Posts Tagged Boston Globe
Class Wars of 2012
By PAUL KRUGMAN
On Election Day, The Boston Globe reported, Logan International Airport in Boston was running short of parking spaces. Not for cars — for private jets. Big donors were flooding into the city to attend Mitt Romney’s victory party.
Fred R. Conrad/The New York Times
They were, it turned out, misinformed about political reality. But the disappointed plutocrats weren’t wrong about who was on their side. This was very much an election pitting the interests of the very rich against those of the middle class and the poor.
And the Obama campaign won largely by disregarding the warnings of squeamish “centrists” and embracing that reality, stressing the class-war aspect of the confrontation. This ensured not only that President Obama won by huge margins among lower-income voters, but that those voters turned out in large numbers, sealing his victory.
The important thing to understand now is that while the election is over, the class war isn’t. The same people who bet big on Mr. Romney, and lost, are now trying to win by stealth — in the name of fiscal responsibility — the ground they failed to gain in an open election.
Before I get there, a word about the actual vote. Obviously, narrow economic self-interest doesn’t explain everything about how individuals, or even broad demographic groups, cast their ballots. Asian-Americans are a relatively affluent group, yet they went for President Obama by 3 to 1. Whites in Mississippi, on the other hand, aren’t especially well off, yet Mr. Obama received only 10 percent of their votes.
These anomalies, however, weren’t enough to change the overall pattern. Meanwhile, Democrats seem to have neutralized the traditional G.O.P. advantage on social issues, so that the election really was a referendum on economic policy. And what voters said, clearly, was no to tax cuts for the rich, no to benefit cuts for the middle class and the poor. So what’s a top-down class warrior to do?
The answer, as I have already suggested, is to rely on stealth — to smuggle in plutocrat-friendly policies under the pretense that they’re just sensible responses to the budget deficit.
Consider, as a prime example, the push to raise the retirement age, the age of eligibility forMedicare, or both. This is only reasonable, we’re told — after all, life expectancy has risen, so shouldn’t we all retire later? In reality, however, it would be a hugely regressive policy change, imposing severe burdens on lower- and middle-income Americans while barely affecting the wealthy. Why? First of all, the increase in life expectancy is concentrated among the affluent; why should janitors have to retire later because lawyers are living longer? Second, both Social Security and Medicare are much more important, relative to income, to less-affluent Americans, so delaying their availability would be a far more severe hit to ordinary families than to the top 1 percent.
Or take a subtler example, the insistence that any revenue increases should come from limiting deductions rather than from higher tax rates. The key thing to realize here is that the math just doesn’t work; there is, in fact, no way limits on deductions can raise as much revenue from the wealthy as you can get simply by letting the relevant parts of the Bush-era tax cuts expire. So any proposal to avoid a rate increase is, whatever its proponents may say, a proposal that we let the 1 percent off the hook and shift the burden, one way or another, to the middle class or the poor.
The point is that the class war is still on, this time with an added dose of deception. And this, in turn, means that you need to look very closely at any proposals coming from the usual suspects, even — or rather especially — if the proposal is being represented as a bipartisan, common-sense solution. In particular, whenever some deficit-scold group talks about “shared sacrifice,” you need to ask, sacrifice relative to what?
As regular readers may know, I’m not a fan of the Bowles-Simpson report on deficit reduction that laid out a poorly designed plan that for some reason has achieved near-sacred status among the Beltway elite. Still, at least you can say this for Bowles-Simpson: When it talked about shared sacrifice, it started from a “baseline” that already assumed the end of the high-end Bush tax cuts. At this point, however, just about all the deficit scolds seem to want us to count the expiration of those cuts — which were sold on false pretenses, and were never affordable — as some kind of big giveback by the rich. It isn’t.
So keep your eyes open as the fiscal game of chicken continues. It’s an uncomfortable but real truth that we are not all in this together; America’s top-down class warriors lost big in the election, but now they’re trying to use the pretense of concern about the deficit to snatch victory from the jaws of defeat. Let’s not let them pull it off.
