Companies that spend heavily on campaigns, lobbying and other political contributions aren’t necessarily helping their own bottom line, according to a new study from Rice University and Long Island University.
Researchers looked at the relationship between corporate political giving and financial returns for 943 companies between 1998 and 2008, and discovered that companies’ political investments “are negatively associated with market performance.”
Mitt Romney has embraced Paul Ryan’s budget and his plan to overhaul Medicare.
Now he’s taken it one step further: Romney has just hired Ryan’s top aide on the House Budget Committee, Jonathan Burks, to become the campaign’s deputy policy director, according to the National Journal.
When it comes to politics, where does the 1 percent park its cash? Larry Bartels flags a recent study by political scientist Adam Bonica, who analyzed the campaign contributions of Forbes’ 400 richest Americans — who’ve given $460 million since 1979 — and mapped their donations to over 50,000 candidates on a liberal to conservative scale:
As Bartels notes, the super-rich were most likely to give to Republicans (that’s the grey section above), but not to the most ideologically extreme candidates. A good chunk of the Forbes 400 gave to both parties, occupying the ideological middle. Democrats received significantly less support from the super-rich, but the donations still piled up.
Forget the White House.
For activists who want to stamp out illegal immigration, the presidency is rather besides the point, at least while Mitt Romney is the nominee.
“I could write in my mother’s name. I really wouldn’t make any difference, because nobody’s listening to me anyhow,” says Dan Beck, a cop and former sheriff from Ohio’s Allen County, who still wears a sheriff’s pin on his jacket lapel.
Here's a lede I don't get to write every day: President Obama and Mitt Romney actually agree on something. Something fairly big. And yet, it still may not happen.
In 2007, Congress passed the College Cost Reduction and Access Act, which lowered the interest rate on federal student loans from 6.8 percent to 3.4 percent. But the law was temporary: It expires this July. Obama wants to extend it. The difference for a student using the loans is about $1,000. On Monday, Romney said he would like to extend it, too. The question is, will Congress cooperate?
Ending the Fed isn’t going to happen any time soon, so why not try it out it in virtual reality? One Ron Paul fan is developing a low-budget video game featuring the Texas Republican on his journey to abolish the central bank, Real Time Economics reports. “You play the role of Ron Paul and make your way across all 50 states collecting Gold (sound money) and Delegates ... to ensure your seat as the President,” the game’s developer, Daniel Williams, explains on the project’s Kickstarter page. Players also progress to “boss fights” to battle each of the 13 branches of the Fed in the game, which Williams plans to release this summer.
In truth, even the presidency wouldn’t secure Paul’s dream of ending the Fed: That would take an act of Congress, or amending the Constitution. But Williams’s game can at least fuel the dream of Paul’s fan base.
Earlier today, I linked to a Goldman Sachs research note arguing that the most fiscally conservative outcome in the 2012 election would be an Obama victory and Republican control of Congress. But their analysis was limited to deficit reduction. Last week, JPMorgan looked at this question using a broader lens: what happens to the economy under Democratic and Republican presidents, and Democratic and Republican Congresses?
The economy has grown the most when Democrats have been in total control of Washington. But, interestingly, it’s grown the least when there’s been a Democratic president and a split Congress--our current scenario. But those are precisely the political conditions under which the stock market tends to perform the best, as well as the scenario that Goldman Sachs believes would lead to the most deficit reduction in 2013.
Of all interest groups trying to influence the 2012 election, you’d think the banking industry would need the least extra help. The financial sector, together with real-estate and insurance, has already donated over $207 million to candidates this election cycle--more than any other single industry. But the donations have predominantly come from the richest and most prominent players on Wall Street, with Goldman Sachs and Bain Capital topping the list.
Think President Obama will win re-election come November? Don’t bet on it—well, at least literally. The Commodity Futures Trading Commission is reportedly expected to ban U.S. traders from betting on the 2012 election, the New York Times reports:
The Dodd-Frank Act... mandated that the agency ban event contracts tied to terrorism, war, gambling and other matters contrary to the “public interest” ... the agency on Monday is expected to say that election derivatives, while a novel idea, have the potential to improperly affect election results. One problem, the agency argues, would arise if a candidate’s supporters bought huge positions and drove public opinion in their favor.
