Still, Opportunity



During last week's presidential debate in Denver, President Obama stated

When it comes to corporate taxes, Governor Romney has said he wants to, in a revenue-neutral way, close loopholes, deductions — he hasn't identified which ones they are — but thereby bring down the corporate rate. Well, I want to do the same thing, but I've actually identified how we can do that.

And part of the way to do it is to not give tax breaks to companies that are shipping jobs overseas. Right now you can actually take a deduction for moving a plant overseas.

Former governor Romney replied in part "The second topic, which is you said you get a deduction for getting a plant overseas. Look, I've been in business for 25 years. I have no idea what you're talking about. I maybe need to get a new accountant."

First, pundits expressed wonderment at Obama's failure to jump on Romney's quip "I maybe need to get a new accountant."   Perhaps he could have asked Romney for the name and number of his accountant so that he, too, might be able to pay at a rate of 13.7%.  "While you're at it," Obama might have mentioned, I'd like to consult your financial consultant, so that maybe Michelle and I could make $21.7 million too; I know a lot of other Americans would like to get in on that."

Of course, in terms of policy (rather than politics), how Mitt Romney made his millions is more significant than how much he got, though reactions from the debate demonstrate that in politics, style trumps substance.

Fact-checkers eagerly analyzed Obama's contention that companies receive tax breaks for shipping jobs overseas, which prompted Romney's denial that such an IRS preference exists.   The consensus, it appears, is that companies receive a deduction for moving expenses for shifting jobs anywhere, abroad or domestically.

Jobs moved from one community to another- as private equity firms like Bain Capital practically specialize in- disrupt communities (permanently damaging some), slash benefits for its employees, and slash the jobs of other employees. Nevertheless, the damage done to the country is eclipsed by offshoring.    That is one way, the guy who claimed Wednesday a President should be "fighting for jobs for the American people" was right in the center of the drive to destroy the American workforce.   The Washington Post in June found

Mitt Romney’s financial company, Bain Capital, invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India.

During the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components, according to filings with the Securities and Exchange Commission.

During this Administration, congressional Democrats have twice (twice!) attempted to lure jobs from abroad- and both times been thwarted by the Gas and Oil Party.  In October, 2010

Senate Republicans, aided by four Democrats and Connecticut's Joe Lieberman, torpedoed the proposed law, which sought to stimulate U.S. jobs with a tempting two-year tax break for businesses that brought overseas jobs back to the country and a new tax on products imported back to the U.S. from companies that ship production out of the country. The bill also would also have made it illegal for off-shoring companies to deduct expenses that they incur when shipping jobs overseas.

Almost two years later, a similar effort failed in Congress.  ABC News reported

Under existing law, employers may take tax deductions for the costs associated with moving jobs out of the country. The proposed legislation would have eliminated that, and used the resulting new revenue to fund a 20 percent tax credit for the costs companies run up “insourcing” labor back into the U.S. The bill failed by 56-42. A count of 60 was required to end debate and move to a final vote.

"A count of 60 was required" by the GOP leadership in the Senate, which has demanded that cloture be approved before practically any Democratic initiative.   All 53 Democrats, joined by New England Republicans Snowe, Collins, and Brow,n voted to impose cloture while all other Republicans voting (42) voted to keep jobs in foreign countries.

Let's take inventory.   The two efforts aimed at enticing corporations to bring jobs back to the country Republicans love so dearly garnered the support of 106 Democrats and the opposition of five Democrats, and the support of four Republicans and the opposition of 82 Republicans.

Certainly, it was the responsibility of Barack Obama to make this point in some fashion.  But not only did the President neglect to describe GOP obstruction of his struggle to help the country, he didn't even slam Congress.  That is political malpractice from a President facing re-election with at least one chamber controlled by the opposition party.

It wouldn't have taken much for President Obama to echo the words of the Senate Majority Leader, who noted "It's fairly easy to see why Republicans are blocking our bill to stop outsourcing.  They're obviously defending their presidential nominee, who of course made a fortune by shipping jobs overseas."    Harry Reid understands that Mitt Romney is vulnerable on outsourcing and the tens of millions of dollars he made off the misery of American families, and the Obama campaign needs to understand it, too.




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Misstep In Colorado


At Fox News, Charles Krauthammer said that polls should tighten a bit with Mitt Romney's solid debate (transcript, here) performance in Denver.  The Republican demonstrated to voters bombarded by ads attacking him that he "does not have horns"  while, Krauthammer observed, Barack Obama unwisely sat on a lead.

Sat on a lead, indeed.   There were at least ten instances in which President Obama stated or strongly implied agreement with his opponent, including

When it comes to our tax code, Governor Romney and I both agree that our corporate tax rate is too high.

