F6 GOP 2012 election LIBRARY plaque placed .. computer reduced to a quivering heap tortoise-like now, YouTube crashed twice .. lucky tv is still working .. Guinness Book of Records could be interested .. thanks for the Afghanistan bring back, too .. have a good day, F6 .. ciao now ..
President Barack Obama speaks during an interview with The Associated Press at the White House, Thursday, Aug. 23, 2012, in Washington. Obama talked about the presidential race and Republican challenger Mitt Romney in the exclusive AP interview before heading off to a long weekend with his family at Camp David, the secluded presidential retreat in the Maryland mountains. His comments come ahead of the GOP convention opening Aug. 27, 2012, in Tampa, Fla. (AP Photo/Carolyn Kaster)
By BEN FELLER AP White House Correspondent WASHINGTON August 25, 2012 (AP)
President Barack Obama said Mitt Romney has locked himself into "extreme positions" on economic and social issues and would surely impose them if elected, trying to discredit his Republican rival at the biggest political moment of his life.
In an interview with The Associated Press, Obama said Romney lacks serious ideas, refuses to "own up" to the responsibilities of what it takes to be president, and deals in factually dishonest arguments that could soon haunt him in face-to-face debates.
Obama also offered a glimpse of how he would govern in a second term of divided government, insisting rosily that the forces of the election would help break Washington's stalemate. He said he would be willing to make a range of compromises with Republicans, confident there are some who would rather make deals than remain part of "one of the least productive Congresses in American history."
With the remarks, Obama set up a contrast between Romney, whom he cast as an extremist pushing staunchly conservative policies, and himself, by saying he would work across party lines. It was a seeming play for the independent voters who decide close elections and tell pollsters they want to see the often-gridlocked politicians in Washington solve the nation's problems.
Mainly, Obama was intent on countering Romney even before his challenger got to the Republican National Convention, which starts Monday in Tampa, Fla. In doing so, the president depicted his opponent as having accumulated ideas far outside the mainstream with no room to turn back.
"I can't speak to Gov. Romney's motivations," Obama said. "What I can say is that he has signed up for positions, extreme positions, that are very consistent with positions that a number of House Republicans have taken. And whether he actually believes in those or not, I have no doubt that he would carry forward some of the things that he's talked about."
Obama spoke to the AP on Thursday before heading off to a long weekend with his family at Camp David, the secluded presidential retreat in the Maryland mountains.
The president was at ease but doggedly on script, steering even personal-themed questions about Romney and running mate Paul Ryan into answers about starkly different visions for helping the middle class.
Romney, a successful former executive of a private equity firm and one-time Massachusetts governor, will introduce himself to a TV audience of millions next Thursday as he takes the convention stage to accept his party's presidential nomination. He has offered himself as a business-minded alternative to Obama and has seized on voter concerns about joblessness and the direction of the nation.
Nearly 10 weeks before Election Day, the race is remarkably stable and reflective of a sharply divided nation, with registered voters about evenly split on their choice and nearly a quarter of them unsure or still willing to change their mind. Across the interview, Obama's messages often seemed directed at moderate and independent voters whose sway could make the difference.
Obama's depiction of a Romney presidency grew most pointed when he was asked if his Republican challenger has no core, as one of Obama's top advisers once put it.
The president suggested that whatever Romney really stands for in life is secondary to the promises Romney has made in the campaign.
In explaining his accusation of "extreme" positions, the president cited Romney's call for across-the-board tax cuts that Obama said would mostly help the rich at the expense of everyone else and cost the nation $5 trillion. Obama singled out Romney's opposition to tax credits for producers of wind energy, the kind of issue that carries large political resonance in a battleground state such as Iowa.
And Obama alluded to the provocative issue of abortion, suddenly thrust to the fore this week when Republican Missouri Senate candidate Todd Akin said the female body has a way to "shut that whole thing down" when a woman is the victim of "legitimate rape."
The Republican platform in Tampa calls for a ban on abortion with no specific exceptions for rape or other circumstances. Obama predicted that a President Romney would not "stand in the way" if Congress gave him a bill that stripped away women's control over their reproductive health.
Romney is on record, however, as not opposing abortion in cases of rape and incest or if it will save the mother's life.
Polling shows social issues such as abortion represent perhaps Obama's best opportunity to draw support from Romney. Obama already holds a broad lead as the candidate more trusted to handle those social issues among Democrats and independents. The issue is one of Romney's biggest vulnerabilities among moderate and liberal Republicans.
Obama also sought to chip away at Romney's trustworthiness, taking fresh shots at Romney's refusal to release years of tax returns for public inspection. He said that position was indicative of a candidate who has a "lack of willingness to take responsibility for what this job entails."
Yet it is the economy that has driven this election and has dominated Obama's message of a middle-class revival.
"We aren't where we need to be. Everybody agrees with that," said Obama, who inherited an economy in free fall and now bears responsibility for a recovery that remains weak. "But Gov. Romney's policies would make things worse for middle-class families and offer no prospect for long-term opportunity for those striving to get into the middle class," the president said.
A Romney spokesman, Ryan Williams, jumped on Obama's account in the interview that the economy clearly needs to get better. "Mitt Romney and Paul Ryan agree," Williams said. "The American people know they aren't better off than they were four years ago."
Obama holds a decisive advantage over Romney when Americans are asked who better understands their daily woes. Yet nearly two-thirds of people in a new AP-GfK poll say the economy is in poor shape, and 60 percent say the country is headed in the wrong direction.
Obama expressed confidence that even voters whose lives have not improved during his term will stick with him as they assess the two candidates.
"If they saw Gov. Romney offering serious proposals that offered some sort of concrete ways in which middle-class families would be helped, then I could understand them thinking about that choice," Obama said. "But that's not what's happening."
And therein lies the central case that Obama made in the interview, as he has made for months, and as he will again at his own party's convention in Charlotte, N.C., in early September.
Obama said he is the candidate whose policies have historically helped the middle class on issues that people care about and that shape the economy — education, manufacturing, science and research, Medicare, debt reduction, tax rates, health care, consumer protection, college aid, energy.
Williams, the Romney spokesman, responded that Obama has piled up national debt and presided over high unemployment. "Too many middle-class families are going to sleep each night worried," he said. "This may be the best President Obama can do, but it's not the best America can do."
The moment that could finally shake up a close race could come in the three debates Obama and Romney hold in October. The president said Romney could run into trouble because of arguments that are not backed up by facts, citing a widely debunked television ad campaign in which Romney accuses Obama of gutting the work requirement in the federal welfare law.
"It will be a little tougher to defend face-to-face," Obama said.
Obama's view of a different second-term dynamic in Washington, even if both he and House Republicans retain power, seems a stretch given the stalemated politics of a divided government. He said two changes — the facts that "the American people will have voted," and that Republicans will no longer need to be focused on beating him — could lead to better conditions for deal-making.
If Republicans are willing, Obama said, "I'm prepared to make a whole range of compromises" that could even rankle his own party. But he did not get specific.
The 25-minute interview, conducted in the library of the White House residence, was part of a multi-faceted campaign by Obama's team to snag some of the spotlight during Romney's big week. Obama denied the notion, widely if quietly held in political circles, that the fiercely competitive president is also driven to beat Romney because he does not hold him in high regard.
"I don't really know him well," Obama said. "The big arguments that I have with Gov. Romney have to do with where we take this country forward."
Associated Press writer Ken Thomas and AP Deputy Director of Polling Jennifer Agiesta in Washington and AP writer Steve Peoples in Columbus, Ohio, contributed to this report.
Comeback Nation: Why the U.S. Economy Is Much Stronger Than You Think
Quite like an Olympic sport, hand-wringing about "America's decline" is popular, practiced all around the world, and often dominated by Americans, themselves. Unlike an Olympic event, it's wasted energy.
By Ruchir Sharma Aug 3 2012, 8:25 AM ET
Usain Bolt is the most dominant sprinter the world has seen in a century, perhaps more, so when he runs at the London games, anything less than victory by a blistering margin will be greeted as a disappointment. Results are always relative to expectations, and this as true for global economic competition as for the 100-meter dash. These days, the United States is an underestimated underdog, while China is still widely seen as something more like Bolt. The expectations gap is crucial to parsing the confused public discussion of the American recovery, and what it means for America's future.
Since the crisis of 2008, most Americans have come to expect gloom rather than gold in the near future. The long-term US growth rate is now burdened by our huge debts, and is slowing to 2.5 percent, down from 3.4 percent between 1950 and 2007. This fall is stoking a premature sense that American preeminence is already over. Polls show that a majority of Americans think China is already the world's "leading" economy, even though it is still about one third the size of the U.S. economy. The reality is that, at 2.5 percent growth, the US remains the fastest-growing rich economy, and is in fact regaining some of the recent ground lost to newcomers like China.
America's performance should be measured against the current competition, not against the records it set in the 1990s or 2000s. All the big emerging markets are slowing, most notably China, which has lowered its growth target to under 8 percent for the first time in many years and may well fall under 7 percent. It is hard to grow at a sprinter's pace when you are hitting middle age, growing careful and a bit fat. China is all three, having recently reached an average real income of more than $5,000, with a total GDP of more than $7 trillion, and a new taste for welfare state programs. Every "miracle economy," from Japan in the 1970s to South Korea in the 1990s, slowed at this real income level.
Unhappily, for those who like to imagine that globalization can produce "win-win" finishes, China's slowdown will be America's gain. The story of American growth slipping by a point will pale in comparison to the three or even four point slip in China. If the U.S. grows 2.5 percent this year, and China slips to 7 percent, the United States should regain the title it lost to China in 2007: that of the single largest contributor to global growth.
This year, the United States will also grow faster than the global average for the first time since 2003, the year an unprecedented boom in emerging market growth began. For the next four years, emerging market growth doubled to over 7.0 percent, creating the widespread perception that the rich nations of the West were being overtaken by the rise of the poor. Now, the historic norm is reasserting itself -- the big emerging nations are slowing dramatically, and the coming years are once again likely to produce more laggards than winners. As of 2007 the emerging markets were on average growing three times faster than the United States; now they are growing only twice as fast.
Evidence of an American revival, against both developed and emerging world competition, is mounting, driven by the traditional strengths of the American economy--its ability to innovate and adapt quickly. America's worst worries -- heavy debt, slow growth, the fall of the dollar and the decline of manufacturing -- will look much less troubling when compared to its direct rivals. While US growth has slowed by a full point so has growth in Japan and Europe, leaving the United States on top of the league of rich nations.
In a global economy that is increasingly shaped by competing forms of capitalism, the American brand appears to be winning. Consider the key challenge of "deleveraging" or digging out from debt. A new study from the McKinsey Global Institute shows that the United States is the only major developed economy that is even loosely following the path of countries that successfully negotiated similar debt-induced recessions, like Sweden and Finland in the 1990s. Total debt as a share of GDP has fallen since 2008 by 16 percent in the United States, while rising in Germany and rising sharply in Japan, the United Kingdom, France, Italy and Spain. As in Sweden during the 90s, the fall in total US debt is due entirely to sharp cuts in the private sector, particularly the finance industry and private households.
