Wednesday, August 29, 2012

How Romney benefitted from gov't

This is kind of a follow up to my last post in which I highlighted Ta-Nehisi Coates' point that Romney has benefitted from affirmative action in a different way than conservatives are claiming Obama has. In this post I want to point you to a very specific way in which Romney benefitted from the gov't, and in a way that contradicts one of his main messages as the Republican nominee for president. Here's Matt Taibbi with the details:

But the way Romney most directly owes his success to the government is through the structure of the tax code. The entire business of leveraged buyouts wouldn't be possible without a provision in the federal code that allows companies like Bain to deduct the interest on the debt they use to acquire and loot their targets. This is the same universally beloved tax deduction you can use to write off your mortgage interest payments, so tampering with it is considered political suicide – it's been called the "third rail of tax reform." So the Romney who routinely rails against the national debt as some kind of child-killing "mortgage" is the same man who spent decades exploiting a tax deduction specifically designed for mortgage holders in order to bilk every dollar he could out of U.S. businesses before burning them to the ground.

Because minus that tax break, Romney's debt-based takeovers would have been unsustainably expensive. Before Lynn Turner became chief accountant of the SEC, where he reviewed filings on takeover deals, he crunched the numbers on leveraged buyouts as an accountant at a Big Four auditing firm. "In the majority of these deals," Turner says, "the tax deduction has a big enough impact on the bottom line that the takeover wouldn't work without it."

Thanks to the tax deduction, in other words, the government actually incentivizes the kind of leverage-based takeovers that Romney built his fortune on. Romney the businessman built his career on two things that Romney the candidate decries: massive debt and dumb federal giveaways. "I don't know what Romney would be doing but for debt and its tax-advantaged position in the tax code," says a prominent Wall Street lawyer, "but he wouldn't be fabulously wealthy."

You see the true motivation behind Republican complaints about gov't spending or benefits in general. They have no problem whatsoever when they are the ones reaping the benefits of gov't. They'll pile up as much debt as is necessary in order to get themselves the benefit. But when they aren't the ones benefitting, that debt that they by and large helped create is the worst thing in the world and threatens the very survival of the nation.

Check out the whole article from Taibbi. It's a good analysis of what Romney and Bain actually did and why his whole professional career is a contradiction of the debt message he touts on the campaign trail. It really confirms what I've said about Romney, that he stands for nothing except for gaining the power he seeks.

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