The ruling could scuttle the plans of one Chicago-based derivatives exchange to offer futures contracts on the election results. It’s “unclear” whether the new law will also apply to Americans betting on the Ireland-based Intrade, the Times adds.
It's not clear that Rick Santorum's wins in Mississippi and Alabama will mean much when we look back on 2012. Mitt Romney still looks to be marching towards the nomination. His delegate count is almost twice that of Santorum's, and if you look at last night's results closely, endorsements from the state's two superdelegates mean Romney actually picked up more delegates in Mississippi than Santorum did.
Quick! Was 2011 or 2010 a better year for the economy?
The answer is 2010, at least if you're looking at growth. That year -- widely considered a disappointing one for the recovery -- saw three percent economic growth. As for 2011, even with the strong fourth quarter, growth was only 1.7 percent. That's not so impressive. And yet this, right now, feels like a recovery. It feels like we turned the corner in 2011. 2010, meanwhile, felt like a setback.
Just a few days before the Michigan primary, a private equity trade group has released a video celebrating the impact of a $850 million investment by the Blackstone Group in the Detroit Medical Center. The group says the investment created 15,000 construction jobs and a children’s hospital, among other politically salient accomplishments:
It’s all part of the Private Equity Growth Capital Council’s campaign to rehabilitate the industry’s public image — an effort launched a few weeks ago after the attacks on Romney’s tenure at Bain Capital.
At least that’s what JP Morgan’s top economist concludes. Michael Feroli pushes back against recent speculation that the 2012 campaign could be mired in another debt-ceiling fight:
Our best estimate (reasoning laid out below) is that the debt ceiling will be hit in December — after the election but before the end of the year. ... However, recall that Treasury can and has used various accounting gimmicks to extend the “drop dead” date on the debt ceiling ... we believe the “drop dead” date on the debt ceiling is probably in February, shortly after Inauguration Day early next year ...
During last night’s Republican debate in Florida, Wolf Blitzer asked the candidates to offer their thoughts on the country’s foreclosure crisis: “How would you phase out Fannie Mae and Freddie Mac? Does the private mortgage industry need additional regulation?” Most of the candidates focused on the housing giants as the cause of the housing bust. But they didn’t say whether the big government-sponsored housing giants could be part of the solution to the ongoing crisis.
The ongoing housing crisis is among the biggest reasons that our economy is still in a funk, and on Tuesday, President Obama laid out a new plan to help resolve it. He wants Congress to pass a bill that would allow “every responsible homeowner” to refinance at lower interest rates, estimating that it would save every participant about $3,000 a year on their mortgage. Obama would pay for his mass-refinancing plan by levying a new fee on big financial institutions. But economists on both left and right have raised large questions about the plan.
The biggest concern is how much risk taxpayers would be taking on through this approach to mass refinancing. A White House official, speaking on the condition on anonymity, indicated that the plan would be fairly broad in scope: It would not only include mortgages that the government already holds through Fannie Mae and Freddie Mac, but also to holders of loans backed by the private sector as well.
That approach could potentially help a large number of homeowners and prevent more foreclosures. But there also is the risk that we would be “transferring massive amounts of bad debt from the current holders to the government,” says Dean Baker, co-director of the left-leaning Center for Economic Policy Research. “If the government is going to guarantee refinancing in this way, then we are giving much more money to banks and investors than to homeowners,” he argues.
As a private-equity fund manager, Romney benefited from the “carried interest” loophole that taxed much of his income at Bain Capital at 15 percent. Now it seems he’s willing to reconsider the tax break that helped make him rich, the Wall Street Journal reports:
If elected president, Mitt Romney might consider ending a tax break that helped the former Massachusetts governor accumulate his fortune, an aide suggested Tuesday. ... Lanhee Chen, the candidate’s policy director, indicated in a call with reporters the candidate might be willing to reconsider a tax break known as “carried interest” as part of a comprehensive tax overhaul. ... There are “a number of exemptions, deductions, credits, administrative treatment of income ... that would be addressed in tax reform,” Mr. Chen said.
