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“Shady Opportunism”: The Political Risks Of Mitt Romney’s Financial Skills

You can conduct byzantine transactions through opaque investment accounts and private corporations in offshore tax havens such as Bermuda and the Cayman Islands. Or you can credibly run for president at a time of great economic distress.

I don’t think you can do both.

Let me be clear that I have nothing against wealth. In fact, I have nothing against great wealth, which is how I would classify Mitt Romney’s estimated $250 million fortune. We can argue about the social utility of private- equity firms such as Bain Capital, but Romney isn’t responsible for distorting the system so that financiers are grossly overpaid. He just took advantage of the situation.

Increasingly, however, I have to wonder whether the achievement Romney touts as his biggest asset in running for president — his business success — might be seen by many voters as a liability.

The question isn’t whether people can relate to a candidate who has tons of money. It’s whether they will connect with a man who didn’t make his money the old-fashioned way — by building a better widget — but by sending capital hither and yon via clicks of a computer mouse to take advantage of arcane opportunities most people never even know about.

Most Americans, for example, do not have an individual retirement account valued at between $20 million and $101 million, as Romney stated last year in a financial disclosure report.

When Romney was running Bain and building up his IRA, the maximum annual contribution permitted by the tax code was $2,000. So how did Romney’s IRA get so huge? He won’t say. It’s possible that he rolled over some money that was originally in a 401(k) retirement plan of the kind offered by many employers. But annual 401(k) contributions were then capped at $30,000, including an employer match — in Romney’s world, chump change.

Analysts surmise that Romney may have placed his interests in various Bain investment partnerships in the IRA, taking advantage of Internal Revenue Service rules that allow these interests to be undervalued for IRA purposes. In some cases they can even be valued at zero, since partnership interests represent future income, not present income, and . . .

Okay, I know I’m losing you here — but you get the point. Individual retirement accounts were created as a way for middle-class Americans to save some tax-deferred money for their senior years. It isn’t clear exactly what Romney is using his gargantuan IRA for, but it’s certainly not what Congress intended.

Then there’s the question of a Bermuda-based company that Romney and his wife, Ann, own, Sankaty High Yield Asset Investors Ltd. According to the Associated Press, the company has been part of Romney’s portfolio for nearly 15 years, but it was not mentioned in any state or federal disclosure reports. It surfaced in Romney’s 2010 tax returns, which he reluctantly released earlier this year.

According to those returns, Sankaty is little more than an empty shell at the moment. But the AP reports that the company “served as Romney’s partnership stake” in a larger group of Sankaty-named funds that Bain once used to manage more than $100 million in investments. (Sankaty, by the way, is the name of a lighthouse on Nantucket.) Channeling private-equity and hedge-fund investments through offshore firms in places such as Bermuda and the Caymans can allow investors to avoid a tax on what is known as “unrelated business income.”

Romney’s campaign says that he pays every penny he is required to pay in taxes — although his income is taxed at about 15 percent, a lower rate than most middle-class Americans pay. Hey, I understand; if I could get away with paying less in taxes, I’d do it, too. And I suppose that if God didn’t want us to have offshore pass-through accounts in sun-drenched tax havens, he wouldn’t have invented them.

But one of the sources of anger and anxiety in this country — on the left and the right — is the sense that there are two sets of rules, one for the rich and powerful and one for everybody else. I don’t think voters want a “regular guy” as president; they want someone who is exceptional. But there is a point at which opportunism begins to shade into rapacity.

In making and managing his money, Romney appears to take every possible, conceivable, imaginable inch that the law arguably allows. That’s good finance. But I doubt it’s good politics.


By: Eugene Robinson, Opinion Writer, The Washington Post, July 5, 2012

July 6, 2012 Posted by | Election 2012 | , , , , , , , , | 1 Comment

“Living By Biography”: Mitt Romney Blistered By Conservative Wall Street Journal Editorial Board

This Wall Street Journal editorial is getting a lot of attention this morning for its scathing criticism of the Romney campaign’s equivocations over whether Obamacare’s individual mandate is or isn’t a tax. Yesterday Romney declared that, yes, it is a tax after all — contradicting his campaign’s earlier contention that it wasn’t — and the editorial blasts Romney for squandering a key issue against Obama.

But let’s face it: The skirmishing over whether the mandate is or isn’t a tax probably won’t have much of an impact on the election’s outcome.

