Some Conservatives Already Quietly Surrendering To Romney
It is usually assumed that the invisible primary ends with the Iowa Caucuses, when the party rank-and-file begin to have their say. But thanks to an exceptionally chaotic and unpredictable pre-caucus period, the central dynamic of the invisible primary–Mitt Romney’s wooing of conservatives skeptical of him–has been extended. And now it’s reached a new phase: The internal struggle among conservative opinion-leaders about when it will prove necessary to throw in the towel and settle for Romney.
The most underreported feature of the contest so far is that most conservatives have already reconciled themselves to Romney as the nominee. They may prefer someone else, and in pursuit of that preference–or to keep ideological pressure on Romney–they may continue to raise alarms about the front-runner’s record, positions, or general-election strategy. But it is exceedingly difficult to find a significant conservative figure who has not already pledged to back Mitt fully if he’s the nominee.
As a result, there will be no last-ditch rightwing crusade to deny Romney the nomination. Nor will a discouraged base threaten to throw the general election to Obama. Instead, you can expect to see an increasingly public debate on the right about the costs and benefits of further resistance, until an eventual surrender.
There are powerful arguments for throwing in the towel early, though the factor most often pointed to by the Beltway commentariat–Mitt’s superior electability–is not necessarily the strongest. Yes, some conservatives (along with most Democrats) have embraced the conventional wisdom that successful candidates must be able to move to the center to win and deemed Romney the obvious choice on electability grounds. But these are people largely already in his camp. Though it’s sometimes hard for political pros to accept, most conservatives simply don’t buy the CW. They actually believe what they have been repeatedly saying since they pulled the GOP hard right after two straight general election debacles: This is a conservative country whose electorate responds best to a clear, consistent conservative message. The 2010 results confirmed that in their minds–and neither political scientists nor polls nor pundits can persuade them otherwise.
So if electability is not a clinching argument for getting on board the Romney Express, what might be? The main temptation for conservatives to call it a day is the strong likelihood that an extended nominating contest will become so nasty, divisive, and cash-draining that it will damage the ticket far more than any “base” misgivings about Romney might. Even as Republicans celebrate the general election advantage they expect from Super-PACs, their lethal power in intra-party battles is becoming plainer every day, and now that Gingrich has foresworn positive campaigning, none of the survivors can be expected to play nice.
Just as importantly, “true conservatives” have doubts and divisions about the ideological reliability of Mitt’s surviving rivals. Santorum is regarded by some as an Washington insider and Big Government Conservative. Newt’s heresies were amply aired by those attack ads in Iowa. And Perry, the closest thing to a consensus “true conservative” candidate, greatly upset believers with his position on immigration.
And so, conservative leaders may well be asking themselves: Is the dubious value of nominating Santorum or Gingrich or even Perry instead of Romney worth the risk of creating the foundation for an Obama campaign assault on the eventual winner as a flip-flopping opportunist with the character of a feral cat?
Possibly not. Currently the most important residual reason for continuing the anti-Romney resistance is the feeling that he hasn’t yet paid sufficient deference to movement conservatives (even though, ironically, he was their candidate four years ago) or made sufficient promises to make their priorities his own. These are concerns that should be able to be finessed. There may well be furious behind-the-scene negotiations going on to ensure that Mitt doesn’t emulate his new supporter John McCain by getting all “mavericky” in the general election or implicitly triangulating against the Right. And it could culminate in a sort of political Groundhog Day, when a particularly powerful opinion leader signals the troops to shorten or extend the nominating contest (though the leader best positioned to do so, Sen. Jim DeMint, has indicated he does not intend to make an endorsement at all.)
So the fight could go on for a while, but not for an extended period (unless Romney does something uncharacteristically stupid, or Rick Perry achieves a complete resurrection). In head if not heart, conservative elites have already given their hand to Mitt, and much of what’s going on at the present is simply a matter of maintaining appearances and executing a solid pre-nup.