- Class Wars of 2012 – Paul Krugman via NYTimes.com (underpaidgenius.com)
- Robots and Robber Barons – NYTimes.com (mbcalyn.com)
- Paul Krugman: Class Wars of 2012 (economistsview.typepad.com)
- Class Wars of 2012 – Paul Krugman (tribuneofthepeople.com)
- Class Wars of 2012 — it ain’t over, yet! (mbcalyn.com)
- Class wars – American style (mbcalyn.com)
- Yes and no… (atung.net)
- Liberty to Lie – NYTimes.com (mbcalyn.com)
- Fix the Debt: plutocrats are turning up the volume on the class war (mbcalyn.com)
- “We are not all in this together.” (prairieweather.typepad.com)
Sorry, Mitt Romney, You Can’t Be Chairman, CEO, And President Of A Company And Not Be Responsible For What It Does… – Business Insider
Sorry, Mitt Romney, You Can’t Be Chairman, CEO, And President Of A Company And Not Be Responsible For What It Does…
Henry Blodget | Jul. 12, 2012
Courtesy of CBS
Today’s bombshell report by the Boston Globe that Mitt Romney may have remained in charge of Bain Capital for three years after he claimed to have left has the potential to destroy Romney’s credibility.
The issue boils down to statements that, at first glance, appear to directly contradict one another:
· According to statements Bain filed with the SEC, Romney was the “chairman, CEO, and president” of Bain from 1999-2002.
· According to Romney, Romney left Bain in 1999 and had “no input on investments or management of companies after that point.”
Beyond determining whether these statements are accurate–or whether Bain misled the SEC or Romney has been misleading the public–the reason this issue is important is that Romney wants to disavow responsibility for anything Bain or Bain companies did after early 1999.
And one of the things that Bain did after early 1999, as Dan Primack of Fortune points out, is invest in a company called Stericycle whose services included the disposal of aborted fetuses.
For obvious reasons, an investment in a company that performed this service might hurt Romney’s standing with the right-to-life voters in the Republican party, even though Romney was pro-choice at the time the investment was made.
And Romney also wants to disavow responsibility for many layoffs that Bain engineered after 1999, an issue he has had to deal with since running for Governor.
When the statements above are examined closely, however, it becomes clear that the Romney campaign may be treading a very fine rhetorical line here–one that it believes might allow Romney to dodge both bullets (the accuracy of his public statements and Bain’s decisions).
Note that the Romney campaign does not deny that Romney was “chairman, CEO, and president” of Bain from 1999-2002.
What the Romney campaign says instead is that Romney “left” Bain in 1999 and had “no input on investments or management of companies after that point.”
So, read to the legal letter, both of those statements may technically be true (or at least defensible).
Romney did leave Bain in 1999, at least for a leave of absence (he went to run the Olympics).
And it is possible that, once he left, he no longer had direct input into investment or management decisions.
As “Chairman, CEO, and President” of Bain, he damn well would have remained responsible for these decisions. In which case, saying he had “left” and implying that he had no involvement or responsibility whatsoever is highly misleading.
The CEO of a car company may not have input into the decision of what specific cars the company makes or where it makes them (though he or she obviously could if s/he wanted), but this CEO is unequivocally responsible for these decisions.
Similarly, if Romney was CEO of Bain at the time it made the Stericycle decision, as well as the company layoffs and other unpleasant facts that Candidate Romney would like to disown, he certainly was responsible for these decisions.
So, enough with walking a fine line rhetorically.
Here are the questions that the Romney campaign needs to answer:
· Was Mitt Romney “chairman, CEO, and President” of Bain from 1999-2002 (even if he had physically “left” and was spending 100% of his time running the Olympics)? If the answer is “yes,” then Romney is responsible for what Bain did during that period–full stop.
· Were the filings submitted to the SEC inaccurate?
The answer to those two questions cannot be “both.” It’s one or the other.
And if the answer is that Mitt Romney was chairman, CEO, and president of Bain for the years in which he has long tried to disavow any responsibility for what the firm did, the American public has every right to feel misled.
