Romney’s Genuine Capitalist Bona Fides Could Be His Downfall
Say what you will about him, Mitt Romney is the real thing: a Wall Street guy to his bones, a numbers whiz who took a small start-up, Bain Capital, and helped turn it into a $65 billion giant among private-equity firms (which is what we now call the the old corporate-raiding leveraged-buyout buccaneers we used to think of as “barbarians at the gate” back in ’80s; in case anyone was wondering, they’re now allowed inside the gate). Romney actually is, in other words, what Newt Gingrich and Rick Santorum and Rick Perry can only talk about in the abstract: he’s a real capitalist.
And now we find that he gets paid like one too. To the surprise of very few, the GOP’s nominee presumptive acknowledged on Tuesday that he pays about 15 percent in taxes, far less a percentage than the average middle-class American, thanks to a host of tax breaks proffered by what Warren Buffett once critically called “our billionaire-friendly Congress.”
But Romney’s biggest political problem right now is not that he is at loggerheads with his fellow Rich Guy, St. Warren of Omaha, who has generously demanded that the billionaire-friendly Congress ask more of the super-wealthy in taxes (which Romney vehemently opposes). Buffett doesn’t command that many votes. Romney’s biggest problem is determining whether the mood of the country has really shifted against the financial plutocrats as much as the Occupy Wall Street movement might indicate.
I think it has, and Romney will have a lot of self-defense to do in the general election.
As much as they might have annoyed their conservative base, Gingrich and Perry were on to something when they attacked Bain Capital in South Carolina. The anti-Wall Steet anger cuts across party lines. It’s not so much the kind of activities that Romney and Bain were engaged in; Bain is really just feeling the blowback from anger on both left and pight. Bain may sometimes destroy jobs, but when it fails at a venture, at least it loses money.
Yet the public may no longer be interested in making the distinction between Wall Street firms that follow the rules and those that don’t. The reason that what Gingrich and Perry are saying resonates goes back to Wall Street’s offenses over the last decade with subprime mortgage securitization. The issue here is not really about the ordinary “the rough and tumble of market capitalism,” as The Wall Street Journal‘s Gerald Seib suggested at the debate last night. Most Americans don’t have a problem with that. The issue is really the corruption of market capitalism represented by the massive fraud that Wall Street banks got away with, for which they were then bailed out by the federal government with no questions asked. All this has aggravated, for average Americans, the frustration they already feel because of the record levels of income inequality that exist in our economy.
That’s why the public is likely to get its dander about Romney’s 15 percent. It is an issue that unites conservatives and liberals, OWS protesters and tea partiers alike. As I wrote in my 2010 book Capital Offense, both the left and the right were justifiably offended by the way the American system of capitalism — real capitalism, that is, the way it’s supposed to work — was subverted during the subprime era. Liberals were appalled by the rampant destruction of social equity, and the rigged way so much wealth was amassed in the hands of the 1 percent; conservatives were outraged that the system didn’t work the way it was supposed to: in other words, if you fail, you die.
So Romney’s biggest problem may not be his robotic campaign style, or the tin ear that lead him to bet Perry $10,000 (presumably at low tax rates) at one point. His biggest problem may be his golden resume. Given the mood of the country, Romney may have a tougher time persuading the public he’s the One during the general election season than he thinks.
By: Michael Hirsh, Chief Correspondent, National Journal; Published in The Atlantic, January 17, 2012
GOP Governors Taught How To Describe Occupy Wall Street
During a meeting of the Republican Governors Association in Orlando this week, Frank Luntz, one of the most well known political communications strategist in the country, talked to GOPers about how they could do a better job talking about the Occupy Wall Street movement.
Yahoo News’ Chris Moody reports that “Luntz offered tips on how Republicans could discuss the grievances of the Occupiers, and help the governors better handle all these new questions from constituents about ‘income inequality’ and ‘paying your fair share.’”
“I’m so scared of this anti-Wall Street effort. I’m frightened to death,” said Luntz, a Republican strategist and one of the nation’s foremost experts on crafting the perfect political message. “They’re having an impact on what the American people think of capitalism.”
According to Moody, this was Luntz’s advice:
1. Don’t say ‘capitalism.’
“I’m trying to get that word removed and we’re replacing it with either ‘economic freedom’ or ‘free market,’ ” Luntz said. “The public . . . still prefers capitalism to socialism, but they think capitalism is immoral. And if we’re seen as defenders of quote, Wall Street, end quote, we’ve got a problem.”
2. Don’t say that the government ‘taxes the rich.’ Instead, tell them that the government ‘takes from the rich.’
“If you talk about raising taxes on the rich,” the public responds favorably, Luntz cautioned. But ”if you talk about government taking the money from hardworking Americans, the public says no. Taxing, the public will say yes.”