The weak link in the U.S. response to the debt crisis is the government. The Scandinavian cases show that government needs to start cutting spending and debt roughly four years after the downturn -- exactly the stage where the US is today. Washington has so far failed to put in place a plan for long-term debt reduction, in part because some politicians and pundits are still pushing for more borrowing to ward off "depression." The Scandinavian cases suggest this is exactly the wrong worry right now. The public debt is a big reason that long-term US growth is likely to slow, but even then, it is important to keep America's debt problem in perspective. China is arguably worse off, with total debt equal to 180 percent of GDP. The more wealthy you are, the more debt you can carry, so America's total debt (350 percent) is actually less of a challenge.
MANUFACTURING GOLD
The most dramatic signs of a US revival are in manufacturing. Even as it was losing out to emerging manufacturing powers in the last decade, the U.S. was reacting much more quickly than other rich nations, by restraining wage growth, boosting the productivity of remaining workers with new technology, allowing a steady fall in the dollar that has made US exports much more competitive, particularly relative to Euro nations, and incorporating inexpensive new foreign sources into its supply chains. The result was that China's rise came largely at Europe's expense. Since 2004 China has gained market share in the export of goods and of manufactured goods, while Europe's share is falling and the US share has held steady. After losing 6 million manufacturing jobs in the last decade, the US gained half a million in the last 18 months while Europe, Canada and Japan lost jobs or saw no change.
Energy is also rapidly emerging as an American competitive advantage. After falling for 25 years, the share of the US energy supply that comes from domestic sources has been rising since 2005, from 69 percent to around 80 percent, due to increasing production of oil and particularly natural gas. This is pushing US natural gas prices to the lowest rates in the world, inspiring manufacturers to relocate to the United States. Textiles was one of the first industries to leave the developed world, but recently Santana Textiles moved from Mexico to the US due to energy costs.
The big danger in the U.S. remains that the government will fail to attack the debt problem. Just as it makes no sense to analyze emerging markets in terms of generic rubrics like BRICs, developed markets also need to be analyzed as individual stories. The dramatically different approaches of the developed nations to the basic challenges -- deleveraging and maintaining strength in manufacturing -- is going to put them on very different growth paths. And if you compare the United States to its rich peers, it has the best chance to be a Breakout Nation, particularly if Washington can get its game together and attack the public debt.
Pretty much everyone seems to agree that President Obama's biggest electoral handicap is the economy. Pretty much everyone also seems to agree that, actually, assigning blame (or credit) for the economy entirely to a president is unfair for a couple of reasons: (1) the president doesn't have anything like full control over national policy levers; and (2) national policy levers don't have anything like full control over the economy, which is also influenced by things ranging from technological change to international boom and bust cycles.
There's no easy way to tease apart all these factors. But there's one simple operation that partly clarifies the picture, and it's especially useful when the economy suffers from troubles that are international in scope: compare the performance of the American economy to other similar economies--i.e., "mature" market economies, with high per capita GDP. With that in mind, take a look at this graph of unemployment rates over the past 12 years, and at my comments on it below.
Focus on the maroon, yellow, and light blue lines. (You can ignore the dark blue line, because it represents the 17 Eurozone countries, which are included in the 27 European Union countries represented by the yellow line.) Let's look at three phases:
[1] The Bush years. When George W. Bush took office, US unemployment was a bit lower than Japan's and about four percentage points lower than Europe's. When he left office, US unemployment was about the same as Europe's and about four percentage points higher than Japan's. So: things got way worse compared to both Europe and Japan.
[2] The Obama years. When Obama took office US unemployment was one fifth of a percentage point below Europe's, and as of last month it was more than two percentage points below Europe's. When Obama took office US unemployment was 3.6 percentage points higher than Japan's and as of last month it was four percentage points higher than Japan's. So: things got much better compared to Europe, somewhat worse compared to Japan.
[3] The Stimulus Years. Of course, it takes a while for a newly sworn-in president to actually do anything that might improve the economy, so maybe starting the clock in January is unfair. If you start it in February--Obama's first full month in the White House--then the US unemployment rate has improved relative to both Europe's and Japan's. And, if you want to capture the impact of Obama's signature attempt to combat the great recession--the stimulus bill--starting the clock a bit later makes sense. The bill was passed in February of 2009, and by the beginning of May, only 3 percent of stimulus expenditures had been made--and, of course, given that some of the employment attributable to this spending comes from second-order effects, you wouldn't expect even 3 percent of the impact by then. So let's take May 1 as the date when you could start realistically looking for appreciable stimulus impact.
What do you see as of May? You see the sharp upward slope of the unemployment curve, which Obama inherited from the Bush years, begin to moderate. And within five months the unemployment rate has reached its acme, after which it drops considerably. Of course, it would be great if it had dropped further, but it would be a lot easier to blame its failure to drop further on president Obama had Europe's unemployment rate, in the same period, not risen by a full percentage point; or had Japan's unemployment rate fallen more sharply than, or even as sharply as, America's.
Again: Neither Obama nor Bush is, in fact, anywhere near wholly responsible for the performance of the economy during their administrations. For example, both Democrats and Republicans, as well as other players, bear some blame for the housing bubble whose bursting marred the end of the Bush years and the beginning of the Obama years.
Still, the first step toward getting clearer on what a president is responsible for--especially during a period of global economic trouble--is to compare America's performance to the performance of similar economies. By that standard, Obama's handling of the economy starts looking pretty good. Maybe not so good that it should be a big political asset, but good enough that, in a just world, it wouldn't be much of a liability.
Housing Starts Jump 20% in One Year: Recovery Ahead, Says Bill McBride
By Stacy Curtin | Daily Ticker – Thu, Aug 16, 2012 1:16 PM EDT
July housing starts registered a bit weaker than expected Thursday, raising questions yet again about the state of the U.S. housing market.
Last month housing starts fell 1.1 percent from June to a seasonally adjusted 746,000, the Commerce Department reported. Construction of single-family homes fell 6.5 percent to the slowest pace since March, but multi-family home construction grew 12.4 percent.
Despite the slowing month-over-month rate, there's a better way to look at the numbers says Calculated Risk [ http://www.calculatedriskblog.com/ ]'s Bill McBride, a long-time housing bear turned bull at the beginning of this year.
Single-family starts are up 21.5 percent from 2011 and overall starts are up 17 percent from last year, which is part of the reason why McBride remains optimistic about a housing rebound.
After four years of some of the weakest housing construction growth in U.S. history (the government began tracking the data in 1959), "a 20 percent growth rate is pretty solid" at a time when growth has slowed, says McBride.
Additionally, housing permits jumped roughly 7 percent, making July the first month since the recession began that the monthly increase in permits topped 800,000.
When most people think of a housing bottom they think in terms of price, but there is more to it, says McBride.
For him, a bottom in housing comes in two parts. First in housing activity — like housing starts, new home sales and residential investment — and second in home prices.
"For housing activity I think there is a clear bottom," McBride says in the accompanying video. "It was a long flat bottom over multiple years" and "housing starts and new home sales... are just slowly going up."
As for home prices, "I think we've turned that bottom too" and it happened in "February or March of this year," he says. Home prices have increased sequentially for the last four months, according to the S&P Case-Shiller Index.
Those who remain bearish on housing often cite a buildup in shadow inventory. Perma-bear Gary Shilling of A. Gary Shilling recently told The Daily Ticker [ http://finance.yahoo.com/blogs/daily-ticker/flood-foreclosures-could-cause-home-prices-drop-20-151541166.html ] he predicts another 20 percent decline in prices when foreclosed homes come on the market. Shilling also says there are many homeowners who are waiting to sell their homes for a higher price, which will add further pressure on the market.
McBride feels that the country's shadow inventory has already peaked and the excess inventory won't have a dramatic downward pressure on prices, he says. Many of the nation's pending foreclosures are in states where a court action is required to foreclose on a home, he adds.
Reuters Posted: 08/17/2012 5:25 am Updated: 08/17/2012 12:28 pm
LONDON, Aug 17 (Reuters) - Twice as many business executives around the world say the global economy will prosper better if incumbent U.S. president Barack Obama wins the next election than if his Republican challenger Mitt Romney does, a poll showed on Friday.
Democrat Obama was chosen by 42.7 percent in the 1,700 respondent poll, compared with 20.5 percent for Romney. The rest said "neither".
The result was different among respondents in the United States, where a slim majority thought Romney would be better for their businesses than Obama.
Obama maintains a seven-point lead over Romney among registered voters in the race for the Nov. 6 presidential election, despite the fact Americans are increasingly pessimistic about the future, according to a Reuters/Ipsos poll conducted last week.
The FT poll was conducted before Romney picked Wisconsin Congressman Paul Ryan as his vice presidential running mate at the weekend, a move that could dramatically shift the election debate between two sharply contrasting views of government spending and debt.
Romney's choice for running mate gave him no immediate boost to his White House prospects, a Reuters/Ipsos poll suggested on Monday.
(Reporting by Andy Bruce. Editing by Jeremy Gaunt.)
It has become a campaign ritual. Immediately after the release of unemployment figures on the first Friday of every month, Democratic and Republican spin shifts into high gear.
“Our mission is not just to get back to where we were before the crisis. We’ve got to deal with what’s been happening over the last decade, the last 15 years — manufacturing leaving our shores, incomes flat-lining — all those things are what we’ve got to struggle and fight for,” Obama declared [ http://www.whitehouse.gov/the-press-office/2012/07/06/remarks-president-campaign-event ] at the Dobbins School in Poland, Ohio.
Romney took the opposite tack [ http://www.mittromney.com/news/press/2012/07/mitt-romney-america-can-do-better-and-kick-gut-has-got-end ] in Wolfeboro, N.H.: “This is a time for America to choose whether they want more of the same; whether unemployment above 8 percent month after month after month is satisfactory or not. It doesn’t have to be this way. America can do better and this kick in the gut has got to end.”
Both candidates are only tinkering at the edges of the most important issue facing the United States: the hollowing out of the employment marketplace, the disappearance of mid-level jobs.
The issue of the disappearing middle is not new [ http://campaignstops.blogs.nytimes.com/2012/02/19/is-this-the-end-of-market-democracy/ ], but credible economists have added a more threatening twist to the argument: the possibility that a well-functioning, efficient modern market economy, driven by exponential growth in the rate of technological innovation, can simultaneously produce economic growth and eliminate millions of middle-class jobs.
If you look at the decade before the recession, the U.S. economy was not creating enough jobs, particularly not enough middle class jobs, and we were losing manufacturing jobs at an alarming rate even before the recession. And I would also put together, combined with those two problems, the polarization of the U.S. job market, the fact that we are getting more and more people at the very top and the very bottom and the middle has been shrinking.
In recent months, Erik Brynjolfsson, a professor at the M.I.T. Sloan School of Management, and Andrew McAfee, a research scientist at M.I.T.’s Center for Digital Business, have raised the stakes in this discussion with the publication of “Race Against the Machine [ http://www.economicsofinformation.com/ ]” and a collection of accompanying essays and papers by the authors.
McAfee has graphically illustrated the key findings [ http://raceagainstthemachine.com/2012/01/05/the-rebound-that-stayed-flat/ ] that worry him and Brynjolfsson. The red line in the figure below, the employment to population ratio, tracks the ratio of the number of people working to the total number of working-age men and women in the United States.
