Newt Gingrich: “So Busy Serving His Country That He Had To Cheat The Government To Save The Government”
While candidate Gingrich has been busy focusing on the tax return failings of his opponent, Governor Mitt Romney, a report by Forbes’ Janet Novack suggests that, once again, Newt may be using a good offense to keep from having to play some serious defense when it comes to his own failure to pay up on his tax obligations.
According to Novack, “Newt Gingrich avoided tens of thousands of dollars in Medicare payroll taxes in 2010 by using a technique the Internal Revenue Service has consistently and successfully attacked.”
Gingrich’s primary source of income, as revealed on the one tax return he has disclosed, comes from two “S” corporations owned by Newt and his wife, Callista. S Corporations are employed as a means to allow money to ‘flow through’ to the shareholder-owner as if it were a sole proprietorship or partnership, thus avoiding taxation at both the corporate level and re-taxation at the personal level.
It is a perfectly kosher way to do business.
However, according to the law, such corporations are supposed to pay out most of its earnings as direct payments to the owner/shareholder rather than as profits or dividends which are exempted from certain tax obligations— such as the 2.9 percent of earnings which are to be paid to Medicare.
As stated on the IRS website
Reasonable Compensation
S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee. The amount of reasonable compensation will never exceed the amount received by the shareholder either directly or indirectly.
Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for the service rendered to the corporation.
The key to establishing reasonable compensation is determining what the shareholder-employee did for the S corporation. As such, we need to look to the source of the S corporation’s gross receipts.
The three major sources are:
1. Services of shareholder,
2. Services of non-shareholder employees, or
3. Capital and equipment.
There is little question that the revenues flowing through Gingrich’s companies are the direct result of the services provided by Newt and his wife, whether by way of speaking fees, book royalties, film productions, etc. Thus, it would be reasonable to expect that the preponderance of revenue coming into the Gingrich corporations would pass through directly to Mr. and Mrs. Gingrich and be subject to taxes such as the Medicare tax.
Yet, in 2010, the Gingrich corporations paid out $444, 327 as salary to Newt and Callista while reporting some $2.4 million as profit or dividends – thus allowing the Gingrichs to avoid paying the 2.9 percent Medicare tax on the bulk of their earnings.
Of course, now that Gingrich is running for president, it is unlikely the IRS will come after him as he would simply call it an attack by the Obama administration.
And while there will, no doubt, be an agreement between Romney and Gingrich not to ‘go there’ – as both are now likely to be vulnerable on their respective tax returns—expect Rick Santorum to make a fuss unless he too turns out have some tax issues.
Personally, I can’t wait to hear Newt find a way to blame this on the media.
Or maybe he’ll tell us that he was so busy serving his country that he had to cheat the government in order to save the government.
By: Rick Ungar, Contributing Writer, The Policy Page, Forbes, January 23, 2012
Greater Of Two Evils: Gingrich Vs Santorum
Why did South Carolina’s evangelical voters go for Newt Gingrich rather than Rick Santorum?
What have we learned from the fact that it was Newt Gingrich, not Rick Santorum, who surged past Mitt Romney in Saturday’s South Carolina Republican primary? The voters who turned out, after all, sure fit the profile of Santorum supporters. Fully 65 percent described themselves as born-again or evangelical Christians, and Santorum was the candidate who most stressed the cultural and religious values in which these voters believe, even as Newt’s private life made a mockery of them. Fifty-three percent of the GOP voters had no college degree, and, again, it was Santorum who explicitly defended both the economic interests and cultural importance of blue-collar workers.
But Gingrich won the votes of 44 percent of the born-agains and evangelicals, while Santorum won just 21 percent. And Gingrich got 43 percent of the non-college grads, while Santorum ended up with just 18 percent.
