Mitt Romney attacks President Obama over welfare reform
Video [embedded]: Making a play for middle-class voters, Republican presidential candidate Mitt Romney sought Tuesday to elevate welfare reform as a campaign issue, accusing President Obama of encouraging a "culture of dependency."
By Philip Rucker and Bill Turque, Published: August 7, 2012
ELK GROVE VILLAGE, Ill. — Mitt Romney sought to inject the issue of welfare into the presidential campaign here Tuesday, accusing President Obama of dismantling federal welfare reform and creating a “culture of dependency.”
But the charge drew immediate push back from the Obama campaign, and a direct rebuke of Romney by Clinton himself, who called it false.
Romney’s comments come as his campaign makes a play for middle-class voters with a new offensive focused on welfare. Earlier Tuesday, his team rolled out a new 30-second television advertisement, “Right Choice,” that says, “Obama guts welfare reform.”
The spot is Romney’s latest attempt to cast Obama as a big-government liberal and to drive a wedge between the president and the legacy [ http://www.washingtonpost.com/wp-dyn/politics/fedpage/administration/president/clintonbill/ ] of the popular Clinton. Experts on the law, however, said the changes were consistent with calls from governors for lighter federal regulations and intended to ease the burden of states seeking flexibility.
“That is wrong. If I’m president, I’ll put work back in welfare,” said Romney, who was campaigning in this suburb just outside Obama’s home town of Chicago. He added, “We will end the culture of dependency and restore a culture of good, hard work.”
The Department of Health and Human Services announced on July 12 [ http://www.acf.hhs.gov/programs/ofa/policy/im-ofa/2012/im201203/im201203.html ] that it would consider requests for waivers from states seeking more latitude in administering Temporary Assistance for Needy Families (TANF). The centerpiece of the 1996 Clinton legislation, TANF established work requirements and time-limited benefits for recipients. Although caseloads dropped sharply as the economy boomed in the late 1990s, state officials and welfare experts say tougher financial times and overly stringent rules have stalled progress.
Lanhee Chen, the Romney campaign’s policy director, said in a memo Tuesday that the rules changes were a sign that “not everyone was enthusiastic about welfare reform.”
“For instance, a man named Barack Obama took to the floor of the Illinois State Senate to announce his opposition. A devoted believer in old-school, big-government liberalism, Mr. Obama had no interest in embracing the welfare reform package,” Chen wrote. “Now as president, with an economy struggling, an election looming, and a dispirited liberal base in need of encouragement, he has decided to turn back the clock.”
Obama campaign officials pushed back hard. In a conference call with reporters, deputy campaign manager Stephanie Cutter blasted the ad as “hypocritical and false.”
She said the administration agreed to allow states to apply for waivers after hearing from governors, including Republicans Gary Herbert of Utah and Brian Sandoval of Nevada, who sought relief from cumbersome federal requirements and paperwork. To secure a waiver, however, states must show that their welfare programs will increase job placements by 20 percent, Cutter said.
“No plan that undercuts the goal of moving people from welfare to work will be approved, and it will not be approved if it weakens or undercuts or avoids time limits,” she said.
The Obama camp got direct support from Clinton late Tuesday evening, who said Romney’s ad was untrue. He said the waivers proposed by the administration were designed to safeguard time limits and were in keeping with the goals of the 1996 legislation. He called the ad “especially disappointing” in light of Romney’s pursuit of a waiver in 2005.
“We need a bipartisan consensus to continue to help people move from welfare to work even during these hard times, not more misleading campaign ads,” Clinton said.
HHS said the waiver proposal was a response to calls from states for more flexibility in how they put people back to work.
“We also heard concerns that some TANF rules stifle innovation and focus attention on paperwork rather than helping parents find jobs,” Acting Assistant Secretary George Sheldon said last month in a message to state officials. Waivers will be granted to states only for projects deemed likely to improve job prospects for TANF recipients, he said.
Said Sheila Zedlewski, a fellow at the Urban Institute’s Income Benefits and Policy Center: “There’s this misperception that the work requirements in TANF are really strong and effective, when in fact work participation rates have been flat for a decade among people on TANF.”
Ron Haskins, former House Republican staffer and a key figure in crafting the 1996 legislation, said he supported changes in the work requirements that would give states more flexibility to tailor education and training programs to local labor market conditions.
He noted that the waivers Romney assailed were consistent with his repeated vows to lighten federal regulatory burdens.
“The Romney campaign says that incessantly, but in this case, no, no, no,” said Haskins, who is co-director of the Brookings Institution’s Center on Children and Families.
But Haskins also had criticism for the Obama administration’s approach, which he said shunned a bipartisan discussion of the issue in favor of regulatory tweaks.
“That’s a thumb in the eye of Republicans,” he said.
Turque reported from Washington. David Nakamura contributed to this report.
In 1996, President Clinton signed bipartisan legislation to reform welfare by requiring work. Sixteen years later, President Obama quietly gutted this landmark law. Mitt Romney will restore the bipartisan reforms to welfare and move our country in the right direction.
Asked by CNN on "The Situation Room with Wolf Blitzer," if he believes the ad, released Tuesday claiming a directive issued by Obama would "gut welfare reform," is misleading, the former House speaker declined, further backing-up his former Republican primary opponent.
The Obama administration issued a directive on July 12 of this year allowing individual states to experiment with changes to their welfare-to-work programs, which are federally funded, with the purpose to "challenge states to engage in a new round of innovation that seeks to find more effective mechanisms for helping families succeed in employment."
Following the Romney campaign ad, Obama staffers have pointed to a letter signed by then-Massachusetts governor Mitt Romney and fellow Republican governors in 2005 asking for more flexibility in state welfare reform. Of the letter, Gingrich said Romney was actually working to allow state legislature to increase work requirements from 50% to 70%.
Gingrich later toned down his support for the wording of the attacks in an interview with CNN's "Anderson Cooper 360" saying, "I think if the ad makers had asked me I would have said, 'This makes it possible,' would have been a good way to enter into what it said."
Gingrich continued, "We have no proof today, but I would say to you under Obama's ideology it is absolutely true that he would be comfortable sending a lot of people checks for doing nothing."
Blitzer cited two Republican governors–Gary Herbert from Utah and Brian Sandoval from Nevada–who asked the Obama administration for more flexibility to better deal with welfare in their states.
To that, Gingrich said they weren't asking for those kinds of waivers and, "They both came out and said they were against what the Obama administration's done."
Of the apparent paradox in Republican ideology, Gingrich allowed that while generally conservative philosophy tries to lessen the federal government involvement in state issues, in this case what counted as work was being stretched beyond acceptability.
"On the issue of work requirement, we felt deeply and accurately and I think Robert would reinforce this that unless you made it a mandatory work requirement, it would get waived to a point where it became a joke. The American people overwhelming believe in the work ethic. And they overwhelmingly reject dependency on the government," said Gingrich.
Tuesday's ad accuses the Obama administration of dropping work requirements for those receiving welfare.
"Under Obama's plan, you wouldn't have to work and wouldn't have to train for a job. They just send you your welfare check," the announcer in the ad continues. "And welfare to work goes back to being plain old welfare."
President Barack Obama's re-election campaign has strongly pushed back, however, calling the attacks false and pointing to the part of the directive's requirement that states with the waiver must increase the number of people on welfare going into the workforce by 20%.
Gingrich was the House speaker in 1996 when welfare reform was signed under then-President Bill Clinton. Passed under welfare reform was a program–the Temporary Assistance for Needy Families (TANF)–which would be affected by Obama's directive. The measure was deemed a win by conservatives, who long pushed for a provision that required work training for Americans receiving government assistance.
Clinton released a statement in defense of the Obama administration on Tuesday calling the Romney campaign ad 'disappointing.'
"Governor Romney released an ad today alleging that the Obama administration had weakened the work requirements of the 1996 Welfare Reform Act. That is not true," Clinton wrote, adding that the Obama administration had taken steps to ensure work requirements for welfare recipients were maintained.
To Clinton's response, Gingrich said that while he did work with the Democratic president to reform welfare, Clinton was not always right.
"First of all Bill Clinton I'm sure was contacted by the Obama White House or the Obama campaign," said Gingrich. "As I just reported a second ago, both those Republican governors disagree with being used by Obama as a defense for what he's doing," referring to governors Sandoval and Herbert.
Gingrich reiterated that he doesn't think Obama has the authority to waive the requirement adding, "the reason was candidly we and the conservative republican congress did not trust the liberal governors to actually keep a work requirement if they had a chance to do away with it. Look at everything Obama's done. Look at all of his commitments on food stamps, all of his commitment on increased commitment on increase dependency."
Earlier Wednesday Gingrich called Obama's methods to alter the program "radical" and as part of a liberal agenda.
"There's just a remarkable difference between Clinton and Obama," Gingrich said on a conference call with reporters. "In many ways, Obama is the anti-Clinton."
CNN's Rebecca Sinderbrand and Ashley Killough contributed to this report
It’s one thing when campaign supporters and even surrogates issue scurrilous attacks on their candidate’s opponent— both sides have done some of this — but it’s another thing altogether when those accusations become a central line of attack stemming from the candidate himself.
Earlier this week, Mitt Romney claimed that President Obama had moved to eliminate the work requirement for welfare recipients.
Romney pushed the point in an ad with the narrator saying:
On July 12, President Obama quietly announced a plan to gut welfare reform by dropping work requirements. Under Obama’s plan, you wouldn’t have to work and wouldn’t have to train for a job. They just send you your welfare check, and ‘welfare to work’ goes back to being plain old welfare.
is issuing this information memorandum to notify states of the Secretary’s willingness to exercise her waiver authority under section 1115 of the Social Security Act to allow states to test alternative and innovative strategies, policies, and procedures that are designed to improve employment outcomes for needy families.
The memo continued:
The Secretary is interested in using her authority to approve waiver demonstrations to challenge states to engage in a new round of innovation that seeks to find more effective mechanisms for helping families succeed in employment. In providing for these demonstrations, H.H.S. will hold states accountable by requiring both a federally-approved evaluation and interim performance targets that ensure an immediate focus on measurable outcomes.