On energy, Governor Romney and I, we both agree that we've got to boost American energy production.

Now, Governor Romney and I do share a deep interest in encouraging small-business growth.

When it comes to corporate taxes, Governor Romney has said he wants to, in a revenue-neutral way, close loopholes, deductions — he hasn't identified which ones they are — but thereby bring down the corporate rate. Well, I want to do the same thing, but I've actually identified how we can do that.

You know, I suspect that on Social Security, we've got a somewhat similar position. 

Now, in fairness, what Governor Romney has now said is he'll maintain traditional Medicare alongside it.

Now, Governor Romney has said he wants to repeal Dodd-Frank, and, you know, I appreciate, and it appears we've got some agreement that a marketplace to work has to have some regulation, but in the past...

And it happens we've got some agreement that a marketplace to work has to have some regulation.

...the irony is that we've seen this model work really well in Massachusetts, because Governor Romney did a good thing, working with Democrats in the state to set up what is essentially the identical model. And as a consequence, people are covered there. It hasn't destroyed jobs.

There's a reason why Governor Romney set up the plan that he did in Massachusetts. It wasn't a government takeover of health care. It was the largest expansion of private insurance. But what it does say is that insurers, you've got to take everybody. Now, that also means that you've got more customers.

At MSNBC, Ed Schultz noted that Obama said nothing about Bain Capital, the 47%, offshore accounts in the Cayman Islands or elsewhere.   Schultz noted that Romney was animated, yet not angry, and appeared to want the job, whereas the incumbent appeared almost indifferent to remaining president.   Mitt Romney, Chris Matthews recognized, "seemed to endure the evening while Romney seemed to relish it."    Chris Hayes, who also realized that Romney helped himself in the debate,  asserted that the President's people believe that Obama's biggest asset is his personality and feared that a more aggressive approach would have undercut that.     Left unsaid: Team Obama worries constantly about the President appearing to be an angry black man.

Reverend Al Sharpton argued that, despite initial impressions of the debate, Romney in the next couple of weeks will have to answer for "his lies."   At Salon, Joan Walsh notices a few of Romney's conflicts with objective reality: the candidate denied proposing a $5 trillion tax cut, contended he is "not going to cut education funding," claimed the Affordable Care Act had raised taxes by a trillion dollars, and, describing inaccurately the Independent Payment Advisory Board, maintained Obama has established "a board that will tell people what kind of treatment they're going to get,"   Whether fact checkers will have much of an impact on the public's perception of the veracity or integrity of the challenger remains to be seen.

Still, there is a major opening for the Obama campaign in Romney's declaration "But you make a very good point, which is that the — the place you put your money makes a pretty clear indication of where your heart is."  That would make for a delightful campaign ad given, as Walsh's Salon  colleague, Alex Seitz-Wald, notes, "The obvious rejoinder, ready-made for a DNC attack, is that Romney’s heart must be in the Cayman Island, Bermuda or Switzerland, where Romney has put his money.

It's on to the vice-presidential debate and the following two presidential debates.   Before this encounter, many pundits had argued that the first debate between Obama and Romney would be the most important of the three, and few if any maintained that either of the last two would be more important.   Fortunately for the incumbent, that will prove false.  Voters will tune in to Obama-Romney II and III to determine if their first impressions were correct.  If so, that bodes ill for the President; if not, his election will be almost assured.  In either case, the first debate, despite an almost unanimous decision for the challenger, thankfully will not prove pivotal.




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The Neo-Liberal Spin



One of the most objective summaries of Bill Clinton's speech to the assembled delegates last night in Charlotte came from the Journalist Division, Richard Wolf and David Jackson of USA Today, who wrote

The former president did what he does best. He made the case for a Democratic-style economic revival based on investments in individuals and innovation. He stood up for the man who defeated his wife four years ago and stated the case against Mitt Romney better than anyone else has been able to do. For 48 minutes, he delivered a stunning tour de force that had delegates on their feet.

But the best from the Rich Lowry/Chris Matthews Division came from GOP consultant and CNN contributor Alex Castellanos, who declared (though he later walked it back a little)

I would recommend to my friend Paul [Begala] here, tonight when everybody leaves, lock the doors. You don't have to come back tomorrow. This convention is done. This will be the moment that probably re-elected Barack Obama. Bill Clinton saved the Democratic Party once, it was going to far left, he came in, the new democrats took it to the center. He did it again tonight.

If Castellanos proves prescient and Clinton's speech did deliver a fatal blow to the bid of Romney-Ryan, the former president presented a tremendous gift to Barack Obama and the nation.