The appeals that Gingrich made mattered far more to these voters than the religious and economic appeals that Santorum offered. What Newt appealed to was these voters’ racism, which he also deliberately wrapped in the belief that the nation’s media elites favor liberal racial policies and look down on people like them. The two incidents that propelled Newt to his victory (other than Romney’s inability to deal with the issue of his taxes) were his assaults on Juan Williams and John King in last week’s debates. When Williams dared to suggest that Gingrich’s labeling of Barack Obama as a “food-stamp president” had racist overtones, Gingrich slapped Williams down almost as though he were a surrogate for Obama—an uppity black in a privileged position complaining of injustices to his own minority group. The impact of this moment on many South Carolina Republicans was little less than cathartic; it was a triumphal outburst of pent-up resentments clearly screaming for release. A few nights later, Gingrich augmented his image as the man who whacks the liberal media with his assault on King.
It’s all straight out of the playbook of George Wallace, who not only slandered and threatened African Americans in his speeches but also took out after the national news media (“Huntley and Chinkley and Walter Contrite,” as he termed them in a burst of almost surreal folk poetry).
The Republican voters of South Carolina may think of themselves as religiously devout and economically embattled, but what they were really looking for in a candidate was a champion who’d slap down pretentious blacks and promise a restoration of white normality. Abnormal as Gingrich may actually be, this was what he offered up in South Carolina, and it went down mighty smooth.
By: Harold Meyerson, The American Prospect, January 23, 2012
The Roots Of Bain Capital In El Salvador’s Civil War
A significant portion of the seed money that created Mitt Romney’s private equity firm, Bain Capital, was provided by wealthy oligarchs from El Salvador, including members of a family with a relative who allegedly financed rightist groups that used death squads during the country’s bloody civil war in the 1980s
Bain, the source of Romney’s fabulous personal wealth, has been the subject of recent attacks in the Republican primary over allegations that Romney and the firm behaved like, in Rick Perry’s words, “vulture capitalists.”One TV spot denounced Romney for relying on “foreign seed money from Latin America” but did not say where the money came from. In fact, Romney recruited as investors wealthy Central Americans who were seeking a safe haven for their capital during a tumultuous and violent period in the region.
Like so much about Bain, which is known for secrecy and has been dubbed a “black box,” all the names of the investors who put up the money for the initial fund in 1984 are not known. Much of what we do know was first reported by the Boston Globe in 1994 when Romney ran for U.S. Senate against Ted Kennedy.
In 1984, Romney had been tapped by his boss at Bain & Co, a consulting firm, to create a spin-off venture capital fund, Bain Capital.
A Costa Rica-born Bain official named Harry Strachan invited friends and former clients in Central America to a presentation about the fund with Romney in Miami. The group was impressed and “signed up for 20% of the fund,” according to Strachan’s memoir. That was about $6.5 million, according to the Globe. Bain partners themselves were putting up half the money, according to Strachan. Thus the Central American investors had contributed 40 percent of the outside capital.
Back in 1984, wealthy Salvadoran families were looking for safe investments as violence and upheaval engulfed the country. The war, which pitted leftist guerrillas against a right-wing government backed by the Reagan administration, ultimately left over 70,000 people dead in the tiny nation before a peace deal was brokered by the United Nations in 1992. The vast majority of violence, a UN truth commission later found, was committed by rightist death squads and the military, which received U.S. training and $6 billion in military and economic aid. The Reagan administration feared that El Salvador could become a foothold for Communists in Central America.
The notorious death squads were financed by members of the Salvadoran oligarchy and had close links to the country’s military. The death squads kidnapped, tortured, and killed suspected leftists in urban areas fueling an insurgency that retreated to rural areas and waged war on the government from the countryside. The war, which lasted 12 years, triggered an exodus that brought more than 1 million Salvadorans to the United States.
There is no evidence that any of Bain Capital’s original investors were involved in these sorts of activities. But the identities of some of the investors remain secret, and there are family names that raise questions.
