General Election Thread (no partisan sniping allowed!)

[OldPhiKap]

Yeah -- it's already being reported that under Ryan's plan, Romney would've paid an effective tax rate of 0.82% in 2010 (instead of the 14% effective rate that he did pay). Expect to see and hear that number a lot in the coming days and weeks.

And that's only in the single year he has disclosed.

How many years of tax returns do you think Ryan had to give to Romney's folks as part of the vetting process? Which leads to the natural follow-up: "Mr. Romney, if it was important for you to review X years of Mr. Ryan's taxes to see if he was fit to be your Vice President, how many years are appropriate for the American people to review for the Office of President of the United States?"

(Which is to reiterate, Mitt should have just dumped the documents months ago and it would be very old news by now. It's not going away).

[tommy]

Actually, Romney insists that while he likes and respect Ryan, he DOESN'T support the Ryan budget:

http://www.denverpost.com/election20...5688?source=bb

I don't want to get partisan here, but you can find quite a few earier instances where he appeared to support the Ryan plan ... but when he introduced Ryan Saturday, he immediately starting distancing himself from the Ryan budget.

I'm not sure that's a fair characterization of what Romney said. He said he has his own plan and that will be the plan they campaign on, but (not surprisingly) he didn't detail any of the differences between Ryan's plan and his own. Who knows, maybe those differences will turn out to be quite minimal. I didn't see in Romney's remarks anywhere where he said he DOESN'T support the Ryan budget or anywhere where he was distancing himself, which to me means distinguishing himself from Ryan, in any meaningful way. He just isn't really saying.

The whole tax return thing had (and still has) legs not so much because people really think there's something scandalous or damning in Romney's tax returns, but because it's a symbol of how Romney is trying to hold the electorate at arm's length and keep the people from really knowing him. It creates around him the very image that the Obama campaign wants him to have -- that of a sheltered elite who doesn't want to get too close to the Little People, but would rather look down upon them from a pedestal and dictate to them what they do and don't need to know.

I think this is a bullseye. And the problem is being exacerbated by Romney waffling now on whether, and how much, and how, he supports or doesn't support Ryan's plan. He's hedging and doubletalking and wanting to have it both ways. He wants the sex appeal and the support of the hardliners that come with attaching himself to Ryan and the clarity of his plan, but in his heart he doesn't agree with the extremity of the plan and he knows it's a bigtime loser with working class voters and seniors, two groups without which he simply cannot win this election. But by playing cutesy with language, by hiding the ball as to whether he really does or doesn't support the Ryan plan, and in what respects he does or doesn't support it, he again is preventing voters from knowing him and, as you say, keeping them at arm's length. It's as if he's saying, "The 'Little People' don't need to know; I'm smart enough to fool them awhile longer." It's a big risk to take, and in fact is the exact opposite of Clinton's "I feel your pain," the genius of which was the emotional connection it forged between voters and the candidate.

In looking at numbers, one of Romney's failings so far is that in many key states he has failed to consolidate the support of voters who view Obama unfavorably. There are large numbers of these voters who are ripe for the picking, but Romney has not been able to bring them over into his camp. They're still undecided. When he conducts himself like this, with the waffling and the doubletalking and the hiding the ball, he's reinforcing the doubts that a lot of these voters must have. Many of them are probably saying to themselves, "For crying out loud, who IS this guy? What on earth does he stand for? What does he really believe? Why doesn't he trust me with the answers to these questions?" Romney has GOT to answer these questions and start moving some of these folks into his camp, and he better do it fast, or this election is going to start to get away from him.

[Tom B.]

In looking at numbers, one of Romney's failings so far is that in many key states he has failed to consolidate the support of voters who view Obama unfavorably. There are large numbers of these voters who are ripe for the picking, but Romney has not been able to bring them over into his camp. They're still undecided. When he conducts himself like this, with the waffling and the doubletalking and the hiding the ball, he's reinforcing the doubts that a lot of these voters must have. Many of them are probably saying to themselves, "For crying out loud, who IS this guy? What on earth does he stand for? What does he really believe? Why doesn't he trust me with the answers to these questions?" Romney has GOT to answer these questions and start moving some of these folks into his camp, and he better do it fast, or this election is going to start to get away from him.

