By: Eugene Robinson, Opinion Writer, The Washington Post, January 16, 2012
“Creative Destruction”: Re-Examining The Myth Of No-Fault Capitalism
From all evidence, the issue of economic justice isn’t going away. Break the news gently to Mitt Romney, who seems apoplectic that the whole “rich get richer, poor get poorer” thing is being discussed out loud. In front of the children, for goodness’ sake.
“You know I think it’s fine to talk about those things in quiet rooms,” he told the “Today” show’s Matt Lauer last week. “But the president has made this part of his campaign rally. Everywhere he goes we hear him talking about millionaires and billionaires and executives and Wall Street. It’s a very envy-oriented, attack-oriented approach.”
Actually, those blasts weren’t coming from President Obama. That was Romney’s competition for the Republican nomination, sounding like a speakers’ lineup at an Occupy Wall Street rally.
Now, I predict, will come a furious attempt by the GOP to unring the economic justice bell. Damage control efforts began with Newt Gingrich backing away from his sharp-fanged criticism of Romney’s record at Bain Capital, the investment firm he led. Don’t attack the GOP front-runner for being a ruthless, heartless corporate raider, Gingrich announced, but rather for not being conservative enough.
This admonition came as a pro-Gingrich political action committee continued to blast Romney as a ruthless, heartless corporate raider. Inconsistency, thy name is Newt.
By most accounts, Bain was a relative laggard in the ruthlessness department. Other private-equity firms were far more brazen in the way they bought troubled companies, laid off workers, stripped away assets and fattened investors’ bank accounts. While Romney’s claim to have created 100,000 jobs looks like a gross exaggeration, it’s true that Bain stuck with companies such as Staples and Sports Authority and helped them grow.
But as for heartlessness, well, it comes with the turf, right? Bain was just serving as an instrument of “creative destruction,” and if workers lost their jobs, if they had to raid their children’s college funds to pay their mortgages, if perhaps that money ran out and they ended up losing their homes, in the long run they’ll still be better off. Or the country will be better off. Or something.
In any event, capitalism means never having to say you’re sorry. Perish the thought that anyone would critically examine this ethos except in a “quiet room.”
But to the horror of radical free-market ideologues, the myth of no-fault capitalism is under scrutiny. No one is arguing against markets, which are indeed the best way to create wealth and thus the best weapon against poverty. No one is arguing that investors who risk their capital in a company should not be able to reap rewards. What the ideologues ignore, however, is that workers also have “capital” at risk — in the form of mind and muscle, creativity, loyalty, years of service. Why is this investment so casually dismissed?
The first of the Republican candidates to raise the fairness issue was Rick Santorum, who spoke in debates of the pain many families were suffering because of economic dislocation. This was before his strong showing in Iowa, so no one was paying attention.
Then Gingrich and Rick Perry picked up the theme in an attempt to slow Romney’s march to the nomination. Whether they meant what they said or were just being tactical, the effect was to open a discussion of economic fairness and justice that will be hard to squelch.
The next logical step is to look at the results being produced by the radically deregulated, no-fault capitalism that has been practiced in this country since the Reagan revolution. Overall, we’ve had tremendous growth and low inflation. But we’ve also seen rising inequality and falling mobility. Middle-class incomes have stagnated, upper-class incomes have skyrocketed, and rags-to-riches stories are now less likely than in most of the “European social democracies” Romney holds in such disdain.
We have failed to keep pace with other industrialized societies in public education, and rather than offer relevant retraining to employees displaced by innovation and globalization, we leave them to their own devices. As a result, we’re starting to lose not just basic manufacturing jobs but also high-value-added, knowledge-based jobs to countries where workers are more qualified.
Government has played a huge role in guiding the nation through previous economic upheavals — after World War II with the GI Bill, for example. It can and should play such a role now.
That’s my view, at least. Thanks to the Republican candidates, of all people, we’ll get to hear what President Obama and his eventual opponent think.