Four members of the de Sola family were among the original Bain investors, or “limited partners” in the company, the Globe reported. Their relative and “one-time business partner,” Orlando de Sola, was an important figure in El Salvador. A well-known right-wing coffee grower with an (in his words) “authoritarian” vision for the country, de Sola spent time living in Miami but was also a founding member of the right-wing Arena party, lead by a U.S.-trained former intelligence officer named Roberto D’Aubuisson.
Craig Pyes, an investigative reporter then with the Albuquerque Journal, wrote a series on the rightist death squads based on extensive on-the-ground reporting in El Salvador in the early 1980s with Laurie Becklund of the Los Angeles Times, while the death squads were still active.
Pyes, who has since won two Pulitzer Prizes and is now a private investigator in California, says that no one has produced any proof that de Sola directly funded death squads.
“However,” Pyes says, “he was in the inner circle of the group around D’Aubuisson at the time that D’Aubuisson was well known to be involved in the death squads. De Sola’s name appears in a December 1983 FBI cable as one of 29 people suspected by State Department officials of furnishing funds and weapons to Salvadoran death squads.”
De Sola’s name also turned up in a notebook, seized from an aide to D’Aubuisson named Saravia, that detailed the finances of D’Aubuisson’s terrorist network, according to Pyes.
The Saravia notebook, reviewed by U.S. officials, listed weapons purchases, payments, and what appear to be descriptions of violent plots by rightists, including the assassination of El Salvador’s Archbishop Oscar Arnulfo Romero in 1980. Asked about the notebook by the New York Times in the late 1980s, de Sola denied that he had ever helped finance political violence. De Sola could not be reached for comment for this story.
Romney, for his part, who was much more accessible to the press in 1994, told the Globe that year that “we investigated the individuals’ integrity and looked for any obvious signs of illegal activity and problems in their background, and found none. We did not investigate in-laws and relatives.” He also said that Bain had checked the names of the Bain investors with the U.S. government. Given the policy of the Reagan administration at the time, though, it’s not clear going to the government would have been the most effective vetting mechanism.
It’s impossible to fully explore the backgrounds of the original Bain investors because we don’t know all their identities, including the names of the four members of the de Sola family mentioned by the Globe. Neither the Romney camp, Bain Capital, nor Strachan — the Bain executive who recruited the Central Americans — responded to requests for comment.
During his first presidential bid in 2007, Romney more than once touted the Central American investors in Bain while trying to woo Hispanic voters. In a speech in March of that year to the Miami-Dade Lincoln Day Dinner, Romney actually specified five of the original “partners” in Bain Capital — but the de Sola family was not among those he named.
And that August he told the Miami Herald, “The investments for the company that I started, Bain Capital, came largely from Latin America. My largest single investors came from El Salvador, Ecuador, Colombia and Guatemala. And so I feel a deep kinship to people in Latin America.”
By: Justin Elliott, Salon, January 20, 2012
The “Appeasement” Parrots Of The GOP
With the country still struggling to pull itself out of an economic recession, foreign policy has not rated the highest among issues discussed by the Republican presidential candidates. But among those foreign policy issues that have been debated, one has dominated the agenda: Iran. And other than Ron Paul, the candidates have arrived at the same verdict on President Obama’s Iran policy: It is appeasement.
Speaking at a forum last month, the candidates lined up to launch the charge at Obama. “For every thug and hooligan, for every radical Islamist, he [Obama] has had nothing but appeasement,” said former Sen. Rick Santorum. “Internationally, President Obama has adopted an appeasement strategy,” said former Gov. Mitt Romney. In September, standing alongside hard-line supporters of Israel’s settlements, Texas Gov. Rick Perry similarly condemned the administration’s “Middle East policy of appeasement” — at almost precisely the same moment that Obama was delivering a speech defending Israel at the United Nations and demanding that Iran meet its nuclear treaty. In late December, Newt Gingrich said on an Iowa radio program, “You have an Obama administration who’s dedicated to appeasing our enemies and dedicated to giving away our secrets.”