That’s why the real news in the Journal editorial — the stuff that should drive the discussion today — is its scalding attack on Romney’s lack of specificity on multiple issues:

The Romney campaign thinks it can play it safe and coast to the White House by saying the economy stinks and it’s Mr. Obama’s fault. We’re on its email list and the main daily message from the campaign is that “Obama isn’t working.” Thanks, guys, but Americans already know that. What they want to hear from the challenger is some understanding of why the President’s policies aren’t working and how Mr. Romney’s policies will do better.

The Journal notes the Obama campaign’s attacks on Romney’s Bain years and offshore accounts, and adds:

All of these attacks were predictable, in particular because they go to the heart of Mr. Romney’s main campaign theme — that he can create jobs as President because he is a successful businessman and manager. But candidates who live by biography typically lose by it. See President John Kerry.

The biography that voters care about is their own, and they want to know how a candidate is going to improve their future. That means offering a larger economic narrative and vision than Mr. Romney has so far provided. It means pointing out the differences with specificity on higher taxes, government-run health care, punitive regulation, and the waste of politically-driven government spending.

The GOP-aligned Journal editoral board is implicitly agreeing that one of the leading critiques of Romney —one being made by the Obama campaign and Dems, but also by more and more media commentators — is entirely legitimate: That he’s refusing to detail his policies with any specificity to speak of on issue after issue.

This goes right to the heart of the central dynamic of this race: The Romney campaign’s gamble that he can edge his way to victory by making this camapign all about Obama, and that along the way, voters won’t notice that he isn’t meaningfully telling us what he would do if elected president. The Journal is calling this out as a non-starter. Does this represent broader GOP establishment opinion? It’s more important than all the short-term skirmishing over whether the mandate is a tax or not.


By: Greg Sargent, The Plum Line, The Washington Post, July 5, 2012

July 6, 2012 Posted by | Election 2012 | , , , , , , , , | 1 Comment

“Winking With A Blind Eye”: Where Are The Pro-Life Reactions To The Romney-Stericycle Story?

Yesterday, David Corn reported in Mother Jones that Mitt Romney may have played an active role Bain Capital’s $75 million investment in Stericycle, a company that disposes of medical waste from abortion clinics. According to Corn, Bain had previously claimed that Romney left the firm in February 1999 and that Romney probably had nothing to do with the deal.

Since this could potentially lose Romney some enthusiasm among social conservatives, I initially thought I would write a post about reactions to the story in the pro-life blogosphere.

Except… I couldn’t find any. Guys, I looked, but as of Tuesday afternoon, here’s where it stands:

Lila Rose’s Twitter feed? No mention as of this writing.

National Right to Life? Top headline as of July 3, 3:57 central time was “Supreme Court Decision Means Americans Must Elect Mitt Romney and a Pro-Life Congress Committed to Repealing ObamaCare.”

Susan B. Anthony List? Its president, Marjorie Dannenfelser, wrote a column for National Review Online yesterday titled “Pro-Lifers Must Unite Behind Romney.” (The discussion in the comments thread did make its way around to the Stericycle story, with folks chiming in both to support and criticize Romney.)

Americans United for Life? Again, as of 4 p.m. central, their online media center made no mention of it.

LifeSiteNews, which previously reported on a Romney fundraiser at the home of a pharmaceutical executive whose company makes the morning after pill, and which published a piece in January calling Stericycle a “medical waste giant allied with the abortion industry” didn’t turn up anything when I did a search for “Romney” and “Stericycle,” and the story wasn’t in their top headlines.

Jill Stanek? Again, no mention in the top headlines and a site search turned up nothing.

World Magazine, which is currently taking a critical stance toward the National Association of Evangelicals over the latter’s acceptance of a grant from the National Campaign to Prevent Teen and Unplanned Pregnancy? Again, my site search turned up nothing.

It could be that nobody’s gotten around to writing about it yet, I guess. Or, it could be that the pro-life blogosphere isn’t thrilled to learn about Romney’s possible role in the Stericycle investment; but, particularly on the heels of the Supreme Court decision, cares most about defeating Obama. In any case, the question will be whether it has any effect on voter enthusiasm. If no likely Romney supporters hear about it, I rather imagine it won’t.


