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

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.”


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

May 18, 2000: Gore Touts Social Security Plan; Critics Say It Would Do Little to Avert Potential Crunch

August 23, 2000: In Tax Plans, Truth Is Closely Budgeted

October 3, 2000: ‘Facts’ and the Debate: A Guide to Key Claims

October 4, 2000: Both Sides Made Math An Elastic Concept; Dueling Data Reflect Philosophical Divides [Kessler finds fault with Gore for include interest and estate taxes in his claims on the cost of Bush cuts]

October 6, 2000: Both Debaters Play Games With Numbers [This not only repeats pundit lies about the solvency of Social Security, but the only fault it finds with Lieberman is that Gore’s budget estimates were more conservative than Congress’]

October 10, 2000: Clinton Caveat On Surplus May Cut Both Ways; Bush, Gore May Overstate Amount Available for Tax Cuts, Spending [This finds fault with Clinton’s claim that it’d be harder to eliminate a tax cut than rein in spending; heh]

January 17, 2001: Clinton, Bush Officials Quarrel Over Surplus

February 18, 2001: Some Want to Keep the ‘Death Tax’ Alive; Group of Wealthy People Calls Bush’s Plan ‘Bad’ for Country and Economy

March 1, 2001: Bush Tries to Avoid GOP’s Past Pitfalls; Critics Believe Long-Term Budget Woes Loom

Now, along the way, Kessler did point to a number of studies that showed Bush’s tax cut would leave us in a hole; he did point to the accounting gimmickry behind it. But when it came to Democrats versus Republicans, the cult of balance won out over informing WaPo’s readers that Democrats were right in their predictions that Bush’s tax cuts would bring back deficit spending.

And they were right.

I don’t mean to pick on Kessler; I just happened to review these stories the other day while looking at Kessler’s long-lost believe in SEC filings.

But they do demonstrate how Kessler has been part of the problem for a long time.

Frankly, his obstinacy in the face of mounting evidence actually serves the country better than his efforts to balance Bush’s budget gimmickry with Democratic corrections, if only as a foil. After all, his now comical refusal to look at the evidence provides catnip to his fellow DC journalists, not to mention frames this as a criminal issue.

But that does prove Krugman’s point. We tried winning important economic questions through wonkery. That–and reporting like Kessler’s–is what put us into such a big financial hole. It’s a price we can’t afford to pay again.

People get that the CEO of Bain Capital and firms like it are one of the reasons why their own economic lives keep getting worse. And the more Kessler tries to argue that a CEO should not be held responsible for the actions of his company, the more it plays into outrage about the kind of lack of accountability people like Mitt have enjoyed for a very long time.

16 replies
  1. BSbafflesbrains says:

    By all means pick on him. People should be accountable for what they say and do; particularly if they have some responsibility for knowing what they are talking about. I remember when making fallacious arguments was a sign of lack of intelligence not clever misdirection or a satisfactory response during argument.

  2. rugger9 says:

    The way it looks to me, now that we have Haley Barbour of MS and the recently elected AL governor, both solid GOP types with cred on all relevant parts of the GOP operation calling for the release, I really think the gig is up for Mittens. When one bases the campaign on business acumen as Mitt has, and the prevents any scrutiny of the truth of his operations, even when caught in lies, it means that those questions are fair game and need to be answered. It would be like someone claiming excessive accomplishments on their resume, for which people get fired out of jobs all of the time. So, the only reasons Mittens is still standing are that the corporate media needs a horse race for ratings, and there’s still a “blah” guy [to quote Ricky the dog] in the WH, and Mitt’s still white.

    So if Mitt is toast, the GOP convention will be a free for all. The establishment doesn’t like Paul [e.g. Rove, the Kochs, Friess, and Adelson] and there is no really viable alternative in the professional politician ranks. As I noted before, it is likely to be some military “war hero” [scare quotes intended] who can be brought in at the last minute. I’m saying again that Petraeus is the one most likely, followed by McChrystal. Most of the other senior military types are true professionals [like ADM Mullen toning down the rhetoric on Iran] and wouldn’t be involved in this kind of BS, with the possible exception of “Perfect Pete of the USMC” who was JCS chairman in the early Shrub years. Or there isn’t any name recognition outside of Stormin’ Norman Schwartzkopfwho wouldn’t go for the GOP dreck either.

  3. Bay State Librul says:

    Obama is battering Romney so Romney will try to reflect his bad week by
    selecting his VP…. Timmy P or the Jersey boy?

  4. earlofhuntingdon says:

    Not hold a CEO accountable? I realize that’s the norm, the outcome preferred by CEO’s and their armies of lawyers, lobbyists and consultants. But rationalizing it because a CEO is not really in charge of the business? Hahahahaha. People lie, cheat, steal; they ignore their spouses, children, families and friends; they eviscerate their competitors and those employees not with their program in order to get that job, and the unreviewable power that often comes with those three letters.