By: Ed Kilgore, The Democratic Strategist, January 9, 2012
A “Bell Hop For The Wealthy”: Rick Santorum’s Dubious Working-Class Creds
The latest polls show a Huntsman surge, and Santorum tanking in NH, so Santorum’s 15 minutes may be up sooner than later. But we shouldn’t let this political moment pass without a comment on the ‘Santorum as working-class hero’ snowjob.
Google Santorum +”working-class,” and you’ll pull up headlines like “Santorum fits working class bill,” “Like Rocky Balboa, Rick Santorum is a working class hero” and “Santorum: The Blue-collar Candidate – The former senator touts his working-class roots” etc. The conservative echo chamber is parroting the meme with impressive message discipline. Top conservative pundits, including Brooks, Will and Krauthammer have jumped on the Santorum as working-class hero bandwagon.
It’s not hard to understand why. One of the largest swing constituencies, the white working-class has trended toward the GOP in recent elections. According to Wall St. Journal columnist Kimberly Strassel
…Barack Obama did better than John Kerry or Al Gore with these voters, though even he earned just 43% of their vote…That was Mr. Obama’s high point. In 2010 a record 63% of this bloc voted for the GOP. And there are signs that, whether out of calculation or desperation, Team Obama may be abandoning them altogether–instead looking for 2012 victory in a progressive coalition of educated, socially liberal voters, combined with poorer ethnic voters, in particular Hispanics.The white working class will make up as much as 55% of the vote in states like Ohio and Pennsylvania. Front-runner Mitt Romney knows it, as does Mr. Santorum. Their fight in New Hampshire and beyond will increasingly be over who can earn more points with this group. Their styles are very different, if equally damaging to the conservative growth message.
Santorum is making a hard-sell pitch for the blue collar vote, as Strassel reports:
Mr. Santorum surged in Iowa as the “I’m One of You” candidate. On the stump, and in his victory speech in Iowa, he’s highlighted his working-class roots. He kicked off his campaign near the Pennsylvania coal mines where his grandfather worked, and he talks frequently of struggling steel towns…He’s the frugal guy, the man of faith, the person who understands the financial worries of average Americans. He’s directly contrasting his own blue-collar bona fides with those of the more privileged Mr. Romney.
In reality, however, Santorum’s working-class creds are awfully thin. His father was a clinical psychologist and his mother was an administrative nurse — clearly more of an upper middle-class upbringing than a blue collar culture. Yeah, he had a grandfather who was a miner, but it’s not like he grew up in a mining family as the GOP meme-propagators would have us believe.
Worse, much of his career in public office has been dedicated to serving as an eager bell-hop for the wealthy. More recently, as the Washington Post reported,
Santorum earned $1.3 million in 2010 and the first half of 2011, according to his most recent financial disclosure form. The largest chunk of his employment earnings — $332,000 — came from his work as a consultant for groups advocating and lobbying for industry interests. That included $142,500 to help advise a Pennsylvania natural gas firm, Consol Energy, and $65,000 to consult with lobby firm American Continental Group, and its insurance services client.
And, as Marcus Stern and Kristina Cooke recently reported for Reuters,
As a senator, Santorum went further, playing a key role in an effort by Republicans in Congress to dictate the hiring practices, and hence the political loyalties, of Washington’s deep-pocketed lobbying firms and trade associations, which had previously been bipartisan.Dubbed “the K Street Project” for the Washington street that houses most of these groups, the initiative was launched in 1989 by lobbyist Grover Norquist, whose sole aim, he said, was to encourage lobbying firms to “hire people who agree with your worldview, not hire for access.”
…Citizens for Responsibility and Ethics in Washington, a liberal government watchdog group, named Santorum among three “most corrupt” senators in 2005 and 2006, accusing him of “using his position as a member of Congress to financially benefit those who have made contributions to his campaign committee and political action committee.”
