This blog discusses several comments about the current election from people I respect greatly. These comments are almost entirely from people who intend to vote for Obama. The many comments I've gotten from people who intend to vote for Romney require less attention. My goal is to use the input of my pro-Obama friends to question myself and to clarify my positions. There is an extended section below about who was making decisions at Bain Capital. I suggest that you skip over that section because there is much more fat beyond it.
FYI -- from Wikipedia article on Bain Capital at http://en.wikipedia.org/wiki/Bain_Capital
"During his leave of absence, Romney continued to be listed in filings to the U.S. Securities and Exchange Commission[71] as "sole shareholder, sole director, Chief Executive Officer and President"."
Yes, his shares are now in a "blind trust." But clearly he is the one who sets the direction of the company. (As he has publicly stating, mocking the term "blind trust". See him on YouTube http://www.youtube.com/watch?v=Uz0QCdkYJwI
Or read a related article, which includes the quote " “You can always tell the blind trust what it can and cannot do,” Romney had said. “You can give a blind trust rules.”
My response:
Thank you. Good research. You’ve inspired me to do some research as well.
My comments are arranged as follows:
1. Bottom-line conclusions limited to the points you were making. Basically, your comments are accurate.
2. More explanation of the issues involved. Although your comments are accurate, they might not have the significance that I think you may be attributing to them.
3. Relevance for my voting decision. Although they are relevant to a voting decision, they are much less relevant, for me, than some other issues. In fairness, I don’t think these issues represent the bulk of your voting decision either. They are simply issues about which you have been kind to educate me.
Bottom-line conclusions:
1. I believe that you can give some broad direction to blind trusts. So if Romney does not want them to invest directly in companies with some broad characteristics (such as weapons industry, investing in China, etc.), I believe he can and should do so. It seems as though he has not done that, but I don’t know for sure.
2. The SEC filings apparently show him as the sole shareholder of Bain until 2002, based on Wikipedia. Presumably, it is correctly citing sources. (I understand that Wikipedia’s citations come from readers and are not necessarily checked by Wikipedia. Nonetheless, I am inclined toward accepting the accuracy of this statement.) As discussed below, this shareholder documentation does not seem to be definitive relative to the decision-making authority.
3. I’ve never liked leveraged buy-outs. They have been legal and I have not given a lot of thought or research to determine whether it is appropriate to restrict them and, if so, how. Nonetheless, I have always disliked them.
4. I was startled to see that the Wikipedia article did not mention exporting (or even “out-sourcing”) jobs, which has been a major issue this year. So I researched that as well. Bain & Company was involved in significant exporting of jobs, but as PolitiFact.com indicates, it is misleading to call them a pioneer. It is also difficult to conclude what the impact is of the exporting of those particular jobs.
Considering these issues in more detail, it is worth nothing that:
Relative to blind trusts:
· Although you can issue instructions, you may or may not do so.
· In the film clip that you sent, Romney while campaigning apparently in MA, was involved in a debate in which he said that someone else’s blind trust was not so blind. Holding that against Romney is like saying two people made a left turn at the corner. One nearly hit a pedestrian. Therefore the other one nearly hit a pedestrian, too.
· His comment on Ted Kennedy’s blind trust (that it is an often-used ruse) is much more relevant; nonetheless, blind trusts can be run blindly. What may be a ruse in one incidence is not necessarily a ruse in another. For example, hiring family members to be staff in someone’s company can be a ruse in some circumstances. Both you and I have hired our spouses to work with us. I would submit that neither of us is engaged in a ruse.
· One of the best ways to avoid risks of perceived conflicts of interest is to instruct a blind trust to invest in broadly-invested mutual funds. If you direct your blind trust to invest in such mutual funds, you will almost assuredly hold assets in the weapons industry or China. It is very difficult to avoid doing so, perhaps almost impossible if you have a lot of assets and want to use mutual funds.
Relative to who made decisions at Bain:
The Wikipedia article has a lot of conflicting statements about who was making decisions at Bain, which I think was your issue in our discussion. The shareholders aren’t necessarily the decision-makers for a firm nor are they the only entities which have a claim on profits. Certainly when there is a single shareholder, one would naturally assume that that person was the decision-maker. However note the following quotes from the Wikipedia article (readers might want to skip over the balance of this section):
CT comment: “Partners” suggests owners, however this sentence says they were partners of a different entity. It is hard to imagine they were not partners in the new entity.
2. “In addition to the three founding partners, the early team included Fraser Bullock, Robert F. White, Joshua Bekenstein, Adam Kirsch, and Geoffrey S. Rehnert”
CT comment: This sentence clearly states that there were other partners. This is inconsistent with the statement that Romney was the sole shareholder. If there is a way to reconcile the statements, the reconciliation would, I believe, result in the shareholder statement being of much less relevance to decision-making compared to the statement about partners.