Romney’s Genuine Capitalist Bona Fides Could Be His Downfall
Say what you will about him, Mitt Romney is the real thing: a Wall Street guy to his bones, a numbers whiz who took a small start-up, Bain Capital, and helped turn it into a $65 billion giant among private-equity firms (which is what we now call the the old corporate-raiding leveraged-buyout buccaneers we used to think of as “barbarians at the gate” back in ’80s; in case anyone was wondering, they’re now allowed inside the gate). Romney actually is, in other words, what Newt Gingrich and Rick Santorum and Rick Perry can only talk about in the abstract: he’s a real capitalist.
And now we find that he gets paid like one too. To the surprise of very few, the GOP’s nominee presumptive acknowledged on Tuesday that he pays about 15 percent in taxes, far less a percentage than the average middle-class American, thanks to a host of tax breaks proffered by what Warren Buffett once critically called “our billionaire-friendly Congress.”
But Romney’s biggest political problem right now is not that he is at loggerheads with his fellow Rich Guy, St. Warren of Omaha, who has generously demanded that the billionaire-friendly Congress ask more of the super-wealthy in taxes (which Romney vehemently opposes). Buffett doesn’t command that many votes. Romney’s biggest problem is determining whether the mood of the country has really shifted against the financial plutocrats as much as the Occupy Wall Street movement might indicate.
I think it has, and Romney will have a lot of self-defense to do in the general election.
As much as they might have annoyed their conservative base, Gingrich and Perry were on to something when they attacked Bain Capital in South Carolina. The anti-Wall Steet anger cuts across party lines. It’s not so much the kind of activities that Romney and Bain were engaged in; Bain is really just feeling the blowback from anger on both left and pight. Bain may sometimes destroy jobs, but when it fails at a venture, at least it loses money.
Yet the public may no longer be interested in making the distinction between Wall Street firms that follow the rules and those that don’t. The reason that what Gingrich and Perry are saying resonates goes back to Wall Street’s offenses over the last decade with subprime mortgage securitization. The issue here is not really about the ordinary “the rough and tumble of market capitalism,” as The Wall Street Journal‘s Gerald Seib suggested at the debate last night. Most Americans don’t have a problem with that. The issue is really the corruption of market capitalism represented by the massive fraud that Wall Street banks got away with, for which they were then bailed out by the federal government with no questions asked. All this has aggravated, for average Americans, the frustration they already feel because of the record levels of income inequality that exist in our economy.
That’s why the public is likely to get its dander about Romney’s 15 percent. It is an issue that unites conservatives and liberals, OWS protesters and tea partiers alike. As I wrote in my 2010 book Capital Offense, both the left and the right were justifiably offended by the way the American system of capitalism — real capitalism, that is, the way it’s supposed to work — was subverted during the subprime era. Liberals were appalled by the rampant destruction of social equity, and the rigged way so much wealth was amassed in the hands of the 1 percent; conservatives were outraged that the system didn’t work the way it was supposed to: in other words, if you fail, you die.
So Romney’s biggest problem may not be his robotic campaign style, or the tin ear that lead him to bet Perry $10,000 (presumably at low tax rates) at one point. His biggest problem may be his golden resume. Given the mood of the country, Romney may have a tougher time persuading the public he’s the One during the general election season than he thinks.
By: Michael Hirsh, Chief Correspondent, National Journal; Published in The Atlantic, January 17, 2012
Mitt Romney’s Miserly Concern For The Poor
“I’m concerned about the poor in this country,” Mitt Romney said the other day. “We have to make sure the safety net is strong and able to help those who can’t help themselves.”
I perked up at those words, because they were something of a departure from his usual stump speech and because they happened to come on a day when I had written about the dire implications of Romney’s proposals for the social safety net.
I don’t question his sincerity. The problem: This fine sentiment doesn’t square with his actual policies.
Consider Romney’s support for the budget plan crafted by Wisconsin Rep. Paul Ryan and passed by the Republican House. It would cut Medicaid spending by $700 billion over 10 years, reduce food stamps by $127 billion and cut in half the funding of Pell Grants for low-income college students.
