“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
“Living By Biography”: Mitt Romney Blistered By Conservative Wall Street Journal Editorial Board
This Wall Street Journal editorial is getting a lot of attention this morning for its scathing criticism of the Romney campaign’s equivocations over whether Obamacare’s individual mandate is or isn’t a tax. Yesterday Romney declared that, yes, it is a tax after all — contradicting his campaign’s earlier contention that it wasn’t — and the editorial blasts Romney for squandering a key issue against Obama.
But let’s face it: The skirmishing over whether the mandate is or isn’t a tax probably won’t have much of an impact on the election’s outcome.
That’s why the real news in the Journal editorial — the stuff that should drive the discussion today — is its scalding attack on Romney’s lack of specificity on multiple issues:
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.
The Journal notes the Obama campaign’s attacks on Romney’s Bain years and offshore accounts, and adds:
All of these attacks were predictable, in particular because they go to the heart of Mr. Romney’s main campaign theme — that he can create jobs as President because he is a successful businessman and manager. But candidates who live by biography typically lose by it. See President John Kerry.
The biography that voters care about is their own, and they want to know how a candidate is going to improve their future. That means offering a larger economic narrative and vision than Mr. Romney has so far provided. It means pointing out the differences with specificity on higher taxes, government-run health care, punitive regulation, and the waste of politically-driven government spending.
The GOP-aligned Journal editoral board is implicitly agreeing that one of the leading critiques of Romney —one being made by the Obama campaign and Dems, but also by more and more media commentators — is entirely legitimate: That he’s refusing to detail his policies with any specificity to speak of on issue after issue.
This goes right to the heart of the central dynamic of this race: The Romney campaign’s gamble that he can edge his way to victory by making this camapign all about Obama, and that along the way, voters won’t notice that he isn’t meaningfully telling us what he would do if elected president. The Journal is calling this out as a non-starter. Does this represent broader GOP establishment opinion? It’s more important than all the short-term skirmishing over whether the mandate is a tax or not.
By: Greg Sargent, The Plum Line, The Washington Post, July 5, 2012
“Winking With A Blind Eye”: Where Are The Pro-Life Reactions To The Romney-Stericycle Story?
Yesterday, David Corn reported in Mother Jones that Mitt Romney may have played an active role Bain Capital’s $75 million investment in Stericycle, a company that disposes of medical waste from abortion clinics. According to Corn, Bain had previously claimed that Romney left the firm in February 1999 and that Romney probably had nothing to do with the deal.
Since this could potentially lose Romney some enthusiasm among social conservatives, I initially thought I would write a post about reactions to the story in the pro-life blogosphere.
Except… I couldn’t find any. Guys, I looked, but as of Tuesday afternoon, here’s where it stands:
Lila Rose’s Twitter feed? No mention as of this writing.
National Right to Life? Top headline as of July 3, 3:57 central time was “Supreme Court Decision Means Americans Must Elect Mitt Romney and a Pro-Life Congress Committed to Repealing ObamaCare.”
Susan B. Anthony List? Its president, Marjorie Dannenfelser, wrote a column for National Review Online yesterday titled “Pro-Lifers Must Unite Behind Romney.” (The discussion in the comments thread did make its way around to the Stericycle story, with folks chiming in both to support and criticize Romney.)
Americans United for Life? Again, as of 4 p.m. central, their online media center made no mention of it.
LifeSiteNews, which previously reported on a Romney fundraiser at the home of a pharmaceutical executive whose company makes the morning after pill, and which published a piece in January calling Stericycle a “medical waste giant allied with the abortion industry” didn’t turn up anything when I did a search for “Romney” and “Stericycle,” and the story wasn’t in their top headlines.
Jill Stanek? Again, no mention in the top headlines and a site search turned up nothing.
World Magazine, which is currently taking a critical stance toward the National Association of Evangelicals over the latter’s acceptance of a grant from the National Campaign to Prevent Teen and Unplanned Pregnancy? Again, my site search turned up nothing.