Since the Great Recession officially ended in June of 2009 G.D.P., equipment investment, and total corporate profits have rebounded, and are now at their all-time highs. The employment ratio, meanwhile, has only shrunk and is now at its lowest level since the early 1980s when women had not yet entered the workforce in significant numbers. So current labor force woes are not because the economy isn’t growing, and they’re not because companies aren’t making money or spending money on equipment. They’re because these trends have become increasingly decoupled from hiring — from needing more human workers. As computers race ahead, acquiring more and more skills in pattern matching, communication, perception, and so on, I expect that this decoupling will continue, and maybe even accelerate.
This view is controversial — especially McAfee’s argument that the decoupling of jobs from other positive economic developments “will continue, and maybe even accelerate.” In other words, the downward employment and jobs spiral will keep going, driven by structural forces. Policies to ameliorate the process – a shorter work week, a massive investment in education (for example, at the community college level), the disaggregation of complex tasks into simple functions that could be executed by mid-skill workers — may only slow the decline, not stop it. This is a deeply pessimistic vision.
“In my dystopian vision of the future, that red line (in the chart) keeps falling down – or suddenly drops off a cliff,” McAfee told The Times, adding: “All of the trends that I see and can identify are contributing to the hollowing out of the economy.”
I have to be brutally honest, I don’t think Andy and I are sure whether it’s different this time around. If you look at the data, this time it seems to be a lot more difficult. So it’s possible we are facing a regime change, a fundamental change in the way technology and employment interact with each other.
The Brynjolfsson-McAfee message has been generally well received in the high-tech community. On July 5, McAfee held the attention of an audience of young researchers and prospective entrepreneurs here at Singularity University [ http://singularityu.org/ ]. For over an hour after his lecture, students met with McAfee to explore the consequences of his argument.
The students’ questions:
How much can wealth accumulate for a small slice of the population at the top, while large numbers of people are forced to work for ever lower pay or to drop out of the workforce altogether? For such a future society to function, would wealth need to be (coercively) redistributed from the top to those below, in order for the mass of the jobless population to survive? Who would have power and how would tax and spending policies be determined in such a radically bifurcated, automated, workless society?
McAfee noted in our interview that some critics have accused him and Brynjolfsson of accepting the “lump of labor fallacy [ http://www.foreignpolicy.com/articles/2012/01/25/sotu_much_mercantilism ]” (the idea that there is a fixed amount of work available) in defiance of economic history. In the aftermath of major periods of technological advance, including the transition from agriculture to industry, employment has grown enormously.
James Hamilton, an economist at the University of California, San Diego, challenged the “Race Against The Machine” thesis in an e-mail to The Times:
I am very skeptical of the claim that technology itself is the problem. In 2005, the average U.S. worker could produce what would have required 2 people to do in 1970, what would have required 4 people in 1940, and would have required 6 people in 1910. The result of this technological progress was not higher unemployment, but instead rising real wages. The evidence from the last two centuries is unambiguous — productivity gains lead to more wealth, not poverty. The unemployment since 2007 was not caused by gains in productivity or increased automation, but instead by loss of demand for the product that the workers had been producing, for example, a plunge in the demand for new home construction.
Amar Bhidé, author of the book “The Venturesome Economy,” and senior fellow at the Center for Emerging Market Enterprises at Tufts, did not mince words responding to a request for comment from The Times:
As you might guess I find the storyline rather unconvincing and Luddite. What’s new about automation? I’ve been banging away for years about the phenomenon of non-destructive creation as a vital complement to creative destruction. The two don’t move in lock step but I have no reason to believe that non-destructive creation has ceased. Until someone persuades me it has, I will limit my anxieties to global warming, financial misregulation, a screwed up health care system, etc.
McAfee countered in an e-mail that “this time really is different,” arguing:
All previous waves of automation affected only a small subset of human skills and abilities. To oversimplify a bit, the industrial revolution was about building machines that had (much) more brute strength than we did. For all mental work, the industrial revolution was meaningless — you still needed people.
Until recently, the digital revolution also didn’t affect that many human skills and abilities. Computers became better at math, and at some clerical abilities, but we people were still miles ahead in other areas. So employers needed to hire humans if they wanted to listen to people speak and respond to them, write a report, pattern-match across a large and diverse body of information, and do all the other things that modern knowledge workers do.
Employers also needed people if they wanted lots of physical tasks done, including driving a truck or vacuuming a floor. The same with most tasks involving sensory perception, such as determining if a soccer ball has crossed a goal line.
All of the above abilities have now been demonstrated by digital technologies, and not just in the lab, but in the real world. So employers are going to switch from human labor to digital labor to execute tasks like those above. In fact, they’re already doing so. I expect this process of switching to accelerate in the future, perhaps rapidly, because computers get cheaper all the time, are very accurate and reliable once they’re programmed properly, and don’t demand overtime, benefits, or health care.
Brynjolfsson, who is more optimistic, said in an interview with The Times, “we are hopeful that that (job growth) will happen, but there is no guarantee of it. There is no economic law that says everyone benefits from technological improvement.” He also pointed out that the surge in inequality driven by rising incomes at the very top of the distribution suggests strongly that the benefits of digitization have not been widely spread.
“The problem is not tech stagnation,” as some have argued, “but the opposite,” Brynjolfsson contends. “Technology is rushing ahead faster than humans can adapt.” The difficulty of human adaptation is, in turn, likely to get worse, he added, because technological innovation — as in Moore’s Law (predicting a doubling of computer capacity roughly every two years) — grows exponentially in scope. The total number of non-farm jobs in the country is now 5 million less than in January, 2008. The 3.7 million jobs added to the economy have not been enough [ http://media.cq.com/blog/2012/06/where-the-jobs-are-and-arent/ ] to make up for the 8.7 million jobs lost in 2008-9.
Brynjolfsson and McAfee have a list of 19 proposals [ http://ebusiness.mit.edu/erik/MA2012_Brynjolfsson_McAfee.pdf ] that they support — which range from massive investment in education, infrastructure and basic research, to lowering barriers to business creation, eliminating the mortgage interest deduction and changing copyright and patent law to encourage new (as opposed to protecting old) innovations.
Any effort to ameliorate the damaging consequences to the employment marketplace stemming from technological innovation, according to Brynjolfsson, requires substantial government action at a time when “the political system is the most dysfunctional part of our society.”
McAfee and Brynjolfsson argue that in a race against machines, humans will lose. In their view, “the key to winning the race is not to compete against machines but to compete with machines.” The question, then, will be whether humans can adapt at anywhere near the pace needed to keep up.
While the many robots in auto factories typically perform only one function, in the new Tesla factory in Fremont, Calif., a robot might do up to four: welding, riveting, bonding and installing a component. Paul Sakuma/Associated Press
Video [embedded] The Robot Factory Future
A robot stacking solar panels at a factory in Milpitas, Calif. Lianne Milton for The New York Times
Robot arms like those at a Philips Electronics factory in the Netherlands can perform the same tasks as hundreds of low-skill workers. Adept Technology
The Foxconn plant in Shenzhen, China. Ym Yik/European Pressphoto Agency
By JOHN MARKOFF Published: August 18, 2012
DRACHTEN, the Netherlands — At the Philips Electronics factory on the coast of China, hundreds of workers use their hands and specialized tools to assemble electric shavers. That is the old way.
At a sister factory here in the Dutch countryside, 128 robot arms do the same work with yoga-like flexibility. Video cameras guide them through feats well beyond the capability of the most dexterous human.
One robot arm endlessly forms three perfect bends in two connector wires and slips them into holes almost too small for the eye to see. The arms work so fast that they must be enclosed in glass cages to prevent the people supervising them from being injured. And they do it all without a coffee break — three shifts a day, 365 days a year.
All told, the factory here has several dozen workers per shift, about a tenth as many as the plant in the Chinese city of Zhuhai.
This is the future. A new wave of robots, far more adept than those now commonly used by automakers and other heavy manufacturers, are replacing workers around the world in both manufacturing and distribution. Factories like the one here in the Netherlands are a striking counterpoint to those used by Apple [ http://topics.nytimes.com/top/news/business/companies/apple_computer_inc/index.html ] and other consumer electronics giants, which employ hundreds of thousands of low-skilled workers.
“With these machines, we can make any consumer device in the world,” said Binne Visser, an electrical engineer who manages the Philips assembly line in Drachten.
Many industry executives and technology experts say Philips’s approach is gaining ground on Apple’s. Even as Foxconn, Apple’s iPhone [ http://topics.nytimes.com/top/reference/timestopics/subjects/i/iphone/index.html ] manufacturer, continues to build new plants and hire thousands of additional workers to make smartphones, it plans to install more than a million robots within a few years to supplement its work force in China.
Foxconn has not disclosed how many workers will be displaced or when. But its chairman, Terry Gou, has publicly endorsed a growing use of robots. Speaking of his more than one million employees worldwide, he said in January, according to the official Xinhua news agency: “As human beings are also animals, to manage one million animals gives me a headache.”
The falling costs and growing sophistication of robots have touched off a renewed debate among economists and technologists over how quickly jobs will be lost. This year, Erik Brynjolfsson and Andrew McAfee, economists at the Massachusetts Institute of Technology, made the case for a rapid transformation. “The pace and scale of this encroachment into human skills is relatively recent and has profound economic implications,” they wrote in their book, “Race Against the Machine [ http://raceagainstthemachine.com/ ].”
In their minds, the advent of low-cost automation foretells changes on the scale of the revolution in agricultural technology over the last century, when farming employment in the United States fell from 40 percent of the work force to about 2 percent today. The analogy is not only to the industrialization of agriculture but also to the electrification of manufacturing in the past century, Mr. McAfee argues.
“At what point does the chain saw replace Paul Bunyan?” asked Mike Dennison, an executive at Flextronics [ http://www.flextronics.com/ ], a manufacturer of consumer electronics products that is based in Silicon Valley and is increasingly automating assembly work. “There’s always a price point, and we’re very close to that point.”
But Bran Ferren, a veteran roboticist and industrial product designer at Applied Minds in Glendale, Calif., argues that there are still steep obstacles that have made the dream of the universal assembly robot elusive. “I had an early naïveté about universal robots that could just do anything,” he said. “You have to have people around anyway. And people are pretty good at figuring out, how do I wiggle the radiator in or slip the hose on? And these things are still hard for robots to do.”
Beyond the technical challenges lies resistance from unionized workers and communities worried about jobs. The ascension of robots may mean fewer jobs are created in this country, even though rising labor and transportation costs in Asia and fears of intellectual property theft are now bringing some work back to the West.
Take the cavernous solar-panel factory run by Flextronics in Milpitas, south of San Francisco. A large banner proudly proclaims “Bringing Jobs & Manufacturing Back to California!” (Right now China makes a large share of the solar panels used in this country and is automating its own industry.)
Yet in the state-of-the-art plant, where the assembly line runs 24 hours a day, seven days a week, there are robots everywhere and few human workers. All of the heavy lifting and almost all of the precise work is done by robots that string together solar cells and seal them under glass. The human workers do things like trimming excess material, threading wires and screwing a handful of fasteners into a simple frame for each panel.
Such advances in manufacturing are also beginning to transform other sectors that employ millions of workers around the world. One is distribution, where robots that zoom at the speed of the world’s fastest sprinters can store, retrieve and pack goods for shipment far more efficiently than people. Robots could soon replace workers at companies like C & S Wholesale Grocers, the nation’s largest grocery distributor, which has already deployed robot technology.
