Mitt and His Buddies Looted Almost $10 Trillion from Real Economy

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The Tax Justice Network just released an updated version of a report showing how much money gets siphoned out of the real economy into tax shelters: conservatively, $21 Trillion, and possibly as much as $32 Trillion.

I’ll have more to say about what the report says about the how the super wealthy have done in the last decade and which banks have been helping to loot the real economy.

But for now, consider where Mitt Romney fits into this picture. TJN shows that it’s really just the richest of the rich–those 91,186 people who make up the top .001%–that account for the biggest chunk ($9.8 Trillion) of this looting.

Not only is Mitt a member of that tiny club. But his net worth–commonly reported to be $250 Million but, given all the secrecy, possibly much more–puts him well above the mean $183 Million that members of this club enjoy.

And Mitt and his buddies in this very elite club have stashed 18% of the total liquid net worth of the world in places where not only can’t potential presidential voters know about it, but it also remains outside the kind of circulation that would really contribute to real economic growth.

Last week, Obama released an ad that said Mitt is the problem. TJN shows just what a big problem Mitt and his buddies really are.

Yesterday’s Some-Sayers Have Become Today’s Fact-Checkers

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Paul Krugman makes a very good argument why the Bain attacks on Mitt Romney are necessary.

There is, predictably, a mini-backlash against the Obama campaign’s focus on Bain. Some of it is coming from the Very Serious People, who think that we should be discussing their usual preoccupations. But some of it is coming from progressives, some of whom are apparently uncomfortable with the notion of going after Romney the man and wish that the White House would focus solely on Romney’s policy proposals.

This is remarkably naive. I agree that the awfulness of Romney’s policy proposals is the main argument against his candidacy. But the Bain focus isn’t a diversion from that issue, it’s complementary. Given the realities of politics — and of the news media, as I’ll explain in a minute — any critique of Romney’s policies has to make use of his biography.

The first point is that voters are not policy wonks. They do not go to the Tax Policy Center website to check out distribution tables. And if a politician cites those distribution tables in his speeches, well, politicians say all kinds of things.

Nor, alas, can we rely on the news media to get the essentials of the policy debate across to the public — and not just because so many people get their news in quick snatches via TV. The sad truth is that the cult of balance still rules. If a Republican candidate announced a plan that in effect sells children into indentured servitude, the news reports would be that “Democrats say” that the plan sells children into indentured servitude, with each quote to that effect matched by a quote from a Republican saying the opposite.

He’s right. While I alluded to this in my post on Glenn Kessler’s changing belief in the seriousness of SEC filings, it deserves exposition directly. Glenn Kessler, back in the days when it was time to distinguish Gore’s economic plans from Bush’s, back in the days when it was time to consider whether Bush’s huge tax cuts would serve the interest of the country, committed just that kind of journalistic sin.

I pointed to this May 3, 2001 story, titled, “Some See Deficiencies in Bush’s Budget Math,” as just one example. It cited Rudolph Penner as the only expert speaking in any way supportively of Bush’s tax cut.

This fiscal situation, despite the uncertainties, is extraordinarily good.

But of course, Penner doesn’t actually say the tax cut is a good idea, just that Bush effectively inherited a good fiscal situation from Clinton.

Kessler then goes on to provide a bunch of anonymous quotes from Bush officials about the tax cuts–many admitting they’re not providing a full picture of the cuts and budget increases–as well as Ari Fleischer providing an excuse for why Bush didn’t include the cost to privatize social security in his estimates.

Which leaves this as the only non-Administration quote in support of the tax cuts.

“Look, [the spending ceiling is] going to hold because you have a different team,” said Sen. Pete V. Domenici (R-N.M.). “We’ve got the president in town.”

Compare that to evidence like this:

“The president is proving his critics right,” said William G. Gale, a budget expert at the Brookings Institution. “The ink isn’t even dry on the tax cut, and he’s already moving ahead on Social Security and defense. The president’s budget adds up only if you think the government will not do anything other than it has been doing.”

[snip]

One budget expert calculated that just the $100 billion in tax refunds will result in $73 billion in additional interest payments over the next 11 years. The entire tax cut would increase interest costs by about $400 billion, thus reducing the surplus by $1.75 trillion.

The budget agreement would increase spending on annually funded federal programs in fiscal 2002 by 4.9 percent, or about $667 billion, slightly higher than the 4 percent sought by the president. The rest of the nearly $2 trillion federal budget goes to pay for programs whose costs can’t be easily reduced — Social Security and Medicare, and interest payments on the national debt.