Castellano's impression probably will prove an exaggeration.   But he did accurately observe that, as much as the former President generally skewered the conservative policies of the opposition, he had brought his New Democrats act to the stage, furthering a dangerous narrative.

The defining characteristic of the speech was in Clinton's propensity for ad-libs, a catalogue of which has been helpfully supplied by Juli Weiner of Vanity Fair.   In the remarks as prepared for delivery (transcript, here) and released by the convention’s press office, Mr. Clinton stated (with close of previous paragraph included for veracity)

Renewable energy production has also doubled.

We do need more new jobs, lots of them, but there are already more than three million jobs open and unfilled in America today, mostly because the applicants don’t have the required skills. We have to prepare more Americans for the new jobs that are being created in a world fueled by new technology. That’s why investments in our people are more important than ever.   The President has supported community colleges and employers in working together to train people for open jobs in their communities.

Improvising, Clinton contended (remarks as delivered, here)

Of course, we need a lot more new jobs. But there are already more than 3 million jobs open and unfilled in America, mostly because the people who apply for them don't yet have the required skills to do them. So even as we get Americans more jobs, we have to prepare more Americans for the new jobs that are actually going to be created. The old economy is not coming back. We've got to build a new one and educate people to do those jobs.

The president -- the president and his education secretary have supported community colleges and employers in working together to train people for jobs that are actually open in their communities...

"Of course" (as The Big Dog himself put it), there is not an insufficiency of skilled American workers- there is an insufficiency of jobs in America.   Highlighting Clinton's false narrative (which he has been spinning for quite some time now) was his observation "the old economy is not coming back."

It wasn't so long ago that Democrats were appalled- justifiably- of the role Mitt Romney's Bain Capital played in the closure in Kansas City of Steel Dynamics and the loss of 700 jobs and with it, health insurance and pensions.  One ad produced by Obama SuperPac Priorities featured a steelworker maintaining "Romney and Bain, they were businessmen, they had no idea how to make steel. They knew how to make money. They used us just like we were the scrap steel that we melted, you know, we were just a means to an end."   And Obama campaign spokesperson Stephanie Cutter argued "In deal after deal, Romney's first priority was to make a personal profit, regardless of the cost to others."

Perhaps no industry better exemplified "the old economy," nor the decline in employment in American manufacturing, than steel.  It's not for lack of productivity of the American or the incompetence of the companies.   As Richard McCormack observed in December, 2009 in the American Prospect

American companies are among the most efficient in the world. The nation's steel industry, for instance, produces 1 ton of steel using two man-hours. A comparable ton of steel in China is produced with 12 man-hours, and Chinese companies produce three times the amount of carbon emissions per ton of steel. The same kinds of comparisons are true for other industries.

But the steel industry, as with much of manufacturing, may not be "coming back," thanks in part to a long line of American presidents enamored of the euphemistically-termed "free trade."   Deserving blame are Gerald Ford,  Jimmy Carter, Ronald(6) Wilson(6) Reagan(6), and their successors.   Donald L. Barlett and James B. Steele explain the North American Free Trade Agreement

was negotiated under President George H.W. Bush, who pledged that the agreement would permit the United States to sell to Mexico "even more of the goods we're best at producing:  computer, manufacturing equipement, high-tech and high-value products."  But NAFTA was sold to Congress and the nation by Bill Clinton.  "I believe that NAFTA will create a million jobs in the first five yeaars of its impact," Clinton  proclaimed on Septmber 14, 1883.  "NAFTA will generate these jobs by creating an export boom to Mexico." Clinton could not count any better than his predecessors...

By 2011 an estimated 1.5 million American jobs had been eliminated by imports from Mexico, according to Economic Policy Institute calculations.  EPI estimated that exports to Mexico supported 791,900 jobs in 2010, meaning a net loss of about 700,000 jobs.  In 2004 EPI had estimated that lost wages from NAFTA job losses were costing American workers $7.6 billion a year.  That's the equivalent of all the annual income of 150,000 American families.

Bill Clinton's slam of "the old economy" (which should be reminiscent of then-Defense Secretary Rumsfeld's slap at "old Europe") is of a piece with his failure, in a discourse surpassing 50 minutes in length, to mention Bain Capital.  A speech focused on the economy, of Barack Obama's success in steering the nation away from the depression looming upon his ascension to the presidency and Mitt Romney's lack of a viable plan to improve the economy, included no reference to Bain nor to Romney's tax returns, inextricably interwoven with his experience at the private equity firm.   This was no mere oversight, for in another comment altered from the prepared remarks, the ex-President stated

Look, I love our country so much.  And I know we're coming back.   For more than 200 years, through every crisis, we've always come back.  People have predicted our demise ever since George Washington was criticized for being a mediocre surveyor with a bad set of wooden fake teeth.  And so far every single person that's bet against America has lost money because we've always come back.  We came through every fire a little stronger and a little better.