One of the things that has struck me about Romney is just how defensive he is about his wealth. I'm not sure why he acts this way -- wealth has never really been an impediment to being elected President. The Bushes were wealthy. Kennedy was wealthy. The Roosevelts were wealthy. Romney says he doesn't need to apologize for being wealthy, but then does all he can to avoid talking about it. Again, it's like he's trying to have it both ways -- he wants to be thought of generally as successful (to bolster his "I'm a good executive; I know how to get things done" meme), but doesn't want to let people in on the story of how he became successful. Again, he's letting the Obama campaign fill in the blanks for him, and the image that they're happy to paint is one of a man who became successful not through hard work and ingenuity, but through privilege and the benefits of being able to play the game of life by a different set of rules.

[sporthenry]

One of the things that has struck me about Romney is just how defensive he is about his wealth. I'm not sure why he acts this way -- wealth has never really been an impediment to being elected President. The Bushes were wealthy. Kennedy was wealthy. The Roosevelts were wealthy. Romney says he doesn't need to apologize for being wealthy, but then does all he can to avoid talking about it. Again, it's like he's trying to have it both ways -- he wants to be thought of generally as successful (to bolster his "I'm a good executive; I know how to get things done" meme), but doesn't want to let people in on the story of how he became successful. Again, he's letting the Obama campaign fill in the blanks for him, and the image that they're happy to paint is one of a man who became successful not through hard work and ingenuity, but through privilege and the benefits of being able to play the game of life by a different set of rules.

Not directly related to the General Election but this comment reminded me of this article about the wealthy being embarrassed by their success.

The wealthy aren't just building financial moats, they're also building psychological moats. The Occupy movement, media coverage of inequality and the Obama campaign's "you didn't build it" attacks have all made the wealthy fearful of any outward signs of success.

The survey showed that only 31 percent of today's One Percenters "like it when others recognize me as wealthy." That's a huge drop from 2010, when 53 percent liked the recognition. This jibes with another recent poll that showed One Percenters don't see themselves (and don't want to be seen) as One Percenters.

The wealthy, in other words, are embarrassed to be wealthy.

http://finance.yahoo.com/news/fear-l...165400847.html

Article also goes on to say how the money isn't trickling down for one reason or another. It is a bit ironic that b/c of the lack of spending by the upper class, it will probably end up costing them money in the long run. But it appears Obama is definitely winning this rhetoric about the "you didn't build it" if even the wealthy are afraid to show their wealth.

[OldPhiKap]

One of the things that has struck me about Romney is just how defensive he is about his wealth. I'm not sure why he acts this way -- wealth has never really been an impediment to being elected President. The Bushes were wealthy. Kennedy was wealthy. The Roosevelts were wealthy. Romney says he doesn't need to apologize for being wealthy, but then does all he can to avoid talking about it. Again, it's like he's trying to have it both ways -- he wants to be thought of generally as successful (to bolster his "I'm a good executive; I know how to get things done" meme), but doesn't want to let people in on the story of how he became successful. Again, he's letting the Obama campaign fill in the blanks for him, and the image that they're happy to paint is one of a man who became successful not through hard work and ingenuity, but through privilege and the benefits of being able to play the game of life by a different set of rules.

It is my understanding, perhaps incorrect, that a tenant of Mormonism is to be humble about your wealth. I am not sure if he is defensive so much as embarrassed to discuss it.

Part of the problem here may also relate to the "how" and not the amount of money itself. That is why there is a lot of suspicion about the refusal to do what his dad did and just release the tax records.

Whatever the cause, he's gonna have to get comfortable with it. If the key issue of 2012 is the economy, and your solution is to change the tax code, you kind of set yourself up for a rolicking discussion of how the changes would have affected you over the last X number of years.

[Duvall]

It is my understanding, perhaps incorrect, that a tenant of Mormonism is to be humble about your wealth. I am not sure if he is defensive so much as embarrassed to discuss it.

Maybe, maybe not.

[gus]

But it appears Obama is definitely winning this rhetoric about the "you didn't build it" if even the wealthy are afraid to show their wealth.

Please note that Obama never said "You didn't build it" nor did he claim that a small business owner wasn't responsible for building his own business.

[sagegrouse]

Many are wondering how is it that Romney's IRA contains over $100 million in assets when the annual limit on contributions is $6,000.

