Willard Mitt Romney Rails Against “Entitlement Society” — That Takes Chutzpa
Earlier this week, Republican Presidential candidate Willard Mitt Romney delivered a speech framing the 2012 presidential election as a choice between an “entitlement society” and an “opportunity society.”
It really takes chutzpa for a guy who was born with a silver spoon in his mouth to rail against an “entitlement society.” Here is a guy who got his start in life the old-fashioned way — he inherited it.
Now I realize that you don’t get to choose your parents. He had no role in deciding that he would be born into the family of an auto executive and Michigan Governor — but at least he should have the decency not to attack “entitlements.”
This is not a guy who pulled himself up by his boot-straps. His name, his family connections and — not incidentally — his money gave him a real leg up when he decided to go into the investment banking business. And let’s not forget that when he did go into business for himself, he didn’t make money building things or inventing things — or designing new products. He made money buying companies, and often breaking them up, or firing employees.
Last Sunday’s New York Times reported that Romney continued to make money from his old firm Bain Capital through his time as Governor and his attempts to run for Senate and President. It noted that much of his income is likely taxed at only 15% — though we don’t know for sure since he refuses to release his tax returns.
He is the poster boy for the one percent — and he is talking about “entitlements”?
If you ask someone on the street which kid in high school Mitt Romney reminds him of, he is likely to tell you it’s the kid who drove to school in a Ferrari and got all the socially “in” girls. He was the smug guy who knew he was set for life.
As humorist and political commentator Jim Hightower used to say of the first George Bush — Romney is a guy who was born on third base and thinks he hit a triple. And he is lecturing America about the “entitlement society? ”
And let’s look at what he refers to as “entitlements.” Mainly he’s talking about Social Security, Medicare and Medicaid. Let’s remember that Social Security and Medicare are not “entitlements” at all. They are earned benefits that people pay for through their payroll taxes throughout their working lives.
And Medicaid? It’s the program that guarantees that if you’re a child who is not lucky enough to be born into the household of an auto executive and Michigan Governor you still get health care. It’s the program that assures that if you weren’t lucky enough to have a trust fund — or if some investment banker bought your company and fired you — that you can still get treatment if you get hit by a bus. It’s the program that assures that when you’re 80 years old and get Alzheimer’s but your 401-K disappeared because a bunch of Wall Street sharpies made reckless investments and sunk the economy — you can get long-term care instead of being left to die on the street.
Then again that’s not something a guy like Mitt Romney would know about. In fact he admitted the other day that he didn’t really know the difference between Medicare and Medicaid until he was 55 years old. Guess a guy who has about $200 million in assets doesn’t have to worry about such things.
You see, a guy like Romney doesn’t have the foggiest that the government initiatives he attacks are precisely the things that actually do create “an opportunity society.”
It was the GI Bill that sent the generation of Americans that fought World War II to college. It is Pell Grants and government-guaranteed student loans that allow most middle class Americans to send their kids to college.
It was Medicare and Social Security that rescued American seniors from poverty and provided guaranteed health care and a guaranteed base income for retirement. Romney, of course, wouldn’t know how important an average $14,000 annual Social Security benefit is to an everyday senior — that’s an hour’s compensation for the high-flying Wall Street types he hung around with at Bain Capital.
No, Romney is much more interested in privatizing Social Security and Medicare so his Wall Street buddies can get their hands on the Social Security and Medicare Trust Funds — even though that would eliminate the guaranteed benefits that are so critical to the health and welfare of America’s seniors.
Romney and the Republicans in Washington don’t seem to give a rat’s rear about the unemployment insurance or payroll tax holiday that will expire in ten days because the House Republicans have refused to pass a two-month extension while the terms of a year-long extension can be negotiated.
Forty dollars a paycheck — the cost of the increased payroll tax bite that everyday families will experience the first of the year — may not mean much to a multi-millionaire like Mitt Romney. But to ordinary families, $40 is the electric bill or several bags of groceries — and after just a few pay periods, it begins to add up pretty fast.