Furthermore:
States that fail to meet interim outcome targets will be required to develop an improvement plan and can face termination of the waiver project.
That’s right, the Department of Health and Human Services was granting flexibility to states because it wanted to improve employment outcomes and H.H.S. promised to terminate the waiver if states didn’t meet the targets.
The ad’s claim is not accurate, and it inflames old resentments about able-bodied adults sitting around collecting public assistance. Pants on Fire!
“Pants on Fire” is PolitiFact’s worst rating.
And the welfare claim comes on the heels of Romney accusing the president of filing a lawsuit [ https://www.facebook.com/mittromney/posts/10150981967501121 ] “claiming it is unconstitutional for Ohio to allow servicemen and women extended early voting privileges during the state’s early voting period.” In reality, as Factcheck.org pointed out [ http://factcheck.org/2012/08/obama-not-trying-to-curb-military-early-voting/ ], “the Democratic lawsuit seeks to restore early voting ‘for all Ohio voters,’ ” because “Ohio’s GOP-controlled Legislature in 2011 limited early voting for nonmilitary residents.” Politifact said that what voters got from the Romney campaign “is a falsehood.” In other words, a lie.
What could push a man to hang his hat on so sharp a nail? Fear, that’s what.
As we move into the conventions, the Republican candidate is still down in the polls [ http://www.pollingreport.com/r2.htm ] — two recent surveys have deplorable favorability numbers for Romney. At this point, according to my colleague Nate Silver’s blog, FiveThirtyEight [ http://fivethirtyeight.blogs.nytimes.com/ ], Obama is favored to win in November.
Romney has to find a line of attack that works because there is a creeping feeling beginning to overtake part of the electorate that his candidacy is in trouble. The problem is that these sorts of desperate, baseless attacks only amplify the sense of panic.
Goldman Sachs Leads Split With Obama, as GE Jilts Him Too
President Barack Obama looks inside a hydrogen cooled generator while touring the General Electric plant in Schenectady, N.Y., with GE CEO Jeff Immelt and plant manager Kevin Sharkey, right. Pete Souza/The White House/Zuma Press
Goldman Sachs Group Inc. headquarters in New York. Scott Eells/Bloomberg
Four years ago, employees of New York-based Goldman gave three-fourths of their campaign donations to Democratic candidates and committees, including presidential nominee Barack Obama. This time, they’re showering 70 percent of their contributions on Republicans. Jin Lee/Bloomberg
Four years ago, employees of New York-based Goldman Sachs Group gave three-fourths of their campaign donations to Democratic candidates and committees, including presidential nominee Barack Obama. This time, they’re showering 70 percent of their contributions on Republicans. Chip Somodevilla/Getty Images
By Jonathan D. Salant - Aug 9, 2012 9:10 AM CT
Goldman Sachs Group (GS) employees have changed to red from blue.
Four years ago, employees of New York-based Goldman gave three-fourths of their campaign donations to Democratic candidates and committees, including presidential nominee Barack Obama. This time, they’re showering 70 percent of their contributions on Republicans.
That’s the biggest switch among the 25 companies whose employees have given the most to candidates and parties since 1989, according to data through June 30 compiled by Bloomberg from the Center for Responsive Politics, a Washington-based research group that tracks campaign donations. Goldman isn’t alone; 13 of the companies’ employees are now giving more to Republicans after backing Democrats four years ago.
“A switch in party preference of this magnitude is virtually unheard of among major companies with an established presence in Washington,” said Rogan Kersh, provost at Wake Forest University in Winston-Salem, North Carolina.
Dallas-based AT&T Inc. (T) employees, who divided their contributions evenly between the parties in 2008, are now giving almost two-thirds of them to Republicans. Chairman Randall Stephenson gave $30,800 to the Republican National Committee in February -- his biggest donation in more than two decades -- six weeks after the Obama administration rejected a proposed merger with T-Mobile USA Inc.
“We don’t comment on personal contributions,” said Claudia Jones, AT&T’s spokeswoman.
GE Giving
Employees of General Electric Co. (GE) are giving 63 percent of their contributions to Republicans this year, almost a mirror image of their distribution in 2008 when Democrats received 66 percent of their donations.
“GE employees contribute personal funds to any candidate they choose,” said Lindsay Lorraine, a company spokeswoman.
Employees of just four of the top 25 companies, Time Warner Inc. (TWX), Pfizer Inc. (PFE), Comcast Corp. (CMCSA), and Microsoft Corp. (MSFT), continued to give a majority of their donations to Democrats. Redmond, Washington-based Microsoft workers and their families are the biggest source of contributions to Obama’s re-election campaign, giving him $418,845. Philadelphia-based Comcast employees and their families are eighth, at $216,156, and Time Warner employees and families are 10th at $191,834.
The business bets are being made even as an Aug. 5 ABC News-Washington Post poll found Romney’s unfavorability rating ticked higher to 49 percent, with 40 holding a favorable view of him. Obama’s favorability rating stands at 53 percent, while 43 percent view him unfavorably.
Wall Street
Nowhere is the change in financial fortunes more pronounced than on Wall Street. The banking industry, blamed for triggering the worst economic downturn since the Great Depression, opposed new regulations and oversight that a Democratic Congress enacted and Obama signed into law over Republican opposition. The presumptive Republican presidential nominee, Mitt Romney, co- founder of the Boston-based private-equity firm Bain Capital LLC, has pledged to repeal the new rules.
Six of the 13 corporations whose employees reversed their political giving are financial institutions, including four of the top five. They are: Goldman, Bank of America Corp., Morgan Stanley (MS) and JPMorgan Chase & Co. (JPM) The other two are Citigroup Inc. (C) and UBS AG. (UBSN)
Much of their money went to Romney’s presidential campaign and the joint fundraising committee set up with the Republican National Committee. Of the 10 companies whose employees gave the most money to Romney Victory, nine were Wall Street firms, according to a computer-assisted analysis by Bloomberg of Federal Election Commission data.
Goldman Reversal
Goldman’s giving showcases the change in loyalties. The company’s employees gave $6.1 million in 2008, 75 percent to Democrats. The amount topped the 25 companies; the percentage trailed only Time Warner. This year, Goldman employees have given $4.9 million, also more than anyone else, with 70 percent going to Republicans. David Wells, a Goldman Sachs spokesman, declined to comment.
Romney “is one of their own, and Obama has been attacking the way they make money,” said Linda Fowler, a professor of government at Dartmouth College in Hanover, New Hampshire. “Throw in legislation to rein in the large banks, and it’s pretty clear that they would switch.”
Four years ago, 15 of the 25 companies, including all six financial institutions, saw a majority of their employees backing Democrats, especially Obama, during the 2008 elections. Then-UBS Americas Chairman Robert Wolf raised more than $500,000 for the Democratic nominee.
Heart v. Head
“Wall Street fell in love with Obama in 2008,” said Stephen Hess, a professor of media and public affairs at George Washington University in Washington. “It had more to do with the heart than the head. And love affairs, at least of the political variety, usually end in disappointment or disillusion. So Wall Street has now returned to its own reality -- as well as one of its own.”
The top company source of funding for Obama in 2008 was Goldman, where employees gave him more than $1 million in campaign cash. JPMorgan and Citigroup employees were also in Obama’s top 10.
This time, Goldman employees are the biggest source of donations to Romney, giving $636,080. In fact, employees of financial firms account for eight of Romney’s top 10 sources of campaign cash. None are among Obama’s top 10 givers.
Regulation Opposition
“Many of the biggest corporations are angry at the Obama administration and the Democrats for their new regulatory policies,” said Craig Holman, a lobbyist for the Washington- based advocacy group Public Citizen, which supported those new laws. “This is ideological giving. These companies are investing heavily against Obama in 2012.”
The Goldman shift could be attributed to both the company’s opposition to the new banking law and its relationship with Romney, said Kersh.
“As Bain CEO, Romney hired Goldman bankers to underwrite Bain-managed IPOs, and Goldman investment managers supervise tens of millions of dollars of Romney’s personal wealth,” he said. “That type of close personal link to a particular industry or company has aided presidential candidates in the past and is paying off handsomely for Romney now.”
To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net
Paul Smith, Tea Party Rally Attendee And Elected Official, Held Sign Depicting Obama's Head On A Spike (VIDEO)
Sterling Heights, Mich. Councilman Paul Smith was asked to resign by the other members of council after a 2009 video surfaced showing Smith at a Tea Party rally holding signs with graphic depictions of President Obama, former Mich. Governor Jennifer Granholm and Minority Leader of the U.S. House Nancy Pelosi.
After carrying signs suggesting President Barack Obama's decapitation and former Michigan Gov. Jennifer Granholm's hanging at a Tea Party rally three years ago, Sterling Heights, Mich. Councilman Paul Smith has been asked by his colleagues to resign his post.
A video from a 2009 Tea Party rally in Troy shows Smith holding graphic signs condemning Obama, Granholm and Minority Leader of the U.S. House of Representatives Nancy Pelosi before his 2011 election to Council.
The least offensive text reads, "she turned Michigan into Detroit," referring to the former governor, with other slogans reading “Extreme left b*tch,” on the Pelosi sign, and "He changed America into Uganda” on the sign with Obama.
In the YouTube video [ http://www.youtube.com/watch?v=SWFS62olq00 ], shown below, Smith tells the cameraman: "We've let a Communist in the White House. He’s not just a Socialist, he’s an out-and-out Communist. He’s taken over the auto industry, he’s taken over the banks."
On Wednesday, Sterling Heights' City Council voted 6-1 [ http://www.detroitnews.com/article/20120809/POLITICS02/208090372#ixzz233yJTocP ] for Smith's resignation, according to the Detroit News, with Smith himself being the only holdout. Mayor Pro Tem Michael Taylor told the paper, "It's obvious we're dealing with someone who is completely irrational."
Sterling Heights has also built a reputation for being a safe place, where residents are protected from the violence that is now all too prevalent in our society.
It is in this context that the City of Sterling Heights must strongly disavow the personal viewpoints expressed by Mr. Smith on the signage displayed in the YouTube video and his attempted defense of the disturbing content.