Santorum has won some blue collar support by promoting his message of “industrial renewal,” and supporting protectionist measures, as John Nichols reports in The Nation. But, as Nichols, says, “There is no reason to overplay Santorum’s commitments. He is an economic conservative who would side more often with Wall Street than Main Street.”
In 2002, for example, Senator Santorum received a 15 percent rating from the AFL-CIO. Not many Senators had a lower score.
Republican strategists are so desperate for a candidate who can relate to the blue-collar “Reagan Democrats” that casting an arch conservative, silk-stocking lawyer like Santorum as a working class hero seems a reasonable stretch. If Santorum does recover from his latest poll dive, it shouldn’t be too hard for Dems to expose his policy agenda as more anti-worker than not.
Note from James Vega:
Using exactly the same, utterly and shamelessly idiotic “grandfather’s history plus general geographical area” theory of social class, Mitt Romney can claim to be “the authentic descendent and representative of Mexican-American autoworkers” – his grandfather lived in Chihuahua, Mexico most of his life and Romney himself grew up “in the shadows of the automobile factories of Detroit”
Newt, on the other hand, can polish his credentials in the African-American community by claiming to be “a scholar of African society whose congressional district was a short distance from Ebenezer Baptist Church where Martin Luther King led the Civil Rights Movement”.
By: J. P. Green, The Democratic Strategist, January 9, 2012
GOP Class Warfare: Make The Middle Class Pay
For viewers of Saturday night’s Republican presidential candidate debate, drawing distinctions between the leading candidates wasn’t hard. We may disagree on whether these men are presidential caliber, but as cartoon caricatures, they’re deliciously unique. Rick Santorum’s sexual obsessions, Rick Perry’s Texas war-mongering, Newt Gingrich’s ego, and Mitt Romney’s profound commitment to flip-flop, any time, anywhere, are all drawn in big, bright, Day-Glo colors. (Ron Paul is, of course, Ron Paul.)
But on one topic they are as alike as genetically modified peas in a pod. In an era in which Americans are paying historically low taxes and the government faces huge budget deficits, they are all fervently determined to give the richest Americans another huge tax break.
The Citizens for Tax Justice have crunched the numbers, and they are remarkable.
The cost of the tax plans proposed by Republican presidential candidates would range from $6.6 trillion to $18 trillion over a decade. The share of tax cuts going to the richest one percent of Americans under these plans would range from over a third to almost half. The average tax cuts received by the richest one percent would be up to 270 times as large as the average tax cut received by middle-income Americans.
The figures are staggering. Here’s a quick breakdown of how the richest one percent of Americans would stand to benefit under the different plans.
- Newt Gingrich: An average tax cut of $391,330
- Rick Perry: An average tax cut of $272,730
- Mitt Romney: An average tax cut of $126,450
- Rick Santorum: An average tax cut of $217,500
Ron Paul’s tax plan isn’t detailed enough to make the same analysis, but he has proposed repealing the federal income tax altogether, which, ideologically speaking, makes him a clear fellow traveler with the rest of his colleagues.
The CTJ report makes a little bit too much of the relative size of the tax cuts enjoyed by the richest Americans compared to the rest of us (for example, under Gingrich’s plan the middle fifth of Americans would get a $1,990 tax cut, a mere pittance compared to the $391,300 delivered to the rich.) In a proportional system, the numbers are always going to be much bigger for the richest Americans, whether we’re measuring hikes or cuts. But the report is right on the money when it points out who ends up really paying for the cuts. Affording the huge tax cuts plans proposed by the leading Republican presidential contenders will require massive cuts to government programs that primarily benefit the lower and middle classes.
Even the meager tax cuts that would go to low-income and middle-income taxpayers under these plans would almost surely be offset by the huge cuts in public services that would become necessary as a result.
GOP lawmakers in Washington are already calling for ending Medicare as guaranteed health insurance for seniors and reducing Social Security benefits, and these tax plans would make necessary even more draconian reductions in the types of public services that middle-income Americans depend on.
