Robert Reich: Mitt Romney IS the Economic Crisis

[kpete]

The real issue here isn’t Bain’s betting record. It’s that Romney’s Bain is part of the same system as Jamie Dimon’s JPMorgan Chase, Jon Corzine’s MF Global and Lloyd Blankfein’s Goldman Sachs—a system that has turned much of the economy into a betting parlor that nearly imploded in 2008, destroying millions of jobs and devastating household incomes. The winners in this system are top Wall Street executives and traders, private-equity managers and hedge-fund moguls, 
and the losers are most of the rest of us.

* * *

The biggest players in this system have, like Romney, made their profits placing big bets with other people’s money. If the bets go well, the players make out like bandits. If they go badly, the burden lands on average workers and taxpayers.

* * *

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

http://www.thenation.com/article/168623/mitt-romney-and-new-gilded-age#

[rurallib]

1. he nails it!

[malaise]

2. MUST READ but

He forgot Bob Diamond

[geckosfeet]

3. Good read. A little economics history, and the short form bio of Rmoney.

Mitt Romney and the New Gilded Age

We've entered a new Gilded Age, of which Mitt Romney is the perfect reflection. The original Gilded Age was a time of buoyant rich men with flashy white teeth, raging wealth and a measured disdain for anyone lacking those attributes, which was just about everyone else. Romney looks and acts the part perfectly, offhandedly challenging a GOP primary opponent to a $10,000 bet and referring to his wife's several Cadillacs. Four years ago he paid $12 million for his fourth home, a 3,000-square-foot villa in La Jolla, California, with vaulted ceilings, five bathrooms, a pool, a Jacuzzi and unobstructed views of the Pacific. Romney has filed plans to tear it down and replace it with a home four times bigger.

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.

Not incidentally, social Darwinism was also the reigning philosophy of the original Gilded Age, propounded in America more than a century ago by William Graham Sumner, a professor of political and social science at Yale, who twisted Charles Darwin's insights into a theory to justify the brazen inequality of that era: survival of the fittest. Romney uses the same logic when he accuses President Obama of creating an "entitlement society" simply because millions of desperate Americans have been forced to accept food stamps and unemployment insurance, or when he opines that government should not help distressed homeowners but instead let the market "hit the bottom," or enthuses over a House Republican budget that would cut $3.3 trillion from low-income programs over the next decade. It's survival of the fittest all over again. Sumner, too, warned against handouts to people he termed "negligent, shiftless, inefficient, silly, and imprudent."

When Romney simultaneously proposes to cut the taxes of households earning over $1 million by an average of $295,874 a year (according to an analysis of his proposals by the nonpartisan Tax Policy Center) because the rich are, allegedly, "job creators," he mimics Sumner's view that "millionaires are a product of natural selection, acting on the whole body of men to pick out those who can meet the requirement of certain work to be done." In truth, the whole of Republican trickle-down economics is nothing but repotted social Darwinism.

Mitt Romney and the New Gilded Age

If you think Reich's piece is hyperbole and exaggeration - think again. For real this time.

An Rmoney presidency will impoverish the nation and enrich a few of his monumentally rich friends across the globe. They will not necessarily be American because plutocracy knows no borders. But make no mistake - an Rmoney presidency will see a resurgence of these plunderers.

[INdemo]

10. But yet there are middle class,and poor,union members and a few union officials that

will vote for this ..this corporate puppet...
If Romney should win (and I dont think he can*) our Democracy or whats left of our Democracy is done,finished,over,tear up the bill of rights,the Constitution because they will be wortless..

* Dont believe he can win the election but with the Electronic machines he can steal it and there are millions out there hiring the lawyers to plead their case that could provide the coverup...

[DallasNE]

23. The Gilded Age

Interesting, because on June 29 I posted on Thinkprogress that Romney was looking to roll back things to The Gilded Age and not just Obamacare. Here is my post.

Romney isn't looking to just repeal everything Obama has done. He would go after everything LBJ put in place (the Texas GOP platform calls for the repeal of the Voting Rights Act), even the acts put together by HST and FDR. In fact, it looks like Romney would like to go all of the way back to the Gilded Age. http://en.wikipedia.org/wiki/Gilded_Age That is, if you can believe a word he says -- after all, he always has the Etch-A-Sketch handy.

