It’s as predictable as vultures at a carcass — when a wealthy Republican is running for office, the press will make his wealth a handicap. Recall that when George H. W. Bush was running in 1988, he was derided as “preppy.” George W. Bush was the undeserving scion of the ruling class, we were told, never mind that he had succeeded in business on his own. Though John McCain had been a fixture on the national stage since 1980, no one had paid much attention to his wealth until he was the Republican nominee, at which point his many houses suddenly became a matter of profound national importance.
Democrats, of course, are permitted to be rich without fear of undue scrutiny. John F. Kennedy was wealthier than Mitt Romney, or he would have been had he lived to collect his inheritance. Lyndon B. Johnson was born poor and died very rich. He didn’t earn his money in the private sector. He used political influence to first purchase and then maintain monopolistic radio licenses in his wife’s name.
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There wasn’t much fuss about John Kerry’s great wealth in 2004. Kerry didn’t earn his fortune either, but secured it through two advantageous marriages. Teresa Heinz Kerry is rumored to be in the billionaires’ club. Good for her, though she didn’t earn it either, but married the heir of the ketchup fortune. John Kerry was an advocate of raising taxes on the rich, but he, like Warren Buffett, declined to contribute more than required to Uncle Sam. In fact, he was caught mooring his yacht in Rhode Island so as to avoid Massachusetts taxes. Oh, and before he married Teresa Heinz, there were a number of years in which Senator Kerry donated nothing at all to charity.
Now it’s Romney’s turn, thanks not just to the press but to Newt Gingrich, who gleefully mouths every left-wing jibe that proves handy. In Florida, he disparaged Romney as a Swiss-bank-account-holding “automatic $20 million a year” guy. Gingrich, who earned his own not-inconsiderable fortune (Tiffany’s account, anyone?) by selling influence, is joined in his dismay at Romney’s larger fortune by other exceedingly wealthy men. NBC’s Brian Williams (annual salary: $13 million) shared the news about Romney’s tax returns this way: “He did it to help stop the questions about his wealth, but in releasing his taxes, he reveals what most Americans will regard as unimaginable wealth.”
Oh “unimaginable wealth” — how shocking. The amount that Brian Williams contributes to charity is not public knowledge. But Newt Gingrich’s contributions are available. Though his adjusted gross income was $3.1 million in 2010 (is that “imaginable wealth”?), Gingrich donated only $81,133 to charity, or 2.6 percent of his income — below the average rate for his income group.
Gingrich and liberals seem to think that paying taxes is “patriotism” — to quote Joe Biden, who gave a grand total of $368 annually to charity in the decade before 2008. By their own standard, their patriotism is a little rusty. Treasury Secretary Tim Geithner was only the most prominent, but far from the only Obama appointee to acknowledge that he hadn’t paid the taxes he owed. And the IRS recently announced that 36 members of President Obama’s executive-office staff owe the government $833,970 in back taxes.
Conservatives think people should obey the law, and that includes paying taxes. But we don’t worship the state or its “greedy hand”(see Amity Shlaes).
Far from having reason to be embarrassed about his wealth, Romney has every reason to be “unimaginably” proud. He didn’t inherit his money (he gave away his inheritance), and he didn’t earn it by parlaying his government post into contracts for services as a “historian.” He earned every penny through his own talents in the private sector. He then paid all the taxes he was required to pay.
Beyond that, Mr. Romney’s tax returns reveal the most generous charitable donor to run for president in recent history. The Romneys donated about 14 percent of their income to charity in 2010 and about 19 percent in 2011. The average donation for people at the Romneys’ level of income is 6 percent.
Would Romney’s money have done more good if he’d forked those extra millions to the IRS rather than to the Mormon Church and the other charities they selected? Well, that would certainly have provided a few more bucks for Solyndra and the urgently necessary high-speed rail from Fresno to Bakersfield. But, on balance, private charities are probably a better bet for improving the world.
It's unpatriotic to have $3 million in a Swiss bank account. That money works better here. "Buy foreign -- it's a better ROI" is no slogan you'll ever hear from a patriotic American. Americans feel varying degrees of reluctance when they buy foreign stuff, as we should. Romney had every opportunity not to park his money overseas and chose not to.
Mike. your kidding, right?! Estimated 1.5% of his total investments in Swiss Bank account?! 1.5%? This is a lame argument. He made his money by funding start up companies (Staples) and working on "turn around" venture capital, which there is a sizable risk of failure. This should not be an issue with Gringrich or anyone else.
