Top story: Romney’s outsourcing record
“According to government documents reviewed by Mother Jones, Romney, when he was in charge of Bain, invested heavily in a Chinese manufacturing company that depended on US outsourcing for its profits-and that explicitly stated that such outsourcing was crucial to its success. This previously unreported deal runs counter to Romney’s tough talk on the campaign trail regarding China. ‘We will not let China continue to steal jobs from the United States of America,’ Romney declared in February. But with this investment, Romney sought to make money off a foreign company that banked on American firms outsourcing manufacturing overseas.” David Corn in Mother Jones.
And he didn’t leave Bain in 1999, either: “Romney has said he left Bain in 1999 to lead the winter Olympics in Salt Lake City, ending his role in the company. But public Securities and Exchange Commission documents filed later by Bain Capital state he remained the firm’s ‘sole stockholder, chairman of the board, chief executive officer, and president.’…The timing of Romney’s departure from Bain is a key point of contention because he has said his resignation in February 1999 meant he was not responsible for Bain Capital companies that went bankrupt or laid off workers after that date.” Christopher Rowland in the Boston Globe.
HARRY REID: Romney couldn’t be elected dog-catcher.
KINSLEY: Outsourcing is economically vital. “Trade is not a zero-sum game. There isn’t a certain number of manufacturing jobs that will either go to China or Germany, or come to us. We want China and Germany to have lots of manufacturing jobs. The more they have, the richer they are, the better off we will be as well. Beggar-thy-neighbor policies don’t work. It’s probably all just talk. Obama campaigns like a crusading populist, and then governs like a consensus-seeking moderate. This works well with an electorate that wants radical change as long as everything important — e.g., monthly checks from the government — stays the same. And Romney clearly cannot be counted on by proponents of any side of any question.” Michael Kinsley in Bloomberg.
RERUN: Obama’s outsourcing record has also come in for criticism.
YGLESIAS: We may need Mitt Romney-like businessmen, but not as president. “while I’m happy to defend the layoff business as a legitimate and even useful element of a dynamic modern economy, I’m sure glad it’s not my job. Normal people, if put in a position where layoffs are necessary, find them to be emotionally arduous in the extreme. I wouldn’t want to be the guy who takes over companies and shuts down operations for a living, and I don’t think I’d want to be friends with that guy. It seems like a job only an emotionally unbalanced jerk would want, hence Up in the Air…Romney’s strength is that he understands those forces better than anyone in the race, but his weakness is that he doesn’t understand the suffering.” Matthew Yglesias in Slate.
STUDY: Outsourcing doesn’t actually cost jobs.
RCP Obama vs. Romney: Obama +2.6%; 7-day change: none.
RCP Obama approval: 47.0%; 7-day change: -0.6%.
1) SACHS: The government is forcing its employees to pay for other companies’ political spending. “In its Citizens United decision, the Supreme Court held that companies have a First Amendment right to make electoral expenditures with general corporate treasuries. And they’ve done so, with relish, pouring millions into the political system. What Citizens United failed to account for, however, is that a significant portion of the money that corporations are spending on politics is financed by equity capital provided by public pension funds – capital contributions that the government requires public employees to finance with their paychecks. This consequence of Citizens United is perverse: requiring public employees to finance corporate electoral spending amounts to compelled political speech and association, something the First Amendment flatly forbids.” Benjamin Sachs in The New York Times.
2) KRUGMAN: Our societal elites have never been more elite.“Mr. Romney’s base – never mind the top 1 percent, we’re talking about the top 0.01 percent or higher – is composed of very self-important people…The first thing you need to know is that America wasn’t always like this. When John F. Kennedy was elected president, the top 0.01 percent was only about a quarter as rich compared with the typical family as it is now – and members of that class paid much higher taxes than they do today. Yet somehow we managed to have a dynamic, innovative economy that was the envy of the world. The superrich may imagine that their wealth makes the world go round, but history says otherwise.” Paul Krugman in The New York Times.