3. “While Bain Capital was founded by Bain executives, the firm was not an affiliate or a division of Bain & Company but rather a completely separate company. … However, the two firms had put in place certain protections to avoid sharing information between …the two companies and the Bain & Company executives had the ability to veto investments that posed potential conflicts of interest.[23] “
CT comment: This indicates that, in some respects, Bain & Company had some decision-making. However, this has little relevance.
4. “The firm initially gave a cut of its profits to Bain & Company, but Romney later persuaded Bill Bain to give that up.[24]”
CT comment: I don’t know how long Bain & Company owned some of the profits, but I don’t think that is particularly relevant.
5. “The partners saw weak spots in so many potential deals that by 1986, very few had been done.[26”
CT comment: This indicates that other people were among the decision-makers.
6. “As the firm began organizing around funds, each such fund was run by a specific general partnership – that included all Bain Capital executives as well as others – which in turn was controlled by Bain Capital Inc., the management company that Romney had full ownership control of.[33] As CEO, Romney had the final approval say on every deal made.[34]”
CT comment: Clear statement that others were involved in making decisions. A CEO is not likely to veto a lot of recommendations made by other partners. This seems to clearly indicate that some of the claims are overstretches.
7. “Romney had two diversions from Bain Capital during the first half of the decade. From January 1991 to December 1992,[50][26] Romney served as the CEO of Bain & Company where he led the successful turnaround of the consulting firm (he remained managing general partner of Bain Capital during this time).[9][10] In November 1993, he took a leave of absence for his unsuccessful 1994 run for the U.S. Senate seat from Massachusetts; he returned the day after the election in November 1994.[51][26][52] During that time, Ampad workers went on strike, and asked Romney to intervene; Bain Capital lawyers asked him not to get involved, although he did meet with the workers to tell them he had no position of active authority in the matter.”
CT comment: Clearly he couldn’t be significantly hands-on at Bain Capital while doing these other efforts. He was working with talented people who would want to have their decisions implemented. One of the things I’ve experienced in corporate America is that the CEO often has less power than people think. If you want to attract capable people, you have to give them some leash. Furthermore, I’ve seen CEOs ask a simple question, only to have their direct reports misinterpret, reading into the question expectations that the CEO never intended. As a result, CEOs sometimes learn not to question things unless they are a key big issue. One of the best things I ever heard in a management-training class was an interview of a CEO who described his job as “deciding who decides”. In other words, he did not make the decision, but he selected who made the decision. Clearly CEOs have influence, but oftentimes, particularly good CEOs, do not have as much control as people think.
8. “Romney took a paid leave of absence from Bain Capital in February 1999 when he became the head of the Salt Lake Organizing Committee for the 2002 Winter Olympics.[65][66] The decision caused turmoil at Bain Capital, with a power struggle ensuing.[67] Some partners left and founded the Audax Group and Golden Gate Capital.[34] Other partners threatened to leave, and there was a prospect of eight-figure lawsuits being filed.[67] Romney was worried that the firm might be destroyed, but the crisis ebbed.[67 ]
CT comment: www.PolitiFact.com cites a Washington Post Fact-Checker as follows:
It is a 2002 Massachusetts State Ballot Law Commission report certifying Romney’s eligibility to run for governor. It examined Romney’s activities when he took over the Olympics and based on weeks of testimony, the report revealed a man consumed with that task and who had no active connection to Bain.
PolitiFact.com concludes “Looking at all the evidence made public so far, we do not think Romney was actively involved in the day-to-day management of Bain after 1999. But it doesn’t mean his influence disappeared after he left.”
9. Romney was not involved in day-to-day operations of the firm after starting the Olympics position.[68][69] Those were handled by a management committee, consisting of five of the fourteen remaining active partners with the firm.[34] However, according to some interviews and press releases during 1999, Romney said he was keeping a part-time function at Bain.[70][34]”
CT comment: See comment in #8.
10. “In practice, former Bain partners have stated that Romney's attention was mostly occupied by his Olympics position.[76][74] He did stay in regular contact with his partners, and traveled to meet with them several times, signing corporate and legal documents and paying attention to his own interests within the firm and to his departure negotiations.[75] Bain Capital Fund VI in 1998 was the last one Romney was involved in;”
CT comment: See comment in #8.
11. “His former partners have said that Romney had no role in assessing other new investments after February 1999,[34] nor was he involved in directing the company’s investment funds.[33] Discussions over the final terms of Romney's departure dragged on during this time, with Romney negotiating for the best deal he could get and his continuing position as CEO and sole shareholder giving him the leverage to do so.[74][34]
CT comment: See comment in #8.
