I think the problem is exactly what Tom Tomorrow points out in the first panel. The “invisible” hand of the free market should be invisible. Instead we see armies of lobbyists, tax break after tax break, an obscenely tilted playing field, investors throwing their excess money at bubble after bubble, rampant insider trading, and a vanishing middle class caused by a widening gap between the 1% and everyone else. Does anyone actually believe we have any free markets any more?
I guess we still have freedom in this country, as long as “Freedom’s just another word for nothing left to lose”.
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Can I just point out that the guy was an American for just 12 years, hasn’t been living in the states for awhile and doesn’t plan to, and when he was a citizen, the courts screwed him into the ground? Why the hell would he live here? In New York, he’s one of those ‘suspicious’ people, if he hits Arizona for some sun a driver’s license isn’t enough to keep him out of a tent jail until they get around to admitting he’s a citizen. Good decision on his part.
Actually, I think the media has been particularly harsh on Saverin. In order to give up his citizenship, he had to pay a pretty hefty exit tax on his net worth to the IRS. Plus the media keep saying how giving up his citizenship will allow him to avoid capital gains taxes, but there are already plenty of ways for wealthy people to avoid those taxes (e.g., by borrowing against unrealized gains). Not to mention that capital gains taxes are already pretty damn low.
I think he is being scapegoated, while far worse abuse of the system goes unreported and unpunished (and often even rewarded).
It’s like prosecuting Martha Stewart in order to look like we are tough on insider trading, while ignoring all the insider trading at the major banks. (I’m not saying Stewart wasn’t guilty, just that there are much bigger fish, but unfortunately they are too powerful to prosecute).
I think Tom Tomorrow’s main point in bringing up Saverin in the last panel is to point out that rational self-interest does not always produce the best results for the overall market. And I agree, which is why we need some regulation.
Obama made a great point yesterday that was, of course, taken completely out of context and savaged by Faux News. In talking about the ads against Romney’s Bain Capital actions, Obama said that making the most money for your investors is not what it takes to be President – the President needs to think about everyone and do what is best for everyone, not what is best for a small group at the EXPENSE of everyone else.
Of course Faux claimed an attack against capitalism – but that’s not what he said. Pure capitalism doesn’t work for a country for the same reason pure socialism doesn’t work – humans will always cheat and crave power, and without some controls any “pure” system eventually becomes a tyranny.
IK, I agree the gov’t tries to set examples with high profile people to make it look like they are going after the problem. Fact is 4 years after the meltdown and all the abuses that led to it only a handful of people have been targeted.
Arthanyel – I halfway agree with you. First I think Romney’s record at Bain should be on the table, he brought it up as experience for solving our problems. But, what I think should be looked at is how well he did his job. If he had choose some other work that we find less offensive, say building a business that makes better and cheaper solar panels then the Chinese, wold we feel the same. Private equity is necessary for certain parts of the business world. Most PE firms are courted by the targets and in most deals the targeted companies recieve more then they are valued at. It’s both a comlicated and risky business and does require advanced skill sets to be successful. PE firms are much more prevalent today then when Romney played the game. So just from a business knowledge standpoint Romney does understand more then Obama in the business world. So are we mad becuase he was very good at doing business or mad because of the business he was in?
PGT, one of the points *is* that Romney, with every choice in the world available to him, did NOT choose work that would have been less “offensive” and detrimental to others. We aren’t mad, we just recognize the symptoms of a personality that is so steeped in an ‘us against them’ mentality that causing damage and debacle is an acceptable business tool. Romney, given the choice of creating light or producing Agent Orange, hasn’t got the ethical structure to look at any deciding factor but his own bottom line.
I won’t disagree with that OB, but I don’t think we should look superficially at the headlines and simply agree. Were these companies that were on they way down or out and basically sold out to BAIN to avoid the pain and allowed them to do the dirty work or were their owners only interested in getting a pay out and sold knowing the potential consequences. In that light it might show a more systemic american business structure. How many valued US businesses do we currently embrace went the way of eliminating US jobs in favor of profit. Apple comes to mind as one.
What has Obama done to bring back jobs and companies to the US is what I’d rather hear him talk about. How has he fostered a climate that stimulates non-government investment in US companies and jobs? It seems he’s acting more like the challenger who can only criticize the incumbant. I’d like to see him completely ignore the challenger and talk about what he’s done and will do. Does anybody know his plans for the next 4 years?
Well, perhaps the real question is what could he have done given the circumstances? The president isn’t Superman and has met nothing but fierce resistance since his election.
Patricia – your correct since Jan 2011, but prior to then he had the advantage. It won’t get any easier from this point either. Perhaps his biggest mistake was listening, he should have drove on and then answered for the results good or bad. But I’m not sure that was the advice from his sages when re-election was factored in.