3) BATE: The world’s poor are getting shoddy drugs. ”We purchased, off the shelf from local pharmacies, about 2,600 drugs to treat malaria, tuberculosis and bacterial infections in low- and middle-income countries, including Ghana, Nigeria, Turkey, India and China. We then tested these drugs to see how much active pharmaceutical ingredient – the chemical that performs the drug’s lifesaving function – they contained. Drugs made by Chinese and, to a lesser extent, Indian manufacturers performed quite badly – sometimes a fifth of them failed basic quality-control tests. Most worryingly, more than 15 percent of the Chinese drugs approved by the WHO failed to include adequate amounts of active pharmaceutical ingredient. To add insult to injury, some of the drugs we tested had been bought through Western donor programs, funded by taxpayers, and steered through aid programs to African markets.” Roger Bate in the Washington Post.
4) GERSON: Romney should embrace equality of opportunity. “Conservatives must take seriously that America’s poor are starting lower and rising less easily than in other developed nations – a problem often related to educational attainment and family structure. Income is not the only thing that matters. In the absence of mobility, inequality hardens into class division. The American ideal requires a realistic prospect of turning ability into achievement…Romney, while disarmingly recognizing his own advantages, should demonstrate some market-oriented innovation in extending advantages to others: promoting early-childhood education, high school completion, college attendance and graduation, parenting skills and wealth-building among the disadvantaged. It would be a powerful political message, addressing a serious need, in a manner consistent with conservative ideals.” Michael Gerson in the Washington Post.
5) KLEIN: Investors are sitting out there, waiting to give the US their money. “They’re negative. Negative! The market will literally pay us a small premium to take their money and keep it safe for them for five, seven or 10 years. We could use that money to rebuild our roads and water filtration systems. We could use that money to cut taxes for any business that adds to its payrolls. We could use that to hire back the 600,000 state and local workers we’ve laid off in the last few years…The fact that we’re not doing any of this isn’t just a lost opportunity. It’s financial mismanagement on an epic scale.” Ezra Klein in the Washington Post.
Top long reads
Maggie Jones on how immigration enforcement ruined a small Iowa town: “In the immediate aftermath of the raid, Seibert and many local business owners struggled to stay afloat. Mexican-owned grocery and clothing stores shut down, along with Restaurante Rinconcito Guatemaltecoa. Business at Seibert’s laundromat and several other local shops dropped by at least 50 percent. Down the street, Agri was collapsing, too. Most of the work force was in jail or had left town…Female workers reported being sexually assaulted by managers, and workplace accidents were not uncommon, including broken bones, eye injuries, hearing loss and grisly mishaps that resulted in amputations.”
Live show interlude: Superchunk play “Detroit Has a Skyline”.
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Still to come: Tim Geithner tried to stop Libor rigging in 2008; Democratic governors are skittish about Medicare expansion too; product safety testing is on the chopping block; falling battery prices could lead to an electric car boom; and hacking an NES to control a synthesizer.
Tim Geithner tried to curb Libor rate rigging in 2008. “While president of the Federal Reserve Bank of New York, Timothy F. Geithner pressed British regulators to reform the way a critical global benchmark called the London interbank offered rate, or Libor, is calculated, according to a June 1, 2008, e-mail obtained by The Washington Post. Writing to the head of the Bank of England, among others, Geithner made six recommendations, which included eliminating incentives that could encourage banks to manipulate the rate and establishing a ‘credible reporting procedure.’ ‘We would welcome a chance to discuss these and would be grateful if you would give us some sense of what changes are possible,’ Geithner wrote. It’s unclear what other steps Geithner took and whether his efforts stopped any wrongdoing by banks.” Jia Lynn Yang in the Washington Post.
Chinese growth is slowing.
Economists see growth picking up. “Despite the recent run of disappointing economic data, a broad range of experts and forecasters expect the economy to improve slightly in coming months, thanks to lower oil prices and new signs of life from sectors like automobiles and housing. Call it a firming up, if not quite a comeback. Economists at many of the most-watched forecasting organizations, both public and private, expect growth to pick up through the summer and into the fall, although only to a pace broadly considered sluggish, if not dismal. This week, Macroeconomic Advisers, an economic consultancy often cited by policy makers, estimated the annual rate of growth in the second quarter at just 1.2 percent – well below the pace needed to reduce the unemployment rate. But the firm also projected growth to accelerate to around 2.4 percent in the third quarter.” Annie Lowrey in the New York Times.
Contra-core interlude: An NES controller hacked to be a MIDI controller.