Rapid improvement in vision and touch technologies is putting a wide array of manual jobs within the abilities of robots. For example, Boeing [ http://topics.nytimes.com/top/news/business/companies/boeing_company/index.html ]’s wide-body commercial jets are now riveted automatically by giant machines that move rapidly and precisely over the skin of the planes. Even with these machines, the company said it struggles to find enough workers to make its new 787 aircraft. Rather, the machines offer significant increases in precision and are safer for workers.
And at Earthbound Farms in California, four newly installed robot arms with customized suction cups swiftly place clamshell containers of organic lettuce into shipping boxes. The robots move far faster than the people they replaced. Each robot replaces two to five workers at Earthbound, according to John Dulchinos, an engineer who is the chief executive at Adept Technology, a robot maker based in Pleasanton, Calif., that developed Earthbound’s system.
Robot manufacturers in the United States say that in many applications, robots are already more cost-effective than humans.
At an automation trade show last year in Chicago, Ron Potter, the director of robotics technology at an Atlanta consulting firm called Factory Automation Systems, offered attendees a spreadsheet to calculate how quickly robots would pay for themselves.
In one example, a robotic manufacturing system initially cost $250,000 and replaced two machine operators, each earning $50,000 a year. Over the 15-year life of the system, the machines yielded $3.5 million in labor and productivity savings.
The Obama administration says this technological shift presents a historic opportunity for the nation to stay competitive. “The only way we are going to maintain manufacturing in the U.S. is if we have higher productivity,” said Tom Kalil, deputy director of the White House Office of Science and Technology Policy.
Government officials and industry executives argue that even if factories are automated, they still are a valuable source of jobs. If the United States does not compete for advanced manufacturing in industries like consumer electronics, it could lose product engineering and design as well. Moreover, robotics executives argue that even though blue-collar jobs will be lost, more efficient manufacturing will create skilled jobs in designing, operating and servicing the assembly lines, as well as significant numbers of other kinds of jobs in the communities where factories are.
And robot makers point out that their industry itself creates jobs. A report commissioned by the International Federation of Robotics [ http://www.ifr.org/ ] last year found that 150,000 people are already employed by robotics manufacturers worldwide in engineering and assembly jobs.
But American and European dominance in the next generation of manufacturing is far from certain.
“What I see is that the Chinese are going to apply robots too,” said Frans van Houten, Philips’s chief executive. “The window of opportunity to bring manufacturing back is before that happens.”
A Faster Assembly Line
Royal Philips Electronics began making the first electric shavers in 1939 and set up the factory here in Drachten in 1950. But Mr. Visser, the engineer who manages the assembly, takes pride in the sophistication of the latest shavers. They sell for as much as $350 and, he says, are more complex to make than smartphones.
The assembly line here is made up of dozens of glass cages housing robots made by Adept Technology that snake around the factory floor for more than 100 yards. Video cameras atop the cages guide the robot arms almost unerringly to pick up the parts they assemble. The arms bend wires with millimetric accuracy, set toothpick-thin spindles in tiny holes, grab miniature plastic gears and set them in housings, and snap pieces of plastic into place.
The next generation of robots for manufacturing will be more flexible and easier to train.
Witness the factory of Tesla Motors [ http://www.teslamotors.com/ ], which recently began manufacturing the Tesla S, a luxury sedan, in Fremont, Calif., on the edge of Silicon Valley.
More than half of the building is shuttered, called “the dark side.” It still houses a dingy, unused Toyota Corolla assembly line on which an army of workers once turned out half a million cars annually.
The Tesla assembly line is a stark contrast, brilliantly lighted. Its fast-moving robots, bright Tesla red [ http://vimeo.com/43083157 ], each has a single arm with multiple joints. Most of them are imposing, 8 to 10 feet tall, giving them a slightly menacing “Terminator” quality.
But the arms seem eerily human when they reach over to a stand and change their “hand” to perform a different task. While the many robots in auto factories typically perform only one function, in the new Tesla factory a robot might do up to four: welding, riveting, bonding and installing a component.
As many as eight robots perform a ballet around each vehicle as it stops at each station along the line for just five minutes. Ultimately as many as 83 cars a day — roughly 20,000 are planned for the first year — will be produced at the factory. When the company adds a sport utility vehicle next year, it will be built on the same assembly line, once the robots are reprogrammed.
Tesla’s factory is tiny but represents a significant bet on flexible robots, one that could be a model for the industry. And others are already thinking bigger.
Hyundai and Beijing Motors recently completed a mammoth factory outside Beijing that can produce a million vehicles a year using more robots and fewer people than the big factories of their competitors and with the same flexibility as Tesla’s, said Paul Chau, an American venture capitalist at WI Harper who toured the plant in June.
The New Warehouse
Traditional and futuristic systems working side by side in a distribution center north of New York City show how robotics is transforming the way products are distributed, threatening jobs. From this warehouse in Newburgh, C & S, the nation’s largest grocery wholesaler, supplies a major supermarket chain.
The old system sprawls across almost half a million square feet. The shelves are loaded and unloaded around the clock by hundreds of people driving pallet jacks and forklifts. At peak times in the evening, the warehouse is a cacophony of beeping and darting electric vehicles [ http://topics.nytimes.com/top/reference/timestopics/subjects/e/electric_vehicles/index.html ] as workers with headsets are directed to cases of food by a computer that speaks to them in four languages.
The new system is much smaller, squeezed into only 30,000 square feet at the far end of the warehouse and controlled by just a handful of technicians. They watch over a four-story cage with different levels holding 168 “rover” robots the size of go-carts. Each can move at 25 miles an hour, nearly as fast as an Olympic sprinter.
Each rover is connected wirelessly to a central computer and on command will race along an aisle until it reaches its destination — a case of food to retrieve or the spot to drop one off for storage. The robot gathers a box by extending two-foot-long metal fingers from its side and sliding them underneath. It lifts the box and pulls it to its belly. Then it accelerates to the front of the steel cage, where it turns into a wide lane where it must contend with traffic — eight robots are active on each level of the structure, which is 20 aisles wide and 21 levels high.
From the aisle, the robots wait their turn to pull into a special open lane where they deposit each load into an elevator that sends a stream of food cases down to a conveyor belt that leads to a large robot arm.
About 10 feet tall, the arm has the grace and dexterity of a skilled supermarket bagger, twisting and turning each case so the final stack forms an eight-foot cube. The software is sophisticated enough to determine which robot should pick up which case first, so when the order arrives at the supermarket, workers can take the cases out in the precise order in which they are to go on the shelves.
When the arm is finished, the cube of goods is conveyed to a machine that wraps it in clear plastic to hold it in place. Then a forklift operator summoned by the computer moves the cube to a truck for shipment.
Built by Symbotic [ http://www.symbotic.com/ ], a start-up company based in the Boston area, this robotic warehouse is inspired by computer designers who created software algorithms to efficiently organize data to be stored on a computer’s hard drive.
Jim Baum, Symbotic’s chief executive, compares the new system to a huge parallel computer. The design is efficient because there is no single choke point; the cases of food moving through the robotic warehouse are like the digital bits being processed by the computer.
Humans’ Changing Role
In the decade since he began working as a warehouseman in Tolleson, Ariz., a suburb of Phoenix, Josh Graves has seen how automation systems can make work easier but also create new stress and insecurity. The giant facility where he works distributes dry goods for Kroger supermarkets.
Mr. Graves, 29, went to work in the warehouse, where his father worked for three decades, right out of high school. The demanding job required lifting heavy boxes and the hours were long. “They would bring in 15 guys, and only one would last,” he said.
Today Mr. Graves drives a small forklift-like machine that stores and retrieves cases of all sizes. Because such workers are doing less physical labor, there are fewer injuries, said Rome Aloise, a Teamsters vice president in Northern California. Because a computer sets the pace, the stress is now more psychological.
Mr. Graves wears headsets and is instructed by a computerized voice on where to go in the warehouse to gather or store products. A centralized computer the workers call The Brain dictates their speed. Managers know exactly what the workers do, to the precise minute.
Several years ago, Mr. Graves’s warehouse installed a German system that automatically stores and retrieves cases of food. That led to the elimination of 106 jobs, roughly 20 percent of the work force. The new system was initially maintained by union workers with high seniority. Then that job went to the German company, which hired nonunion workers.
Now Kroger plans to build a highly automated warehouse in Tolleson. Sixty union workers went before the City Council last year to oppose the plan, on which the city has not yet ruled.
“We don’t have a problem with the machines coming,” Mr. Graves told city officials. “But tell Kroger we don’t want to lose these jobs in our city.”
Some jobs are still beyond the reach of automation: construction jobs that require workers to move in unpredictable settings and perform different tasks that are not repetitive; assembly work that requires tactile feedback like placing fiberglass panels inside airplanes, boats or cars; and assembly jobs where only a limited quantity of products are made or where there are many versions of each product, requiring expensive reprogramming of robots.
But that list is growing shorter.
Upgrading Distribution
Inside a spartan garage in an industrial neighborhood in Palo Alto, Calif., a robot armed with electronic “eyes” and a small scoop and suction cups repeatedly picks up boxes and drops them onto a conveyor belt [ http://www.youtube.com/watch?v=bJOTqjRdgSA ].
It is doing what low-wage workers do every day around the world.
Older robots cannot do such work because computer vision systems were costly and limited to carefully controlled environments where the lighting was just right. But thanks to an inexpensive stereo camera and software that lets the system see shapes with the same ease as humans, this robot can quickly discern the irregular dimensions of randomly placed objects.
Such robots will put automation within range of companies like Federal Express and United Parcel Service that now employ tens of thousands of workers doing such tasks.
The start-up behind the robot, Industrial Perception Inc., is the first spinoff of Willow Garage, an ambitious robotics research firm based in Menlo Park, Calif. The first customer is likely to be a company that now employs thousands of workers to load and unload its trucks. The workers can move one box every six seconds on average. But each box can weigh more than 130 pounds, so the workers tire easily and sometimes hurt their backs.
Industrial Perception will win its contract if its machine can reliably move one box every four seconds. The engineers are confident that the robot will soon do much better than that, picking up and setting down one box per second.
“We’re on the cusp of completely changing manufacturing and distribution,” said Gary Bradski, a machine-vision scientist who is a founder of Industrial Perception. “I think it’s not as singular an event, but it will ultimately have as big an impact as the Internet.”
Inventors Shawn Frayne (right) and Alex Hornstein (left) stand next to their Solar Pocket Factory. CREDIT: Shawn Frayne | Alex Hornstein
InnovationNewsDaily Staff Date: 21 August 2012 Time: 02:18 PM ET
Making clean energy fit into a person's pocket would be a neat trick, and two inventors have begun working on the solution. They envision tiny automated factories that make solar panels as small as a person's fingers.
The table-size Solar Pocket Factory [ http://www.kickstarter.com/projects/alex9000/the-solar-pocket-factory-an-invention-adventure ] could churn out a solar panel every 15 seconds, giving full-size factories in China a run for their money, say Shawn Frayne and Alex Hornstein, who are hoping to raise $50,000 on the crowd-funding website Kickstarter to finish their prototype and prepare for a product launch in 2013.
