Thursday Reads: Mitt Romney, Casino Capitalist, and Other NewsPosted: July 5, 2012 | |
I hope everyone had a nice, relaxing holiday. There wasn’t a whole lot of news breaking yesterday, but I read some good reactions to the Vanity Fair Story on the many overseas tax shelters that Mitt’s Romney uses to hide his money.
Mitt Romney, Casino Capitalist
At the Nation, Ben Adler worked up an excellent summary of the VF article, highlighting the main points. Here’s his summary of a particularly disturbing part–the possibility that Bain was laundering money money for some questionable people.
§ Did Bain serve as a tax haven for foreign criminals? As Shaxson explains, “Private equity is one channel for this secrecy-shrouded foreign money to enter the United States, and a filing for Mitt Romney’s first $37 million Bain Capital Fund, of 1984, provides a rare window into this. One foreign investor, of $2 million, was the newspaper tycoon, tax evader, and fraudster Robert Maxwell, who fell from his yacht, and drowned, off of the Canary Islands in 1991 in strange circumstances, after looting his company’s pension fund. The Bain filing also names Eduardo Poma, a member of one of the ‘14 families’ oligarchy that has controlled most of El Salvador’s wealth for decades; oddly, Poma is listed as sharing a Miami address with two anonymous companies that invested $1.5 million between them. The filings also show a Geneva-based trustee overseeing a trust that invested $2.5 million, a Bahamas corporation that put in $3 million, and three corporations in the tax haven of Panama, historically a favored destination for Latin-American dirty money—’one of the filthiest money-laundering sinks in the world,’ as a US Customs official once put it.”
Politico seemed disapproving of the Obama campaign calling attention to the VF piece. The headline seems to suggest that it is somehow unseemly to refer to an opponent’s tax evasion methods.
From Obama campaign spokseman Ben LaBolt, on a call with Ohio reporters:
“Today we’re learning more about Mitt Romney’s bets against America. Vanity Fair’s raising important questions about Romney’s offshore accounts in foreign tax havens, including his mysterious corporation in Bermuda, his funds in the Cayman Islands, and the Swiss bank account he opened. The question is, why? Was he avoiding paying his fair share of U.S. taxes? Was he hedging against the dollar? Until he releases his tax returns from that period, Americans will never know. This raises serious questions. If he has nothing to hide, why doesn’t he just release his tax returns?”
And from Bill Burton, at Priorities:
“Today’s Vanity Fair article confirms what the New York Times and the Wall Street Journal reported but the Romney campaign falsely denied. Unlike the vast majority of Americans who pay their fair share of taxes, Mitt Romney is avoiding taxes by stashing millions of dollars in the Cayman Islands. This matters in the presidential campaign because it is just these types of loopholes for the wealthy that Romney would protect, forcing more of the tax burden onto the middle class.
Those seem like pretty good questions to me.
RalphB posted this AP article in the comments yesterday: Mystery Bermuda-based company and other undisclosed Romney assets hint at larger wealth
For nearly 15 years, Republican presidential candidate Mitt Romney’s financial portfolio has included an offshore company that remained invisible to voters as his political star rose.
Based in Bermuda, Sankaty High Yield Asset Investors Ltd. was not listed on any of Romney’s state or federal financial reports. The company is among several Romney holdings that have not been fully disclosed, including one that recently posted a $1.9 million earning — suggesting he could be wealthier than the nearly $250 million estimated by his campaign.
The omissions were permitted by state and federal authorities overseeing Romney’s ethics filings, and he has never been cited for failing to disclose information about his money. But Romney’s limited disclosures deprive the public of an accurate depiction of his wealth and a clear understanding of how his assets are handled and taxed, according to experts in private equity, tax and campaign finance law.
Romney reported this holding on his 2010 tax form, but he did not disclose it when he ran for governor in 2001-02, even though he was required to do so. Pretty sleazy. Unfortunately, the statute of limitations on this ethics violation has expired.
Paul Krugman blogged about Romney yesterday: Off And Out With Mitt Romney.