The story notes that Romney praised the carried interest break for private-equity and hedge fund managers back in 2008
When Newt Gingrich and Mitt Romney weren’t trading barbs at Monday night’s debate, they were united in blaming President Obama’s policies for wrecking the economy. One such point of consensus was their claim that federal regulations — namely Dodd-Frank — were making it harder for people to “get housing” and “renegotiate mortgages.” Romney has previously said that banks were simply too scared to lend in the face of so much regulation. But beneath the rhetoric, there are some legitimate concerns that new regulations might tighten up a housing market that’s still ailing — though most of the major changes have yet to go into effect.
Forbes interviewed some tax experts who perused Gingrich’s newly released 2010 tax returns and flagged one potential anomaly:
Republican Presidential candidate Gingrich and his wife, Callista, treated only $444,327 of what they got from Gingrich Holdings. Inc. and Gingrich Productions as compensation to them, while reporting a whopping $2.4 million of their earnings from these corporations as profits or dividends. Medicare taxes are levied at a rate of 2.9% on an unlimited amount of compensation and self-employment income (say, from a consulting contract, speeches or a book) but not on profits from a business...
National Journal asks whether Mitt Romney would follow the advice of his economic advisers as president or his campaign promises to the GOP base. The story points out that Romney’s top economic advisers have advocated for policy reforms that are at odds with Romney’s campaign platform: Glenn Hubbard has pushed for mass refinancing of mortgages, as Ezra has discussed, and Greg Mankiw has argued that interest rates should be cut all the way to zero to flood the market with liquidity. By contrast, Romney says that the housing market should “heal itself” without any intervention and that monetary policy should be tightened, not loosened.
ProPublica’s Jesse Eisinger points out that private-equity firms rely heavily on debt to amplify their returns. By that logic, if Romney really wanted to run the United States like Bain, he should be pushing the U.S. government to borrow more while it’s still a bargain.
It’s almost as if Mr. Romney never worked in — what’s that other phrase for private equity? — oh yes, a leveraged buyout firm. Leverage as in debt, debt and more debt. Debt amplifies the returns of L.B.O. firms. Indeed, they often saddle companies with extra debt precisely so that their investors can cash out faster, a technique Bain deployed under Mr. Romney’s watch.
L.B.O. firms certainly never think of debt as immoral. When the borrowing is good, private equity is going to grab the money. When Mr. Romney rails against debt, he is running away from his entire career in business....
Newt Gingrich has been pushing the line that Obama is the “food stamp president.” On first glance, the numbers back him up: There are now a record number of Americans receiving food stamps, with about 46 million participants in 22 million households. But that’s mainly because there’s been record poverty levels, not because President Obama has taken major steps to make it easier to receive food stamps from the government.
Last night, Kelly Evans managed to sneak in the GOP presidential debate’s only question about the euro zone crisis, asking Romney what would happen if the United States faced another financial catastrophe as a result. “This is not some imaginary event,” said Evans, a Wall Street Journal economics writer and one of the debate’s moderators. “How far would you be willing to go to keep the financial system functioning?”
For months now, Mitt Romney has been refusing to release his tax returns. But he’s not said why. “Is there some secret?” MSNBC’s Andrea Mitchell asked him in December. “People know you’re wealthy.” But Romney was unmoved. “There’s nothing to hide,” he said, but no, he wasn’t planning on releasing the returns.
Mitt Romney’s campaign would have you believe that every job lost over the past three years is President Obama’s fault. That includes the 820,000 jobs lost in January 2009, despite the fact that Obama didn’t become president until the 20th of the month. It includes the 726,000 jobs lost in February 2009, before any of Obama’s policies had gone into effect. It suggests Romney holds a deeply ambitious view of a president’s power to influence the labor market -- -- a view, as we’ll see, that’s not shared by economists who were responsible for White House economic policies in recent administrations.