12. Although he had left open the possibility of returning to Bain after the Olympics, Romney made his crossover to politics permanent with an announcement in August 2001.[65] His separation from the firm was finalized in early 2002.[34][77] “
CT comment: Seems clear that Romney had little involvement in the decision-making after 1999.
Relative to exporting jobs:
· There are two types of out-sourcing:
o Shifting jobs outside your company, for example, hiring a PEO to manage the HR and Employee Benefits for your employees.
o Exporting jobs overseas.
I think we should be clear that we are talking about exporting jobs here.
· As noted above, Wikipedia says nothing about exporting jobs.
· From PolitiFact.com: “Our research shows that outsourcing was well established by the time Bain began buying shares in the companies described in the recent articles. To call these companies pioneers is a stretch.
"This had been going on for decades," said Tim Sturgeon a researcher who focuses on outsourcing at the Industrial Performance Center at MIT.
Outsourcing grew significantly starting in the early 1990s thanks in part to the expansion of the Internet and changes in the rules of international trade. Bain was one of scores of private equity firms that participated.
"They were part of the herd," said Sturgeon. "To say they picked the pioneers gives (Bain) too much credit for being innovative. It was a mainstream strategy by that point."
"This had been going on for decades," said Tim Sturgeon a researcher who focuses on outsourcing at the Industrial Performance Center at MIT.
Outsourcing grew significantly starting in the early 1990s thanks in part to the expansion of the Internet and changes in the rules of international trade. Bain was one of scores of private equity firms that participated.
"They were part of the herd," said Sturgeon. "To say they picked the pioneers gives (Bain) too much credit for being innovative. It was a mainstream strategy by that point."
· In my opinion, the exportation of jobs to other countries is a problem for the United States. However, blindly criticizing all exportation is crazy. Exporting jobs overseas can be critical in an environment where competition is international. So many people complain about exporting jobs, but their buying decision is based on the lowest price. Hence as consumers they encourage the activity that they rail against. There is a lack of integrity in the discussion of this issue. (FYI, I have bought only one automobile from a foreign auto company, about 25-30 years ago, due to gasoline mileage per gallon. I favor U. S. companies, but would not buy a U.S. company if all they sold was gas-guzzlers. Of course, it is a complicated issue as my U. S. company cars have some parts made overseas.) Exporting jobs can actually SAVE U. S. jobs, because it can keep companies afloat which would otherwise fold. It is also worth noting that people in other countries are also human beings in need of jobs and that exporting jobs can be very favorable to world peace and to U. S. security. Ideally, we could grow jobs everywhere.
· Steve Jobs begged President Obama to allow talented engineers to have waivers allowing them to immigrate. He told President Obama that he was being forced to export jobs because he could not find enough talented staff in the U.S. President Obama told him there was nothing he could do. I don’t use this as a basis for my voting decision, but it certainly seems strange. My guess is that President Obama did not want to address this issue without a broader solution on immigration. That may or may not be a good idea. But, in that context, it is interesting that, despite a campaign promise to introduce comprehensive immigration reform as soon he got in office, President Obama did not do so.
· It certainly seems strange that the U. S. is the only developed country that penalizes companies for repatriating profits. As a result, profits get re-invested abroad. Romney has appropriately consistently advocated changing this position.
· The argument that “someone who has profited from exporting jobs won’t do anything to reduce such exporting” is obviously specious. Such a person understands the causes of the exporting and may or may not want to make changes. Romney has certainly shown many signs of wanting to make changes.
o As noted above, Romney favors changing the laws regarding repatriation of profits.
o He supports allowing immigration by people with needed skills. As Steve Jobs pointed out, this practice could save/create a lot of jobs in the U. S.
o He favors domestic energy production and the pipeline from Canada.
§ Clearly, the availability of domestic energy would encourage more jobs in the U. S. I share environmental concerns but for security concerns and economic concerns (which are very important now), I think Romney’s energy policy is superior to the energy policy of President Obama. President Obama takes credit for the natural gas development in this country, despite the fact that his policies have discouraged that development. Most politicians in his shoes would take such credit, unfortunately. It is the responsibility of the voter to pay attention and not fall for such blather. (Similarly, President Obama takes credit for a lot of jobs formed in private enterprise. I don’t think my experience is unusual in that I added staff IN SPITE of President Obama’s actions, not thanks to them.)
§ Below, under the topic of “Jobs” as a major issue, I’ve also commented on Romney’s fact-checked claim that President Obama sued 7 oil companies because 28 birds died. It is no wonder that many people in the energy sector feel that President Obama’s administration is bad for jobs.
§ As he notes, increased domestic energy sources and Canadian sources would decrease our reliance on the Middle East, making the Arab nations much less relevant. We would have less reason to be involved in the Middle East, which would save us a lot of money, manpower and effort that could be re-oriented to our economic advantage.