The two inventors have already tested microsolar panels for charging mobile phones, powering energy-charging stations at the High Line park in Manhattan, and even replacing the batteries in a daughter's toys.
Today's small solar panels cost about twice as much as big solar panels and typically fail within two to five years. Frayne and Hornstein say they have figured out how to shave 30 percent off the cost and make "microsolar" panels that would last five times longer.
The solution comes from building an automated factory [ http://www.innovationnewsdaily.com/1351-google-factory-usa.html ] that can churn out solar panels of a consistent quality based on higher-quality materials. Such automation not only would sidestep the costs of human labor required to glue and assemble every part of the tiny panels by hand, it would cut down on the costs of dealing with flawed panels that get thrown out and wasted, the two inventors say.
Rewards for people who donate to the Kickstarter project include kits for assembling solar panels that can power a person's own smartphones or household gadgets.
Success for the Solar Pocket Factory could signal yet another step toward robotic factories that would change the world — in terms of both spreading clean-energy technologies and disrupting the human work force. The Pentagon has started its own project to create robotic sewing machines [ http://www.innovationnewsdaily.com/1244-pentagon-robot-sewing-machines.html ] capable of outcompeting human workers in Asian factories.
The plan underlines the fact that the Republican Party and the oil, gas and coal industries, long in agreement on policy and ideology, have grown closer than ever before. Romney, whose top energy adviser is the wealthiest oilman in the country, is on pace to raise more money from these industries than either George W. Bush or Sen. John McCain (R-Ariz.) did when he ran for president. The industries are also pumping millions into the new unlimited money vehicles, super PACs and dark money nonprofits, that are spending tens of millions of dollars per month to influence the election.
"This is an industry that has a close affinity with the Republican Party and I would expect that this would be an industry that is not just giving through the contributions of individual executives [to the campaign and to super PACs], but also to 501c organizations," which do not disclose their donors, says Sheila Krumholz, executive director of the Center for Responsive Politics.
According to data analyzed by the Center for Responsive Politics, Romney has raised $2.2 million from the oil and gas industry, on pace to exceed the amounts raised by both McCain and Bush in the past two elections, and more than $600,000 from mining interests, already more than what McCain or Bush raised for his entire campaign. The Republican National Committee has pulled in $4 million from oil and gas, likely on pace to pass the $5.9 million they raised in 2008.
One thing aiding Romney's fundraising from the oil, gas and coal industries is his decision to forgo public funds for the general election, which will begin at the end of both parties' conventions. This will allow him to raise far more money than either Bush or McCain could after he entered into the public fund system.
This says nothing about the millions going to super PACs and nonprofits, which have been empowered -- or in the case of super PACS, created -- by two 2010 court decisions that enable them to raise and spend unlimited sums from corporations, individuals and unions for the first time. The top two super PACs supporting Romney's campaign, Restore Our Future and American Crossroads, have raised more than $8 million from the extractive industries.
The billionaire energy titans, David and Charles Koch, plan to spend more than $100 million through their nonprofit Americans for Prosperity and other groups, none of which will disclose their donors, to defeat President Barack Obama. The Kochs are opposed to climate science that says that fossil fuel use by humans is to blame for the rise in global temperatures and have spent millions to convince politicians and the public [ http://www.greenpeace.org/usa/en/campaigns/global-warming-and-energy/polluterwatch/koch-industries/ ] that climate science is false. David Koch hosted a fundraiser for Romney [ http://www.nytimes.com/2012/07/09/us/politics/romney-mines-the-hamptons-for-campaign-cash.html ] in the Hamptons back in June that brought in millions for the presidential hopeful's campaign.
"The Koch brothers must just be doing a dance," says Natural Resources Defense Council Action Fund director Heather Taylor-Miesle.
The absence of climate change in Romney's energy plan comes four years after McCain ran with a platform both acknowledging human involvement in the warming planet and also in favor of a cap and trade system to reduce carbon emissions. The Republican Party platform adopted at the 2008 GOP convention announced the following: "The same human economic activity that has brought freedom and opportunity to billions has also increased the amount of carbon in the atmosphere. While the scope and longterm consequences of this are the subject of ongoing scientific research, common sense dictates that the United States should take measured and reasonable steps today to reduce any impact on the environment."
As governor of Massachusetts Romney worked to reduce carbon emissions in his state and in the entire Northeast when he worked to create a cap-and-trade system for the states in the region, called the Regional Greenhouse Gas Initiative (REGGI).
"This is a guy who a few short years ago helped with REGGI up in the Northeast; helped us to create a functional program to address climate pollution," Taylor-Miesle says. "He was one of the reasonable voices in the room. It's alarming that in such a short amount of time he goes from leading to backtracking in every way possible."
The climate-denying Koch brothers are not the only donors getting what they want out of Romney's energy plan.
A central part of the plan is taking the power to permit and license new onshore drilling on federal lands out of the hands of the federal government and putting it into the hands of the states. That means that states like Alaska or North Dakota, which is enjoying a massive oil boom [ http://www.propublica.org/article/the-other-fracking-north-dakotas-oil-boom-brings-damage-along-with-prosperi ] under the current regulatory regime, would be able to allow drilling on federal lands with no oversight from Washington.
North Dakota stands out, in particular, as it is where Romney's top energy adviser, oil billionaire Harold Hamm, is making his fortune. Hamm, whose stump speech is only three words, "Beat Barack Obama," has given $985,000 to Restore Our Future and raised money for the Romney campaign. He would profit greatly from this change in policy as his company, Continental Resources, would be freed to drill beyond the Bakken fields in North Dakota using techniques including hydraulic fracking and horizontal drilling.
"It's the most comprehensive and bold energy plan ever," Hamm said in a statement [ http://depausa.org/media/view/depa-leader-applauds-romneys-commitment-to-north-american-energy-independen ] about Romney's energy plan. "Such a dynamic plan -- embracing oil, natural gas and other forms of domestic energy production -- will be good for the energy industry, but, more importantly, a huge boost for the overall economy of the country." The Romney campaign was not immediately available for comment.
In a recent op-ed [ http://newsok.com/in-defense-of-fossil-fuels/article/3551779 ], Hamm stated that the Obama administration will "drive us headlong into the magical fantasy of 'alternative and renewable energy.'" While Hamm has not always been so negative on alternative energy, the op-ed presaged the Romney energy plan's limited details on alternative energy, which include eliminating alternative energy government loans.
Despite stating in its call to eliminate alternative energy subsidies that the government should not be "distorting the playing field," the plan also preserves oil and gas industry tax breaks, which the Obama administration has called for repealing. Hamm defended those tax breaks during Senate testimony, "If we do away with these [tax breaks], we'll stop the march to energy independence we've begun."
At a fundraiser at the Wyoming home of former Vice President Dick Cheney, Romney acknowledged his adviser and his great wealth, "Harold's doing just fine, by the way ... Forbes publishes his net worth on a regular basis."
The coal industry also gets a big boost from Romney's energy plan. Among many other policies supporting the industry, Romney calls for a repeal of regulations limiting the amount of mercury, a hazardous pollutant, that can be emitted from coal and oil power plants. The plan headlines one section, "The Obama Administration Has Imposed Regulations That Ensure A Coal Power Plant Will Never Again Be Built In The United States."
Joseph Craft, the head of Alliance Resource Partners, a major coal company, is not only Romney's top fundraiser in Kentucky -- he's the campaign's state finance director -- but he is also a major donor to both of the super PACs supporting Romney's bid. Through both contributions from his own pocket and those from the corporate treasury of Alliance Resource Partners, Craft has given $2.1 million to American Crossroads and $500,000 to Restore Our Future.
Romney and the super PACs supporting him have not only received contributions from climate deniers and oil, gas and coal executives, but also from supporters of climate science and alternative energy innovation. A Politico article in March [ http://www.politico.com/news/stories/0312/73642.html ] noted that these donors, including Trammel Crow, the founder of Earth Day Dallas, and hedge funder Julian Robertson, a major funder of the Environmental Defense Fund, hope that Romney will flip-flop back to his previously held positions after being elected to office.
For now though, all the public has to go on is the plan put forward by the Romney campaign.
Sher Valenzuela, GOP's 'We Built It' Speaker, Received Millions In Government Loans
Delaware Republican lieutenant gubernatorial candidate Sher Valenzuela, displays an April 4, 2012 copy of the the News Journal as she speaks during a news conference Thursday, July 19, 2012, in Philadelphia. (AP Photo/Matt Rourke)
By Nate C. Hindman Posted: 08/24/2012 5:36 pm Updated: 08/25/2012 12:56 pm
First State Manufacturing, Valenzuela's company, has received more than $2 million in federal loans [ http://www.nationalsmallbusinessweek.com/wp-content/uploads/2012year/Program2012_websize.pdf#page=13 ], according to a Small Business Administration document. Among the loans is $20,000 in SBA-backed credit that Valenzuela and her husband received to get their business started. In addition, Valenzuela borrowed $1.8 million in government-backed funding to build her firm's 66,000 square-foot facility, where at least 40 technicians work today.
This is not the first time that an entrepreneur tapped by the Romney campaign to espouse its "We Built It" message turned out to have relied on the government for help with their business.
SPRINGFIELD, Mo. — Republican vice presidential candidate Paul Ryan says President Barack Obama wants to ease work requirements for welfare recipients even though that claim has been largely debunked by independent fact checkers.
Ryan told donors at a $1.2 million fundraiser in Missouri on Thursday that Obama wants to strip the work requirements from the welfare reform law. Ryan says it showed the president wants to promote dependency on government as a solution to economic woes.
The Obama administration granted a waiver requested by Republican and Democratic governors seeking greater flexibility in how to administer the welfare work requirement in their states. Mitt Romney's presidential campaign has seized on that in recent weeks, saying Obama undercut the welfare reform law signed by President Bill Clinton in 1996.
Steve King: TSA Gives Grandma 'The Spread-Eagle Search' While '20-Year-Old Middle Eastern Male Waltzes Through'
Rep. Steve King, R-Iowa speaks in Washington. (Alex Brandon / AP)
By Patrick Svitek Posted: 08/24/2012 1:41 pm Updated: 08/24/2012 3:11 pm
Rep. Steve King (R-Iowa) said Monday that the TSA's security screening in U.S. airports needs to be more selective so grandmothers don't get "the spread-eagle search" while a "20-year-old Middle Eastern male waltzes through with a smirk on his face."
During a town hall meeting in Le Mars, Iowa, King told attendees that he disagrees with federal officials who think that airport security should follow a uniform procedure for passenger screening.
"So that means the 75-year-old grandmother gets the spread-eagle search and while that happens, maybe the 20-year-old Middle Eastern male waltzes through with a smirk on his face. I'm not making that up. I've seen that. That image will not ever leave my mind."
"But we have to do that, apparently, because we're so squeamish about making judgment calls that we've put everybody through a formula and a process so that everybody gets searched, and I don't know if we'll ever get away from that," King added.
During the same event, King criticized multicultural groups at Iowa State University, recalling a time he browsed through the school's directory of student organizations after speaking on the campus several years ago.
"It started with Asians and it ended with Zeitgeist, so from A to Z, and most of them were victims' groups -- victimology -- people that feel sorry for themselves, and they're out there recruiting our young people to be part of the group that feels sorry for themselves," King said [ http://www.youtube.com/watch?v=_ukvj7QA-wU (next below)].
