“Off And Out With Mitt Romney”: A Willing Participant In The Destruction Of The Middle Class
In a better America, Mitt Romney would be running for president on the strength of his major achievement as governor of Massachusetts: a health reform that was identical in all important respects to the health reform enacted by President Obama. By the way, the Massachusetts reform is working pretty well and has overwhelming popular support.
In reality, however, Mr. Romney is doing no such thing, bitterly denouncing the Supreme Court for upholding the constitutionality of his own health care plan. His case for becoming president relies, instead, on his claim that, having been a successful businessman, he knows how to create jobs.
This, in turn, means that however much the Romney campaign may wish otherwise, the nature of that business career is fair game. How did Mr. Romney make all that money? Was it in ways suggesting that what was good for Bain Capital, the private equity firm that made him rich, would also be good for America?
And the answer is no.
The truth is that even if Mr. Romney had been a classic captain of industry, a present-day Andrew Carnegie, his career wouldn’t have prepared him to manage the economy. A country is not a company (despite globalization, America still sells 86 percent of what it makes to itself), and the tools of macroeconomic policy — interest rates, tax rates, spending programs — have no counterparts on a corporate organization chart. Did I mention that Herbert Hoover actually was a great businessman in the classic mold?
In any case, however, Mr. Romney wasn’t that kind of businessman. Bain didn’t build businesses; it bought and sold them. Sometimes its takeovers led to new hiring; often they led to layoffs, wage cuts and lost benefits. On some occasions, Bain made a profit even as its takeover target was driven out of business. None of this sounds like the kind of record that should reassure American workers looking for an economic savior.
And then there’s the business about outsourcing.
Two weeks ago, The Washington Post reported that Bain had invested in companies whose specialty was helping other companies move jobs overseas. The Romney campaign went ballistic, demanding — unsuccessfully — that The Post retract the report on the basis of an unconvincing “fact sheet” consisting largely of executive testimonials.
What was more interesting was the campaign’s insistence that The Post had misled readers by failing to distinguish between “offshoring” — moving jobs abroad — and “outsourcing,” which simply means having an external contractor perform services that could have been performed in-house.
Now, if the Romney campaign really believed in its own alleged free-market principles, it would have defended the right of corporations to do whatever maximizes their profits, even if that means shipping jobs overseas. Instead, however, the campaign effectively conceded that offshoring is bad but insisted that outsourcing is O.K. as long as the contractor is another American firm.
That is, however, a very dubious assertion.
Consider one of Mr. Romney’s most famous remarks: “Corporations are people, my friend.” When the audience jeered, he elaborated: “Everything corporations earn ultimately goes to people. Where do you think it goes? Whose pockets? Whose pockets? People’s pockets.” This is undoubtedly true, once you take into account the pockets of, say, partners at Bain Capital (who, I hasten to add, are, indeed, people). But one of the main points of outsourcing is to ensure that as little as possible of what corporations earn goes into the pockets of the people who actually work for those corporations.
Why, for example, do many large companies now outsource cleaning and security to outside contractors? Surely the answer is, in large part, that outside contractors can hire cheap labor that isn’t represented by the union and can’t participate in the company health and retirement plans. And, sure enough, recent academic research finds that outsourced janitors and guards receive substantially lower wages and worse benefits than their in-house counterparts.
Just to be clear, outsourcing is only one source of the huge disconnect between a tiny elite and ordinary American workers, a disconnect that has been growing for more than 30 years. And Bain, in turn, was only one player in the growth of outsourcing. So Mitt Romney didn’t personally, single-handedly, destroy the middle-class society we used to have. He was, however, an enthusiastic and very well remunerated participant in the process of destruction; if Bain got involved with your company, one way or another, the odds were pretty good that even if your job survived you ended up with lower pay and diminished benefits.
In short, what was good for Bain Capital definitely wasn’t good for America. And, as I said at the beginning, the Obama campaign has every right to point that out.
By: Paul Krugman, Op-Ed Columnist, The New York Times, July 5, 2012
“Shady Opportunism”: The Political Risks Of Mitt Romney’s Financial Skills
You can conduct byzantine transactions through opaque investment accounts and private corporations in offshore tax havens such as Bermuda and the Cayman Islands. Or you can credibly run for president at a time of great economic distress.