And while Kessler likely didn’t stamp that case with the “Some Say” headline, he failed to do what a journalist presenting such evidence should have: said clearly that Bush’s budget numbers didn’t add up, even before you accounted for the increases in defense and social security spending Bush planned (to say nothing of unexpected expenses like post-9/11 Homeland Security and two wars).

Mind you, that wasn’t the only version of such a story Kessler wrote. He also wrote the following “Some Say” stories:

May 3, 2000: Candidates Duel Over Tax Cuts; Gore and Bush Trade Analytical Shots, Seeking an Imprimatur of Fiscal Responsibility

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Do Republicans Wish They Retroactively Had Let Newt Sustain His Bain Attacks?

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Two soundbites from the Sunday shows have made a big stink: Mitt Romney’s former Bain partner, Ed Conard, admitting that Mitt was legally CEO of Bain until 2002. And GOP fixer Ed Gillespie, distancing Mitt from the outsourcing Bain did by insisting Mitt had “retroactively retired” before all the bad stuff happened but while (Conard confirmed) he was legally CEO.

All that’s on top of the fact that Mitt was profiting mightily from this vulture capitalism and siphoning the money to his offshore havens in Bermuda and Cayman Islands, which we’re not yet really talking about.

More telling, though, is the list of Republicans now calling on Mitt to release more his tax returns:

  • Columnist Bill Kristol
  • AL Governor Robert Bentley
  • Lobbyist and former MS Governor Haley Barbour
  • Columnist George Will
  • Strategist Matt Dowd
  • Strategist Ana Navarro
  • Strategist John Weaver

Now, none of these people–with the possible exception of Barbour–are big insiders who have any leverage over Mitt. Moreover, I can’t think of any way that any of them would definitely know the content of Mitt’s tax returns.

But what if they do? What if they know or suspect that those tax returns would expose not just Mitt’s role in Bain (including how much they paid him in salary in 2001 and 2002 to do, Mitt claims, absolutely nothing), but how much money he siphoned away to tax havens so as to avoid paying his fair share to the country he now wants to lead? What if they know the tax returns will doom his campaign, and want to force him to release them now, while they can still replace him with Chris Christie or someone else? (To be fair, with such a diverse mix of GOPers, I suspect they’ve got different motives for their comments, including–some of them–good faith belief releasing the forms would be best.)

Which makes me think back to the week in January when the GOP had the chance to fully expose what Mitt did at Bain–with the video Newt’s SuperPAC released above–but backed off that chance. (h/t ZachBeauchamp for finding a working copy)

Newt released the video on January 7. By January 10, Newt accused Mitt of undermining capitalism. But then, on January 11, he reversed himself, claiming he overstepped and asking his SuperPAC to edit the video, using the same claims of inaccuracy advanced by fact checkers that have foundered on the obvious facts included in SEC filings now. But by January 17, he was calling on Mitt to release his tax returns. Newt won the South Carolina primary on January 21. On January 24, Mitt released a single tax return, showing he paid very little in taxes and had tax shelters in Switzerland (now closed), Bermuda, and Cayman Islands, but revealing nothing about what he did in the key years in 2001 and 2002. Since Mitt won the nomination, Newt has even warned Democrats not to attack Mitt on the same terrible Bain record he himself did.

I sort of get the feeling Newt knows what’s in Mitt’s tax returns. Indeed, I’ve seen oblique tweets from a few Republicans this weekend saying “I told you so” and paying off debts, leading me to believe more than a few Republicans tried to warn their party that this Bain thing would blow up and are now being vindicated.

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Glenn Kessler Didn’t USED to Treat SEC Filings as Boilerplate

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As gobsmacked as I am that no one can seem to find the people running Bain Capital from 1999 to 2002, when Mitt Romney was officially listed as its CEO, Chairman, and President, I’m equally shocked by Glenn Kessler’s claims that SEC documents are not to be trusted.

Kessler’s scarequoted SEC documents

On Thursday, Kessler suggested SEC filings don’t mean what they say.

There appears to be some confusion about how partnerships are structured and managed, or what SEC documents mean. (Just because you are listed as an owner of shares does not mean you have a managerial role.)

Then on Friday, he mocked the journalistic convention that treated “SEC documents” (his scarequotes) as factual.

There is a journalistic convention that appears to place great weight on “SEC documents.” But these are public filings by companies, which usually means there are not great secrets hidden in them. The Fact Checker, in an earlier life covering Wall Street, spent many hours looking for jewels in SEC filings.

