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

Guest post: Another Romney/Bain Firm Got Subsidies (Then Closed a Plant)

by Kenneth Thomas

Another Romney/Bain Firm Got Subsidies (Then Closed a Plant)

The Tampa Bay Times reports (via Jed Lewison) that another Bain-owned company, Dade Behring, was a recipient of $7.1 million in subsidies from Puerto Rico and the federal government the year before it laid off 300 workers there. A common problem with many subsidized projects, it took the money and ran without any consequences.
As I have pointed out before, another Bain-owned company, Steel Dynamics, received at least $95 million in incentives from state and local governments in Indiana, for two separate investments. In fact, this exceeds the $85 million Bain made in profit from the firm.

Now we have a third example of Bain-owned companies getting government subsidies. For a candidate who claims to be about private enterprise, Romney clearly doesn’t walk the walk. As Jed Lewison has noted before, it’s clear that when Romney talks about crony capitalism, he’s talking about himself.

How many other government subsidies are in Bain’s past? Inquiring minds want to know.

crossposted with Middle class political economist

Balancing the Budget with Tax Cuts and Defense Spending Increases

PGL at Econospeak points us to

Charles Riley of CNNMoney has a must see graph showing how defense spending under Mitt Romney would compare to the current DOD baseline budget over the next decade. His title notes the spending over the next decade will exceed the baseline budget by more than $2 trillion. I like this:

Romney has proposed a slew of tax cuts, and plans to cap federal spending at 20% of GDP. But in both cases, the Romney campaign hasn’t fully explained how those provisions will be paid for. The lack of detail means that Romney’s claim of moving toward a balanced budget requires a great deal of trust.

But no one should trust Mitt Romney on fiscal matters. No one.

Bait and Switch: Is Pope Benedict Really Against Raising Taxes On the Wealthy to Help Balance Government Budgets?

(Reuters) – Invoking Pope Benedict, Republican Representative Paul Ryan defended his budget plan on Thursday at Georgetown University, where a group of the Jesuit institution’s faculty has accused him of misusing Catholic teachings to push cuts to programs that serve the poor.

“The overarching threat to our whole society today is the exploding federal debt,” Ryan said, speaking in a Gothic, oak-paneled auditorium on the Georgetown campus.

“The Holy Father, Pope Benedict, has charged that governments, communities, and individuals running up high debt levels are ‘living at the expense of future generations’ and ‘living in untruth.'”

— “Republican Ryan cites popeto defend budget cuts,” David Lawder, Reuters, Apr. 26

The overarching threat to our whole society today is the exploding federal debt?  Well, maybe. But this is an argument against raising revenues by raising taxes on the wealthy?  Or, for that matter, on anyone?
What’s most angering is this deliberately disorienting, gimmicky refusal by these pols—Ryan and Romney, in particular—to acknowledge that raising revenue through taxes reduces the government’s budget deficit and debt; that lowered tax rates in the last 11 years have significantly increased budget deficits and the debt (and that that also happened in the 1980s); that budget deficits and the national debt decreased during the 1990s after tax rates were raised during the G.H.W. Bush administration; and that Ryan’s and Romney’s tax-reduction plans would, according to (apparently) all projections except their own, substantially increase the national debt. 
It’s one thing to argue for a substantial reduction or elimination of the national debt, but quite another to pretend that raising tax revenues isn’t one possible way to help do that.  
These people do make Ayn Rand philosophical arguments to support their policy proposals, but the claim that the pope “has charged that governments, communities, and individuals running up high debt levels are ‘living at the expense of future generations’ and ‘living in untruth,’” is a non sequitur to the question of how we reduce the national debt.  

It appears, though, that this particular bait-and-switch—Ryan’s claim that the pope supports his budget proposals because the pope has expressed concern about high debt levels of governments, communities and individuals—is causing outright revulsion among both mainstream media pundits and the general public once they hear about it.  The pope as Ryan’s budget guide?  Really?  Comments posted to an article about it yesterday on Slate, titled “Paul Ryan Cites Pope In Defense of Budget Plan,” almost universally express disgust and dismay at Ryan’s claim.  The pope as Ryan’s budget guide?  

