“Bain Capitalist”: Mitt Romney Haunted By His Victims
During Mitt Romney’s Senate campaign 17 years ago, the Republican politician was faring quite well against Ted Kennedy, right up until voters started hearing from some of Romney’s victims.
To briefly review, Romney got very rich running a private-equity firm, Bain Capital, which broke up companies and laid off American workers. He had considerable success orchestrating leveraged buyouts, seeking taxpayer subsidies, flipping companies quickly for large profits, and making money for investors, even when the employees of those companies were deemed collateral damage.
In the 1994 campaign, this mattered. Many of Romney’s victims drove to Massachusetts to protest the Republican’s campaign, and Democrats put together a half-dozen ads featuring laid-off workers who said they suffered while Romney lined his pockets at their expense.
It proved effective in 1994, and Dems hope it will work again in 2012.
A former employee of Bain Capital, GOP presidential front-runner Mitt Romney’s former company, said Sunday that Romney’s decisions cost him and many others their jobs.
Randy Johnson said Sunday that the former Massachusetts governor’s decisions as Bain’s CEO put him out of work.
Romney was the chief executive officer of Bain Capital in 1992 when the company purchased American Pad & Paper, or Ampad, and oversaw the management of that company and others.
Ampad went bankrupt in 2000, and investors netted over $100 million from the deal, according to the Boston Globe.
Johnson told reporters yesterday, “I really feel that he didn’t care about the workers. It was all about profit over people.”
For its part, the Romney campaign recently began arguing that critics of Bain Capital’s layoffs are borderline communists, trying to “put free enterprise on trial.”
Between this and Romney’s agenda — take away health care coverage from millions, tax breaks for the wealthy, free reign for Wall Street, more foreclosures — the “man of the people” routine may prove to be a tough sell.
By: Steve Benen, Contributing Writer, Washington Monthly Political Animal, January 2, 2011
Withdrawing Unemployment Insurance Will Not Solve Job Crisis
1. The Long-Term Unemployed Are in Dire Financial Shape.
Eliminating unemployment insurance will make matters much worse for those who are already experiencing a financial disaster. In 2009, the Heldrich Center conducted a national survey of workers who lost a job during the recession. When we re-contacted them in August 2011, we found that 4 in 10 were still unemployed or working part time and looking for full-time jobs. Among that group, three quarters had been out of work for more than six months. Fully half had been jobless for more than two years. Their financial condition is dire. They have not only reduced spending on things they would like to have, like vacations and clothing, but also on things they need, such as food, transportation, and healthcare. Sixty percent have sold possessions and borrowed money from family or friends.
2. UI Benefit Support Makes Re-employment More Likely, Not Less.
Eliminating UI will lead to less job seeking, not more. Our surveys found that–compared to people without UI support–those receiving UI spent more time each week going to job interviews and job fairs, networking with friends and colleagues, and scouring the Internet and newspapers for job openings. Enrollment in UI programs keeps workers in the labor market. They get more advice, encouragement, and training. And, job seekers on UI are required to regularly report to state employment agencies about their job search activities.
3. Cutting UI Benefits will drive up the cost of other government programs.
Without UI payments, more unemployed workers will drop out of the labor market and fall into other government safety-net programs. Seven in 10 of the long-term unemployed workers in our study described their financial condition as flat-out “poor.” Yet, the average UI benefit of $1,200 per month–less than the $1,400 average monthly cost of housing in America–is often the vital source of income that enables them to pay their mortgage and feed their family. Withdrawing UI will not solve the job crisis in America, but it will drive up spending in other federal programs, such as food stamps, disability insurance, Social Security, Medicare, and Medicaid. Unemployed workers–who would much rather get a job than get a check from the government–will be driven to these programs as a last resort.
By: Carl E. Van Horn, U. S. News and World Report, December 9, 2011
Human Weather Vane Mitt Romney Shifts On Payroll Tax Cut
The idea of extending the payroll tax cut polls very well. How do I know? Because human weather vane Mitt Romney suddenly vocally supports it.