It is regrettable that such images and the intolerant and violent viewpoints that they espouse are brought forth in the public discourse. It is the city's hope that those who are exposed to these images judge them as the personal opinion of one man.
The details in each case are different, with the international banks suspected of using their American subsidiaries to process tainted money for clients that included Iran, Cuba, North Korea, sponsors of terrorist groups and drug cartels.
What the cases have in common is that the accused banks took advantage of a law that was not changed until 2008 and that allowed banks to disguise client identities and move their money offshore. The cases, including one filed this week by New York’s banking regulator against Standard Chartered, also cast a harsh light on just how much activity with Iran was permitted in the years leading up to 2008 and whether the practices had violated the spirit, if not the letter, of the law.
Foreign banks until 2008 were allowed to transfer money for Iranian clients through their American subsidiaries to a separate offshore institution. In the so-called U-turn transactions, the banks had to provide scant information about the client to their American units as long as they had thoroughly vetted the transactions for suspicious activity. Suspecting that Iranian banks were financing nuclear weapons and missile programs, the loophole was finally closed in 2008.
The new money-laundering claims made by the New York Department of Financial Services against Standard Chartered are particularly embarrassing for the Treasury Department, because they show how, until 2008, foreign banks could collaborate with their Iranian clients to circumvent United States sanctions, said Jimmy Gurulé [ http://newsinfo.nd.edu/for-the-media/nd-experts/faculty/jimmy-gurule/ ], a former Treasury Department official who is a law professor at the University of Notre Dame.
Standard Chartered, as part of a strategy to ignore regulations imposed by a division of the Treasury Department, schemed with its Iranian clients to omit crucial details from money-transfer paperwork, according to a regulatory order filed Monday [ http://www.dfs.ny.gov/banking/ea120806.pdf ]. An e-mail from a lawyer to bank executives in 2001 said that payment instructions for Iranian clients “should not identify the client or the purpose of the payment,” according to the order.
The strategy of masking client details was driven, in part, by a desire for speed, according to law enforcement officials involved in the money-laundering cases. Transactions with certain risky clients, like the Iranians, were subject to much more rigorous vetting. To avoid the holdup, the officials said, some foreign banks willfully removed the names.
Since January 2009, the Justice Department, Treasury and other government entities have brought charges against five foreign banks — the British banks Lloyds and Barclays; the Dutch banks Credit Suisse and ABN Amro, now the Royal Bank of Scotland; and ING Bank of Amsterdam. The British bank HSBC is also under investigation by United States authorities for suspected money-laundering violations connected to Iran, Mexico, Saudi Arabia, Cuba and North Korea, and the bank has set aside $700 million to cover potential fines.
The settlements with the five banks generally included deferred prosecution agreements along with a substantial forfeiture of assets comparable in size to the basket of illegal transactions the banks engaged in. The five cases, which resulted from bank actions from 1995 through 2007, produced forfeitures of $2.3 billion over the last three and a half years. About half of that money went to Treasury and half to other entities, including the Manhattan district attorney’s office, which joined the Justice Department in most of the settlements.
So far, the Standard Chartered case is playing out entirely differently. To start with, action against the bank on Monday was brought by a single regulator, Benjamin M. Lawsky, a former prosecutor who now leads the New York Department of Financial Services. That is virtually unprecedented, since the vast majority of money-laundering charges come from regulators acting in concert.
The federal agencies are still investigating Standard Chartered and are debating just how expansive the suspected wrongdoing was. Mr. Lawsky claims the bank processed $250 billion in tainted money while cloaking the identities of its Iranian clients by stripping their names from paperwork. Some federal authorities, though, believe that the amount is closer to the $14 million that Standard Chartered acknowledges did not comply with regulations.
It is unclear whether the bank will settle with regulators or continue to fight. Standard Chartered must appear next week before Mr. Lawsky to explain the apparent violations and why it should not have its New York license revoked.
The divergent views on the bank’s culpability stem, in part, from the murkiness of the law governing how foreign institutions processed transactions with Iran.
Until 2008, American economic sanctions had a large exception for Iran because the Middle Eastern nation had such a vast oil business with the United States. The loophole permitted the U-turn transactions, allowing foreign institutions to route money to a bank in the United States, which would then transfer the money immediately to a different foreign institution.
Since Monday, Standard Chartered has fiercely argued that its transactions on behalf of Iranian banks and corporations fell squarely within that loophole. But Mr. Lawsky is largely basing his case on claims that the bank violated the law by covering up the identity of its Iranian clients and thwarting American efforts to detect money laundering.
In the settlements with the five banks since 2009, federal authorities and the Manhattan prosecutor accused the banks of “stripping” identifying information from some of the transactions that would have shown they were subject to sanctions and should not be allowed.
For example, in Lloyds’s $217 million settlement [ http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Documents/lloyds_agreement.pdf ] in 2009, senior bank managers warned colleagues in 2002 against “stripping” information from transactions referencing Iran, according to court records. In response, the records say, Lloyds simply began to “instruct Iranian banks on how to ‘clean’ payment instructions in which they were the originating bank to avoid detection” by Treasury Department filters.
The stripping constituted criminal conduct, the Justice Department said, when the transfers from sanctioned countries terminated in the United States — rather than taking a U-turn and heading back offshore. By ending in America, the transactions were subjected to stricter security standards, law enforcement officials said. In a letter sent Wednesday from Adam J. Szubin, director of Treasury’s Office of Foreign Assets Control, to Britain’s Treasury office, the department explained its enforcement efforts both before and after the 2008 changes. Now, all cross-border transfers require “the inclusion of complete originator and beneficiary information,” according to the letter, which was obtained by The New York Times.
United States banks were involved in the pre-2008 transactions only as an intermediary, and American banks have generally not been charged with violations similar to those brought against the five foreign banks. Because American banks were prohibited from being the beginning or ending party in transactions involving Iran and other sanctioned countries, they would not have been involved in the conduct that got the foreign banks into trouble.
Since the tighter sanctions went into effect, there have been no charges brought on post-2008 conduct, although Treasury’s letter says that investigations are ongoing.
Gina Talamona, a Justice Department spokeswoman, said that the lack of recent illegal conduct is because the settlements with foreign banks “required the banks to implement rigorous compliance programs and other safeguards” against further violations of sanctions. She said that the department’s enforcement program “has had a significant impact on banking industry practices involving sanctions.”
Companies are set to pay $8 billion to settle charges of ripping off the government. No CEOs have been charged
By Salon Staff Tuesday, Aug 7, 2012 05:03 PM CDT
This year, military contractors, banks, pharmaceutical companies and other corporations might end up spending more than $8 billion in settlements with the government, the New York Times reports [ http://www.nytimes.com/2012/08/08/business/more-fraud-settlements-for-companies-but-rarely-individuals.html ]. Though the lawsuits include accusations of overbilling, drug marketing, selling “dangerous and defective” equipment to the military, and price and security fraud, thus far no individual within the corporations involved has been held accountable.
The Justice Department does not rule out charging executives. However, a government enforcer official, who spoke on the condition of anonymity, told the Times that in many cases it’s too expensive and difficult to gather the evidence needed to prosecute high-positioned individuals.
The new rules would require the service companies to provide monthly statements to customers, warn them before interest rates are adjusted and offer more options to avoid foreclosures.
State and federal investigations into foreclosure practices found widespread examples of hasty foreclosures, forged signatures and lost paperwork among the companies that collected mortgage payments and monitored homeowner compliance.
“The major failures in this industry demonstrate that all servicers need to meet basic standards of good customer service,” Richard Cordray, director of the consumer bureau [ http://www.consumerfinance.gov/ ], said in announcing the proposed rules.
While he acknowledged that some mortgage servicers did their jobs well, “these proposed rules are about putting the service back in mortgage servicing,” Mr. Cordray said. “From processing payments to evaluating struggling homeowners and helping them avoid foreclosures, the bottom line is to treat consumers fairly by preventing surprises and runarounds.”
The rules will be open for public comment until Oct. 9, and final rules are expected to be issued in January, the bureau said. The rules are being formally introduced as amendments to two laws that cover most aspects of buying and financing a home, the Truth in Lending Act and the Real Estate Settlement Procedures Act.
The proposals cover two areas: providing clear and timely information to consumers about their mortgages and requirements for handling customer accounts, correcting errors and evaluating borrowers.
In addition, service companies would be required to make good-faith efforts to contact delinquent borrowers and notify them of options that would help them avoid foreclosure.
Also, the companies would need to offer consumers advance notice and pricing information about property insurance [ http://topics.nytimes.com/your-money/insurance/index.html ] that the mortgage company forces a homeowner to buy if the company discovers the property is not insured — a practice known as force-placed insurance.
In handling customer accounts, service companies would have to credit the account on the day a payment was received; maintain accurate and accessible documents; offer direct access to support people who could help delinquent borrowers; and, if the company offers loan modifications [ http://topics.nytimes.com/your-money/loans/loan-modifications/index.html ], promptly review applications.
Officials at the American Bankers Association have been meeting with consumer bureau officials about the rules for some time. Bob Davis, executive vice president of the association, said that while it was important for consumers to receive clear and accurate information about their loans [ http://topics.nytimes.com/your-money/loans/index.html ], “we want to make sure servicing doesn’t get tangled up in so much red tape that high-quality, responsive servicing is no longer viable, particularly at small banks.”
Some small mortgage servicers would be exempt from a portion of the new rules, to lessen the regulatory burden on small businesses, the bureau said.
Interest rates on mortgages and refinancing are at record lows, giving borrowers plenty to celebrate. But the bigger winners are the banks making the loans.
Banks are making unusually large gains on mortgages because they are taking profits far higher than the historical norm, analysts say. That 3.55 percent rate for a 30-year mortgage could be closer to 3.05 percent if banks were satisfied with the profit margins of just a few years ago. The lower rate would save a borrower about $30,000 in interest payments over the life of a $300,000 mortgage.
“The banks may say, ‘We are offering you record low interest rates, so you should be as happy as a clam,’ ” said Guy D. Cecala, publisher of Inside Mortgage Finance, a home loan publication. “But borrowers could be getting them cheaper.”