[snip]

We had examined many SEC documents related to Romney and Bain in January, and concluded that much of the language saying Romney was “sole stockholder, chairman of the board, chief executive officer, and president” was boilerplate that did not reveal whether he was actually managing Bain at the time. (For instance, there is no standard definition of a “chief executive,” securities law experts say, and there is no requirement for anyone to have any responsibilities even if they have that title.)

Trillions of dollars are traded based on what these documents say, but a purportedly respectable journalist who used to cover Wall Street says they’re just boilerplate.

Only, he didn’t used to say that.

As Kessler reminds his readers, he used to cover finance. So to see how he, as a finance reporter, treated SEC documents, I thought I’d review what he wrote during precisely the period Mitt’s corporate whereabouts are in such dispute, 1999 to 2002. Kessler covered finance at the WaPo from the time he moved there in 1998 until about May 2, 2002, when he started covering foreign affairs. Thus, Kessler stopped covering finance just weeks after the time Mitt resigned from the boards of Marriott and Staples (presumably Mitt’s severance deal with Bain was around the same time).

SEC filings, more SEC filings, and no boilerplate

It was an interesting time to cover finance, too. In addition to a slew of articles engaged in one-side, other-side journalism citing experts warning that Bush’s tax cuts might bring back deficit spending but Pete Domenici and Ari Flesicher saying they wouldn’t so he couldn’t really be sure, Kessler covered growing awareness about tax havens, the end of the Dot-Com bubble, the AOL Time-Warner merger, and Enron. And in a number of those stories he treated earnings reports and other SEC documents as transparent truth.

Kessler pointed to corporate earnings reports for a January 29,1999 story predicting the economy would begin to slow.

Corporate earnings are closely watched on Wall Street because, in a world of dreams, deals and wild bets, earnings are real; they are the equivalent of batting averages for baseball addicts. Corporate earnings also provide hints on the general direction of the economy, which is why some analysts remain downbeat about the economy in the coming year despite the string of positive earnings reports. [my emphasis]

And he looked at them in very close detail.

Individual corporate earnings reports also turn up nuggets of how companies have boosted their profits. Compaq Computer Corp., the world’s number two computer maker, said Wednesday that fourth-quarter earnings rose a better-than-expected 2.2 percent. Profits rose to 43 cents a share, compared with 42 cents in the same period of 1997. But tax credits from Compaq’s purchase of Digital Equipment Corp. last year significantly cut the company’s tax rate, boosting net income about 5 cents a share.

In a January 13, 2000 story explaining different estimates for the value of the AOL Time-Warner deal, Kessler reveals the WaPo was the only paper to look beyond stock price in its calculations; it included Time-Warner’s debt, presumably gleaned from SEC documents.

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Where Is this Killer Instinct in Governance?

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I confess I am thoroughly enjoying the Obama campaign’s attack on Mitt Romey’s Bain experience. Contrary to DC pundits’ beliefs, the outsourcing story really really resonates in those parts of the country where outsourcing has devastated the country–which just happen to include a bunch of swing states. Yet with the squabble over when Mitt left, the pundits have catnip to keep them interested while the Obama campaign really builds the narrative about Mitt. If the economy crashes again–which is, I think, the biggest threat to Obama’s reelection–he will have already cemented the idea that financial vultures like Mitt are the problem, not the solution. And heck, the campaign’s focus on tax havens like Bermuda and Cayman Islands might actually get society to focus on them generally.

Plus, as ads like this show, the Obama campaign is showing a wonderful cutthroat instinct rarely seen among Democrats.

But as big a mystery as who ran Bain Capital for the three years when Mitt was legally CEO but purportedly doing nothing with the company is this: where has this killer instinct been the last 3 years?

Imagine how effective such ads would be targeted at the obstructionists in the Senate? Mocking the 33rd time House Republicans repeal ObamaCare rather than doing something about jobs? And while I understand that such killer attacks are more effective directed against one villain who personifies evil, the GOP has villainized Pelosi effectively–there are ways to do it.

Obama’s right: Corporatist vultures like Mitt are part of the problem (though Obama’s fondness for trade deals is too). But so are the people in Congress who would rather see the economy fail just to have the President fail too.

Republicans in Congress truly are villains (many Democrats are too, of course). It’s time to start treating them like it.

Sheldon Adelson Could Buy Bibi a Very Effective October Surprise

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The Internet is abuzz today with Sheldon Adelson’s announcement that he has already donated $10 million to Mitt Romney’s SuperPAC and plans to provide limitless donations to defeat Obama.