But Romney’s campaign also asks us to believe that every job created in Massachusetts while he was governor was Mitt Romney’s doing. Obama might deserve the blame for the jobs lost in every state on his watch, but George W. Bush, who was president during Romney’s governorship, gets no credit for the jobs created in Massachusetts during his administration. And Romney claims that every job created by any company that Bain Capital had a hand in should also be credited to Romney -- even if the job was created long after Bain separated from the company. Heads, I created a jobs; tails, you lost one.
In a speech Thursday morning, U.S. Chamber of Commerce President and chief executive Tom Donohue warned President Obama and the Democrat-controlled Senate against letting election-year politics hold back the legislative agenda. In his in his annual address on the state of business, Donohue said that “2012 must not be a wasted year simply because it is an election year.”
The Chamber president singled out the Senate for failing to act on any of the economic growth bills that the Republican-led House has passed and criticized an administration official for saying the payroll tax extension was the single item that was on Obama’s “must-pass” legislative agenda. In particular, he pressed Obama to greenlight the Keystone XL pipeline that has alarmed environmental advocates and the Democratic base. “There is no legitimate reason — none at all — to subject it to further delay,” he proclaimed.
That said, there also are a host of issues on which the Chamber and the current Republican Party diverge as well: on tax increases, an immigration overhaul and regulatory reform, for instance. Through Donohue didn’t point fingers at Republicans during his speech, he said shortly afterward that electoral politics were also holding back the GOP from always making the best policy choices.
Newt Gingrich has gone nuclear against Mitt Romney’s work in private-equity and venture capital at Bain, claiming that his work was comparable to “rich people figuring out clever legal ways to loot a company.” But from 1999 to 2001, Gingrich served as a paid member of an advisory board for Forstmann Little, one of the early leaders in the private-equity world, as The New York Times reports.
Over the past few days, two very different versions of Mitt Romney have emerged on the campaign trail. There’s Mitt Romney, job-creator, the Bain executive who swooped in to help start-ups become nationally successful enterprises. Then there’s Mitt Romney, job-destroyer: the Bain executive who swooped in to help ailing firms reorganize, lay off workers, and sold them off at a profit — only to have some of them go bankrupt later.
There’s a fundamental reason these two Romneys have emerged: During his time at Bain, Romney pursued two very different kinds of investments — venture capital and private equity — that have had very different political ramifications for his presidential campaign.
From 2001 to 2003, Glenn Hubbard served as President George W. Bush’s chief economist. Today, he’s dean of Columbia University’s School of Business and one of Mitt Romney’s top economic advisers. But right now, the candidate who could most benefit from his advice is President Obama.
Hubbard is an advocate for using Fannie Mae and Freddie Mac to set off a nationwide wave of mortgage refinancing. In a paper co-authored with Columbia economist Christopher Mayer, Hubbard estimates that more than 75 percent of the homeowners with 30-year mortgages backed by Fannie or Freddie are paying interest rates higher than 5 percent. But for the past two years, interest rates have been closer to 4 percent. That means tens of millions of Americans are paying more than they need to every single month.
Rick Santorum’s socially conservative brand has helped him break through with a last-minute surge in Iowa. But his agenda isn’t restricted to reimposing “Don’t Ask, Don’t Tell,” outlawing gay marriage nationwide, or promoting prayer in public schools. Santorum also wants to use the federal tax incentives to promote traditional marriage and families.
Ron Paul has an investment portfolio that’s worth anywhere between $2.44 million and $5.46 million, and the Wall Street Journal has taken a closer look at his holdings. Paul’s investments wildly diverge from the typical portfolio: Sixty-four percent of his investments are in gold and silver-mining stocks, and he holds no bonds and almost no business stock funds.
The Tax Policy Center has run the numbers on Newt Gingrich’s tax plan. The verdict? Gingrich’s plan does more for wealthy American households than any plan released by the other 2012 candidates — and increases the deficit by trillions.