    People don’t do that to obtain a well-paid sinecure; for that, they sit on several boards of directors. Being CEO is being on top of the heap. It attracts the exceptional, the predatory, and the exceptionally predatory.

  5. lefty665 says:

    Thanks EW, Kessler’s earned it.

    In Krugman’s column today, “Policy & the Personnel” he repeats the some are opposed to personalization comment, but drops the “progressive” characterization that you quote from his blog yesterday. Wonder who pushed back?

    It’s seemed the anti-personalization crap was coming from people like Bill Clinton, with his defense of private equity. Bill’s not now, nor was he ever, a “progressive”. I’ll spare you my DLC, Blue Dog rant.

    A couple of more finance notes that have cropped up in the last day or so:

    (1) As “sole stockholder” Romney got ALL the profits regardless of his active involvement until 2002.

    (2) Ex Bain director Conrad’s comments yesterday about Romney being CEO until 2002 seem to have eclipsed what may have been his real substance. He observed that it took more than 3 years for Romney to exit because he was negotiating a “better” retirement package. Romney clearly wanted materially more than the Bain folks thought he deserved. If he’d wanted a reasonable settlement they’d have given it to him and been shed of him. Part of that may be the $100k+ salaries for doing nothing but sign SEC filings for those years, and refusing to get out of the way until they paid him off with real money. Sounds a lot like extortion.

    (3) Romney’s statements are that his retirement agreement was retroactive to 1999 and ran until 2009.

    (4) No tax returns before 2010. Hummm, wonder why? DUH (sound of lightbulb going on over my head).

    It is clear, yet under-reported, that Romney profited hugely from his ownership of Bain through 2002, regardless of his level of active engagement as a manager. Hanging his culpability on specific management decisions between 1999 and 2002 is a chumps game. It is interesting, but it comes under the heading of “Oh yeah, and that too”.

    Remember Deep Throat’s admonition to Woodward, “Follow the Money”.

    We know Romney’s retirement agreement ran from 1999 to 2009. The inference from Conrad’s statement is that it was huge. Romney’s refusal to show his tax returns tends to confirm that.

    One can accept all Romney’s self serving, intentionally misleading factoids without being diverted from the underlying truth. Romney profited massively from every Bain act, every factory closing, every job lost, every pension fund looted, every offshored factory between at least 1993 and 2009.

    It doesn’t make a damn bit if difference whether Romney’s dead hand was at the wheel.

    Mitt got paid every time a US worker lost a job.
    Mitt got paid every time a pension fund was looted.
    Mitt got paid every time a company was raped and the carcass left to rot.

    Mitt got paid. That is the story, that is what cannot stand the light of day.

  6. nolo says:

    Great stuff, EW. I found it particularly hilarious that the NYT this morning used Harvey Pitt quotes (a very good securities law tactician, truth be told — for the corporatists), to defend the notion that Mr. Romney’s ownership reports on SEC Schedule 13D aren’t much of an issue [Mr. Pitt, you’ll recall, was a Bush 43-appointed SEC Chairman — but resigned when it turned out he had missed the ball on the ENRON collapse! Ah, irony!]

    And, now — lest it be lost in the weeds, here:

    We must ALWAYS remember that the “business” of Bain Capital (and its Funds III through VIII, LP — or whatever) is and was. . . wait for it. . . to acquire, hold and sell SECURITIES. Mr. Romney’s company didn’t make electronic switches, steel or even medical diagnostic test machines.

    No, Mr. Romney’s company — its core business (and the core business of all of private equity, actually) is to typically find a public company, take a big stake of the company (usually very much on the cheap), then restructure the operations (actually, mostly fire the US workers, offshore the functions, loot the pensions, etc.), then take all the cash they can back out (either through recaps, or outright sales to third parties, or going private transactions). More than occasionally, the company goes belly up in the bankruptcy courts and/or must be reorganized under Chapter 11, as a result.

    So — it is non-sensical for Mr. Romney to insist that all he did was passively “own securities” in Bain Capital and its affiliated partnerships — at least a defense to the abominations that happened at some of the Bain portfolio companies. THAT WAS “THE BAIN CAPITAL BUSINESS MODEL” — its core purpose — under Mitt Romney!

    The only thing Bain Capital “made” — in its business — was decisions related to buying and selling huge chunks of securities (in the takeover sense of the word). That was THE whole business. Mr. Romney didn’t need to meet with UAW officials to hammer out claw-backs; no, he had minions at each protfolio company doing that FOR him.

    As lefty says — he just. took. the. cash.

    Pound away on that!


  7. lefty665 says:

    @Bay State Librul: Not sure he’s going to get that far. He’s got to change the subject, and quickly.

    There are good reasons a lot of Repubs don’t like Romney much. More than a few of them truly believe in entrepreneurship and getting ahead through hard work and making things. Some also grieve for our lost industrial base. Getting rich by looting corporations and sending the work offshore is not high on their list of admirable capitalist vocations. Nolo lays it out nicely.