It’s not a particularly surprising line of attack. “Appeasement,” with its obvious reference to British Prime Minister Neville Chamberlain’s capitulation to Adolf Hitler at Munich in 1938, is probably the single most overworked accusation in the conservative foreign policy lexicon, a free-floating, no-evidence-required assertion of weakness and surrender. The charge has become so unmoored from any actual historical context that many who use it are not even aware of its provenance. During the 2008 presidential campaign, “Hardball’s” Chris Matthews famously humiliated right-wing shout radio jock Kevin James by repeatedly asking what had actually happened at Munich, to which a red-faced James could only repeatedly scream, “Appeasement!”
One can disagree with the Obama administration’s two-track approach of engagement with and pressure on Iran. But to describe that approach as “appeasement” is to declare oneself desperately in need of a dictionary. The Obama administration has overseen the adoption of some of the most stringent multilateral sanctions ever on Iran. It has undertaken unprecedented defense cooperation with regional allies, including the placing of a NATO missile defense radar system in Turkey, to Iran’s continued outrage. And the administration successfully facilitated the appointment of a special U.N. human rights monitor for Iran to track the regime’s continued abuses.
Iranian President Mahmoud Ahmadinejad’s recent jaunt through Latin America, intended to combat the perception that Iran is increasingly isolated, was a bust, long on photo ops and statements of solidarity from the likes of Hugo Chavez, but short on actual measures that might help Iran out. The Wall Street Journal reported Tuesday that Iranians’ efforts to protect their savings from rampant, sanctions-induced inflation by offloading rials for more stable currencies had gotten so bad that Iranian authorities cracked down on the practice.
There is a legitimate argument to be had over whether the punishing measures taken by the international community will actually push the Iranian government toward a compromise on its nuclear program, which it insists is for peaceful purposes, but about which the International Atomic Energy Agency continues to have troubling unanswered questions. At the very least, though, one would think that enacting such measures would inoculate the administration from the charge of being weak on Iran. But no, some of Obama’s conservative critics have gone so far as to redefine appeasement as simply the act of talking to one’s adversaries, as columnist Charles Krauthammer did when he insisted that the administration’s efforts at negotiations with Iran “did nothing but confer legitimacy on the regime.”
In reality, talks with Iran have served as a force multiplier for other efforts to put pressure on Iran over its nuclear program. As one Israeli defense official told me for an article last year, the Israelis themselves were very skeptical that talks with Iran would have any benefit, but now recognize that the effort “contributed to building international consensus” around the problem. Negotiations have actually done the opposite of conferring legitimacy on the regime — they made clear to the world, and to the Iranian people, that the Iranian government, not the U.S., was the central obstacle to a resolution, thereby facilitating further sanctions. On Monday, Nicholas Burns, the under-secretary of state for political affairs during the George W. Bush administration, told MSNBC’s Andrea Mitchell that “Iran is probably more isolated today than the day that President Obama took office.”
Conservative mendacity aside, it’s worth looking at what former British Prime Minister Winston Churchill, the patron saint of the anti-appeasement crowd, had to say about it. “The word ‘appeasement’ is not popular, but appeasement has its place in all policy,” Churchill told an audience in 1950. “Make sure you put it in the right place. Appease the weak, defy the strong.” Returning to the theme later that year, he noted that “Appeasement in itself may be good or bad according to the circumstances.”
It should come as no surprise that the views of Churchill the man are quite a bit more nuanced than those of Churchill the Neocon Dashboard Saint, but what might this mean with regard to Iran? It means remembering that, despite the significant self-inflicted setbacks created by our invasion of Iraq, the U.S. is still dealing from a position of considerable strength against a weaker power in Iran. The U.S. has by far the largest military in the world, with an annual defense budget of over $700 billion, while Iran spends around $9 billion per year.