"And so far every single person that's bet against America," Clinton had added, "has lost money."

One person, however, who did not lose money when he "bet against America" was Mitt Romney- or at least we can assume, absent the tax returns Clinton ignored.    As Maryland Governor (and convention speaker) Martin O'Malley noted on ABC's This Week in early July, Romney

bet against America when he put his money in Swiss bank accounts and tax havens and shelters and also set up a secret company, the shell company in Bermuda.  What went the way of Europe were the Swiss bank account and the American dollars that Mitt Romney stuffed in that offshore Swiss bank account, jobs that he facilitated companies in moving offshore, out of places like Ohio, Pennsylvania and Maryland.

We- the country- got none of that from Bill Clinton.   So we applaud, cheer, and laugh with Bill Clinton and hope that while his address obviously did not deliver the mortal wound Alex Castellanos initially claimed it would to the presidential candidacy offered by the Gas and Oil Party, it put it into critical condition.  Let us not forget, however, that Bill Clinton's secondary cause is Barack Obama.   Bill Clinton's primary cause is Bill Clinton.

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Mitt Keeps It Hidden


Roughly one month earlier, Majority Leader Harry Reid recently told The Huffington Post, a Bain Capital investor called him about Mitt Romney and maintained "Harry, he didn't pay any taxes for ten years."   Reid continued

He didn't pay taxes for 10 years!  Now, do I know that that's true?  Well, I'm not certain.  But obviously he can't release those tax returns.  How would it look?  You guys have said his wealth is $250 million.  Not a chance in the world.  It's a lot more than that.  I mean, you do pretty well if you don't pay taxes for 10 years when you're making millions and millions of dollars."

Romney has, at first glance, denied Reid's charge, noting he has "paid taxes every year- and a lot of taxes."

No doubt he has done so- the property taxes on the six homes Romney owns must be enormous, especially because they are hardly shacks in the low-rent districts.   To be fair, the presumptive GOP presidential nominee may have been referring to federal income taxes, though without release of his returns we probably will never know for sure.  

As the chart (below) from Citizens for Tax Justice indicates, in 2011 (as in most years) "the share of total taxes paid by each income group is similar to that group's share of income."   In a slap to poor and lower middle class citizens, conservatives exuberantly shout "we are the 53 per cent!"    Forty-seven percent of Americans pay no taxes, they claim; the claim pertains to federal income taxes, they sometimes acknowledge.   But that 53%, generally, includes the lowest 20%, which pay 2.1% of all taxes; the next 20%, which pays 5.3% of all taxes taxes; and a fair chunk of the next 20%, which pay 10.3% of all taxes.     (As a whole, they pay 17.7% of all taxes in the U.S.A. while pulling down 21.7% of the total income; not much of a discrepancy, and not very progressive.)    These are the freeloaders to many Republicans; to the rest of us, they're Americans, most of them hard-working, unable to find a job, or elderly.

The total effective tax rates for the middle class also do not differ dramatically than those for the middle class, as the table below from the CTJ demonstrates.

Without disclosure of those tax records, we'll never know for sure but presumably, the former governor probably was honest when implying that he has had a net tax burden every year.   The Alternet's Joshua Holland suggests nine other reasons, arguably each more likely than paying no taxes, for Romney's stubborness.    One such motive may be the disconnect between documents filed with the SEC and, later, with the FEC.

The Boston Globe found that Bain Capital filed with the Securities and Exchange Commission public documents maintaining Romney was the firm's sole stockholder, chairman of the board, chief executive officer, and president from 1999-2002.   Additionally,  "a Massachusetts financial disclosure form Romney filed in 2003 states that he still owned 1000 percent of Bain Capital in 2002.   and Romney's state financial disclosure forms indicate he earned at least $100,00 as a Bain 'executive' in 2001 and 2002, separate from investment earnings."

But according to Ryan Grim and Jason Cherkis at The Huffington Post

In August 2011, Romney told federal authorities, as part of the financial disclosure process, that he "retired from Bain Capital on February 11, 1999 to head the Salt Lake Organizing Committee [for the 2002 Winter Olympics]. Since February 11, 1999, Mr. Romney has not had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way."

The two filings, obviously, are contradictory.  But there is not much left of the Federal Election Commission and the former governor (who in the SEC filing maintained that he attended board-related meetings for companies owned by Bain) probably lied to it rather than to the SEC.   If true, that would place Romney front and center at Bain Capital when it was Offshoring Central- and when it acquired $75 million of shares in Stericycle, a large medical waste disposal firm.     David Corn notes in a filing on 11/30/99, Romney is named "as an individual who holds 'voting and dispositive power' with respect to the stock owned by Bain."    And it has not gone unnoticed that one of the activities of Stericycle included the disposal of the, er, products of abortions.