A spokesman for King was not immediately available for comment after a message was left by email and telephone.
The town hall footage was posted Friday on YouTube by CREDO SuperPAC, a liberal group targeting 11 Tea Party lawmakers, including King, by recruiting on-the-ground volunteers in their congressional districts. CREDO SuperPAC's website calls King [ http://act.credoaction.com/take_down/the-ten.html ] possibly "the most open bigot in Congress."
The anti-Tea Party crusade is not the first time King has been criticized by Democratic opponents for similar offenses.
Earlier in the year, King was asked whether Congress could stop President Barack Obama from "bringing small quantities of Muslims into this country." King did not confirm that assertion, or say he agreed with it, but he did say [ http://thinkprogress.org/politics/2010/06/21/103493/king-immigration-plan-deport/ ] he "wouldn't be surprised" if that was the case and "will try to watch it."
UPDATE: 3:04 p.m. --
In an interview on the "The Final Say" radio show Thursday, King doubled down on his comments that multicultural student groups are full of "people that feel sorry for themselves."
"It's not the multiculturalism that's wrong, it's the victimology, which has been the core of multiculturalism," King said [ http://www.blogtalkradio.com/thefinalsay/2012/08/23/the-final-say-with-brett-jon-rappaport ]. "People are being told that it's not their fault, that it's somebody else's. They've been discriminated against because clearly they belong to some victims group somewhere or they are a victim, and they just haven't found the group to join. That's the excuse path. We need to have individual responsibility, a culture that supports it -- that celebrates it -- and one that discourages the slackers from lining up at the public trough and accepting the benefits of the sweat of someone else's brow."
Rep. Steve King Piles On Bachmann's Anti-Muslim Witch-Hunt
Published on Aug 24, 2012 by CREDOsuperpac
At a recent town hall in Le Mars, Iowa, Rep. Steve King piles on Michele Bachmann's anti-Muslim witch-hunt by alleging that Sec. Clinton's Deputy Chief of Staff, Huma Abedin, is "deeply entrenched" with the Muslim Brotherhood.
Transcript:
Rep. Steve King: I've never met her. I do know what's in the news report about her. The things that I am hearing from the people who are doing investigations beyond what we've seen in the news indicate, very strongly to me, that her family network, her network, is deeply entrenched in the Muslim Brotherhood. That's what I see from the news and that's what I see from the investigative reports that have not yet been published. And I think that it's a legitimate question that's been raised and we ought to examine it.
By David Gibson| Religion News Service, Published: August 23, 2012
The news that New York Cardinal Timothy Dolan, the nation’s most prominent Catholic prelate, will deliver the closing blessing to the Republican National Convention in Florida next week was seen as a huge coup for Mitt Romney, the party’s presumptive nominee. But the move has also prompted a sharp debate within the church over the increasingly close ties between leading bishops and the GOP.
“The cozy relationship between a sizable portion of U.S. bishops and the Republican Party should be cause for concern, and not just among progressive Catholics,” Michael O’Loughlin wrote in a post on the website of America magazine, a leading Catholic weekly published by the Jesuits.
“Cardinal Dolan’s appearance in Tampa will damage the church’s ability to be a moral and legitimate voice for voiceless, as those who view the Catholic Church as being a shill for the GOP have just a bit more evidence to prove their case,” O’Loughlin concluded.
Similarly, David Cruz-Uribe, a member of the Secular Franciscan Order and a professor of mathematics at Trinity College, wrote on the Vox Nova blog that Dolan’s decision “will only drag the Church further into a partisan divide and fuel the perception (true or not) that the Catholic Church wants to replace the Episcopalians as the Republican party on its knees.”
Conservative Catholics have, not surprisingly, welcomed Dolan’s appearance and hope it augurs well for Romney.
“I now predict that if Mitt Romney wins the White House in 2012 there will be a very healthy relationship between a Romney administration and the U.S. Bishops, led by a close working relationship between Cardinal Dolan and President Romney,” said Thomas Peters, who writes for CatholicVote.org, which has endorsed Romney and his Catholic running mate, Paul Ryan.
Romney disclosed the news of Dolan’s planned blessing on Wednesday (Aug. 22) during an interview on the conservative Catholic cable channel EWTN. He did so in the context of a discussion about his shared opposition with the bishops to the Obama administration’s controversial birth control mandate.
By tradition, the local bishop often delivers a prayer at the party convention meeting in his city, but it is highly unusual for another bishop — and the leader of the hierarchy — to fly in to deliver a benediction, as Dolan will do on Aug. 30, right after Romney is formally nominated.
Philadelphia’s Cardinal John Krol did so in 1972 when he was president of the bishops’ conference and went to Miami for the Republican convention that nominated Richard Nixon and Spiro Agnew. But that seems to be the only modern precedent.
Whether Dolan’s appearance will have any actual effect in swinging Catholic voters to Romney is unclear. Obama is holding a slim lead among Catholics at this point, and Catholics often ignore the hierarchy’s advice on political matters.
Dolan’s spokesman has sought to portray the cardinal’s appearance as purely nonpartisan: “It’s as a priest going to pray,” said Joseph Zwilling, director of communications for the Archdiocese of New York.
Zwilling reiterated that point in a statement released on Thursday, and added that Dolan “would be willing to accept a similar offer from the Democratic Party as well.”
But the Democrats seem unlikely to extend an invitation to Dolan, who is among dozens of Catholic leaders suing the administration over the contraception mandate. It’s also very possible that Dolan would not receive a warm welcome when the Democrats hold their convention in Charlotte, N.C., a week after the GOP nominates Romney in Tampa, Fla.
Dolan and the bishops have become increasingly critical of Obama as policy differences over gay marriage and abortion rights have provided ammunition for fierce rhetorical blasts from many bishops and their allies, who have compared Obama to a totalitarian dictator, or worse.
Earlier this month, Baltimore Archbishop William P. Lori, an up-and-coming voice in the hierarchy who has led the campaign against the administration’s contraception policy, gave an interview that was widely viewed as indicating that a good Catholic could not vote for a candidate who supports abortion rights, as Obama does.
At the same time, Romney’s selection of Ryan as his running mate has brought an outpouring of praise from several bishops. Some of them like Ryan’s proposals on cutting entitlements and taxes, despite the conflict that other bishops see between those policies and Catholic teaching.
Others, like Dolan, who was archbishop of Milwaukee before coming to New York in 2009, have close personal ties to Ryan, a Wisconsin congressman. Dolan has often taken a softer line on Ryan’s policies than other Catholic leaders, and his praise has grown as Ryan’s visibility has increased.
Dolan recently told a radio program that he is “happy” Ryan is on the GOP ticket and called him a “great public servant.”
“We go way back, Congressman Paul Ryan and I,” Dolan said. “I came to know and admire him immensely. And I would consider him a friend. He and his wife Janna and their three kids have been guests in my house; I’ve been a guest at their house. They’re remarkably upright, refreshing people.”
Ryan’s own bishop, Robert Morlino of the Diocese of Madison, has also emerged as a strong defender of Ryan’s Catholic bona fides.
Morlino wrote a column this month expressing pride in Ryan’s “accomplishments as a native son, and a brother in the faith.” And on Tuesday he told a radio program that Ryan is an “excellent Catholic layman of the very highest integrity” who “understands the principles of Catholic social teaching” and applies them “very responsibly.”
There was at least one bit of good news for Catholic Democrats this week, however. Organizers of next month’s Values Voter Summit in Washington, a major political rally for the religious right, announced that Cardinal Dolan had been invited to speak. But Zwilling said that wouldn’t happen.
“He has not received an invitation as far as we can tell,” Zwilling said. “In any event, he is not going.”
Mitt Romney Tax Returns May Have Employed Legally Dubious Maneuvers, Tax Experts Say
By Ryan Grim Posted: 08/24/2012 12:09 pm Updated: 08/25/2012 3:43 pm
WASHINGTON -- Tax experts who have begun to examine the Bain Capital documents released Thursday by Gawker [ http://gawker.com/5936394/ ] are raising questions as to whether presumptive GOP presidential nominee Mitt Romney has paid all the taxes he owed.
At issue are two tax-avoidance techniques employed by Bain Capital, the firm founded by Romney, which have been commonly used in the private equity world but have come under increasing legal scrutiny.
The first scheme involves owning U.S. dividend-paying stocks in an offshore account and pretending, for accounting purposes, not to own the stock. Instead, the taxpayer tells the Internal Revenue Service that he owns a derivative product that is identical in every way to the stock -- except it isn't the stock, so therefore no U.S. taxes are owed. It's called a "total return equity swap," because the buyer still gets the benefit -- the "total return" -- of owning the stock, or equity.
"This use of total return equity swaps, such as to avoid the U.S. dividend withholding tax, was very widespread for more than a decade, and may not be dead yet, although the IRS issued a shot-across-the-bow Notice concerning the practice in 2010," writes [ http://danshaviro.blogspot.com/2012/08/the-bain-document-drop.html ] Daniel Shaviro, the Wayne Perry Professor of Taxation at New York University School of Law [ https://its.law.nyu.edu/facultyprofiles/profile.cfm?personID=20283 ]. "But taxpayers who engaged in it to avoid the dividend withholding tax were coming perilously close to committing tax fraud, in cases where the economic equivalence to direct ownership was too great."
The second technique is "not legal," according to Victor Fleischer, a tax expert and professor of law at the University of Colorado [ http://victorfleischer.com/archives/306 ]. A taxpayer saves substantial amounts of money by pretending that regular income received as a management fee for running a private equity firm is not income, but is instead a capital gain. That drops the tax rate on that income from 35 percent to 15 percent.
Citing the Gawker documents [ http://gawker.com/5936394/ ], Fleischer notes that Bain engaged in the management-fee maneuver to reduce the tax bill of its investors. "Unlike carried interest, which is unseemly but perfectly legal, Bain’s management fee conversions are not legal. If challenged in court, Bain would lose. The Bain partners, in my opinion, misreported their income if they reported these converted fees as capital gain instead of ordinary income," he writes.
Shaviro, meanwhile, notes that Bain employed a version of the total return equity swap and says that taxpayers who engage in the practice have little legal justification for doing so. "[T]he only leg that taxpayers had to stand on in some of these cases was common practice and the apparent lack of IRS enforcement (not a very strong leg if the correct application of the law was clear)," he writes. "How far out on the limb were Bain-affiliated foreign entities that were making money through total return equity swaps, and claiming not to owe U.S. withholding tax? And what should we make of this, for purposes of the presidential campaign, if what they were doing, while legally dubious, was common practice?"
"The unauthorized disclosure of a number of confidential fund financial statements is unfortunate," said Charlyn Lusk, a spokeswoman for Bain Capital. "Our fund financials are routinely prepared by auditors and demonstrate a commitment to transparency with our investors and regulators, and compliance with all laws."
Michele Davis, a spokeswoman for the Romney campaign, said that Romney is not responsible for whatever tax strategy employed. "As we have said many times before, Governor and Mrs. Romney's assets are managed on a blind basis. They do not control the investment of these assets, the investment decisions are made by a trustee," he said.
But if Bain used improper tax-avoidance techniques, the Romneys would be required to amend their returns regardless of the blind nature of the investments.