This certainly doesn’t mean that the U.S. should acquiesce to an Iranian nuclear weapon, but it does suggest that the U.S. and its partners should at least consider making explicit what was implicit in the proposed 2009 deal on fuel for the Tehran Research Reactor: a recognition of Iran’s right to domestic enrichment in exchange for the complete satisfaction of the IAEA’s concerns, and a commitment to ongoing verification. At the very least, talks should continue to be pursued in the hope of establishing some line of regular communication between the U.S. and Iran as a way to calm tensions, which are running high over Iran’s provocative threats to close the Strait of Hormuz, and the assassination of another Iranian nuclear scientist.
Finally, as we face a new round of calls for preventive war against Iran, from many of the same people who advocated preventive war against Iraq, it’s very much worth remembering that the Iraq war provided a greater strategic benefit to Iran than any “appeasement” conceivably could. Some of those gains have been lost in recent years, partly as a result of the Arab Spring, partly as a result of the Obama administration’s hard diplomatic work, and partly because of Iran’s own incompetence and belligerence. Clearly, Iran continues to represent a challenge to the U.S. and its interests on a number of fronts, but it’s important to keep that challenge in perspective, and not allow ourselves to be marched into another ruinous military adventure with unforeseeable consequences through the ridiculous idea that anything short of war is “appeasement.”
By: Matt Duss, Policy Analyst , Center for American Progress, Published in Salon, January 20, 2012
Unlimited Contributions Give “Super PACs” Power To Change Presidential Race
With the South Carolina primary less than a week away, residents of the state are being bombarded with a barrage of political advertisements funded by Super PACs.
“It’s coming in fast and furious,” said Randy Cable of South Carolina’s conservative talk radio station WORD.
Cable said that Super PACs are buying up a majority of his station’s air time.
“They’re a game changer,” Cable told Rock Center Special Correspondent Ted Koppel in an interview scheduled to air Monday night.
This election season is the first presidential race to feel the influence of Super PACs, political action committees that can receive unlimited money from individuals, corporations and unions. Some of these Super PACs have morphed into powerful outside organizations working solely on electing a presidential candidate of their choosing. While a campaign supporter can only donate $2500 directly to a presidential candidate, he or she can donate unlimited amounts of money to a Super PAC supporting the same candidate.
“The Super PACs are outspending the candidate committees two to one at this point in time,” Cable said. “The ones that are buying the most [air time] are going to have the biggest impact. You know, just like in the world of business and advertising, politics goes the same way. Those that spend the most have the biggest impact.”
Every major GOP presidential candidate has a Super PAC supporting their campaign. Super PACs are supposed to operate independently of the candidates, meaning they can’t communicate directly with the politicians and their campaign staff. Super PACs have been effective even with the communication barrier, because they are often run by people who already know how the candidates think. A look at whose running the Super PACs reveals a roster of former staffers and advisers to the presidential candidates.
Carl Forti, a former political director for Mitt Romney, helped launch the ‘Restore Our Future’ Super PAC in 2010. The Super PAC supports Romney’s campaign for president.
Koppel asked Forti, “Some of the research I’ve read on you and your organization suggests that you may by the end of this political year have spent four hundred million dollars on the campaign. Is that fair? Does that seem reasonable?”
Forti responded by saying, “Potentially. Well, that seems a little high probably, but between the different entities it may be three hundred, three-fifty.”
Of those criticizing the millions raised by Super PACs, Forti said, “There’s a lot of criticism leveled at Super PACs, but we’re just operating under the laws as provided.”
The Citizens United Supreme Court decision in 2010 allowed the unique political action committees to form. In the case of Citizens United against the Federal Election Commission, the Supreme Court ultimately ruled that the government could not limit political spending by corporations.
Some of this election year’s most negative advertising has come from Super PACs, giving candidates a way to effectively attack an opponent without having the blame pinned directly on them.
At a press conference held Monday morning in South Carolina, Republican presidential candidate Jon Huntsman cited the negative tone of this year’s campaign when he announced he was dropping out of the race.