In the long run, I support alternative energy as well,, which has the same types of advantages, but it is much farther down the road and President Obama has taken ineffective, unwise steps to support alternative energy.
o His idea of lowering marginal tax rates and dropping deductions is very favorable in terms of both growing and retaining jobs in the U. S. It stimulates domestic investment because each additional dollar of income has less tax associated with it than would otherwise be the case. I don’t know if that tax approach is ideal under all circumstances. But it definitely seems to be a good idea right now. Increased hiring and investment will help to reduce our debt. Another anomaly is that people who rail against “special interests” are defending tax deductions – such as real estate tax deductions – which favor special interests.
· Ironically, Obama has been criticized for not having addressed the exporting of jobs. I’m not familiar with his actions in this regard and he obviously can’t address all the issues facing our country.
· I suggested a few years ago that it might be a good idea to charge Social Security and Medicare payroll taxes on U. S. companies’ foreign employees’ salaries. I don’t know whether that is a good idea or not because I have not fully analyzed it and because I have obtained reactions from other people. As Romney has indicated, you need to have broad input before reaching specific conclusions. There can be unintended consequences. The reasons I raised this issue are:
o That would dilute the value of out-sourcing jobs. It would not stop the exportation of jobs that critically needed to be out-sourced. But it might tilt close decisions in favor of retaining jobs.
o The funds it would bring in would help solve our Social Security and Medicare problems.
Relevance of these topics for the election, at least for my decision as to who I’ll vote for
Does it matter where people have their money invested?
Most investment advice is to diversify investments, including overseas. The so-called BRIC countries (Brazil, Russia, India and China) have been highly-promoted. Whether someone has investments in those countries or not does not indicate what their decisions in the role of President of the U. S.
The investments have been legal.
A person’s past and intended public policies are clearly much more relevant than where they invest.
In a very close decision, I can imagine a decision being made on this issue, but the attention focused on this issue is clearly intended to avoid discussion of the real issues of this election.
In this regard, it is relevant that the Democratic strategists have consistently made clear that they feel that it is hard for Democrats to win 2012 elections based on the issues. They have repeatedly stated that the Democratic election strategy for 2012 has to be character assassination of the Republican candidates. That does not mean that some of these “character assassination” issues are not relevant. Todd Akin is a particularly terrible candidate, for example, and the criticism of him is appropriate. (The fact that Claire McCaskill donated $2,000,000 to his primary campaign because she thought he was the only Republican candidate she could beat is another story worthy of discussion, but off-topic here.)
By the way, it is interesting that the Democrats who have so focused on Romney’s investments and his taxes (including Senator Reid who baldly lied when he stated that Romney had not paid taxes and refused to retract when confronted about it and Congresswoman Pelosi) have not, as far as I know, ever disclosed their tax returns or their investments. There is some difference between a President and a member of Congress, but there is also reason to be distrustful of such people.
Does it matter whether someone was involved in leveraged buy-outs?
For me, it does matter because I don’t like LBOs. That’s one reason why Huntsman was my preferred Republican candidate, not Romney.
But this issue pales compared to others.
Does it matter if someone made money by exporting jobs to other countries?
For me, that is only relevant if I think it means that the person espouses policies that encourage such exporting of jobs unnecessarily.
Au contraire, Romney is on record consistently favoring policies that would discourage exporting such jobs. I have not analyzed all of Romney’s positions in this regard and we can’t know what would happen if he became President. But it seems clear that this focus on exporting jobs is part of the Democratic strategy of character assassination.
What are the big issues in this campaign that differentiate the candidates for me? It is worth remembering that I voted enthusiastically for President Obama and I am pro-choice, an environmentalist, have a history of supporting high taxes, etc.
The debt:
Our debt is crushing. Future generations will suffer as a result. Our country cannot survive with such debt.
President Obama promised to reduce the debt. But everything he has done has increased the debt. He has not only continued deficits but they are so much larger than any previous administration despite fraudulent accounting by the administration. His spending has, at best, been less effective than it should have been. Clearly it will have hugely less lasting impact than the spending under FDR.
He appointed a Commission which did OUTSTANDING work. Then he entirely shelved their recommendations, taking no action at all.
He brought the war onto the balance sheet because he expected to decrease war spending and wanted to use the reduction in war spending to claim that he was improving the debt. He used it to mask some of his spending.
He created a “payroll tax holiday” for employees, thereby significantly expanded Social Security's unfunded liability. Of course, because they are off-ledger, they don’t show up in the officially-published deficit and debt numbers. But these unfunded liabilities are crushing.
