“Swiss Coffers”: What Does Mitt Romney Have To Hide?
The Democrats are putting all their emphasis on touting the Buffett Rule ahead of a Senate vote for next week to coincide with Tax Day. The push is ostensibly an effort to twist the arm of a few of the more moderate Republicans—say the two Maine Senators or running for reelection in Democratic territory Scott Brown—under the hope that they’ll fear public backlash if they vote down the measure, a policy favored by over half of the country. However even if they peel off a few Republicans there is little hope that the bill would make any progress in the GOP-controlled House. Instead, as a conference call hosted by the Obama campaign Monday afternoon made clear, the push is an effort to focus attention on Mitt Romney’s wealth as a viability as the Republican nomination contest begins to come to a conclusion.
Senate Majority Whip Dick Durbin and Wisconsin Representative Tammy Baldwin joined Obama campaign manager Jim Messina on the call. Messina used most of his time talking with the reporters to attack Romney’s refusal to release his tax returns beyond the past two years. “Why is it ok to give John McCain 23 years and the American public only two? It doesn’t make sense, he can’t justify it, and he should release it,” Messina said, referring to the records Romney provided to McCain in 2008 while he was being vetted as a possible VP candidate.
“Romney is the beneficiary of a broken tax system and he wants to keep it that way,” Messina said, hinting at Romney’s 13.9 percent rate for his 2010 taxes. “He wants a system in which firefighters, cops, teachers and middle class Americans all pay a higher tax rate than he does. We think that’s wrong.”
Durbin went a step further, questioning why Romney keeps some of his money in a Swiss bank account. “It is impossible for him to explain or defend owning a Swiss bank account,” Durbin said. “I asked Warren Buffett at a meeting we had recently, ‘have you ever had a Swiss bank account?’ He said, ‘No, there are plenty of good banks in the United States.’ I started asking people ‘why do you have a Swiss bank account?’ There are two reasonable explanations. Number one: you believe the Swiss Frank is a stronger currency than the United States dollar, and that apparently is the decision the Romney family made during the Bush presidency. And secondly, you want to conceal it, you want to hide something.” Durbin didn’t quite accuse Romney of impropriety, but the implication was clear that the Senate Majority Whip believes the Republican presidential candidate is hiding information that could damage his political campaigns.
By: Patrick Caldwell, The American Prospect, April 9, 2012
“Disclosure For Thee But Not For Me”: Romney Using Ethics Exception To Limit Disclosure Of Bain Holdings
Republican presidential front-runner Mitt Romney, whose wealth has become a central issue in the 2012 campaign, has taken advantage of an obscure exception in federal ethics laws to avoid disclosing the nature and extent of his holdings.
By offering a limited description of his assets, Romney has made it difficult to know precisely where his money is invested, whether it is offshore or in controversial companies, or whether those holdings could affect his policies or present any conflicts of interest.
In 48 accounts from Bain Capital, the private equity firm he founded in Boston, Romney declined on his financial disclosure forms to identify the underlying assets, including his holdings in a company that moved U.S. jobs to China and a California firm once owned by Bain that filed for bankruptcy years ago and laid off more than 1,000 workers.
Those are known only because Bain publicly disclosed them in government filings and on the Internet. But most of the underlying assets — the specific investments of Bain funds— are not known because Romney is covered by a confidentiality agreement with the company.
Several of Romney’s assets — including a large family trust valued at roughly $100 million, nine overseas holdings and 12 partnership interests— were not named initially on his disclosure forms, emerging months later when he agreed to release his tax returns.
There is no indication that Romney is violating any rules, and his advisers note that his reports have been certified by the Office of Government Ethics, which reviews the disclosures required of presidential candidates.
Romney spokeswoman Andrea Saul said the disclosure “completely and accurately describes Governor Romney’s assets as required by the law.” She said Romney does not know the details of his investments since he turned them over to a trustee to manage, and that ethics officials confirmed that “everything … was reported correctly” and completely.
Several outside experts across the political spectrum, however, say Romney’s disclosure is the most opaque they have encountered, with some suggesting the filing effectively defeats the spirit of disclosure requirements.