- Sorry, Mitt Romney, You Can’t Be Chairman, CEO, And President Of A Company And Not Be Responsible For What It Does… (businessinsider.com)
- Sorry, Mitt Romney, You Can’t Be Chairman, CEO, And President Of A Company And Not Be Responsible For What It Does… – Business Insider (tribuneofthepeople.com)
- Romney Discrepancies Over When He Left Bain Capital Could Constitute a Felony (news.firedoglake.com)
- THIS JUST IN… Boston Globe refuses Romney demand to “correct” Bain story (americablog.com)
- Obama campaign accuses Romney of lying about Bain tenure (nbcpolitics.msnbc.msn.com)
- BOSTON GLOBE: Mitt Romney Left Bain Capital Three Years After He Said He Did (businessinsider.com)
- Did Mitt Romney Lie About Leaving Bain Capital? (slog.thestranger.com)
- Mitt Romney Bain Mess Shows Stonewalling Consequences (huffingtonpost.com)
- Three Fibs Mitt Romney Tells About His Business Record (thinkprogress.org)
- The Bain Of This Campaign, Ctd (andrewsullivan.thedailybeast.com)
This deal was in the 1980s, and involved Romney’s hunt for $300 million in financing for a deal, which Milken provided:
What transpired would become not just one of the most profitable leveraged buyouts of the era, but also one of the most revealing stories of Romney’s Bain Capital career. It showed how he pivoted from being a relatively cautious investor to risking his reputation for a big payoff. It is one that Romney has rarely, if ever, mentioned in his two bids for the presidency, perhaps because the Houston-based department store chain that Bain assembled later went into bankruptcy.
But what distinguishes this deal from the nearly 100 others that Romney did over a 15-year period was his close work with Milken’s firm, Drexel Burnham Lambert Inc. At the time of the deal, it was widely known that Milken and his company were under federal investigation, yet Romney decided to go ahead with the deal because Drexel had a unique ability to sell high-risk, high-yield debt instruments, known as “junk bonds.”
The Obama campaign has criticized the deal as showing Romney’s eagerness to make a “profit at any cost,” because workers lost jobs, and challenged Romney’s assertion that his business background best prepares him for the presidency. Romney, meanwhile, once referred to the deal as emanating from “the glorious days of Drexel Burnham,” saying, “it was fun while it lasted,” in a little-noticed interview with American Banker magazine.
The “glorious” part, for Romney at least, was that he used junk-bond financing to turn a $10 million investment into a $175 million profit for himself, his partners, and his investors. It marked a turning point for Romney, according to Marc Wolpow, a former Drexel employee who was involved in the deal and later was hired by Romney to work at Bain Capital.
“Mitt, I think, spent his life balanced between fear and greed,” Wolpow said. “He knew that he had to make a lot of money to launch his political career. It’s very hard to make a lot of money without taking some kind of reputational risk along the way. It’s just hard to do. It doesn’t mean you have to do anything illegal or immoral, but you often have to take reputational risk to make money.”
The story is long, and some of the most interesting elements are the fact that Milken was slapped with the insider trading charges that ultimately led him to being jailed after a guilty plea just as the deal with Bain was being cemented:
Some clients feared being tainted by scandal, but Romney stayed loyal: The deal was too important.
“We did not say, ‘Oh my goodness, Drexel has been accused of something, not been found guilty,’” Romney told the Globe years later. “Should we basically stop the transaction and blow the whole thing up?”
The less-sexy elements of the piece relate to the merger of department store chains into Stage Stores, which later filed for bankruptcy and which has been one of the cases highlighted by Democrats as an example of how Bain profited even if some of the companies it took over did not.
This is not a freshly-unearthed case – the authors of the book “The Real Romney,” one of whom co-wrote this Globe piece, write about the Milken deal in their book. This is also the way leveraged buyouts work – complicated, multi-dimensional deals.
But the chances of this story making it into ad copy or direct mail are high, with Milken’s very-recognizable name attached and the Globe’s reporting quoted.
Republicans have been relieved that the messaging around Romney’s business career has remained, as Alex and John Harris put it, a “muddle” so late in the year. The bet from the Democrats is that there is seepage over time, filling out the frame of Romney as too risky to take a chance on.
- Romney and Milken (politicalwire.com)
- Mitt and the junk bond king (boston.com)
- Sunday Reads (skydancingblog.com)
- The Pro-Obama Super PAC Hits Mitt Romney With A Vicious Ad That Keeps The Focus On Bain Capital (businessinsider.com)
- Rajat Gupta – Take-Down-of-Indians Pattern Continues (2ndlook.wordpress.com)
- Romney Adviser Hits Back On Bain Offshoring: Obama Is ‘Outsourcing’ Jobs To Nebraska! (thinkprogress.org)
- Inside Mitt Romney’s Houston Stage Stores connection (bizjournals.com)
- Romney “Sick at Heart” Over Bain Job Losses (crooksandliars.com)
- New York City High-School Students Earn Prestigious Scholarships (theepochtimes.com)
- Mitt’s no policy problem – Politico (politico.com)