Rich Santorum told debate watchers Saturday night that he’d prefer it we just abolished the term “middle class” from the popular lexicon. Dividing up Americans according to their income levels just serves Obama’s “class warfare” agenda, claimed Santorum.
But it’s impossible to look at the tax plans proposed by Gingrich, Romney, et al. and not understand how class warfare really works in the United States today. The rich get a huge windfall — and the rest of us are supposed to pay for it.
By: Andrew Leonard, Salon, January 9, 2012
A “Steel Skeleton In The Closet”: Mitt Romney, Bain Capital And The $44 Million Bailout
It was funny at first.
The young men in business suits, gingerly picking their way among the millwrights, machinists and pipefitters at Kansas City’s Worldwide Grinding Systems steel mill. Gaping up at the cranes that swung 10-foot cast iron buckets through the air. Jumping at the thunder from the melt shop’s electric-arc furnace as it turned scrap metal into lava.
“They looked like a bunch of high school kids to me. A bunch of Wall Street preppies,” says Jim Linson, an electronics repairman who worked at the plant for 40 years. “They came in, they were in awe.”
Apparently they liked what they saw. Soon after, in October 1993, Bain Capital, co-founded by Mitt Romney, became majority shareholder in a steel mill that had been operating since 1888.
It was a gamble. The old mill, renamed GS Technologies, needed expensive updating, and demand for its products was susceptible to cycles in the mining industry and commodities markets.
Less than a decade later, the mill was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health insurance they’d been promised, and their pension benefits were cut by as much as $400 a month.
What’s more, a federal government insurance agency had to pony up $44 million to bail out the company’s underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.
PROFITABLE FAILURES
In his campaign for president, Romney has championed free markets and vowed to shrink the role of government. The Republican has argued that his business acumen makes him the best candidate to fix the nation’s economy and bring down the stubbornly high unemployment rate. Romney’s opponents point to his business career as evidence that he is willing to cut jobs and benefits.
The story of Bain’s failed investment in the Kansas City mill offers a perspective on a largely overlooked chapter in Romney’s business record: His firm’s brush with a U.S. bailout.
His supporters say the pension gap at the Kansas City mill was an unforeseen consequence of a falling stock market and adverse market conditions. But records show that the mill’s Bain-backed management was confronted several times about the fund’s shortfall, which, in the end, required an infusion of funds from the federal Pension Benefits Guarantee Corp.
Romney’s career at Bain included both successes and failures. That is not unusual in the private equity business, where investors buy troubled companies and try to turn them around, often through aggressive use of debt.
“Bain Capital invested in many businesses,” Romney spokesman Ryan Williams said in a written statement. “While not every business was successful, the firm had an excellent overall track record and created jobs with well-known companies like Staples, Dominos Pizza and Sports Authority.”
Bain showed a remarkable knack for turning a profit. A prospectus from the year 2000 obtained by the Los Angeles Times shows that the buyout firm delivered an average annual return on investment of 88 percent between its founding in 1984 and the end of 1999.
Romney headed the firm for that entire period, except for a hiatus in 1990 to 1992, when he returned to Bain Capital’s sister consulting firm, Bain & Co. In 1999 he left the business to run the Winter Olympics in Salt Lake City.
The steel company declared bankruptcy in 2001. Romney continued receiving dividends from Bain after his departure. He accumulated a personal fortune of between $190 million and $250 million, according to campaign disclosure forms.
Steven Kaplan, a University of Chicago professor of entrepreneurship and finance, describes Bain’s track record under Romney as “fantastic,” even if some ventures ended in failure.
“You don’t do this by just squeezing out costs. Those kinds of returns only come from growth,” he said. “Yes, they had some bad investments, I guess in the same way presidents make some bad calls.”
