Political Nutz

Observations on the pathetic state of American politics

Monthly Archives: January 2012

Why Can’t Romney Just Say It? “I’m Really Rich (and You’re Not)”

All this hand-wringing about Mitt Romney‘s tax returns and dealings at Bain is mostly not relevant to his qualifications to be president.  But his inability to just tell the truth about his immense personal wealth is unsettling.  There’s no indication Mr. Romney has cheated anyone or broken any laws while pursuing a very successful career in the financial industry.  It’s odd, then, that he keeps avoiding questions about his wealth and how he achieved it and equally ludicrous that he continues to try to position himself as just “one of the guys” who understands the plight of working (or unemployed) Americans.

I personally think the favorable tax treatment for dividends and capital gains is unfair and tax shelters in the Cayman Islands should be prohibited.  But that’s not the law. I’d have a lot higher regard for Mr. Romney if he would just stand up and say that he made a lot of money by investing money and that he uses the tax code to keep as much of it as he can. He would still have to answer questions about the fairness of tax laws but at least he wouldn’t look so much like a hypocrite.

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Super PAC Fairness

So I have an a solution to the debate about Super PACs and the gusher of corporate contributions to political campaigns.  Someone needs to file a suit and get the Supreme Court to declare that individual people are corporations.  Then each citizen could make unlimited campaign contributions, pay taxes at the reduced corporate rate, get incentives to move to selected cities, and be exempt from criminal prosecution.  Real equality!

Corporations are not people, and money is not speech. The Supreme Court has ruled otherwise, effectively disenfranchising most Americans. The disclosure loopholes allow politicians to buy government in secret. And anyone who thinks candidate committees aren’t illegally coordinating activities with “independent” super PACs is simply naive. [Editorial: The vultures of Citizens United are coming home to roost; St. Louis Post-Dispatch, 15-Jan-2012]

Class Warfare? It Should Be.

The ever-increasing gap between the wealthiest few Americans and what used to be the middle class isn’t just a statistic.  Leading Republicans, all of whom happen to be on the top end of the wealth scale, say the rest of us are just envious whiners, that we just need to get a job and work harder.  Guess what.  That’s what we’ve been doing for the last thirty years: working more hours, being more productive and often adding a second income to the family.  In spite of all that, median family income trails the growth in overall GDP since the early 80’s.

How, I wonder, to the Republicons explain that.

Here’s a chart from Professor Lane Kenworthy showing the drop-off in family income:

Prof. Kenworthy concludes:

The disconnect between economic growth and middle-class income growth is due largely to rising inequality. In the past several decades much of the economy’s growth has gone to those at the top of the income distribution.

Why are CEO’s Whining?

Yesterday Thomas Donohue, chief executive officer of the U.S. Chamber of Commerce delivered his State of American Business address.  The nation’s chief Obama basher offered a very upbeat assessment of the nation’s businesses, summarized  by Daniel Gross of  Yahoo! Finance:

…the state of American business and the state of the economy, at least as the typical American experiences it, may be two different things. Since the financial crisis, business has bounced back much more rapidly than the consumer and than the economy at large. In the three years since the meltdown of 2008, U.S. companies have returned to impressive profits, refinanced debt at low rates, cut costs and reaped efficiencies in impressive fashion, stormed into global markets. They’re now collectively sitting on nearly $2 trillion in cash; the stock market has made up most of the vast losses it suffered. Labor unions have never been weaker, and with large amounts of slack in the labor market, management has been beating the living daylights out of its employees.

It’s a great time to own a company. But it’s not such a great time to work for one.

God is Watching Tim Tebow

What to say?  Forty-three percent of Americans in a recent poll believe divine intervention played a part in Denver Bronco victories led by quarterback Tim Tebow.  I just wonder what those folks think happened during that three-game losing streak when Terrific Tim was just plain lousy and the Broncos were outscored 87 to 40.  Was God maybe on vacation?  Gone Fishing?

Romney Could Just Tell the Truth about Bain

Mitt Romney could easily diffuse the firestorm about his years at Bain Capital LLC.  Instead of trying to create a myth about how his private equity firm created thousands of jobs and saved American free enterprise he could just offer a simple explanation of how private equity investments work.  His monologue might go something like this:

We looked for underperforming companies we thought we could turn around.  We invested in them, trimmed the fat, used tax credits and government-backed loans to shore them up, gave ourselves big dividends, and sold them, usually at a profit.  Some of them went bust.  End of story.

Liberals could argue that the private equity system has nothing to do with entrepreneurship and is fundamentally a way for rich guys to leverage other people’s’ money —often taxpayers’ money— to eliminate investment risk and make piles of money for themselves.  But there’s nothing illegal or maybe even unethical about it.  However, Romney’s suggestions that he created hundreds of thousands of jobs and was some kind of cutting edge entrepreneur is simply ridiculous.

Mr. Romney might have a harder time defending his incessant critique of government involvement in big business given the degree to which Bain relied on tax breaks, subsidies and federally backed loans to make huge profits.

The June 12 Diane Rehm Show has an excellent discussion of how private equity investment works and the pros and cons.

Related articles

Why Isn’t This Part of the Healthcare Discussion?

5% of Americans Made Up 50% of U.S. Healthcare Spending

Painting by Mikhail Nesterov

America’s healthcare spending crisis is a concentrated phenomenon. The challenge isn’t just about making everybody’s insurance cheaper (although that would be nice). It’s about figuring out how to cut costs, wisely and fairly, for the disastrously ill and preventing diseases before they become chronic. This is America’s 5% problem.  [The Atlantic, 13-Jan-2012]

A Department of Health and Human Services study reveals that healthcare costs are, not surprisingly, skewed towards elderly folks with serious, some times catastrophic, chronic conditions.  These are precisely the people private insurance companies don’t want to deal with.  Figuring out a way to help this small group —that could include any of us— would be a big step in improving America’s healthcare system.

Romney vs. Insurance Reality

Poor Mitt Romney wants so desperately to prove he’s like the rest of us: a simple man who understands what it’s like living paycheck to paycheck, making just enough to pay the bills, and working hard to keep your job.  Of course, he has zero personal experiences like that.  But reality and facts don’t stop him from pretending as when he recently made the statement about how great it is to be able to fire your insurance company if the company doesn’t meet your needs. As Paul Krugman explains in today’s “Who Fires Whom?” column, we can’t –in the real world– fire our insurance companies:

“… it’s as if Romney doesn’t understand his own health reform, which was in large part about ensuring not that you can fire your insurance company, but rather about ensuring that your insurance company can’t fire YOU.”

Grand Canyon Saved Again–Republicans Outraged

Kudos to Interior Secretary Salazar who following in the footsteps of Teddy Roosevelt today extended a 20 year ban on new mining on federal lands near the Grand Canyon.  The outrage of the mining industry and the GOP congressmen is reminiscent of the original battle to make the Grand Canyon a national park in the first place.  Just a century ago, industrialists and their congressional lackeys fought federal protection of the Canyon for a decade insisting on their right to turn a federally owned, national treasure into the world’s biggest open-pit mine.

Grand Canyon, October 2011

The Real Jobs Data

The GOP won’t show this chart…. but they will continue to fabricate numbers to try to obscure these data.