I don’t think you can do both.
Let me be clear that I have nothing against wealth. In fact, I have nothing against great wealth, which is how I would classify Mitt Romney’s estimated $250 million fortune. We can argue about the social utility of private- equity firms such as Bain Capital, but Romney isn’t responsible for distorting the system so that financiers are grossly overpaid. He just took advantage of the situation.
Increasingly, however, I have to wonder whether the achievement Romney touts as his biggest asset in running for president — his business success — might be seen by many voters as a liability.
The question isn’t whether people can relate to a candidate who has tons of money. It’s whether they will connect with a man who didn’t make his money the old-fashioned way — by building a better widget — but by sending capital hither and yon via clicks of a computer mouse to take advantage of arcane opportunities most people never even know about.
Most Americans, for example, do not have an individual retirement account valued at between $20 million and $101 million, as Romney stated last year in a financial disclosure report.
When Romney was running Bain and building up his IRA, the maximum annual contribution permitted by the tax code was $2,000. So how did Romney’s IRA get so huge? He won’t say. It’s possible that he rolled over some money that was originally in a 401(k) retirement plan of the kind offered by many employers. But annual 401(k) contributions were then capped at $30,000, including an employer match — in Romney’s world, chump change.
Analysts surmise that Romney may have placed his interests in various Bain investment partnerships in the IRA, taking advantage of Internal Revenue Service rules that allow these interests to be undervalued for IRA purposes. In some cases they can even be valued at zero, since partnership interests represent future income, not present income, and . . .
Okay, I know I’m losing you here — but you get the point. Individual retirement accounts were created as a way for middle-class Americans to save some tax-deferred money for their senior years. It isn’t clear exactly what Romney is using his gargantuan IRA for, but it’s certainly not what Congress intended.
Then there’s the question of a Bermuda-based company that Romney and his wife, Ann, own, Sankaty High Yield Asset Investors Ltd. According to the Associated Press, the company has been part of Romney’s portfolio for nearly 15 years, but it was not mentioned in any state or federal disclosure reports. It surfaced in Romney’s 2010 tax returns, which he reluctantly released earlier this year.
According to those returns, Sankaty is little more than an empty shell at the moment. But the AP reports that the company “served as Romney’s partnership stake” in a larger group of Sankaty-named funds that Bain once used to manage more than $100 million in investments. (Sankaty, by the way, is the name of a lighthouse on Nantucket.) Channeling private-equity and hedge-fund investments through offshore firms in places such as Bermuda and the Caymans can allow investors to avoid a tax on what is known as “unrelated business income.”
Romney’s campaign says that he pays every penny he is required to pay in taxes — although his income is taxed at about 15 percent, a lower rate than most middle-class Americans pay. Hey, I understand; if I could get away with paying less in taxes, I’d do it, too. And I suppose that if God didn’t want us to have offshore pass-through accounts in sun-drenched tax havens, he wouldn’t have invented them.
But one of the sources of anger and anxiety in this country — on the left and the right — is the sense that there are two sets of rules, one for the rich and powerful and one for everybody else. I don’t think voters want a “regular guy” as president; they want someone who is exceptional. But there is a point at which opportunism begins to shade into rapacity.
In making and managing his money, Romney appears to take every possible, conceivable, imaginable inch that the law arguably allows. That’s good finance. But I doubt it’s good politics.
By: Eugene Robinson, Opinion Writer, The Washington Post, July 5, 2012
“We Own You Mitt”: Conservatives Worrying About Romney
Are prominent conservatives panicking about Mitt Romney’s campaign? It sorta looks that way, today. The Wall Street Journal editorial board — the men who ensure that even educated, newspaper-reading rich conservatives are successfully misinformed on all the major issues of the day — has a big “Mitt Romney is blowing it” editorial today (published online late Wednesday) that seems designed to stir up as much trouble as possible for the candidate.
The first line is hilarious and patently untrue: “If Mitt Romney loses his run for the White House, a turning point will have been his decision Monday to absolve President Obama of raising taxes on the middle class.”
In reality, Mitt Romney will definitely accuse Obama of raising taxes, even if he’s squishy on the “mandate is a tax” line. Also, it’s early July, it’s guaranteed to be an incredibly close race and, honestly, the only people who will notice whether Romney decides to declare the mandate a tax are people who have been paying close enough attention to the race to have already made up their minds.
