Is Mitt Romney a Financial Parasite?

“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”. -- Abraham Lincoln

How does the good of a few greedy parasites, beholden to nothing, outweigh the good of the nation? How does anyone justify legislation and policy that further lines the pockets of these parasites? Even if parasitic wealth was taxed at the same rate as the rest of us, they would still be filthy rich! And, they don't create jobs. Hell, most of them never worked a day in their life. But apparently, enough of us believe in their speculative finance economy that has made them obscenely wealthy, and the propaganda that they spew that we are willing to risk an economic catastrophe to protect that obscene wealth.

Which brings me to presidential candidate, Mitt Romney, whose fiscal plan delivers huge tax cuts to the wealthiest Americans while simultaneously forcing massive cuts to public services and social security on which the middle class rely. Then, there is the matter of his personal finances...

Not only, according to his released tax returns, did Romney make $42.7 million over the past two years, paying only $6.2 million in taxes - that’s an effective tax rate of less than 13.9% for doing nothing - he took advantage of a giant tax loophole that's available to only a very select few. It's called the carried interest loophole, or as it's often called the hedge fund manager tax loophole (in 2009 Top 10 Hedge Fund Honchos Averaged $900,000/Hr). Why hedge-fund tax loophole? Because hedge fund managers, partners in real estate ventures, and private equity kingpins are the select few who can use this legal provision to escape paying what the 99.9999 of the population are forced to pay.

What exactly is carried interest? 

Well, aside from the fact that closing this loophole could save taxpayers and the deficit $15 billion by 2015, it is the percentage - usually 20% - that  hedge fund managers and private equity kingpins can claim as investment,  taxed at the long-term capital gain of 15% rate,  instead of claiming what it actually is, fees or income,  which would be taxed at what the rest of us pay, 35%.

Wait, it gets better.  The maximum amount a married couple can pass to their children without paying gift taxes is $10 million, but Romney paid zero gift tax on the $100 million trust funds he set up for his sons. That's right, they avoided $31 million in gift tax that 99.9999% of the population would've had to pay if they did the same thing! According to David Cay Johnston, they "gave their sons some of their carried interest. And because the carried interest is not an ownership, it is a right to receive profits, Congress lets you value that gift at zero". 

In a nutshell, top hedge fund managers, gifted with a much lower tax rate, who do not produce anything tangible, or, some might argue, anything of any value whatsoever, make  more hourly, than most Americans will earn in a lifetime,  and financial parasites presidential candidates, who left their company 13 years ago,  still receives a share of the firm’s “carried interest” profits – taxed at the same low rate. It's the gift that keeps on giving to those with ghastly gobs of power and privilege.

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Ron Paul's Convoluted "Audit the Fed" Scheme.

It can't be stated enough. Ron "Audit the Already Audited Fed" Paul's donning the mantle of an outsider when, in reality, he's been playing dirty politics inside the beltway for over 30 years.  Once again,  presidential candidate, Clint Richardson, who produced The Corporation Nation  - which exposes the hidden wealth and investment totals of the United States, Inc. - proves it again.  In the video below, he asks why HR 1207, the predecessor to Ron Paul's “HR 459, The Audit the Fed Bill to the 112th Congress“ that "garnered broad bi-partisan support with 320 cosponsors in the 111th Congress - enough votes to pass in Congress - was transformed from a free-standing bill into an amendment,  which was attached (but removed in conference) to the Dodd-Frank Financial Reform Bill“.

Not to mention, in the description of another bill that Ron Paul sponsored this year - H.R. 1496: Federal Reserve Transparency Act -  it states the Federal Reserve System is already audited.

“To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.”

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John McCain is to the Economy as George W. was/is to Foreign Policy.

There's a refreshing lack of pretense about a man who doesn't know how many homes he owns ...it brings back memories of the 2000 election, when, then, Gov. George W. Bush, generated the "warmth" of the "regular" man, ignorant of the blue-blooded protocol and knowledge that seemed to radiate abundantly from his "eggheaded" opponent Al Gore.

That is, it's "refreshing" when your only expectation of that man is meeting him at the local pub to chug down a few brewskis and discuss the latest on your favorite team.

However, when the man in question is running for the most powerful office in the world, ignorance, and even worse, deliberate ignorance, can only serve to debilitate, drain, exhaust and impoverish our already weakened state.

John McCain's ignorance about information, almost as obvious as your given name, sheds additional light on John McCain's discomfort with anything related to finance or economics. Just as George W.'s deliberate ignorance of anything "international" - in combination with a multitude of other factors - has resulted in tragic consequences, John McCain's obvious disquietude about anything economic/financial could prove disastrous.

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We Need a President Who Helps Eligible Investors Avoid Paying U.S. Taxes...

