Relevant and even prescient commentary on news, politics and the economy.

Mitt Romney Reads Angry Bear!*

After the Bain Existence controversy about my post about Bain Capital yesterday, and whether or not Bain Capital really wanted to lend Chrysler and GM money to fund their managed bankruptcies, and about whether or not Bain Capital’s PR agency understands the concept of sarcasm and can recognize it even when it’s wearing a red flag, and about whether or not Mitt Romney knows that Chrysler and GM did file for bankruptcy and did undergo managed ones that, thanks to the government’s bailout money, enabled them to emerge as ongoing entities rather than pieces for liquidation, I swore off politics posts on AB and figured I’d just limit myself to my tried-and-true subject matter: legal analysis.

But, well, I live in Michigan, which is both Ground Zero for the auto companies and Ground Zero for the next big day of primaries.  And, well, Romney was in the state today (albeit not my part of the state) giving a speech and being interviewed by local journalists.  And his speech and the interviews were covered on the local evening news broadcasts, including the one I watched. 

I still might have resisted commenting, were it not that Romney apparently was asked by a reporter this afternoon why he continues to imply in his spoken comments and op-ed pieces that GM and Chrysler did not go through bankruptcy, or did not go through managed bankruptcy, as he repeatedly now says he recommended at the time, and instead were given the federal bailout money to survive without filing bankruptcy.  I say “apparently,” because the news clip I saw, on the Detroit metro NBC affiliate (, showed only Romney’s answer to whatever question was asked; it did not show the reporter asking the question. 

But, speaking between clenched teeth  embedded in a frozen “drop dead, you liberal elite member of the news media” smile—eyes flashing with barely-controlled rage—he said, um, that the car companies did file for “managed bankruptcy,” and that they finally did so at his urging, having earlier refused to do so, and that it is very nice that the companies have survived and are thriving now.

Which it is.  Very nice, that is.  But now that Romney has conceded that managed bankruptcy is in fact what the companies underwent, he now really should also concede that the only way they were able undergo and emerge from managed bankruptcy, rather than go through just a plain old bankruptcy whose endgame is liquidation, is that the federal government’s bailout financed it.  And that there was no other possible source of that financing.  Unless, of course, Bain Capital could done it, maybe through leverage provided by Goldman Sachs, which might have had the funds for it because it already had been bailed out by the government. 

Or maybe Bain Consulting (no relation to Bain Capital) had an even better idea—if only they’d been asked.

The managed bankruptcies that Romney had in mind in early 2009 for the two car companies pretty clearly were liquidations that would then allow Bain Capital or other venture capital firms to buy small parts of these companies, eliminate union workers, and … I’m not sure.  A weird, incoherent ad his campaign’s been running on the local news broadcasts actually hints at the elimination-of-union-workers thing, while actually advertising that “liberals” got “Obama” to save the auto industry.  Seriously.

Anyway, in keeping with my promise in my earlier post today in which I said I would never, ever—ever—again write something facetious would expressly identifying it as sarcasm, satire, or just a plain old joke, I make the following disclaimer: the title of this post is intended as a joke.  Mitt Romney probably does not read Angry Bear.  Even though he did seem awfully well prepared for the question.

The reporter who asked him the question must be an AB reader, though.*

*That sentence was edited after this post was posted, to make clear that the reporter was quite well prepared, and that of course that indicates that he had read my AB post about Romney’s weird failure to acknowledge that the two car companies did go through managed bankruptcy and emerged from it as ongoing companies only thanks to the government’s financial assistance (a.k.a., the bailout) during the bankruptcy process.

BREAKING NEWS: Bain Capital Really, Really, REALLY Did Not Want to Lend GM and Chrysler Money For Their Managed Bankruptcies!”*

Oookaaaayyy.  Normally when I receive an email message that I want to forward or mention elsewhere, I first ask permission of the emailer.  Not this time, though.

The following email was sent to Angry Bear last evening, and forwarded to me by Ken late last night:

On Wed, Feb 15, 2012 at 6:27 PM, Charlyn Lusk <> wrote:

You currently have a blog posting regarding Bain Capital, GM and Chrysler, which is incorrect.  Refer to the CNBC retraction below.  Please update your story accordingly.


