Monday, January 16, 2012

Class Warfare

Class Warfare

By Michael Maynard
January 12, 2012

“I think it's about envy. I think it's about class warfare.” Mitt Romney on “The Today Show.” responding to Matt Lauer’s question the concerns of anyone about the increasingly inequal distribution of wealth in the U.S. "I think when you have a president encouraging the idea of dividing America based on 99 percent versus one percent... you've opened up a whole new wave of approach in this country which is entirely inconsistent with the concept of 'one nation under God.'" ... "I think it's fine to talk about those things in quiet rooms and discussions about tax policy and the like,"

Willard Mitt Romney has a problem being in touch with “the common man”. In his case, he is completely out of touch with the underlying reasons why the Occupy protest movement spread rapidly and about the growing anger and resentment about the increasing inequality of wealth in the United States. Since he is a member of the 1%, Romney should be defensive about how he developed his extensive fortune.

(According to a Pew Research study) “In 2009, 47 percent of respondents said there were "very strong" or "strong" conflicts between the rich and poor. In 2011, 66 percent saw the same, possibly signaling that the "We are the 99 percent" rhetoric of Occupy Wall Street has had an impact. The ongoing economic recession also may have magnified class differences as income inequality has risen, continuing a trend occurring in American society since at least the 1970s.” (Source - The Huffington Post “Class Conflict Awareness Rose Significantly From 2009 To 2011: Report”)

The Great Recession and its impact upon middle and lower class families should rightly be the primary topic of the 2012 Presidential campaign. Of course, how to reignite the economy needs to be discussed in public. The exchange of ideas about job creation and increased investment in the United States to create more permanent high-paying manufacturing and skilled jobs, not more lower paying service sector and temporary jobs, should be the central issue. Mitt Romney should be leading this discussion since he is stating that his business expertise and experience are why he should become President.

Are his self-professed expertise and experience really reasons to vote for him? . During his tenure as a venture capitalist, Bain Capital most of the investments made were in retail or service companies, such as Staples, The Sports Authority and Artisan Entertainment. No creating good jobs at higher wages there.

Bain Capital switched to high risk investments, leveraged buyouts, in which the “investment” is really debt, using the company’s assets as collateral. The only fundamental difference between leveraged buyouts and home mortgages are the number of zeroes and the interest percent involved. Often, massive layoffs occurred after the investment was made. Bain Capital claimed to have an 113% percent return on investment, but that high rate of return was made on only a few of its investments. Some of the highest were a 3400% return on Calumet Coach and a 1600% return on the Gartner Group. Both Calumet and Gartner are service companies. I strongly doubt that any of the Occupy movement protesters were investors in these companies.

Was Romney being defensive about his one term as Governor of Massachusetts from 2003 to 2007? He’s already backed away from his largest achievement ensuring health insurance coverage for all citizens. He did inherit a budget gap of $3 billion dollars, created during the terms of the three previous Republican Massachusetts governors: William Weld, Paul Celluci and Jane Swift. Job growth increased at a 1.3 percent rate during Romney's term in office, ranking Massachusetts 47th out of 50 states during that time.

The state of Massachusetts raised $501 million in new income in the first year of the fee increase program, more than any other state in the nation that year (New York was second with $367 million. Nine other states raised fees and fines by more than $100 million). There were increases in 88 different new or existing fees, including fees to get a marriage license, renew a driver's license, legally possess a gun, recording the sale of a house upon closing, and from Children's Medical Security Program co-pays and premiums, the program for low-income families.. Romney also approved $128 million in tax changes such as sales tax from purchases on the Internet, and raised another $181 million in additional business taxes in the next two years. The total of increased taxes on businesses was $308 million per year.

However, the primary reduction in Massachusetts debt was from capital gains tax revenue caused by a previously enacted capital gains tax increase, lowering the deficit by $1.3 billion. So the real debt reduction was from higher taxes on the 1%. A lot of pain was inflected on the wallets of the 99%, needlessly.

As a management consultant, venture capitalist and governor, Mitt Romney’s policies, investments and programs did not produce jobs, especially not good jobs at higher wages. Those policies and programs are very similar to the ones proposed by his other Republican primary competitors. We all know by now the definition of insanity. There are no sane reason to believe that those economic results would change if any of them became President.

The class warfare would continue on, unabated.

No wonder he’s so defensive.

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