Here's one example. When a private equity firm (say Bain Capital), using investor money, buys a stock the PE firm gets 20 percent of the profits on the investment, once the investors have gotten a minimum return of 8 percent or so. The gains are typically long-term capital gains in that the P-E firm buys a company and uses leverage (debt) to increase its long-term gain potential (and it's a bit riskier). But there's more: the P-E firm is able to generate extremely inexpensive common shares for the company:

• Suppose a firm buys a company for $100 million.
• It may use $30 million in long-term bank financing. That leaves $70 million.
• Then it issues preferred stock to the investors of $69.9 million with a coupon of, say, six percent.
• Each investor also gets an equal number of shares of common stock.
• What is the common stock worth? Well, $100 thousand. It's the purchase price (100) less the debt (30) less the value of the preferred stock (69.9).
• The PE firm would get 20 percent of the common stock as the main potential source of gains on the deal. Bain's stock, for example, would only be valued at $20 thousand.
• The partners could get compensated with shares of this low-value common stock and use this as an IRA (or other retirement) contribution. These shares could get transferred to a retirement account (it requires a fiduciary agent of some sort).

Then, suppose the deal succeeds, and five years later the company is sold for $300 million (typical target gain in PE is 3:1). After paying off the loan (which may already have been paid off) and redeeming the preferred shares, there is approximately $200 million in gains and probably more (see note). The PE firm's share is $40 million. Its investors get a return of $160 million plus on an initial investment of $70 million (an annual return of 18 percent).

The shares placed in retirement accounts get cash upon sale of the common shares, which leads to a huge inflation of the valuation of those accounts.

There are other ways to produce the same results, and there are posters on DBR (Hurley for 3, e.g.) far more knowledgeable than I am.

[Note: the total gains to investors (including the PE firm) are the capital gains on the common shares, the coupon on the preferred shares, and the cash accumulated or the debt reduced in operating a profitable business. Substracted are the deal expenses on selling the company and fees paid to the PE firm, which is usually compensated directly by the company. The investors in a PE fund would get only 80 percent of the gains, provided a threshold return is reached.]

sagegrouse

[sporthenry]

Please note that Obama never said "You didn't build it" nor did he claim that a small business owner wasn't responsible for building his own business.

Look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something—there are a whole bunch of hardworking people out there. If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet. The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own.

Now obviously its been taken out of context and I don't think Obama meant it as has been shown in the media but this quote does serve to show the differing ideologies of the two candidates and what I would hope some of the race actually boiled down to.

[77devil]

It is my understanding, perhaps incorrect, that a tenant of Mormonism is to be humble about your wealth. I am not sure if he is defensive so much as embarrassed to discuss it.

Part of the problem here may also relate to the "how" and not the amount of money itself. That is why there is a lot of suspicion about the refusal to do what his dad did and just release the tax records.

Whatever the cause, he's gonna have to get comfortable with it. If the key issue of 2012 is the economy, and your solution is to change the tax code, you kind of set yourself up for a rolicking discussion of how the changes would have affected you over the last X number of years.

Linked article explains how Romney may have accumulated a large chunk of his wealth tax deferred. Nothing sinister here. It's simply an example of why many voters may have difficulty accepting the advantages that Romney was able to capitalize upon legally that are unavailable to all but a select few. The article states that 0.001% of IRA's are larger than $20 million.

http://www.boston.com/news/politics/...idance/?page=1

[OldPhiKap]

Many are wondering how is it that Romney's IRA contains over $100 million in assets when the annual limit on contributions is $6,000.

Here's one example. When a private equity firm (say Bain Capital), using investor money, buys a stock the PE firm gets 20 percent of the profits on the investment, once the investors have gotten a minimum return of 8 percent or so. The gains are typically long-term capital gains in that the P-E firm buys a company and uses leverage (debt) to increase its long-term gain potential (and it's a bit riskier). But there's more: the P-E firm is able to generate extremely inexpensive common shares for the company:

• Suppose a firm buys a company for $100 million.
• It may use $30 million in long-term bank financing. That leaves $70 million.
• Then it issues preferred stock to the investors of $69.9 million with a coupon of, say, six percent.
• Each investor also gets an equal number of shares of common stock.
• What is the common stock worth? Well, $100 thousand. It's the purchase price (100) less the debt (30) less the value of the preferred stock (69.9).
• The PE firm would get 20 percent of the common stock as the main potential source of gains on the deal. Bain's stock, for example, would only be valued at $20 thousand.
• The partners could get compensated with shares of this low-value common stock and use this as an IRA (or other retirement) contribution. These shares could get transferred to a retirement account (it requires a fiduciary agent of some sort).