But the point is actually just to hammer Romney adviser Eric Fehrnstrom for being sort of feckless and horrible at messaging, and to let the Romney campaign know that the Journal will be telling them which things to say, thank you very much. (The conservative press is much better at bullying its candidates into adopting particular strategies and policies than the liberal press, which has approximately zero power over candidates and elected officials.)
This latest mistake is of a piece with the campaign’s insular staff and strategy that are slowly squandering an historic opportunity. Mr. Obama is being hurt by an economic recovery that is weakening for the third time in three years. But Mr. Romney hasn’t been able to take advantage, and if anything he is losing ground.
The Romney campaign thinks it can play it safe and coast to the White House by saying the economy stinks and it’s Mr. Obama’s fault. We’re on its email list and the main daily message from the campaign is that “Obama isn’t working.” Thanks, guys, but Americans already know that. What they want to hear from the challenger is some understanding of why the President’s policies aren’t working and how Mr. Romney’s policies will do better.
Then! The Journal compares Romney to John Kerry. So mean!
Following this explosive editorial, the Weekly Standard’s Bill Kristol, America’s wrongest and dumbest partisan pundit, weighed in with his me-too “Romney’s strategy is all wrong” column, which has the very troll-y headline “Dukakis, Kerry … Romney?” Kristol wants to hear policy specifics from Romney, which is an awful idea, frankly, because Republican policies are pretty much universally unpopular once you go into actual detail, and Romney is correct in believing that his best hope is to remain as vague as possible on as many issues as possible.
But the argument is about a broader fear that a winnable election is slipping through the Republican Party’s grasp, and if that is indeed happening, Romney and his campaign are going to be blamed for letting it happen. As Josh Marshall says, columnists and pundits actually usually don’t have much of an idea what’s going on in a campaign. Conservatives are frustrated that Romney’s not kicking ass in the polls, and if he isn’t, it’s because his stupid campaign (made up of longtime Romney associates, for the most part) is stupid and bad.
It’s possible, though, that the Romney campaign is doing the absolute best it can running against an incumbent president who remains broadly personally popular. And it’s probable that Romney, for all his flaws, was the best candidate to face Obama this year. Buyer’s remorse aside, does anyone honestly think Jeb Bush or Mitch Daniels or Tim Pawlenty or Chris Christie would be performing better right now?
As I said, the words of the WSJ editorial page carry weight, so we’ll see if Romney (who has already called the mandate a tax) makes some sort of gesture toward “shaking up” his campaign (which would lead, naturally, to headlines about his campaign being in disarray — it’s lose-lose!), but these guys are actually just whining about how it’s harder to beat Obama than they have always thought it ought to be.
By: Alex Pareene, Salon, July 5, 2012
“In No Mood For Happy Talk”: The Public Wants Outsourcing Of Jobs Stopped
In his latest ‘Public Opinion Snapshot,’ TDS Co-Editor Ruy Teixeira has some very bad news for outsourcing pioneer Mitt Romney and his fellow Republicans who have been so blase about it. “The public is very, very concerned about outsourcing and wants action to mitigate the damage from the practice,” notes Teixeira, explaining:
Let’s start with how heavily the public believes outsourcing contributes to our ongoing economic problems. In a September 2010 NBC/Wall Street Journal poll, 86 percent agreed (including 68 percent who strongly agreed) that U.S. companies outsourcing work to foreign countries is one of the reasons for our struggling economy and unemployment. This was ranked the highest of eight reasons tested in the survey.Similarly, in a December 2010 Allstate/National Journal survey, 67 percent thought outsourcing played a major role in high unemployment, compared to just 28 percent who thought it played a minor role and 4 percent who thought it played no role at all.
And Americans believe somethjing can — and should — be done about it, continues Teixeira:
Not surprisingly, the public wants something done about this problem. In the August 2010 edition of the same survey, 70 percent thought it was either extremely (39 percent) or very (31 percent) important to reduce the number of jobs being outsourced in order to help the U.S. economy recover from the recession.Even more impressive, in the March 2011 Pew Mobility survey, “Keep jobs in America” was ranked first out of 16 possible steps government could take to make sure people don’t fall behind economically. Ninety percent deemed it either one of the most effective steps (59 percent) or a very effective step (31 percent) the government could take.