[Wounded Bear]

4. Been saying this for a while, now...

Why would I vote for a guy that is part of the problem? People like Rmoney put us into this mess.

I'm to expect that he has a solution, when he makes his fortune on prolonging the crisis?

Doesn't make any sense.

[DCKit]

16. Keep betting on RMoney, eventuallly he'll pay off.

Trust me. I have a sterling record on Wall St.

You know I'm lying, right?

[Martin Eden]

5. K&R n/t

[hay rick]

6. Reich's conclusion- calling out the Democrats.

"So why don’t Democrats connect these dots? It’s not as if Americans harbor great admiration for financial dealmakers. According to the newly released twenty-fifth annual Pew Research Center poll on core values, nearly three-quarters of Americans believe “Wall Street only cares about making money for itself.” That’s not surprising, given that many are still bearing the scars of 2008. Nor are they pleased with the concentration of income and wealth at the top. Polls show a majority of Americans want taxes raised on the very rich, and a majority are opposed to the bailouts, subsidies and special tax breaks with which the wealthy have padded their nests.

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.

Yet this admission would require that they propose ways of reversing these trends—proposals large and bold enough to do the job. Time will tell whether today’s Democratic Party and this White House have the courage and imagination to do it. If they do not, that in itself poses almost as great a challenge to the future of the nation as does Mitt Romney and all he represents."

[INdemo]

11. Perfect..thank you for that

[Amonester]

7. The Biggest Ca$ino: "If they go badly..."

"If the bets go well, the players make out like bandits. If they go badly, the burden lands on average workers and taxpayers."

Something is missing:

If they go badly, the burden lands on average workers and taxpayers, but the players STILL make out like bandits (because they R).

[Overseas]

8. K&R. Well said.

[ErikJ]

9. Low tax rate breeds unlimited greed.

The top tax rate needs to be over 50% at least to stop it. An economist says that every time the tax rate goes below 50% the economy forms unsustainable speculative bubbles. I cant remember his name now but T. Hartmann talks about this guy's priniciple all the time.

[Poiuyt]

12. Every time Robert Reich puts pen to paper, he absolutely NAILS it!

The man is brilliant and has an uncanny ability to see the Big Picture. For the life of me, I can't understand why Obama doesn't have him as one of his top advisors.

[Gregorian]

13. What a brilliant man Reich is. We revolted to get away from the likes of Romney. Anti-American.

[Auntie Bush]

14. "Romney, made their profits placing big bets with other people’s money."

No wonder Romney bet Perry $10,000 without batting his eye. He's so used to betting millions that $10,000 seemed like chump change. He's the one who's going to end up being the CHUMP!

[lonestarnot]

15. He abused Seamus too; think what he'll do to you.

[moondust]

17. Don't forget Michael Milken.

Mitt and the junk bond king

http://articles.boston.com/2012-06-24/business/32395686_1_mitt-romney-drexel-employee-junk-bond

It was at the height of the 1980s buyout boom when Mitt Romney went in search of $300 million to finance one of the most lucrative deals he would ever manage. The man who would help provide the money was none other than the famed junk-bond king Michael Milken.

[Cali_Democrat]

18. K&R

[quaker bill]

19. The big point that most miss

"They mostly bet with other investors’ money, including the pension savings of average working people"

First, having worked close to these individuals, this statement is correct. Generally the most skin they put in any game is 10% of the upfront costs, even when they have wealth to cover all of it. 90% of the money is borrowed. They do it through a shell LLC in case things go poorly. If things go really bad, they lose their 10%, and others lose the 90%. If things go bad all over at the same time, the taxpayers pick up the 90% in a bail out.

So the question arises, why do these "job creators" need to be rich when they do their business on 90% other people's money? Writing the tax code to leave them more and more money does nothing, because they only ever use a tiny fraction of their money to do business. No rich person in their right mind puts much of the fortune at risk, ever. Those that do are generally not rich for very long.

[Dalai_1]

20. Thank you! great post K&R n/t

[tpsbmam]

21. If the bets go badly, they still usually make out like bandits.....

he left that really important bit out! Hell, a prime example is Romney at Bain!

[Vattel]

22. wow, talk about nailing it