He found some Medicare savings, but rather than use those savings to reduce the unfunded Medicare liabilities, he diverted those funds to new spending, using them to “balance” Health Care Reform. Regardless of what you think about Health Care Reform, it is NOT appropriate to raid Medicare to pay for it. What’s worse:
· He has consistently claimed that he helped solve Medicare’s problems by finding these savings. That would be true if the savings inured to Medicare, but he spent them elsewhere! This accounting is similar to check-kiting.
· Many of the Medicare savings seem likely to be reversed by other legislation, supported by the Administration (and others). Various government agencies have annotated their financial projections with comments that they believe/fear that significant projected Medicare savings will be reversed by other legislation.
President Obama takes credit for what was inappropriately called the "bail-out". More so than most politicians, President Obama lays blame on previous administrations. In this regard, the previous administration did him a big favor. So he takes credit for it.so he should not take credit for it. Furthermore, it is inappropriate for anyone to count the repayments but not the original investment, another example of inappropriate accounting.
His programs have created new government agencies that will have a lot of future cost and new benefits that will have future cost. He front-ended the revenue and back-ended the costs in order to create misleading positive cash flows during his Presidency. Maybe there is some justification to the front-ending and back-ending, but refusing to admit the long-term consequences is certainly an example of poor leadership.
In order to reduce the "cost" of Health Care Reform, the administration packaged some unrelated cost savings, such as student loan cost savings, into the Health Care Reform bill. But they put related cost increases, such as restoring Medicare doctors' fees into a separate bill.
It also created huge costs for the States and for businesses. These costs are detrimental to our economy. An observer may feel that the benefits of Health Care Reform may offset these costs. But it is inappropriate to ignore that these costs have been created.
The administration and its allies have continually chosen to quote the CBO out-of-context to create a false impression about the true fiscal effect of their policies. For example, they focus on the short-term “score”, ignoring comments from the CBO such as "Therefore, the programs would add to budget deficits in the third decade—and in succeeding decades—by amounts on the order of tens of billions of dollars for each 10-year period." This comment was made relative to the Class Act which was part of Health Care Reform.
One thing President Obama has done well is to crack down on Medicare fraud and some other types of fraud.
Two people I respect greatly (one of whom will vote for President Obama and one of whom will vote for Romney) have told me that they feel that President Obama avoided the debt issue because he wanted to get re-elected and that they hope he will address it in a second term when he no longer needs to worry about re-election. I hope they are right, but I’m skeptical because:
· Politicians interpret re-election to be a mandate for them to continue their policies.
· The same people who told him he shouldn’t address that issue because of its implications for his re-election will now tell him that it will hurt the chances of the Democratic nominee in the next election.
· There is a lot that he could have done, but chose not to do and his messaging has been misleading, at best, on this issue. There is nothing in his track record that indicates he will reduce the debt and his current prospective budgets increase it further.
Nonetheless, I hope they are right.
By the way as I mentioned yesterday:
· I don’t think that Romney’s tax plan will work as well as he states. As a result, I don’t think that tax rates will drop 20%. As he states, he will outline fundamental principles and then work with both sides of the aisle to get something that will work, with the intention that it be consistent with those principles.
· I believe the Democrats are correct that Romney and Ryan are including all entities that are taxed as pass-through entities in their definition of small business. Some of those entities make a lot of money.
· Clearly, President Obama’s plans also don’t work. He can’t soak the rich to solve the problems. And the positions that he and Biden take that they won’t change Social Security or Medicare are really stupid. How can anyone believe that?
Checks and Balances:
I tend not to criticize inadvertent misstatements, nor events which were either unavoidable or in a class of events which can’t all be avoided. An example of my position is that I defended Nancy Pelosi repeatedly (even though I don’t like her politics) when people criticized her comment that we have to pass the Health Care Reform bill in order to learn what is in it. However, I have subsequently understood that her comment is central to what President Obama is doing.
It is not just a question of big government. It is a question of concentrating power in the executive branch. Every citizen should be scared about this. The key to the success of the United States has been its checks and balances. President Obama’s Health Care Reform and his Dodd-Frank financial reform both assign much greater responsibility to the executive branch. It is not just more responsibility to execute the laws of the land. Instead they have been given much responsibility to decide how things should work. Instead of developing proposals and getting Congressional approval, they are authorized to proceed with no checks and balances. This is a HUGE issue. Many people who support President Obama are unconcerned because they like giving more power to him. They should step back and consider the principles involved. Some time there might be a Tea Party member who inherits this power; they would not like that.
Worse yet, under President Obama’s direction, several agencies have not been satisfied with their broad powers and have acted in illegal fashion. As I’ve noted previously, in a meeting that involved about 20 people, I challenged two HHS staff (who I greatly respect) because they were involved in illegally changing aspects of Health Care Reform. Neither denied that they were doing so. One said he was comfortable doing so because he was making the law “better”. The other indicated that they might not get away with it.