Mortgage bankers acknowledge that they are realizing big gains right now from home loans. But they say they cannot afford to cut rates even more because of the higher expenses resulting from stiffer regulations.
“There is a much higher cost to originating mortgages relative to a few years ago,” said Jay Brinkmann, chief economist at the Mortgage Bankers Association, a group that represents the interests of mortgage lenders.
The jump in revenue for the banks is not coming from charging consumers higher fees. Instead, it comes from the their role as middlemen. Banks make their money from taking the mortgages and bundling them into bonds that they then sell to investors, like pensions and mutual funds. The higher the mortgage rate paid by homeowners and the lower the interest paid on the bonds, the bigger the profit for the bank.
Mortgage lenders may also be benefiting from less competition. The upheaval of the financial crisis of 2008 has led to the concentration of mortgage lending in the hands of a few big banks, primarily Wells Fargo, JPMorgan Chase, Bank of America and U.S. Bancorp.
“Fewer players in the mortgage origination business means higher profit margins for the remaining ones,” said Stijn Van Nieuwerburgh, director of the Center for Real Estate Finance Research at New York University.
Mary Eshet, a spokeswoman for Wells Fargo, said the mortgage business remains competitive. “The only way we can effectively grow our business and deliver great service to customers is by offering market competitive rates,” she said.
The other three banks declined to comment. But the banks are benefiting from the higher mortgage gains. Wells Fargo reported $4.8 billion in revenue [ https://www.wellsfargo.com/downloads/pdf/press/2q12pr.pdf ] from its mortgage origination business in the first six months of the year, an increase of 155 percent from $1.9 billion in the first six months of 2011. JPMorgan Chase and U.S. Bancorp, the other big lenders, are also reporting very high levels of mortgage origination revenue. Wells Fargo made 31 percent of all mortgages in the 12 months through June, according to data from Inside Mortgage Finance.
“One of the reasons that the banks charge more is that they can,” said Thomas Lawler, a former chief economist of Fannie Mae and founder of Lawler Economic and Housing Consulting, a housing analysis firm.
The banks are well positioned to profit because of their role in the mortgage market. After they bundle the mortgages into bonds, the banks transfer nearly all of the loans to government-controlled entities like Fannie Mae or Freddie Mac. The entities, in turn, guarantee the bond investors a steady stream of payments.
The banks that originated the loans take the guaranteed bonds, called mortgage-backed securities, and sell them to investors. The banks nearly always book a profit when the bonds are sold.
The mortgage industry has a yardstick for measuring the size of those profits. It compares the mortgage rates paid by borrowers [ http://www.freddiemac.com/pmms/ ] and the interest rate on the mortgage bond [ http://www.bloomberg.com/quote/mtgefncl:ind ] — a difference known in the industry as the spread.
For example, a bank may lend money to homeowners at a 3.6 percent interest rate. After bundling those mortgages, the bank may then sell them in bonds that have an interest rate of 2.8 percent. The lower interest rate on the bond shows that the banks are effectively able to sell the mortgages to investors for a gain.
The banks pocket that markup when they sell the bonds. The bigger the spread between the mortgage rate and the bond rate, the bigger the markup for the banks.
Mortgage analysts who track this difference say it has been historically high in recent months. They contend that if the market were functioning properly, the recent drop in the bond rates should have led to a larger decline in mortgage rates for consumers than has actually occurred. .
Instead, the difference between the two rates is increasing: mortgage rates are falling much more slowly than the bond interest rates.
In the six months through June, the average difference between the two rates was 1.1 percent, and at the start of this month it was 1.26 percent. From 2000 to 2010, it was about 0.5 percent.
If banks offered mortgages with an interest rate that was half a percentage point lower — a move that would leave their mortgage gains closer to the historical levels of 0.5 percent — borrowers would see real savings.
Bankers say they need the extra mortgage revenue to cover new costs. As a result of more stringent conditions since the housing bust, bankers are required to be more diligent in approving loan applications. The banks say this requires better-trained employees and other added expenses. If Fannie Mae and Freddie Mac find flaws in the loan applications, they ask the banks to buy back the faulty loans, which can be expensive for the lenders.
“Fannie and Freddie are requiring zero-error loans,” said Tom Deutsch, executive director of the American Securitization Forum, a group that represents financial firms active in the mortgage market.
But Mr. Lawler, the housing analyst, is somewhat skeptical about the banks’ fears about the costs of buybacks. “If banks do their job properly, there should be little buyback risk,” he said.
The failure of mortgage rates to fall further poses a quandary for the government entities like the Federal Reserve and the Treasury Department, which have spent hundreds of billions of dollars to help make home loans cheaper.
“Policy makers get a little frustrated that they are not getting all the bang for their buck that they could,” said Mr. Lawler.
If the Federal Reserve bought more mortgage bonds in the market, it could actually increase banks’ mortgage profits, since such buying could drive down bond rates and increase the size of the markup banks take when they sell their mortgages.
It is hard to see how this situation can change in favor of lower rates for consumers. The banks are finding plenty of consumers wanting mortgage loans at current rates, and bond investors are happy to pay whatever low rate is offered.
And regulators, who are loath to dictate business practices, are unlikely to force banks to lower mortgage rates.
Still, the housing market would benefit if rates to consumers fell in tandem with the bond rates, said Mr. Van Nieuwerburgh of New York University.
“The relatively high mortgage rates do not help the housing recovery because they make it harder for new homeowners to get on the housing ladder and because they make refinancing relatively less attractive,” he said.
In Real Estate Deal, Romney Made His Loss a Couple’s Gain
A home in Missouri City, Texas, that is an investment property of Mitt Romney, who financed the home to its current occupants in 1997. Michael Stravato for The New York Times
By MIKE McINTIRE Published: August 9, 2012
MISSOURI CITY, Tex. — Look closely and it is there, sandwiched between Goldman Sachs Hedge Fund Partners II and D3 Family Bulldog Fund: the mortgage on Timothy and Betty Stamps’s modest home on Gentle Bend Drive here.
Nearly lost among the blizzard of hedge funds, thoroughbred horses and other gold-plated investments in Mitt Romney’s personal financial disclosures, the interest from the $50,500 mortgage is loose change to Mr. Romney, whose net worth has been estimated at close to a quarter-billion dollars.
Yet for the Stampses, who have been writing $600 monthly checks to “Willard M. Romney” for 15 years, the money they borrowed from him to buy their home in 1997 was life-changing.
The mortgage is the last vestige of a troubled, and previously unreported, investment by Mr. Romney in Texas real estate in 1982, before he struck it rich as the wunderkind of Bain Capital. And while the Stampses’ happy ending is a counterpoint to the image, seized upon by political opponents, of Mr. Romney as a cold, calculating financier, the episode also offers an early illustration of his appetite for deals promising low risk and high return.
Lured by the prospect of buying five rent-to-own houses in the Houston suburbs without putting up any of his own money, Mr. Romney jumped into a speculative deal geared toward “affluent free enterprise capitalists who desire a quality investment with tax shelter benefits,” according to a prospectus. Based on frothy assumptions of a never-ending real estate boom, it was unlike the data-driven, analytical investments that came to define his later successes at Bain Capital.
The result was a rare Romney flop: The housing market soon collapsed, and he was stuck renting out the houses for years before unloading them, mostly at a loss, in the late 1990s, according to property records. The renters were offered the first chance to buy, but the Stampses could not qualify for a mortgage, recalled Mr. Stamps, who at the time had recently lost his job at an oil company.
“Then I got this phone call, personally, from Mr. Romney, asking if we really wanted to buy the house,” Mr. Stamps, 63, said in an interview the other day at the barbershop he now runs. “I said, yes we did. And he said he would loan us the money. He really helped us when we needed it.”
Amid the campaign furor over Mr. Romney’s wealth and taxes, the relatively tiny real estate investment — the mortgage generates less than $2,500 in annual interest income, according to his disclosures — has gone largely, though not entirely, overlooked.
Mr. Stamps said that he and his wife had received calls in recent months from strangers who “seemed to be looking for negative stuff” about Mr. Romney, but that the couple had nothing to say to them. (The Stampses recently refinanced the original 30-year loan; the new mortgage, still with Mr. Romney, was dated June 12 but signed just two weeks ago. Details of the interest rate were not included in the public record.)
Andrea Saul, a Romney campaign spokeswoman, declined to answer questions about the Texas investment.
At the time Mr. Romney made the investment, he was a rising star at Bain & Company, the management consulting firm, and was still a couple of years away from starting Bain Capital, its private-equity spinoff. Real estate speculation was rampant in Texas, and William Roy Jolly, an airline pilot and investor from Utah who knew Mr. Romney through the Mormon Church, approached him about investing in a deal to buy new low-to-middle-income houses at a discount.
The deal, Mr. Jolly said, was “a marvelous scheme” to help renters who could not qualify for a mortgage to eventually buy their houses, while allowing investors to write off depreciation and mortgage interest on their taxes without risking their own money: most purchases were 100-percent financed with first and second mortgages from Texas banks.
The prospectus for the investment, called the Gem Plan, played up the tax shelter benefits, saying it was structured “so that deductions are projected to be twice the amount of the cash required each year.”
Mr. Romney elected to buy five houses, intending that the profits would accrue to each of his five sons, Mr. Jolly said.
“Mitt loves clever ideas that are designed to make everyone involved richer, and he loved this idea,” he said. “He could take a bit of tax depreciation up front, give the houses to his sons, and eventually the renters, after a five-, six-, seven-year period, could buy a home on their own. Everybody wins.”
As luck would have it, there were few winners.
Mr. Romney borrowed more than $300,000 to buy the properties, according to property records. Rental income covered expenses for a time, but with the market downturn in the 1980s, the deal quickly soured.
Property records show that liens for unpaid community association fees were filed against two of Mr. Romney’s houses and that the mortgages on them were soon underwater. By the end of the decade, the homebuilder who sold the houses to Mr. Romney went bankrupt, and some other investors’ houses were in foreclosure.