Gingrich would give the top 1 percent of U.S. households an average $430,000 tax cut, with their tax rate dropping 22 percentage points under the assumption that the Bush tax cuts expire in 2012. Households with an income of more than $1,000,000 would get a whopping $760,000 tax break on average, heavily weighted by the top 0.1 percent, who’d get a $2.3 million tax reduction. By contrast, the bottom 20 percent would save only an average of $649 under the Gingrich plan — with their tax rate dropping just 1.5 percentage points — and more than half of that group wouldn’t see any benefit at all. And those earning $40,000 to $50,000 would get a tax cut of about $1,900 on average.
Newt Gingrich released his tax plan the same week that Rick Perry unveiled his in October. The two tax plans bear many similarities, but few took much notice of Gingrich’s at the time. Now that Perry has cratered and Gingrich has surged in the polls, Newt’s proposal — which he describes as a “flat tax” plan — is starting to receive more attention, and it goes even farther than most of his rivals in lowering taxes.
Pushing back against the charge that he supports “amnesty” for illegal immigrants, Newt Gingrich outlined another immigration reform proposal that would have “citizen juries” to decide whether illegal immigrants are fit to be granted legal status—but not citizenship.
On the trail in Florida on Friday, Gingrich explained that he would grant “path to legality” to upstanding illegal immigrants with deep family ties who could prove they could support themselves without federal welfare or other benefit programs.
Newt Gingrich is trying to carve out a middle way on illegal immigration, pushing a “Red Card Solution” that would essentially expand the guest-worker program without giving those immigrants a pathway to citizenship.
But Gingrich’s compromise isn’t eliciting much praise within the immigration community: Activists on both on left and right say that Red Carding fails to address fundamental problems with the U.S. immigration system.
Urging compassion on illegal immigration, Newt Gingrich offered a specific idea of how to reform the broken system during the Republican primary debate Tuesday night: the Red Card Solution.
“The Krieble Foundation is a very good red card program that says you get to be legal, but you don’t get a pass to citizenship,” Gingrich said. “And so there’s a way to ultimately end up with a country where there’s no more illegality, but you haven’t automatically given amnesty to anyone... I would urge all of you to look at the Krieble Foundation Plan.”
The 2012 Republican field hates Dodd-Frank. But when asked what they particularly detest about Obama’s Wall Street bill, the candidates don’t tend to get very specific. They blast Dodd-Frank for killing the economy through regulations and attack the Democratic authors of the legislation.
“If you want to put people in jail, I want to second what Michele (Bachmann) said, you ought to start with Barney Frank and Chris Dodd,” Newt Gingrich said during a debate last month.
How much of Herman Cain’s gravity-defying popularity has to do with his tax plan? Quite a bit, it seems. According to a new Des Moines Register poll, 29 percent of likely Republican caucus-goers in Iowa think they’d be better off under Cain’s 9-9-9 tax plan, with just 18 percent saying they’d be worse off. And, despite evidence that the plan is sharply regressive, the plan’s even more popular among Iowa Republicans making less than $50,000, with 34 percent saying they’d be better off.
The Tax Policy Center has released a detailed analysis of Rick Perry’s tax plan, and its findings aren’t pretty. The nonpartisan group — which is jointly run by Brookings and the Urban Institute — estimates that the tax cuts under Perry’s plan would reduce federal tax revenue by nearly $1 trillion in 2015 compared with current law, which assumes that the Bush tax cuts and other tax breaks due to the expire at the end of 2012 aren’t renewed. That would be a whopping 27 percent drop in total projected revenue.
Though originally billed as a flat tax, Rick Perry’s plan is anything but simple: it preserves the current tax code and Social Security system while allowing people to opt out of both into parallel system. As such, there are some big questions about how Perry’s plan would work in practice — and about who would stand to benefit the most.
1) How will the new tax breaks for the wealthy be paid for?
Perry’s plan allows individuals to either keep their current tax rate, including deductions, or chose a 20 percent flat tax instead. But Perry’s alternative would only stand to benefit wealthier Americans, so upper-income individuals would be inclined to chose the 20 percent rate, while lower-income folks would chose to keep what they have. The plan also eliminates the estate tax, the capital gains tax and other taxes on the wealthy. In the end, it would amount to “a huge tax cut for the wealthy,” according to Roberton Williams, senior fellow at the Tax Policy Center. “If you’re a rich guy, what’s not to like?”