Good luck explaining that one to the base, Governor.      And good luck explaining to the American public why you have at least $20 million in an Individual Retirement Account, when mere mortals are prohibited by law from contributing more than $17,000 per year (employers, $30,000 additional) to their IRA.

But Mitt Romney may not have to explain his IRA, or why he was with Bain when he swore that he wasn't, or paid 5% or 10% of his income in taxes, or the numerous, questionable offshore accounts he set up for himself or others, or his generous contribution to the same Planned Parenthood he has vowed to "get rid of," or any of the other peculiarities of the uber-wealthy.    He will not have to explain anything if he does not release relevant tax returns, and it's going to take a lot more than Harry Reid or 21 Republicans to get him to do it.




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Not In The Welfare Business


When Rush Limbaugh says something untrue- roughly speaking, when his lips move- he is not always lying, manipulating arguments, or even distorting the truth.    Sometimes he is simply misinformed.

The latter may have been the case on Wednesday when Limbaugh repeated Something Everyone Knows Is True but is not.    Complaining about Christine Romans responding to the Bain Capital controversy, Rush stated  

Christine, I'm gonna tell you: If it keeps up, CNN's gonna need a private equity firm to come in and bail it out and save it.  Your job, Christine, may depend on a private equity firm down the road. You never know.  But, by definition, private equity comes in and buys failing companies.  Why?  Not to hammer the final nail in the coffin.  They want to save them.

Although it is clear that private equity firms are not in business to create jobs or even to save companies but to enrich investors and themselves, that is a judgement call.    Much of the defense of their anti-social behavior hinges on the truism "private equity comes in and buys failing companies" or, as Limbaugh oddly puts it, "by definition, private equity comes in and buys failing companies."     And that is simply not true.

Don't take it from me.      Josh Kosman, author of  "The Buyout of America: How Private Equity Will Cause the Next Great Credit Crisis,"     was interviewed on January 18 by Judy Woodruff of PBS News Hour and asserted

there's just one thing that I needed to jump in and say. I think it's a fallacy -- and it's what the Mitt Romney defenders are trying to throw up in the air -- that private equity firms buy troubled companies. They're almost always buying profitable businesses, not troubled businesses.

But don't take it from Kosman.   Take it from Stewart Kohl, interviewed simultaneously by Woodruff and whom she describes as "co-CEO of The Riverside Company, a private equity firm that manages more than $3 billion in assets."      Kohl, who generally defends the business, a moment later remarked "We collect money from pension funds and endowments for colleges and foundations and the like. And firms like The Riverside Company invest that into, as Josh says, mostly healthy companies..."

Woodruff, recognizing the critical concession being made, followed up by asking "But you agree it's mostly healthy companies that are invested in?"   Kohl replied

Yes.  There's a subset, a segment of private equity they focuses on troubled companies, companies that are struggling. I have a lot of respect for those firms. That's hard work, and it is not something that The Riverside Company does. But it is a small, but important part of private equity.

If people are left to believe, as most have, that the companies buy only troubled or failing companies, they might buy the line, as Limbaugh seems to, "if not for the private equity firm moving in, everybody would lose their job."     And most of the media, Judy Woodruff and a few others excepted, are content to leave that impression.


                                           HAPPY MEMORIAL DAY
                                           (or at least a reverent one)
 

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Creating A Storyline



Asked by CNN's Christine Romans "why is it not hypocrisy for the president to take campaign donations from private equity when he's attacking private equity and making that a central part of his campaign?" Democratic National Committee chairperson Debbie Wasserman Schultz responded in part

Accepting a contribution from a particular person involved in venture capital and criticizing Mitt Romney who has made his record as a venture capitalist at Bain the central focus of his credibility and his qualification for being president are completely different things.    Who contributes to Barack Obama has little to do with that because those contributors are not running for president.

"Who contributes to Barack Obama" would pertain to the President's "attack" on venture capital and taking "campaign donations from private equity when he's attacking private equity" would be hypocritical.... if Obama had attacked venture capital.   Initially, he stated

...And when you're president, as opposed to the head of a private equity firm, your job is not simply to maximize profits. Your job is to figure out how everybody in the country has a fair shot. Your job is to think about those workers who get laid off, and how are we paying for their retraining. Your job is to think about how those communities can start creating new clusters so they can attract new businesses. Your job as president is to think about how do we set up an equitable tax system so that everybody's paying their fair share, that allows us then to invest in science, and technology, and infrastructure, all of which are going to help us grow.