“The bottom just fell out of the market,” said Kenneth Cornett, a Houston financial planner who was Mr. Jolly’s partner in the deal. “People lost a lot of money during that time.”
It is not clear if the renters made out any better. The Gem Plan was structured so that they paid monthly “option-to-purchase fees” and, if they elected to buy, the purchase price would reflect a 12 percent annual increase in the value of the house over the rental period.
As Mr. Romney’s fortunes rocketed at Bain and his public profile grew with an unsuccessful run for the United States Senate in Massachusetts, he continued to hang onto the humble houses in Houston, collecting rent and paying the mortgages. Then, in 1997, with real estate on a comeback, Mr. Romney appears to have decided to sell all five of them. Records show two were sold to local real estate investors, and three others to the people renting them.
When Mr. Stamps took the call from Mr. Romney, he and his wife, a nurse, had all but given up hope of being able to buy the house they had been renting for five years. Mr. Romney told him it looked like the couple had been taking good care of the property and that “we would be good people to buy it,” said Mr. Stamps. Mr. Stamps said he never heard from Mr. Romney again, and only became aware of who he was when he started running for president four years ago.
“His name came up somewhere,” he said, “and my wife and I said to each other, ‘That’s the guy we bought our house from!’ ”
Mr. Jolly, 76, laughed when told that Mr. Romney was still collecting mortgage payments on one of the houses he talked him into buying 30 years ago.
“That sounds like Mitt,” he said. “He never gives up.”
UPDATE 1-Home prices help Fannie Mae profit, no U.S. help needed
Wed Aug 8, 2012 11:58pm IST
WASHINGTON Aug 8 (Reuters) - Fannie Mae on Wednesday reported a quarterly profit due to stronger home prices and said the mortgage financier did not need additional taxpayer funds to stay solvent, the second consecutive quarter the company did not request help since it was seized by federal authorities during the financial crisis.
Fannie Mae, which buys mortgages from lenders and repackages them as securities for investors, said it earned $5.1 billion for the second quarter ending in June, enough to keep the company afloat and make a required $2.9 billion dividend repayment to the U.S. Treasury.
"We think that there is a reasonable chance that we can make a profit for the rest of the year," Fannie Mae's chief financial officer Susan McFarland said in an interview.
The higher home prices and a decline in the company's single-family delinquency rate underpinned Fannie Mae's $7.8 billion profit for the first half of the year. In the same period a year earlier, the government-controlled company lost $9.3 billion.
McFarland called the second-quarter housing prices "normal seasonal improvement" and said she did not expect to see this kind of trend continuing. "There is a high likelihood that we will see home prices come down in the latter half of the year," she said. Because of that, the company does not expect its financial results to be as strong in the latter half of the year compared to the first half.
The latest data showed U.S. home prices rose for the fourth month in a row in May, suggesting the recovery in the housing market is gaining traction after the 2007-09 collapse.
REPAYMENTS
Fannie Mae has drawn down $116.1 billion in taxpayer money and has repaid the U.S. Treasury $25.6 billion, or 22 percent of the company's government funds. The mortgage finance giant's smaller sister company Freddie Mac has drawn $72.3 billion in taxpayer funds since it was taken over and has made about $20.1 billion in repayments.
Although Fannie Mae did not need taxpayer funds this quarter to help cover required 10 percent dividend repayments, McFarland said she expects there may be periods where the company's income would not be sufficient enough to meet the requirements.
"A lot of things are out of our control with the economy being soft," she said. "We have to be a bit cautious before we declare permanent victory and that we will be able to sustain profits quarter in and quarter out."
On Tuesday, Freddie Mac said it earned $3 billion for the three months ending June 30, due to a decline in credit losses. The company also said it did not need additional funds from the U.S. Treasury.
Trade Deficit in the U.S. Shrank More Than Forecast in June Aug 9, 2012 The U.S. trade deficit narrowed more than forecast in June as the biggest drop in crude oil prices in more than three years helped cut the nation’s import bill. The gap shrank 11 percent to $42.9 billion, the smallest since December 2010, from $48 billion in May, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey of 69 economists called for the deficit to shrink to $47.5 billion. Exports climbed to a record on demand for autos and industrial engines. [...] http://www.bloomberg.com/news/2012-08-09/trade-deficit-in-the-u-s-narrowed-more-than-forecast-in-june.html [with comments]
Romney opposition to wind tax credit gives Obama opening, shows risks of green-jobs skepticism
By Associated Press, Published: August 7, 2012
DENVER — Mitt Romney’s presidential campaign has been savaging what it calls President Barack Obama’s “unhealthy” obsession with “green jobs.” The Republican challenger criticizes the government program that propped up solar manufacturer Solyndra, and he mocks Obama’s vision of a boom in employment, citing a European study to argue that new solar or wind-energy positions would destroy jobs elsewhere.
But when a campaign spokesman said last week that Congress should let a tax break for wind energy producers expire at the end of the year, some Republicans were concerned the candidate had gone too far.
Republican Rep. Tom Latham, R-Iowa, noting that nearly 7,000 Iowans work in the wind industry, assailed the Romney campaign for “a lack of full understanding of how important the wind energy tax credit is for Iowa and our nation.” Iowa’s senior senator, Chuck Grassley, told reporters he didn’t believe Romney really opposed the extension, and he joined five other GOP lawmakers in voting for it in the Senate Finance Committee.
The Obama campaign quickly organized conference calls for reporters and circulated fact sheets showing the deep support the credit has in such swing-voting states as Iowa, Colorado and Nevada.
Obama will appear in Denver and western Colorado Wednesday to promote his economic plan, and the wind tax credit may well come up.
The backlash on the wind tax issue shows the risks Romney takes in targeting a fast-growing and popular industry that Obama has embraced. However, Romney’s aides argue the campaign is just making a principled economic argument against excessive government interference in the marketplace — one that the conservative movement, which Romney has struggled to win over, has praised.
Indeed, Patrick Hedger, a researcher at FreedomWorks, a small-government group that is a prominent backer of the tea party movement, called Romney’s position “a happy surprise.” He added that Republicans who feared a political cost from Romney’s position were stuck in an outdated way of thinking. “We’ve got to get out of this cycle of buying votes with money we don’t have,” Hedger said.
But critics contend that Romney, who counts members of the fossil fuels industry as major financial supporters and relies on the head of an oil company as his energy adviser, has backed himself into a corner. “I think it’s really a knee-jerk reaction to what this president has done,” said Jeff Gohringer, a spokesman for the League of Conservation Voters. “He (Romney) is actually going to states and advocating cutting thousands of their jobs.”
Surveys show the industry’s popularity. A Gallup poll in March found Americans nearly twice as likely to favor wind and solar energy as coal or oil. The American Wind Energy Association released a poll last month showing that more than half of Iowa’s voters say they would not back a presidential candidate who did not support expanding wind power. A January poll by Colorado College found that a majority of voters in six Western states believe that expanding renewable energy will create more jobs.
In Colorado, GOP Rep. Doug Lamborn says he was pleased the Romney campaign took a stand against the tax credit. “It shows he’s standing on principle and not pandering to win votes,” Lamborn said. But Lamborn is the only one of the state’s seven congressional representatives to oppose the extension.
Obama made green jobs a focus of his 2008 campaign, and he included tens of billions of dollars in incentives to promote energy efficiency and the renewable industry in federal stimulus efforts. After Solyndra’s bankruptcy last year, Republicans lined up to criticize the administration program that guaranteed the firm’s loans, and Romney has broadened the attack to the administration’s support for the entire industry, even in states where it is popular.
During a May stop in Colorado, where the poll from Colorado College found two-thirds of residents believe renewable energy will create jobs, Romney mocked Obama for spending billions to create “green jobs.” He asked the crowd: “Have you seen those jobs anywhere?”
The Romney campaign argues that what it calls “much-ballyhooed” wind and solar jobs may actually lessen the total number of jobs available because they replace positions in dirtier, but more labor-intensive industries. It cites a controversial Spanish study that found that every renewable energy job in that country destroyed 2.2 others.
“In place of real energy, Obama has focused on an imaginary world where government-subsidized windmills and solar panels could power the economy,” Romney wrote in a March op-ed piece published in The Columbus Dispatch in Ohio. “This vision has failed.”
The Obama campaign has been eager to respond, especially after an Iowa Romney campaign spokesman, Shawn McCoy, said last week that the candidate favored doing away with the wind tax credit.
“Mitt Romney would slash investments in clean energy, which would cede leadership of these critical sectors of our economy to competitors like China and India — and the jobs that go with them,” the Obama campaign said in a statement, adding that the Republican has opposed ending tax breaks for the oil industry.
The American Wind Energy Association estimates that 37,000 jobs would be lost if the tax credit isn’t extended this year. The credit was created in a 1992 energy bill signed by President George H.W. Bush and was renewed in a 2005 measure that passed a Republican Congress and was signed by President George W. Bush.
The Obama administration gave Romney an opening by overselling the promise of renewable energy jobs, said Jonathan Rothwell, a senior associate at the Brookings Institution who helped write a report on the growth of green jobs. The jobs will come, Rothwell said, but it will probably take a couple of decades. “The Obama administration did exaggerate the short-term benefits of the green economy by implying it would drive us out of the recession,” he said.
Rothwell noted that renewable energy jobs are well-dispersed across the country and, while small in number, are growing rapidly. “That explains why there is broad, and in some cases bipartisan support,” he said.
The issue came up in an annual green energy conference hosted by Senate Majority Leader Harry Reid on Tuesday in Las Vegas.
Obama’s interior secretary, former Colorado Sen. Ken Salazar, noted that the Senate Finance Committee agreed on the proposal last week to extend the wind energy tax credit.
“That shows it ought not to be a Republican or Democratic issue, it ought to be an American issue,” Salazar said, stating the administration view.
Reid said he was confident it would pass by the end of the year.
Associated Press writer Ken Ritter contributed from Las Vegas.
Here in Iowa, we're number one in wind energy jobs. But thousands of those jobs could be at risk.
That's why everyone from President Obama to Governor Branstad, and both Iowa Senators, support extending the wind energy tax credit.