The beauty of Ryan’s statement is that it helpfully highlights that, Romney’s insistence to the contrary, this election is not about the present and future economy—will cutting taxes for the wealthy by 20% and eliminating the EPA and banking regulations really spur the economy and lower the national debt?—but instead about the very structure and purpose ofgovernment itself.  And because Ryan has now invoked the pope as supposed political supporter of Ryan’s budget, the real Republican intent will likely gain widespread attention.

Halleluiah.  And praise the pope.

The Laugher Curve: Romney Etch-A-Sketch Aide Says Romney Thought TARP Unnecessary but Urged Support of It as a Give-Away to Wall Street

Okay.  The subtitle of this post is a loose paraphrase of statements that Romney aide Eric Fehrnstrom made to ABC News on Thursday.  But not all that loose a paraphrase. It’s actually a direct deduction from Fehrnstrom’s comments.

As Washington Post blogger Greg Sargent mentioned on Friday, Fehrnstrom test-drove a new, or rather a newly clarified and perfected, campaign theme.  He claimed that the economic collapse began three years ago, immediately after Obama’s inauguration, rather than during the Bush administration.  Or that the severe economic downturn, which began in late 2007, and the near-collapse of the banking system, which occurred in the last few months of 2008, are unrelated to the deepening of the recession in 2009 and the ongoing high (but decreasing) unemployment rate, and also are unrelated to each other.  I’m not sure which.  Nor apparently is Fehrnstrom. 

He is sure, though, that the jobs created since the beginning of this administration, including the ones generated in, say, the last two years, owe nothing to Obama’s policies. 

Call it the theory of neo-economic severability.  Which occurs when some political hatchet wielder misjudges the level of most people’s credulity.  Or misjudges the public’s memory about major, fairly recent events, or at least about the public’s ability to have its memory refreshed by a few video clips and headlines from, say, the fall of 2008.  

Or just call it the Laugher Curve. 

My instant reaction after reading the first two paragraphs of Sargent’s post was: Ah! I should have known it!  My liberal-Democrat parents and my American History teachers lied to me. The Great Depression started in March 1933, since that was the beginning of the massive job losses that occurred in the last nine months of that year and in the following two years or so. The uptick in employment in ’36-’37 had nothing to do with Roosevelt’s policies and were instead the result of Hoover’s policies—something that should have been obvious all along, since the market crash and the economic collapse beginning in late 1929 were unrelated to each other and to the Great Depression, which started in 1933.  Those people waiting in breadlines during the Hoover administration were just practicing in case a Democrat was elected down the road and caused a Depression.  Unfortunately, one soon was, and he did.

Then I read Sargent’s third paragraph and saw that real pundits had gotten there first with that one.  Oh, well.

Sargent says that while Fehrnstrom’s claim is a step beyond Romney’s routine ones, at least in its clarity, it’s really a rendition of Romney’s main theme: that Obama’s policies caused the economic collapse.  And Sargent’s livid that the media hasn’t called Romney on it, by pointing out the, um, chronology problem.  

I’m not so sure that Fehrnstrom’s claim isn’t really new.  I’ve thought Romney’s just been claiming that Obama’s policies haven’t succeeded in spurring economic growth and hiring and instead have hindered it.  (Especially in Michigan, Ohio, Indiana and elsewhere where GM and Chrysler plants and huge numbers of auto suppliers’ factories shuttered after Obama allowed those two automakers to liquidate back in 2009, despite Romney’s frantic warnings about the dire consequences.)  I think Fehrnstrom’s new iteration is different, not just clearer. 

But as the ABC News story shows, this new theme isn’t just Fehrnstrom’s talking point; it’s also Romney’s.  On Thursday, Romney pretended that a Lorain, Ohio National Gypsum plant where Obama campaigned in January 2008 had closed during Obama’s presidency.  Actually, it closed a few weeks after Obama spoke there in 2008.  The plant, which employed about 70 people, made drywall.  Y’know, for new homes.  The market for which, and therefore the building of which, slowed in 2007 and collapsed in 2008.  It’s a market that can’t exist at all without a healthy credit market. 

Which brings me to … TARP.  A.k.a, the bank-bailout.  Or at least it reminds me that that was the subject of this post’s subtitle. 

Sargent suggests that some member of the press who covers Romney’s campaign stops ask Romney what exactly he would have done as president in 2009 to spur the economy and job creation.  But we already know the answer to that: eliminate all regulation on business and reduce or eliminate taxes on corporations and wealthy individuals. 