3. Republicans should forget about winning the battle over the ‘middle class.’ Call them ‘hardworking taxpayers.’
“They cannot win if the fight is on hardworking taxpayers. We can say we defend the ‘middle class’ and the public will say, I’m not sure about that. But defending ‘hardworking taxpayers’ and Republicans have the advantage.”
4. Don’t talk about ‘jobs.’ Talk about ‘careers.’
“Everyone in this room talks about ‘jobs,’” Luntz said. “Watch this.”
He then asked everyone to raise their hand if they want a “job.” Few hands went up. Then he asked who wants a “career.” Almost every hand was raised.
“So why are we talking about jobs?”
5. Don’t say ‘government spending.’ Call it ‘waste.’
“It’s not about ‘government spending.’ It’s about ‘waste.’ That’s what makes people angry.”
6. Don’t ever say you’re willing to ‘compromise.’
“If you talk about ‘compromise,’ they’ll say you’re selling out. Your side doesn’t want you to ‘compromise.’ What you use in that to replace it with is ‘cooperation.’ It means the same thing. But cooperation means you stick to your principles but still get the job done. Compromise says that you’re selling out those principles.”
7. The three most important words you can say to an Occupier: ‘I get it.’
“First off, here are three words for you all: ‘I get it.’ . . . ‘I get that you’re. I get that you’ve seen inequality. I get that you want to fix the system.”
Then, he instructed, offer Republican solutions to the problem.
8. Out: ‘Entrepreneur.’ In: ‘Job creator.’
Use the phrases “small business owners” and “job creators” instead of “entrepreneurs” and “innovators.”
9. Don’t ever ask anyone you want them to ‘sacrifice.’
“There isn’t an America today in November of 2011 who doesn’t think they’ve already sacrificed. If you tell them you want them to ‘sacrifice,’ they’re going to be be pretty angry at you. You talk about how ‘we’re all in this together.’ We either succeed together or we fail together.”
10. Always blame Washington.
Tell them, “You shouldn’t be occupying Wall Street, you should be occupying Washington. You should occupy the White House because it’s the policies over the past few years that have created this problem.”
The Occupy movement has scored a number of small victories since September, when the Occupy Wall Street protesters first assembled in downtown New York. Bank of America announced it would not be charging debit card fees, one of the many triggers that sparked the protests, and a congressman introduced an amendment called the OCCUPIED Amendment that would reform campaign finance laws. Campaign finance rules that favor corporate power are a chief Occupy Wall Street target.
By: The Washington Independent, Admin, December 1, 2011
Since Corporations Are “People”, They Should Have A Pledge Of Allegiance
Despite what the Supreme Court and Mitt Romney say, corporations aren’t people. (I’ll believe they are when Georgia and Texas start executing them.)
The Court thinks corporations have First Amendment rights to spend as much as they want on politics, and Romney (and most of his fellow Regressives) think they need lower taxes and fewer regulations in order to be competitive.
These positions are absurd on their face. By flooding our democracy with their shareholders’ money, big corporations are violating their shareholders’ First Amendment rights because shareholders aren’t consulted. They’re simultaneously suppressing the First Amendment rights of the rest of us because, given how much money they’re throwing around, we don’t have enough money to be heard.
And they’re indirectly giving non-Americans (that is, all their foreign owners, investors, and executives) a say in how Americans are governed. Pardon me for being old-fashioned but I didn’t think foreign money was supposed to be funneled into American elections.
Romney’s belief big corporations need more money and lower costs in order to create jobs is equally baffling. Big corporations are now sitting on $2 trillion of cash and enjoying near-record profits. The ratio of profits to wages is higher than it’s been since before the Great Depression. And a larger and larger portion of those profits are going to top executives. (CEO pay was 40 times the typical worker in the 1980s; it’s now upwards of 300 times.)
But, hey, if the Supreme Court and regressive Republicans insist big corporations are people and want to treat them as American citizens, then why not demand big corporations take a pledge of allegiance to the United States?
And if they don’t take the pledge, we should boycott them. (Occupiers — are you listening?)
Here’s what a Corporate Pledge of Allegiance might look like:
The Corporate Pledge of Allegiance to the United States
The [fill in blank] company pledges allegiance to the United States of America. To that end:
We pledge to create more jobs in the United States than we create outside the United States, either directly or in our foreign subsidiaries and subcontractors.
If we have to lay off American workers, we will give them severance payments equal to their weekly wage times the number of weeks they’ve work for us.
We further pledge that no more than 20 percent of our total labor costs will be outsourced abroad.
We pledge to keep a lid on executive pay so no executive is paid more than 50 times the median pay of American workers. We define “pay” to include salary, bonuses, health benefits, pension benefits, deferred salary, stock options, and every other form of compensation.