The “advisory” panel that is part of Health Care Reform is an important issue that has gotten some attention. Unfortunately, to whatever degree that panel does not have authority, the authority belongs to Presidential appointees. There is no oversight of the Executive Branch.
For purposes of efficiency, the Executive branch has to be allowed to be able to get its work done, but there should be checks and balances in terms of submitting programs to Congress for pre-approval if significant or allowing review, etc. These are being obliterated.
He has furthered the practice of absorbing power in Washington and then using it to bully/blackmail states into supporting his positions. For example, Washington collects money from state citizens and then holds it ransom prior to giving it back to the states. The Supreme Court ruling on Health Care Reform reversed some of his action in this regard. (Of course, President Obama, like many presidents, has tried to stack the Supreme Court. More than most presidents, but not in an unprecedented way, he has tried, improperly in my opinion, to cow the Supreme Court.)
As you know, I am a fan of alternative energies. But it is a big mistake for the Federal government to make direct investments/loans in the industry. Instead it should be creating incentives for citizens/investment companies to invest in such entities. As noted in the next section, President Obama thinks he can do everything better than anyone else. These decisions should be left to the public and investment professionals. In addition to the likelihood that better decisions would be made, it avoids the temptation and the perception that the government takes other steps to make its investments look good. Directly choosing winners and losers is unquestionably a terrible tactic that is characteristic of the centralization of power that the Obama administration strongly favors.
After campaigning on an issue of increasing transparency in Washington, I feel that President Obama has decreased transparency.
In fairness, I should note that his educational policy has been a counter-example, of giving more control to the states.
Working together:
You could argue that this issue is more of a short-range issue than the above. But, as I have previously written, I am offended that President Obama has actively worked to undermine our country working together to solve our problems:
i. Long before I saw anything in print about this issue, I complained that President Obama was promoting class warfare.
ii. The Republicans were stupid to say they wanted President Obama to fail, but anyone who has really been watching what has been going on knows that President Obama excluded the Republicans from discussions from day one. As I have said in previous writings, I don’t know if this was President Obama’s idea or not. Nancy Pelosi likes to take credit for it. But regardless of whose idea it was, President Obama did it.
iii. As I have explained previously, President Obama is responsible for the demise of the “Blue Dog Democrats” and a large part of the rise of the Tea Party. Tragically, this aspect of his legacy is going to be hard to reverse.
iv. He could have helped to create an atmosphere which might have encouraged people like Joe Lieberman, Bayh and Olivia Snowe to continue their service to our country.
I am not a fan of Maureen Dowd, but she recently wrote something that I think is very insightful and significant. In case you don’t know, Ms. Dowd is a very “liberal” or “leftist” writer, depending on your preferred terminology. She wrote:
“President Obama likes to be alone. When he speaks at rallies, he doesn’t want the stage cluttered with other officeholders. When he rides in his limo, he isn’t prone to give local pols a lift. He wants to feel that he doesn’t owe his ascension to anyone else — not a rich daddy, not a spouse or father who was president, not even those who helped at pivotal moments. He believes he could do any job in his White House or campaign, from speechwriter to policy director, better than those holding the jobs.” (Emphasis added by Claude.)
Ms. Dowd’s comment is directly related to a criticism I’ve had of both the recent Bush administration and the Obama administration. It is also related to my “white hat; black hat” comments. I don’t believe we will succeed if decisions are made by small groups of people who share strong ideological beliefs and don’t see value in listening to other people.
Jobs:
In the current environment, jobs are a big issue. President Obama’s policies have generally had a negative impact on job creation, sometimes justifiably. For example, I think it is important to find ways to internalize environmental costs.
His much-touted supposed reduction in the unemployment rate is really damning for President Obama because:
· The unemployment rate should have decreased much more, consistent with prior situations. President Obama himself promised it would be much lower.
· Many of the jobs that have been created, and for which he takes credit, have been created in spite of his policies, not because of his policies.
· Many people have given up looking for a job, hence are not counted. This is a HUGE issue.
· Many people are under-employed. That is not necessarily President Obama’s fault (although Romney’s policies should improve the situation).
President Obama’s two major legislative efforts in his first administration have been Health Care Reform and Dodd-Franks financial reform. I think each of those has some good features and some negative features. I believe each would have been better had President Obama honored his pledge to consider all options and to work together with others. However, even if you think those laws are perfect, it is quite clear that those laws impede job growth. You might believe that the goals of those laws justify their negative impact on jobs. That is subjective and you are certainly entitled to such an opinion. But it is not appropriate to have negatively impacted the job market, yet claim that you’ve done a lot.