Charlyn Lusk

Charlyn Lusk

Stanton Public Relations & Marketing

880 Third Avenue

New York, NY 10022

            212-366-5300       (main)

            646-502-3549       (direct)

Allow me, please, to not just refer the CNBC retraction Ms. Lusk links to be to republish it here in its entirety:

WITHDRAWN: CNBC Report that Bain Advised Obama Administration on Auto Company Bailout Has Been Refuted

By Andrew C. McCarthy

January 13, 2012 8:56 A.M.


I am deleting my earlier post about it, though I will save it in the event there needs to be some record of it — I haven’t thought that through, but in fairness to the Romney campaign, I want to delete the earlier post now.

Ah. Who knew?  Okay, well, who who doesn’t read the National Review or watch CNBC knew?

Anyway … late last night, Ken emailed Ms. Lusk back:

Sent: Wednesday, February 15, 2012 11:43 PM
Subject: Re: Your story on Bain Capital, GM and Chrysler

Updated to make the distinction clear.  I leave it to Beverly if she wants to change her title and/or any of the other text.


He cc’d it to Dan, Bruce Webb and me.  I responded, clicking the “All” response button:

Yikes.  The title of that post was intended as facetious.  Given the content of the post—which did not say that Bain actually wanted to lend GM and Chrysler money for their managed bailouts, but instead made the point than no private equity money or other private-source funding was forthcoming or likely to be forthcoming—I assumed that it the facetious intent of the title of the post would be obvious.

Silly me.  But then, I actually had no idea that there had been a report last month saying that Bain had … whatever … much less that the report was withdrawn.


I will write up a separate post now explaining this. The title of the post?  How about: “BREAKING NEWS: Bain Capital Really, Really, REALLY Did Not Want to Lend GM and Chrysler Money For Their Managed Bankruptcies!”


By then, Dan had emailed me saying simply, “Can you follow up on the correction?

And so I have. 

Lessons learned:

1.      Never, ever write facetiously for public consumption without specifying that what you’re writing is intended as sarcasm, satire, whatever;

2.      Subscribe to the National Review, because you never know when it might have to retract a statement about a corporation, at the request of the corporation’s PR firm;

3.      That Bain Capital is an entity entirely distinct from Bain Consulting; and

4.      That I really need to retain a PR firm.  Or a lawyer.

What I didn’t learn, but really want to now, is what, exactly, Bain Consulting advised the Obama administration about the auto bailouts.  I can guess, though.  That it should allow the two auto companies to file for unsupported bankruptcy, so that vulture capitalists—er, venture capitalists can acquire what they want of the companies’ remnants on whatever terms they dictate, maybe?


*I just corrected the formatting of the post so that the font and font size are consistent throughout.  The weird font changes in the original were the result of cut-and-paste things (as well as my utter cluelessness about how to avoid such things). I did not intend that parts of the post make it look like I was shouting. Not that I wouldn’t mind shouting.  Or screaming.  But ….

BREAKING NEWS: Bain Capital Wanted to Lend GM and Chrysler Money For Their Managed Bankruptcies!***

**This appears to be incorrect. It was based on a story that CNBC has now updated. It was “Bain Consulting,” not Bain & Co., that advised the government on re-financing the automobile companies. — klh

Ah!  Mystery Solved! Yesterday,in my post, “Crony Capitalism On A Grand Scale“—the title of the post borrowed from an op-ed piece by Romney in yesterday’s Detroit News characterizing the auto bailouts that way—I noted that Romney seems unaware that both companies filed for bankruptcy.  Romney says, as apparently he says often when forced at gunpoint to explain his opposition to those bailouts, that he was for the idea of “managed bankruptcy” for both companies, and never actually acknowledges that that is what happened.  Much less that these bankruptcies were “managed,” and therefore were able to emerge from bankruptcy as ongoing enterprises rather than as pieces of physical assets, machinery and the like, for a Bain Capital-owned company in the process of being restructured, to scavenge and resell.