Turns out that when Republicans in Washington talk about taxes, they’re not so worried about a $40 increase ordinary people will have to pay in payroll taxes every time they get a paycheck. They’re worried about million dollar tax breaks for the gang on Wall Street.
Romney doesn’t even seem to have a clue that it is funding for public education and the public infrastructure that allows everyday Americans to have an opportunity to succeed — or that government has a responsibility to jumpstart the economy so that everyday, middle class people can get jobs.
In fact, he seems to agree with the Republican leaders of the House who say that unemployment benefits discourage people from looking for work. Guess Mitt has never been one of the five people competing for every available job. Oh, I forgot, Mitt says he is “unemployed” too. Talk about out of touch.
No, Romney’s view of an “opportunity society” is one where the government does nothing to help prevent foreclosures “so the market can bottom out.” It is one where the government stands by while the American auto industry collapses and costs a million Americans their good middle class jobs.
Then again, maybe Mitt’s idea of an “opportunity society” is having the “opportunity” to win the lottery — or maybe that would be a $10,000 bet. Doesn’t everyone make those?
By: Robert Creamer, The Huffington Post, December 22, 2011
Mitt Romney Relied On Corporate Welfare: How Bain Capital Leveraged Government Assistance To Boost Profits
During the presidential campaign, Mitt Romney has lashed out at the Obama administration’s taxpayer subsidized grants to clean energy start-up companies. “The U.S. government shouldn’t be playing venture capitalist,” wrote Romney in October. “The very process invites cronyism and outright corruption.” But public records show that Romney’s private equity firm, Bain Capital, repeatedly persuaded the government to play venture capitalist when it came to its own portfolio of companies.
News outlets have recently focused attention on Romney’s history as a businessman at Bain, which he founded in 1984. What hasn’t been reported, or fully explained by the candidate, is how Romney often got ahead in the private sector by using government help.
The likely GOP nominee made much of his estimated $250 million fortune buying companies, reorganizing them, and selling them for a profit. Though Romney, whose only government experience is his one term as Massachusetts governor, is quick to claim that he turned around investments using sound management and data-driven strategies, he does not mention one aspect of his success. Bain Capital owned companies that padded their profits using millions in public subsidies. In other cases, firms owned by Bain employed K Street lobbying firms to pursue lucrative government programs.
Consider two of Romney’s first major investments: office supply company Staples Inc. and photo album manufacturer Holson Co. Both persuaded state officials to subsidize their growth.
Shortly after Bain took control of Holson in 1987, executives pushed for the company to expand in the South. Officials from the firm had negotiated with Gov. Carroll Campbell, a Republican, to extend $200,000 in utility support for a new Holson plant in the city of Gaffney. The local city council also approved a $5 million bond for construction, after meeting with representatives from Holson. Five years after South Carolina’s taxpayers had helped finance the factory, Bain chose to sell Holson’s Gaffney facility for $2.8 million. Romney’s firm reaped the profits on the taxpayers’ expenditure.
The history of Staples, a company that Bain grew from a single store, is a hallmark of the Romney record. Staples’ rapid growth, however, drew on substantial state subsidies.
In 1996, Tom Stemberg, a close Romney business partner leading Staples, met with Maryland Gov. Parris Glendening, a Democrat, to negotiate a package of taxpayer sweeteners to build a new distribution center in Hagerstown. The Glendening administration, using a “Sunny Day” fund of discretionary development money, awarded Staples $2.3 million in grants and low interest loans. The following year, as Glendening prepared for his reelection campaign, top Staples executives maxed out in donations. Stemberg and his colleagues gave a total of $16,000.
A similar story played out in Connecticut, where Staples landed a deal in which taxpayers subsidized over $6 million in low-interest loans for the company to construct a distribution center in Killingly in 1998.
Tapping Washington
The federal government also played a pivotal role in Romney’s ascendant path through corporate America.
GS Industries, a steel company purchased by Bain in the early ’90s, faced fiscal problems as Bain withdrew large dividends and management fees. Under Bain’s leadership, the steelmaker hired the K Street lobbying firm of Wiley Rein to seek government support. In 1998-99 the firm paid $140,000 for a lobbying team that included former Democratic Rep. Jim Slattery. GS Industries eventually won a federal loan guarantee, but before the loan could be delivered, the company fell to bankruptcy in 2001. Bain’s executives still made $50 million from their involvement with the firm.