We pledge to pay at least 30 percent of money earned in the United States in taxes to the United States. We won’t shift our money to offshore tax havens and won’t use accounting gimmicks to fake how much we earn.
We pledge not to use our money to influence elections.
Companies that make the pledge are free to use it in their ads over the Christmas shopping season.
By: Robert Reich, Professor of Public Policy at the University of California at Berkeley, Robert Reich Blog, November 8, 2011
Soaring Inequality: “It’s Time To Take The Crony Out Of Capitalism”
Whenever I write about Occupy Wall Street, some readers ask me if the protesters really are half-naked Communists aiming to bring down the American economic system when they’re not doing drugs or having sex in public.
The answer is no. That alarmist view of the movement is a credit to the (prurient) imagination of its critics, and voyeurs of Occupy Wall Street will be disappointed. More important, while alarmists seem to think that the movement is a “mob” trying to overthrow capitalism, one can make a case that, on the contrary, it highlights the need to restore basic capitalist principles like accountability.
To put it another way, this is a chance to save capitalism from crony capitalists.
I’m as passionate a believer in capitalism as anyone. My Krzysztofowicz cousins (who didn’t shorten the family name) lived in Poland, and their experience with Communism taught me that the way to raise living standards is capitalism.
But, in recent years, some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us. They’re not evil at all. But when the system allows you more than your fair share, it’s human to grab. That’s what explains featherbedding by both unions and tycoons, and both are impediments to a well-functioning market economy.
When I lived in Asia and covered the financial crisis there in the late 1990s, American government officials spoke scathingly about “crony capitalism” in the region. As Lawrence Summers, then a deputy Treasury secretary, put it in a speech in August 1998: “In Asia, the problems related to ‘crony capitalism’ are at the heart of this crisis, and that is why structural reforms must be a major part” of the International Monetary Fund’s solution.
The American critique of the Asian crisis was correct. The countries involved were nominally capitalist but needed major reforms to create accountability and competitive markets.
Something similar is true today of the United States.
So I’d like to invite the finance ministers of Thailand, South Korea and Indonesia — whom I and other Americans deemed emblems of crony capitalism in the 1990s — to stand up and denounce American crony capitalism today.
Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.
The upshot is that financial institutions boost leverage in search of supersize profits and bonuses. Banks pretend that risk is eliminated because it’s securitized. Rating agencies accept money to issue an imprimatur that turns out to be meaningless. The system teeters, and then the taxpayer rushes in to bail bankers out. Where’s the accountability?
It’s not just rabble-rousers at Occupy Wall Street who are seeking to put America’s capitalists on a more capitalist footing. “Structural change is necessary,” Paul Volcker, the former chairman of the Federal Reserve, said in an important speech last month that discussed many of these themes. He called for more curbs on big banks, possibly including trimming their size, and he warned that otherwise we’re on a path of “increasingly frequent, complex and dangerous financial breakdowns.”
Likewise, Mohamed El-Erian, another pillar of the financial world who is the chief executive of Pimco, one of the world’s largest money managers, is sympathetic to aspects of the Occupy movement. He told me that the economic system needs to move toward “inclusive capitalism” and embrace broad-based job creation while curbing excessive inequality.
“You cannot be a good house in a rapidly deteriorating neighborhood,” he told me. “The credibility and the fair functioning of the neighborhood matter a great deal. Without that, the integrity of the capitalist system will weaken further.”
Lawrence Katz, a Harvard economist, adds that some inequality is necessary to create incentives in a capitalist economy but that “too much inequality can harm the efficient operation of the economy.” In particular, he says, excessive inequality can have two perverse consequences: first, the very wealthy lobby for favors, contracts and bailouts that distort markets; and, second, growing inequality undermines the ability of the poorest to invest in their own education.
“These factors mean that high inequality can generate further high inequality and eventually poor economic growth,” Professor Katz said.
Does that ring a bell?
So, yes, we face a threat to our capitalist system. But it’s not coming from half-naked anarchists manning the barricades at Occupy Wall Street protests. Rather, it comes from pinstriped apologists for a financial system that glides along without enough of the discipline of failure and that produces soaring inequality, socialist bank bailouts and unaccountable executives.
It’s time to take the crony out of capitalism, right here at home.
By: Nicholas D. Kristof, Op-Ed Columnist, The New York Times, October 26, 2011
Why Democratic Strategists Have Begun To Root For Mitt Romney
It wasn’t long ago that conventional wisdom among Democratic strategists handicapped Mitt Romney as President Obama’s toughest potential Republican challenger. But lately there has been a big shift.
In fact, it is becoming clearer and clearer that Mitt Romney is the very embodiment of the political narrative that will likely define the 2012 Presidential race. Unless there is a miracle, the outcome of next year’s election will likely be determined by whom the public blames for the lousy economy.