MikeB,
Have you not heard the NUMEROUS times Mr. Romney has said ALL of his finances are held in a blind trust? Do you understand what that means? It means that he wanted to maintain the upmost level of integrity and turned over all control of his finances to a firm that determines where his money goes and what investments he holds. This allows Mr. Romney to avoid all conflicts of interest, and avoid any appearance of impropriety in making money off of legislation (VISA and Speaker Pelosi, anyone???). Mr. Romney has NO SAY in the fact that his money is in a Swiss bank account. BLIND means he cannot know, nor have any influence over where that money is. Reporters discovered the location of the money, and made a big hulabaloo over it. I'm sure Mr. Romney's adversaries will make a big deal about it. I see the blind trust as a move that shows the level of integrity Mr. Romney has, a quality sorely lacking in another major candidate, I might add. Just sayin'
MikeB,
While you are correct that offshore bank accounts (be they Swiss of Cayman Island) might appear unpatriotic, you cannot lay the blame for their existence on Mr. Romney. He has explained many times that before he decided to enter politics he placed all of his money in what is called a blind trust. That means a firm manages all of his investments and accounts. They decide where to put his money, and where to invest his money. This allows Mr. Romney to maintain the upmost level of integrity and avoid any semblance of impropriety (google Speaker Pelosi and legislation regarding VISA where she made quite a bit of money by purchasing stocks in VISA before passing legislation for an idea of how politicians can so easily fall into this trap). Mr. Romney has no say in the fact that those bank accounts exist, and probably had no knowledge of their existence before the press discovered them. That is why the trust is called blind -- Mr. Romney must have no knowledge of how his money is being managed, and can have no say in the opening or closing of accounts. Otherwise, it is not blind.
Lay the blame for his accounts at the feet of the firm that manages his funds, but not at his feet. And while you are at it, give the guy props for once again showing us that the he has integrity. After all, it is a rarity in politics, these days.
Do you have any foreign investments? Any at all? Heck, in my own company's 401K plan there's an Asian mutual fund, a European mutual fund, and so on (as I'm sure are in many 401K plans). I don't see a difference here--in a global economy, people have money parked all over the globe, buy foreign products, and travel to foreign countries--does that make them unpatriotic?
I suppose some would say that one should only buy American products, travel in the USA, and use the Almighty Dollar under all circumstances.
Of course there's nothing 'wrong' with Romney's wealth - every think in your article is true, until the last line ... "You’d think Gingrich would understand that."
Mona, how can you and the other staffers here be so completely eaten up with Newt-bashing that it makes you blind to the bigger issue. It's 'NOT ABOUT NEWT - IT"S ABOUT OBAMA. Do you not think that Obama's BillionDollarCampaign isn't going to make Romney's wealth a huge talking points issue in their class warfare strategy? It will be relentless, and it will resonate with a zillion people in the country who are the products of government schools and the resultant soft/fuzzy thinking. So the question isn't about Romney's wealth (as a matter of fact, none of the questions are about Romney's 'anything' - he's a fine man and would make a decent/good President) - the question is about Romney's ability to deflect/dismiss the attacks without looking defensive about it and to reach/connect with the American people who are looking for competent leadership that doesn't moonwalk to the attacks of the Left.
The only question that matters in 2012 is "who is best able to defeat Obama in the general election." Nothing else except removing Obama from office matters this year.
You guys should quit contemplating your navel and get outside the Beltway more. Newt's caught fire not because people are dumb, but because people are 1) clear eyed that we're in serious trouble that makes these times not 'normal times', and 2) they are scared. That none of you seem to recognize that we have reached an existential moment is not confidence inspiring among a lot of your readership.
There is the small matter of the undisclosed money being sheltered in the Caymans that Romney has refused to discuss. The Caymans is a tax haven for the wealthy, the drug dealers, organized crime, and the like.
How are the monies that are hid overseas creating jobs here in the United States? Everybody I ever heard of that has a Cayman account did so to keep their money as far away from the American justice system as they possibly could; would you really want to elect such a person to the office of the President?
Where did you ignorant products of our school systems get the idea that all monies rightfully belong to the government? This is what comes of throwing money at teachers unions. More, always more, except in achievement.
