“Blind Trusts Don’t Seem So Blind”: Where And How Does Mitt Romney Hide His Money?
Mitt Romney never wanted to release his tax returns. He refused disclosure in 1994 during his unsuccessful U.S. Senate bid, in 2002 when he won election as Governor of Massachusetts, and in his failed 2008 attempt to gain the Republican nomination for President. Last January Romney finally released his 2010 tax return and an estimate for 2011 after constant badgering by his Republican primary rivals.
Those documents revealed his offshore bank accounts and his tax rate, just shy of 15 percent, or less than what most middle-class Americans pay, despite his estimated worth of up to $250 million. As the Washington Post reported: “By offering a limited description of his assets, Romney has made it difficult to know precisely where his money is invested, whether it is offshore or in controversial companies, or whether those holdings could affect his policies or present any conflicts of interest.” Now journalist and author Nicholas Shaxson digs deeper in a new investigation published by Vanity Fair.
According to Shaxson, Romney is using every possible loophole to avoid paying more taxes. He takes his payments from Bain Capital as investment income, allowing him to pay at a rate much lower than the 35 percent he would owe if he had earned an “ordinary income” of salaries and wages.
But as Shaxson also points out, nobody even knows how much Romney should pay because nobody knows what his offshore accounts actually hold. He maintains accounts and entities not only in Switzerland, but in Bermuda and the Cayman Islands as well.
Consider the example of Sankaty High Yield Asset Investors Ltd., a Bermuda-based corporation set up by Romney in 1997. This entity wasn’t even disclosed in financial documents until 2010, and upon examining that return, Shaxon writes: “We have no idea what is in this company, but it could be valuable, meaning that it is possible Romney’s wealth is even greater than previous estimates.” Furthermore, Bain Capital holds at least 138 funds in the Cayman Islands, with Romney having personal interests in at least 12 that are worth as much as $30 million. The Romney campaign has stated that his taxes would not be affected even if he included these interests, but there’s no way to confirm this because everything is hidden behind confidentiality laws.
Equally intriguing are the Romneys’ blind trusts, designed, as Shaxon explains, “to avoid conflicts of interest for those in public office by having politicians’ assets managed by independent trustees.” But in Romney’s case, the blind trusts don’t seem so blind. Their personal lawyer, Bradford Malt, was appointed to be the trustee, and in 2010, the Romneys invested $10 million in Solamere Founders Fund, which was founded by their son Tagg and former campaign fundraiser Spencer Zwick.
Shaxson also asks whether Romney used “blocker corporations” in the Cayman Islands and elsewhere to escape paying taxes on his retirement account, which is estimated to contain as much as $102 million. Offshore blocker corporations are used to avoid the Unrelated Business Income Tax.
The Obama campaign has hit Romney’s financial holdings hard in ads – and even created a world map showing the overseas locations where the Republican candidate holds accounts. Other Democrats have joined this line of attack. In an interview with The Huffington Post, former Ohio Governor Ted Strickland asserted, “Why would any person who aspired to be president, as Mitt Romney has for probably much of his life, open a Swiss bank account? What does that say about his political judgment and what does it say about his commitment to the United States of America?”
Illinois Senator Dick Durbin adds that there are only two reasons why one would want to hold a Swiss bank account: “Number one, you believe the Swiss franc is a stronger currency than the United States dollar. And that apparently was the decision the Romney family made during the Bush presidency.”
“And secondly, you want to hide something, you want to conceal something,” he said. “It is impossible for him to explain or defend owning a Swiss bank account.”
With Shaxson’s revealing piece, speculation over Romney’s handling of his money will no doubt continue. If the Romney campaign wants everyone to stop questioning his tax returns and offshore accounts, why not just disclose all of the information, as his father George Romney did during his own 1968 presidential run?
By: Lynn Zhong, The National Memo, July 4, 2012
“Santorum’s Prophecy Is Coming True”: Republicans Scratch Their Heads At Romney Tax Messaging Chaos
Republicans are bewildered by the Romney campaign’s declaration that the health care law’s individual mandate is not a tax. The GOP seized on the messaging opportunity handed to them by the Supreme Court, and immediately started trumpeting the idea that President Obama wasn’t just raising taxes — he was orchestrating the largest tax hike in American history. But a top Romney adviser threw water on that Monday, saying the mandate isn’t a tax. The RNC chairman then said Romney believes it is a tax.
Confused yet? Republican strategists told TPM that far from the unified voice the GOP said it would present after the Supreme Court ruling, the messaging has been chaotic, and ultimately embarrassing for Romney and the GOP. But, they believe, the disarray won’t affect down-ballot races, in which GOP candidates can still push the tax messaging.