“His approach turns the whole purpose of the ethics statute on its ear,” said Cleta Mitchell, a Republican lawyer who has represented dozens of candidates and officials in the disclosure process, including Romney’s leading challenger for the GOP nomination, Rick Santorum.
Romney’s fortune and his association with Bain are frequent topics in the presidential campaign, with opponents charging that the way he accumulated much of his wealth — through leveraged buyouts that in some cases ended in bankruptcy and layoffs — is at odds with the interests of working-class Americans.
The ties to Bain, a private firm known for its reticence, put Romney in a rare category exempting him from the transparency rules that apply to most candidates.
Like all nominees for federal office, Romney is covered by the statute that mandates disclosure of assets. But since the 2004 campaign — when Democratic presidential candidate John Kerry declined to disclose some of his wife’s holdings — the Office of Government Ethics has permitted nominees and presidential candidates to postpone revealing underlying assets in investment accounts that have a legally binding confidentiality agreement.
Bain routinely asks its investors to sign such agreements.
But after a nominee is in office, the ethics agency requires that any undisclosed assets be sold as a way to meet conflict-of-interest requirements.
The implications for Romney, if elected, are uncertain because sitting presidents are not subject to the conflict-of-interest sections of the ethics law. Although still subject to the disclosure requirements, a president cannot be compelled by OGE to sell undisclosed assets, according to an OGE official. Romney’s would be the first presidency to face this circumstance, according to the official, who spoke on condition of anonymity because of the sensitivity of the topic in an election year.
Romney does disclose underlying assets in his accounts held by financial firms other than Bain, such as Goldman Sachs. But his advisers say Bain holdings, the source of most of his wealth, are kept confidential at the request of Bain management for proprietary business reasons. Romney’s attorneys asked Bain officials to release information about the funds, but the request was denied, according to Saul.
When he talks about Bain, Romney promotes the image of a jobs generator spawning megastores such as Staples and Sports Authority , which serve as emblems of Bain’s extraordinary financial success.
But some other Bain-affiliated companies have a history of controversy. Romney is invested, for example, in DDI, a company in California once owned by Bain that filed for bankruptcy in 2003 and laid off more than 1,000 workers.
Company chief executive Mikel Williams said the firm has returned to profitability and is expanding, in part because of recent support from Bain and others.
Romney also has holdings in Sensata Technologies, a high-tech sensor control firm that has moved U.S. manufacturing jobs to China. A Sensata spokesman declined to comment.
Most of Romney’s holdings in Bain accounts are impossible to identify because of the confidentiality rules imposed by Bain, but his investments in Sensata and DDI were revealed through Securities and Exchange Commission filings.
Saul said it is unfair to link the candidate to such firms because “Governor Romney has not had any role at Bain Capital since he left over a decade ago,” and has turned over “control and overall management” of his investments to a trustee.
Ethics office’s ‘double standard’
Under pressure, Romney recently released hundreds of pages of tax returns for 2010 and estimated returns for 2011. A comparison of those returns with his federal and state “personal financial disclosure” reports and corporate filings at the SEC revealed dozens of discrepancies – and provided a window into what might emerge if Romney revealed the assets he holds in Bain accounts.
“I don’t know what legal authority exists for the federal ethics office to allow Mitt Romney not to disclose these assets,” said Mitchell, the Republican campaign lawyer. “The statute intends for presidential candidates to publicly disclose underlying assets.”
She said she views the OGE’s exception as a “double standard” that allows very wealthy candidates to avoid disclosure because they are more likely to have their assets in accounts covered by a confidentiality agreement.
By comparison, she said, her congressional clients are required to report every asset unless they qualify for one of the few exceptions described in the law.
One indication of the lack of specificity in Romney’s disclosures is the size of his report. In 2011, it ran 27 pages, compared with 123 pages filed by Ross Perot before he announced his presidential bid in 1992 and 51 pages filed by Henry Paulson, former chief executive of Goldman Sachs, when he was nominated as Treasury secretary in 2006.