Then, suppose the deal succeeds, and five years later the company is sold for $300 million (typical target gain in PE is 3:1). After paying off the loan (which may already have been paid off) and redeeming the preferred shares, there is approximately $200 million in gains and probably more (see note). The PE firm's share is $40 million. Its investors get a return of $160 million plus on an initial investment of $70 million (an annual return of 18 percent).

The shares placed in retirement accounts get cash upon sale of the common shares, which leads to a huge inflation of the valuation of those accounts.

There are other ways to produce the same results, and there are posters on DBR (Hurley for 3, e.g.) far more knowledgeable than I am.

[Note: the total gains to investors (including the PE firm) are the capital gains on the common shares, the coupon on the preferred shares, and the cash accumulated or the debt reduced in operating a profitable business. Substracted are the deal expenses on selling the company and fees paid to the PE firm, which is usually compensated directly by the company. The investors in a PE fund would get only 80 percent of the gains, provided a threshold return is reached.]

sagegrouse

You are one smart bird, indeed. Thanks for the most cogent explanation of this I have seen/heard. -- OPK

[OldPhiKap]

Linked article explains how Romney may have accumulated a large chunk of his wealth tax deferred. Nothing sinister here. It's simply an example of why many voters may have difficulty accepting the advantages that Romney was able to capitalize upon legally that are unavailable to all but a select few. The article states that 0.001% of IRA's are larger than $20 million.

http://www.boston.com/news/politics/...idance/?page=1

Thanks.

Assuming this is all true, is there any good reason for Romney not to just release his taxes? It is hard for him to argue that it's not anyone's business when his father was the one who started all of this. I cannot see how it helps to drag this into the autumn.

Maybe dump them over Labor Day weekend and be done with it.

[Tommac]

There might not be any "sniping" going on but I smell a lot of partisanship.

[gus]

Many are wondering how is it that Romney's IRA contains over $100 million in assets when the annual limit on contributions is $6,000.

Here's one example. When a private equity firm (say Bain Capital), using investor money, buys a stock the PE firm gets 20 percent of the profits on the investment, once the investors have gotten a minimum return of 8 percent or so. The gains are typically long-term capital gains in that the P-E firm buys a company and uses leverage (debt) to increase its long-term gain potential (and it's a bit riskier). But there's more: the P-E firm is able to generate extremely inexpensive common shares for the company:

• Suppose a firm buys a company for $100 million.
• It may use $30 million in long-term bank financing. That leaves $70 million.
• Then it issues preferred stock to the investors of $69.9 million with a coupon of, say, six percent.
• Each investor also gets an equal number of shares of common stock.
• What is the common stock worth? Well, $100 thousand. It's the purchase price (100) less the debt (30) less the value of the preferred stock (69.9).
• The PE firm would get 20 percent of the common stock as the main potential source of gains on the deal. Bain's stock, for example, would only be valued at $20 thousand.
• The partners could get compensated with shares of this low-value common stock and use this as an IRA (or other retirement) contribution. These shares could get transferred to a retirement account (it requires a fiduciary agent of some sort).

Then, suppose the deal succeeds, and five years later the company is sold for $300 million (typical target gain in PE is 3:1). After paying off the loan (which may already have been paid off) and redeeming the preferred shares, there is approximately $200 million in gains and probably more (see note). The PE firm's share is $40 million. Its investors get a return of $160 million plus on an initial investment of $70 million (an annual return of 18 percent).

The shares placed in retirement accounts get cash upon sale of the common shares, which leads to a huge inflation of the valuation of those accounts.

There are other ways to produce the same results, and there are posters on DBR (Hurley for 3, e.g.) far more knowledgeable than I am.

[Note: the total gains to investors (including the PE firm) are the capital gains on the common shares, the coupon on the preferred shares, and the cash accumulated or the debt reduced in operating a profitable business. Substracted are the deal expenses on selling the company and fees paid to the PE firm, which is usually compensated directly by the company. The investors in a PE fund would get only 80 percent of the gains, provided a threshold return is reached.]

sagegrouse

Something else to consider: leverage rates were likely higher (probably 3-1 or perhaps even 4-1) on some of the positions in Romney's IRA. Bain's purchase of Accuride was financed at a staggering 39/1 debt to equity ratio. I don't know if that deal is part of his IRA. Also, he may have received some of his carried interest (the 40mm in your example) into the IRA, which would also lead to tremendous return on a relatively tiny GP contribution.