Of course the Republicans will argue that the culprit is the “overreaching,” “innovation-stifling” big government and its leader, President Obama. Their prescription to solve the country’s economic woes: eliminate every regulation in sight, cut taxes for the wealthy and free Wall Street bankers that lead us into the promised land.
Democrats, on the other hand, will pin the blame exactly where it belongs — on the reckless speculation of the big Wall Street banks, their Republican enablers — and the stagnant middle class incomes that have resulted from the top one percent of Americans siphoning off virtually all of the country’s economic growth since 1980. They will fault the “do-nothing Republican Congress” for their insistence on defending the status quo, and their refusal to create jobs.
Earlier this summer — when Republicans had succeeded in making “fiscal responsibility” and “deficit reduction” the touchstone of American political discourse — a businessman like Romney appeared to many to be just the ticket. But the tide has turned.
Once they got the debt ceiling “hostage taking” episode behind them, the administration has used its jobs package — and its own budget proposals — to draw a sharp line in the sand. The President has demanded that Congress take action on jobs and pay for it by raising taxes on millionaires.
Then came the Occupy Wall Street Movement — and the worldwide response — that has tapped into the public’s fundamental understanding, and anger, at the real nature of the economic crisis. The fact is that one of the only people around more unpopular than politicians are Wall Street bankers.
Finally, of course, the economic facts on the ground have made it clearer and clearer that right wing economic theories that blame “bloated entitlements” to seniors who make an average of $14,000 a year — and demand “fiscal austerity” — are just plain stupid. According to the Washington Post, even the International Monetary Fund (IMF) — long the world’s leading advocate of deficit reduction and “austerity” — has now warned that “austerity may trigger a new recession and is urging countries to look for ways to boost growth.”
As the national economic dialogue has shifted, the public’s view of Mitt Romney has also come into focus. His out-of-touch “1% moments” proliferated.
On August 11, the blog Think Progress captured the now-famous video of Romney opining, “Corporations are people, my friend.” Of course, given his record of dismembering and bankrupting companies at his old firm, Bain Capital, if “corporations are people,” then Romney is guilty of murder.
On August 29th Romney disputed an account about the expansion of his beach front home. “Romney: Beachfront home is being doubled in size, not quadrupled,” The Hill reported.
Then, just a few days ago, the Center for Responsive Politics reported that Wall Street donors had abandoned President Obama in droves and flocked to Romney.
Finally, an extraordinary photo surfaced from Romney’s days as CEO of Bain Capital, where he made massive profits while five of the companies under his firm’s direction went bankrupt and thousands of workers lost their jobs.
Apparently their difficulties in finding places to stash their profits became a joke among the young hotshots at Bain. They posed for a photograph with money stuffed in their pockets — even their mouths. There at the center of the picture was the grinning CEO, Mitt Romney, with money overflowing from his pockets and his suit jacket.
There he is — posing as the poster child for the 1%.
The picture could be the iconic image of the iconic line from the film Wall Street: “Greed is Good.”
Increasingly, many Democratic strategists have begun to feel that Romney could be the best possible opponent for President Obama next year.
Think about the way swing voters make political decisions. They don’t make their judgments about how to vote based on “policies or programs.” They evaluate the personal qualities of the candidates.
In determining who is on their side and shares their values — do swing voters choose Romney — the poster child for the 1% — or President Obama?
In the coming campaign, who is more likely to appear as an insider defending the status quo that people don’t like — and who will appear to be an outsider trying to bring change? Normally you’d have to say that the consummate “insider” is the guy who is President of the United States. Not necessarily so if his opponent is Wall Street’s own Mitt Romney.
And several factors unique to Romney make his situation even worse:
Voters want leaders with strong core values. That’s not a description of Mitt Romney who has flip-flopped on just about every position he’s ever taken in public life. When Karl Rove ran George Bush’s campaign against John Kerry he said that Kerry’s statement that he voted for the War in Iraq before he voted against it was the gift that kept on giving. Rove took a Senator with strong convictions and convinced swing voters that he had none. If Rove could do that to Kerry, think about the easy time Democrats will have in convincing America that Romney’s values shift with the wind.
Voters want to connect emotionally with their leaders. Ask Al Gore how important it is for candidates to “connect” with the voters. Romney has the personality of a statue. He just doesn’t make emotional contact.
Much of the Republican smart money is going to Romney because it thinks he is increasingly likely to be the nominee. I can understand why the Wall Street money is going to Romney — they want their guy to be President.
But I’m guessing that if he gets the nomination, by this time next year, Wall Street’s investment in Romney will look about as “smart” as all that money they put into sub-prime mortgages and credit default swaps four years ago.
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