And so if your main argument for how to grow the economy is "I knew how to make a lot of money for investors," then you're missing what this job is about. It doesn't mean you weren't good at private equity. But that's not what my job is as president...

Later clarifying his remarks, the President commented

My view of private equity is it is set up to maximize profits.  And that's a healthy part of the free market. That's part of the role of a lot of business people. That's not unique to private equity.  I think there are folks who do good work in that area, and there are times where they identify the capacity for the economy to create new jobs or new industries.

Now it's not only Republicans, but also members of the mainstream media who are wrestling with the English language.       The primary objective of private equity, to maintain profits, "is a healthy part of the free market" which is "not unique to private equity."    In so doing, "there are times where they identify the capacity for the economy to create new jobs or new industries."
The President could have said "private equity is set up to maximize profits while incurring massive debt, generally cutting workers' benefits and jobs."    But he didn't.   He took pains not to criticize private equity, not to criticize Bain, and not even to criticize Mitt Romney.    Rather, he simply explained that the skills those managers display are not transferable to the role of a president, which "is to make sure the country is growing not just now, but 10 years from now, 20 years from now."

Or Obama could have proposed that Bain Capital make public (which, as a private company it is not required to do) a list of the companies it has purchased.    The President might have noted, as one union official has, that Romney's "entire management experience at Bain Capital is buying companies and loading them up with debt and then looting the balance sheet.    It's the very model that drove the American economy off the cliff then left other people to manage the wreckage."  

But President Obama decided, in part so there would be no contradiction between his analysis and acceptance of money and advice from the industry, to take the high road.    So, too, did Wasserman-Schultz, accusing Romans merely of "not just comparing apples and oranges (but rather) comparing apples and coconuts."    It was an accurate and polite response from someone who might have begun by observing that the premise of Christine Romans' question should not have been a simple restatement of a Republican talking point designed to excuse the looting of American jobs and pensions by multimillionaires.



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A Minor Objection From Obama


No doubt you've read about, or heard, President Obama's brutal attack on Bain Capital and the free enterprise system when he defended his campaign's comments about the aforementioned company.   Obama explained

The reason why this is relevant to the campaign is that my opponent, Governor Romney, his main calling card for why he thinks he should be president is his business experience. He's not going out there touting his experience in Massachusetts. He's saying, I'm a business guy, and I know how to fix it, and this is his business.

And when you're president, as opposed to the head of a private equity firm, your job is not simply to maximize profits. Your job is to figure out how everybody in the country has a fair shot. Your job is to think about those workers who get laid off, and how are we paying for their retraining. Your job is to think about how those communities can start creating new clusters so they can attract new businesses. Your job as president is to think about how do we set up an equitable tax system so that everybody's paying their fair share, that allows us then to invest in science, and technology, and infrastructure, all of which are going to help us grow.

And so if your main argument for how to grow the economy is "I knew how to make a lot of money for investors," then you're missing what this job is about. It doesn't mean you weren't good at private equity. But that's not what my job is as president.

My job is to take into account everybody, not just some. My job is to make sure the country is growing not just now, but 10 years from now, 20 years from now.

If that wasn't vicious enough, the Socialist-in-Chief later reiterated

My view of private equity is it is set up to maximize profits.   And that's a healthy part of the free market. That's part of the role of a lot of business people. That's not unique to private equity.      I think there are folks who do good work in that area, and there are times where they identify the capacity for the economy to create new jobs or new industries.

Democratic (the identification here used very loosely) Senator Mark Warner of Virginia echoed the President's statement, remarking (according to Talking Points Memo)

Bain Capital was a very successful business.     I think they got a good return for their investors. That is what they were supposed to do. I think when you’re in public life, though, what you’ve got is a different time horizon. The notion that everything in government is exactly the same way that it is in business, they’re different time horizons when you’ve got to invest for the long haul, when you actually do the kind of early stage investing, whether in preschool, whether it’s in K-12, whether infrastructure, that doesn’t pay back quarter to quarter.

Warner spokesman Kevin Hall told TPM there is, as the latter put it, "no daylight" on the issue between his boss and Obama.

Of course there isn't.   Warner, unoficially a Blue Dog Democrat, one thought to be interested in the 2016 presidential nomination, could hardly have been offended by the President's endorsement of rapacious corporate practices.

And endorse Bain Capital he did.    The problem, according to Obama, isn't the debt the private equity firm routinely created for the companies it took over.    Nor is it the individuals fired so as to finance the debt, nor the salaries reduced and the pensions often eliminated for the workers who remained.    And it certainly isn't the millions Mitt Romney and the Board of Directors scooped up as they were destroying companies.