Forbes has confirmed that billionaire Sheldon Adelson, along with his wife Miriam, has donated $10 million to the leading Super PAC supporting presumptive Republican presidential nominee Mitt Romney–and that’s just the tip of the iceberg. A well-placed source in the Adelson camp with direct knowledge of the casino billionaire’s thinking says that further donations will be “limitless.”

But the attention is mostly focused on the sheer numbers he’s talking about, not what it suggests that Adelson–who already spent buckets of money to try to defeat Mitt in the primary–has now promised limitless donations to defeat Obama.

This is about Likud trying to decide the American elections.

Adelson doesn’t hide the fact that this donation is about Israel as much as it is Obama’s “socialism.”

Adelson, this source continues, believes that “no price is too high” to protect the U.S. from what he sees as Obama’s “socialization” of America, as well as securing the safety of Israel. He added that Adelson, 78, considers this to be the most important election of his lifetime.

Nor is it surprising he’s doing this. More than he is for any of these American politicians, Adelson is Bibi Netanyahu’s Sugar Daddy. And Obama has been remarkably successful thus far in stymying Bibi’s goal of forcing the US to attack Iran. In addition to the sanctions regime that has brought about negotiations, in recent months, the Administration has leaked both a white paper showing that an Iran attack would do nothing but set off a regional war and news of the bases in Azerbaijan Israel would use if it unilaterally attacked Iran. David Sanger quoted Presidential briefers and Joe Biden–Bibi’s old nemesis–blaming Israel for freeing StuxNet, possibly intentionally. Leon Panetta has, on the record, told the entire world, including Iran, when Israel planned to attack. (I actually thought Panetta’s latest 60 Minutes appearance might have been an attempt to placate Israel.)

It may appear to us that the Administration continues typical American policy of capitulating to Israel. But the Obama Administration has taken surprisingly strong measures to push back against Israel.

And now Sheldon Adelson has promised to use unlimited funds to get rid of President Obama.

As much as the money concerns me, that’s not what I worry about the most. The Israelis have never been shy about running off-the-books operations to influence our policies. Indeed, they played a role in Iran-Contra, the start of which goes back to the last October Surprise plot to make sure a Democrat didn’t get reelected in 1980. And the state of affairs in Israel’s neighborhood (both Syria and Egypt would be excellent candidates, though if I were Turkey I’d be cautious, too) is such that it would be very very very easy to create an October Surprise that would make it a lot harder for Obama to get reelected.

Bibi’s Sugar Daddy just announced the world he will do anything in his power to defeat Obama. You can be sure Bibi feels the same way.

Update: Iran/Israel confusion fixed, h/t vl.

I Was Wrong About The Chen Affair

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I am in the unenviable position of having to say I was wrong and am sorry. This is in relation to the issue of US diplomacy vis a vis China as relates to Chinese dissident Chen Guangcheng. In case anybody has forgotten, I wrote a rather harsh article toward the US government, by the State Department, conduct within 24 hours or so of it hitting the news wires:

Hillary Clinton, and the State Department under President Obama, have been far from perfect, to be sure; but, overall, one of the stronger, if not strongest, departments in Obama’s cabinet. But this is way ugly, and ought to, by all rights, leave a very permanent mark. It is a stain fairly earned in every sense of the word. Hard to imagine a more cravenly constructed pile of PR bullshit since the Jessica Lynch affair. Yet here it is in living steaming brownish color. All painted with Madame Secretary conveniently in Beijing, China. Awkward!

In a nutshell, I was extremely critical of the entire show, and especially the press manipulation component thereof.

I was wrong. I still have pretty strong issues with the opportunistic way in which the press was contacted by Chen on the way from the embassy to the hospital, which was completely aided and abetted by the US diplomatic officials with him, but this is, at this point, kind of a minor quibble it seems. And, heck, who knows, maybe it was even part of the plan.

Whatever, it seems to have worked out.

Here is today’s lead from the Washington Post:

Blind legal activist Chen Guangcheng, who had been at the center of a diplomatic row between the U.S. and Chinese governments, left Beijing on Saturday afternoon on a United Airlines flight bound for Newark and an uncertain life in the United States, after Chinese officials and American diplomats worked out of the public view to arrange for him and his family to travel out of the country.

In the past two weeks, while waiting for movement on the Chinese side, senior staff in the State Department had been laying the groundwork for Chen’s departure, including the logistics of his transportation, according to a senior administration official who was not authorized to give his name.

