This week may mark the beginning of the end of Mitt Romney’s campaign for President. If you’ve been around Logarchism a while, you know I’m not typically one to get all breathless at the barest whisper of trouble for a Republican candidate. This looks different from the typical political gaffe, though.
See, here’s the problem. Romney has an existing reputation for a lack of conviction, for changing his stance on issues more frequently than the weather changes. It’s why the Etch-a-Sketch statement was so damaging for him, despite for most candidates being merely a benign statement of fact. The expected Republican Presidential candidate has a rapidly building narrative that he is having trouble defending. Let’s start with the narrative, and then look at possible defenses and their respective pitfalls.
The narrative is that Mitt Romney did not leave Bain Capital in 1999 as he had originally claimed, but rather left years later. During the time he claims to have left, but was still the sole shareholder, chairman, president, and CEO, Bain was engaged in many practices that are not playing well with Americans, whether liberal, moderate, or conservative. Bain was responsible for offshoring numerous jobs. The investment firm purchased KB Toys, a company that failed after Bain bled it of cash. They also invested in a company that profited from disposing aborted fetuses, an activity that is particularly repulsive to Republicans.
If he did, in fact, leave in 1999, then the Bain SEC filings, which called him the sole owner, chairman, president, and CEO, look suspect. Under the most charitable light, given how much of his net worth was tied up in the firm, it would be irresponsible in the extreme for him to be entirely hands-off. This is particularly concerning when you consider that he points to his Bain experience as evidence of how well he can run the nation.
In the midst of this comes information regarding Romney’s individual retirement accounts (IRAs). Somehow, he managed to amass $102 million in his accounts. Now, there’s absolutely nothing wrong with having a large sum of money in a bank account. Where the problem arises is how one gets that much into an IRA, because there are strict laws governing one’s ability to contribute to those accounts, due to their advantageous taxation. In order for Romney’s IRAs to have reached such stratospheric levels, he would have had to not only contribute the maximum each year, but also garner a return on investment that itself is stratospheric. If we had access to his tax returns for the years he is unwilling to share, we would find out how he did this.
How might this have happened? It turns out that he could have put shares of Bain Capital into his IRA. And it just so happens that if you own a company in its entirety, you can put as many shares as you wish into your IRA account by merely valuing the shares at zero. It’s quite the tax loophole.
So how does Romney combat all of these skeletons that are rattling in his closet?
Some of the Bain activities have a modicum of defense. KB may well have failed anyway, for example. But Bain chose to take money out of the dying firm, hastening that demise, rather than work on transforming the company into something that could have survived. By analogy, instead of treating the patient, the doctor chose to harvest the organs, draw the blood, and profit from them. In other words, even the more charitable view of “it would have happened anyway” doesn’t play especially well.
Romney can provide evidence that he really did depart in February of 1999. But Romney’s aide’s statement that he retired “retroactively” from Bain has the same problem that Senator John Kerry had when he said that he voted in favor of a bill before he voted against it. To those who understand the inside intricacies, the statement makes sense, but to most voters it sounds slippery, as if they’re being lied to…even if they’re not.
If Romney packed his IRA with Bain shares at zero basis, he has yet another problem. This is the sort of behavior that gets less sophisticated Americans livid. It’s the sort of activity that makes the Occupy crowd complain bitterly…right alongside Tea Partiers.
The Bain story seems to be becoming something of a matryoshka doll. Each part of the story you open reveals another story. It’s matryoshka dolls all the way down, which may turn into a neverending story from now until November.
- The Secret Behind Romney’s Magical IRA (bloomberg.com)
- Video: Fmr. Bain partner: ‘Legally’ Romney was CEO of Bain until 2002 (msnbc.msn.com)
- Is Mitt Romney’s Magical IRA Akin To His Magical Mormon Underwear? (dekerivers.wordpress.com)
- How Romney Never Really Left Bain (alan.com)
- Wait–Maybe THIS Is How Mitt Romney Got So Rich… (businessinsider.com)
- Bain Document Listed Romney As “Managing Memeber” In 2002 (alan.com)
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