Steve Pagliuca, a current Bain managing director who sought election to the U.S. Senate in 2009, and filed a 94-page disclosure. He too was denied permission to release underlying assets in Bain accounts, according to a source familiar with the matter, who spoke on condition of anonymity because he was not authorized to speak on the topic.
Romney is not the first presidential candidate to say he is unable to list underlying holdings in a private equity account. But he is the first to do so for such a large portion of his overall assets.
“I have never seen anything like this,” said Joe Sandler, a Democratic Party lawyer who has shepherded candidates and nominees through the disclosure process for 26 years. “Romney’s approach frustrates the very purpose of the ethics and disclosure laws,” he said. Sandler served as general counsel to the Democratic National Committee when Kerry ran for president.
As a senator, Kerry continues to say he cannot list assets in a Bain account held by his wife, Teresa Heinz Kerry, which his staff says is in compliance with Senate rules.
When he was running for president, Kerry did not list assets in Bain and half a dozen other private equity and hedge fund accounts — some valued over $1 million. A Kerry aide, who spoke on condition of anonymity because she was not part of the presidential campaign, said, “In this case, Senator Kerry wasn’t a beneficiary of Heinz family trusts, had no role in their management, and preexisting confidentiality agreements governing proprietary information were a unique issue.”
New Jersey Sen. Frank Lautenberg (D) does not list underlying investments in several private equity accounts his wife owns — and he provided no explanation with his disclosure report. His chief of staff, Dan Katz, said information on accounts owned by trusts connected to Lautenberg’s wife have proved unobtainable so far, but the senator has been told he is in compliance with Senate rules.
Senate Ethics Committee officials said they could not comment on individual members.
When he ran for the Senate from New Jersey in 2000, Jon Corzine, a former chief executive at Goldman, initially declined to release tax returns, citing confidentiality obligations to his firm. William Canfield III, a former Republican counsel to the Senate Ethics Committee, said at the time that the New Jersey millionaire had a special obligation to disclose, in part because of his extraordinary wealth.
“Mr. Corzine has to understand, while he retains some privacy rights, he has given up a substantial number of them in holding himself out for public office,” Canfield said at the time. Canfield has gone on to private practice and advised federal candidates, including Texas Gov. Rick Perry.
A spokesman for Corzine, who ultimately released his tax returns, declined to comment.
The purpose of disclosure
The 1978 Ethics in Government Act requires candidates to publicly disclose their wealth in broad ranges and to list the assets in most partnerships, trusts and pooled investment funds.
The purpose is to allow the public to identify potential conflicts of interest and the personal economic priorities of candidates and elected officials, said Fred Wertheimer, the longtime advocate who worked to enact the measure in the aftermath of the Watergate scandal.
Mitchell and several other Washington campaign lawyers say they advise candidates to reveal underlying assets, divest them if they cannot be disclosed or choose not to seek public office.
“My clients have had fund managers squawk about their ‘proprietary information’ and I’ve always been told, ‘There is no choice — the law requires disclosure,’ ” Mitchell said.
Canfield, the former Senate ethics lawyer, will not comment on Romney’s assets. But, he said, “I always counsel my clients to err on the side of disclosure” and to note on ethics forms “the same description of assets they would disclose to the IRS.” Doing so, he said, is in keeping with the spirit of the law and prevents embarrassing questions about discrepancies.
Romney’s tax forms showed holdings in a Swiss bank account, a real estate trust and nine offshore accounts not named on the public disclosure reports. In addition, 12 Bain accounts described as “fund” investments on the disclosure were identified as “partner” investments to the IRS.
Romney’s attorneys subsequently amended the disclosure to acknowledge the Swiss bank and the real estate accounts. The other assets, Romney aides said, were too small to report or had been listed, under other names, on the public disclosure. The general explanations were accepted by government ethics reviewers as were the amendments.
“Any document with this level of complexity and detail is bound to have a few trivial inadvertent issues,” Saul said at the time.
In his disclosure reports, Romney’s lawyers noted that he retired from Bain in 1999, is now a “passive investor” and “has not had any active role with any Bain entity.”
