For the moment at least, Mitt Romney’s counter-attack seems to be prevailing in the sudden set-to over his record at Bain Capital.
The Republican establishment is circling the wagons around Mittens, while Newt Gingrich has half-way, kinda, sorta, maybe-but-not-really walked back his rip job on the man he never tires of calling a “Massachusetts moderate.”
Portraying Eye of Newt as a second cousin of Che Guevara for having the bad manners, not to mention the major balls, to drag up some, you know, real-life people hurt by several of Bain’s sleazier deals, the capital gains and trust-fund set is sputtering in outrage, bashing Leroy’s newtron bomb as an anti-American assault on free markets, motherhood and the constitutional right of 1% grubstakers to exploit whomever they damn well please.
Just below the surface, however, lies a trio of issues related to the main stage Bain story that has erupted as a bitter GOP intraparty feud over economic ethics and values, and is now playing out in the South Carolina primary. These matters are deeply intertwined with Romney’s primary campaign narrative — that his private sector experience is a defining credential that makes him eminently qualified and suited to lead the U.S. out of economic stagnation – and, in the long run, seems likely to keep the Bain controversy alive and well deep into the general election:
Transparency in the Temple: Exhibit A, and this week’s winner of the Little Pulitzer for Investigative Punditry, is a splendid essay by investments writer Elizabeth McDonald, of Fox Business.com.
McDonald knocks the MSM’s reporting on Bain to date as “lame” – “restructuring organizations is as old as Jesus tossing the money changers out of the Temple,” she says – by way of arguing that Romney’s stubborn, not-now, not-ever refusal to release his tax returns is far more telling and important to voters as a signifier of who he is.
But the broader controversy is likely the reason why Romney has yet to release his personal income tax returns, which every candidate since the Nixon era has done.
Three parts of the U.S. tax code legally enhance private equity executive payouts: Paying income taxes at the lower 15% capital gains tax rate versus the higher 35% income tax rate; borrowing heavily to do deals and then deducting on corporate tax returns the interest costs on those loans, thus juicing profits and executive payouts further; and getting lots of stock options from the companies they restructure.
In a nicely understated, just-the-facts tone, she next details clearly why these sweetheart features of the tax code offer many, many millions of reasons why Mittens dearly doesn’t want to release his returns, choosing instead to brazen it out by wrapping himself in the red, white and blue of good ole American gumption and entrepreneurship.
Close readers of this space will recall that a similar what-does-eMeg-have-to-hide controversy over Romney BFF Meg Whitman’s attempt to conceal her taxes was a crucial plot twist in the California press corps’ months-long unmasking of what Newt might call the “pious baloney” of the “I’m just here to help California” image she portrayed on the campaign trail.
Significantly, the Washpost editorial board fired a shot across the bow of Mitt’s yacht on the tax issue this week. Take it to the bank that the MSM piling on won’t be far behind.
Jobs in a box: A fundamental underpinning of Mitten’s rationale for his candidacy is his self-described spectacular success in “creating jobs” while at Bain, an alleged accomplishment he has trumpeted since day one of the campaign.
Sadly for him, there’s not a shred of hard evidence to support the claim.
And to tell from Keach Hagey’s excellent explainer over at Politico – “Mitt Romney’s Bain Capital Days – a Black Box” – there won’t be any anytime soon, unless His Mitness Himself decrees it must happen.
Did he, as he claims, help create 100,000 jobs and thereby prove he knows how to do what the country needs most? Or were he and his fellow Harvard MBAs just “rich people figuring out clever legal ways to loot a company,” as Newt Gingrich claimed last week, or “vultures,” as Rick Perry claimed this week?
So far, the definitive and comprehensive answers to these questions have proven elusive to even the country’s best journalists because of the very private nature of private equity. The greatest privacy-destroying force known to man — an American presidential campaign — is going head-to-head with one of the most secretive redoubts of the American economy and for now, the door of Bain’s vault is holding.
“Bain, even for a private equity firm, is particularly private,” said Josh Kosman, author of “The Buyout of America: How Private Equity Is Destroying Jobs and Killing the American Economy.” “Most private equity firms are, because once you look behind the numbers, there is much they don’t want you to see.”
