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
After Payroll-Tax Debacle, GOP Goes Into Damage-Control Mode
Atop the House chamber Wednesday morning, the flag fluttered in the breeze. In his office underneath the Capitol dome, House Speaker John Boehner twisted in the wind.
His House Republicans had killed a bipartisan plan to cut taxes for 160 million Americans, earning themselves an avalanche of criticism and condemnation from friend and foe alike. So Boehner assembled nine of his House Republican colleagues in his conference room, invited in the TV cameras, and proclaimed that Republicans really and truly want to enact the payroll-tax break that they just defeated.
“We’re here. We’re ready to go to work,” Boehner announced.
But the only thing he was working on, it turned out, was damage control.
Fox News’s Chad Pergram, noting that Boehner’s talking points were mostly about legislative process, asked: “Do you think that you’ve lost the argument?”
“We’re here. We’re ready to work,” the speaker repeated.
Reuters’s Tom Ferraro asked what Boehner made of the criticism from Senate Republicans “like Scott Brown, who says you’re playing politics.”
“We’re here, ready to go to work,” Boehner answered.
CNN’s Deirdre Walsh further annoyed the speaker by mentioning the savage editorial in Wednesday’s Wall Street Journal that branded the GOP payroll-tax strategy a “fiasco.” Another reporter asked if there might be some way to back down on his refusal to accept the Senate’s two-month extension of the payroll-tax cut.
“We’re here, ready to work,” Boehner said.
The Associated Press’s Dave Espo asked “if any of the 10 of you intend to go home for Christmas.
“We’re here, ready to do our work,” Boehner said.
At exactly the moment House Republicans were executing the failed photo-op, Democrats were on the House floor, trying to disrupt the day’s “pro forma” session with a stunt designed to further embarrass the majority.
Although most House members had gone home for the holidays, House leaders arranged the perfunctory sessions so that the chamber wouldn’t technically go into recess without passing the payroll-tax cut.
But as the speaker pro tempore, Rep. Mike Fitzpatrick (R-Pa.), sought to bring the pro forma session to a close, “pursuant to Section 3B of House Resolution 493,” Steny Hoyer, the Democratic whip, interrupted to request that the chamber bring up the Senate bill. Fitzpatrick walked off the dais.
“Mr. Speaker, you’re walking out!” Hoyer called after him. “You’re walking away just as so many Republicans have walked away from middle-class taxpayers.” A few seconds later, the sound system was cut off and the C-SPAN cameras were disabled.
Hoyer, joined by Rep. Chris Van Hollen (D-Md.), took his case to the microphones outside the House chamber, where a statue of the late humorist Will Rogers, hands in pockets, seemed to gaze at the pair with a look of amusement.
“The speaker of the House and the Republican leadership were AWOL,” Van Hollen complained.
That’s because the leaders were conferring nearby with their “conferees” – the people Boehner wants to negotiate a new tax deal with Democrats. But there is a problem with this plan: Senate Democrats already negotiated a compromise with Senate Republicans, and the House Republicans rejected it. And, to the Democrats’ delight, several of the “conferees” Boehner appointed are on the record opposing the payroll-tax cut.
“I’m not in favor of that. I don’t think that’s a good idea,” said one conferee, Dave Camp (Mich.), according to the Hill newspaper.
“From a policy standpoint, it doesn’t make a whole lot of sense,” another conferee, Tom Price (Ga.) told National Public Radio.
The conferees did not address this awkwardness at their photo-op (aides, handing out seating charts to the photographers, didn’t pretend it was anything more than that), instead turning the discussion to non-sequiturs.
Price gave his perspective “as a physician.” Renee Ellmers (N.C.) delivered her remarks “as a nurse” and “as a mom.” Rep. Nan Hayworth (N.Y.) added the information that “I’m a doctor and a daughter of elderly parents” and has “also been a small employer.” Tom Reed (N.Y.) let everybody know “I have an 11- and 13-year-old at home.”
Congratulations, all around. None of these credentials, however, avoided the conclusion that the House Republicans had screwed up badly and now stand to take the blame if payroll taxes rise.
Two minutes after their photo-op, the conferees, abandoning the conceit that they were conferring over anything, left Boehner’s conference room.