CASHING IN
Overall, Bain made at least $12 million on the steel company it created by merging the Kansas City mill with another in South Carolina before the new entity declared bankruptcy in 2001. Bain also collected an additional $900,000 a year through 1999 for management consulting services, public filings show.
Some analysts say Bain should not be blamed for the company’s failure, noting that a wave of cheap imports forced nearly half of the U.S. steel industry into bankruptcy during that period. Another company set up around the same time, in which Bain took a minority stake, Steel Dynamics in Fort Wayne, Indiana, thrived.
“GS and Steel Dynamics were about as different as it gets,” industry analyst Michelle Applebaum said. GS’s core products were vulnerable to competition while Steel Dynamics became “one of the country’s lowest-cost manufacturers of steel sheet,” a product with more staying power. Steel Dynamics was also a non-union shop.
Former company executives say they were generally satisfied with Bain’s leadership, but they say the firm would have been better equipped to weather tough times had it not been saddled with such a heavy debt load.
They also fault Bain for putting inexperienced managers in place and spurning a buyout offer from a competitor. Workers say efforts to cut corners often backfired, driving costs higher.
The Kansas City millworkers, meanwhile, are still fuming, after being left with no health benefits and a reduced pension check.
“Romney cost me lots and lots of sleepless nights and lots and lots of money,” said Ed Stanger, who worked at the plant for nearly 30 years.
A GOOD LIVING
Since opening in 1888 as The Kansas City Bolt and Nut Co., the steelworks that sprawl along the Blue River valley in the city’s northeast corner provided a steady and prestigious living for thousands of men. It was hard, dirty, dangerous work. The plant kept two surgeons on site in case of accidents, and death on the job was not unknown.
When summer temperatures would top 100 degrees, workers wore long johns under their protective suits so their sweat could offer some relief.
Still, it wasn’t easy to get a job at the mill. The pay was good, lifting countless families into the middle class. Workers bought houses and cars and sent their kids to college.
“Hard work is supposed to pay off,” said John Cottrell, who spent decades working with molten metal. White burn marks crisscross his massive forearms, and years of asbestos exposure have left him short of breath. Sitting at his kitchen table in the working class suburb of Independence, he looks a decade older than his 64 years.
At its peak in 1970, the Kansas City plant, then owned by Armco Steel Corp, employed 4,500 people. Poor market conditions forced a wave of layoffs in the early 1980s and led the company to prune its product line. By the early 1990s, the plant focused on two items: wire for products such as mattress springs and tires; and high-carbon balls and rods used by the mining industry to pulverize rocks.
It was around that time that the mill workers started noticing the kids in suits.
Armco wanted to sell its Kansas City plant to concentrate on other aspects of its business. Jack Stutz and a few of the other Armco managers were looking for backers to help them buy it. They spoke to GE Capital, which, in turn, contacted Bain Capital because it had earned a sterling reputation for turning companies around.
The risks were obvious. The mill’s equipment was out of date and it faced stiff competition from Nucor Corp, which also made grinding balls.
Nevertheless, Bain and its partners decided to buy the mill for $75 million. Bain put up about $8 million to gain majority control of the company, renamed GS Technologies Inc. GE Capital, former Armco executives and Leggett & Platt, a major customer for the mill’s wire rods, chipped in the rest of the equity.
As part of the deal, Armco agreed to cover employee pension obligations if the plant closed within five years — a $120 million liability, according to the Kansas City Business Journal.
THE BIG DIVIDEND
Bain got its money back quickly. The new company issued $125 million in bonds and paid Bain a $36.1 million dividend in 1994.
“Paying distributions with debt is not uncommon,” said Campbell Harvey, a finance professor at Duke University. “The only thing that strikes me as a bit unusual is the size of the dividend. There would be logic in them saving some cash for a downturn.”
Looking back on the dividend payout, Stutz and another former GS Technologies officer, Mario Concha, believe it weakened the mill’s financial position.