When he was asked about President Obama’s jobs plan during a GOP presidential debate in October, Romney was dismissive of the idea of extending the payroll tax cut on the grounds that it would do nothing to create jobs. Here’s his answer, in full (emphases mine):
MR. ROMNEY: No one likes to see tax increases, but look, the–the stimulus bills the president comes out with that are supposedly going to create jobs, we’ve now seen this played in the theater several times. And what we’re seeing hasn’t worked. The American people know that when he–when he went into office and borrowed $800 billion for a massive jobs stimulus program, that they didn’t see the jobs. Some of those green jobs we were supposed to get, that’s money down the drain. The right course for America is not to keep spending money on stimulus bills, but instead to make permanent changes to the tax code.
Look, when you give–as the president’s bill does, if you give a temporary change to the payroll tax and you say, we’re going to extend this for a year or two, employers don’t hire people for a year or two. They make an investment in a person that goes over a long period of time. And so if you want to get this economy going again, you have to have people who understand how employers think, what it takes to create jobs. And what it takes to create jobs is more than just a temporary shift in a tax stimulus. It needs instead fundamental restructuring of our economy to make sure that we are the most attractive place in the world for investment, for innovation, for growth and for hiring, and we can do that again.
MS. GOLDMAN: So you would be OK with seeing the payroll tax cuts–
MR. ROMNEY: Look, I don’t like–(inaudible)–little Band- Aids. I want to fundamentally restructure America’s foundation economically.
Romney gives no indication whatsoever of favoring an extension of the payroll tax. If anything he indicates a willingness to see it rise, saying, “No one likes to see tax increase, but …” to start and giving his much ballyhooed “Band-Aids” answer when questioner Julianna Goldman asserts that he’d be OK with the payroll tax cuts expiring.
That was October. Since then the political winds have started blowing strongly in favor of extending the tax cut—so strongly in fact that, Romney told conservative radio show host Michael Medved, “I would like to see the payroll tax cut extended just because I know that working families are really feeling the pinch right now—middle-class Americans are having a hard time.”
Of course Romney’s camp is outraged at the notion that badmouthing an extension in October and supporting it in December constitutes either a flip or a flop from the famously flexible former Massachusetts governor. “Governor Romney has never met a tax cut he didn’t like,” spokeswoman Andrea Saul said in a statement E-mailed to reporters Monday night. “He has made it clear that he does not believe that by itself the payroll tax cut will create the type of permanent long term change that is needed to turn the economy around.”
Let’s give Romney the benefit of the doubt. Let’s assume that in October he liked the idea of a payroll tax cut extension. The characterization of him as a human weather vane still holds: He kept his support secret in October because he apparently didn’t think a GOP debate audience would cotton to that view; now he’s trumpeting it because the winds have shifted.
Who needs polls when we have Mitt Romney?
By: Robert Schlesinger, U. S. News and World Report, December 6, 2011
“A Shell Of Her Former Self”, Olympia Snowe Keeps Falling
With time running out, President Obama used his weekly address yesterday to call on Congress to approve an extension of the payroll tax cut. Economists project a significant economic hit if lawmakers fail to act, and the president said, “Now is the time to step on the gas, not slam on the brakes.”
Then there was the Republican address, delivered by Sen. Olympia Snowe (R-Maine).
…Snowe put her emphasis on a Constitutional amendment requiring a balanced budget, saying ,”We have no greater duty than to once and for all obligate the government to live within its means and spend no more than what it takes in.”
Snowe argued that, among other things, the balanced budget amendment would enforce the mandatory spending cuts that are supposed to take effect in 2013 because of the failure of the super committee to reach agreement on an alternative deficit reduction plan.