Medicaid expansion is proving a tough sell to both parties. “While the resistance of Republican governors has dominated the debate over the health-care law following last month’s Supreme Court decision to uphold it, a number of Democratic governors are also quietly voicing concerns about a key provision to expand coverage. At least seven Democratic governors have been noncommittal about their willingness to go along with expanding their states’ Medicaid programs, the chief means by which the law would extend coverage to millions of Americans with incomes below or near the poverty line. ‘Unlike the federal government, Montana can’t just print money,’ Gov. Brian Schweitzer (D) said in a statement Wednesday. ‘We have a budget surplus, and we’re going to keep it that way.’” N.C. Aizenman and Karen Tumulty in the Washington Post.
Product safety testing is in danger of being cut. “Congress is poised to scrap funding for the only program that consistently tests select vegetables and fruit for pathogens – an initiative that’s led to about 30 recalls since 2009. The Agriculture Department, which runs the Microbiological Data Program, says getting rid of it is a necessary belt-tightening measure during tough fiscal times. USDA officials have suggested that the initiative would be a better fit for the Food and Drug Administration, which regulates vegetables and fruits. But that agency lacks the money needed to marshal more inspectors, and there’s no sign that the program will be moved there. President Obama did not request funds for the 11-year-old program in his most recent budget, and the House and Senate did not include any in the agriculture spending bills they’ve crafted.” Dina ElBoghdady in the Washington Post.
The Justice Department has settled the one of the biggest fair lending cases ever. “In one of the largest fair-lending payouts in history, Wells Fargo agreed on Thursday to spend at least $175 million to settle federal accusations that it steered black and Latino borrowers into high-cost loans and charged them excessive fees. The settlement with the nation’s largest home mortgage lender is rooted in a lawsuit filed four years ago by Baltimore over fair-lending violations. It culminated Thursday in what federal officials called ‘systemic discrimination’ spanning 36 states and involving more than 34,000 minority customers over five years. ‘This is a case about real people – African American and Latino – who suffered real harm as a result of Wells Fargo’s discriminatory lending practices,’ said Thomas E. Perez, assistant attorney general for civil rights.” Ylan Mui in the Washington Post.
A super PAC is itching to fight other super PACs. “It’s a super PAC that hates super PACs. Jonathan Soros, son of a prominent liberal financier, is helping to launch an independent advocacy group with hopes of spending up to $8 million targeting House lawmakers, primarily Republicans, who oppose public matching funds for elections and other campaign finance reforms. The new super PAC, called Friends of Democracy, will file its first disclosures with the Federal Election Commission later this month and plans to zero in on 10 to 15 House races with television ads, mailings and Web messaging, Soros and other organizers said Thursday.” Dan Eggen in the Washington Post.
Teachers’ unions give heavily to outside groups. “What do the American Ireland Fund, the Rev. Al Sharpton and the Gay, Lesbian and Straight Education Network have in common? All have received some of the more than $330 million that America’s two largest teachers unions spent in the past five years on outside causes, political campaigns, lobbying and issue education. The contributions-totaling more than $200 million from the National Education Association and more than $130 million from the American Federation of Teachers-were disclosed in annual reports that unions file with the Labor Department detailing their spending on political activities and advocacy work, as well as separate political-action-committee filings.” Alicia Mundy in the Wall Street Journal.
Reboot trailer interlude: Oz: The Great and Powerful, Sam Raimi’s prequel to The Wizard of Oz.
Dropping battery prices could help electric cars take off. “New research from analysts at the McKinsey & Company suggests that the price for lithium-ion batteries could fall by as much as two-thirds by 2020. Instead of $600 per kilowatt-hour today, batteries would cost just $200/kwh in 2020 and $150/kwh in 2025. And that, the report suggests, would upend the entire automobile industry. It’s a bold prediction. Many analysts, including those at the Energy Department or at Pike Research, expect battery prices to come down only slowly, short of any radical technological breakthroughs. But the McKinsey report, written by Russell Hensley, John Newman and Matt Rogers, takes a closer look at three factors that they expect will have a powerful effect.” Brad Plumer in the Washington Post.
Dylan Matthews is writing Wonkbook while Ezra, Karl and Michelle are all traveling. And no, this isn’t a conspiracy. It just kind of worked out that way.