Private equity managers already get the vast majority of their income from capital gains, which are taxed a lower rate, but also take a fee -- typically 2 percent -- off the top. That management fee is income. But some private equity managers have claimed to "waive" that fee in exchange for future capital gains.
"In exchange for a minimal amount of economic risk, the tax benefit is enormous: the compensation is transformed from ordinary income (taxed at 35%) into capital gain (taxed at 15%). Because the management fees for a large private equity fund can be ten or twenty million per year, the tax dodge can literally save millions in taxes every year," writes Fleischer [ http://victorfleischer.com/archives/306 ]. "The problem is that it is not legal."
The IRS says the fee cannot be waived in exchange for capital gains [ http://pmstax.com/ftp/part/rp9327.pdf ] if the income "relates to a substantially certain and predictable stream of income from partnership assets." In other words, Bain investors would need to convince a judge that their revenue stream was risky and not "substantially certain and predictable."
Fleischer says he doesn't think the tactic would hold up in court. "Because the deals vary in their aggressiveness, there is some disagreement among practitioners about when it works and when it doesn’t," he writes. "But in my opinion, and the opinion of many tax practitioners, the practices that were common in the private equity industry in the 2000s became very, very questionable, and it’s unlikely that they would have stood up in court."
But did Romney himself benefit from these maneuvers? And is Romney responsible for the legally dubious tax avoidance strategies Bain employed? Yes, Fleischer concludes:
Yes, Romney left Bain in 1999 or 2002. But as part of his severance agreement, he continues to receive interests in these funds, which he has reported on his financial disclosures. In the usual case, a departing partner would receive an economic stake in the GP (Bain Capital Partners X, LP), rather than an economic stake in the LP (Bain Capital Fund X, LP) — representing a payment for the management services he provided in the past. Indeed, because he filed an 83(b) election, we can be sure that he received GP interests as part of his severance agreement, and that he therefore benefited personally from management fee conversions.
[...]
Romney here is not like a passive mutual fund investor. He helped engineer the funds in the first place. For at least some of the funds, the fee conversion was set in place at the time of the fund’s formation — in the case of Fund VII, when Romney was the sole shareholder of the management company that actually waived the fees (2000). It seems reasonable to infer that fee conversions were in place for earlier vintages of Bain Capital funds as well. I haven’t yet reviewed all of the Gawker documents, but we are talking hundreds of millions of dollars in tax liability on these funds — one hundred million in Fund IX alone (20% of the $500 million converted), another $70 million in fund X. It is unthinkable that in the 1990s through 2002, when Romney was putting together funds, that he was unaware of the fee conversion strategy, or that he was unaware that he continued to benefit from it today.
"The Bain documents posted yesterday show that Bain Capital will go to great lengths to help its partners and its investors avoid tax," said Rebecca Wilkins, senior counsel at Citizens for Tax Justice. "Beyond simply putting their funds offshore, the Bain private equity funds are using aggressive tax-planning techniques such as blocker corporations, equity swaps, alternative investment vehicles, and management fee conversions."
Rep. Sandy Levin of Michigan, the top Democrat on the tax-writing House Ways and Means Committee, questioned the fee conversion strategy in a statement.
“[R]eports today indicating that Bain managers converted even their regular management fees [ http://www.nytimes.com/2012/08/24/us/politics/documents-show-details-on-romney-family-trusts.html (about 40% of the way down in the post to which this is a reply, following the Gawker story/release of the documents)] into additional carried interest income that is taxed at capital gains rates is a particularly egregious example of how wealthy fund managers are able to avoid paying the same tax rates on their compensation as other Americans," he said. "This is a stark reminder of why Congress needs to act to close this loophole."
Mitt Romney Reaped Huge Tax Benefits Based On 'Active' Role At Bain Capital
By Zach Carter, Ryan Grim and Jason Cherkis Posted: 08/26/2012 12:45 am Updated: 08/26/2012 3:44 pm
WASHINGTON -- Mitt Romney has repeatedly insisted during the presidential campaign that layoffs and other controversy surrounding Bain Capital companies for the past decade are not his responsibility, because he retired in 1999. When tax experts charged that he benefited from legally dubious tax avoidance strategies [ http://www.huffingtonpost.com/2012/08/24/mitt-romney-tax-returns_n_1827632.html (just above)] employed by Bain, his campaign noted that the investments are kept in a blind trust completely out of his control.
"As we have said many times before, Governor and Mrs. Romney's assets are managed on a blind basis. They do not control the investment of these assets. The investment decisions are made by a trustee," spokeswoman Michele Davis said.
But according to his 2010 tax return, when the Internal Revenue Service comes calling in April, Romney has a different answer: The presumptive GOP nominee reaps lucrative tax breaks for "active" participation in the private equity firm he founded, as well as a host of other investments.
As David Kautter, a tax expert at American University, explains, the concept of active investment has different meanings for the IRS and for regular people. "When you say you're actively involved in all these businesses, people do think, OK, you're actively involved. But the tax law has its own definition," he said.
The IRS advises that [ http://www.irs.gov/publications/p925/ar02.html ] "[f]actors that indicate active participation include making decisions involving the operation or management of the activity, performing services for the activity, and hiring and discharging employees. Factors that indicate a lack of active participation include lack of control in managing and operating the activity, having authority only to discharge the manager of the activity, and having a manager of the activity who is an independent contractor rather than an employee."
Even if Romney could persuade the IRS his involvement was legitimately active, that still leaves him in a rhetorical jam: For tax purposes, he claims an active status; for political purposes, he claims to have zero to do with the investments.
The distinction is valuable, for the IRS treats passive and active income and losses differently [ http://romneytaxproblem.wordpress.com/ ]. If a passive investment loses money, the taxpayer can only write off that loss if passive gains have also been made. But active losses can be written off at a 35 percent rate and deducted from the taxpayer's ordinary income. In other words, a taxpayer wants active losses, not passive losses. So by describing many of his investments as active, Romney saves himself millions of dollars in taxes.
With those active investments, he is also securing a tax break few Americans enjoy: When he wins, he's paying a 15 percent rate on the gain. When he loses, he's writing it off at 35 percent, meaning that tax policy is subsidizing Romney's risk in his Bain investments.
In other words, Romney didn't build that, at least not without taxpayer backing.
Federal rules allow many of these tax loopholes. But under the technical terms of the retirement package that Romney negotiated for himself, he has borne a lighter tax load than most other retired financial professionals. And the unusually large scope of his deductions and the generous rate at which they are recognized have some tax experts questioning their validity.
Romney's 2010 tax return lists $301,630 in "trade or business interest" deductions and $503,737 in "trade or business expense" deductions -- all of it described as expenses from his business partnerships, including Bain. Specifically from his various Bain-related activities, Romney scored a total of $547,525 in such deductions.
These kinds of deductions are only available to "active" participants in business partnerships. While Romney filed as an active participant for tax purposes, there is no evidence that he took part in Bain management decisions in 2010, and he has denied doing so.
The sophistication with which Romney used Bain's later efforts to boost his own income could serve as fodder for political campaign advertisements. Since Romney has been willing to profit from Bain's later activity, the Obama campaign may well argue that such practices are fair game for attack ads. Some Democrats are already on the attack.
"Governor Romney appears to be saying one thing to the American people and one thing to the Internal Revenue Service," Rep. Brad Miller (D-N.C.) said to The Huffington Post. "Right now we are just seeing inconsistent statements. The American people are entitled to know more than that. If there's a legalistic distinction, we are entitled to know what that is. ... Has he played too close to the line or over the line?"
It is also possible that these deductions are all legitimate expenses for Bain and the handful of Goldman Sachs subsidiaries in which Romney is a partner. But listing personal expenses as business expenses is not allowed.
In addition, some tax experts are surprised by the size of the deductions he takes as business expenses and the aggressive nature of the deductions.
"One question is just the amount of the expenses," said Rebecca Wilkins, senior tax policy counsel at Citizens for Tax Justice. "At half a million dollars, you have to wonder what all of that is."
These two different tax rates present a tempting opportunity: By applying deductions to the pool of money taxed at 35 percent, rather than the pool of money taxed at 15 percent, Romney can reduce his overall tax bill. The $805,367 in deductions from his partnerships all receive exactly this useful treatment -- which may or may not be appropriate, depending on the nature of the expenses incurred.
"What's problematic is that these expenses are being deducted at the ordinary income tax rate of 35 percent, while the related income is mostly subject to the preferential long-term capital gain tax rate of 15 percent," Wilkins said.
Whether these expenses rightly apply to the pool of money taxed at 35 percent can only be determined by accessing the tax returns of Romney's Bain partnerships, which are not public documents. But many investment partnerships recognize stock losses that could not receive this favorable treatment.
In the years after Romney insists that he ended any active role at the firm, Bain Capital companies suffered huge job losses, plant closures and bankruptcies. KB Toys may be the saddest example. The New York Times has reported [ http://www.nytimes.com/2011/12/19/us/politics/retirement-deal-keeps-bain-money-flowing-to-romney.html?pagewanted=all ] that after Bain bought the toy company in 2000, KB Toys filed for bankruptcy, laying off more than 3,000 workers. Bain's aggressive financial maneuvering, however, scored a 370 percent return on its investment.
Romney's own testimony and Securities and Exchange Commission filings demonstrate that he might not have been as hands off decision-making during those later years as he's suggested. Either way, his sophisticated tax practices show that he continued to benefit not only from Bain's profits but, at least in his tax bill, from Bain's losses.
[This story was the result of a reader tip. To tip us off to another, write to offthebus@huffingtonpost.com.]
Mitt Romney Financial Disclosure Probe Sought By SEIU, Ethics Groups
Mitt Romney financial disclosures are questioned by ethics groups and the Service Employees International Union.
By Jason Cherkis Posted: 08/24/2012 5:26 pm Updated: 08/24/2012 8:38 pm
WASHINGTON -- A group of civic watchdogs and the Service Employees International Union have asked the U.S. Office of Government Ethics [ http://oge.gov/ ] to examine Mitt Romney's financial disclosures, ratcheting up scrutiny of the Republican presidential candidate's finances.
The group wrote in a letter to the ethics office that the review is warranted because of concerns that Romney's disclosures "are not in compliance" with federal regulations:
"As you know, the Act requires candidates for federal office to disclose their financial holdings so that the public can identify potential conflicts of interest and personal economic priorities of federal officials and candidates. However, candidate Romney has refused to disclose most of his stock holdings. This lack of disclosure undermines public confidence in government, denies voters the facts they need to make an informed decision in the 2012 presidential election, and violates both the spirit and the letter of the law."
“Gov. Romney refusal to release a broad set of tax returns only serves to highlight the unanswered questions about his finances and the extent to which he has benefited from offshore tax havens and other tax loopholes," Levin said in a statement to The Huffington Post. "He should follow the standard set by his father decades ago because if he has nothing to hide, he has nothing to hide. He should be proud to fully inform the American people."
Rep. Brad Miller (D-N.C.) said the legislation may be necessary. "It is the kind of information Americans expect to get from presidential candidates," he said. So far, he added, the punishment for Romney's failure to disclose financial infomation has been political -- not legal.
