Mitt Romney: Asset stripper and vulture capitalist

By Webster G. Tarpley

 It is now widely known that Mitt Romney has been closely allied to the Israeli Prime Minister Biniamin Netanyahu since the two worked closely together at the Boston Consulting Group starting in 1976."

Washington DC, July 4, 2012 - According to most polls, Democratic president Barack Obama and Republican challenger Mitt Romney remained locked in a very close race for the White House. For many people in the United States and around the world, Obama is now the devil they know, and they judge his presidency a failure. But the November election will offer a choice. It is therefore time to learn more about Willard “Mitt” Romney.

Mitt Romney, US Republican candidate

It is now widely known that Mitt Romney has been closely allied to the Israeli Prime Minister Biniamin Netanyahu since the two worked closely together at the Boston Consulting Group starting in 1976. Netanyahu has advised Romney on politics, and Romney has reciprocated with advice about finance and economics. Romney has boasted in Republican presidential debates that he plans to make his friend Netanyahu the arbiter of US Middle East policy.

In addition, leading members of the discredited neocon faction, anxious to return to the positions of power from which they were ousted at the end of the Bush Cheney years, are advising Romney on foreign policy. Neocons working for Romney now include Robert Kagan, Eliot Cohen, Cofer Black, and Robert Joseph. Romney can be expected to give the Israelis what they want, in contrast to the personal friction which has arisen between Obama and Netanyahu.

Mitt Romney was born into an extremely wealthy Republican family: his father, George Romney, controlled the automobile company American Motors, which went bankrupt as a result of his management. George Romney was then elected Governor of Michigan, ran unsuccessfully for president in 1968, and served as Secretary for Housing and Urban Development under Nixon. Romney’s mother once ran for U.S. Senate.

In 1984, Romney was one of the founders of Bain Capital, a Wall Street firm which had a business model of buying troubled companies and then looting them for the maximum gain which could be extracted. Called private equity or leveraged buyouts, the Bain method was often to load the endangered companies with masses of junk bond debt, while using the borrowed money to buy up the voting stock to secure total control for further destructive measures. Some workers were fired, with pay cuts, speedup, and the loss of health care and pension benefits imposed on the rest. Bain often exploited these companies for several years, letting them go bankrupt and close some months after Bain had left the scene.

And these were the lucky victims. In other cases, Bain would immediately break up the targeted company, and then sell off the pieces to make a quick profit. The workers would lose jobs, their paychecks, their severance pay, health benefits, pensions, and their human dignity, often being told that their services were no longer required and being escorted out of the plant by armed security guards. In the case of a Kansas City steel mill looted by Bain, 750 workers were fired immediately and the plant was permanently closed. Bain was able to shift $44 million of pension costs to the federal government and the US taxpayer, while Bain realized $12 million on an $8 million investment, and also collecting $4.5 million in consulting fees, according to Reuters. Romney’s activities at Bain are more accurately described as asset stripping or vulture capitalism. Many would call Romney a hedge fund hyena. Using these looting methods, Bain Capital during the 14 years it was run by Romney gave investors a profit of 113% per year, about a dozen times the rate of interest on investment grade bonds.

Romney supporters celebrate this orgy of economic looting as “creative destruction,” arguing that it makes the overall economy more efficient. In reality, Romney’s approach to wrecking companies is a case study of why laissez-faire capitalism cannot survive: Corporate raiding like this destroys jobs and production, even as it increases the amount of debt and speculative paper in the system. But this is the method which Romney says he wants to bring to the United States government.

After 14 years at Bain Capital, Romney is estimated to be worth $250 million. He still receives large annual payments from Bain. Romney has hidden much of this wealth outside of the United States, including in a Swiss bank account, a dozen investment vehicles in the Cayman Islands, and in Sankaty High Yield Asset Investors Ltd., a Bermuda tax shelter which Romney had failed to report on the compulsory disclosure forms which are required of all presidential candidates. Romney has resisted making his federal income tax returns from past years available to the public, usually a routine procedure; so far only his 2010 tax return has been disclosed

Incredibly, the US federal tax code favors and subsidizes sociopathic activities of the type carried on by Romney during his years at Bain Capital. US taxpayers earning more than about $388,000 per year as wage income can expect to pay a tax rate of 35% on all earnings over that amount. But, since the profits of Bain Capital and similar firms have been classified by corrupt lawmakers under the heading of “carried interest,” they are considered a capital gain, and are therefore taxed up to any amount at a mere 15%. This means that the US taxpayer is giving looters like Romney a generous tax subsidy to encourage them to wreck more companies, more lives, and more communities. People who actually work for a living, by contrast, are penalized.

Romney’s wife is Ann Romney, who plays an active role in his presidential campaign. Ann’s private life became controversial some months ago when a Democratic supporter accused Ann, who was born to wealth, of never having worked a day in her life. Ann pointed self-righteously to her five sons, and intoned that every mother is a working mother. Lost in the recriminations was the question of how many domestic servants Ann had to help her in the home. This question is difficult to answer for past years, but Internet sources indicate that the Romney family today employs a total of 27 domestic servants. This puts the Romneys’ home life beyond the imagination of most working Americans.

According to Mitt, Ann drives “a couple of Cadillacs.” Ann’s hobby is the aristocratic and elitist sport of dressage, involving a public competition among trained horses. Ann says that her devotion to dressage comes from the role that horseback riding has played as a therapy against her affliction with multiple sclerosis. Some of Ann’s horses have cost over $100,000 each - about three times what the average American family makes in a year - plus tens of thousands of dollars per year for stables, fodder, and related care.

In the 1981 French presidential campaign, incumbent Valéry Giscard d’Estaing was hurt by his horseback riding hobby: when asked by a journalist what was his favorite way to relax, the aristocratic Giscard replied: “Equitation at my domicile.” Many voters concluded that the president was out of touch with the needs of ordinary working people. The same conclusion applies to Romney. The choice between Obama and Romney is therefore bleak.