August 10, 2012
-
Obama, Not Reid, Should Be Taking on Mitt Romney’s Tax Record
All credit to Matt Tiabbi for this one. I only cut and paste this so that people will read it and discuss it, as I know nobody would do were I to just post it as a link.
The ongoing war between Harry Reid and Mitt Romney is certainly interesting, as battles between congenitally unlikeable politicians go, but to me it misses the point. The Democrats want everyone in the world to know that Mitt Romney won’t release a decades’ worth of tax returns, and they apparently want voters to suspect that he didn’t pay any tax during that time. They’re using Harry Reid to spread that message, which makes enough sense politically, I guess.
But what they should be doing instead is hammering Romney on the missing returns, yes, but focusing even more on the returns he did release. We’ve known for seven months now, for instance, that Romney paid $3 million in federal taxes in 2010 on $21.7 million in taxable revenue, an effective tax rate of 13.9 percent. Which, as most people know, is less than half the rate most people pay on their income tax.
When Romney released these numbers, he said they were “entirely legal and fair,” and added, “I’m proud of the fact that I pay a lot of taxes.”
The Romney tax returns are a prime example of our increasingly two-tiered bureaucratic system, in which there is one set of rules for poor and middle-class people, and another set of rules for people like Mitt Romney.
The most common method of giving preferential treatment to the rich is through semantics. The old classic was that you called a rich kid blowing coke in his dorm room one thing, and you called a black street kid smoking crack something else, and the two got different penalties for the same crime – cocaine use.
Or, and this one is still true in some states, the rich white kid who uses a fake ID to get into a club gets hit with a misdemeanor and a fine, while an immigrant who uses a fake ID to get a job at a chicken plant gets dragged in for a felony and can get up to 15 years in jail. Both offenses are simple forgery, but one is also called felony fraud and you get real prison time for it.
In Mitt’s case, the money you and I make to support ourselves is called income and is taxed up to 35 percent, but the money Mitt makes raiding companies with borrowed money and extracting draconian management fees from captive companies that have no choice but to pay them is called “Carried Interest,” and taxed at a top rate of 15%.
The ostensible excuse for this outrageous difference is based upon a built-in cultural value judgment, which says that the work Mitt Romney does raiding companies with borrowed money is more valuable than the work ordinary people do laying asphalt or teaching autistic children. Here’s what one private equity spokesperson said by way of explanation for this difference:
Steve Judge, the president of the Private Equity Growth Capital Council, a trade group for private equity funds, said carried interest is a way to reward risk takers in a way that tax havens do not. “They don’t have the purpose of incentivizing risk taking,” Judge said. “That makes it inappropriate to blend carried interest with them.”
So the carried interest tax break is a way to “incentivize” the kind of work Mitt Romney does. One wonders then if the relatively higher tax rates paid by teachers and librarians and cops is … what? A disincentive? Anyway, it’s this skewed set of obligations that Mitt Romney thinks is “fair.”
The Obama administration, if it wanted to, could make a lot of hay over this. It could say, “Mitt Romney doesn’t want to release his tax returns for years and years during the last decade. But the years for which he did release returns, he paid a rate that’s less than half of what most ordinary American professionals make – and he thinks that’s ‘fair.’”
Now, Obama has gone after Mitt’s tax returns – a little. He’s released a few ads here and there, including one called “Makes You Wonder” that called Mitt’s use of carried interest in his tax return a “trick,” a semantic move for which Obama was criticized, since it was actually nothing of the sort. Mitt Romney’s ability to pay a top rate of 15% for his work was no trick at all but a fully-legal expression of the values of our current political system, a system, again, that Mitt Romney is “proud of” and thinks is “fair.”
The reason the Obama administration hasn’t gone after this aggressively is probably the same reason it hasn’t fought harder to repeal that carried interest tax break (which Obama incidentally promised to do four years ago), and the same reason that everyone from Corey Booker to Bill Clinton has urged Obama to lay off the theme of private equity thuggery in his campaign against Romney. Big-time politicians are still afraid to explain to the American people how exactly it is that many Wall Street firms make their money, because they’re afraid to lose access to the crumbs those firms sometimes toss their way.
In the case of Romney, what we’ve mostly heard is that he’s a turnover specialist who sometimes creates jobs and sometimes eliminates them – a kind of ideologically-neutral efficiency consultant who takes a cut when poorly-run companies cut out the fat. The Obama ads about Bain have been emotionally effective, but they’re still frustratingly vague about the actual mechanics of these takeovers. We learn from these ads that a bunch of rich guys took over plants and fired workers, but what we don’t learn is how companies like Bain raise the money for those takeovers, why the plants subsequently become cash-poor, how this industry works generally, and not just at Bain.
