Opinion

The Great Debate

Why Romney can’t defend capitalism

When Fox News worries out loud that Mitt Romney’s failure to account for his time at Bain and his personal tax affairs may represent his Swiftboat moment, it is plain the Republican presidential bid has careened offtrack. The Bain attacks are “part of a strategy by Team Obama to turn Romney’s biggest perceived strength – his business experience – into his biggest weakness,” writes Fox’s Juan Williams. “Romney needs to come clean or his hopes of being president will end long before Election Day.”

How has Romney come so close to bungling his big chance, even before he has been nominated by his party? He appeared to be in an ideal position to turn his experience as a businessman into a winning political narrative. During these jobless economic doldrums, Romney might have become a champion of capitalism, explaining how private enterprise works and how it creates jobs.

His problem is that his time at Bain is not a classic story of heroic capitalism at work. Instead of an old-school entrepreneur with a good idea who raises funds to employ Americans to make a product that sells successfully around the world, Romney took distraught companies, charged them hefty fees, fired workers, and set the stumbling enterprise off in a new direction, laden with debt. Some companies prospered, some failed. Some gave Americans new jobs, some sent jobs overseas.

Romney’s tax embarrassment follows a similar arc. No one likes paying taxes, but conservatives have made tax dodging a religion, so Romney was in prime position to explain how taxing people too much can drag an economy down and how the rich, if lightly taxed, spend freely and create jobs. But the intricacies of Romney’s vast wealth are far from simple and his personal tax avoidance measures beyond ingenious.

There may be good reasons to hold a bank account in a tax haven like the Caymans, but most Americans don’t have reason to resort to such ruses. They suspect that those who help avoid the payment of taxes due in America are unpatriotic, even un-American. So how does Romney set minds at rest on his tax record? He doesn’t; he insists he will only issue two tax returns.

Where is Obama’s promised minimum-wage hike?

During the 2008 campaign, presidential candidate Barack Obama made a pledge to raise the minimum wage to $9.50 per hour by 2011. Promises like this one inspired a generation of young voters, excited long-neglected progressive voters and gave hope to millions of his supporters across the country.

President Obama ran a campaign of soaring rhetoric and uplifting ideas. Amidst two unpopular wars, a rapidly deteriorating financial crisis and the wildly unpopular presidency of George W. Bush, Americans were desperate for a change. He was viewed as a “transformational” candidate, a president who would turn the page on the stagnant politics of Washington.

It is now four years later, and there has been no increase to the minimum wage. There has been no congressional vote, much less a whisper from the White House on the minimum wage.

We need to make campaign finance a civil rights issue

Two Supreme Court decisions (Citizens United v. Federal Elections Commission and, later, American Tradition Partnership v. State of Montana) and an appellate court decision (SpeechNow v. Federal Election Commission) are fundamentally transforming our political system and our democracy to a degree we may not grasp until the results of this year’s elections become clear. Never has our electoral process been more captive to vast – and mostly anonymous – sums of money from a handful of large corporations and wealthy individuals.

For all the scorn rightfully heaped on Citizens United, however, it’s actually SpeechNow v. Federal Election Commission that has been most destructive. SpeechNow allows not-for-profit organizations to accept unlimited contributions from individuals for independent expenditures, and this decision birthed both “super PACs,” which can accept unlimited contributions but must disclose donors, and “tax-exempt organizations” which are not subject to the disclosure requirements that apply to candidates, parties, PACs and super PACs.

Under these recent court decisions, a handful of immensely wealthy individuals and CEOs and boards of directors of large corporations now legally direct tens of millions of dollars to funding an overwhelming stream of political ads on behalf of candidates from whom they obviously expect some sort of fealty once the candidates are in office.

Mitt Romney, the Schrodinger’s Cat of private equity

Mitt Romney is a quantum CEO, the Schrödinger’s Cat of private equity: From 1999 to 2002, he both was and was not the chief executive officer and sole owner of a powerful Bain Capital investment fund. After that period, Romney’s surrogates explain, he “retroactively” retired from this post. But, as Schrödinger’s famous thought experiment reminds us, just because you find a retroactively dead cat doesn’t mean he wasn’t previously simultaneously alive and dead.