By: Sarah Morice-Brubaker, Religion Dispatches, July 3, 2012

July 6, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

“We Own You Mitt”: Conservatives Worrying About Romney

Are prominent conservatives panicking about Mitt Romney’s campaign? It sorta looks that way, today. The Wall Street Journal editorial board — the men who ensure that even educated, newspaper-reading rich conservatives are successfully misinformed on all the major issues of the day — has a big “Mitt Romney is blowing it” editorial today (published online late Wednesday) that seems designed to stir up as much trouble as possible for the candidate.

The first line is hilarious and patently untrue: “If Mitt Romney loses his run for the White House, a turning point will have been his decision Monday to absolve President Obama of raising taxes on the middle class.”

In reality, Mitt Romney will definitely accuse Obama of raising taxes, even if he’s squishy on the “mandate is a tax” line. Also, it’s early July, it’s guaranteed to be an incredibly close race and, honestly, the only people who will notice whether Romney decides to declare the mandate a tax are people who have been paying close enough attention to the race to have already made up their minds.

But the point is actually just to hammer Romney adviser Eric Fehrnstrom for being sort of feckless and horrible at messaging, and to let the Romney campaign know that the Journal will be telling them which things to say, thank you very much. (The conservative press is much better at bullying its candidates into adopting particular strategies and policies than the liberal press, which has approximately zero power over candidates and elected officials.)

This latest mistake is of a piece with the campaign’s insular staff and strategy that are slowly squandering an historic opportunity. Mr. Obama is being hurt by an economic recovery that is weakening for the third time in three years. But Mr. Romney hasn’t been able to take advantage, and if anything he is losing ground.

The Romney campaign thinks it can play it safe and coast to the White House by saying the economy stinks and it’s Mr. Obama’s fault. We’re on its email list and the main daily message from the campaign is that “Obama isn’t working.” Thanks, guys, but Americans already know that. What they want to hear from the challenger is some understanding of why the President’s policies aren’t working and how Mr. Romney’s policies will do better.

Then! The Journal compares Romney to John Kerry. So mean!

Following this explosive editorial, the Weekly Standard’s Bill Kristol, America’s wrongest and dumbest partisan pundit, weighed in with his me-too “Romney’s strategy is all wrong” column, which has the very troll-y headline “Dukakis, Kerry … Romney?” Kristol wants to hear policy specifics from Romney, which is an awful idea, frankly, because Republican policies are pretty much universally unpopular once you go into actual detail, and Romney is correct in believing that his best hope is to remain as vague as possible on as many issues as possible.

But the argument is about a broader fear that a winnable election is slipping through the Republican Party’s grasp, and if that is indeed happening, Romney and his campaign are going to be blamed for letting it happen. As Josh Marshall says, columnists and pundits actually usually don’t have much of an idea what’s going on in a campaign. Conservatives are frustrated that Romney’s not kicking ass in the polls, and if he isn’t, it’s because his stupid campaign (made up of longtime Romney associates, for the most part) is stupid and bad.

It’s possible, though, that the Romney campaign is doing the absolute best it can running against an incumbent president who remains broadly personally popular. And it’s probable that Romney, for all his flaws, was the best candidate to face Obama this year. Buyer’s remorse aside, does anyone honestly think Jeb Bush or Mitch Daniels or Tim Pawlenty or Chris Christie would be performing better right now?

As I said, the words of the WSJ editorial page carry weight, so we’ll see if Romney (who has already called the mandate a tax) makes some sort of gesture toward “shaking up” his campaign (which would lead, naturally, to headlines about his campaign being in disarray — it’s lose-lose!), but these guys are actually just whining about how it’s harder to beat Obama than they have always thought it ought to be.


By: Alex Pareene, Salon, July 5, 2012

July 6, 2012 Posted by | Election 2012 | , , , , , , , , | 1 Comment

“Insane Economic Policy”: GOP’s Rejection Of Medicaid Funds Is One More Ideologically Driven Bad Idea

My emotions after the Supreme Court’s ruling on the Affordable Care Act last week went through various stages: confusion (thanks, CNN), shock and finally sheer joy. It was a complete surprise to have the highest court uphold the entire law, including the individual mandate. Liberals rightly celebrated the ruling as a historic step toward ensuring a better quality of life for all Americans.