Me?  I just want some reporter to ask Romney, in light of Fehrnstrom’s claim, why, if the economy was fine until 2009 and the banking industry wasn’t collapsing back in the fall of 2008, he urged Republican members of Congress to vote for the bailout.  Oh.  Oh, wait.  It must be that TARP worked so well—and so fast—that by January 20, 2009 the economy was healthy again.  But then one of those damn healthcare-legislation death panels intervened and mandated the death of the recovered economy, as practice for some time down the road, after enactment of the Affordable Care Act, when the panel would have to kill nice old ladies instead of the GDP.  Either that or, well, Romney wanted the bailout as a gift to Wall Street, not as the only apparent way to keep the entire financial system from unraveling, his contrary claims notwithstanding; according to Fehrnstrom, Romney thought the financial system and the economy were fine.

But I’d also like a reporter to ask Romney why he’s adopted Fehrnstrom’s modus operandiof misrepresenting the timing of occurrences or misstating who said whatever, by simply cutting out words, or years.  Before his recent Etch-a-Sketch notoriety, Fehrnstrom gained notice as the aide who concocted an ad last fall showing Obama in a news clip saying something like “If we keep talking about the economy, we lose.”  The original clip was from 2008, and Obama was quoting McCain.  

Several commentators have written in recent weeks that a hallmark of Romney’s campaign is shaping up to be bald lies, mostly by Romney himself.  Most of these misrepresentations involve something Romney says falsely that Obama said, but sometimes the misrepresentations are fabricated statistics.  Always though, they are easily disprovable, and the statements that can’t be disproved with a video clip showing what actually was said or what actually happened, or with statistics, eventually will be disproved when Romney is directly asked the basis for the statement.  At least I assume Romney eventually will be asked this, even though Romney assumes otherwise. 

But rather than suggest that Romney regularly makes things up—that he’s a habitual liar—Obama should pretend to take him at his word.  While some voters may decide to abide a presidential candidate who they know is a habitual liar and cockily flaunts it, a majority probably wouldn’t risk voting for one who appears to base important decisions on supposed facts that have not been checked for accuracy.  Everyone knows that Romney is comically malleable.  But, if taken at his word, he’s also easily conned. 

Obama should take him at his word and illustrate the point, incident by incident.  Most voters, after all, probably would rather have a president whom they wouldn’t trust to sell them a used car than a president who they wouldn’t want buying one.  Romney of course would be the former, and most voters will recognize that.  But not before pausing and wondering.


Romney’s speech at the shuttered National Gypsum factory is important for a more substantive reason, too: Statements he made in the speech serve, I think, as a pretty stark argument for Keynesian economics and therefore undermine the Republicans’ anti-stimulus refrains regarding the 2009 stimulus law and their current opposition to use of federal funds to help state and local governments avoid further layoffs of teachers, firefighters and police officers.  And it’s pretty hard not to juxtapose those statements with Romney’s hostility toward the auto-industry bailout, both then and now.  I’ll post a short post on this later today or tomorrow.  A short post is all that’s necessary, because Romney’s words speak for themselves.  Economics isn’t my bailiwick.  But for this it doesn’t have to be.

Chris Christie’s Sweet Dream (And Romney’s)

“I’ve never seen a less optimistic time in my lifetime in this country and people wonder why,” the first-term Republican governor said at the Bush Institute Conference on Taxes and Economic Growth in New York City.

“I think it’s really simple. It’s because government’s now telling them ‘stop dreaming, stop striving, we’ll take care of you.’ We’re turning into a paternalistic entitlement society,” he said.

“That will not just bankrupt us financially, it will bankrupt us morally because when the American people no longer believe that this a place where only their willingness to work hard … determines their success in life then we’ll have a bunch of people sittin’ on a couch waiting for their next government check,” Christie said.

That, pretty clearly, is the message that the Republicans, party-wide, have settled on for this election: People are depressed because of the existence of the social safety net and other government programs such as student-loan and job-retraining programs, and because the very wealthy haven’t had their tax rates cut enough, the gap between the very wealthy, and all those couch potatoes who work regular jobs isn’t large enough.  

I wish them all the best with that message.  And I hope they keep pushing it, all the way to November. 

I think it’s simple, too. I’ll leave it at that.