“It’s a problem, I’m not going to lie,” said Hogan Gidley, a former top adviser to Rick Santorum’s campaign. “I’m not going to sugarcoat it, it’s a problem for the Republicans.”
Gidley was often the public face for Santorum’s warnings that Romney would be caught in precisely this kind of health care mess if he became the nominee. Now that the Supreme Court has ruled and Romney’s campaign has already stepped on the GOP’s messaging, he says Santorum’s prophecy has come true.
“Here we are a couple months into the general and you’re going, ‘Hey wait a minute, that Rick Santorum was right,’” he said.
Democrats are certainly enjoying the “message dichotomy,” as Gidley put it. The party has sent out multiple press releases highlighting the differences between Republican leaders and their presidential nominee. But Gidley said Democrats who believe they’ve got Romney and the GOP on the run should be warned.
“Democrats are doing a dance in the street with the fact that the RNC and the Republican nominee are on different spin planes on this issue,” he said. “But when the dust settles, again, you’re just going to realize that Romney wants to repeal it and Obama doesn’t.”
Other Republican strategists agreed that the split on whether the mandate amounts to a tax is bad optics. But they said that Republicans candidates other than Romney — who don’t have the baggage of Romneycare to deal with — can still run on the tax messaging.
“It’s not as clean and on-message as Republican strategists might prefer,” said Jon McHenry, an unaligned D.C.-based GOP consultant and pollster. “But it’s a one-day, inside-the-Beltway, ‘what are these guys doing?’ story as opposed to taking the tax issue off the table for the next five months.”
Down ballot, the tax argument still works, McHenry said.
“[Senate] Democrats aren’t going to put Mitt Romney on air defending their position. They’re just not,” he said. “It’s more a missed opportunity for the Romney campaign than it is a detriment to other [GOP] campaigns.”
Another strategist agreed that Republicans are annoyed by the Romney campaign steering the focus away from the tax-based message, which strategists think has real legs.
“A lot of people think he’s trying to get too cute,” said the strategist.
By: Evan McMorris-Santoro, Talking Points Memo, July 3, 2012
“Why Bain Is Back”: The Folks On The Receiving End Of Capitalism’s Creative Destruction
A month ago, conventional wisdom had it that the Bain attacks on Mitt Romney were somehow failing terribly — notwithstanding the fact that they’ve been key parts of every other campaign Democrats and Republicans have run against Romney going all the way back to 1994. And yet all of a sudden, the Obama campaign is going full outsource/Bain attack on Romney at every opportunity. So they think it’s working great. New polling suggests they may be on to something. And in the most telling development, in the days leading up to the surprise Supreme Court ruling, the Romney campaign itself is mounting a mammoth pushback, signaling more clearly than anything that they think it’s working too.
So what happened?
Consider three basic factors. First, round one of the Bain Wars was almost entirely hashed out in what you might call the Acela corridor — an insular community, overwhelmingly affluent and educated, and decidedly not the audience for the message or the folks who find themselves on the receiving end of capitalism’s creative destruction.
Sen. Sherrod Brown (D-OH) visited TPM’s DC offices last week as part of our Newsmaker interview series and said basically: trust me, this message worked in Ohio. Maybe he was right all along. I suspect he was.
But there was another rhetorical dimension. ‘Private equity’ is a weird phrase. Most people have no idea what it does or doesn’t mean. And the Romney campaign through it’s surrogates was able to hit its opponents with something like ‘Hey, it’s poor form to be going all Nation magaziney and pretending that private equity isn’t awesome!’
And within that community, it worked. Thus Cory Booker, Bill Clinton, and a lot of other Democrats. ‘Private equity’ means a lot of different things. My own sense is that some parts of it are incredibly destructive while others create efficient allocations of capital. But who cares what I think? Wherever you come down on that question there’s simply no question that private equity is at the tip of the the spear of creative destruction in our society. So in a country where everybody gets to vote, it’s sort of crazy to think criticizing something like that would somehow be beyond the pale like attacking the Pope or crapping on motherhood and apple pie. But there it was.
‘Outsourcing’ though and ‘Offshoring’ — these are just more graspable words, more concrete concepts. Everybody understands them. Everybody knows what they mean. I’m pretty sure the Romney campaign wants to say something like, ‘C’mon, our whole economy today is based on stuff like this and we all know it and everybody accepts it so don’t pretend otherwise.’ But they can’t. And what really got them all boxed up was when they got themselves into this ridiculous debate over whether Mitt’s an ‘outsourcer’ or an ‘offershorer’. As I said Monday, that’s an argument you lose by winning. Or lose by losing. Whichever way, you lose.