In the current issue of New York magazine, Benjamin Wallace-Wells takes a great in-depth look at Mitt Romney’s career with Bain Capital, where the GOP front-runner once helped pioneer the use of leveraged buyouts as a means of slimming down corporations and making them more efficient:
Herman Cain has modified a key part of his tax plan, appearing to concede to criticism that his 9-9-9 plan would unduly punish the poorest Americans. Cain suggested today that poor families would be exempt from the individual 9 percent flat tax that in his plan. “Say amen, y’all. If you are at or below the poverty line…then you don’t pay that middle 9,” he said at a Friday speech in Detroit. “Your plan isn’t 9-9-9, it’s 9-0-9.” But both liberal critics and non-partisan policy analysts say that the changes are unlikely to eliminate the plan’s unequal treatment of rich and poor.
Ever wonder what Ron Paul’s America would look like? Then read the budget outline that Paul released as part of his 2012 presidential bid. It promises to cut $1 trillion during his first year in office, balance the budget by 2015, withdraw us from all foreign wars and eliminate five Cabinet-level agencies in the process. Economists across the political spectrum say the impact of such drastic government spending cuts would be majorly disruptive and harmful to the economy in the short term.
“At the scale he’s talking about, it’s unlikely you could have an immediate reduction in government without hurtling the economy into recession,” says Kevin Hassett, economic policy director for the American Enterprise Institute and chief economic adviser to John McCain’s 2000 presidential campaign. Hassett maintains that Paul’s plan for a limited government “would be really positive” in the long run. But he also believes that there would be better means to achieving that end. “I think that you could achieve his long-run objectives with less short-run disruptions,” he concludes.
Schumer: ‘We are going to be labeling tea party economics. Tea party double-dip recession. Tea party gridlock.’
This morning, I attended a reporter’s breakfast that Third Way held with Sen. Chuck Schumer (D-N.Y.). Here’s what caught my attention:
- “Where do we go from here on the jobs bill? We are going to divide it into different pieces and put them before the Senate and see if our Republican colleagues continues to block it piece by piece by piece. We hope they don’t.”
- “They don’t really have a plan for jobs. Nobody believes that deregulation, which may have some positive effects five years from now, is going to change this.”
- “We are going to be labeling tea party economics. Tea party double-dip recession. Tea party gridlock. We think that’s going to have a real effect. So in a sense, it’s a sword and a shield. The sword is our effort to do something on jobs. The shield is pointing out what’s keeping us from moving forward.”
The emergence of Occupy Wall Street has come just as Democratic leaders and President Obama himself are pivoting toward a more populist agenda. In recent days, a growing number of prominent Democrats have expressed solidarity with the movement’s anti-corporate message. But even in the heart of the nation’s capital, activists say that politicians shouldn’t be expecting their support — no matter how sympathetic they may be to a message about the widening income gap.
Did immigrants take the vast majority of new jobs in Texas? That’s the claim coming from the Center for Immigration Studies, an advocacy group for immigration reduction.
A new CIS research memo concludes that 81 percent of the jobs created in Texas since 2007 have gone to newly arrived immigrant workers—93 percent of whom aren’t US citizens and half of whom are illegal immigrants. The authors based their analysis on the Census Bureau’s Current Population Survey, and their conclusions have gained particular traction as attacks have mounted against Rick Perry’s immigration record. “Should Rick Perry be bragging about a job creation record if 40 percent went to illegal immigrants?” writes the National Review.
But Ray Perryman, head of an economics research firm based in Waco, Texas, argues that the paper has significant methodological problems, calling the eye-popping numbers in the study “highly suspect.” Perryman who has closely studied the economic impact of immigration in Texas and elsewhere, raises three basic questions about the study.
1) Does the study undercount the number of native workers getting jobs? First, Perryman believes that CIS’s methods may be overestimating the proportion of new jobs going to immigrant versus native-born workers. He points out that the study’s analysis of job growth doesn’t distinguish between “new jobs” that didn’t exist beforehand and openings that were created because of retirement, attrition, or other voluntary exits from the workforce.