This was a mystery to me. Sure, Romney regularly makes up facts to match Tea Party of Club for Growth ideology.  But in Michigan,everyone—everyone—knows that GM and Chrysler went through formal bankruptcy proceedings.  In court. How, I wondered, did he expect to get away with pretending that these companies didn’t go through managed bankruptcies?

Ah! Mystery solved! In an ABC News report last night by Chris Bury (a genuine news reporter,not a pundit disguised as one, and a long-ago favorite of mine from back when he was reporting for Nightline), illustrates the impact of the bailouts on Michigan’s economy, which is suddenly resurgent.  And in the report, which is today’s Yahoo News highlighted ABC NEWS video, explains what Romney means by “managed bankruptcy.”

Turns out, he means, best as I can tell anyway, that private equity firms lend the corporation the money to get through bankruptcy, in exchange for ownership of the company after its emergence from bankruptcy.  In the case of GM and Chrysler, many tens of billions of dollars.  In an op[ed in the New York Times back then, he described the managed bankruptcy he had in mind as one in which the government would guarantee private loans, but it would not itself provide the financing.  Which raises the question of how, exactly, this would have saved the government money, since the companies are repaying the government the loans to the extent possible.

But it also raises the question of Romney’s recommendation that the government play Russian Roulette with the auto industry.  Bury’s report points out that Bush Administration officials who put together the initial bailout legislation recognized, as did the Obama administration officials who took over, that the chance was nil that private equity money in such large sums would be forthcoming.  And why he conflates ideology with fact, even when the stated fact is baldly nonsensical. “If(automakers) get the bailout … you can kiss the American automotive industry goodbye,” Bury’s report quotes Romney as saying in that New York Times op-ed.  Destroying the industry by saving it?

Meanwhile, an editorial in today’s Washington Post* says,in complaining about Obama’s proposal to raise taxes on bailed-out banks in order (the editorial says) to cover the auto bailouts:

TARP was the price the country paid for a public good — financial stability — that the country needed. It’s inconsistent for the president to hail the bailout of one private industry —autos — while playing politics with the bailout of another — banking — that was and is no less necessary to a modern economy. It compounds the inconsistency to demand that the latter pay for the former.

Apparently the [Post]’s editorial board thinks GM and Chrysler caused the housing bubble and sold subprime mortgage-backed securities.

*The sentence has been corrected to say that the editorial is in today’s Washington Post. Originally, the sentence said incorrectly that the editorial is in today’s Wall Street Journal.


***Yup.  Definitely incorrect.  See my above post on the subject. 

As I just wrote in response to a comment, I’m still sorta dismayed that the title of my post was treated, even by a PR firm representing (I guess) Bain, as a representation of fact rather than as the sarcasm that it pretty clearly was.  

Oh, well.

UPDATE to “What if Eisenhower’s budget were your (grandparents’) family’s?”

In my first of two posts yesterday, “What if Eisenhower’s budget were your (grandparents’) family’s?”, about an ABC News item from the evening before discussing Obama’s proposed 2013 budget, and propagating the truism, so popular among pols and pundits, that the federal budget is like a family’s, only with eight zeroes following total expenditures, income receipts and carried debt, I mentioned that the piece contained a February 2009 clip of Obama promising that his final first-term budget would halve the deficit that his administration inherited.  I saw the video because it was highlighted on the Yahoo News pages yesterday morning.

Jake Tapper, ABC’s White House correspondent said Obama was now breaking that promise. I pointed out that the promise probably was based in part on Obama’s intent to end some of the Bush tax cuts (the clip shown was just a few words of Obama’s comments).  Reader RJS noted in the comments to my post that Dean Baker also posted a takedown of the ABC News report and of the silly federal-budget-and-family-budget analogy. 

Baker also mentioned Tapper’s inclusion of the clip of Obama’s February 2009 promise to halve the deficit, and points out that the main reason that the promise is unfulfilled is that the economic downturn proved far more severe than Obama and most mainstream economists recognized at the time, and so the tax revenues have been correspondingly lower than anticipated.  