It appears that the Obama campaign has decided to ignore the queasiness of Democrats with Wall Street ties, and go after Mitt Romney’s record at Bain. And rightly so!
After all, what is Romney’s case – that is, why does he want us to think he should be president? It’s not about ideology: Romney offers nothing but warmed-over right-wing platitudes, with an extra helping of fraudulent arithmetic, and it’s fairly obvious that even he himself doesn’t believe anything he’s saying.
Instead, his thing is competence: supposedly, his record as a successful businessman should tell us that he knows how to create jobs….[but] even if Romney were a true captain of industry, a latter-day Andrew Carnegie, this wouldn’t be a strong qualification.
In any case, however, Romney wasn’t that kind of businessman. He didn’t build businesses, he bought and sold them – sometimes restructuring them in ways that added jobs, often in ways that preserved profits but destroyed jobs, and fairly often in ways that extracted money for Bain but killed the business in the process….
Or put it a different way: Romney wasn’t so much a captain of industry as a captain of deindustrialization, making big profits for his firm (and himself) by helping to dismantle the implicit social contract that used to make America a middle-class society.
I particularly want to recommend a brilliant essay in The Nation by Robert Reich: Mitt Romney and the New Gilded Age. Reich has really dedicated himself to standing up for the 99% this year, and this piece really brings it all together and holds Romney up as the perfect symbol of “casino capitalism.”
Connect the dots of casino capitalism, and you get Mitt Romney. The fortunes raked in by financial dealmakers depend on special goodies baked into the tax code such as “carried interest,” which allows Romney and other partners in private-equity firms (as well as in many venture-capital and hedge funds) to treat their incomes as capital gains taxed at a maximum of 15 percent. This is how Romney managed to pay an average of 14 percent on more than $42 million of combined income in 2010 and 2011. But the carried-interest loophole makes no economic sense. Conservatives try to justify the tax code’s generous preference for capital gains as a reward to risk-takers—but Romney and other private-equity partners risk little, if any, of their personal wealth. They mostly bet with other investors’ money, including the pension savings of average working people.
Another goodie allows private-equity partners to sock away almost any amount of their earnings into a tax-deferred IRA, while the rest of us are limited to a few thousand dollars a year. The partners can merely low-ball the value of whatever portion of their investment partnership they put away—even valuing it at zero—because the tax code considers a partnership interest to have value only in the future. This explains how Romney’s IRA is worth as much as $101 million. The tax code further subsidizes private equity and much of the rest of the financial sector by making interest on debt tax-deductible, while taxing profits and dividends. This creates huge incentives for financiers to find ways of substituting debt for equity and is a major reason America’s biggest banks have leveraged America to the hilt. It’s also why Romney’s Bain and other private-equity partnerships have done the same to the companies they buy.
These maneuvers shift all the economic risk to debtors, who sometimes can’t repay what they owe. That’s rarely a problem for the financiers who engineer the deals; they’re sufficiently diversified to withstand some losses, or they’ve already taken their profits and moved on. But piles of debt play havoc with the lives of real people in the real economy when the companies they work for can’t meet their payments, or the banks they rely on stop lending money, or the contractors they depend on go broke—often with the result that they can’t meet their own debt payments and lose their homes, cars and savings.
Reich notes that if Romney were to win the White House, he would be very different from past wealthy presidents.
We’ve had wealthy presidents before, but they have been traitors to their class—Teddy Roosevelt storming against the “malefactors of great wealth” and busting up the trusts, Franklin Roosevelt railing against the “economic royalists” and raising their taxes, John F. Kennedy appealing to the conscience of the nation to conquer poverty. Romney is the opposite: he wants to do everything he can to make the superwealthy even wealthier and the poor even poorer, and he justifies it all with a thinly veiled social Darwinism.
Obama should be holding Romney up as the personification of all that brought the economy to its knees in 2008. Why aren’t the Democrats screaming from the rooftops about it?