In fact the takeover method espoused by Bain and many other private equity firms is a lot closer to the Tony Soprano-takes-over-Davey-Scatino’s-sporting-goods-store “Bust Out” model (and we’ll be getting into this more in the magazine in upcoming weeks) than it is to anything like legitimate consulting.
Barack Obama is one of the few politicians with the communication skills to explain this to middle America, but he’s refusing to go there, probably because he’s still hoping for a post-election rapprochement with Wall Street. He wants to go after Bain Capital, but not private equity in general; he wants to go after Mitt Romney’s missing tax returns, but not the tax returns of all people like Mitt Romney.
That makes him look weak and indecisive, and it makes his message confusing.
In the meantime, there are going to be a lot of these battles-by-proxy, in which surrogates like Harry Reid try to egg Romney into releasing his tax returns. There’s no doubt the returns are embarrassing – otherwise Romney would have released them by now. And there’s no doubt that Romney should take heat for not releasing those returns. But there’s enough information already for Barack Obama to tell a powerful story about wealth and privilege to most ordinary Americans. He just doesn’t want to tell it.
Comments (10)
Matt is great
While I would concede that there is a place in the economy for companies like Bain, I disagree that they’re taking on that much risk if the returns are so great that they become multimillionaires. It’s a message that just doesn’t jive.
The biggest issue – the white elephant, if you will – is the role of money in politics and the fact that in order to be anywhere near electable is to have a lot of money – money that Wall Street has and is careful to distribute.
Hence why Obama – who looks increasingly likely to be the first President who is out-raised by the opposition – is hesitant to attach the piranha effect of companies like Bain: he’s still hoping for those “few crumbs” to be tossed his way.
The entire financial system is in dire need of root-and-branch reform, but it’s not going to come any time soon.
i disagree with the author on several points:
1) it is very important that voters can find out about Romney’s previous tax returns. Romney has demanded the same from others during previous campaigns he has entered. he once insisted even the spouse of one of his opponent’s should release years of tax. more importantly is the fact that when he ran and lost a Senate bid against Ted Kennedy Romney played the same tune by refusing to release his tax returns then. there was suspicion that Romney had filed taxes as a resident of Utah and not Massachusetts as he claimed. Romney insisted his tax returns were all on the up and up, he wasn’t hiding anything and that voters should just trust him. sound familiar? eventually it was discovered Romney hadn’t filed his returns as a Massachusetts resident as he had claimed and his campaign manager, a man who is on his campaign again now, admitted the Romney camp had been lying all along. also, several weeks ago on a talk show Romney’s wife had the arrogance to say regarding his taxes, “We’ve shown you people enough for you to know about us and the way we live”. He’s running for the highest office in the nation to be leader of the free world and she tells us the voters they’ve shown us enough?
2) i keep hearing people complaining about what Obama hasn’t done yet. Obama came into office facing the worst economic disaster since the Great Depression. the first piece of legislation he signed (i believe he signed it on his first day. it could have been his second or third) was the Lilly Ledbetter Act which gives women legal recourse if they discover they are being paid less than men for equal work. Obama rescued the U.S. auto industry against the advice of even some in his own administration. GM is now number 1 in the world and has paid back the loan with interest, a great thing for our economy all around. Obama signed more legislation during his first two years than any other President ever. he fought for and got healthcare reform by pressuring Congress to keep on it. that was a promise he made and kept and as more and more of healthcare reform takes effect more and more people are benefiting, costs are already coming down for both individuals and many small businesses and in the long run it will be increasingly good for the economy. healthcare costs in this country were spinning out of control. then remember when Somali pirates took U.S. hostages at sea? remember during the week that followed republicans used the opportunity to tell everyone Obama is weak? meanwhile Obama quietly oversaw the operation and gave the order for special forces to pull the trigger. the captain of the U.S. ship was successfully rescued after which Obama’s critics suddenly became silent, not even giving him credit.
all of this time Obama had quietly and behind the scenes ratcheted up the pressure on finding and getting Bin Laden, another promise he made. as we all know Obama made a high risk decision in getting Bin Laden by sending Navy Seals into Pakistan instead of using drones. he made the decision on his own and against advice of some of his advisers who told him it could be the end of his political career should the risky Navy Seals operation go wrong. anyone who doubts that need only ask John Brennan who called it one of the gutsiests decision made by any President in recent history. Carter still gets blamed for the failed helicopter mission to rescue hostages in Iran at the end of his Presidency. in the face of what could have become insurmountable political damage Obama decided to send in the Seals because 1) he was concerned about collateral damage a drone attack in a populated area of Pakistan would have caused and 2) in the case of a drone attack we would have had no proof that Bin Laden was actually killed. i think that one decision alone cuts through the idea Obama makes decisions based on political gain alone.
while all of this was going on the LBGT community was becoming more and more vocal against Obama because he had not yet overturned don’t ask don’t tell in the military. imagine you’ve promised to mow the lawn, do the dishes, pick up the kids, weed the garden, wash the car, take out the garbage, repair the roof, clean the gutters, fix the boiler, run to the grocery store, trim the hedges and paint the fence. you’ve completed the first 5 tasks and are continuing to work on the ones yet to be done and there’s someone yelling at you because numbers 7 and 8 haven’t been done yet. Obama did overturn don’t ask don’t tell but he had to get other things done first like ensure that in spite of republicans in Congress deliberately sitting on their hands on the economy there would be now 29 straight months of private sector job growth.