But not Mitt Romney. He'd raise taxes on wind energy, protecting tax breaks for oil companies and millionaires instead. Romney would jeopardize thousands of jobs and knock the wind out of Iowa's economy.
Reporter: "Was there ever any year where you paid lower than the 13.9%?"
Mitt Romney: "I haven't calculated that. I'm happy to go back and look."
Voiceover: "Did Romney pay 10% in taxes? 5%? Zero? We don't know."
"But we do know that Romney personally approved over $70 million in fictional losses to the IRS as part of the notorious Son of Boss tax scandal. One of the largest tax avoidance schemes in history."
Rachel Maddow explains that while Mitt Romney still won't share his tax returns (despite mounting pressure from the media and voters to do so), what we do know about his finances is that he has made an active pursuit of finding ways to avoid paying taxes.
Now that the question of Mitt’s knowledge of Son of Boss deals has been raised by CNN [ http://www.cnn.com/2012/08/08/opinion/canellos-kleinbard-romney-taxes/index.html (second item in the post to which this is a reply)], I thought it might be a public service to explain Son of Boss deals. A lot of commentators seem to think that they are too hard to understand, but I don’t think so. I’ve told my friends at Dogs Against Romney [ http://www.facebook.com/#!/DogsAgainstRomney ] that they might not want to bother filling in the beagles and the mastiffs , but I think the border collies and the poodles [ http://petrix.com/dogint/1-10.html ] are ready for it.
Basis
I have previously explained Son of Boss using the ill fated tax shelter of EMC founder, Richard Egan [ http://riles52.blogspot.com/2010/10/its-over.html ], who got into the game in its waning days. His advisor, Stephanie Denby, commented on the beauty of the deals:
Secondly, some of the transactions focus on generating basis as opposed to capital loss. Basis is more discrete [sic] and less likely I believe to cross the IRS radar screen.
We are taxed on income, not gross receipts. That means that when you sell something you get to deduct your basis. In its simplest manifestation basis is the amount of money that you paid for something. You buy something for five dollars and sell it for six, your income is a dollar. Of course it can be more complicated if you acquire assets in other ways, such as by gift or inheritance or in a like-kind exchange. The important point though is that when you sell something the higher your basis the less your gain or the greater your loss.
Once you own something though it is kind of hard to increase its basis. If it is a partnership interest you increase your basis by the income that flows through to you, so your gain will be less if you sell the partnership interest, but that is like hitting your head against the wall because it feels so good when you stop. If it is a tangible asset, you could spend money to improve it, but that doesn’t really feel that satisfying. Of course, if it is an appreciated asset, you could die, but that is kind of extreme. The way that the designers of the Marriott deal came up with involved combining two things each of which is only slightly complicated – short sales and the formation of a partnership. Here is a link to the decision [ http://riles52.blogspot.com/search?updated-min=2012-01-01T00:00:00-05:00&updated-max=2013-01-01T00:00:00-05:00&max-results=50 ] if you want to follow along, but I’ll try to break it down for you.
Short Sales
When I was a kid, my father used to tell me jokes. There was a problem though. He worked on Wall Street. He did not have a particularly lucrative career (He was a senior order clerk) but he had a Wall Street sensibility to him . So the jokes that he told me were incomprehensible to an eight year old. One of them that I finally got when I was about thirty, was his little ditty about short sales “He who sells what isn’t hissen, buys it back or goes to prison.” The important tax principle is that the proceeds of a short sale are not gross income. You recognize gain or loss when you close the short sale.
Partnership Formation
When you put stuff into a partnership, the partnership’s basis in the stuff is your basis in it. You increase your basis in your partnership interest by your basis in the stuff you put in. Another important principle is that your share of the liabilities of a partnership is part of your basis in the partnership. If you increase your share of the liabilities it increases your basis, but if it decreases it reduces your basis, just as if you took out cash. Your basis can never go below zero. If a loss allocation would drive it below zero, the loss is suspended, but a liability decrease, like a cash distribution, will cause you to recognize gain. If you put leveraged property into a partnership and the liability shifts away from you or is paid down by the partnership, you may end up recognizing gain.
Now you are ready to do your Son of Boss deal. Here are the steps:
Marriott International sells short two-year Treasury notes and invests the proceeds in five-year Treasury notes. Marriott International, as a limited partner, and a third party, as the general partner, form a partnership. Marriott International contributes the five-year Treasury notes, subject to the short-sale obligations, to the partnership and the general partner contributes some cash. The partnership obtains additional assets and subsequently sells the five-year Treasury notes and closes the short sale obligation on the two-year Treasury notes.
Marriott International transfers its partnership interest to another Marriott subsidiary.
No gain or loss is recognized on the transfer, but the partnership-interest transfer results in a technical termination of the partnership which causes a deemed distribution of the assets to each partner and a re-contribution of the assets to a new partnership.
The tax basis of the assets takes on the “outside” tax basis of Marriott International’s interest, i.e., the value of the five-year Treasury notes Marriott International contributed to the first partnership, which value is not reduced by the short-sale obligation.
The remaining additional assets later are depreciated or are sold, and Marriott International recognizes the resulting tax losses.
I always had a hard time understanding these deals, because of my training as an accountant. You can’t get the damn thing to work without an unbalanced entry. Essentially though the money that Marriott got for the short sale allowed it to buy something that it had basis in. Marriott argued that the obligation to cover the short sale was not a liability as defined by Code Section 752. So even though it didn’t really have to come up with any money out of its own pocket, it had basis in the partnership interest. The rest of the maneuvers are a little technical, but essentially the free basis gets shuffled around until it is actually used. In Richard Egan’s version of the deal EMC stock was contributed to the partnership that had been created. The IRS and the Court’s didn’t put it the way a confused accountant would – “Ok, I have a debit, now what the hell am I supposed to credit?”, but they essentially got to the same bottom line -
The initial short sale, which generates the cash proceeds, and the subsequent covering transaction are “inextricably intertwined,” because under Regulation T the proceeds are chained to the obligation to close the short sale. Thus, the proceeds of the first step in the short sale transactions are also subject to the uncertainties of closing the short sale. In short, if contribution of the proceeds of the short sale increased the partners’ outside basis, the contribution of the obligation to return the Treasury notes that had been sold short required a decrease in the partners’ outside basis.
I never ran into these deals in their heyday. If I had I would have scratched my head, but I might have bought into it because of the letters from the tax attorneys who are supposed to know this stuff better than I do even if they don’t know a debit from a credit. So I would not be shocked if Romney did one of these deals for himself. Presumably the statute of limitations would be closed. That didn’t stop Tim Geithner from paying for his mistakes though. If Romney did do a Son of Boss deal, it really does not tell us anything about him that we do not already know, but if we want to hold him to the Geithner standard, he should pay regardless of the statute of limitations.
Rachel Maddow points out the sudden and drastic change in the Mitt Romney campaign strategy as his ads have suddenly pivoted from jobs and the economy to "values" issues - a tactic likely designed to shore up the Republican base as the number of available swing voters declines.
President Obama has declared war on religion by forcing religious institutions to go against their faith. Mitt Romney will stand up and protect religious freedom whenever it is threatened.
Yovany Gonzalez's Wells Fargo Lawsuit Alleges Bank Fired Him, Cut Dying Daughter's Health Insurance Yovany Gonzalez and his late daughter Mackenzie. Gonzalez alleges in a new lawsuit that Wells Fargo fired him because his daughter needed cancer treatment. 08/08/2012 http://www.huffingtonpost.com/2012/08/07/wells-fargo-yovany-gonzalez_n_1751461.html [with comments]
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What they’re saying: Rep. Todd Akin invokes “stage 3 cancer of socialism”
Rep. Todd Akin, R-Mo. (AP/Jeff Roberson)
The winner of Missouri's GOP primary thinks socialism is "unbiblical"
Akin is fond of the “stage three cancer socialism” metaphor (he used it to describe the Supreme Court’s decision on the Affordable Care Act, and while describing what federal student loans had done to the country in a recent debate [ http://www.youtube.com/watch?feature=player_embedded&v=2Zuteh5CpIM (next below)]),
and of pointing out how he thinks that America is slowly devolving towards what he says was the Soviet Union’s model.
Texas Congressman Louie Gohmert in 2009]. And they were a bunch of communists and they were socialists, and what was it that they thought? They thought that the job of the government should be to provide you, first of all, with a job and then they wanted the government to give you healthcare and food and housing and an education. And one thing particular about them: They didn’t wanted you to talk about God ever.
And now in our country, let’s see, we’ve got all this government spending going on, so the government can provide you with healthcare and a job and food and housing and an education, and it’s politically correct not to talk about God because if you did that, gentlemen, you’d realize your rights come from God.
Akin has a unique read on Thanksgiving that he explained in a presentation from the House floor. “It’s commonly told, people, that the Pilgrims came here for religious freedom,” he said [ http://www.youtube.com/watch?v=8AwmxxvNWCY (next below)].
“Of course, that is not true. In fact, much of what you hear, the stereotypes of history, in fact, are not true. They had religious freedom in Holland, so they didn’t come to America for religious freedom…”
The real turkey and stuffing, as it were, comes when he gets to socialism:
“Governor [William] Bradford knew that socialism was unbiblical [sic],” Akin said. “He knew it was a bad idea. It wasn’t going to work. Eventually they were forced to throw it out because they were going to starve to death if they kept trying to make the socialism work … It was a form of theft, and it was not a good system.
knew his Bible well enough to know that socialism was in violation of God’s law,” Akin continued. “God’s law says, ‘Thou shall not steal,’ it allows for the ownership of private property, and it never gives a government the right to take something that belongs rightfully to one person and redistribute it to someone else. Governor Bradford understood that far better than the pastors of our churches in America do today.”
Saw this on my way home from work tonight, on University Ave, Provo. East Bay. I had to double take it and flip around to record it, sorry my camera sucks. I thought this was messed up.