As Fox News’s Chris Wallace usefully pointed out in an interview with Romney last month, “You would cut all of these programs, Governor, that people depend on, and a lot more than that.”
Romney, in response, focused on his proposal for Medicaid. He would turn the program over to the states and allow funding to grow at inflation plus 1 percentage point — significantly less than the historical growth of health-care costs.
“By doing that, you save an enormous amount of money,” Romney said. “I happen to believe that states can do a better job caring for their own poor, rooting out the fraud and waste and abuse that exists within those programs.”
Wallace: “But you don’t think, if you cut $700 billion in aid to the states, that some people are going to get hurt?”
Romney: “By cutting welfare spending dramatically, I don’t think we hurt the poor. In the same way, I think cutting Medicaid spending by having it go to the states, run more efficiently with less fraud, I don’t think will hurt the people that depend on that program for their health care.”
Really? Reforming welfare to encourage work was a good idea, but for those who need temporary help, benefits are increasingly inadequate. Adjusting for inflation, benefits are now below the 1996 level in all but two states. And turning the program into a block grant has meant that states, reeling from the impact of the recession, have been unable to respond adequately to increased needs.
That history is hardly reassuring about Romney’s plan to cut hundreds of billions from Medicaid. But the welfare analogy isn’t the only cause for concern. The Congressional Budget Office (CBO), analyzing the Ryan cuts, found that states “would face significant challenges in achieving sufficient cost savings through efficiencies to mitigate the loss of federal funding.”
So much for Romney’s mythical world in which huge cuts can be accomplished with zero harm to the poor and disabled.
Instead, according to the CBO, states would face a menu of unappetizing choices. If they did not want to raise taxes or reduce other spending, they would have to choose among cutting already low provider payments; reducing the benefits that the program covers; or throwing people now eligible for help off the program.
The impact of Romney’s approach on the safety net would go far beyond Medicaid. The brutal arithmetic of his stated plan to cap spending at 20 percent of gross domestic product — while, unlike Ryan, increasing defense funding — is that safety-net programs would have to be chopped significantly beyond where even Ryan would take them.
Romney’s tax plan would exacerbate the unfairness. He would continue the Bush tax cuts for the wealthiest Americans and provide extra breaks that would primarily help the rich. According to a new analysis by the nonpartisan Tax Policy Center, taxpayers with incomes of $1 million or more would see an average tax cut of $287,000 compared to letting the Bush tax cuts for the wealthy expire.
At the same time, Romney would do away with recent increases in the child tax credit and the earned-income tax credit — provisions that help low-income families. As a consequence, between 16 and 20 percent of those with incomes of $50,000 or less would actually see their taxes rise under a President Romney.
In other words, Romney would spend hundreds of billions for a tax cut whose benefits flow overwhelmingly to the wealthiest Americans, even as he would cut even more from programs that help the most vulnerable.
Those skewed priorities are hard to square with Romney’s stated concern, however heartfelt, for the poor. The man from Bain Capital needs to take another look at his figures.
Why The Bain Capital Controversy Is So Damaging To GOP Chances This Fall
The last few weeks of the Republican Presidential road show has been dominated by discussion of Mitt Romney’s career as head of a Wall Street private equity firm — Bain Capital. Most people who enter politics have some previous career in the private sector — especially if they’re wealthy.
But Mitt Romney’s career on Wall Street — which he apparently hoped would allow him to tout his credentials as a “job creator” — will instead weigh down his election hopes like a massive millstone. There are six reasons why:
1). First and most important, attacks on Romney’s history at Bain are not “attacks on free enterprise” — or being “anti-business.” They are important for what they communicate about Mitt Romney and his values and the contrast that it poses with President Obama.
Barack Obama – like Mitt Romney — earned a degree at Harvard — and all of the opportunities that afforded. But when he graduated from law school, Obama went to work helping workers in the shadow of closed -down steel mills. Romney made millions for himself closing down steel mills.