Romney cited the fact that President Obama’s administration sued oil companies due to the deaths of 20-25 birds. The Christian Science Monitor says (http://www.csmonitor.com/Environment/Energy-Voices/2012/1017/Romney-s-charge-Obama-used-bird-deaths-to-attack-Bakken-oil-producers.-True ):
“The claim is true. In 2011, the federal government charged seven oil companies with violating the Migratory Bird Act after federal agents discovered 28 dead birds near open reserve pits. Prosecutors dismissed charges against one of the companies and reached plea agreements with three others. The remaining three companies, Brigham Oil & Gas LP, Newfield Production Co., and Continental Resources Co., fought the charges and won.”
People often cite President Obama’s actions relative to the auto industry as having saved a lot of jobs. That might be true, but companies that enter bankruptcy and come out of bankruptcy retain jobs as well. And government involvement creates conflict of interest risks. I thought the Cash for Clunkers law was going to be a good idea until I discovered how low the standards were for the gasoline mileage of the cars that could be purchased with that incentive. Was the Cash for Clunkers law enacted to protect President Obama’s efforts relative to the car industry? Because of the way he chose to handle the situation, it is reasonable to fear conflict of interest. Also, it is my understanding that President Obama’s staff chose which car agencies would close. I’ve seen documentation that car agencies were closed predominantly in Republican districts. I’m inclined to think that Presidential involvement with the auto industry was a good idea, but that not all of what the government did was good. However, as I don’t know enough about these issues, they are not meaningfully related to my voting decision.
In the current environment, Romney is clearly a much more favorable choice regarding jobs.
In the principle of transparency, I should note that I work in the insurance industry. Readers have cause to wonder if I am biased against President Obama because of his continual misrepresentations (scape-goating) of the insurance industry to curry votes, his actions that will significantly reduce employment in the insurance industry and his actions that will significantly reduce the incomes of middle-class people who continue to work in the insurance industry. The answer is that I question myself continually in that regard. For example, when I opposed the Class Act so actively and strongly, my concerns involved the long-run implications. However, each time I questioned myself, I concluded (accurately, I believe) that in the years I have left in the industry (I am 64 years old), the Class Act would have been a boon to sales. In the longer run, it would have been disastrous to the industry and to the country. I firmly believe that my opposition did not reflect my personal financial interests, but rather reflected my strong concerns for the future of our country, You, of course, are free to draw your own conclusions.
Centrism:
At the current time, I think we need a centrist. Romney is clearly the centrist candidate. I criticize Romney for pandering to the conservative wing of the Republican Party in order to get nominated (as evidenced by his stupid 47% comment*). I prefer that candidates tell people the hard realities. He clearly has re-stated his positions. But I think President Obama knows that Romney is a centrist; he is simply trying to take advantage of Romney’s previous statements.
* I strongly oppose the 47% comment because it was pandering as noted above. As such, I don’t think it represents Romney’s thinking accurately. However, while it is abundantly clear that Romney has an outstanding track record of helping individual people who are in need, it is not clear that he has an abstract philosophy of helping needy people indirectly, via policy. As stupid as his comment was, I do think that most of us feel that we should be entitled to things (many wealthy bemoan the “entitlement” attitudes of the less-wealthy, but many wealthy people also feel entitled to their big homes, country club memberships, etc.), that many of us feel victimized and that we have policies that encourage dependence on the government. It is difficult to balance helping people with encouraging independence.
The Tea Party would not like many of Romney’s positions. For example:
· They wouldn’t like his position on income taxes.
· They wouldn’t like his position to means-test Medicare and Social Security. Democrats should love these ideas. They change the intended nature of these programs from “social insurance” programs to “wealth transfer” programs. Under the circumstances, I don’t think there is another way to salvage the situation.
One person I greatly respect told me that he hopes his vote for Obama will send a message to the Republican Party that it should be more centrist. I think he is dreaming. If Romney loses, Tea Party members will conclude that the Republicans lost because they had a centrist candidate instead of a Tea Party candidate.
Honesty in elections:
I often make my election decision by voting against the candidate who had the most misleading ads. It is important that we discipline our candidates.
Sometimes the misleading nature of the ads is really stupid. Candidates obviously don’t think the public is very smart. Too often, we prove them right. For example, the monies taken from Medicare to fund Health Care Reform is a real issue in this campaign. As noted above, the issue is that Medicare needed those savings to reduce its unfunded liabilities. Generally, Paul Ryan has stated it accurately. But most Republican candidates seem to be trying to scare seniors into thinking that their Medicare benefits are being reduced. That’s not true, but the long-term viability of Medicare is being undermined.