While the two presidential campaigns tussle over this paradox, the real shame is how willing Romney and his defenders are to tolerate this bending of the truth, heretofore confined to particle physics. It’s another insight into the increasingly murky culture of American capitalism.

While Romney has claimed at times he was retired from Bain Capital during the period, he also signed documents filed with the Securities and Exchange Commission attesting that he was the “sole stockholder, sole director, Chief Executive Officer, Managing Director and President” of a multimillion-dollar investment fund.

The chief justice’s contribution to tax reform

The surprise resolution of our national healthcare drama – the mandate is a tax! – has a kernel of solace for Republican partisans saddened by the constitutionality of Obamacare: The mandate is a tax! During President Obama’s 2008 campaign, he promised not to boost taxes on anyone who makes less than $250,000. Technically, the healthcare law now defies that promise.

While the political value of that fact is questionable – Obama technically broke this pledge years ago, with a cigarette tax included in the healthcare bill, and has mostly lowered taxes on working Americans – this is a good opportunity for the president and his administration to recognize that sound policy is going to require higher taxes on everyone, even the middle class.

What’s important is that he figure out how to do it in an economically efficient way that might have a chance of attracting support from Republicans. Luckily, the careful opinion of Chief Justice John Roberts may provide a useful model of how to tax intelligently. In it, he echoes conservative intellectuals like Harvard economist Greg Mankiw and American Enterprise Institute tax expert Alan Viard, who argue that taxing consumption rather than income is smart policy, and that taxing energy is one of the best ideas of all.

Is Murdoch trying to sink Romney?

Rupert Murdoch should never go on holiday. It only makes him grumpy. He returned last month from cruising on his yacht off the coast of Croatia looking for a scrap. When Steve Jobs invented the iPad, he could hardly have imagined the havoc caused by one crabby old geezer letting rip on Twitter. Murdoch, a genius with the snappy tabloid headline, didn’t need all 140 characters to reduce Romney’s campaign to toast. “Tough O Chicago pros will be hard to beat unless [Romney] drops old friends from team and hires some real pros,” he wrote, adding the fatal one-word zinger: “Doubtful.”

Romney met Murdoch recently for a secret chat about how things were going on the campaign trail, but the relaxed Republican nominee presumptive, perhaps with his lavish family vacation at Lake Winnipesaukee, New Hampshire, on his mind, said he thought everything was just dandy. As Murdoch’s editors know to their cost, when the antipodean grouch asks how things are going it means he thinks things are going badly. As Romney’s minders did not issue a handout about the disastrous meeting, the lazy fourth estate did not know it was going on and so did not report it. But Murdoch took to his Twitter account to let the world know he was NOT HAPPY.

As Murdoch told the British inquiry into press standards, it used to be that “If you want to judge my thinking, look at The Sun.” Nowadays Murdoch’s hacks simply follow his Tweets. There is not much pretense any longer that Wall Street Journal journalists are any more independent of their master’s voice than Nipper, the dog on the HMV logo. The paper duly piled on with a blistering leading article beginning, “If Mitt Romney loses his run for the White House…” before careening downhill, accusing the Romney campaign of being “hapless”, “politically dumb” and a “failure”. A companion blast in the New York Post, titled “Mitt’s Losing Habit”, concluded that “Not all politicians are winners. Whatever Obama may or may not be, he’s a winner. The jury’s out on Romney.” Ouch.

It may be constitutional, but it’s still a bad law

So the Supreme Court has upheld most of the Affordable Care Act as constitutional. As someone who supports universal healthcare, who has lived most of his life in the UK, which has an admirable national health service, and who believes affordable healthcare for all is the mark of a civilized nation, I say it’s too bad. It is a wretched piece of legislation: complex, expensive, incomprehensible – do you know anyone, even a health expert, who can tell you what it means in a single sentence – easy for the unscrupulous to manipulate, unpopular, and politically catastrophic for the president.

