Fathers & Sons: Willard Inc. is no George Romney, and it appears to be no accident that he keeps his finances under such tight wraps

You may or may not want to read about "Smart Alec," or "How Microsoft Lost Its Mojo," but the August Vanity Fair also contains the above e-referenced poke into Willard Romney's finances, based on the limited publicly available documents, by Nicholas Shaxson.

"The contrast between George Romney and his son Mitt -- a contrast both in their business careers and in their willingness to come clean about their financial affairs -- dramatically illustrates how America has changed."

-- Paul Krugman, in his NYT column today, "Mitt's Gray Areas"

"Not only was George Romney, that loser, ironclad in his ideological commitments; his vision of how capitalism should work was in every particular the exact opposite of the one pushed by the vulture capitalist he sired."

-- Rick Perlstein, in a January rollingstone.com column,
"What Mitt Romney Learned From His Dad"

by Ken

I got a jolt this morning when I noticed this in the NYT's "Today's Headlines" e-mail:

Cuomo for President? Who Said That? Well, Dad
By DANNY HAKIM
Andrew M. Cuomo has said he wants to concentrate on being "the best governor I can be," but Mario M. Cuomo has higher ambitions for him.

No, I didn't actually read the piece. The blurb told me as much as I wanted to know about it. (And I was damned if I was going to waste a precious nytimes.com click on it. That's the same reason I'm not providing a link. If you want to read the piece, I'm sure you can find it for yourself. Waste your own damn click.)

For all the twists and complications of his political career, Mario Cuomo remains one of my dwindling band of political heroes, someone who came to public prominence championing the proposition, increasingly under attack by the benighted forces of the greed-and-ignorance Right: We're all in this together. Young Andrew, however, seems more attuned to the thinking of an older, slightly less benighted Right: Some of us are in this together, and if we serve the interests of us folk who matter, it will like magic benefit all those other people, the one who don't matter so much, as well.

I've wondered how Mario and Matilda Cuomo have felt about the political odyssey of Young Andrew. I guess I hoped there was at least a vein of disappointment, even disapproval. I've been led to believe that Birch Bayh (another of my political heroes) has never been thrilled with the "centrism" (to use a polite word) of Young Evan B. Heck, even George W. Bush reportedly grew weary of disapproving phone calls from "Poppy" -- kind of ironic considering how George H.W. is said to have come to dread those incessant calls from his mother browbeating him in the name of his moderate-Republican father, Sen. Prescott Bush.

As I've written before, I'm fascinated and appalled by what seems to me an unbridgeable gap between the Two Romneys: the unspeakable Willard Inc. and his father, onetime Michigan Gov. (and presidential candidate) George Romney. George R wasn't one of my political heroes, but maybe in some retrospective way he should qualify. He was a remarkable political figure: a certified titan of American industry who at the same time felt a commitment to promote social and economic justice for Americans as a whole. This gap was beautifully explored by Rick Perlstein in a January rollingstone.com column, "What Mitt Romey Learned From His Dad," which I wrote about here as "Willard Inc. may be his father's biological offspring, but politically speaking, he's no George Romney." Rick P is a reliably terrific writer, but this column was something else -- a must-read if you've never read it, or haven't read it recently.

Now Paul Krugman is reviewing the subject with an economist's perspective on the financial side of the father's and son's careers, with an eye to what the differences may tell us about ways in which the country has changed. I guess I've already spoiled the sleight of hand of the opening:

Once upon a time a rich man named Romney ran for president. He could claim, with considerable justice, that his wealth was well-earned, that he had in fact done a lot to create good jobs for American workers. Nonetheless, the public understandably wanted to know both how he had grown so rich and what he had done with his wealth; he obliged by releasing extensive information about his financial history.

But that was 44 years ago. And the contrast between George Romney and his son Mitt . . . . [for the rest of this sentence, see the quote atop this post].

THERE IS, FIRST, AN UNBRIDGEABLE GAP

BETWEEN THE TWO ROMNEYS' CAREERS

What did George Romney do for a living? The answer was straightforward: he ran an auto company, American Motors. And he ran it very well indeed: at a time when the Big Three were still fixated on big cars and ignoring the rising tide of imports, Romney shifted to a highly successful focus on compacts that restored the company's fortunes, not to mention that it saved the jobs of many American workers. . . .