“Is the conference over?” I asked Price.
He chuckled. “Legislation is not a game of solitaire,” he said.
But for House Republicans, it’s getting very lonely.
By; Dana Milbank, Opinion Writer, The Washington Post, December 21, 2011
“Apocryphal Scene”: Braveheart Republicans? Or False-Hearted?
House Republicans, on the eve of Tuesday’s vote denying tax relief to 160 million Americans, huddled in a conference room in the Capitol basement for more than two hours.
Were they puzzling over how to explain to constituents why they were effectively ordering a tax increase on the middle class after fighting for much larger tax breaks for the wealthy? Were they justifying the killing of a bipartisan compromise that had the support of all but eight Senate Republicans and the tacit approval of House Speaker John Boehner?
Nope. Turns out they were talking Monday night about their favorite scenes from “Braveheart.” About 10 House Republicans went to the microphones to share their memories of the Mel Gibson film, Republican sources told my Post colleagues Paul Kane and Rosalind Helderman.
One member spoke about the apocryphal scene in which the 13th-century Scottish rebel William Wallace ordered his troops to moon the English. Another member recounted the scene in which Wallace commanded the rebels to hold their positions before raising their spears against the charging English cavalry.
This inspired the assembled lawmakers to chant: “Hold! Hold! Hold! Hold!”
Finally, toward the end of the meeting, Rep. Rob Bishop (Utah) bravely rose to tell his colleagues that he hated the film. He introduced a motion that all references to “Braveheart” be banned. His colleagues laughed and heckled. The motion was not adopted.
But Bishop was right: “Braveheart” is a conspicuously poor choice for the House GOP.
For one thing, the Republicans are, if anything, in a reverse-“Braveheart” position: In this fight, they are the nobles putting down the overtaxed peasants. For another, the Scots they are emulating were defeated and slaughtered, and Wallace was captured (possibly betrayed by his own side), then drawn and quartered.
That the House Republicans would embrace a doomed cause and its martyred leader gets at their main problem in the majority: They’d rather make a point than govern the country. And in this case, it’s not entirely clear what point they’re trying to make.
Is it making sure the tax cut is paid for? For the last decade, Republicans approved billions of dollars in tax cuts, mostly for the rich, without paying for them.
Is it because they want the tax-cut extension to be for a year rather than just two months, as the Senate approved? Then why did so many Republicans originally criticize any tax-cut extension?
In killing the Senate compromise, which passed 89 to 10, with 39 Republican votes, the House GOP resorted to a variant of the “deem and pass” resolution they derided when Democrats proposed it during the health-care fight. Reneging on their pledge to hold a vote on the Senate compromise, Braveheart Republican leaders ordered up a resolution that rejected the Senate measure without a direct vote.
Caucus chairman Jeb Hensarling (Tex.), demanding a conference between the House and Senate to resolve differences, instructed his colleagues to “go and watch ‘Schoolhouse Rock’ ” to see how “things are settled between the House and Senate.” But this ignored the fact that Senate Democrats had already compromised with Senate Republicans; Hensarling was asking them to compromise on their compromise.
House Democrats didn’t exactly distinguish themselves, either. Rep. Jim McGovern (Mass.) said Republicans had imposed “martial law.” Rep. Jim McDermott (Wash.) brought a Christmas stocking and lump of coal to the floor. Minority Leader Nancy Pelosi (Calif.) recalled a Woody Allen joke (“the food at this place is really terrible . . . and such small portions”) that she attributed to Yogi Berra.
But that didn’t hold a torch to the Republicans’ “Braveheart” performance. It wasn’t the first congressional invocation of the film (Dick Gephardt once showed up to a meeting in William Wallace attire when he was House Democratic leader), but until now it hasn’t been embraced quite so earnestly.
“Look, this is a ‘Braveheart’ moment,” Rep. Phil Gingrey (R-Ga.) said on Fox News on Monday, describing the House Republicans’ instructions to Boehner. “You, Mr. Speaker, are our William Wallace. Let’s rush to the fight.”