LBO 101:
1. Opportunity identification
2. First topic of discusssion: How many layoffs are required to drive sufficient increase in balance sheet leverage to generate loans for dividends that make partners whole on our initial investment?
3. Decision point: Go or no go
4. If no go, move to next opportunity; If go, then submit loan package to select banks who will earn large fees for making, processing, and servicing the loan
5. With loan secured, layoffs begin posthaste
5. Next Step: use proceeds from loan to pay a quick dividend to LBO partners--making them whole on their original investment--and use the balance for corporate operations
6. Manage costs with extreme oversight going forward
7. Continue regualr dividend payments to LBO partners going forward
8. Pay fees and bonuses to LBO partner going forward
9. Drive cost-management practices into the corporate culture
10. Eventually, exit the deal through a sale or bankruptcy
11. No matter what happens, the LBO partners have made back their original investment (usually with the first dividend) plus management fees, bonuses, and capital gains (in about 50% of the deals)
12. Note: every single payment to the LBO partners has a tax angle that makes the deal work to the advantage of the LBO partners--not the corporate entity that may or may not being turned-around
That's how LBOs work. It's definitely capitalism. But it's the kind of capitalism that can occur in ANY social welfare state with a Byzantine tax code that creates a perfect storm for the LBO artiste. What's amazing when you think about it is how Mitt Romney could simply never resist firing people for the express purpose of freeing up capital that would be used to pay himself and his partners a big dividend right at the outset. Mitt may be a capitalist but no one should impute moral superiority to him. If we didn't know it was Mitt, a devout man, we would simply see a man with Promethean avarice, technocratic skill, and a skosh of generosity to a very small select number of charities in which he has a vested interest.
It does seem that Ms. Charen and most conservatives in the media know little or nothing of the actual mechanics of a leveraged buyout, how it works, who benefits, who suffers, and why. Conservative media falls prey to a symbolic-chaining that equates any capitalistic activity with virtue.
Mitt may be just what the country needs but that we've settled upon green-mailers and LBO specialists as saviors is supremely ironic for anyone who worked on Wall Street in the mid-eighties (like I did) when those same people were universally vilified and even jailed in some cases. Man-o-man.
Bravo. That being said, I tried a serious, from-the-inside post on carried interest a few days ago and I'm not sure anyone read past the first line. They don't want to know. They just want to believe what they believe, dayum the facts.
To give you a sense of how unknowledgeable my conservative friends are about how our system of capitalism works take Mitt's actual tax rate--from Rush to NRO all claim that Romney's real tax is at least 50% because he receives his dividends after the corporate tax is applied (35+15=50). Good grief, do any conservatives at all understand the definition of marginal tax rate, deductibility of corporate debt interest payments, SGA, insurance, corporate expenses, and the coup de grace of carried interest plus the ability to use tax-deferred IRAs and offshore investment accounts as tax-advantaged wealth accumulation vehicles--all legal and "carefully managed" as was smugly pointed out by the man himself. To his credit, Mitt is nothing if not carefully managed.
Mitt is a wealth accumulator not an income earner so a better way to figure Mitt's charity is to calculate his annual giving as a percent of his net worth in the year of the gifting. Be sure and include the value of the IRAs and offshore accounts, blind trusts, etc. When you do that it appears that Mitt's charitable contributions are a very legal 1% at best, making him a piker like everyone else.
Mitt is no better a person than anyone else in the political arena but Obama will have far less trouble demonizing Romney in the fall than anyone other candidate. The specter of conservatives wagging to defend Romney is comic-opera of no mean proportion. It is very risky strategy for Romney to shout that he's proud of what's he's done. It's a big ole fat one right down the middle.
I'll bet anyone at NRO $10k that Obama will understand LBOs come the fall and exploit Romney quite easily.
In reply to those who complain about money off-shore:
At this time we have (I can never remember the exact number) less than ten major banks. FDIC covers $250K in each bank, although at the time of TARP it was $100K in each bank. Past that amount, one puts money in treasuries (have you seen the interest rates lately?) or in foreign banks - foreign banks if one wants to use it to buy and sell things. Don't forget - even though most banks that close are taken over by another bank and funds greater than $250K survive - those with amounts greater than the ceiling in Indy Bank lost that money.