In 1999, Romney departed Bain to take over as the chief executive officer of the Salt Lake City Winter Olympics. The experience, turning an organization in disarray and deeply in the red into a popular event that actually earned over $100 million in profits, is portrayed as yet another example of the candidate’s private sector management skills. Yet the turnaround was achieved in part through the use of professional influence peddling. Under Romney’s management, the Olympic organizing committee spent over $3.3 million on Beltway lobbyists to secure federal funding for the 2004 Winter games.
Olympics lobbyists from firms like Patton Boggs and King & Spalding helped secure federal grants for communications equipment, educational money and public transportation. Millions of dollars were procured from federal officials, who wanted to allay safety concerns in the aftermath of 9/11.
As the New York Times reported earlier this week, Romney’s has continued to earn a windfall from Bain. When he left the firm, he signed a severance package that allowed him to share in the company’s profits in perpetuity. The arrangement might come back to haunt the candidate, given Bain’s increased reliance on lobbyists over the last five years.
Starting in 2007, Bain Capital began retaining various lobbying firms to pressure lawmakers to keep open a loophole that allows much of the earnings by private equity managers to be taxed as capital gains rather than the top income bracket of 35 percent. Given Romney’s profit-sharing retirement deal, the campaign to extend the loophole, which still hasn’t been closed, likely boosted the candidate’s fortune. (Romney has refused to release his tax return, leaving questions about his income.)
As Romney pillories Obama for using the government to fix problems in society (health reform, the auto bailout, etc.), he invites a closer examination of his own career. A balanced view of the Romney record shows he has never had any qualms about government help when it came to his own bottom line. Whether through hiring insider lobbyists or funneling taxpayer subsidies to his companies, government assistance has been part and parcel to the rise of Romney.
By: Lee Fang, Salon, December 21, 2011
Mitt Romney Still Making Millions From Lucrative Bain Capital Retirement Deal, Pays Little Taxes
2012 GOP presidential hopeful Mitt Romney has been banking on his time running the private equity firm Bain Capital to be a major selling point for his campaign. “I spent my career in the private sector. I think that’s what the country needs right now,” Romney says.
Romney has had to contend with the fact that Bain made a lot of its money buying up companies, then laying off workers and reneging on benefits to gut those companies, burying them with debt as Bain walked away with millions. In fact, one of his former business partners has explicitly said, “I never thought of what I did for a living as job creation.” And as it turns out, even after Romney left the firm, he was profiting from Bain’s activities due to a lucrative retirement deal:
In what would be the final deal of his private equity career, he negotiated a retirement agreement with his former partners that has paid him a share of Bain’s profits ever since, bringing the Romney family millions of dollars in income each year and bolstering the fortune that has helped finance Mr. Romney’s political aspirations.
The arrangement allowed Mr. Romney to pursue his career in public life while enjoying much of the financial upside of being a Bain partner as the company grew into a global investing behemoth.
Since Romney left, Bain has made its money gutting companies like KB Toys and Clearchannel, laying off thousands of workers and leaving the companies under heavy debt loads, while Romney has reaped the benefit. Adding insult to injury, the money Romney has been collecting from Bain is likely not taxed as normal income but as “carried interest,” meaning it is subject to the capital gains tax rate of 15 percent rather than the top income tax rate of 35 percent:
[S]ince Mr. Romney’s payouts from Bain have come partly from the firm’s share of profits on its customers’ investments, that income probably qualifies for the 15 percent tax rate reserved for capital gains, rather than the 35 percent that wealthy taxpayers pay on ordinary income. The Internal Revenue Service allows investment managers to pay the lower rate on the share of profits, known in the industry as “carried interest,” that they receive for running funds for investors.