The point is not just that workers were laid off, or jobs were outsourced — though they were. The point is not whether some of the ventures Romney funded succeeded and others failed. The point is that the impact of Romney’s business activity on the lives of ordinary people was incidental to his one and only goal: making huge sums of money for himself and a small group of his partners and investors.
Romney’s idea of success was embodied in that picture from two decades ago, with Romney at the center, surrounded by a squadron of Wall Street sharpies with money coming out of their pockets, their mouths and ears.
The point of the Bain story is that Romney would do whatever he could legally do to make money for himself and his crew. The effect of his decisions on the lives of ordinary people — or even the businesses in which they invested — was simply irrelevant. If shifting jobs overseas would make him and his friends more money – fine. If Bain could make millions by loading up a business with debt and bleeding it of cash — that was fine too — even if it meant that the business itself was ultimately forced to close. If buying a business and chopping it up into parts for resale would make him more money — so be it.
Improving the lives of ordinary workers — or of local communities — was never his goal. His goal was to make millions and millions of dollars for himself — often at other people’s expense. Instead of viewing ordinary workers as human beings who were parts of a team, he viewed them as “factors of production” — assets to be used when they helped him make money — objects to be discarded when that would fatten his bottom line.
Americans want a President who understands and cares about ordinary people — that’s not the Mitt Romney of Bain Capital.
2). If you were the Republican Party, you couldn’t pick a worse time to nominate a candidate with a resume as one of Wall Street’s “Masters of the Universe.”
Even today, most voters are acutely aware that the recklessness of the big Wall Street Banks — and a complicit Bush Administration — caused the 2008 financial crisis that cost eight million Americans their jobs and worst economic calamity since the Great Depression.
The GOP will have to go some distance to convince everyday voters that they should trust their economic futures to a guy who was part of precisely the same crowd whose greed and recklessness just sent the economy crashing in flames.
After all, not many people would be keen to sign up for a cruise managed by the same team that commanded the Titanic.
3). Over the last year, Americans have become increasingly focused on economic inequality — and on the fact that the gang that caused the economy to collapse kept making billions while everyone else paid the price.
The message of the Occupy Movement doesn’t resonate solely on the left of the political spectrum. Occupy speaks to many independents and conservatives as well.
And let’s remember, the Occupy Movement started out as “Occupy Wall Street.” Americans are increasingly uncomfortable with the exploding role of the financial sector in the American economy. They are not uncomfortable because of theoretical or “policy” concerns. It just doesn’t make sense to them that a relatively tiny number of people — who don’t build a product or create a service — can make massive amounts of money, while ordinary people who work hard and play by the rules see their incomes flat-line.
Their view is simple. They create cars, or food, or houses or computers — or they provide police protection, or care for sick people, or teach our kids. Why should they be asked to sacrifice when guys who basically gamble for a living — as Wall Street speculators — make incomprehensibly large sums of money?
It makes no sense to them that 400 families control as much wealth as 150 million of their fellow Americans — that the top 1% control 30% of all of the wealth in America.
It makes no sense that a hedge fund investor like John Paulson can make $5 billion in income and pay a lower percentage in taxes than a secretary. He makes $2.4 million per hour — or $40,000 a second. Paulson makes as much in the first 1.25 minutes of the work year as the average worker makes all year long.
That kind of excessive wealth might not upset everyday Americans so much if their own incomes were growing. But those incomes have stagnated for decades. And over those same decades, the incomes of the top 1% have increased by almost 300%.
And perhaps most galling to everyday voters, is the fact that the wealthiest Americans have such an outsized influence setting the rules — cutting their own taxes — making their own regulations — and are rarely held accountable for the recklessness that has cost everyone else so dearly.
Americans feel that the middle class is in dire jeopardy — that it is under attack. They worry that the American dream will be snatched from their own families — and those of their children.
Not a great time for the Republicans to nominate a poster boy for the one percent.
4). The impact of Romney’s record at Bain is magnified by his own personality.
Romney comes across as a cold, calculating guy — precisely the kind of guy who doesn’t blink an eye when he orders up hundreds of “pink slips.” He is about as empathetic as a rock.