Mona, again, you are terrific! Nail-on-the-head terrific! I don't often use exclamation points, but I like your mind. You understand things in a simple, straightforward way and you express them in a simple, straightforward way. There is no "bias" in your thinking, it's just that you THINK. Too bad a lot of other NRO contributors don't. Deadheads all. You're the bright one! The only bright one left standing at NRO. I mean that. I don't like to gush, but when I recognize intelligence, a very rare commodity, I feel like shouting it from the rooftops!
Okay, enough praise. I'm a middle class guy with a family, toward the end of my career and old enough to have a few grandchildren. I'm very well educated, but never made any money; I just made a living. I'd say we're around the median in personal wealth. It's not particularly my fault that I didn't make money. My interests and personality just didn't lead in that direction. I'm reasonably comfortable with that. I don't particularly envy those who've made money and I certainly don't covet their wealth. I admire entrepreneurial people, because I'm not one of them. They're an interesting type of personality that has played an important role in building America. Wealth aside, I think I'm just as important in my way, but I haven't shared in the great American dream of wealth. Nevertheless, I'm grateful for my house and home, the possessions I have, the food I eat and the clothes I wear. I don't fault others for obtaining more. What they do with it is between them and God, if they're believers, and, if not, between them and their conscience. Romney's been honest in obtaining his wealth and generous in its use. How can Americans, I mean AMERICANS, criticize that? Get off the envy and covetous bandwagon. Be grateful for what you have. Work hard and you'll have something in this great land. It may not be what others have, but don't compare yourself to "others", just do what you need to do to live and be honest and decent about it. While you're at it, try being generous and fair to others, rich and poor.
American free enterprise is built upon self-interest. If you want to call that selfishness, it's your right to choose the perspective. In a perfect world.... However, the world isn't perfect and human beings aren't perfect. We're flawed and are not usually motivated by altruism, unless, of course, all of our needs and then some are met. It's a tough existence, but it teaches us some things that, I believe, are important to our eternal development. Romney, clearly, uses much of his money to benefit American causes and institutions. That money is spent here and develops America. You seem to believe that if any of one's money is spent outside America, it's somehow selfish. That's, of course, ridiculous. Americans voraciously engage in foreign spending at home and abroad, just as citizens of other nations engage in foreign spending to one degree or another. The practice has grown as the global economy has become more accessible and integrated. Romney is no more unpatriotic than someone who buys a Japanese or German car. Don't be dim.
As for envy, this "beef with Romney" is most certainly, in its populist sense, about envy. It's driven by the left's, Gingrich's, et al's despicable use of class warfare emotions. That is, most certainly, raw envy.
Romney's wealth is more to do with his fathers political poisitions/connections than Mitts omnipotence in wealth management. Keeping your wealth shielded overseas is an individual prerogative, but hiding the extent of your wealth in a offshore account like the Cayman's appears quite sinister - if not fully un-American.
I am nearly convinced the NWO (New World Order) has pegged the prospect of its survival on seperating we the people from these truths we hold to be self evident; the reason why the decadent elite is on board the SS team Romney is because Romney has long been a shipmate of theirs.
Get real MikeB, anybody who shops at Wal Mart, buys a new TV or a pair of athletic shoes is "sending their money overseas" - the finance/banking/investment industry is no different.
Wealth is not a problem - hard work is not a problem - these are all good things and should be encouraged. The problem is that there is an income redistribution in this county and that hard work is discouraged and taxed at much higher tax rates than investment and money-managing.
There is income redistribution in this country - via government-imposed taxes - from the middle and upper middle class (who pay 25-35% in federal income taxes + payroll tax) to the super rich (who pay only 15% taxes and only on income, even from salary (carried interest) that they are unable to hide in one of the numerous loopholes and tax shelters available to them).
The only way to fix this income redistribution and bring tax fairness is:
1. Tax all income at exactly the same rates. The income of the super rich (capital gains, dividents, salaries for money managers/carried interest) should be taxed at the same marginal rates as regular income - just as when federal taxes were originally introduced in the USA.
2. Close ALL tax shelters and loopholes that the super rich use to hide a large part of their income (Cayman/Swiss accounts, hundred-million-$-tax-free IRAs, etc.)
3. Eliminate the AMT which now mostly targets the working middle class!
4. Introduce new tax brackets for incomes over $1M and $10M. When federal taxes were originally introduced in the USA only incomes of over $1.2M (in 2011 adjusted $) were taxed, at progressive rates, but now there is not even a separate tax bracket for incomes larger that $1M.
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