Because Romney’s income is almost exclusively derived from what are qualified as investments (he recently said he has no income that qualifies for the personal income tax), he is able to drive his tax rate to absurdly low levels for someone making as much as he does. Citizens for Tax Justice estimated that Romney pays about a 14 percent tax rate, below the level at which many middle-class families are paying. And he’s paying that low rate on money made via dismantling companies and eliminating jobs.
By: Pat Garofalo, Think Progress, December 19, 2011
Has Gingrich Ever Heard An Idea He Didn’t Like?
Can we please bury the notion that Newt Gingrich is some kind of deep thinker? His intellect may be as broad as the sea, but it’s about as deep as a birdbath.
I’m not saying the Republican presidential front-runner is unacquainted with ideas. Quite the contrary: Ideas rain through his brain like confetti, escaping at random as definitive pronouncements about this or that. But they are other people’s ideas, and Gingrich doesn’t bother to curate them into anything resembling a consistent philosophy. Given enough time, I’m convinced, he will take every position on every issue.
The week’s most vivid example of Gingrich’s intellectual promiscuity sent principled conservatives into apoplexy. Mitt Romney, his chief opponent for the GOP nomination, had called on Gingrich to return the $1.6 million in consulting fees he received from housing giant Freddie Mac. Gingrich replied that he would “be glad to listen” if Romney would first “give back all the money he’s earned from bankrupting companies and laying off employees” during his time as head of the investment firm Bain Capital.
If this were a column about Gingrich’s hypocrisy, the point would be that he has been scorchingly critical of Freddie Mac while accepting tons of the firm’s money. But this is about his shallowness — and the fact that, in blasting Romney, he adopted the ideas and rhetoric of Occupy Wall Street.
Republicans are supposed to believe that “bankrupting companies and laying off employees” is something to celebrate, not bemoan, because this is seen as the way capitalism works. Even in the heat of a campaign, no one who has thought deeply about economics and adopted the conservative viewpoint — which Gingrich wants us to believe he has done — could possibly commit such heresy.
Gingrich doesn’t just borrow ideas from the protesters he once advised to “get a job, right after you take a bath.” He’s as indiscriminate as a vacuum cleaner, except for a bias toward the highfalutin and trendy.
Take his solution for making the federal government so efficient that we could save $500 billion a year: a management system called Lean Six Sigma. There’s no way Gingrich could resist such a shiny bauble of jargon. Why, the name even includes a letter of the Greek alphabet — the sort of erudite touch that a distinguished professor of history, such as Gingrich, could not fail to appreciate.
I won’t argue with the corporate executives who say that Lean Six Sigma works wonders for their firms. But is a technique developed by Motorola to reduce the number of defects in its electronic gear really applicable to government? There’s no reason to think it would be, unless you somehow restructured government to introduce competition and a genuine, not simulated, profit motive. I guess Professor Gingrich will get back to us on that; at the moment, he’s too busy playing with his new piece of management-speak.
Another example is Gingrich’s bizarre claim last year that “Kenyan, anti-colonial behavior” was the key to understanding President Obama. Aside from being one of the stranger, least comprehensible utterances by a prominent U.S. politician in recent memory — and that’s saying something — it was also completely unoriginal. Gingrich was citing and endorsing a hallucinatory piece in Forbes by Dinesh D’Souza. It was merely the idea du jour.
Gingrich finds it hard to watch an intellectual fad pass by without becoming infatuated. Do you remember Second Life, the digital realm? In 2007, he told us it was “an example of how we can rethink learning” and potentially “one of the great breakthroughs of the next 10 years.” I know Second Life still exists, but have you heard a lot about it recently? Has it changed your world?
Gingrich didn’t originate the idea of solving the health insurance problem through an individual mandate, but he supported it — before bitterly opposing it. Nor was he saying anything new last week when he made the offensive claim that Palestinians are an “invented people.” His xenophobic views about the alleged threat to the United States from Islam and sharia law conflict with earlier statements praising immigration and the melting pot as great American strengths. But for Gingrich, the word contradiction has no meaning.
Gingrich’s debating technique is dogmatic insistence, rather than persuasion. His discourse knows no past and no future, just the glib opportunism of now.