He has a hard time connecting with people in public — and on TV. And he seems to have a tin ear — a hard time understanding how his remarks will be interpreted by ordinary voters.
He “enjoys” firing people who don’t give him good service. Really?
He doesn’t understand how it might sound for a guy who has a fortune of $200 million to say that he is actually “unemployed” too. Or when — having graduated from Harvard, born into a family of the CEO of a big auto company, he says he has been worried about getting a “pink slip”? Sure.
He doesn’t even have to stop and think when he offers to bet $10,000 on who is right in a televised debate? Ten thousand dollars is two thirds of the average annual Social Security benefit.
That kind of tin ear sends a message to ordinary voters that he is simply out of touch – that he doesn’t understand or empathize with the lives of ordinary Americans.
Then there is the story of the 12-hour trip with the dog in the kennel on top of the car. The story about how when the dog got sick riding on top of the car — had an attack of diarrhea. Romney hosed down the car — hosed down the dog — put the dog back on top of the car and continued the drive.
These personal characteristics just reinforce the picture of Romney as a Wall Street baron who doesn’t understand or care about the needs, or lives, or interests of ordinary Americans.
5). The fact that Newt Gingrich and Rick Perry have joined in defining Romney’s Bain years absolutely inoculates Democrats from charges that they are “anti-free enterprise” or “anti-business” when they make the same charges.
Probably not very likely that Gingrich or Perry would volunteer to attack Romney’s history at Bain next September — but they just did. All Democrats need to do is put a clip of Rick Perry in an ad where he accused Romney of being a “vulture capitalist.”.
6). Finally, in so many respects, Romney’s Bain history makes him the perfect antagonist in the campaign narrative set out by President Obama last month in his Kansas speech.
The President will, quite correctly, frame the upcoming election as a battle for the future of the American middle class — a choice between a society where we’re all in this together or all in this alone.
He will offer a vision of America where we look out for each other — where everyone is called upon to play by the same rules — and everyone gets a fair shot, a fair shake and contributes their fair share.
The Willard Mitt Romney who ran Bain Capital is the perfect foil for the Democratic narrative this fall. That’s why the Bain Capital narrative is so important for defining Romney and setting the terms of this year’s election campaign.
Just visualize the national political debate that features the Mitt Romney we’ve seen on TV the last several weeks and the Barack Obama who made the speech in Osawatomie, Kansas last month.
At the close of his Kansas speech — which took place in the same town where Theodore Roosevelt had announced his “New Nationalism” a century ago. Obama said:
“We are all Americans,” Teddy Roosevelt told them that day. “Our common interests are as broad as the continent.” In the final years of his life, Roosevelt took that same message all across this country, from tiny Osawatomie to the heart of New York City, believing that no matter where he went, no matter who he was talking to, everybody would benefit from a country in which everyone gets a fair chance.
And well into our third century as a nation, we have grown and we’ve changed in many ways since Roosevelt’s time. The world is faster and the playing field is larger and the challenges are more complex. But what hasn’t changed — what can never change — are the values that got us this far. We still have a stake in each other’s success. We still believe that this should be a place where you can make it if you try. And we still believe, in the words of the man who called for a New Nationalism all those years ago, “The fundamental rule of our national life,” he said, “the rule which underlies all others — is that, on the whole, and in the long run, we shall go up or down together.” And I believe America is on the way up.
By: Robert Creamer, The Huffington Post, January 16, 2012
To Mitt Romney, Detractors Suffer From Envy
Mitt Romney thinks he has figured out why people are critiquing his private-sector record: they’re jealous of rich people.
Romney said on Wednesday’s Today show that all the carping about greed and excess in America is “about envy. It’s about class warfare.”
Romney is smarting from attacks over his time as the head of Bain Capital, the Boston private-equity firm he founded. Gov. Rick Perry called Romney a “vulture capitalist” and Newt Gingrich accused him of “looting companies” while at Bain. These broadsides echo the Democrats who have derided Romney as a “corporate buyout specialist” who outsourced and eliminated jobs in order to line his own pockets.