3) Obama has been pressing Romney on his taxes and as more facts about his taxes come out Obama has been pressing more. yes the Obama ads don’t explain all the tricks and loopholes people like Romney take advantage of that most of us can’t. you couldn’t possibly explain all of that in a couple of 30 second ads. if people are basing what they know about our economy and tax system and the candidates based on 30 second ads they see during commercial breaks of Jersey Shore and American Idol…well need i say more? people need to watch and read investigative reporting because all of this information is out there, spoken about and debated over but not by Suki.
4) the last point i’ll make is this. a young woman told me she wanted to take on an organization. she was very upset about the org’s practices. she wanted to do this alone and in a direct manner because it was her right to do so as she said. for one thing this would have been analogous to flying a piper cub alone to take on an aircraft carrier. we happened to be walking in Manhattan as she told me. as we stood on a corner waiting to get the walk sign so we could cross a busy street i asked, “Have you ever gotten the walk sign but as you were about to step off the curb a truck is making a turn into your path? you’re not sure if the driver sees you but he’s not showing signs of stopping. sure, as a pedestrian you have the right of way but do you say it’s your right to cross the street walk head strong into the path of the truck?” i could literally see the light go off in her head, almost literally. she got the message and wound up rethinking her plan.
yes we want Obama to do everything we want him to do right this minute. kids want mommy to drop everything and take them to the toy store right away. the thing is Obama has to manage his assets, see what takes precedence, assess what is possible to get passed through the worst most reticent do-nothing U.S. Congress in history rather than do something at the moment that will be a waste of time right now. Obama has cut taxes to the middle class by an average of about $3,000/year. tax rates for the middle class are the lowest they’ve been in 30 years. he’s cut taxes to small businesses nearly a dozen times. he’s fought for and gotten greater affordable preventative healthcare for women against fierce opposition from the other side of the aisle….remember Rush Limbaugh calling Sandra Fluke a slut and a prostitute over the issue of women’s healthcare? all these things i’ve mentioned and more yet we still complain about something like 30 second Obama ads because they don’t explain the intricacies of carried interest? and anyway i think most people get what’s going on with Romney’s taxes and why Romney is refusing to make them public as every other President and Presidential candidate in recent history has done.
btw, the Romney camp has argued John McCain only released 2 years of his tax returns during his Presidential run. they use that as Romney’s justification. there’s only one problem. McCain released those two year as a catch-up. he has released his prior tax returns since he’s been in the Senate. Romney can’t tell the truth.
Until now, I thought ‘hoovering’ was something that only happened in porno movies.
Obama should not engage in more mudslinging. For one thing, it’s not presidential. For another thing, he has Biden to serve as an attack dog. Joe? Where are you? But Harry Reid is handling it well. And he is so confident that Mitt will not release more tax returns that he (Reid) is willing to frame the narrative himself. In the worst case Romney will come clean, a welcome outcome.
“You know I think it’s fine to talk about those things in quiet rooms,” says Mitt, on the topic of wealth envy. I do not believe he paid zero taxes. Probably Mitt wants to conceal a record of corruption or theft. Mostly, he wishes the press would stop being so noisy.
Joe? Where are you?
Good post. What I wonder about most these days, is this, is this the best the GOP can do? I’ve heard of flaming out with your head held high, and I wonder if that’s what they’re doing, or maybe there is some other plan or maybe just hoping for something bad to happen to Obama. I mean just how good is Obama’s security, I’d be very concerned about that if I were him. If he moves ahead in the polls too far, some right wing Bubba might take a pot shot at him. I’ve felt like I’m on the edge of my seat since he was elected.
The thing about the taxes that Mitt want’s to and will keep secret is his shady way of acquiring and stripping companies down. He’s a kind of bungling Gordon Gekko.
Oh no, I read more stuff that irritated me. Merely reading the words “Jersey Shore” makes my eyes roll and makes me fear for a country whose citizens are addicted to watching some of the fakest people on earth, do…well, nothing as far as I can tell. It’s more bizarre than politics.
obama put lot of people out of work he try hard to bankrupe the coal mine and doing and going after the eleat plant that burn coal he going to make eaver thing to go up wear nobode can aford it i be vote for Momey
Your work forces out your followers for blog commenting.
good roof coatings
Cool website buddy I am gona suggest this to all my list of contacts.
bad credit business loans