No, none of that.    It is, well, simply not the place of a President to make millions.   That is better left to companies like Bain, which apparently provide a socially worthwhile service to the country.    Romney, in this framework is among those "folks who do good work in that area" who "identify the capacity for the economy to create new jobs or new industries.  

It was kind of President Obama to vouch for his opponent's efficiency and effectiveness.Obama differs only in noting that Mitt Romney and other heads of Bain perform a different function, assume a different role, than does the President of the United States.  

Still, Mitt Romney wasn't satisfied.   Responding to the President's remarks, the presumptive GOP nominee issued a statement maintaining

President Obama confirmed today that he will continue his attacks on the free enterprise system, which Mayor Booker and other leading Democrats have spoken out against....

So Barack Obama nods and winks at Wall Street, assuring the 1% that Mitt Romney and the type of firm he headed are (in 1960s lingo) just Swell.   Neat.    Cool.   We don't wish any offense- looting is merely not what a President does.    Then Romney accuses Obama of attacking the "free enterprise system," an odd description of marauders periodically destroying companies while reaping millions, assisted by government subsidy (video below).

Admittedly, it's a little difficult for President Obama to be terribly critical of Mitt Romney when he himself is raising dough from private equity executives.      Still, Romney's extreme response- slamming an opponent for "attack(ing)" free enterprise when the latter is defending it- suggests that mild, tepid questioning of the opposition will get the Obama campaign nowhere.    It must respond in kind, and slamming politicians who became multimillionaires on the carcasses of American companies would be a good place to start.







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Loyalty To Self

Somebody should be held accountable.  

On Meet The Press (transcript of roundtable discussion here) today, Obama surrogate Cory Booker, mayor of Newark, NJ, maintained

...As far as that stuff, I have to just say from a very personal level, I'm not about to sit here and indict private equity. To me, it's just this--we're getting to a ridiculous point in America, especially that I know. I live in a state where pension funds, unions and other people are investing in companies like Bain Capital. If you look at the totality of Bain Capital's record, it ain't--they've done a lot to support businesses, to grow businesses, And this, to me, I'm very uncomfortable with.

Not satisfied that viewers wouldn't understand that the professional career of the (soon-to-be) GOP presidential nominee is irrelevant, Booker a few minutes later stated

But the last point I'll make is this kind of stuff is nauseating to me on both sides. It's nauseating to the American public. Enough is enough. Stop attacking private equity, stop attacking Jeremiah Wright. This stuff has got to stop because what it does is it undermines, to me, what this country should be focused on. It's a distraction from the real issues. It's either going to be a small campaign about this crap or it's going to be a big campaign, in my opinion, about the issues that the American public cares about.

(Sarcasm Alert) Oddly enough, the American public cares about jobs.    Mitt Romney has claimed he and Bain Capital "were able to help create over 100,000 jobs."    He has offered no evidence to support the claim, nor has he clarified whether the job gain was net or gross.     In the unlikely event, the vulture capitalist helped create 100,000 jobs, it is as likely it helped lose 100,000 jobs.     The centerpiece of Romney's campaign is his claimed ability to bolster the economy- and not based on his record as governor of Massachusetts (from which he has run at every opportunity) but on his professed business acumen and experience.    And the mayor of Newark calls that "a distraction from the real issues."

But the Obamites shouldn't have been surprised.    Cory Booker's goal is not the promotion of the re-election of Barack Obama but the promotion of himself.     Booker once called charter school activists "modern-day freedom fighters," apparently confusing them with the likes of George Washington, Lech Walesa, Vaclav Havel, and Fannie Lou Hamer.     He has periodically aligned himself with the right-wing governor of New Jersey, Chris Christie, in word and in video, and is widely assumed in New Jersey to have his sights on a run for either governor or U.S. senator.     Salon's Steve Kornacki recognizes Booker's plunge into the sewer of false equivalence is not a gaffe and "hardly means he made a mistake, at least in terms of his own ambition."    He explains

Financial support from Wall Street and, more broadly speaking, the investor class has been key to Booker’s rise, and remains key to his future dreams.

It’s easy to forget, but before the world met Barack Obama in 2004, many believed that the first black president would be Booker. Armed with Stanford, Yale and Oxford degrees and all of the invaluable personal connections he forged at those institutions, he set out in the mid-1990s to craft a uniquely appealing political biography, swearing off lucrative job offers to move to Newark’s Central Ward and take up residence in public housing. Within a few years, he won a seat on the City Council, where he showed an early and consistent knack for self-generated publicity, most notably with a ten-day hunger strike in the summer of 1999.