All credit to Barack Obama for at least getting universal healthcare on the statutes, something that has eluded presidents of both stripes for a century. It is a shaming fact that 50 million Americans have to either burden themselves with debt or throw themselves on the mercy of emergency rooms when they get sick. Some may be libertarians, others so rich they don’t have to worry about paying out a fortune when they fall ill. But they are in a minority.

Most are ordinary folks, those who don’t enjoy the canopy of care provided through employers, oblivious young people who imagine they’re immortal, or those without work or who simply can’t afford exorbitant premiums. These are the mothers with blubbing young children you meet in any emergency room at any time of day or night, throwing themselves and their offspring on the mercy of hospital staff. They are not making some principled stand about keeping government at bay. They are the sort of people – poor people, or people on modest incomes — you might imagine a Democratic president would strain to serve.

Will George W. Bush become a surprise Obama asset?

Whatever happened to George W. Bush? While 88-year-old George H.W. Bush still goes skydiving and chats about Justin Bieber with his granddaughter Jemma, the faux Texan who brought us two wars, waterboarding, an economic meltdown and record public borrowing is strangely missing. Just as well, you might think. What could he possibly say?

But George W. is a key witness in the trial of Barack Obama. Under attack from Mitt Romney for presiding over a stagnant economy, Obama blames his plight on the gaping hole in the country’s finances left by his predecessor. “Huge reckless bets were made with other people’s money,” Obama told an audience in Cleveland, this month. “And too many, from Wall Street to Washington, simply looked the other way.” Then, “in the fall of 2008 it all came tumbling down with a financial crisis that plunged the world into the worst economic crisis since the Great Depression.”

Obama has made light of his sour inheritance, joking: “Some have said I blame too many problems on my predecessor, but let’s not forget that’s a practice that was initiated by George W. Bush.” But in invoking the ghost of George W. he is deadly serious. To be left nursing the worst economy since Herbert Hoover is no laughing matter. The figures for the Bush years suggest Obama has a lot to complain about. Whether you judge it by stock market prices, or the number of Americans in poverty, or median household income, or growth in public debt, or GDP growth, or job growth, or number of Americans without health insurance, Bush passed on to Obama an economy heading South.

What public unions and gay marriage have in common

The political fireworks in Wisconsin, culminating in the recent unsuccessful recall election of the Republican governor, Scott Walker, have a lot of people saying good riddance to public-sector unions. Last year, Walker and the Wisconsin state legislature enacted Wisconsin Act 10, stripping most – though crucially not all – of the state’s public unions of their most fundamental powers, including collective bargaining and the ability to deduct dues from workers’ paychecks. Many observers – and not only Republicans – have signaled their approval, arguing that public unions – representing teachers, bus drivers, healthcare workers – shouldn’t exist in the first place.

“Public sector unions have reached their high water mark,” a Forbes columnist cheered last week. “Let the cleanup begin as the red ink recedes.”

It turns out, however, that killing off public-sector unions is a lot harder than most people imagine. And, curiously, the reason is related to recent court decisions about gay marriage. Late last month, the U.S. Court of Appeals for the First Circuit ruled that the 1996 Defense of Marriage Act is unconstitutional and cannot be enforced. The principle is equal protection under the law: If you allow same-sex couples to marry – as eight states and the District of Columbia now do – you can’t economically discriminate against them (by denying the ability to file joint tax returns or withholding Social Security benefits) simply because they are not heterosexual.

Sometimes leaking classified information is perfectly fine

The brewing controversy over leaks of classified information presumes that disclosures of classified information to unauthorized persons are always impermissible and undesirable. But that presumption does not correspond precisely to the reality of government operations as they are conducted in practice.

The leaders of the House and Senate Intelligence Committees said last week that they would work “to ensure that criminal and administrative measures are taken each time sensitive information is improperly disclosed.”

In fact, however, classified information is frequently disclosed at the interface between national security agencies and the news media. This is not necessarily a surreptitious or underhanded process. Rather, though it is not often discussed, it is how the system normally functions.

  •