“At the time they paid that dividend, they felt that the financials justified it,” Stutz said.
GS announced plans for a $98 million plant modernization and Kansas City officials agreed to a tax break worth about $3 million, according to press accounts.
In 1995 Bain merged GS with another wire rod maker in Georgetown, South Carolina, to form one of the largest mini-mill steel producers in the U.S. The new company issued another $125 million in bonds to pay for the merger. Bain doubled down, reinvesting $16.5 million of its earlier dividend.
The new company, dubbed GS Industries Inc., would have annual revenues of $1 billion and employ 3,800 people.
Already, though, there were warning signs that the company was not on a sustainable course. Concerned about the level of debt, which totaled $378 million in 1995 on operating income less than a tenth of that amount, the merged company’s new CEO, Roger Regelbrugge, negotiated a clause in his contract that would allow him to retire at the end of 1997.
Regelbrugge said he was concerned that the company would have to go through a painful restructuring if it had not sold shares through an initial public offering (IPO) by then.
Regelbrugge had done one restructuring in the 1980s at the South Carolina mill, laying off workers and haggling with creditors. He did not want to go through that painful process again.
“Unless we had plans to go public at that time, I did not want to carry that debt load ad infinitum,” he said.
Over the next two years, GS Industries completed its upgrade of the Kansas City plant and laid the groundwork for an IPO to pay down some of the debt.
Meanwhile, managers struggled to forge a cohesive whole from two companies that made similar products but had different corporate cultures, different manufacturing processes and different labor contracts.
“I guess the two cultures never really got together,” Stutz said.
ON STRIKE
In 1997, with Armco’s pension guarantees set to expire in one year, the United Steelworkers local at the Kansas City plant was worried that GS was not setting aside enough money to cover pension obligations and other benefits in the event of a shutdown.
David Foster, the negotiator for the union, said labor talks were typically more tense at companies owned by private equity firms because the high level of debt left managers with less flexibility.
Contract talks foundered and the union went on strike in April 1997. The first standoff since 1959 quickly turned nasty. Workers shot bottle rockets at security guards, tossed nails in the roadways to flatten the tires of nonunion trucks and pounded on the windows of vehicles as they left the plant.
After 10 weeks, the two sides reached a deal that boosted pensions and ensured that workers would get health and life insurance in the event of a shutdown.
The workers put down their picket signs, but the equipment upgrades weren’t delivering productivity gains as quickly as hoped. At the end of 1997, Regelbrugge decided to retire rather than stick around for an IPO that wasn’t going to materialize.
Shortly after that, an industry competitor offered “a whole lot of money” to buy GS, according to Regelbrugge, but Bain turned it down. A company insider said the suitor was the global behemoth Mittal Steel Company, but added that no formal offer was ever made.
As GS Industries sought to cut costs, it hired line managers with no experience in the steel industry, workers said. One had worked at Walmart; many others came straight out of the military.
“He would come up with some of the stupidest damn ideas that you ever seen,” the former steelworker Linson said of one supervisor, a retired Air Force colonel.
Paperwork proliferated. Cost-cutting efforts backfired. Managers skimped on purchases of everything from earplugs to spare motors and scaled back routine maintenance. Machines began to break down more often, and with parts no longer in stock a replacement could take days to arrive.
Labor costs spiked as managers revamped work schedules with little understanding of how the plant actually operated. Linson says he picked up an entire shift of overtime each week because his managers didn’t realize that a furnace needed a full eight hours to heat up to operating temperature.
“That didn’t work to their advantage,” he said. “I made a lot of money.”
Daily life at the plant was also growing more dangerous. Veteran crane operator Ed Mossman says he was ordered to pick up a load of steel that was 50 percent above the recommended weight limit – a prospect that could have toppled the crane and sent Mossman plunging to his death. When he refused, he says, he was fired after putting in 29 years at the mill.
“The first 15 years, I had the best job in the United States, as far as I was concerned,” Mossman said. “The last five years down there got to be pure hell.”