I thought of mentioning this in my post yesterday, but didn’t because, well, y’know, a promise is a promise, and the Tapper’s point concerned specific economic legislation proposed by Obama.  Baker notes that if Obama kept his promise now and proposed a budget that halved the deficit for fiscal 2013, the deficit reduction would be, um, pretty temporary, since drastically cutting government spending in a weak economy with a persistently high unemployment rate would weaken the economy further, leading to lower tax revenues ….

Of course, communicating this requires a short explanation of Keynesian economics.  Which—who knows?—maybe Obama will actually start doing.  If a gun is held to head.

Crony Capitalism On A Grand Scale

An article in yesterday’s New York Times, which I think deserves much more notice than it seems to be getting,  says that last week, “Mr. Romney’s campaign held an elaborate “policy round table” fund-raiser at a Washington hotel, featuring panel discussions run by lobbyists [who are] former cabinet officials or members of Congress.”
Today in the Detroit News, that very same Mr. Romney has an op-ed piece complaining that the GM and Chrysler bailouts were “crony capitalism on a grand scale.”  The reason for the epithet?  That by prior agreement heading into the managed bankruptcies of those companies—bankruptcies that in fact were “managed” ones rather than just plain bankruptcies, and that therefore allowed the companies to emerge from bankruptcy and continue operating—union jobs received more protection than non-union jobs, and because Chrysler’s secured creditors were not protected. 

Okay, well actually, he doesn’t acknowledge that the two companies did file for bankruptcy, and instead claims that they should have been forced to do so.  To file for “managed bankruptcy,” that is.  At least if I understand him correctly.  And actually, he claims (again, if I understand him correctly) that GM’s secured creditors will, by fiat of the Obama administration, not be repaid in full.  And he says that were it not for the bailouts, the companies would have survived without layoffs, or without as many layoffs, or without non-union layoffs … or ….


In fact, as every Michigander (and Ohioan) knows, both companies filed for bankruptcy, the bankruptcies were “managed,” and both emerged from it much-downsized but still employing many thousands of people directly or via their suppliers.  And, as they also know, neither company would have emerged from bankruptcy at all without the government’s financial assistance.  Which is why the government agreed to the bailout.  

And, according to a comment to the op-ed, GM’s secured creditors in fact were promised that they would be repaid in full, and expect to be. 

So what’s Romney’s point? Best as I can tell, adding the actual facts to the op-ed, it’s that Chrysler’s secured creditors, who would have been paid virtually nothing had the company dissolved, weren’t privileged over the employees, in the restructuring.  This doesn’t sound to me like a serious plea for votes.  Not from employees—even laid-off ones—anyway.  And, since most of Chrysler’s secured creditors probably don’t vote in Michigan, not from the secured creditors either.  But maybe they’ll attend his next fundraiser, to meet those lobbyists whom Romney will delegate his policymaking to. 

What if Eisenhower’s budget were your (grandparents’) family’s?

What if Eisenhower’s budget were your (grandparents’) family’s? What if Kennedy’s were? How about LBJ’s?  Nixon’s? What if Reagan’s were your parents’ or your own family’s? How about G.H.W. Bush’s? Clinton’s? G.W. Bush’s?
One of my pet peeves is the use by political reporters and pundits of sophistic or downright imbecilic supposed analogies.  (Like last week’s classic from Politco’s Jim VandeHei, analogizing Obama’s justification for agreeing to team up with a Super PAC, notwithstanding his opposition to the Citizens United decision, to a teenager’s refrain that he wants to what “everyone else” is doing—as if what the teen’s friends are doing would have a profound effect on the teenager and others unless that teenager went along.)
So this morning when I clicked on the Yahoo News page, my opening page for one of the web browsers I use, and saw that one of the featured videos was a clip from last night’s ABC Nightly News broadcast, titled “What if Obama’s Budget Were Your Family’s?”, I shook my head in dismay at the sheer persistence of this ridiculously false analogy. 

The clip begins with Diane Sawyer introducing a piece by ABC’s White House correspondent Jake Tapper purporting to explain Obama’s submitted budget by reducing the basic amounts of money—the budget total, the deficit in the budget, and the amount of debt already owed—by lopping off eight zeroes at the end, so that $38 trillion becomes $38,000 (a plausible middle-class annual expenditure), for example.  In this analogy, the family’s annual deficit is about $9,000, because this is a so-called working-class family whose annual income is $29,000. The $9,000 deficit will be added to the family’s already-existing “credit card” debt of $153,000.  Or something.