Even really smart strategists manage sometimes to charge into a brown paper bag like this. But this was a bad move because it opened Romney up to that most lethal political weapons: ridicule and mockery. The Obama camp seemed to get this early and just decided to drive a freight train right through him. Holding out for this distinction seemed incredibly stupid and more than that wildly out of touch since the difference is basically immaterial to people who lose their jobs as a result of it. And, as always, weakness which invites attacks.
In a country afflicted for decades by loss of high-paying manufacturing jobs and chronically stagnant working class and middle class wages it’s crazy to think that Romney’s history as a private equity king — especially one working the lower tiers of the private equity world — wouldn’t be a liability for a lot of voters. But it was something that DC reporters were best positioned to miss.
By: Josh Marshall, Talking Points Memo, July 2, 2012
“Clearly In Peril”: Thomas Jefferson’s View Of Equality Under Siege
On the 236th anniversary of our nation’s birth — squalling to the world in our very first utterance that all men were created equal and endowed with unalienable rights — the essence of our politics remains who exactly are those men who are self-evidently equal and inherently vested with those rights. Over the subsequent two-plus centuries, we’ve invoked the spirit of our primal shout every time we’ve expanded our definition of equal men — when we moved to popular elections, abolished slavery, gave women the vote, enacted civil rights legislation and today, when gays and lesbians are winning the equal status and unalienable rights that heterosexual Americans take for granted.
But the author of our founding declaration was concerned with more than legal equality. Thomas Jefferson envisioned a nation of yeoman farmers (and, to be sure, slaveholders like himself) and wanted it to remain chiefly rural to avoid the concentration of wealth and power that would come if the nation urbanized and if finance grew into a dominant sector. His great rival Alexander Hamilton feared that the nation would remain a backwater absent cities, finance and manufacturing. As Treasury secretary, Hamilton used the powers of the nascent republic to foster industry and development. As the United States grew into the world’s dominant economy, the concerns that Jefferson voiced grew more acute. How could the United States retain its formal equality and civic virtue in the face of towering economic inequality that enabled the rich to dominate our political system?
In the first half of the 20th century, both Roosevelts and their allies devised reforms to restore some of Jefferson’s egalitarianism in what was, by then, Hamilton’s America. Progressive taxation, the establishment of wage and labor standards and the legalization of unions reduced economic inequality, while the prohibition of corporation donations to political campaigns diminished, somewhat, the wealthy’s sway over government.
But that, as they say, was then. The war that the American Right and corporate elites have waged against the Roosevelts’ Jefferson-Hamilton synthesis for the past 40 years has largely prevailed. Taxes have grown radically less progressive, the minimum wage has declined as a percentage of the median wage and unions’ legal protections to organize in the face of employer opposition have eroded. In consequence, wages are at their lowest level since the end of World War II as a share of the national income, and U.S. median household income is at roughly the same level it was 20 years ago. The nation is richer and more productive than it was 20 years ago, but all that added income and wealth has gone to the top 10 percent, and disproportionately to the richest 1 percent.
The growing concentration of wealth has led to a growing concentration of political power as well. The Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission struck down 100 years of legal restraints on corporations’ ability to fund campaigns and buy elected officials. The court permitted unions to dip into their treasuries to fund campaigns too, but, as I noted last week, its decision last month in Knox v. Service Employees International Union, Local 1000 — issued by the same five conservative justices who promulgated Citizens United — created a legal double standard between unions and corporations. By virtue of Knox, a union must ask its members’ permission to spend on political campaigns, but a corporation need not ask its shareholders.
So how is our foundational assertion of equality faring on this July Fourth? As to social parity, it has seldom looked more robust. As to economic equality and the political equality with which it is inextricably intertwined, the picture is bleak. The mega-banks that plunged us into deep recession have had the political power to forestall their breakup. A handful of billionaires continues to donate unprecedented sums to election campaigns. The share of national income and wealth that goes to the vast majority of Americans continues to decline. The Republican Party — and the five Republican appointees to the Supreme Court — are committed to doctrines that will make these disparities more glaring. The recent exception to this trend is the health-care-reform act, which partially extends the Declaration’s assertion of equal rights to the realm of medical access. That’s no small achievement, but, with that single exception, on this July Fourth, Jefferson’s vision of equality is clearly in peril.
By: Harold Meyerson, Opinion Writer, The Washington Post, July 3, 2012
“Bereft Of Discernible Principles”: Our Strange Ideological Divide
When Democrats pursue centrist solutions to problems, Republicans react as though we were all just herded onto collective farms.
If you knew nothing about the Affordable Care Act (ACA), the picture you saw last Thursday of liberals celebrating and conservatives lamenting the end of American liberty would have convinced you that a monumental shift to the left had just taken place. Was the military budget cut by two-thirds or higher education made free for all Americans, you might have asked? At the very least, a universal, public health-insurance program must have been established. But no, the greatest ideological battle in decades was fought over a law that solidifies the position of private health-insurance companies.