But in the jubilation hangover, some more sober analysis has taken its place. One important aspect of the Court’s decision gives no reason to celebrate: the ruling that the federal government can’t withdraw all Medicaid funds from governors who refuse to expand Medicaid rolls in their states, essentially making it possible for them to opt out. The Medicaid expansion is meant to give coverage to about 17 million Americans by 2019, accounting for almost half of the 32 million people the bill promised to insure. Yet as Sarah Kliff reported, if states opt out of expanding Medicaid, it could leave some of the poorest Americans stuck in a no-man’s land in which they don’t qualify for Medicaid but also don’t qualify for subsidies to buy insurance. Beyond literally being a matter of life or death for many uninsured Americans, it’s also an economic issue: the White House calculated that expanding the number of Americans with insurance would increase economic well-being by about $100 billion a year, or about two-thirds of a percent of GDP.

It seems foolhardy for governors to reject what is basically free money to help more people in their own states gain health insurance. Josh Barro wrote just after the ruling that while the White House’s stick was taken away, its carrot—the federal government’s picking up 100 percent of the states’ Medicaid expansion tab for the early years, gradually declining to 90 percent after that—would be enough to incite states to participate. And they stand to see other economic benefits. States that already provide coverage and care to people living at 133 percent of the poverty line would no longer shoulder those costs, saving them millions. Even for those that don’t offer such coverage, the bill stands to save all states money by getting rid of the “hidden tax” they pay in higher insurance premiums that account for the cost of covering the uninsured, also potentially saving millions.

Yet Republican governors are already contemplating rejecting the money. The Hill reported this week that fifteen governors are either flat-out planning to reject the Medicaid expansion money or are leaning in that direction. Firm nos have come from Florida, Iowa, Kansas, Louisiana, Nebraska, South Carolina and Wisconsin. Eight more are still undecided yet appear to be following suit: Alabama, Georgia, Indiana, Mississippi, Missouri, Nevada, Texas and Virginia. Yet Brian Beutler reports today that these very states have some of the country’s highest uninsured rates and would stand to see the biggest benefits. Florida ties with Nevada and New Mexico in second to last place in the country at 21 percent uninsured, and South Carolina and Louisiana come in with 19 and 17 percent rates, respectively.

An indignant refusal of federal money in these states may sound familiar. Alabama, Louisiana, Mississippi, South Carolina and Texas were among the handful of states to say they would reject federal stimulus money way back in early 2009. The argument was similar back then: as with the Medicaid expansion money, the states were expected to change some policies to protect more of their residents from economic harm. In the case of the stimulus money, they had to expand unemployment benefits to more people. That’s what made GOP governors too cranky to accept the funds. Eventually all fifty accepted federal funds, although some still turned away the money meant to increase those unemployment benefits. Meanwhile, the last holdout, South Carolina, had the nation’s second-highest unemployment rate at the time that it was contemplating rejecting the funds on ideological grounds.

But other federal money was later rejected outright. After President Obama’s 2010 State of the Union, he called for building a high-speed rail network and pledged $8 billion in stimulus money for rail projects in various states. Yet four Republican governors—New Jersey’s Christie, Wisconsin’s Walker, Ohio’s Kasich and Florida’s Scott—refused to take money for the projects. They would have created tens of thousands of jobs in each state—an estimated 16,000 in Ohio, 10,000 in Wisconsin and 10,000 in Florida.

Meanwhile, as research my colleague Mike Konczal and I conducted showed, ultraconservative Republican governors across the country have been enacting policies that hurt their economies, and therefore the entire economy, in other ways. In the midst of a massive jobs crisis, the eleven states that flipped red after the 2010 midterms and Texas accounted for 70 percent of public sector job losses last year, either laying off or pushing these workers out through attrition. The rest of the states lost only an average of .5 percent of their government workforces. Without these massive waves of job losses, our unemployment rate would likely be closer to 7 percent.

What ties all of these conservative state-level actions together? An adherence to ideology over what’s best for the economy—even their own state economies. The belief that government spending should be shrunk at all costs has steamrolled over policies that shouldn’t be about party affiliation. Taking federal money for much-needed updates to our infrastructure that would also create thousands of jobs is clearly the right choice. Throwing government workers out of their jobs at a time of sky-high unemployment is clearly the wrong choice. And now these conservative states are threatening to keep millions of Americans out of health insurance policies because they worry about higher state spending in the long run. This despite the fact that their residents and their budgets stand to see huge benefits now. The Republican Party’s abhorrence of government is driving bad economic decision-making—and that’s hurting all of us.

By: Bryce Covert, The Nation, July 5, 2012

July 6, 2012 Posted by | Affordable Care Act | , , , , , , , , | Leave a comment

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