The clip then shows Tapper at Jay Carney’s press briefing yesterday asking whether, given the increase in amount of debt after one year, this isn’t irresponsible.  Tapper then moves to a Feb. 2009 clip of Obama promising to reduce the deficit his administration inherited, by one-half.  Tapper says Obama’s budget breaks this promise.

Which it does, assuming that the promise wasn’t based partly on a proposal to end most of the Bush tax cuts.  The clip is, well, clipped, so its context is missing.  But since Obama’s attempts to end enough of the Bush tax cuts to substantially lower the deficit have been blocked by the Republicans, any reference to this broken promise should give Obama the opportunity to point this out.  All he has to do is actually take that opportunity to do that.  Which, with Obama, is problematic.

But as for the tiresome family-budget analogy, Obama himself is partly to blame for its persistence, having (stupefyingly) adopted it, repeatedly, himself rather than explaining the easily explainable: that the analogy is false and destructive.  Basic Keynesian economics is really not very hard to explain, so why make false representations of economic fact that undermine your policy positions, rather than bother to explain it?

But even just taking the analogy on its own terms, I’m wondering why all of that working-class family’s current $153,000 debt is described as credit card debt rather than, say, mortgage debt, or student-loan debt, or car-purchase debt owed as monthly car payments (and necessary for the family breadwinners to get to work).  Or why the credit card debt might not reflect necessary purchases such as food and gas, or, say, a furnace or roof replacement for the home.  Is their income too low for them to own a home?  Have a car?  Take out college loans?

And this is not even to mention that families cannot raise their annual income by deciding to do so, as governments can by, say, increasing tax receipts. 

Which brings me to the point in the title of this post: What if Eisenhower’s budget were your (grandparents’ or parents’) family’s? Really were?  What would the country be like now if it had been?  What if Kennedy’s were? How about LBJ’s?  Nixon’s?  How about Reagan’s?  G.H.W. Bush’s? Clinton’s? G.W. Bush’s?  And what if the current budget, and revenue-raising options, really were like your family’s?

Any takers?  Jake Tapper? 

Corporate Leveraging of Campaign Contributions Under Citizens United

Last week, Dan posted what had been an email message I sent him in response to a link he’d sent me to an article by Thom Hartmann on Truthout about the Supreme Court’s infamous Citizens United opinion.  The key (consecutive) paragraphs of Hartmann’s piece, which I quoted in my email/post, were:

Most Americans don’t realize that the idea that “corporations are people” and “money is speech” are concepts that were never, ever considered or promoted or even passed by any legislature in the history of America. Neither were they ever promoted or signed into law by any president – if anything, the opposite, with presidents from Grover Cleveland in 1887 to Barack Obama in 2010 condemning them.

And Congress and the executive branch are the two of the three branches of government that are elected by the people, and thus the only two to which the founders of this country and the framers of the Constitution gave the right to create laws.

The Supreme Court is so much not supposed to create law, that Article 3, Section 2 of the Constitution even says that it must operate “under such Regulations as the Congress shall make.”

I said there are two problems with what Hartmann’s arguments—arguments that are being made by many others as well who are appropriately outraged by Citizens Unitedand earlier corporate-free-speech Supreme Court opinions. 

One problem, I wrote, is that there needs to be an explicit distinction made between the idea of “corporate personhood” in law, generally, and “corporate personhood” in a constitutional-rights sense.  I said that Hartmann and the others who have adopted this position, including the drafters of the current proposed constitutional amendment to negate Citizens United by declaring corporations non-persons, clearly intend that this apply only to the corporate-free-speech Supreme-Court-created laws.

I said that the “corporate personhood” fiction actually was created, I believe, simply as a practical way to allow corporations to own property, and that eventually that fiction enabled corporations to sue and be sued, to be subject to criminal laws and civil regulatory law and to be charged with violations of those laws and to be fined for violations and required by court order to comply with (say) a particular environmental or securities regulation or whatever.  I noted that state statutes, which provide for the creation of corporations, and federal statutes, which recognize corporations as legal entities, do provide for these things.  And although they don’t use the term “corporate person,” these laws (e.g., tax laws, environmental laws, lawsuit procedural laws) do include corporations in the statute’s “definitions” section, in defining the term “person,” in order to make clear that the statute or regulation does apply to corporations.