The watchdog groups lobbying the ethics office include Citizens for Responsibility and Ethics in Washington, People for the American Way, Public Campaign, Public Citizen and The Social Equity Group. With the SEIU, their letter [ http://big.assets.huffingtonpost.com/financeletter.pdf ], the groups argued that Romney is required by law to provide a more meaningful disclosure of his assets and investments. They wrote:
"What little information is public about candidate Romney's holdings establish that he owns a significant -- if not a controlling -- interest in a wide variety of operating companies that directly do business with the United States government or that would directly benefit or be harmed by regulatory policies of the executive branch. For example, based on press reports and publicly available information, Romney's funds may include companies such as Hospital Corporation of America, Clear Channel Communications, and Sensata Technologies. Ownership of each of these companies would present a clear conflict of interest for any high government official, let alone the President. ... Accordingly, it is of the utmost importance that candidate Romney comply with the Act to the fullest degree, and that your Office assure strict compliance with the candidate disclosure rules."
The Office of Government Ethics hasn't responded to the letter, an SEIU spokesman said.
Mitt Romney: 'I'm The Guy Who Was Able To Get Health Care' For Massachusetts 08/26/2012 Mitt Romney said Sunday that he doesn't foresee a problem appealing to women voters, touting the fact that his Massachusetts health care law helped many women in that state obtain access to health care. "With regards to women's health care, look, I'm the guy who was able to get health care for all of the women and men in my state," the presumptive Republican presidential nominee told Chris Wallace on "Fox News Sunday." "They're [the Obama administration] just talking about it at the federal level, but we actually did something and did it without cutting Medicare and without raising taxes." [...] http://www.huffingtonpost.com/2012/08/26/mitt-romney-health-care-massachusetts_n_1831207.html [with embedded video, and comments]
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Mitt Romney Blue-Collar Work Days: Candidate Once Pretended To Be Mechanic, Farmer, Butcher
By Jason Cherkis Posted: 08/24/2012 11:58 am Updated: 08/24/2012 1:22 pm
WASHINGTON -- Back in 2002, when Mitt Romney began running for governor of Massachusetts, his campaign managers thought it would be a good idea to have the millionaire perform various blue-collar jobs around the state. In a move that presaged "Undercover Boss," strategists put Romney in blue jeans, gave him a long, shiny wrench, and had him play at being a mechanic for a photo op.
The campaign called these events "work days." He served sausages outside Fenway Park. He donned a hard hat. He hammered nails. He drove a tractor on a farm, bumping along stiffly in the seat. It was, at times, painfully forced. Then again, every day was basically his first on the job.
"Just keep on doing some stuff?” Romney asked as the cameras whirred before turning back to the engine block. He mumbled under the hood about power steering fluid and stabbed at the engine with a wrench as if unsure where to put it. At one point, he wondered to the crowd, "Whose Bichon Frise is that over there? Is that a neighbor? Oh, that's great."
These kinds of stunts are a political tradition designed to showcase the candidate as just another average Joe. In 2007, then-Sen. Barack Obama worked a day as a home health care worker. Romney did similar duty one afternoon with a nurse in Medford, Mass.
Some pols pull it off better than others. Watching the footage from a news report and Democratic trackers today, it's hard not to feel sorry for Romney. For those brief moments, the one thing he seemed to have in common with the common man was, simply, a strong desire not to be caught looking stupid.
The Boston Herald gave him a hard time back then, describing these events as "Village People-esque." His Democratic opponent for governor, state Treasurer Shannon O'Brien, called them a "costume party."
"In 2002, putting Romney in different costumes and having him work with 'real people' was the first of many lame attempts during his political career to portray Mitt as a regular guy who understands the challenges faced by average people," O'Brien recently told The Huffington Post. "It backfired back then and appears to backfire every time he's tried to be the 'aw shucks' regular guy in subsequent presidential campaigns."
With the Republican National Convention just days away, Romney is once more looking for a way to present himself to the masses. His campaign has turned to skilled ad men to re-craft his image, with hopes that glossy ads and the right tag line can turn the multi-millionaire businessman into a Republican populist. It's the same task that Romney's 2002 campaign faced. And the jury is out as to whether it works.
"The work day events and spots may have contributed to our success in 2002," said Jonathan Spampinato, who was the deputy political director. "But I don't recall a positive correlation between our polling numbers and the work day adverts."
On those work outings, Romney seemed to really stumble when he stopped acting and became himself.
In front of the microphones, he talked about filling up cars with gas and changing some oil. "On that Jeep Cherokee ... it took five quarts," he said, uncomfortably sharing the exacting details of the work.
While on the farm, Romney blurted, "I have severe allergy to hay." He added, laughing maybe to himself, "We'll be dripping from eyes to nose shortly. I sent a crew back to go find as many handkerchiefs as they're able to find."
I've been struck by the baldness of Romney's repetitive lies about Obama -- that Obama ended the work requirement under welfare, for example, or that Obama's Affordable Care Act cuts $716 billion from Medicare benefits.
The mainstream media along with a half-dozen independent fact-checking organizations and sites have called Romney on these whoppers, but to no avail. He keeps making these assertions.
Every campaign is guilty of exaggerations, embellishments, distortions, and half-truths. But this is another thing altogether. I've been directly involved in seven presidential campaigns, and I don't recall a presidential candidate lying with such audacity, over and over again. Why does he do it, and how can he get away with it?
The obvious answer is such lies are effective. Polls show voters are starting to believe them, especially in swing states where they're being repeated constantly in media spots financed by Romney's super PAC or ancillary PACs and so-called "social welfare" organizations (political fronts disguised as charities, such as Karl Rove and the Koch brothers have set up).
Romney's lying machine is extraordinarily well financed. By August, according to Jane Mayer in her recent New Yorker article, at least 33 billionaires had each donated a quarter of a million dollars or more to groups aiming to defeat Obama -- with most of it flooding into attack ads in swing states.
In early August, "Americans for Prosperity," one of the nonprofit front groups masquerading as a charity, and founded in part by billionaire right-wingers Charles and David Koch, bought some $27 million in ad time on spots now airing in eleven swing states.
So Romney's lying machine is working.
But what does all this tell us about the man who is running this lying machine? (Or if Romney's not running it, what does it tell us about a man who would select the people who are?)
We knew he was a cypher -- that he'll say and do whatever is expedient, change positions like a chameleon, eschew any core principles.
Yet resorting to outright lies -- and organizing a presidential campaign around a series of lies -- reveals a whole new level of cynicism, a profound disdain for what remains of civility in public life, and a disrespect of the democratic process.
The question is whether someone who is willing to resort to such calculated lies, and build a campaign machine around them, can be worthy of the public's trust with the most powerful office in the world.
This campaign cycle raises an old question with renewed force. Why is it that in politics crazy goes with mean? What explains why the political faction with all the barmy ideas is also the one that promotes cruelty and injustice? By now the connection seems so inevitable and obvious that no one asks anymore. It isn't, though, and seeing as how "know thy enemy" is good advice, here is a brief, two-part answer to the question. Crazy goes with mean, first, because right-wing politics is now, and always and everywhere has been, a disturbance of the moral part of the mind and, second, because that's the part of the mind that controls rationality.
Conscience, or morality -- what we call it doesn't matter -- is what enables us to be rational, and conscience demands that we try to be as rational as we can. The important truth isn't, as we usually hear, that reason demands morality. It's the reverse; morality asks us to be rational, especially in politics. Sometimes, in other words, believing in crazy ideas is a kind of wrongdoing.
Racial prejudice is a straightforward, familiar example of this. People who are prejudiced believe false, irrational things about others, and they do so because offloading feelings of rage or worthlessness onto the targeted group gives them a comforting sense of superiority. They let themselves be tempted out of rational belief into beliefs that are both irrational -- false, inconsistent and so forth -- and very cruel. But even in overtly racist societies, like, say, Mississippi in 1940, there are always some people who are able to resist the insidious temptations to enjoy the ego boost of prejudice, to think as everyone else thinks, and to ignore facts. They are able to hold their wishes, ego, fears, and anger in check and see the world and other people as they are, not as they might look through those distorting lenses. They are people with a strong conscience.
We can only succeed in being rational if conscience is strong enough. If it isn't, logic gets overruled by id and interest. As a result we rationalize, exaggerate, deny and contradict ourselves. When our moral center does not hold, we are prone to blind ourselves to uncomfortable facts and inconsistencies, to fall back on superstition, to believe what serves our own interests or our rageful desire for vengeance, or to think as everyone else thinks or some authority dictates. Ego dominates our sense of reality, and wishes, fears, sadism, and rage are in control. Crazy and mean go together.
This tie between irrationality and moral wrong has become the central fact of contemporary American politics. Yet for 40 years the political faction in which this tie is most obvious has touted itself as the party of "morality." We have a burgeoning radical right that is both the unreasonable party and, despite its moral pretensions, the party of cruelty, greed and dishonesty. This isn't to say that conservatism is immoral and liberalism isn't. Both conservatism and liberalism are built on moral insights of one kind or another, and no one rational can fail to see that moral flaws like greed and dishonesty exist all along the political spectrum. The problem is that on the right, irrationality and opposition to moral values are not merely personal flaws. They are policy.
The ways in which this is true are discouragingly familiar and numerous. On the one hand, rightist politicians question the science of evolution and climate change, endorse wacky economics, and insist that Obama is a muslim who was born in Africa. On the other, they promote rage politics, tell fibs and destroy jobs and wages and families in order to enrich a tiny group of bankers and businessmen. To evade the central moral ideals of kindness, mercy, and forgiveness, the right dismisses those who defend them as weak, effeminate, whining, bleeding hearts. Then it enacts laws that make the United States the prison and death penalty capital of the world. In fact, the right promotes vengeance and heartlessness throughout the law and, against all reason and in defiance of obvious fact, denies both that waterboarding and other horrors are torture and that law and morality forbid us to torture prisoners. These policies reflect failures of conscience -- a lack of empathy or a habit of overruling empathy when it is inconvenient or conflicts with self-interest or self-approval, and a surrender to sadism and vengefulness.
To preserve its image as the party of virtue, the right defends a smug pseudomorality, detached from any real sense of guilt or obligation or compassion and aiming first at control and punishment of others rather than, as with true conscience, self-judgment and self-control. So rightists inveigh against homosexuality and gay marriage, deny any moral difference between live human tissue and real human lives, and sentimentalize that doing so protects families. This false moral fervor lets them deceive themselves and others about their own greed and crookedness. The worse they are in reality, the more rabidly they defends these fake, self-serving "convictions." In the end, they conclude that they are so good, and their enemies so evil, that they must be in power at all costs, even if this means undermining rational government and fair elections. And rather than lose a campaign debate about reality with some pointy-headed, high-IQ economist or geologist or climatologist, they choose instead simply to abandon truth and reality altogether. Instead, they opt to undermine the voters' understanding -- manipulating their rage, inflating their prejudices, and feeding them misinformation.
Though the wrongs of the right have been exposed and analyzed over and over, a huge swath of the voting public continues to accept this group's self-description as the party of morality and of ordinary people. Among the bitterest ironies of the rise of an American right, with its sham "family values" and its claim to the moral mantle, is the continuing harm it wreaks on families and on the genuine moral culture that was once the backbone of American democracy. There is no easy way out of this grip of wrong and unreason on us, and hard to imagine one that does not depend on an awakening of conscience.
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