Hagey recounts the conscientious but failed efforts to mine some actual hard data by some of the best fact-testers in the business, including the Washpost’s Glenn Kessler, and also recalls that the late Ted Kennedy’s campaign demolished similar Romney claims on the way to skunking Mittens in the 1994 Senate campaign, by highlighting the human face of several of the deals now being attacked by Gingrich.
When Romney tried before — in his 1994 Senate race — to use the supposed job-creating power of private equity for political gain, the result was a PR disaster for the industry. His Democratic opponent, Sen. Ted Kennedy, fired back with damaging ads highlighting the strike at an Indiana factory of Bain-owned Ampad, which laid off workers and hired them back at lower wages with fewer benefits.
The pro-Gingrich super PAC attack videos — and whatever Democrats cook up for the general election if Romney wins the nomination — just pick up where Kennedy left off, highlighting the personal stories of laid-off workers.
Far from a partisan issue or media obsession, Romney’s questionable claims about job creation don’t seem to be passing the smell test among even such Tea Party favorites as the oh-how-we-miss-her Sarah Palin, who addressed the question thusly to no less a capitalist triumphalist than Sean Hannity:
Gov. Romney has claimed to have created a 100,00 jobs at Bain, and people are wanting to know, is there proof of that claim and was it U.S. jobs created for United States citizens? … And that’s fair. That’s not negative campaigning — that’s fair to get a candidate to be held accountable to what’s being claimed.
(P.S. Lest you think that Palin had a secret Clarity Bypass in the months since she dropped out of sight, she quickly provided an addendum to her comments that proved she’s still taking stupid pills: “Nobody should be surprised that things about Bain Capital and maybe tax returns not being released yet and maybe some record not being as transparently provided to the public as voters deserve to see right now — don’t be surprised that that’s’ all coming out today.” But we digress).
The heartbreak of brain farts: Mitt’s latest brain fart on the Bain controversy, expressed in an interview with Matt Lauer, is to charge that concerns about wealth inequality are simply “about envy.”
You know, I think it’s about envy. I think it’s about class warfare. When you have a President encouraging the idea of dividing America based on the 99 percent versus 1 percent—and those people who have been most successful will be in the 1 percent—you have opened up a whole new wave of approach in this country, which is entirely inconsistent with the concept of one nation under God. The American people, I believe in the final analysis, will reject it.
Envy? Really? As Rick Perry might say, “Oops.”
A just-released, don’t miss study from the Pew Research Center suggests that while Mitt’s “they’re all jealous of us” argument might be just the ticket for a Republican primary, down the road it may sound a bit insensitive to a huge majority of the country, including such important general election groups as independents, younger voters and, um, white people (not to mention anyone on the upside of the IQ bell curve).
The Occupy Wall Street movement no longer occupies Wall Street, but the issue of class conflict has captured a growing share of the national consciousness. A new Pew Research Center survey of 2,048 adults finds that about two-thirds of the public (66%) believes there are “very strong” or “strong” conflicts between the rich and the poor—an increase of 19 percentage points since 2009….
As a result, in the public’s evaluations of divisions within American society, conflicts between rich and poor now rank ahead of three other potential sources of group tension—between immigrants and the native born; between blacks and whites; and between young and old. Back in 2009, more survey respondents said there were strong conflicts between immigrants and the native born than said the same about the rich and the poor.1
?These changes in attitudes over a relatively short period of time may reflect the income and wealth inequality message conveyed by Occupy Wall Street protesters across the country in late 2011 that led to a spike in media attention to the topic. But the changes also may also reflect a growing public awareness of underlying shifts in the distribution of wealth in American society. According to the most recent U.S. Census Bureau data, the proportion of overall wealth—a measure that includes home equity, stocks and bonds and the value of jewelry, furniture and other possessions—held by the top 10% of the population increased from 49% in 2005 to 56% in 2009.
Next up: Mitt announces his plan to send truckloads of cake to Occupy protesters around the nation.
ICYMI II: Why we always keep C-Span on in the background. Talk about a national treasure.