The biggest lie in the Presidential election of 2008 was President Obama’s oft-repeated claim that insurance companies would not pay his mother’s health insurance bills. As has subsequently been exposed and accepted by the White House, all of his mother’s health care bills were routinely paid. However, in addition to seeking to get her health care bills paid, his mother made a claim on her disability income insurance policy for a reimbursement of lost wages. I don’t know the details of that claim, but it was declined. President Obama served as her attorney in challenging the denial of her disability income claim. When the White House acknowledged the truth of this paragraph, Obama’s spokesperson said:
· That he accurately described his memory of the event. This strains credibility. He was her attorney and he doesn’t remember what it was about? If there was any chance of that being the case, he has a responsibility to fact-check himself before repeatedly making a false statement. That was not a single off-the statement, it was a premeditated repeated lie intended to sway votes.
· That is does not make any difference because it illustrates the point he was trying to make.
Education:
Education has been a critical long-term issue to me for well over 40 years. As a country, we have done a very poor job in this area.
There are a lot of non-money issues involved.
President Obama has a spotty record in this regard:
· His best action has been to weaken the historic Democratic lock-step support of teachers’ unions.
· I was not a fan of “No Child Left Behind”, but it is not clear that President Obama’s alternative will be successful. As noted above, he has provided more control in this regard to the states.
· I think the main messages kids in the inner city have heard from him are non-inspirational in terms of education.
o They’ve heard that they should be out on the street protesting. (Even if that is true, it should be balanced by urging them to concentrate on their studies. The balancing comments have not been included.)
o They’ve heard that the rich, Wall Street, and business executives are the primary causes of our problems. That does not encourage education.
o They’ve heard that their job is to vote for the Democrats who will solve all their problems for them.
People may argue that the above bullet points do not fairly represent President Obama’s position. That may be true and I don’t believe that perception is reality. But perception does impact reality and I think this is what many kids are “hearing”. Recognize that, like the rest of us, they are seizing on interpretations that justify what they want to do. They don’t want to be studying. President Obama has missed out on a great opportunity to turn students’ attitudes more toward education.
· I should note done some things well in this area, but I am disappointed that it has not been a bigger focus and some things he has done have
Foreign policy is not a big issue in this election. I won’t take the time to discuss President Obama’s practices here but, for whatever it is worth, I think his record is spotty. In our discussion yesterday, you compared him to the most recent President Bush. I would agree that his foreign policy is better than President Bush’s, but that’s not saying much because President Bush had the worst foreign policy, in my view, of any of the presidents in my lifetime. If you compare President Obama to Presidents Bush #1, Clinton, Reagan and Kennedy, for example, he compares poorly in my opinion. As we discussed, the drone issue is a very important and difficult issue. Your son, Mike, is right on target with his concerns.
Romney’s positions have been spotty also. For example, I don’t support the statements he made after the 9/11 attack on our embassy in Libya. He also stated that the Palestinians don’t want peace. I would agree that some of the Palestinians have not wanted peace, but I think the bigger problem is that many of the other Arabs don’t want to solve the Palestinian problem because if the Palestinian problem is solved, they’ll lose support for their drive to wipe Israel off the map.
You also mentioned Capital Gains tax. I favor taxing Capital Gains. If we want to encourage certain types of investment (e.g., start-ups), then we should have specific incentives for such investments. Above, I’ve noted that an incentive for alternative energy investment could make sense. A lot of Capital Gains have little direct relationship with investing in start-up business; they are the result of speculation in the stock market. Republicans often cite statistics that show that Capital Gains tax revenues increase when the Capital Gains tax is lowered. I have not studied the issue, but I think it is a timing difference, not a long-run difference. People liquidate assets to recognize capital gains before an increase in capital gains rate is about to occur. Likewise, they hold off on realizing a capital gain when the tax rate is going to be lower in the future. I think it is the (expectation of) changes back-and-forth that causes the results that Republicans state. In a steady-state situation, I don’t think that low Capital Gains tax rates will produce more revenue.
Lastly, as I intend to post this on my blog, I’d like to honor two other comments from people I greatly respect who is going to vote for President Obama.
· One stated that President Obama has had a tremendously positive impact on children around the world, encouraging them to aspire to success that they had never dreamed was possible for them. I think that is an excellent observation. However, I would also observe that we have already accomplished that goal. A second term in office is not likely to have a marginally increased advantage. Many people criticize President Carter as having been an ineffective President. Nonetheless, I am glad I voted for him because of the tremendous way he has leveraged having been President to do good in the world. (Note: I don’t agree with some of his efforts to do unauthorized foreign policy on behalf of the U. S.) Herbert Hoover is another president who, although he has been criticized as ineffective, went on to parlay the fame he got as President into doing a lot of good for the world. If President Obama were to be defeated for a second term, his legacy would still encourage children around the world and he could spend a lot of time, if he so chose, encouraging them to develop their skills and succeed in life.
· The other stated that he is concerned about toxins in the air and other environmental issues. This is a legitimate issue. I agree that President Obama will take a stronger stance on this issue and it is important to me. However, the other issues overwhelm this and many other issues on which I would agree with President Obama.
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