“This race has degenerated into an onslaught of negative and personal attacks not worthy of the American people and not worthy of this critical time in our nation’s history,” Huntsman said.
Political analysts say that an anti-Newt Gingrich ad run by ‘Restore Our Future’ during the lead-up to the Iowa Caucuses significantly impacted Gingrich’s one-time lead. Gingrich finished fourth in the caucuses.
“We learned in Iowa, if you unilaterally disarm, you might as well not run. If you allow other candidates to have a scorched earth, multimillion dollar ad campaign and there’s nothing that responds, they simply, by constant defamation drive you down,” Gingrich told Koppel.
Following Gingrich’s finish in Iowa, a Super PAC supporting the former Speaker of the House called ‘Winning Our Future,’ received a $5 million donation from wealthy casino owner Sheldon Adelson. In South Carolina, ‘Winning Our Future’ has launched anti-Romney advertisements.
While Gingrich has publicly denounced the negative advertisement, the Super PAC supporting him continues to run the ad that paints Romney as a greedy businessman and attacks his record from his days at venture capital firm Bain Capital.
“We’re now entering a world where until the laws are changed, every serious campaign will have one or more Super PACs. They will spend an absurd amount of money and it will virtually all be negative. That’s a fact,” Gingrich said. “Given the playing field right now, you have no choice.”
The power of the Super PAC has been mocked by comedian Stephen Colbert, host of Comedy Central’s ‘The Colbert Report.’ Colbert created his own Super PAC and recently handed over control of it to Jon Stewart, renaming it ‘The Definitely Not Coordinated with Stephen Colbert Super PAC.’
Colbert handed over control to form an exploratory committee about a possible presidential run in South Carolina. His Super PAC also launched a satirical anti-Romney advertisement that likened the former Massachusetts governor to a serial killer, implying that Romney killed businesses.
Colbert talked to Koppel shortly before he relinquished control of his Super PAC.
“It would be stupid to be in the 2012 campaign or want your voice heard in the 2012 campaign and not have a Super PAC,” Colbert said. “I mean, the RNC, the DNC, those organizations really don’t mean much anymore. Karl Rove has more money than the RNC.”
Back in South Carolina, the advertisements seem to be getting nastier by the day as the million dollar donations continue to pour in.
“These Super PACs don’t have reputations to protect, so I think that there is a tendency for them to get nastier in the ads that they run and they don’t have the same restraints operating on them as candidate committees do,” said Ellen Weintraub, a commissioner for the Federal Election Commission.
Weintraub and the FEC are tasked with regulating the Super PACs. Weintraub said that a key difference between the PACs and the candidate committees is that the Super PACs do not have to disclose their donors as often. The first time that many of the Super PACs will disclose their donors will be at the end of January, which means that voters will have cast their vote in several key primaries before knowing who is behind the advertisements that flooded their televisions and radios.
“At some point, you have to step back from the regulations, you know, take your face out of the book and see the forest for the trees,” Weintraub said. “And I think for a lot of people out there, seeing the massive amounts of money that are being raised and spent by groups in the candidates’ names effectively on the outside, and seeing that these groups do appear to have some kind of connection to the candidates. I think it’s going to raise a lot of questions for the public.”
So how do political advertisements get so nasty? Unlike consumer advertisements, political ads do not have to be vetted by the Federal Trade Commission.
“I mean it’s actually more difficult to sell somebody white bread than it is to sell a president getting into the White House,” said Linda Kaplan Thaler, an advertising executive.
Thaler is behind campaigns like Wendy’s advertising campaign and the Toys R’ Us popular jingle, ‘I Don’t Want to Grow Up.’ Thaler said that when it comes to consumer advertising, it’s about building a love for the brand. With politicians, it’s different.
“You know, when it comes to politics, it’s not so much about, you know, that I have to love the candidate I’m voting for. It’s very often, I have to dislike him the least,” Thaler said.
By: Jessica Hopper, Rock Center, January 16, 2012
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 