Now fast-forward to Romney the Younger, who made even more money during his business career at Bain Capital. Unlike his father, however, Mr. Romney didn't get rich by producing things people wanted to buy; he made his fortune through financial engineering that seems in many cases to have left workers worse off, and in some cases driven companies into bankruptcy.

THEN THERE'S THE STARK CONTRAST IN HOW
THE TWO ROMNEYS DEALT WITH FINANCES

And in particular -- for two public figures -- their disclosure thereof. The differences are even more damning to Willard when you consider that in his father's time there was nothing automatic about release of even the now-common release of two or maybe three years' worth of tax returns, whereas Willard himself is not only a veteran political candidate but a former governor.

As Willard is no doubt tired of hearing by now, when his father made his run for the presidency, he released an astounding 12 years' worth of tax returns ("explaining," says PK, "that any one year might just be a fluke"), revealing that he made a lot of money ("in his best year, 1960, he made more than $660,000 -- the equivalent, adjusted for inflation, of around $5 million today") and "he paid a lot of taxes" ("36 percent of his income in 1960, 37 percent over the whole period"), both because he "seldom took advantage of loopholes to escape his tax obligations" and because "taxes on the rich were much higher in the '50s and '60s than they are now" ("once you include the indirect effects of taxes on corporate profits, taxes on the very rich were about twice current levels").

By contrast, Willard "grudgingly release[d] one year's tax return plus an estimate for the next year." Which "show[ed] that he paid a startlingly low tax rate."

But as the Vanity Fair report points out, we're still very much in the dark about his investments, some of which seem very mysterious. Put it this way: Has there ever before been a major presidential candidate who had a multimillion-dollar Swiss bank account, plus tens of millions invested in the Cayman Islands, famed as a tax haven?

"And then," PK writes, "there's his Individual Retirement Account."

I.R.A.'s are supposed to be a tax-advantaged vehicle for middle-class savers, with annual contributions limited to a few thousand dollars a year. Yet somehow Mr. Romney ended up with an account worth between $20 million and $101 million.

There are legitimate ways that could have happened, just as there are potentially legitimate reasons for parking large sums of money in overseas tax havens. But we don't know which if any of those legitimate reasons apply in Mr. Romney's case -- because he has refused to release any details about his finances. This refusal to come clean suggests that he and his advisers believe that voters would be less likely to support him if they knew the truth about his investments.

And that is precisely why voters have a right to know that truth. Elections are, after all, in part about the perceived character of the candidates -- and what a man does with his money is surely a major clue to his character.

Oh, says PK, there's "one more thing":

To the extent that Mr. Romney has a coherent policy agenda, it involves cutting tax rates on the very rich -- which are already, as I said, down by about half since his father's time. Surely a man advocating such policies has a special obligation to level with voters about the extent to which he would personally benefit from the policies he advocates.

Yet obviously that's something Mr. Romney doesn't want to do. And unless he does reveal the truth about his investments, we can only assume that he's hiding something seriously damaging.

THE VANITY FAIR ARTICLE:
"WHERE THE MONEY LIVES"

Nicholas Shaxson's tantalizing, exhaustive poke-athon into leads gleaned from such public disclosures as Willard's people have grudgingly made of his finances, "Where the Money Lives," begins:

A person who worked for Mitt Romney at the consulting firm Bain and Co. in 1977 remembers him with mixed feelings. "Mitt was . . . a really wonderful boss," the former employee says. "He was nice, he was fair, he was logical, he said what he wanted . . . he was really encouraging." But Bain and Co., the person recalls, pushed employees to find out secret revenue and sales data on its clients' competitors. Romney, the person says, suggested "falsifying" who they were to get such information, by pretending to be a graduate student working on a project at Harvard. (The person, in fact, was a Harvard student, at Bain for the summer, but not working on any such proj ects.) "Mitt said to me something like 'We won't ask you to lie. I am not going to tell you to do this, but [it is] a really good way to get the information.' . . . I would not have had anything in my analysis if I had not pretended.