..Like President Bush needs a crash course in "trickle-down" economics.

Matt Romney, the wealthiest candidate running for president, with a personal fortune of up to $250 million, may look Presidential but as we all know appearances can be deceiving.

-- While in private business, Mitt Romney utilized shell companies in two offshore tax havens to help eligible investors avoid paying U.S. taxes, federal and state records show.

Romney gained no personal tax benefit from the legal operations in Bermuda and the Cayman Islands. But aides to the Republican presidential hopeful and former colleagues acknowledged that the tax-friendly jurisdictions helped attract billions of additional investment dollars to Romney's former company, Bain Capital, and thus boosted profits for Romney and his partners.

Romney has based his White House bid, in part, on the skills he learned as co-founder and chief of Bain Capital, one of the nation's most successful private equity groups. His campaign cites his record while governor of Massachusetts of closing state tax loopholes; his involvement with foreign tax havens had not previously come to light.

In the Cayman Islands, Romney was listed as a general partner and personally invested in BCIP Associates III Cayman, a private equity fund that is registered at a post office box on Grand Cayman Island and that indirectly buys equity in U.S. companies. The arrangement shields foreign investors from U.S. taxes they would pay for investing in U.S. companies.

Romney still retains an investment in the Cayman fund through a trust. Campaign disclosure forms show the investment paid him more than $1 million last year in dividends, interest and capital gains.

In Bermuda, Romney served as president and sole shareholder for four years of Sankaty High Yield Asset Investors Ltd. It funneled money into Bain Capital's Sankaty family of hedge funds, which invest in bonds and other debt issued by corporations, as well as bank loans.

Like thousands of similar financial entities, Sankaty maintains no office or staff in Bermuda. Its only presence consists of a nameplate at a lawyer's office in downtown Hamilton, capital of the British island territory.

"It's just a mail drop, essentially," said Marc B. Wolpow, who worked with Romney for nine years at Bain Capital and who set up Sankaty Ltd. in October 1997 without ever visiting Bermuda. "There's no one doing any work down there other than lawyers."

Investing through what's known as a blocker corporation in Bermuda protects tax-exempt American institutions, such as pension plans, hospitals and university endowments, from paying a 35% tax on what the Internal Revenue Service calls "unrelated business income" from domestic hedge funds that invest in debt, experts say.

Kevin Madden, Romney's campaign spokesman, said there was nothing improper about the Bermuda arrangement, or in Romney's investment in the Cayman fund. In neither case, Madden said, did Romney gain the ability to defer or avoid paying U.S. taxes.

"I would disagree that these could be described as tax loopholes," he said. "These are perfectly normal and perfectly legal arrangements that American companies put together to be successful in the market."

The Cayman fund is registered at P.O. Box 908GT on Grand Cayman Island, corporate records show. Like the Bermuda company, it maintains no office or staff overseas.

Romney first purchased a 3.25% share of the Cayman fund, and was listed as a "general partner (passive)" before his retirement from Bain Capital in late 2001, records show. He put his financial assets into a blind trust in January 2003, when he took office as Massachusetts governor.

Brad Malt, who controls Romney's financial trust, said Bain Capital organized the Cayman fund to attract money from foreign institutional investors.

"This is not Mitt trying to do something strange," he said. "This is Bain trying to raise some number of billions from investors around the world."

The privately held Cayman fund does not disclose its total investment pool. But Securities and Exchange Commission records show it has invested through a Delaware partnership in a California-based network of healthcare centers, a Texas real estate group, a New Jersey phosphate manufacturer and numerous other companies.

Romney is the wealthiest candidate running for president, with a personal fortune of up to $250 million, according to financial disclosure forms he filed in August. His financial trust retains investments in at least 32 Bain and Sankaty equity, hedge and debt funds, among other assets, the documents disclosed.

Under his retirement agreement, Romney retains a share of the profits at Bain Capital, as well as the right to make new investments in Bain funds through his trust, until February 2009.

Malt said he had repeatedly increased Romney's stake in the Cayman fund since 2003. He said he was unaware of the specific figures, but added that he knew he "wrote a lot of checks," and that it paid a return of 20% to 30% a year.

Malt said he was "pretty confident" that he had invested in additional offshore funds for Romney since taking over the trust. "I don't care whether it's the Caymans or Mars, if it's organized in the Netherlands Antilles or the Jersey Islands," he said. "That means nothing to me. All I care about is whether it's a good fund or a bad fund. It doesn't affect his taxes."

Connections with offshore companies became a presidential campaign issue in April, when the Washington Post reported that Democratic candidate John Edwards had worked as a paid advisor to the Fortress Investment Group. Fortress incorporated hedge funds in the Cayman Islands, allowing its partners and foreign investors to avoid or defer paying U.S. taxes. The disclosure embarrassed Edwards, who has called for reducing financial inequalities in America and who had sharply criticized corporations that utilize offshore tax shelters.