Romney’s tax returns indicate that he and his wife received “carried interest,” a controversial form of compensation that provides a share of profits to Bain managers and is taxed at the lower capital gains rate.
Romney’s compensation from ongoing Bain deals results from a retirement agreement when he left the company in 1999 allowing him a stake in Bain’s new investment funds for a decade after.
By: Tom Hamburger, The Washington Post, April 5, 2012
“No Shortage Of Stupid Ideas”: Romney Vows No Tax Returns Unless Meeting Transcripts With Foreign Leaders Released
In the wake of a report raising questions about whether Mitt Romney exploited a tax shelter in the 1980s, the Obama campaign is calling for the release ofRomney’s tax returns during those years.
Instead of simply saying no, Romneyland attempted to sidestep the issue with what might just be the dumbest deflection ever:
“The Obama campaign is playing politics, just as he’s doing in his conduct of foreign policy,” Romney spokesperson Andrea Saul wrote. “Obama should release the notes and transcripts of all his meetings with world leaders so the American people can be satisfied that he’s not promising to sell out the country’s interests after the election is over.”
I cannot even begin to comprehend the delusions that Romneyland must be under to think that this is a reasonable response. Never mind the false equivalency—President Obama has already released his own tax returns despite Mitt Romney’s refusal to do so—it’s absurd to think that any president would be wise to publicly release the transcripts of every conversation he ever has with any foreign leader. If that were the policy, it wouldn’t result in more transparency, it would simply mean that presidents would no longer have meaningful conversations with foreign leaders, because no foreign leader in their right mind would agree to such terms. And can you imagine the diplomatic fallout from retroactively and unilaterally breaking confidentiality across the board for past conversations?
There’s been no shortage of stupid ideas to come out of Romneyland, but this is one of the stupidest. But even if we cut them some slack and say that it’s so stupid that they couldn’t possibly really mean it, it still doesn’t change this fact: Unlike President Obama, and unlike his father, Mitt Romney is unwilling to release his tax returns. So, what’s he hiding?
By: Jed Lewison, The Jed Report, Daily Kos, March 30, 201
“Broccoli And Bad Faith”: Health Insurance Is Nothing Like Broccoli
Nobody knows what the Supreme Court will decide with regard to the Affordable Care Act. But, after this week’s hearings, it seems quite possible that the court will strike down the “mandate” — the requirement that individuals purchase health insurance— and maybe the whole law. Removing the mandate would make the law much less workable, while striking down the whole thing would mean denying health coverage to 30 million or more Americans.
Given the stakes, one might have expected all the court’s members to be very careful in speaking about both health care realities and legal precedents. In reality, however, the second day of hearings suggested that the justices most hostile to the law don’t understand, or choose not to understand, how insurance works. And the third day was, in a way, even worse, as antireform justices appeared to embrace any argument, no matter how flimsy, that they could use to kill reform.
Let’s start with the already famous exchange in which Justice Antonin Scalia compared the purchase of health insurance to the purchase of broccoli, with the implication that if the government can compel you to do the former, it can also compel you to do the latter. That comparison horrified health care experts all across America because health insurance is nothing like broccoli.
Why? When people choose not to buy broccoli, they don’t make broccoli unavailable to those who want it. But when people don’t buy health insurance until they get sick — which is what happens in the absence of a mandate — the resulting worsening of the risk pool makes insurance more expensive, and often unaffordable, for those who remain. As a result, unregulated health insurance basically doesn’t work, and never has.
There are at least two ways to address this reality — which is, by the way, very much an issue involving interstate commerce, and hence a valid federal concern. One is to tax everyone — healthy and sick alike — and use the money raised to provide health coverage. That’s what Medicare and Medicaid do. The other is to require that everyone buy insurance, while aiding those for whom this is a financial hardship.
Are these fundamentally different approaches? Is requiring that people pay a tax that finances health coverage O.K., while requiring that they purchase insurance is unconstitutional? It’s hard to see why — and it’s not just those of us without legal training who find the distinction strange. Here’s what Charles Fried — who was Ronald Reagan’s solicitor general — said in a recent interview with The Washington Post: “I’ve never understood why regulating by making people go buy something is somehow more intrusive than regulating by making them pay taxes and then giving it to them.”