"It was a strange atmosphere. It did leave a bad taste in your mouth," the former employee recalls.

This unsettling account suggests the young Romney -- at that point only two years out of Harvard Business School -- was willing to push into gray areas when it came to business. More than three decades later, as he tried to nail down the Republican nomination for president of the United States, Romney's gray areas were again an issue when he repeatedly resisted calls to release more details of his net worth, his tax returns, and the large investments and assets held by him and his wife, Ann. Finally the other Republican candidates forced him to do so, but only highly selective disclosures were forthcoming.

Even so, these provided a lavish smorgasbord for Romney's critics. Particularly jarring were the Romneys' many offshore accounts. As Newt Gingrich put it during the primary season, "I don't know of any American president who has had a Swiss bank account." But Romney has, as well as other interests in such tax havens as Bermuda and the Cayman Islands.

Eventually the article takes us into what Shaxson calls "Tax Haven U.S.A.," increasingly a haven, not just for domestic tax dodgers, but for "tax-evading and other criminal foreign money . . . predominantly channeled not into productive investment but into real estate and financial business."

One cannot properly understand Wall Street's size and power without appreciating the central role of offshore tax havens. There is absolutely no evidence that Bain has done anything illegal, but private equity is one channel for this secrecy-shrouded foreign money to enter the United States, and a filing for Mitt Romney's first $37 million Bain Capital Fund, of 1984, provides a rare window into this. One foreign investor, of $2 million, was the newspaper tycoon, tax evader, and fraudster Robert Maxwell, who fell from his yacht, and drowned, off of the Canary Islands in 1991 in strange circumstances, after looting his company's pension fund. The Bain filing also names Eduardo Poma, a member of one of the "14 families" oligarchy that has controlled most of El Salvador's wealth for decades; oddly, Poma is listed as sharing a Miami address with two anonymous companies that invested $1.5 million between them. The filings also show a Geneva-based trustee overseeing a trust that invested $2.5 million, a Bahamas corporation that put in $3 million, and three corporations in the tax haven of Panama, historically a favored destination for Latin-American dirty money—"one of the filthiest money-laundering sinks in the world," as a U.S. Customs official once put it.

Bain Capital has said it did everything required by the U.S. government to check that the investors were not associated with unsavory interests. U.S. law doesn't require Bain to enforce the tax laws of its investors' home countries, but the presence of Swiss trustees, Bahamas trusts, and Panama corporations would raise red flags with any tax authority.

Many Americans might react with a shrug to the idea of shady foreign money such as Robert Maxwell's being invested here. But, says Rebecca Wilkins, of the Washington, D.C.-based nonprofit Citizens for Tax Justice, "It is shocking that a presidential candidate should think that is O.K."

EVEN DIE-HARD BUSINESS TYPES GET THAT
WILLARD HAS TO RELEASE THE RETURNS

Here defrocked Wall Street tech analyst turned Internet entrpreneur (CEO and editor-in-chief of Business Insider) and Daily Ticker blogger Henry Blodget talks to The Daily Ticker's Aaron Task.

Henry B has been persistently on Willard's case about releasing his tax returns in his own interest. (See, for example, his Daily Ticker post today, "Yes, Mitt Romney Should Release His Tax Returns," and his Friday post on his own Business Insider site, "Dear Mitt Romney: It's Time To Release All of Your Tax Returns").

Some excerpts from the above clip:

AARON TASK: Henry, what is it that you think is in those returns that you want to see?
HENRY BLODGET: I don't know! Let me see them and I'll tell you what is in the returns that we want to see. I think the issue is that there's been no president or presidential candidate in the last 20, 20, 30 years who hasn't released all of the tax returns that people think might be at all relevant to what's going on. . . . The question that everybody is asking, and not just from a partisan perspective, is: What is Romney hiding?