So, we’ll just ignore those last months that Cheney and Bush spent moling every department in the government, setting roadblocks into the process to slow and stop the implementation of every decision stamped with a ‘D’? No, coming into a corrupt and blind system of buck-passing didn’t give Obama an instant advantage, as strange as that might seem. It didn’t help, either, that the Republicans refused to do their jobs to the extent that they wouldn’t even read legislation they’d had a part in writing.
The main problem I have with Romney’s work at Bain is that it was mainly successful (read, profitable) because of tax breaks that were given to them. To say it plainly, much of Romney’s money came from sucking from the government’s teat. If this is being held up as a successful business, then we are doomed.
http://www.dailykos.com/story/2012/01/04/1051546/-Bain-Survives-on-Three-Tax-Breaks
http://articles.latimes.com/2012/jan/12/nation/la-na-bain-subsidies-20120113
http://www.nationalmemo.com/bain-subsidies-romney/
IK – I hear ya, but can you identify 1 taxpayer or 1 business in the entire country that does not get a tax reduction, tax credit, or deduction? Everyone single taxpayer gets at least the 1 person deduction. All homeowners get interest deduction and/or property tax deduction. All businesses get to deduct paper clips and a whole myraid of other deductions, so to say any business or person doesn’t suck off the gov’t teat is false. The system is set up so that everyone MUST suck because that is how politicians keep constituents appeased, and throwing out the tax code is a topic for another discussion.
So I think it’s unfair to categorize any entity who receives a tax “break” or “deduction” as evil, since it includes everybody and every business anyway.
FALSE EQUIVALENCY ALERT! (I love these things)
To equate everyone because they get deductions is to equate everyone because they are eating, even though some have 6 course meals at French restaurants and some eat out of trash cans.
But I think we will all agree that there is a difference between an company who can deduct real expenses of doing business and companies that make $40 BILLION of profit a quarter and still get $3 Billion of government aid.
I also hear ya IL-08, and you and IK are both correct on them receiving tax breaks. But I believe the issue of their taxes is a Red Herring. GE makes way more then BAIN and paid even less taxes while receiving many tax breaks, and their CEO was rewarded with a position advising the president.
If we don’t like the business that Romney ran because we think it’s immoral then we should just comment on that and not accuse it of taking perfectly legal tax write offs that any other similar company can and would take.
I think even IK would agree that if the gov’t offered a company he started a tax break and that company had investers he’d be in super hot water if he didn’t take those deductions. You can argue the morality of the tax breaks, but thats a separate issue from how well he did his job.
No, the tax breaks are not a red herring. Tax breaks exist to promote a desired behavior in the country. We give capital gains breaks because we want to encourage investment. But what Bain mainly did was take companies that were cash cows (regular income) and restructure then so that their income (taxed high) became capital gains (taxed low), without making any actual investment.
Here’s an analogy — we have patents to reward inventors for their efforts and encourage innovation. But the patent laws have gotten so screwed up that we now have companies (called “patent trolls”) that buy up patent portfolios and then go around threatening to sue companies unless they pay up. They do no inventing or research of any kind. And they are able to do this because companies are forced to file lots of (often bogus) patents as a defensive move. Patent trolls get away with this because defending against a patent law suit is more expensive than just settling, and once one company settles then it is easier for the troll to extort money out of other similar companies. So the patent system ends up stifling innovation rather than encouraging it.
This is similar to the situation with Private Equity companies. As the linked articles in my previous comment explained, they exist mainly to take advantage of very specific tax breaks, not to add any value to their target companies. There is a big difference between a company using a tax break in the way it was intended, and a company whose main purpose is to use a tax break as a loophole.
And yes, GE is guilty of taking advantage of tax loopholes too. But we’ve already seen how Congress (and the Republicans specifically) are more interested in creating new loopholes than closing them (after all, why would they bite the hand that feeds them?). Heck, Norquist’s tax pledge, signed by virtually all Republicans, prohibits them from closing any loopholes.
Psgt – “What has Obama done to bring back jobs and companies to the US”
1) Attempted to create tax incentives for companies hiring in the US
2) Attempted to remove tax incentives for offshoring jobs
3) Attempted to kick start future American industries
4) Attempted to provide funding for re-training of American workers and tax credits for companies that invest in retraining
I say “attempted” of course because the GOP has shot down every single initiative, by filibuster from 2009 to 2010 and from House deafness in 2011 and 2012.
Of course he did drive the saving of the auto industry and thanks to Obama’s economic strategy we’ve seen the first increase in manufacturing hiring in the US in decades.