Eugene Steuerle, co-director of the Urban-Brookings Tax Policy Center at the Urban Institute, a nonpartisan Washington-based think tank, said he was troubled by the growing use of offshore jurisdictions, even for legitimate purposes.

"There's clearly something wrong when you have to use post office boxes to conduct business," he said. "You ideally want a world where setting up shell corporations wouldn't be necessary."

But offshore companies are now "part and parcel" of America's booming private equity and hedge fund business, said Kurt Schacht, managing director of the Centre for Financial Market Integrity at the CFA Institute, which represents chartered financial accountants, in Charlottesville, Va. He defended the practice.

"I don't think they're loopholes," he said. "It's not like they're trying to break the law. It's just taking advantage of what's available under current tax laws."

As a presidential candidate, Romney regularly touts his successful business background. But he rarely describes his unusual experience in the rarefied world of international high finance.

After starting as a management consultant, Romney helped found Bain Capital in 1984. Initially launched as a venture capital fund to provide seed money to start-up companies, Bain Capital quickly evolved into a leveraged-buyout shop. Romney and his partners borrowed money to buy dozens of troubled companies, and then charged high fees to revamp management, consolidate operations and, in some cases, lay off workers. To cash out and pay the underlying debt, they resold the companies or took them public as quickly as possible.

Romney took a leave of absence from Bain Capital in February 1999 to take over the scandal-marred 2002 Salt Lake City Winter Olympics. By then, Bain Capital already had opened its first offshore entities.

According to a report by Fitch IBCA, a major credit-rating service, Bain Capital managed more than $5.5 billion in assets by mid-1999. The total included $2 billion managed by Sankaty Advisors, which included at least two Bermuda-based subsidiaries set up during Romney's tenure.

Public documents do not disclose how much of the $2 billion was channeled through Bermuda. The Sankaty funds are named for a red-and-white lighthouse on the Massachusetts island of Nantucket.

Romney legally remained the top executive at Bain Capital during his leave of absence. On Feb. 20, 2001, a Bain filing to the SEC described Romney as "sole shareholder, a director and president of Sankaty Ltd. and thus . . . the controlling person of Sankaty Ltd." The company, it added, was organized "under the laws of Bermuda."

Today, Bain Capital manages $60 billion in assets, according to a spokesman. The total includes $23 billion in Sankaty debt and credit funds. Half a dozen Sankaty affiliates now are active in Bermuda, corporate registry records show.

The Sankaty debt hedge funds are organized as partnerships in Delaware that produce taxable business income by investing in fixed-income bonds and other debt instruments. Under tax law, even tax-exempt U.S. institutions may face a 35% tax if they invest directly in such hedge funds. By investing instead through a Bermuda corporation, the taxes are legally blocked, experts say.

In Congress, both the House Ways and Means Committee and the Senate Finance Committee held hearings in September that examined whether the use of such offshore blocker corporations allowed tax-exempt U.S. organizations to improperly engage in business.

"A lot of people are looking at this," said a Senate investigator, who asked not to be identified because he was not authorized to deal with the media. "It grates that these people are only using these offshore arrangements to avoid paying taxes."

Janne Gallagher, vice president and general counsel of the Council on Foundations, a nonprofit membership group of 2,100 charities and grant-making foundations, said the practice was "pretty prevalent" in her field as portfolio managers sought to spread risk through hedge funds.

"It's a substantial tax, and that's what generally has led people to invest in these offshore blockers," she said. "I think everyone would prefer not to if they could avoid the consequence."

Rep. Sander M. Levin (D-Mich.) introduced legislation that would allow tax-exempt institutions to make such investments without going offshore. The bill passed the House but has drawn little support in the Senate.

As governor, Romney helped raise at least $300 million in much-needed state revenue by closing what he called tax loopholes. Critics called the strategy a backdoor way to raise taxes, and Romney failed in an effort to give state officials the authority to penalize corporations that lowered their tax bills by moving their profits out of state.

As a presidential candidate, Romney calls for lowering the corporate tax rate, lowering income taxes and eliminating taxes on interest, dividends and capital gains for those earning less than $200,000. He does not discuss the use of offshore tax havens on his campaign website.

We can't forget about Cofer Black, Romney's personal advisor. Romney made a point of saying that on matters of interrogation and torture techniques he defers to his campaign's counterterrorism czar, Cofer Black

"Blackwater appears to have its own presidential candidate [Romney] . . . one whose presidency could make the company's profitable business under Bush look like a church bake sale." -- Jeremy Scahill

Gosh, this guy makes George Bush and Rudy Giuliani look like Bert and Ernie.