By: Eugene Robinson, Opinion Writer, The Washington Post, December 16, 2011
All The G.O.P.’s Gekkos: “I Create Nothing I Own”
Almost a quarter of a century has passed since the release of the movie “Wall Street,” and the film seems more relevant than ever. The self-righteous screeds of financial tycoons denouncing President Obama all read like variations on Gordon Gekko’s famous “greed is good” speech, while the complaints of Occupy Wall Street sound just like what Gekko says in private: “I create nothing I own”, he declares at one point; at another, he asks his protégé, “Now you’re not naïve enough to think we’re living in a democracy, are you, buddy?”
Yet, with the benefit of hindsight, we can see that the movie went a little off at the end. It closes with Gekko getting his comeuppance, and justice served thanks to the diligence of the Securities and Exchange Commission. In reality, the financial industry just kept getting more and more powerful, and the regulators were neutered.
And, according to the prediction market Intrade, there’s a 45 percent chance that a real-life Gordon Gekko will be the next Republican presidential nominee.
I am not, of course, the first person to notice the similarity between Mitt Romney’s business career and the fictional exploits of Oliver Stone’s antihero. In fact, the labor-backed group Americans United for Change is using “Romney-Gekko” as the basis for an ad campaign. But there’s an issue here that runs deeper than potshots against Mr. Romney.
For the current orthodoxy among Republicans is that we mustn’t even criticize the wealthy, let alone demand that they pay higher taxes, because they’re “job creators.” Yet the fact is that quite a few of today’s wealthy got that way by destroying jobs rather than creating them. And Mr. Romney’s business history offers a very good illustration of that fact.
The Los Angeles Times recently surveyed the record of Bain Capital, the private equity firm that Mr. Romney ran from 1984 to 1999. As the report notes, Mr. Romney made a lot of money over those years, both for himself and for his investors. But he did so in ways that often hurt ordinary workers.
Bain specialized in leveraged buyouts, buying control of companies with borrowed money, pledged against those companies’ earnings or assets. The idea was to increase the acquired companies’ profits, then resell them.
But how were profits to be increased? The popular image — shaped in part by Oliver Stone — is that buyouts were followed by ruthless cost-cutting, largely at the expense of workers who either lost their jobs or found their wages and benefits cut. And while reality is more complex than this image — some companies have expanded and added workers after a leveraged buyout — it contains more than a grain of truth. One recent analysis of “private equity transactions” — the kind of buyouts and takeovers Bain specialized in — noted that business in general is always both creating and destroying jobs, and that this is also true of companies that were buyout or takeover targets. However, job creation at the target firms is no greater than in similar firms that aren’t targets, while “gross job destruction is substantially higher.”
So Mr. Romney made his fortune in a business that is, on balance, about job destruction rather than job creation. And because job destruction hurts workers even as it increases profits and the incomes of top executives, leveraged buyout firms have contributed to the combination of stagnant wages and soaring incomes at the top that has characterized America since 1980.
Now I’ve just said that the leveraged buyout industry as a whole has been a job destroyer, but what about Bain in particular? Well, by at least one criterion, Bain during the Romney years seems to have been especially hard on workers, since four of its top 10 targets by dollar value ended up going bankrupt. (Bain, nonetheless, made money on three of those deals.) That’s a much higher rate of failure than is typical even of companies going through leveraged buyouts — and when the companies went under, many workers ended up losing their jobs, their pensions, or both.
So what do we learn from this story? Not that Mitt Romney the businessman was a villain. Contrary to conservative claims, liberals aren’t out to demonize or punish the rich. But they do object to the attempts of the right to do the opposite, to canonize the wealthy and exempt them from the sacrifices everyone else is expected to make because of the wonderful things they supposedly do for the rest of us.
The truth is that what’s good for the 1 percent, or even better the 0.1 percent, isn’t necessarily good for the rest of America — and Mr. Romney’s career illustrates that point perfectly. There’s no need, and no reason, to hate Mr. Romney and others like him. We do, however, need to get such people paying more in taxes — and we shouldn’t let myths about “job creators” get in the way.
By: Paul Krugman, Op-Ed Columnist, The New York Times, December 8, 2011
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