If the Republicans thought that Romney’s profiteering from outsourcing was not going to be much of an issue, they are in denial. As Teixeira concludes, “These data suggest conservatives’ attempts to portray outsourcing as no big deal and nothing to worry about are doomed to fail. The public is in no mood for happy talk on this one.”
By: Democratic Strategist Staff, July 3, 2012
“Blind Trusts Don’t Seem So Blind”: Where And How Does Mitt Romney Hide His Money?
Mitt Romney never wanted to release his tax returns. He refused disclosure in 1994 during his unsuccessful U.S. Senate bid, in 2002 when he won election as Governor of Massachusetts, and in his failed 2008 attempt to gain the Republican nomination for President. Last January Romney finally released his 2010 tax return and an estimate for 2011 after constant badgering by his Republican primary rivals.
Those documents revealed his offshore bank accounts and his tax rate, just shy of 15 percent, or less than what most middle-class Americans pay, despite his estimated worth of up to $250 million. As the Washington Post reported: “By offering a limited description of his assets, Romney has made it difficult to know precisely where his money is invested, whether it is offshore or in controversial companies, or whether those holdings could affect his policies or present any conflicts of interest.” Now journalist and author Nicholas Shaxson digs deeper in a new investigation published by Vanity Fair.
According to Shaxson, Romney is using every possible loophole to avoid paying more taxes. He takes his payments from Bain Capital as investment income, allowing him to pay at a rate much lower than the 35 percent he would owe if he had earned an “ordinary income” of salaries and wages.
But as Shaxson also points out, nobody even knows how much Romney should pay because nobody knows what his offshore accounts actually hold. He maintains accounts and entities not only in Switzerland, but in Bermuda and the Cayman Islands as well.
Consider the example of Sankaty High Yield Asset Investors Ltd., a Bermuda-based corporation set up by Romney in 1997. This entity wasn’t even disclosed in financial documents until 2010, and upon examining that return, Shaxon writes: “We have no idea what is in this company, but it could be valuable, meaning that it is possible Romney’s wealth is even greater than previous estimates.” Furthermore, Bain Capital holds at least 138 funds in the Cayman Islands, with Romney having personal interests in at least 12 that are worth as much as $30 million. The Romney campaign has stated that his taxes would not be affected even if he included these interests, but there’s no way to confirm this because everything is hidden behind confidentiality laws.
Equally intriguing are the Romneys’ blind trusts, designed, as Shaxon explains, “to avoid conflicts of interest for those in public office by having politicians’ assets managed by independent trustees.” But in Romney’s case, the blind trusts don’t seem so blind. Their personal lawyer, Bradford Malt, was appointed to be the trustee, and in 2010, the Romneys invested $10 million in Solamere Founders Fund, which was founded by their son Tagg and former campaign fundraiser Spencer Zwick.
Shaxson also asks whether Romney used “blocker corporations” in the Cayman Islands and elsewhere to escape paying taxes on his retirement account, which is estimated to contain as much as $102 million. Offshore blocker corporations are used to avoid the Unrelated Business Income Tax.
The Obama campaign has hit Romney’s financial holdings hard in ads – and even created a world map showing the overseas locations where the Republican candidate holds accounts. Other Democrats have joined this line of attack. In an interview with The Huffington Post, former Ohio Governor Ted Strickland asserted, “Why would any person who aspired to be president, as Mitt Romney has for probably much of his life, open a Swiss bank account? What does that say about his political judgment and what does it say about his commitment to the United States of America?”
Illinois Senator Dick Durbin adds that there are only two reasons why one would want to hold a Swiss bank account: “Number one, you believe the Swiss franc is a stronger currency than the United States dollar. And that apparently was the decision the Romney family made during the Bush presidency.”
“And secondly, you want to hide something, you want to conceal something,” he said. “It is impossible for him to explain or defend owning a Swiss bank account.”
With Shaxson’s revealing piece, speculation over Romney’s handling of his money will no doubt continue. If the Romney campaign wants everyone to stop questioning his tax returns and offshore accounts, why not just disclose all of the information, as his father George Romney did during his own 1968 presidential run?
By: Lynn Zhong, The National Memo, July 4, 2012
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