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EUGENE ROBINSON: The money manager

Eugene Robinson

Eugene Robinson

WASHINGTON -- You can conduct byzantine transactions through opaque investment accounts and private corporations in offshore tax havens such as Bermuda and the Cayman Islands. Or you can credibly run for president at a time of great economic distress.

I don't think you can do both.

Let me be clear that I have nothing against wealth. In fact, I have nothing against great wealth, which is how I would classify Mitt Romney's estimated $250 million fortune. We can argue about the social utility of private equity firms such as Bain Capital, but Romney isn't responsible for distorting the system so that financiers are grossly overpaid. He just took advantage of the situation.

Increasingly, however, I have to wonder whether the achievement Romney touts as his biggest asset in running for president -- his business success -- might be seen by many voters as a liability.

The question isn't whether people can relate to a candidate who has tons of money. It's whether they will connect with a man who didn't make his money the old-fashioned way -- by building a better widget -- but by sending capital hither and yon via clicks of a computer mouse to take advantage of arcane opportunities most people never even know about.

Most Americans, for example, do not have an individual retirement account valued at between $20 million and $101 million, as Romney stated last year in a financial disclosure report.

When Romney was running Bain and building up his IRA, the maximum annual contribution permitted by the tax code was $2,000. So how did Romney's IRA get so huge? He won't say. It's possible that he rolled over some money that was originally in a 401(k) retirement plan of the kind offered by many employers. But annual 401(k) contributions were then capped at $30,000, including an employer match -- in Romney's world, chump change.

Analysts surmise that Romney may have placed his interests in various Bain investment partnerships in the IRA, taking advantage of Internal Revenue Service rules that allow these interests to be undervalued for IRA purposes. In some cases they can even be valued at zero, since partnership interests represent future income, not present income, and ...

OK, I know I'm losing you here -- I'm in danger of losing myself -- but you get the point. Individual retirement accounts were created as a way for middle-class Americans to save some tax-deferred money for their senior years. It isn't clear exactly what Romney is using his gargantuan IRA for, but it's certainly not what Congress intended.

Then there's the question of a Bermuda-based company that Romney and his wife Ann own, Sankaty High Yield Asset Investors Ltd. According to The Associated Press, the company has been part of Romney's portfolio for nearly 15 years but was not reported in any state or federal disclosure reports. It surfaced in Romney's 2010 tax returns, which he reluctantly released earlier this year.

According to those returns, Sankaty is little more than an empty shell at the moment. But AP reports that the company "served as Romney's partnership stake" in a larger group of Sankaty-named funds that Bain once used to manage more than $100 million in investments. (Sankaty, by the way, is the name of a lighthouse on Nantucket.) Channeling private-equity and hedge-fund investments through offshore firms in places such as Bermuda and the Caymans can allow investors to avoid a tax on what is known as "unrelated business income."

Romney's campaign says that he pays every penny he is required to pay in taxes -- although his income is taxed at about 15 percent, a lower rate than most middle-class Americans pay. Hey, I understand; if I could get away with paying less in taxes, I'd do it, too. And I suppose that if God didn't want us to have offshore pass-through accounts in sun-drenched tax havens, he wouldn't have invented them.

But one of the sources of anger and anxiety in this country -- both on the left and the right -- is the sense that there are two sets of rules, one for the rich and powerful and one for everybody else. I don't think voters want a "regular guy" as president; they want someone who is exceptional. But there is a point at which opportunism begins to shade into rapacity.

In making and managing his money, Romney appears to take every possible, conceivable, imaginable inch that the law arguably allows. That's good finance. But I doubt it's good politics.

Eugene Robinson's email address is eugenerobinson@washpost.com.

Comments

notblind 2 years, 2 months ago

What set of rules is Obama playing by ??? It's neither of the two that Mr. Robinson mentioned. There has NEVER been a President less qualified that Obama. Joe the Plumber could do a better job as he at least knows what physical labor is and how to run a business to make money. Two things Obama has never done.

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Jan 2 years, 2 months ago

What short memories. GW Bush, by any reasonable measure, was far worse. Just because you have been brainwashed to believe Obama's accomplishments are not noteworthy doesn't mean he does not have them. You should say that no other president in our history has had as much blocking by the other party. Republicans cannot stand the idea that he is succeeding even with the interference with most major legislation. We should vote out every single Republican that has identified themselves with being more interested in defeating Obama than fixing the problems with our economy and healthcare.

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notblind 2 years, 2 months ago

The only way to fix the economy is to get Obama and his minions out of Washington. Whatever they are doing there is can't be called governing.

Even Nixon was better than Obama. Nixon said he would get us out of Viet Nam and he did it. Obama said he would get us out of Iraq and Afganistan just to get elected.

Obama's overinflated ideas of his own intellectual superiority is only surpassed by LBJ's as far as past presidents go and we know how well LBJ's presidency worked out for the country. The phrase "credibility gap" was coined in response to LBJ's misinformation and outright lies but Obama's administration makes Johnson look like an honest man.