That isn’t to ignore that those companies will be subject to greater regulation, outlawing their cruelest abuses of their customers, and millions will be added to the insurance program for the poor. The ACA is a very, very good thing, but after its full implementation we will still have the least socialized health-care system of any advanced country in the world. Yet to hear the ACA’s opponents tell it, the law will twist America into a socialist republic just a couple of short steps from Poland circa 1972. In other words, Democrats managed to pass a useful but rather centrist social reform, and Republicans reacted as though all private property were confiscated and we were herded onto collective farms. It’s enough to make one wonder what might have happened if a real-live liberal were to become president and pursue an agenda that even remotely resembles the caricature Republicans present of Barack Obama’s.
One thing we can be fairly sure of is that the ideology represented by that agenda would play almost no role in its chances for success or failure. Through no fault of his own, Obama has made sure of that. Republicans’ burning hatred of him has set the template for them, one they are likely to use again and again. When he embraced a health-care plan with Republican origins (an individual mandate plus subsidies) or a market-based notion of how to handle climate change (cap and trade), they not only turned away from those ideas but in the process also ran to the right even faster than they had been moving before. At the same time, they went about purging their ranks of anyone who had shown anything less than contempt for the other side. Those moderate (and many not-so-moderate) Republicans purged by Tea Party opponents in primaries will not be coming back.
The result is that in future debates, anything Democrats want to do—almost regardless of its content—will be met with cries of “socialism!” Obama could propose that the entire system of public education be dismantled in favor of private school vouchers, and Republicans would promptly declare the idea to be Marxist social engineering and come out for a system of private education without any taxpayer funds at all. The next Democratic presidential nominee could be Bernie Sanders or Joe Lieberman, and his ideas would be met with precisely the same response.
In many ways, Mitt Romney is the perfect candidate for this version of the GOP, bereft of discernible principles and willing to trot to the right at a moment’s notice. You may have noticed that despite the predictions of many a pundit, Romney did not “move to the center” upon becoming his party’s de facto nominee. There is not a single position he has taken that is at odds with the hard-right persona he established during the primaries—not a single radical nutball he has repudiated, not a single signal he has sent that he will be anything but what the Republican base wants him to be.
And what if Romney loses? The loudest voices in the party will insist that it was only because he was not conservative enough, and the pressure will be on to choose a nominee next time around who genuinely believes all the things Romney pretends to believe (get ready for Santorum ’16). Yet there may be a countervailing force within the party, likely led by Karl Rove, arguing that the GOP’s problem is a demographic one (Rove understands this well). It has increasingly become the party of white men, an evolution accelerated when its presidential primaries feature endless fear-mongering about immigration and slut-shaming of any woman more free-spirited than Queen Victoria. That demographic narrowing could prove disastrous this year. Ruy Teixeira, one of the clearest-eyed observers of electoral and demographic trends, argues that because of the growth in the minority populations that overwhelmingly support Obama, the president could lose white working-class voters by 28 points and white college-educated voters by 19 points and still win. In other words, he could do just as poorly with whites as Democrats did in the 2010 blowout and still be re-elected.
If that happens, will the Republicans try to moderate ideologically? The truth is, they don’t really have to. They were more conservative than ever in 2010 and won a historic electoral victory. Or consider the last Republican president. When he first took control of his party’s nominating contest in 2000, George W. Bush was hailed by innumerable commentators as a “different kind of Republican”—someone who could reach out to all kinds of voters with his “compassionate conservatism.” He was particularly good at convincing Latino voters that he bore them no ill will and lost their votes by a measly 9 points in 2004 (in the latest polls, Romney trails Obama among Latinos by more than 40 points). Yet what was the policy substance of Bush’s presidency? Massive tax cuts for the wealthy, needless wars costing trillions, a gargantuan expansion of the national-security state, a federal judiciary filled with movement conservatives—in other words, an eight-year orgy of conservative wish fulfillment.
Democrats certainly warned from the beginning that there was less compassion than conservatism in Bush’s ideas. But they had nothing like the collective freak-out that Republicans had over Barack Obama, casting his center-left accommodationism as a terrifying program to achieve radical socialist tyranny. They will say the same about the next Democratic president, no matter what his or her true leanings. Their own ideology, on the other hand, will be something that most Americans have only the vaguest sense about, and their policy radicalism will be no bar to winning elections. All it will take is the right economic conditions and some symbolic toning-down of their rhetoric to cover the twisted face of anger, resentment, and outright hate that increasingly defines their soul. They’ve done it before, and there’s no reason they can’t do it again.
By: Paul Waldman, Contributing Editor, The American Prospect, July 3, 2012
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