Meanwhile, a wave of cheap imports from Asia drove steel prices down sharply, while costs for natural gas and electricity rose. The Asian financial crisis lowered demand for mined metals, which hit the company’s grinding-ball business.
The company, along with other steelmakers, successfully petitioned the U.S. International Trade Commission for tariff rate quotas on imported wire rods and also entered the federal loan guarantee program for troubled steel companies — two remedies at odds with a free-market stance. Romney now says it was a mistake for the government to try to protect the steel industry.
Nevertheless, net losses at the company grew to $52.9 million in 1999 from $16.1 million in 1997, while operating income dropped to $9.6 million from $37.9 million over the same period — not enough to sustain the firm’s debt and obligations for long.
THE BLAME GAME
Charles Bradford, an analyst at Bradford Research, blames the union, in part, for the failure of GS Industries to survive in the new global marketplace.
“If you look at the steel companies that went under at the time, all of them were unionized,” he said. “I’m not saying this was the only factor — these firms faced other headwinds such as cheap labor and a strong dollar … but the unions held them back.”
Union officials blame the Bain managers for saddling the company with too much debt for a capital-intensive, cyclical industry such as steel. “They look at ways to try to leverage the financial resources of the company during an uptick in the markets, stream money out of it and leave wreckage behind them,” said the union’s Foster.
Regelbrugge blames his successor, Mark Essig, for installing senior managers who did not know the business. “I have no question that the company would have survived under different management,” he said. Essig did not return calls seeking comment.
A spokesman for Bain Capital said: “Over $100 million and many thousands of hours were invested in GSI to upgrade its facilities and make the company more competitive during a 7-year period when the industry came under enormous pressure and 44 U.S. steel companies went into bankruptcy. In the same period, we worked to turn around GSI, we helped launch and grow an innovative business called Steel Dynamics that is today a $6 billion global leader…. Our focus remains on building great companies and improving their operations.”
GS Industries declared bankruptcy on February 7, 2001, and said it would shut down the Kansas City plant, eliminating 750 jobs. In a press release, the company said the bankruptcy was triggered in part by “the critical need to restructure the company’s liabilities.”
Workers soon found out what that meant. In April, GS said it was shedding the guarantees it had promised its workers in the event of a plant closure – the severance pay, health insurance, life insurance and pension supplements that had been negotiated during the 1997 strike.
Workers could buy health insurance through the company’s plan, but the company would no longer share its costs. For many who were struggling with asbestosis or other ailments contracted during their years of work, the cost was prohibitive.
“The wife and I, we just held our breath and prayed a lot,” said Stanger, the ex-millworker. He was quoted a price of $1,800 per month – more than his pension payment.
FEDERAL AID
The U.S. Pension Benefit Guaranty Corp, which insures company retirement plans, determined in 2002 that GS had underfunded its pension by $44 million. The federal agency, funded by corporate levies, stepped in to cover the basic pension payments, but not the supplement the union had negotiated as a hedge against the plant’s closure.
For Joe Soptic, who worked at the plant for 28 years, that meant a loss of $283 per month, about 22 percent of his pension. Others lost up to $400 per month, according to documents supplied by the union.
Comparatively, the GS bailout was one of the pension guarantor’s smaller hits. The federal fund swung from a $7.7 billion surplus to a $3.6 billion deficit that year as it struggled to cover bankruptcies in the steel and transportation industries. The failure of LTV Steel, for example, cost the agency $1.9 billion.
The agency’s woes prompted Congress in 2006 to require companies to contribute more toward their pensions. Press accounts said this change accelerated the shift away from pension plans toward 401(k)s and other defined-contribution retirement plans that offer less security for workers.
Many of the older workers at the Kansas City mill were just a few years away from Social Security and Medicare, but younger workers didn’t have that safety net. Even with $600,000 earmarked by the U.S. Labor Department for job retraining, many had trouble finding work.