“The bottom line is, the real reason many lawmakers don’t want a balanced budget amendment is the exact reason why it’s so essential,” Snowe said. “They don’t want their hands tied; they want to continue to spend without restraint. Their way has been to break budgets and amass more and more debt, all the while promising Congress will one day balance the budget. Well, as we sadly know, the promises were empty, the debt is astronomical and their way hasn’t worked. Now, it’s time for our way.”
Even for Republicans, this is ridiculous.
For one thing, the Balanced Budget Amendment is already dead. The House, dominated by far-right Republicans, brought the proposal to the floor two weeks ago, and it failed miserably. Why on earth would the official GOP response tout an already-defeated measure related to the debt when the focus should be on the economy?
For another, the BBA is a spectacularly bad idea. It would devastate the economy and make responses to future crises effectively impossible. Bruce Bartlett, a veteran of the Reagan and Bush administrations, explained recently that this is a “dreadful” idea and the Republican proposal “is, frankly, nuts.”
And finally, what has gotten into Olympia Snowe? In October, she partnered with a right-wing Alabama senator to push a plan to make the legislative process even more difficult. A week earlier, she demanded the administration act with “urgency” to address the jobs crisis, only to filibuster a popular jobs bill a day later. The week before that, Snowe prioritized tax cuts for millionaires over job creation. Shortly before that, Snowe tried to argue that government spending is “clearly … the problem” when it comes to the nation’s finances, which is a popular line among conservatives, despite being wrong.
It’s tempting to think the fear of a primary challenge is pushing Snowe to the far-right, but the truth is, the senator’s GOP opponents next year are barely even trying. She may fear a replay of the Castle-O’Donnell fight that played out in Delaware, but all indications are that Snowe really doesn’t have anything to worry about.
And yet, she’s become a shell of her former self. It’s rather sad to watch.
There is some prime real estate in the political landscape for genuine GOP moderates who could have a significant impact. Instead, Congress has Olympia Snowe, who now bears no resemblance to the centrist she used to be.
If I had to guess, I’d say most mainstream voters in Maine have no idea of the extent to which Snowe has moved to the right, which is a shame. I wonder how those who supported her in the past would even recognize her anymore.
By: Steve Benen, Contributing Writer, Washington Monthly, December 4, 2011
“Capitalists Without Customers Are Out Of Business”: Raise Taxes On Rich To Reward True Job Creators
It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.
Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.
I’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. (MSFT) in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc. (AMZN)
Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.
That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.
Theory of Evolution
When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around.
It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. But it’s equally true that without consumers, you can’t have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do.
That’s why our current policies are so upside down. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer.
And that’s what has been happening in the U.S. for the last 30 years.
Since 1980, the share of the nation’s income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007, from 42 percent at the peak of U.S. productivity in the early 1960s, and about 30 percent during the expansion of the 1990s. In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.
One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.
It’s true that we do spend a lot more than the average family. Yet the one truly expensive line item in our budget is our airplane (which, by the way, was manufactured in France byDassault Aviation SA (AM)), and those annual costs are mostly for fuel (from the Middle East). It’s just crazy to believe that any of this is more beneficial to our economy than hiring more teachers or police officers or investing in our infrastructure.
More Shoppers Needed
I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.
If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.
It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again. Shifting the burden from the 99 percent to the 1 percent is the surest and best way to get our consumer-based economy rolling again.
Significant tax increases on the about $1.5 trillion in collective income of those of us in the top 1 percent could create hundreds of billions of dollars to invest in our economy, rather than letting it pile up in a few bank accounts like a huge clot in our nation’s economic circulatory system.
Consider, for example, that a puny 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut beyond December, preventing a $1,000 increase on the average worker’s taxes at the worst possible time for the economy. With a few more pennies on the dollar, we could invest in rebuilding schools and infrastructure. And even if we imposed a millionaires’ surtax and rolled back the Bush-era tax cuts for those at the top, the taxes on the richest Americans would still be historically low, and their incomes would still be astronomically high.
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
So let’s give a break to the true job creators. Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.
By: Nick Hanauer, Bloomberg, November 30, 2011
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