That set the stage for Booker’s 2002 race for mayor, an ugly contest against incumbent Sharpe James, an entrenched icon of the city’s civil rights generation of black politicians. James, as any self-respecting Newark mayor would do, leveraged his clout for campaign contributions from city workers, vendors and those who aspired to be city workers and vendors.

Booker, meanwhile, had hardly lost touch with his old classmates, keeping one foot in Newark and the other in Manhattan, where he built on the connections to elite donors that he already had. He called the millions of dollars he raised for the race “love money.” The press – and James’ campaign – took note that almost all of it was from outside Newark, nearly half of it was from outside New Jersey, and a quarter of it came directly from Wall Street.

Booker lost that election, but was handily elected mayor four years later.       Six years later, the only cause Cory Booker is interested in is Cory Booker and he is lasciviously eyeing Wall Street cash.    If the Obama campaign was unaware of that, it has only itself to blame. |



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Nothing Like Running Companies Into The Ground


Don't blame David Gregory, not for offering up the question that begged to be asked.    On yesterday's Meet The Press (segment here from Crooks and Liars), Gregory repeated a talking point of the GOP and especially of the Romney campaign, when he asked Vice President Biden "The argument is, "Why not give somebody who's got-- a real background in business to try to turn it around?"

The query gave Biden an opportunity to repeat Obama campaign talking points, which have the advantage of being accurate:       Obama upon taking office faced the nation's worst-ever recession; if the "jobs bill" had been passed, a lot more teachers, firefighters, and police officers would have been been (re-) hired; when Romney was governor, Massachusetts ranked 47th of 50 states in job creation; Romney saved companies only "by piling debt on them."

Whoa, let's go back to that one.    Accumulating debt and firing workers is Romney's specialty.    In the video below, Robert Reich describes how private equity firms feed at the public trough while amassing millions for their executives.    David Waldman applies this scheme to the Repub candidate by explaining

Romney borrows money to buy a majority stake in a company, takes over its board of directors, and uses that position to vote Bain a fat management contract, and take out the biggest loans possible from the company's bank. That money goes to pay back the people who put up the money for the purchase, as well as giant bonuses for Bain managers. But now the company has a huge debt to the bank (the interest on which is, of course, tax deductible), which the Bain managers sorta-kinda attempt to pay back by cutting payroll, benefits, investments in equipment, etc. Basically anything they can find to transfer the pain to anyone other than themselves.

Pete Kotz explains how Bain Capital eviscerated one company during the fifteen years Romney led the company:

James Sanderson had encountered a rare moment of industrial harmony. It was the early 1990s, and the 750 men and women at Georgetown Steel were pumping out wire rods at peak performance. They had an abiding trust in management's ability to run a smart company. That allegiance was rewarded with fat profit-sharing checks. In the basement-wage economy of Georgetown, South Carolina, Sanderson and his coworkers were blue-collar aristocracy.

"We were doing very good," says Sanderson, president of Steelworkers Local 7898. "The plant was making money, and we had good profit-sharing checks, and everything was going well."

But that was before Bain (figuratively) came to town because Romney's

specialty was flipping companies — or what he often calls "creative destruction." It's the age-old theory that the new must constantly attack the old to bring efficiency to the economy, even if some are destroyed along the way. In other words, people like Romney are the wolves, culling the herd of the weak and infirm.

His formula was simple: Bain would purchase a firm with little money down, then begin extracting huge management fees and paying Romney and his investors enormous dividends.

The result was that previously profitable companies were now burdened with debt. 

Georgetown Steel was about to run headlong into class warfare, GOP-style, as

Bain would slash costs, jettison workers, reposition product lines, and merge its new companies with other firms. With luck, they'd be able to dump the firm in a few years for millions more than they'd paid for it.

But the beauty of Romney's thesis was that it really didn't matter if the company succeeded. Since he was yanking out cash early and often, he would profit even if his targets collapsed.

Which was precisely the fate awaiting Georgetown Steel.

When Bain purchased the mill, Sanderson says, change was immediate. Equipment upgrades stopped. Maintenance became an afterthought. Managers were replaced by people who knew nothing of steel. The union's profit-sharing plan was sliced twice in the first year — then whacked altogether.

"When Bain Capital took over, it seemed like everything was being neglected in our plant," says Sanderson. "Nothing was being invested in our plant. We didn't have the necessary time to maintain our equipment. They had people here that didn't know what they were doing. It was like they were taking money from us and putting it somewhere else.

Hmm.    And where might that "somewhere else" have been?      Kotz notes

History would prove him correct. While Georgetown was beginning its descent to bankruptcy, Romney was helping himself to the company's treasury.

That's great, because as David Gregory says people are saying, what Washington really needs to restore a bustling economy with good-paying jobs is a businessman like Mitt Romney in charge.








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