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Jan 2 years, 2 months ago

I thought that I might be able to get you to do some research and learn some facts before responding. Obviously, you are not interested in facts so I will not waste my time.

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kevin 2 years, 2 months ago

So was Carter. Do the Liberals have anything else to talk about except G. Bush? I guess that is the limit of their education. They are all brain-washed people anyway. Is Bush as far back as your brain can take you to find lousy Presidents? If you had any brains, you would start blaming Obama for his failures. The next administration is going to have a field day with Obama buddy.

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dmoore 2 years, 2 months ago

Why does Romney's wealth matter? I would much prefer a man who has built a fortune to a community organizer any day! I think most Americans would also. And by the way, quit the old class warfare line of his income was taxed at 15 per cent. His capital gains tax is 15% NOT his income tax. You get away with this because of the stupidity of the people who agree with the Obama administrations class warfare rhetoric. Why don't you write about his record? Because it is truly pathetic. Class warfare is his only chance and sadly too many parasites of society believe it or agree with it!

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FordGalaxy 2 years, 2 months ago

You are correct in stating that too many people are either completely uninformed or willfully ignorant of the difference between capital gains tax and income tax. Sadly, it is jsut another salvo in the battle that is this campaign season. A god friend of mine, someone I count as very intelligent, parroted the old "Warren Buffet pays a lower tax rate than his secretary" line the other day. I called him out on it, pointing out the difference between capital gains and income, and he responded that it didn't matter, he still shouldn't pay a lower rate.

Now I believe that a person making more should pay more, but to frame it as he did is nothing more than class warfare and wealth envy.

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kevin 2 years, 2 months ago

The Liberals are brain-dead because the only machine they know how to operate is one with a keypad on it.

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FordGalaxy 2 years, 2 months ago

So we should be wary of Mitt Romney because he made his millions through financial services, even though we are now a mostly financial services driven economy? Most people making great fortunes now are doing so through financial services. We're trusting in China, India, Japan, and only a few other countries to build better widgets. We'll help sell the widget, but we're not building it.

And why not a business man? Obama has assembled a cabinet that is the least experienced, as far as the private sector is concerned, in this nation's history. If it isn't the least experienced, it's close to it. Obama himself referred to working in the private sector as 'time spent behind enemy lines." I'll take my chances with Romney, who at least understands that business can't be regulated out of existence. Obama may have brought about fewer regulations than Bush, but his regulations cost more to implement than Bush's did.

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JV 2 years, 2 months ago

Not electable eh? How about a little more updated news from July 6th?

From Politico: The Romney campaign, along with its Romney Victory fund and the Republican National Committee, raised more than $100 million in June, obliterating the campaign's goal and setting the one-month record for any Republican campaign

From the AP: Employers added only 80,000 jobs in June, a third straight month of weak hiring that shows the economy is struggling. The Labor Department says the unemployment rate was unchanged at 8.2 percent. The economy has added just 75,000 jobs a month in the April-June quarter. That's one-third of 226,000 a month created in the first quarter. Job creation is also trailing last year's pace through the first six months of 2012. High unemployment could shift momentum to Mitt Romney, the presumptive GOP presidential nominee.

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notblind 2 years, 2 months ago

None of these facts matter to a liberal. They are truly blind. Their darling is an abject failure at everything but campaigning.

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kevin 2 years, 2 months ago

Let me be clear!! (famous Obama words) Put J. Jackson, A.Sharpton, and B.Obama on the top of a mountain in the desert and let them spend the rest of their lives talking from the top.

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kevin 2 years, 2 months ago

In the words of Liberal politicians, "Let me be clear." I would vote for anyone that earned a living from the private sector, no matter what. Compare Romney to Obama. Obama earned his so-called "living" 100% from political jobs and from all the people that donated to his education. Obama never earned a dime for any of his education. As for what Romney does with his money is his business and was 100% legal. The Congress, which contains two parties, gave the IRS all its power to grant exemptions and loop-holes for people with money and for people without a lot of money. It is SMART to take advantage of any loophole and stupid not to. Even people that don't put in a dime towards income taxes even get a $1,000+ refunds! Now that is the joke.

Obama has NO experience nor does he know anything about creating jobs. This is mainly because people like you and Obama are socialist Liberals with no ideas. Keep on writing your columns in the GDP because it only strengthens the resolve of the tea party folks to wipe you all out. Every word in your column is a great statement that defines a Liberal. Obama will have a great time working for Al Sharpton & Jessie Jackson after he leaves the office of "destroying America, which our soldiers have fought for. Obama could at least learn how to keep his oath of office and live by the Constitution.

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notblind 2 years, 2 months ago

I recently finished reading the latest installment of Caro's biography of LBJ. Some of the insights into the Kennedy administration provide excellent illumination of Obama's administration. Kennedy, like Obama, spent very little of his time as a congressman actually on capital hill. He was either out playboying around or later he was out campaigning for the presidency.

Once he was elected president he could not get any of his pet bills passed because he had NO idea how to get things done on capital hill. Sound familiar ?

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CD 2 years, 2 months ago

I seem to recall one big bill that passed. What about the credit card protections? There are others.

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