Can’t wait to hear the next installment of Christie’s VP audition script.  Maybe something about all those auto-industry-worker couch potatoes who’ve stopped dreaming and striving now that Obama has handed GM and Chrysler to the UAW?

By the way, did Christie ever use the student-loan program, I wonder?  Or did he, like Romney and Romney’s kids, have no need for it?

Christie was speaking at the Bush Institute Conference on Taxes and Economic Growth. Tomorrow’s audition will be by Paul Ryan. It’s a follow-up audition, actually.


Apparently, not all government programs cause mental depression.

… And Whom Would President Romney Pay Off? Do Tell!

Car sales “are growing so fast that Detroit can barely keep up,” according to an AP report published this evening bearing a Detroit dateline.  “Three years after the U.S. auto industry nearly collapsed, sales of cars and trucks are surging. Sales could exceed 14 million this year, above last year’s 12.8 million.”
The report says that as a result, carmakers and their suppliers are adding shifts and hiring thousands of workers around the country.  Most of the added jobs in the upper Midwest are for the Big Three carmakers and their suppliers. 

That’s the good news.   But two of these carmakers, and many of the suppliers in the Midwest and elsewhere in the country, would have collapsed in 2009 but for the government bailout of those two carmakers.

So the good news is really bad news, Romney told Fox News today, in sticking to his anti-bailout stance.  “The president ‘was paying off the people that supported him and that, by the way, are trying to get him re-elected,’ Romney said,” according to the AP report.

What?  No longer a Detroit-would-have-been-better-off-without-the-bailout claim?  Just an Obama-was-paying-off-the-UAW-and-only-incidentally-saved-the-US-auto-industry-and-hundreds-of-thousands-of-jobs defense? 

I dunno.  This doesn’t sound to me like a winning complaint for the general election.  Especially since the obvious question is: And whom will you be paying off as president, Mr. Romney?

Steven Rattner Cross-Examines Romney. Hooray.

Steven Rattner, the lead adviser on the Obama administration’s auto task force in 2009, has an op-ed titled “Delusions About the Detroit Bailout” in today’s New York Times.   Some highlights:

As a presidential aspirant, Mr. Romney evidently hasn’t felt a need to be consistent or specific as to what should have been done to address the collapse of the auto industry starting in late 2008. But the gist is that the government should have stayed on the sidelines and allowed the companies to go through what he calls “managed bankruptcies,” financed by private capital.

That sounds like a wonderfully sensible approach — except that it’s utter fantasy. In late 2008 and early 2009, when G.M. and Chrysler had exhausted their liquidity, every scrap of private capital had fled to the sidelines.

I know this because the administration’s auto task force, for which I was the lead adviser, spoke diligently to all conceivable providers of funds, and not one had the slightest interest in financing those companies on any terms. If Mr. Romney disagrees, he should come forward with specific names of willing investors in place of empty rhetoric. I predict that he won’t be able to, because there aren’t any.

Rattner then says that without government financing, the two companies would have been unable to undergo Chapter 11 reorganization, and instead would have been forced to cease production and liquidate.  He then addresses the claim that Obama improperly rigged the reorganization to favor the UAW:

Among Mr. Romney’s grievances — and to be fair, those of other opponents of the auto rescue — is that the auto task force trampled on bankruptcy precedents and even the law to effect President Obama’s plan of “shared sacrifice” by all stakeholders.

What he conveniently ignores is that the president’s plan was litigated throughout the federal court system — all the way to the Supreme Court, in the case of Chrysler — without so much as a nod to the opponents from a single judge.

“[E]very stakeholder received more from our plan than if the companies had been left to go bankrupt on their own,” Rattner says.

My question is: Why has Romney gotten away for so long without being asked during say, one of the 20 debates, who, exactly, would have provided the private funding that he claims was available.  And, if he can’t answer that question, why does he keep making the claim?

Apart from the obvious—that Romney habitually simply fabricates statements of fact to support his ideology and his political ambitions—this particular fabrication seems to me to get to the very heart of the supposed raison d’être for his candidacy: his business and economics acumen.  He either was dangerously mistaken about the availability of private funding for the restructurings or, as president, he would just make up evidence on which to base critical decisions—with results as dramatically different than he predicts at the outset as the auto company bankruptcies would have been had Bush and Obama actually followed his advice as he now claims they did.  
Why has this not occurred to anyone until now?  Anyone who matters, anyway.