[gus]

Thanks.

Assuming this is all true, is there any good reason for Romney not to just release his taxes? It is hard for him to argue that it's not anyone's business when his father was the one who started all of this. I cannot see how it helps to drag this into the autumn.

Maybe dump them over Labor Day weekend and be done with it.

I've long felt that the returns will show nothing particularly exciting. Speculation about tax amnesties and zero taxes are likely all well off base -- the chance of him having broken tax law is infinitesimal. But the man has been running for poilitical offices for a decade. He's way too smart to have broken the law. I kept thinking that his decision to not release the returns were a combination of modesty and stubborness. Maybe he took an aggressive tax position (e.g. valuing his carried interest at zero when transferring to his sons' trusts) that he and his tax attornery feel would be upheld in a court, but his campaign manager worries has bad optics.

But it's coming to the point were not releasing the returns are damaging his chances of being elected, so I can't understand why he hasn't released them. My bet is that they're released shortly after the convention, if for no other reason that it has an arbitrary cut off of one phase of the campaign.

[OldPhiKap]

There might not be any "sniping" going on but I smell a lot of partisanship.

Nothing wrong with believing in something.

Nothing right with attacking someone else's beliefs.


I think that's the distinction the mods are seeking. But could be wrong.

[OldPhiKap]

But the man has been running for poilitical offices for a decade. He's way too smart to have broken the law.

I think Mitt already voiced that concern in the primaries, unintentionally. Remember when he got beat up on a question about illegal alien gardeners or landscape folks? "Heavens, no, I can't have illegals. I'm running for office!" or something like that. One of the sillier attacks in the primary IMO -- if you're not smart enough to figure out that's a problem, you don't deserve the job. As is often the case, the "gaffe" is speaking the truth before filtering it through bull droppings.

. . . but his campaign manager worries has bad optics.

But it's coming to the point were not releasing the returns are damaging his chances of being elected, so I can't understand why he hasn't released them.

This is my confusion about refusing to release them. Yeah, he's rich. Yeah, he pays a low rate. We all know that. Just get it out there, pull off the band-aid, and be done with it.

People's imaginations about what is being withheld from them usually far exceeds what is really being withheld. Human nature.

[blazindw]

Any chance he releases some of the tax returns during the Democratic Convention? Usually, the other party yields to the convening party during their time and doesn't release anything big, but the tax returns would either 1) draw attention away from the convention or 2) be buried under Democratic Convention (and NFL/NCAA football opening weekend) coverage.

[OldPhiKap]

Any chance he releases some of the tax returns during the Democratic Convention? Usually, the other party yields to the convening party during their time and doesn't release anything big, but the tax returns would either 1) draw attention away from the convention or 2) be buried under Democratic Convention (and NFL/NCAA football opening weekend) coverage.

Normally, and historically, the Friday of a long holiday week (like Labor Day) would be perfect. Problem here, though, is that the Democratic convention is right after that IIRC. Which means a national audience to beat Mitt up about either not releasing his taxes, or an expose of what is in there while it is fresh news. And Mitt looks like he is caving if he waits until after the DNConvention and then releases.

Should have done it over the Fourth of July. Could still do it this weekend and have it be "old news" by the time the DNConv. rolls around. But the window is closing fast it seems to me.

[Dukeface88]

I've long felt that the returns will show nothing particularly exciting. Speculation about tax amnesties and zero taxes are likely all well off base -- the chance of him having broken tax law is infinitesimal. But the man has been running for poilitical offices for a decade. He's way too smart to have broken the law. I kept thinking that his decision to not release the returns were a combination of modesty and stubborness. Maybe he took an aggressive tax position (e.g. valuing his carried interest at zero when transferring to his sons' trusts) that he and his tax attornery feel would be upheld in a court, but his campaign manager worries has bad optics.

This or something like it is my thought as well. There's probably nothing illegal, but there's likely something (or somethings) that the Romney campaign thinks is embarrassing.

As for the strategy compnent, maybe Romney is hoping that he can drive up people's expectations, so whenever the taxes do get released (or leaked), people won't think that whatever is in them is that bad in comparision to the speculation?