Part of the answer, surely, is that elected Democrats are still almost as beholden to the wealthy for campaign funds as the Republicans, and don’t want to bite the hand that feeds them. Wall Street can give most of its largesse to Romney this year and still have enough left over to tame many influential Democrats (look at the outcry from some of them when the White House took on Bain Capital). But I suspect a deeper reason for their reticence is that if they connect the dots and reveal Romney for what he is—the epitome of what’s fundamentally wrong with our economy—they’ll be admitting how serious our economic problems really are. They would have to acknowledge that the economic catastrophe that continues to cause us so much suffering is, at its root, a product of the gross inequality of income, wealth and political power in America’s new Gilded Age, as well as the perverse incentives of casino capitalism.
Please go read the whole thing. You won’t regret it.
In other news,
The Sun has been very active lately.
(SPACE.com) The sun is unleashing some powerful solar flares today (July 4) in an impressive celestial fireworks display just in time for the U.S. Independence Day holiday.
The latest solar flare erupted at 5:47 a.m. EDT (0947 GMT) and hit its peak strength eight minutes later. The flare fired off from the active sunspot AR1515 and registered as a class M5.3 solar storm on the scale used by astronomers to measure space weather, according to the Space Weather Prediction Group operated by NOAA.
Class M solar flares are powerful, but still medium-strength, sun storms that can supercharge northern lights displays on Earth. The weakest of the sun’s strong solar flares are C-class storms.
NASA’s Solar Dynamics Observatory spacecraft currently watching the sun also captured another solar flare this morning that reached M2 on the sun storm scale.
“As the United States is observing Independence Day, active region 1515 unleashed another M2-class solar flare,” SDO scientists wrote in an announcement posted to the mission’s Facebook and YouTube sites. The flare peaked at 12:37 a.m. EDT (0437 GMT), they added.
Here’s a video of solar flares that took place on July 4, 2012.
TV doctor Drew Pinsky, AKA Dr. Drew, is being looked at by the Feds in the GlaxoSmithKline case.
One of Glaxo’s blockbuster drugs was Wellbutrin, which was approved by the FDA to treat depression. Starting in 1999, the Justice Department says, the company “engaged in a nationwide scheme” to promote the drug to treat other conditions including weight problems, addictions, and sexual dysfunction. Pinsky was one of the experts paid to tout Wellbutrin, according to the complaint filed against Glaxo by government prosecutors….
The federal complaint says Cooney Waters, a public-relations firm hired by Glaxo to promote Wellbutrin, “hired Dr. Drew Pinsky from MTV and Loveline as a spokesperson to deliver messages about WBSR [Wellbutrin] in settings where it did not appear that Dr. Pinsky was speaking for WBSR.”
Apparently Pinsky hasn’t specifically been accused of any crime. He told The Daily Beast that he was paid $275,000 to discuss “intimacy and depression” in a number of settings and media. He claims that all of his “comments were consistent with my clinical experience.”
Here’s one example from the federal complaint:
Pinsky said one of the ingredients in Wellbutrin “could explain a woman suddenly having 60 orgasms in one night.” The complaint against Glaxo says “Dr. Pinsky explained that one of the things he advocates for people experiencing diminished libido or arousal” is Wellbutrin.
A sunken land bridge that once was home to “tens of thousands” of people has been discovered in the North Sea between Scotland and Denmark.
‘Britain’s Atlantis’ – a hidden underwater world swallowed by the North Sea – has been discovered by divers working with science teams from the University of St Andrews.
Doggerland, a huge area of dry land that stretched from Scotland to Denmark was slowly submerged by water between 18,000 BC and 5,500 BC.
Divers from oil companies have found remains of a ‘drowned world’ with a population of tens of thousands – which might once have been the ‘real heartland’ of Europe.
A team of climatologists, archaeologists and geophysicists has now mapped the area using new data from oil companies – and revealed the full extent of a ‘lost land’ once roamed by mammoths….
The area was once the ‘real heartland’ of Europe and was hit by ‘a devastating tsunami’, the researchers claim. The wave was part of a larger process that submerged the low-lying area over the course of thousands of years.
Those are my recommendations for today. Now it’s your turn. What are you reading and blogging about?