I then made the point that the problem of corporate personhood is not that the law, either statutory or court-created, treats corporations as legal entities that have legal rights and obligations, but instead that the Supreme Court has pronounced corporations “persons” for purposes of First Amendment speech rights.  Constitutional rights, I explained, apply only to persons.  In order to accord corporations First Amendment rights, the Court had to declare them persons—not mere legal entities in a statutory sense (as in say, corporations can own property), but persons—in a constitutional sense.  This, I said, is a really important distinction.

And it is.  A really important distinction. 

The distinction gets complicated, though, I said, when you consider that there are some constitutional rights that most people would think do and should pertain to corporations: the Fourth Amendment’s guarantee against warrantless searches and seizures, and the Fifth and Fourteenth Amendments’ due and property “takings” provisions, for example.  But that’s because actual people do own direct monetary shares of corporations, and so corporate property does belong to real people, and because the constitutional protections at issue there—against warrantless searches and seizures of documents, for example—would compromise those rights of real persons (the corporation’s employees or customers, for example).

In other words, to the extent that the corporation—or union, or nonprofit political organization (the iconic example in legal opinions being the NAACP)—has constitutional, rather than mere statutory, rights, those rights are derivatives of the rights of the organization’s human members. 
The First Amendment right to advocate for a particular political candidate or party or political position, using shareholders’ money is hardly a right that logically derives from those shareholders’ own First Amendment speech rights, I said.  “The exercise of those speech rights cannot reasonably be interpreted as intentionally collective among the shareholders; the specific expenditure is not foreseeable to shareholders, and many shareholders, whose politics differ from that of the CEOs, would be horrified by it if the transparency that Justice Kennedy so vaunted in the opinion actually existed and they knew about the corporation’s political role,” I wrote.

My post was posted prematurely.  I’d intended to edit it before it was posted.  And, as I said in a comment I posted to the post, that comment needs clarification, because it implies inaccurately that corporate management normally lacks, or at least should lack, the legal authority to take actions that are unforeseeable to shareholders.  What I meant is that corporate management—and, regarding the use of corporate funds for political purposes of this sort, this presumably would be the CEO—should not be able to leverage the First Amendment speech rights of unwitting shareholders in so unforeseeable a respect. What Citizens United did was authorize corporate top management to leverage shareholders’ First Amendment speech rights and shareholders’ money for political campaign expenditures.  But unlike Goldman Sachs when lending leverage to Bain Capital, these shareholder political donors are captive ones.

Of course, the Fab Five majority in Citizens United did pretend otherwise.  But then, as I said in another earlier post on AB, declaring clearly-false facts in order to arrive at their chosen result in that case is the very hallmark of that opinion. 

In the comments to my earlier post that this post clarifies, there was some discussion about whether the remedy for an objecting shareholder is to simply sell the corporate stock.  But for that to be an option even just for people who own the stock directly rather than through a pension fund or mutual fund, the corporation would have to divulge to its shareholders its intent to make that expenditure.  Suffice it to say that corporations do not divulge the specifics of these expenditures, even after they’re made, much less beforehand.  And the sale on short notice may cause the shareholder to accept a financial less on the sale, all in order to prevent the derivative use of the individual’s First Amendment speech right never foreseeably conferred in the first place. 

This particular constitutional right, by its nature, should not transfer so artificially and unintentionally.


For readers who didn’t see my earlier post, and who are curious, I said that the other problem with what Hartmann and others are arguing is their claim that the courts have no authority to render decisions pronouncing rules of constitutional law.  I said, accurately, that this claim is profoundly dangerous.  I said it mirrors what Clarence Thomas and Antonin Scalia regularly claim, except of course when they themselves are fabricating some new rule of constitutional law.  As they did in Citizens United.

I also said I love Thom Hartmann, but that I think his position here needs some refinement.