Indeed, conservatives used to like the idea of required purchases as an alternative to taxes, which is why the idea for the mandate originally came not from liberals but from the ultra-conservative Heritage Foundation. (By the way, another pet conservative project — private accounts to replace Social Security — relies on, yes, mandatory contributions from individuals.)
So has there been a real change in legal thinking here? Mr. Fried thinks that it’s just politics — and other discussions in the hearings strongly support that perception.
I was struck, in particular, by the argument over whether requiring that state governments participate in an expansion of Medicaid — an expansion, by the way, for which they would foot only a small fraction of the bill — constituted unacceptable “coercion.” One would have thought that this claim was self-evidently absurd. After all, states are free to opt out of Medicaid if they choose; Medicaid’s “coercive” power comes only from the fact that the federal government provides aid to states that are willing to follow the program’s guidelines. If you offer to give me a lot of money, but only if I perform certain tasks, is that servitude?
Yet several of the conservative justices seemed to defend the proposition that a federally funded expansion of a program in which states choose to participate because they receive federal aid represents an abuse of power, merely because states have become dependent on that aid. Justice Sonia Sotomayor seemed boggled by this claim: “We’re going to say to the federal government, the bigger the problem, the less your powers are. Because once you give that much money, you can’t structure the program the way you want.” And she was right: It’s a claim that makes no sense — not unless your goal is to kill health reform using any argument at hand.
As I said, we don’t know how this will go. But it’s hard not to feel a sense of foreboding — and to worry that the nation’s already badly damaged faith in the Supreme Court’s ability to stand above politics is about to take another severe hit.
By: Paul Krugman, Op-Ed Columnist, The New York Times, March 29, 2012
“Deficit-Exploding”: Mitt Romney’s Fantasy Tax Cuts
Let’s take a trip back to 1992. Then-Gov. Bill Clinton, in his campaign manifesto, said: “Middle-class taxpayers will have a choice between a children’s tax credit or a significant reduction in their income tax rate.”
By February 1993, President Clinton’s position on a middle class tax cut had morphed into this:
Before I ask the middle class to pay, I’m going to ask the wealthiest Americans and companies, who made money in the ’80s and had their taxes cut, to pay their fair share. And I’m going to cut more government spending. But I cannot tell you that I won’t ask you to make any contribution to the changes we have to make.
To justify the reversal, Clinton cited a budget deficit that was $50 billion larger than what he thought it was before the election. Fast forward to today.
Former Gov. Mitt Romney has pledged to cut income tax rates by 20 percent for every American, not just the middle class. He has also embraced Rep. Paul Ryan’s Medicare reform plan, which would convert the program from a defined benefit to a defined contribution scheme.
Romney emerges from Michigan committed not only to the Ryan plan, but also to a 20 percent cut in tax rates, above and beyond his prior commitment to making the Bush tax cuts permanent. …That’s not the race I’m sure Romney intended to run. But it will be hard to change now.
Yes, hard to change now—and impossible to realize once in office.
Such deficit-exploding tax cuts will never become law. Romney—a sane man—already knows this. There will be no need for Clintonian “evolution.” And, especially if the Senate remains under Democratic control, the odds for which increased with Sen. Olympia Snowe’s surprise retirement announcement, the Ryan plan stands little chance of even reaching President Romney’s desk.
To review: Mitt Romney has set himself up to (ahem) severely disappoint conservatives who already suspect his ideological convictions.
As I see it, Romney could blunt this backlash-in-the-making by picking up the pieces of last year’s aborted Grand Bargain. There is a solid left-right consensus on raising badly-needed federal revenue by reigning in the billions we spend through the tax code. Pair reduction in tax expenditures with modest entitlement reforms and you can see at least the lineaments of restored budget sanity.
This is probably the best outcome our political system can manage these days.
The question is, as president, would Mitt Romney be able to sell it to conservatives who don’t trust him?
By: Scott Galupo, U. S. News and World Report, February 29, 2012
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