It could be that nobody’s gotten around to writing about it yet, I guess. Or, it could be that the pro-life blogosphere isn’t thrilled to learn about Romney’s possible role in the Stericycle investment; but, particularly on the heels of the Supreme Court decision, cares most about defeating Obama. In any case, the question will be whether it has any effect on voter enthusiasm. If no likely Romney supporters hear about it, I rather imagine it won’t.
By: Sarah Morice-Brubaker, Religion Dispatches, July 3, 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
“Behind Closed Doors”: In Quiet Rooms, Where All The Romney Money Is Hidden
The incredible new Vanity Fair piece on Romney’s secretive off shore tax accounts and business practices at Bain immediately made me think of one of my favorite video clips of 2012, this one where Romney is talking about how issues related to the concentration of wealth should only be discussed in “quiet rooms”: http://youtu.be/ismksjp10q0
Mitt Romney undeniably likes his secrets, especially when it comes to money, and I have to admit that the revelations in Vanity Fairgave me a different take on the “quiet rooms” quote. I had always assumed it was just Mitt being Mitt, doing his classic Thurston Howell III imitation, another in a long line of Mitticisms (I like being able to fire people, I know a couple of Nascar team owners, did I tell you the funny story about how my dad laid off a bunch of people, etc.) reminding us how cluelessly out of touch Mitt was. It was also the ultimate in big money Republicanism: we don’t talk about these issues in public because we don’t want people to get mad and start a class war. But now it occurs to me what Mitt was really trying to guard in his quiet rooms: all the millions he has secretly stashed away.
What Mitt, with his offshore accounts and his secretive business practices and his endorsement of the Ryan budget which gives even more advantages to Wall Street tycoons like himself, is trying to preserve is the ability to play by a different set of rules than the rest of us. He wants a world where the wealthy have all these advantages and loopholes and secret deals and lower tax rates, precisely because that was his entire business model at Bain Capital. He wants a world where he doesn’t have to pay taxes on his accounts in Bermuda and the Caymans and Luxembourg and Switzerland. He wants a world where he can recruit any sleazebag overseas investor to invest in Bain. As Alex Seitz-Wald at Salon.com puts it: “This pattern of elusiveness is hardly confined to Romney’s finances, but rather defines his public life.”
Mitt’s entire career is defined by the secrets he has, and the fact that he didn’t have to play by the same rules as everyone else except for a few other well-connected Wall Street guys. The way Mitt made his money is exactly the kind of thing we should be talking about in this presidential campaign — and not only because it relates directly to Romney’s character, experience, and values. We should be talking about this because we should be debating as a country whether we want a country whose economic system is structured primarily to benefit a small number of wealthy, well-connected insiders operating behind closed doors, manipulating the tax code and financial markets to become more and more wealthy; or whether we want a country where businesses make money the old-fashioned way, by manufacturing and selling quality products, and playing by the same rules everyone else has to play by. By and large, with only occasional exceptions where Bain actually created real new jobs, the way Romney became wealthy was to make other people poorer — manipulating the financial markets and tax code, off-shoring jobs, cutting wages and benefits, laying off people, driving companies into bankruptcy while still getting huge fees from them. He also ripped off the rest of us taxpayers through the outrageous carried interest loophole, through loading up companies with debt and then writing it off, and through taking advantage of the taxpayer-backed Pension Benefit Guarantee Corporation’s obligation to pay off pensions when Bain’s companies went bankrupt. I guess it is not surprising that having made most of his money that way, he decided to keep so much of that money invested in secret overseas accounts.
No wonder Mitt Romney wants to keep this discussion confined strictly to “quiet rooms”. I would too if I had stashed so many of the millions I made from off-shoring jobs and all these other revolting business practices into secret off-shore accounts. But it is time for America to have this discussion — and not just in quiet rooms.
By: Mike Lux, The Huffington Post, July 3, 2012
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