The bigger question than “what has he done” is “what has he tried to do and been blocked” – because many of the things he has tried to do are spot on to really help the domestic economy, where what the GOP has tried to do it savage the middle class and the poor to give more tax breaks to the wealthy.
Psgt – I didn’t say, nor did Obama say, that Private equity companies are bad or that we shouldn’t have them. THAT is GOP propaganda. What he SAID was that optimizing ROI for your investors in a private equity company is nothing like being President – and he was 100% correct on that.
OF COURSE people in business try to maximize profits. That’s why they are in business. If Romney had NOT done his best to maximize the ROI for his investors he would have been a BAD CEO. But being a good CEO does not require the same skills as being a good President, and being a good CEO of a private equity firm (whose ENTIRE BUSINESS is based on radically changing companies and selling them off) is nothing like being a good CEO of a Fortune 50 corporation (where at least you have to worry about employees and customers as well as investors).
I have seen VC’s and private equity firms in action (IK can attest to his experience) and the LAST thing they care about is employees or customers. What they care about is getting out as fast as possible and making a huge profit. What happens after that is completely uninteresting to them. And we have all seen many companies that missed their window and ended up imploding or being destroyed by the changes made by the VC and PE czars, companies that could have been successful and employed thousands for decades if they had just been allowed to run their business.
Arthanyel, it is even worse than that. I’ve been at investment social events where VCs and PE czars were actually bragging about how they destroyed a company but made lots of money on it.
So I would not say that what happens to the companies they raid is “uninteresting” to them. At least some of them get a sick ego boost out of killing them.
Let me be clear. I have been an investor, and I believe strongly in capitalism and free markets. But the current Republican version of capitalism is anarchy for the rich and powerful (along with an unhealthy dose of corruption), and has little to do with actual free markets.
IK and Arthayel – I am not disagreeing that the tax code advantages to investers using companies like BAIN are morally sound uses of them. But they are not illegal. I am also not saying I agree with BAIN style business tactics. We should not forget that the owners who sold out to BAIN probably made out well too. In all cases the employees were treated as commodities or more appropriately liabilities to be written off and discarded. But, that being the nature, however perverse was comletely legal and done well by BAIN et al.
Here’s my analogy. If your a defense lawyer and more specifically a public defender it is your job to represent defendants to the best of your ability. Even if your client says “yes I raped, tortured and killed all 20 of those 6 year old girls and prfited from selling the videos of my escapades”, you must try and clear them. If you are successful in finding the technicality that turns the monster loose to pray on society again, you’ve done your job very well. Do we chastise those lawyers, even ones who may want to serve as politicians?
Yes, we can examine Romney’s experience at BAIN and decide if it adds anything of value for a president. Lets also look at Obama and decide what experience he brought into the white house. 2 years of national level senate duty, of which 1 year was spent campaigning. Does one year of experience qualify anyone for the most demanding job in the country. Now as the incumbant he has 4 years experience and as such he may be a better choice then an unknown. But what I want to hear from him is more about how he’s going play the 2nd half. The media will dissect Romney, they don’t need any help.
Psgt: I think your point about the lawyers makes exactly the point we are trying to make. No one blames Romney for doing his job in the best way possible at the time. Not even Obama. We are just saying that THAT job does NOT equate to the experience you need to be president, and that success in THAT job in no way implies you know anything about growing the economy.
Let’s be clear – if a defense lawyer manages to defend his guilty client, then the LEGAL system worked and the lawyer did his job. But that does NOT mean JUSTICE was served – in fact, the opposite is true. And if you are electing someone to implement Justice For All, how would that defense lawyer’s experience qualify him for that job? In fact, morality does come in to play and any lawyer that took that case and got his client off did his job, but failed as a human being. As Romney has failed as a human being on multiple occasions.
Final point – the universe is not al about the President. Running the government is a huge team effort and there are many parts to make it work.
Obama has already been clear about how he would rebuild the economy – change tax incentives to make jobs here and not overseas, stop rewarding rapacious companies at the expense of American workers, spend money to start building the future businesses and educated workforce we need to make those future businesses WORK, and try to help rebuild the middle class which is the ultimate driver of the economy. And Republicans have unilaterally blocked every action he has tried to implement that approach.
Romney and Republicans have made it clear that their approach to “building the economy” is tear down protections on our air, water and living conditions, give more tax breaks to the wealthy at the expense of the middle class and the poor, end all support for future businesses and education and let the “free hand of the market” magically make it work, and continue to erode the middle class to funnel money to the top 1%. That is not a recipe for a rebuilt economy – it is the recipe for turning the US into Somalia. And since all the Republicans want is to get in power so they can do this (look at what is happening in Michigan, or Wisconsin) we have to STOP THEM while we still can.