AARON: Look, I think there's a lot of things that he probably could have done that were legal, the way the tax code is set up, for wealthy people -- a lot of them do this, they park money overseas and there's nothing technically wrong with it. But if you want to be president of the United States, it's a question you're going to have to address to the American people, of why aren't you keeping that money here in America? Especially when his tax rate was 14 percent in 2010, which is pretty low by historical standards.
HENRY: Unbelievably low. And again, his whole plank is "taxes are too high," "there's too much regulation," "we've got to free business," "it's great that people can get rich in this country." And look, it is great that people can get rich, and he has been tremendously successful, and if he's going to run on the whole plank of individual responsibility -- "go out and accomplish your goals" -- he should be proud of that, and he should say, "Look, I have been tremendously successful, and here are all the taxes I have paid, and I have paid every dime I owed, and of course I'm going to take advantage of the loopholes and things like that, because that's what everybody does. He should just stand up and say that, instead of hiding behind it.

HENRY: Again, it's not a partisan thing. I think even people who are violently pro-Romney and want change should just want to see these returns. How did he make his money? Where is his money? [Something about] loopholes? . . . If he's running on his personal success and his integrity and having paid every dime, good! Show us! And then again, if you're going to make the argument that the problem with the U.S. economy is that taxes are too high, especially on rich people, what I would like to hear him say is: If I hadn't paid these tens of millions of dollars in taxes -- and again, last year he paid 3 million in taxes on 22 million of income -- if I hadn't had to pay those taxes, here's why the economy would have been better. I'd like to hear him say that, and effectively that's what he's arguing, that his 14-percent rate should be lower, because there's too much tax. I think he has a point. Of course Obama is using this to try to distract people from the economy, which is not doing well. But there is a very easy way to end that distraction in one minute, and that is: release the returns. Then you're done. You can say it's all out there, say what you will, Obama, and you can't run from the economy.

WILLARD KNOWS HE WON'T BE "DONE"

IF HE "JUST" RELEASES THE RETURNS

Right-wing types who imagine that the only problem with releasing the returns is that they'll make Willard "look" bad -- like, say The Simpsons' Mr. Burns. Oh, they'll do that, all right, and that could cost him a certain amount of support. Even with the lapdog right-wing-controlled media, a certain number of folks hit hard by the meltdown brought on by right-wing governance may begin to wonder whether Willard is really on their side. But the real danger is that, however adroitly those tax returns were massaged -- within Willard's people's expansive idea of the boundaries of the law -- they're apt to be riddled with stuff that more than looks bad. The minute those returns go up online, all over the country there are going to be forensically fanatical troublemakers on their case, turning up funny stuff that threatens to explode into a 21-smoking-gun salute, and even the spin-happy infotainment noozers are going to have to keep tabs on the story for fear of being left inspinnably behind.

Henry Blodget makes the point -- every time he tackles the subject -- that eventually what's being hidden will come out. This is a good point, and one that cover-uppers all too often forget. My guess, though, is that there's so much funny stuff buried among Willard's financials that lots of really gruesome stuff isn't going to come out without sustained pressure for disclosure.

OH, HE WEARS THE MORMON UNDERWEAR,
BUT DOES HE WALK THE MORMON WALK?

One last point from Henry B: Releasing the returns, he says, is "the right thing to do."

Mitt Romney is campaigning to become President of the United States. Americans have every right to want to know how he made his money and and how he manages it, as well as what sorts of taxes he pays. Regardless of who you're rooting for in the campaign, it is is far better that this information come out now, rather than later (and it will come out). Given that Mitt Romney is campaigning on financial expertise and economic know-how, these questions are even more relevant for him than for any other candidate, which Mitt Romney obviously knows. And if Mitt Romney persists in refusing to release the returns, this issue really will become a distraction.

The Mormon Church advocates doing the right thing without delay regardless of the cost. [Boldface emphasis added. -- Ed.]

Mitt Romney should stop denouncing people asking perfectly reasonable questions and, instead, follow that advice.

I love that! Willard's famous faith commands him to do the right thing without delay regardless of the cost! Unless he wants to tell us that he's not serious about that faith, he just likes to wear the underwear.

But of course that's not all there is to Willard's Mormonism. There's money. As Henry B himself reported last week: "The Vast Majority Of Mitt Romney's Charitable Donations In The Past Two Years Have Gone To The Mormon Church." As long as the church elders are getting their cut of the loot, I don't think Willard will be hearing so much as a harsh word from the defenders of his faith.

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