Acs, on leave as director of the Center for Entrepreneurship and Public Policy at George Mason University.

“Those are all recession years and we know that we’ve been adding jobs for the last couple years so this is no longer happening,” Acs said.

The highest numbers for small business closures were in the late 70s and early 80s, which is quite predictable. We were suffering through the stagflation of the late 70s due to oil price shocks, then by the very deep recession brought on by Fed chairman Paul Volcker jacking interest rates up to wring inflation out of the economy. But it’s clear by now that Cruz doesn’t really care what is true, only what is politically useful.


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