Even the budget director under Reagan dismisses Romney’s claims that he created jobs at Bain. http://politicalwire.com/archives/2012/05/22/stockman_says_romney_didnt_create_jobs.html
Arthanyel and IK – I completely agree with your final thoughts. We can’t blame something that worked well for doing what it was designed to do, but we can criticize the business model.
I don’t think the republicans want to do away with protections for air and water or end support for small business and education. Matter of fact, Romney recently said he’d like to reinstate the school voucher program in DC that Obama is in the process of terminating and turn it into a model to spur the public school system there to get more competitive and better. The people of DC are in favor of it, however the unions don’t like it. I am in favor of that. Heck in a large city near me the state spends $14,000 per child on education and they graduate without being able to read. Give that $14,000 to the family and let them pay for a private education that will help lead to a more productive future life. Thats a good idea, bad for the public system because they’ll have to do a better job.
So I disagree that republicans in general want to throw granny off a cliff. Yes, I do believe we need a balance of revenue increases with reductions in spending. I also think we need a much simpler tax code eliminating many if not all loop holes.
Psgt: “I don’t think the republicans want to do away with protections for air and water or end support for small business and education. ”
I said future business, not small business, but that’s a quibble.
if you don’t think Republicans want to do these things, then I humbly submit you are not paying attention. I point you to the “Forgotten 15” bills the Republican House passed claiming they were “job bills”. Virtually all of them dismantle clean air, water, and environmental protections and have nothing to do with jobs. Republicans have repeatedly stated they want to shut down the Department of Education and the EPA as federal functions. They have repeatedly stated they will not support any government incentives to future businesses under the mantra that “the government shouldn’t try to pick winners” and the IHOTFM Man will take care of the future.
As for Romney’s recent announcement about school vouchers, I am generally in favor of the voucher concept – but not as Republicans want to implement it. It’s all well and good to give parents choices, but if the total of the vouchers wont cover a basic education (as Republicans want, so they can lower education spending) then its a dead horse and you can’t ride it. Not to mention that as with all Republican plans, it gives more money to the rich and takes more benefits away from the poor. Every tax dollar that is currently paid by people that send their children to private schools (including me) would be taken out of the “public” system. The result – the rich would spend less on educaoitn, and the oor would spend more – and get less.
I don’t think that Republicans want to “throw granny off a cliff”. I just think that they are focused on taking from the poor and middle class to give to the rich, and that as long as the rich Republicans can have what they want they do not care about anyone else. So they don’t want to throw granny off the cliff, but if she is FALLING off they will not raise a finger to save her.
Arthayel – I have not seen or read the 15 bills you mention, but I’ll take you at your word.
On education it seems we’ve been throwing billions upon billions at it and made no discernable progress. Giving more gov money to colleges to “make college affordable” has done nothing of the sort. In fact it has just made college more expensive. My oldest son will start college next year and the tuition is 60k yr. All it did was allow them to raise prices because of the influx of gov $s. On the private school for k-12 issue, I have to disagree that the rich sending their kids to private schools takes money out of the system. In fact it puts more money into the public system because they get the tax dollars from the rich peoples property tax and state income tax, but don’t have to educate those children. The rich pay the private schools as well as contribute their share to public, they pay twice. I send all my children to private school but I’m not rich. The rich people at the school donate money to grant funds so that kids who otherwise coundn’t afford the whole 25k yr cost can get a decent education, so they pay 3 times actually. All self raised, no tax dollars.
I’d submit to you that not all republicans, even in congress, are evil step on the poor guy kill the environment people. Thats not saying that there arn’t some who are. I did very well in my life under republican rule as well as democrat rule. I raised myself from the “lower” class to the “upper middle” class because I was allowed to start a business and my wife too, along with working a regular job. I’ve been a democrat for a while and believe in the old democrat values my parents taught me, work hard, pay your bills, take care of family and neighbor, don’t ask for gov’t help unless you have no family or neighbors or church. I identify with many republican and democrat principles, but do not subscribe to all the principles of either party. Current democrats (i live in a blue state) are notorious for tax and spend, current republicans are known for slash and cut. I like the dems because they take care of the little guys, but I like the reps because they don’t let them go out of control. I remember the omnibus spending frenzy under Pelosi, they held Bush hostage for his war spending. I blame Bush for letting it happen. Same Reps who blast spending now were all to happy to join the dems at the feeding table then, so they’re all hypocrites. We need a balance of dems and reps, but we need a leader who can galvanize them and bring them together. Reagan and Clinton were good at that, but sadly Obama is not. It’s a shame the dem party would’nt let another democrat run who I could vote for, there is alot of talent out there, same with the republicans. Unfortunately, neither Romney nor Obama are it, for me.
Great conversation Arthanyel, thanks! 🙂