Listen, this is still very far from ideal in a number of respects, and it will be a long time, if ever, before we know all the facts and circumstances surrounding this mess. But fair is fair, my initial criticism, even if correct in some lesser elements, was dreadfully wrong overall.

Hat’s off to Hillary Clinton, the State Department and the Obama Administration. It is far from perfect, but it is looking pretty good. I was wrong to be too critical, too soon.

UPDATE: The Washington Post has a pretty fleshed out tick tock on the gig. It actually does look like fairly decent work by State. Would love to see an honest version of the same on the flip side, from the Chinese perspective. That would be fascinating.

The 4 Month Detainee Review Election Season Special

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There’s something else I’ve been puzzling through in the Periodic Review Board directive released the other day governing how the Obama Administration will give the detainees at Gitmo reviews to see if they still need to be held.

The timing.

This DTM is effective upon its publication to the DoD Issuances Website; it shall be converted to a new DoD issuance. This DTM shall expire effective November 5, 2012. The first meeting of the Periodic Review Board (PRB) to consider whether the continued detention of any GTMO detainee is warranted shall occur no earlier than 60 days after notification to Congress in accordance with section 1005(c) of the Detainee Treatment Act of 2005 (Reference (e)).

Maybe I’m misreading the bureacratese. But I read that passage to mean the Directive went into effect on the 9th (Wednesday). The PRB cannot meet until 60 days after DOD tells Congress it will conduct such a review–so June 8, assuming this counts as notice. And then this Directive expires on November 5, literally the day before the Presidential election.

I understand why you’d let this expire on Election Day Eve. After all, if by some miracle Mitt Romney wins, you might want to free everyone to prevent top Mitt advisor Cofer Black from getting a hold of the detainees and shaming the US again.

Even barring a jail break to save these men from Cofer Black, given that it takes years for lawyers to negotiate the representation of Gitmo detainees, what could really be accomplished during four months dominated by a Presidential election.

Unless I’m misreading all this, the answer seems to be, precisely nothing.

Chen Guangcheng: The Hollow Core of a Press Manipulation Presidency

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I live in the Pacific time zone, a full three hours behind the news makers and breakers on the east coast. I woke up early yesterday, by my time, and found an apparent great story occupying my Twitter stream: Chinese dissident and activist Chen Guangcheng had not only, through the miracle that is United States benevolence, been sheltered in the US Embassy (as had been theorized) from his daring blind man’s escape from house arrest, but had been represented in a breathtakingly humanitarian deal with the oppressive Chinese government that resulted in his proper medical care, reunion with his family and a safe and fulfilling life from here on out.

The proverbial “and everybody lived happily ever after”.

By the time I got my second eye open, and focused, I realized what I was reading something more akin to a Highlights Magazine “What’s Wrong With This Picture?” puzzle.

And so it was. What a difference a day makes. The initial report I read this morning at the source Washington Post article appears to be pushed aside from their website, supplanted by a more honest report.

The first report at the WaPo depicted an incoming call to the reporter from US Ambassador to China, Gary Locke:

What I was not prepared for was when Locke said, “I’m here with Chen Guangcheng. Do you speak Chinese? Hold on.”

And then passed the phone over.

“Hello, this is Chen Guangcheng,” came a matter-of-fact, almost cheerful voice.

I introduced myself in halting Chinese, using my Chinese name and the Chinese name for The Washington Post. I asked how Chen was, and where. I asked him to speak slowly, to make sure I could understand.

“Washington Post?” Chen repeated, his voice sounding generally happy. Chen said he was fine and was in the car headed to the hospital, Chaoyang Hospital. He repeated the name slowly, three times.

And that was it. Chen handed the phone back to the ambassador, who said they were stuck in traffic, but promised a full briefing later.

Following the old “two source” rule for journalists, I definitely had my story. Chen was indeed under U.S. diplomatic protection, as we and other news outlets had been reporting. He was now leaving the embassy on his way to the hospital. In a vehicle with the American ambassador. The first word would go out soon after that, in a blast to our overnight editors, and via my Twitter account.

I learned later that I was just one in a succession of calls U.S. diplomats made from the van at Chen’s request — they also spoke to Chen’s lawyer and to Secretary of State Hillary Rodham Clinton, recently arrived in Beijing for an important two-day summit.

That was the “happily ever after” story which was too good to be true.

It was indeed too good to be true. A mere twelve hours later, and even the Washington Post Read more →

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