Apparently plenty of others felt the same way. Staffers emerged from the GOP caucus meeting at 6:45 p.m. Monday to say the meeting would break up in five minutes. But the Republicans’ impromptu movie night didn’t end until 8:17 p.m., when Boehner, face as orange as Mel Gibson’s was blue, marched forth with his Bravehearts in a cloud of cigarette smoke toward their inevitable tragedy.
By: Dana Milbank, Opinion Writer, The Washington Post, December 21, 2011
The GOP’s Payroll Tax Fiasco: Even The WSJ Is Ticked Off With Their Own Minions
Cry Me A River….
GOP Senate leader Mitch McConnell famously said a year ago that his main task in the 112th Congress was to make sure that President Obama would not be re-elected. Given how he and House Speaker John Boehner have handled the payroll tax debate, we wonder if they might end up re-electing the President before the 2012 campaign even begins in earnest.
The GOP leaders have somehow managed the remarkable feat of being blamed for opposing a one-year extension of a tax holiday that they are surely going to pass. This is no easy double play.
Republicans have also achieved the small miracle of letting Mr. Obama position himself as an election-year tax cutter, although he’s spent most of his Presidency promoting tax increases and he would hit the economy with one of the largest tax increases ever in 2013. This should be impossible.
House Republicans yesterday voted down the Senate’s two-month extension of the two-percentage-point payroll tax holiday to 4.2% from 6.2%. They say the short extension makes no economic sense, but then neither does a one-year extension. No employer is going to hire a worker based on such a small and temporary decrease in employment costs, as this year’s tax holiday has demonstrated. The entire exercise is political, but Republicans have thoroughly botched the politics.
Their first mistake was adopting the President’s language that he is proposing a tax cut rather than calling it a temporary tax holiday. People will understand the difference—and discount the benefit.
Republicans also failed to put together a unified House and Senate strategy. The House passed a one-year extension last week that included spending cuts to offset the $120 billion or so in lost revenue, such as a one-year freeze on raises for federal employees. Then Mr. McConnell agreed with Senate Majority Leader Harry Reid on the two-month extension financed by higher fees on Fannie Mae and Freddie Mac (meaning on mortgage borrowers), among other things. It passed with 89 votes and all but seven Republicans.
Senate Republicans say Mr. Boehner had signed off on the two-month extension, but House Members revolted over the weekend and so the Speaker flipped within 24 hours. Mr. Boehner is now demanding that Mr. Reid name conferees for a House-Senate conference on the payroll tax bills. But Mr. Reid and the White House are having too much fun blaming Republicans for “raising taxes on the middle class” as of January 1. Don’t be surprised if they stretch this out to the State of the Union, when Mr. Obama will have a national audience to capture the tax issue.
If Republicans didn’t want to extend the payroll tax cut on the merits, then they should have put together a strategy and the arguments for defeating it and explained why. But if they knew they would eventually pass it, as most of them surely believed, then they had one of two choices. Either pass it quickly and at least take some political credit for it. Or agree on a strategy to get something in return for passing it, which would mean focusing on a couple of popular policies that would put Mr. Obama and Democrats on the political spot. They finally did that last week by attaching a provision that requires Mr. Obama to make a decision on the Keystone XL pipeline within 60 days, and the President grumbled but has agreed to sign it.
But now Republicans are drowning out that victory in the sounds of their circular firing squad. Already four GOP Senators have rejected the House position, and the political rout will only get worse.
One reason for the revolt of House backbenchers is the accumulated frustration over a year of political disappointment. Their high point was the Paul Ryan budget in the spring that set the terms of debate and forced Mr. Obama to adopt at least the rhetoric of budget reform and spending cuts.
But then Messrs. Boehner and McConnell were gulled into going behind closed doors with the President, who dragged out negotiations and later emerged to sandbag them with his blame-the-GOP and soak-the-rich re-election strategy. Any difference between the parties on taxes and spending has been blurred in the interim.
After a year of the tea party House, Mr. Obama and Senate Democrats have had to make no major policy concessions beyond extending the Bush tax rates for two years. Mr. Obama is in a stronger re-election position today than he was a year ago, and the chances of Mr. McConnell becoming Majority Leader in 2013 are declining.
By: Editorial, The Wall Street Journal, December 21, 2011
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 