“They give you a year’s worth of training, you’re 50-something years old, nobody wants to hire you,” said Steve Morrow, who retrained in the field of heating and air conditioning.
After nearly 30 years as a steelworker, Joe Soptic found a job as a school custodian. The $24,000 salary was roughly one-third of his former pay, and the health plan did not cover his wife, Ranae.
When Ranae started losing weight, “I tried to get her to the doctor and she wouldn’t go,” Soptic said. She ended up in the county hospital with pneumonia, where doctors discovered her advanced lung cancer. She died two weeks later.
Soptic was left with nearly $30,000 in medical bills. He drained a $12,000 savings account and the hospital wrote off the balance.
“I worked hard all my life and played by the rules, and they allowed this to happen,” Soptic said.
By: Andrew Sullivan and Greg Roumeliotis, Reuters, January 6, 2012
Mitt Romney And The Privileges Of The Very Wealthy: “Thanks, Much Obliged”
What better person than the French-speaking Mitt Romney to lay bare the pure beating heart of noblesse oblige.
Sunday morning’s NBC debate in Concord, N.H. was a vast improvement over the ABC one the night before — it occurred to the non-Romney candidates that they might want to train their fire on the man who’s up 20 points in the New Hampshire polls. Their focus trailed off as the debate progressed, but Rick Santorum and Newt Gingrich did manage to produce a revealing exchange at the outset regarding Romney’s motivations to enter politics. They challenged Romney’s oft-repeated claim that he, unlike they, was no career politician but rather a man who saw running for office as the duty of a good citizen who, when his work is complete, returns like Cincinnatus to his plow, or to his carried-interest loophole for private equity investment managers, as the case may be. In the best zinger of the debate, Gingrich chalked this up as a bunch of “pious baloney.” But it is these lines of Romney that should get the attention. From Ben Smith’s writeup:
Mitt Romney suggested in today’s debate that only rich people should run for office, and then quickly celebrated the fact that he’d forced a rival to take out a loan against his house. Romney said his father, Michigan Governor George Romney, had told him, “Mitt, never get involved in politics if you have to win an election to pay a mortgage.”
“If you find yourself in a position when you can serve, why you ought to have a responsibility to do so if you think you can make a difference,” he recalled his father telling him. “Also, don’t get in politics if your kids are still young because it might turn their heads.”
A few seconds later, he bragged about his run against Teddy Kennedy. “I was happy he had to take a mortgage out on his house to ultimately defeat me,” he said.
The exchange with Newt Gingrich brought out Romney at his most tone-deaf, and echoed his offer of a $10,000 bet to Rick Perry in an earlier debate. Romney’s rivals are already looking for ways to turn his wealth — and his tone-deaf treatment of it — into a liability. The Obama campaign regularly blasts him as out-of-touch with the lives of American workers.
So: the person running on the vision of a “merit” and “opportunity” society opposed to Barack Obama’s “entitlement” society believes that politicians should be independently wealthy, not peons who have to rely on the paltry earnings of a U.S. senator or governor. It’s worth noting that this is hardly the first time that Romney has depicted his move into politics in 1994 in this light. In his 2007 piece about Romney’s relationship with his father, who after running American Motors became governor of Michigan and ran for president in 1968, Jonathan Cohn wrote: “George Romney had always said the ideal time to run for public office was after you had achieved financial independence and your children were old enough to put up with the loss of privacy.” So Mitt today was just echoing the advice of the father he revered. But of all the aspects of George Romney that are to be admired — including many lacking in his son — this brand of noblesse oblige wasn’t one of them. Once again, I’m simply amazed that the Republican Party, at a time of heightened consciousness about the privileges of the very wealthy, is on the verge of nominating a quarter-billionaire who, when presented with the notion of running for president, says: thanks, much obliged.
By: Alec MacGillis, The New Republic, January 8, 2012
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