    Close to 150 SEC filings with his signature 1999-2002 have turned up so far. That’s approaching an average of one a week. Can’t brush that off as “has not had any active role with any Bain Capital entity…”. Folks may not know much about private equity, but they know that dog won’t hunt. That’s just where the questions start.

    Many Repubs are not fond of him, there are too many documents with his signature, there was what looks like a pissing contest inside Bain over his buyout, the Teabagger wildcard is what it is, and he’s done dumb stuff like gratuitously offending Bob Schieffer. Mittens may find he’s got more questions that he doesn’t want to answer than he can say grace over.

    The blood’s in the water, that often loosens tongues, and the sharks get into a frenzy. Did I mention that…

    Mitt got paid every time a US worker lost a job.
    Mitt got paid every time a pension fund was looted.
    Mitt got paid every time a company was raped and the carcass left to rot.

    Mitt got paid millions and millions and millions. He really does not want to talk about it. The reality must be awful.

    The campaigns semi hysterical attacks and non denial denials imply they’re pretty frantic.

  8. rugger9 says:

    @lefty665: #7
    Nice summary, and I would add a couple more to that list which is damning enough [Rhodes has a real good show on it today]:
    1. Apparently Mittens’ contract for the Olympics [which had a 1.3 billion dollar bailout from the USA taxpayers after Mittens tool over, Rhodes has McSame’s rant on the Senate floor] had a no conflict of interest clause, which provides the reason 2/99 was so important, not just the Stericycle issue that ought to make fundie heads explode. If he remained at Bain in any capacity -> conflict of interest.
    2. However, Mittens wanted to be a governor, so when the MA slot opened u due to the implosion of the GOP candidate du jour, he decided no primary was better than a contested one in UT, so he magically became a MA resident for long enough to run [seven years residency is required, and the home has specific requirements to it, no absentee, read Pierce on the topic].
    3. The 23 years of returns given to McSame in 2008 were enough to have Grampy pick Palin, even accounting for “viagra frenzy”. It was a lot of self0funding given up.
    4. Notice that Mittens hasn’t released his STATE return for 2010, which I suspect would clearly show he was a NH resident in the northwoods cabin. That’s a problem because Mittens has admitted to voting for Scott Brown in the 2010 Senate race to replace Teddy, allegedly living in his son’s basement. As noted before, residency has requirements of “principal domicile and center of personal activity” type of language, and 250 million dollar guys simply don’t live in basements [snark Q, has Mitt ever had Cheetos?]. We could have a voter felon in addition to an SEC one.

    Retroactive retirement???? Wow.

  9. rugger9 says:

    So, slightly off topic, but let’s toss it out there:

    Who replaces Mittens? We’ll need to account for the Paulistas in Tampa, and also dish on the scandals that exist for just about all of the possibilities.

  10. Frank33 says:

    The Olympic Uniform Scandal rages, UniformGate. Ralph Lauren had this year’s uniforms Made In China. Plus, they are aesthetically problematic.

    But the comedy continues because Mittens Romney outsourced Olympic uniforms also. Mittens was criticized for outsourcing to the brutal dictatorship of Burma. Mittens denied it. The uniforms were made not in Burma, but in Myanmar.

    “The torch relay clothes were NOT made in Burma. They were manufactured in Myanmar,” the organizing committee responded. “In fact they were made in the exact same factory that produces clothes for GAP, North Face and other major clothing labels.”

    Both Gap and North Face denied at the time that they purchase products manufactured in Burma.

  11. lefty665 says:

    @rugger9: Thanks to you and others for the props.

    An excerpt on one company, and a clue to why he may quit before we see tax returns is below.

    Returns will disclose gains/losses from investments he made in companies like DDi that were downstream from his Bain gains. With that information calculation of how much he personally made from each person fired, job eliminated, pension fund looted, plant offshored is possible. His Bain payout piles on top of that.

    The 2010 returns are available here – Most of the detail is in the trust returns.

    “A closer relationship existed between Romney and another politically toxic company, printed circuit board maker DDi Corp. Romney and Bain invested more than $45 million into the company in the late 1990s, taking over controlling interest. Profitable years ensued. When the economy turned sour, so too did the company’s fortunes — but not without Bain taking its cut of the pie.

    According to the Orange County Register — the California-based company’s hometown paper –- Bain raised $39 million in October 2000 by selling DDi shares. In February 2001, Bain raised $54 million by selling more shares. Bain also received $10 million in management fees. Romney, who as part of common industry practice had bought personal stock in the company, sold his DDi shares for $4.1 million in May 2000.”

  12. P J Evans says:

    And the GOP found John Sununu somewhere and hauled him out to insult the president. Mostly it just made Sununu look like he’s been in a cave for the last five years, or possibly just senile.

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