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Biden says we Must "Reengage America in the World."

In November, 2007 U.S. Senator Joseph Biden, chairman of the Senate foreign relations committee and among the most experienced foreign policy experts in Washington, gave a speech before the Center for U.S. Global Engagement, called for "A New Approach to Pakistan." Biden is the only Presidential candidate who understands the ever-increasing complexity of global challenges and threats that America faces now and in the future.

We can't afford to elect another President who does not comprehend the ripple effect the smallest of his decisions can make, and because our world is shrinking, that those ripples can come back to us in the form of all consuming tidal waves the likes of which we've never seen.

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Choose Your Candidate Quiz

My results:
Today's Washington Post submitted a series of issue questions to each of the principal Democratic and Republican candidates and then developed a quiz that helps you decide which candidates you agree with on the issues. Joe Biden, Dennis Kucinich and Mike Gavel's responses are not included on the Democratic side. Alan Keyes and Tom Tancredo are not included on the Republican side.

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Connecting the Dots is Crucial to Our Survival

Joe Biden, presidential candidate and current chairman of the Senate Foreign Relations Committee, in a recent interview with Salon, spelled out why he calls himself the "odd man out"...because as he says he has the ability to "connect the dots".

He's right. More than ever we need a President who is an expert in foreign policy who has the ability to assemble the pieces, synthesize the information, and integrate the facts into a conceptual understanding...in other words, see the big picture. We're living in an age of specialization, which can be tremendously useful, and a great advantage as long as we continue to make the connections between the vastly different distinctions, all the while keeping things in proper perspective.

“Reason is understanding the connection between the general and the particular” -- Immanuel Kant

Ironically, Joe Biden's vote for the bankruptcy bill -- the bill I absolutely despise -- clarified my decision as to who I believe should replace Bush.

Unfortunately, Joe Biden resides in one of the only states in the country where there is no cap on interest rates credit card companies can offer, hence the reason every single credit card issuer incorporates in the state of Delaware, making it almost impossible to totally ignore their greedy demands. This puts Mr. Biden at a clear disadvantage if he decides to take on that industry.

As we all know, decisions are not always as clear cut as they appear. One must give priority to certain factors over others, weighing the pros and cons of each one and then incorporate what they've discovered to make a final decision that will hopefully support their overall agenda or goal.

Mindful of Mr. Biden's long history as a Senator including he was the youngest man elected to the Senate in history while at the same time having to overcome the tragedy of losing his wife and daughter in a car accident while raising two young sons, that he was listed as the "poorest" Senator in the Senate, that he drives an economical car, he commutes to Washington DC by train every day and overall has proven himself to be a man of integrity I came to the conclusion his decision may have been made taking the following into consideration.

He knew voting against the bill would make no difference to the outcome; he was pretty sure he would enter the 2008 Presidential race; he knew that foreign affairs is a critical issue to our future; and he knew his expertise in this area is far superior to all of the other candidates. Voting against the bill may have accomplished nothing more than to kill his political career at a time when his knowledge and leadership is invaluable to America.

Joe Biden's response voting for the bankruptcy bill:

"At the outset, I refused to support bankruptcy reform until fundamental changes were made. I fought to establish a "safe harbor" for those below their state's median income. I also insisted on a provision requiring lenders to post a clear warning about the dangers of making minimum monthly payments, one of the worst debt traps for consumers.

This bill establishes unprecedented protections for child support and alimony, making bankruptcy part of the enforcement system for women and children, who now will be at the head of the line, in front of every other creditor. Is this bill perfect? No. But over several congresses it has earned the kind of bipartisan consensus only balanced legislation can achieve."

We can no longer depend on our advantageous geographical location to protect us. As our world shrinks more and more each day, it is crucial to the survival of our country, perhaps the world, that our next President has the ability to as Joe Biden says, "connect the dots".

No candidate is perfect but there is no question Joe Biden has the integrity, strength, wisdom, experience and resolve needed to put this country back together.

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Time to Get Over 9/11

NY Times Op-Ed columnist Tom Friedman thinks 9/11 has made us stupid.

"I honor, and weep for, all those murdered on that day. But our reaction to 9/11 — mine included — has knocked America completely out of balance, and it is time to get things right again."

He doesn't want to forget those who died that terrible day but he wants America to stop living in the shadow of 9/11 and start to embrace what America stands for, hope for the future, "where anything is possible for anyone".

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US in Danger of a Dictatorship.

Presidential candidate Ron Paul has cautioned that the United States is now at a crisis point. He feels "the people", so indifferent to protecting their liberties, are opening the door for a dictatorship. The "elite" may be preparing a take-over even if it means they must make up events to scare "the people".

He has a point.

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