Yet, like the snobby homecoming queen who thinks everyone hates her because they are jealous, Romney can’t see that it’s not his financial success in itself that is the problem. It’s that many people find his self-serving brand of capitalism—which was the hallmark of the recent economic collapse—repulsive.
Don’t blame the green-eyed monster. It’s simply that Americans are increasingly fed up with the behavior of the ultra-wealthy who have enriched themselves with no regard for the pile of middle class bodies they leave in their wake. In fact, a Pew poll released Wednesday discovered that two thirds of the public (66 percent) believes there are “very strong” or “strong” conflicts between the rich and the poor, up 19 points since 2009.
Why would this be? Cue the tape: “Make a profit. That’s the name of the game, right?” a smirking Romney says in King of Bain: When Romney Came to Town, a documentary Gingrich’s super PAC released on the Internet Wednesday.
In other words: don’t hate the player, hate the game.
But it’s not a “game,” Mitt.
Furthermore, making a profit is only one component of owning a business. Whatever happened to the idea that you are responsible for your workers and to the larger community? Too often, people feel like just pawns in a game of ever-increasing largesse for the top dogs. The big shots are always the winners—often getting payouts in the millions when their companies fail—and the “losers” are left to figure out how to eat or buy clothes for their children. (A new study found that $100 million “golden parachutes” have become commonplace for failed CEOs.)
Romney’s “class envy” claim is predicated on a lie we often here from the uber-rich and their defenders: the highest goal and achievement for Americans is to be wealthy, when all most people want is to be able to provide a decent lives for their families.
Pew Research found in 2008 that only 13 percent of adults say it’s “very important” for them to be wealthy. The survey found that, “Four times more people say ‘doing volunteer work or donating to charity’ is a very important priority than say the same about being wealthy.” And about five times more Americans (67 percent) say it’s very important to them to have enough free time. Having children, living a religious life, and getting married also ranked vastly higher than being wealthy.
Yet, Romney has made the “class envy” trope central to his message. In his New Hampshire victory speech Romney whined that President Obama “divides us with the bitter politics of envy.
Romney complained to on Wednesday’s Today show, “Everywhere [President Obama] goes we hear him talking about millionaires and billionaires and executives and Wall Street. It’s a very envy-oriented, attack-oriented approach and I think it will fail.” In maximum Thurston Howell III mode, Romney allowed, “I think it’s fine to talk about those things in quiet rooms.” But the president is talking about it in public!
How uncouth. Doesn’t Obama know that it’s always best to discuss the unwashed masses over martinis at the gentlemen’s club?
The unlikely hero in this tale has been Newt Gingrich, who has been making the most coherent argument for ethical capitalism. Says Gingrich, what we want is “a free enterprise system that is honest … fair to everyone and gives everyone an equal opportunity to pursue happiness.” Criticizing Romney’s brand of free enterprise, Gingrich said, “It’s not fine if the person who is rich manipulates the system, gets away with all the cash and leaves behind the human beings.”
Be still, my heart.
Newt’s new message—and Romney’s continued tin ear to this issue—may pay dividends in the upcoming primary states. Unlike Iowa and New Hampshire, which have some of the lowest unemployment rates in the country, people in South Carolina are suffering mightily with a 9.9 percent unemployment rate. Ditto for the following two primary states, Florida and Nevada, with jobless rates in the double digits.
Romney gaffes, such as “I like to be able to fire people” probably aren’t going to engender a lot of love. Nor will his joking that, “I’m also unemployed … and I’m not working” as he told a group of unemployed Floridians. In Nevada—with the highest foreclosure rate in the country—a clip showing Romney saying, “Don’t try and stop the foreclosure process” is sure to be a dud.
Romney needs to figure out that Americans aren’t player haters. They don’t have “Mitt envy.” They just want jobs.
I’ll bet Romney $10,000 I’m right.
By: Kirsten Powers, The Daily Beast, January 13, 2012
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