"Since coming out to you and mom nineteen years ago, I’ve watched you vote for the Republican candidates in every major race. Save for the occasional mealtime argument or sarcastic Fox News barb, I’ve held my tongue, despite the hurt and anger that came from watching you vote for a party that has made a sport out of demonizing gay and lesbian people, like me, for political gain. I did so because I never had a solid enough argument that the Democratic Party was wholly different. They often stopped short of institutionalizing discrimination of gays, but were sadly lax on standing on principle and advocating for its eradication. Until now."
Describing himself as a nearly 40-year-old man, Francophile -- who insists he'd "stay quiet" in any other election, continues:
"This election presents a clear choice between two people whose policy beliefs directly affect the course of my life. Let me be clear: A vote for Mitt Romney is a vote against me. There is no argument to counter that fact.
You might want to argue that you’re not a single-issue voter, but when the single-issue is your own son’s equality under the law, I wouldn’t recommend that argument. ... Because it might be nice to one day have my father stand up at my wedding, realizing he helped make it happen."
Good news for Francophile, though -- he quotes his dad has having replied in part, "I will honor your request because you are my son and I love you. I do support the democratic position on gay marriage."
It's the second time this week that Reddit has hosted a controversial parent-child conversation pertaining to LGBT rights. Earlier this week, a shocking letter penned by a man who disowned his gay son [ http://www.huffingtonpost.com/2012/08/07/father-letter-disowning-gay-son_n_1752053.html (second item above)] shortly after he came out also went viral via the website.
Ohio headed toward extra voting time for Republicans only
The Rachel Maddow Show Aughust 8, 2012
Rachel Maddow describes a partisan dynamic in Ohio that is having the effect of ending early voting for Democratic counties but extending voting opportunities in Republican counties.
GOP war on voting curbs access in Ohio Democratic counties
The Rachel Maddow Show Aughust 9, 2012
EJ Dionne, Washington Post columnist and author of "Our Divided Political Heart," talks with Rachel Maddow about the outrageous partisan disparity in voting access taking shape in Ohio.
New ID laws, purges, reduced access advance GOP war on voting
The Rachel Maddow Show Aughust 10, 2012
Rachel Maddow reports on new Republican-set obstacles to voting across the country, from voter ID laws in Pennsylvania, to voter purges in Iowa, to reduced voting access in Democratic counties in Ohio.
Will Obama campaign engage Ohio voting access battle?
The Rachel Maddow Show Aughust 10, 2012
Ted Strickland, former Ohio Governor, co-chairman of President Obama's re-election campaign, talks with Rachel Maddow about the Obama campaign's reaction to the Republican effort to make voting more difficult in 2012 and whether the Obama campaign plans to take action against the new partisan voting access disparities in Ohio.
Scott Brown demands Elizabeth Warren reimburse taxpayers for voter registration mailings
By Michael Levenson, Globe Staff
08/10/2012 12:58 PM
Senator Scott Brown demanded Friday that his Democratic rival, Elizabeth Warren, reimburse taxpayers for the $276,000 that the state spent to mail thousands of voter registration forms to welfare recipients.
Brown, a Republican, has argued the mailing to nearly 500,000 welfare recipients was a partisan plot to boost Warren’s campaign, since it was spurred by a lawsuit filed by Demos, a liberal group that is chaired by Warren’s daughter.
State officials have said they agreed to the mailing to ensure they were in compliance with the National Voter Registration Act, the federal law that requires welfare offices to provide recipients with voter registration materials. Demos, the group that brought the lawsuit, has said Warren’s daughter played no role in the suit, and pointed out they have filed similar lawsuits in eight other states.
Brown made his demand in a statement issued by his campaign.
“It’s been disturbing for a lot of people to learn that the state’s welfare department undertook an unprecedented voter registration drive at the behest of Elizabeth Warren’s daughter and the organization she represents,” he said. “It is clear that this was done to aid Elizabeth Warren’s Senate campaign. Professor Warren has more than $13 million dollars in her campaign account, and if she wants to mail every welfare recipient a voter registration form, she should do so at her own expense, not taxpayers’. She should immediately reimburse the state for the cost of this mailing and stop playing politics with the taxpayers’ money.”
Warren’s campaign manager Mindy Myers shot back in a statement today. “Scott Brown is just dead wrong,” she wrote. “Scott Brown cannot continue ignoring the facts of this case or misleading the people of Massachusetts to convince them to ignore the facts. This is just a ridiculous political stunt. It’s not about Scott Brown. It’s not about Elizabeth Warren. And it’s certainly not about anyone’s daughter. And as a father, he ought to think about that. This is about enforcing a bipartisan law passed almost 20 years ago and enforced by presidents of both political parties.”
Michael Levenson can be reached at mlevenson@globe.com.
This week may be remembered as one in which a new term entered the political lexicon: the welfare vote.
The welfare vote, in case you haven’t heard, is the creation of pandering liberal strategists who sue governments demanding that poor people get the opportunity to exercise their right to vote, the right that so many of the rest of us enjoy but routinely neglect to exercise.
Scott Brown clearly believes this kind of voter registration is wrong, and he’s not afraid to try to do something about it. On Friday, he called on Elizabeth Warren’s campaign to reimburse the state for the $276,000 it spent mailing registration forms to welfare recipients. From his outraged words and tone, you would have thought the state was trying to register Martians.
The mailing was triggered by a lawsuit filed by a group called Demos, which has sued nine states claiming violations of a federal voting rights law. The group is chaired by Amelia Warren Tyagi, Elizabeth Warren’s daughter. Of the states it has sued, only Massachusetts has responded with such a mass mailing, which sent Brown and other conservatives over the edge.
When, exactly, did supporting the right to vote become liberal or conservative?
On Friday, that’s when.
“It’s been disturbing for a lot of people to learn that the state’s welfare department undertook an unprecedented voter registration drive at the behest of Elizabeth Warren’s daughter and the organization she represents,” Brown said in a statement. He then took his case to its ludicrous outer limit, saying Warren’s campaign should repay the state for the cost of the mailing.
Secretary of State William Galvin always opposed the law, which passed in 1993 and forms the basis of the Demos complaint. Back then, it was known as the “motor-voter law” because it would have allowed people to register to vote when they got their driver’s licenses. He opposed it, as he has many voter-participation measures over the years, because it figured to cost money. After a protracted fight between Democrats and Republicans over what government agencies would be entrusted with the voter registration push, welfare offices and military recruitment stations joined Registry offices on the list.
Now, I don’t know why, but I doubt that Brown, the National Guard officer, opposes the registration push at recruitment centers. Registering people on welfare, on the other hand, is a waste of money, apparently, and a dirty trick. Note the automatic assumption, as well, that welfare recipients must, as a matter of course, be liberal Warren voters.
They probably should be, given Brown’s apparent contempt for their voting rights.
Look, Scott Brown has a math problem in this election, as a Republican running in a heavily Democratic state. I’m not naive enough to expect him to support registering more likely Democratic voters. Partly, this is routine and understandable political gamesmanship on his part.
But that isn’t all that’s going on here. Attacking welfare recipients, on whatever grounds, is a time-honored way to shore up one’s conservative base, to divide and conquer. That’s a cynical level of politics Brown should want to rise above.
As for Warren’s daughter, it goes without saying that she can get involved in politics all she wants. Demos has a long record of fighting to register voters, and as long their targets are legitimately eligible, no one should object. The right response is to rally and register your own supporters.
There are certain ideas that I used to consider self-evident, among them that voting is a healthy exercise in a democracy. But that was before politicians like Brown set me straight: Voting is for the kind of people who will vote for you. How could I miss that? How did I ever get it into my head that voting itself was the American ideal?
Adrian Walker is a Globe columnist. He can be reached at walker@globe.com.
Joseph Stiglitz: 'This Deficit Fetishism Is Killing Our Economy'
By The Associated Press Posted: 08/09/2012 11:45 am Updated: 08/09/2012 3:23 pm
NEW YORK (AP) — What's wrong with the U.S. economy?
Growth comes in fits and starts. Unemployment has been over 8 percent for three and a half years. Cutting taxes and interest rates hasn't worked, at least not enough.
To Joseph Stiglitz, the Nobel Prize-winning economist, the economy's strange behavior can be traced to the growing gap between wealthy Americans and everyone else.
When the rich keep getting richer, he says, the costs pile up. For instance, it's easier to climb up from poverty in Britain and Canada than in the U.S.
"People at the bottom are less likely to live up to their potential," he says.
Stiglitz has taught at Yale, Oxford and MIT. He served on President Bill Clinton's council of economic advisers, then left the White House for the World Bank, where he was the chief economist. He's now a professor at Columbia University.
In an interview with The Associated Press, Stiglitz singled out the investment bank Goldman Sachs, warned about worrying over government debt and argued that a wider income gap leads to a weaker economy.
Below are excerpts, edited for clarity.
Q: The Occupy Wall Street demonstrations are no longer in the news, but you make the case that income inequality is more important than ever. How so?
A: Because it's getting worse. Look at the recent Federal Reserve numbers. Median wealth fell 40 percent from 2007 to 2010, bringing it back to where it was in the early '90s. For two decades, all the increase in the country's wealth, which was enormous, went to the people at the very top.
It may have been a prosperous two decades. But it wasn't like we all shared in this prosperity.
The financial crisis really made this easy to understand. Inequality has always been justified on the grounds that those at the top contributed more to the economy — "the job creators."
Then came 2008 and 2009, and you saw these guys who brought the economy to the brink of ruin walking off with hundreds of millions of dollars. And you couldn't justify that in terms of contribution to society.
The myth had been sold to people, and all of a sudden it was apparent to everybody that it was a lie.
Mitt Romney has called concerns about inequality the "politics of envy." Well, that's wrong. Envy would be saying, "He's doing so much better than me. I'm jealous." This is: "Why is he getting so much money, and he brought us to the brink of ruin?" And those who worked hard are the ones ruined. It's a question of fairness.
Q: Markets aren't meant to be fair. As long as we have markets, there are going to be winners and losers. What's wrong with that?
A: I'm not arguing for the elimination of inequality. But the extreme that we've reached is really bad. Particularly the way it's created. We could have a more equal society and a more efficient, stable, higher-growing economy. That's really the "so what." Even if you don't have any moral values and you just want to maximize GDP growth, this level of inequality is bad.
It's not just the unfairness. The point is that we're paying a high price. The story we were told was that inequality was good for our economy. I'm telling a different story, that this level of inequality is bad for our economy.
Q: You argue that it's making our economy grow more slowly and connect it to "rent- seeking." That's an economist's term. Can you explain it in layman's terms?
A: Some people get an income from working, and some people get an income just because they own a resource. Their income isn't the result of effort. They're getting a larger share of the pie instead of making the pie bigger. In fact, they're making it smaller.
Q: So, for example, I put a toll booth at a busy intersection and keep all the money for myself.
A: That's right. You just collect the money. You're not adding anything. It's often used when we talk about oil-rich countries. The oil is there, and everybody fights over the spoils. The result is that those societies tend to do very badly because they spend all their energy fighting over the pile of dollars rather than making the pile of dollars bigger. They're trying to get a larger share of the rent.
Q: Where do you see this in the U.S.? Can you point to some specific examples?
A: You see it with oil and natural resources companies and their mineral leases and timber leases. Banks engaged in predatory lending. Visa and MasterCard just settled for $7 billion for anticompetitive behavior. They were charging merchants more money because they have monopoly power.
One good example was Goldman Sachs creating a security that's designed to fail. That's just taking money from some fool who trusted them. Our society functions well when people trust each other. It's particularly important for people to trust their banks. Goldman basically said, "You can't trust us."
Q: Economic growth is slowing again. Unemployment seems to be stuck above 8 percent. Is that the result of high debts or slower spending?
A: The fundamental problem is not government debt. Over the past few years, the budget deficit has been caused by low growth. If we focus on growth, then we get growth, and our deficit will go down. If we just focus on the deficit, we're not going to get anywhere.
This deficit fetishism is killing our economy. And you know what? This is linked to inequality. If we go into austerity, that will lead to higher unemployment and will increase inequality. Wages go down, aggregate demand goes down, wealth goes down.
All the homeowners who are underwater, they can't consume. We gave money to bail out the banking system, but we didn't give money to the people who were underwater on their mortgages. They can't spend. That's what's driving us down. It's household spending.
Q: And those with money to spend, you point out, spend less of every dollar. Those at the top of the income scale save nearly a quarter of their income. Those at the bottom spend every penny. Is that why tax cuts seem to have little effect on spending?
A: Exactly. When you redistribute money from the bottom to the top, the economy gets weaker. And all this stuff about the top investing in the country is (nonsense). No, they don't. They're asking where they can get the highest returns, and they're looking all over the globe. So they're investing in China and Brazil and Latin America, emerging markets, not America.
If the U.S. is a good place to invest, we'll get money from all over the world. If we have an economy that's not growing, we won't get investment. That's exactly what's happening. The Federal Reserve stimulates the economy by buying bonds. Where's the money go? Abroad.
Q: What's the answer, then? Raising taxes on wealthy people can't possibly solve all the problems you mention.
A: No, there's no magic bullet. But there are other ways of doing things. Just to pick one, look at how we finance higher education. Right now, we have this predatory lending system by our banks with no relief from bankruptcy. In some fundamental ways, it's really evil and oppressive. Parents that co-sign student loans now find out they can't discharge those loans, even in bankruptcy.
Education is so important, but there are so many barriers. Just 8 percent of those students in the most selective colleges come from the bottom half of the income scale. Eight percent! They can't get in because they don't get as good an education in elementary and high schools. Education is the vehicle for social mobility. It's how we restore the American dream.
$100,000 income: No big deal anymore June 19, 2012 Highlights • Less than 20 percent of American households earn more than $100,000. • Health care costs have gone up more than 134 percent from 2000 to 2011. • Median incomes rose 19.9 percent from 2001 to 2011. One hundred thousand dollars. Since the 1980s, the magical "six-figure" salary has been a benchmark for financial success. Not too long ago, that income often meant two nice cars in the garage of a large house, fun family vacations and plenty of money left over to save for retirement and college tuition. But times have changed. Not only has standard inflation steadily eroded the real value of a $100,000 income, but the costs of housing, health insurance and college tuition have risen dramatically in recent years. Consider the rising costs of food, energy and the necessities of a middle class life, and that six-figure luxury quickly turns to six-figure mediocrity. Less than 20 percent of American households even break the six figures. But many who earn incomes near the mark find that their prized incomes don't take them as far as the hype. Many say that while breaking the $100,000 annual income mark may still be an impressive milestone, it doesn't exactly roll out the red carpet. [...] http://www.bankrate.com/finance/personal-finance/100-000-income-no-big-deal-anymore-1.aspx
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The massive policy gap between Obama and Romney
Obama has released detailed policy proposals. Romney hasn't. (Kevin Lamarque -- Reuters)
Posted by Ezra Klein on August 6, 2012 at 9:50 am
The central difficulty of covering this presidential campaign — which is to say, of explaining Barack Obama and Mitt Romney’s disparate plans for the country — is the continued existence of what we might call the policy gap. The policy gap, put simply, is this: Obama has proposed policies. Mitt Romney hasn’t.
It is important to say that this exists separately from any judgments about the quality of either man’s policies. You can believe every idea Obama has proposed is a socialist horror inspired by Kenyan revenge fantasies. This would, I think, be a strange judgment to reach about plans to invest in infrastructure, temporarily double the size of the payroll tax cuts and raise the marginal tax rate on income over $250,000 by 4.5 percentage points. Nevertheless, Obama’s policy proposals are sufficiently detailed that they can be fully assessed and conclusions — even odd ones — confidently drawn. Romney’s policies are not.
Romney’s offerings are more like simulacra of policy proposals. They look, from far away, like policy proposals. They exist on his Web site, under the heading of “Issues,” with subheads like “Tax” and “Health care.” But read closely, they are not policy proposals. They do not include the details necessary to judge Romney’s policy ideas. In many cases, they don’t contain any details at all.
It is in the distance between “cut in marginal rates” and “revenue-neutral” that all the policy happens. That is where Romney must choose which deductions to cap or close. It’s where we learn what his plan means for the mortgage-interest deduction, and the tax-free status of employer health plans and the Child Tax Credit. It is where we learn, in other words, what his plan means for people like you and me. And it is empty. Romney does not name even one deduction that he would cap or close. He even admitted, in an interview with CNBC, that his plan “can’t be scored because those details have to be worked out.”
Compare that to Obama’s tax plan, which you can read on pages 37 through 40 of his 2013 budget proposal [ http://www.whitehouse.gov/omb/budget/Overview ] (though not, it should be said, on his campaign Web site, which is even less detailed than Romney’s). In these pages, Obama tells you exactly how he would like to raise taxes on the rich. He proposes allowing the Bush tax cuts to expire for income over $250,000, capping itemized deductions for wealthy Americans at 28 percent, taxing carried interest as ordinary income and more. The total tax increase, compared to current policy, is $1.5 trillion.
Whether you think it’s a good idea or a bad idea to raise taxes on the rich, Obama has told you exactly what he wants to do. Conversely, whether you think it’s a good idea or a bad idea to cut marginal tax rates by broadening the base, Romney hasn’t actually told you what he wants to do.
The same is true in other policy areas. In health care, for instance, Obama signed the multi-thousand page Affordable Care Act into law, and has backed a number of specific reforms that would build upon the policy, including giving states waivers to go their own way while meeting the law’s standards and giving the independent Medicare board more power over benefit packages. Obama’s vision for the health-care system is almost absurdly detailed.
Romney’s plan spans [ http://www.mittromney.com/issues/health-care ] 369 words. He would “promote alternatives to ‘fee for service.’” Which alternatives? It’s a mystery. He would “end tax discrimination against the individual purchase of insurance.” That can mean any of a couple of huge policy changes. It could mean, for the first time ever, that employer-provided health plans are taxed — a massive tax increase. It could mean that all spending on health insurance is made tax free — a giant, and expensive, tax cut. Which is it? Romney doesn’t say.
On financial regulation, Romney would “repeal Dodd-Frank and replace with streamlined, modern regulatory framework.” That is literally his entire plan. Three years after a homegrown financial crisis wrecked the global economy, the likely Republican nominee for president would repeal the new regulatory architecture and replace it with … something.
On deficit reduction, Romney’s plan “requires spending cuts of approximately $500 billion per year in 2016.” He has not released spending cuts that come anywhere close to that goal. He does have some nice words to say about the Ryan budget, but Romney advisers have told the media [ http://www.politico.com/blogs/burns-haberman/2012/08/paul-ryans-weekend-131130.html ] that their candidate disagrees with large parts of it, including the Medicare cuts.
The comparison to Obama is, again, instructive. Pages 23 through 37 of Obama’s budget detail dozens of spending cuts and tell you how much money they’ll save. You might not like those spending cuts, or you might want to see more. But at least you know the specifics of the president’s plan.
You might say that this is the natural result of an incumbent running against a challenger. Obama, by virtue of being president, has to develop detailed policies, and he oversees a massive bureaucracy able to help him get specific. Romney, by virtue of his not yet having Obama’s job, does not.
But in 2008, John McCain ran on a far more detailed policy platform than Romney. To name just one example, like Romney, McCain promised to end the tax code’s discrimination against health insurance bought by individuals. But he told us how he would do it: by taxing employer-based insurance and using the savings to give families a $5,000 tax credit to put toward buying health insurance. Nor has Romney released anything that matches “Renewing America’s Purpose [ http://campus.murraystate.edu/academic/faculty/mark.wattier/Purpose.pdf ],” the 457-page policy book that George W. Bush released during the 2000 election. Romney’s vagueness is unique among modern presidential campaigns.
It should not be considered partisan to demand details from the two men campaigning to be president. Both Republicans and Democrats should want to know the specifics of Romney’s tax plan. Both liberals and conservatives should insist that Romney reveal his plans to regulate the financial system. But so far, Romney has refused to give voters the most basic information about what he would do as president. That means he has refused to give voters the most basic information necessary for them to make an informed choice this November. That’s not acceptable. And neither voters nor the media should accept it.
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