I’m noticing one overriding fact in writing about Republicans as they leer towards the end of their convention. I feel more and more nauseated by having to watch them, listen to them, sniff their pasty souls and outrageous deceptions. As one vivid example, Republicans have spent the last year and more raising alarms about the chief problem facing our country: the deficit. We owe trillions of dollars, is their mantra, and Obama has been the most irresponsible president in history in running up that debt. But as Matt Taibbi pointed out in a hard-hitting article in Rolling Stone yesterday (Aug. 29), it is actually Republicans, and Mitt Romney in particular, who are the debt mongers. Here is what he says:
Mitt Romney is one of the greatest and most irresponsible debt creators of all time. In the past few decades, in fact, Romney has piled more debt onto more unsuspecting companies, written more gigantic checks that other people have to cover, than perhaps all but a handful of people on planet Earth.
What Taibbi is referring to, of course, is Romney’s reign at Bain Capital, the “private equity” company he headed for years, and through which he made his big money. That’s because the way “leveraged buyouts” (LBOs) work is by the gathering of a small amount of capital (by companies like Bain) with which to borrow huge amounts of money (borrowing a lot with only a little is called “leverage”) from the likes of Goldman Sachs, so they can take over a given company. One example Taibbi uses is the buyout of KB Toys. In that case, Bain put up $18 million of its own, and then borrowed no less than $302 million from investment banks to complete the deal. Then Bain induced KB Toys to “redeem $121 million in stock and take out more than $66 million in bank loans - $83 million of which went directly into the pockets of Bain's owners and investors, including Romney.” Long story short, KB Toys went into bankruptcy (because, you see, the company is saddled with the huge debt Bain borrowed to buy it, and has to pay it off, often an impossibility, even after laying off half its workers), while Bain earned a return of “at least 370% on the deal” or up to 900% if the assertion of Big Lots, LB Toys’ former parent company, is correct. In dollar terms, that is, Bain added more than $300 million in debt to KB Toys, and took out more than $120 million in cash via fees and other perks. As usual, they managed to do this by giving big bonuses to the company’s top managers: “CEO Michael Glazer got an incredible $18.4 million, while CFO Robert Feldman received $4.8 million and senior VP Thomas Alfonsi took home $3.3 million.” Of course, mere workers were left with no jobs and no money at all when the company, formerly a successful maker of things, went belly up.
Now we have Mitt Romney, and his current attack dog, Paul Ryan (but really, doesn’t Ryan look like some bug-eyed Disney cartoon?) excoriating President Obama for piling up $5 trillion in debt. This is the Republican mantra. Debt will bring down our country. Debt is the cancer eating away at the American dream. Government simply can’t afford to spend any money on frills—by which they mean, of course, social programs like Medicare, Medicaid, Social Security, or any kind of welfare programs whatever (other than corporate welfare, of course). Austerity, that’s the only way to get out of our debt crisis. And the fact that Mitt is the great debt creator himself, or that economic history has proven that austerity fails to solve depressions, and in fact makes them worse—because the problem, as Paul Krugman has pointed out endlessly, is that austerity reduces employment, and people without jobs can’t afford to spend money, so businesses don’t invest, having no one to sell to, hence the depression—matters not a jot. Romney and most Republican movers and shakers, that is, are investors. And investors make their money by being paid back in currency that is more, not less valuable. If money that debtors pay back is less valuable, then investors lose. This is the whole story in a nutshell. The deficit becomes the prime concern of the investor class because they fear that inflation rises from it; and inflation, whether it be rising prices, or an increase in the money supply (which is what finances stimulus programs to put people back to work), cheapens the value of the dollars they have invested. Being paid back in cheaper dollars is a loss to them. What they really want is to be paid back in more valuable dollars—the result of deflation. They can’t opt for too much deflation, of course, because that would bring down the whole system. But enough deflation to bring sufficient pain to the poor bastards who have borrowed from them, and a somewhat greater return on their investments, is just right. This is the core of the “hard, courageous” choices they pretend to make as leaders: pain and deprivation for the working stiffs, the ones who borrow, so the investor class and financiers can have ever bigger cars and houses and yachts and private schools for their precious offspring.
This makes the upcoming election starker than any in recent memory. If the Republicans manage to convince the benighted American public of the rightness of their deficit analysis, and win this election to put Romney in the driver’s seat, with a Republican congress to allow him to implement his austerity program (austerity for you and me, that is, not for the investor class who can count on lower tax rates and bigger loopholes in which to hide their money), watch out. The nation will be even more the plaything of the moneyed class, while the so-called “entitlement” programs that keep the unemployed from falling off the edge entirely, will be decimated. We simply can’t afford them, will be the Republican rationale. Which is to say, we simply can’t afford the poor.
What we will be able to afford are even more and bigger mansions for the likes of corporate raiders like Romney, and even better financial deals for his backers—the Goldman Sachses, the Morgan Stanleys, the Citigroups, and dear old Sheldon Adelson. I may need a whole blog to cover the latter—the most foul, scabrous creature that has appeared on a national scene since Charles Dickens was portraying them in his novels—but here, suffice it to say, this is the guy who earns his money running a gambling empire, the Sands Corporation, that is even now under investigation by the Justice Department for allegations of bribery (in China) and money laundering (everywhere). Nice fellow. And Adelson has said in no uncertain terms, that he will personally spend at least $100 million to get Republicans elected not just to the presidency, but to Congress as well. If he succeeds, of course, there will be a new Attorney General, and (he no doubt hopes and intends) his legal problems will go away. There will also be a more generous and cooperative (read ‘obsequious’) policy towards Israel’s Likudniks, as well as a more aggressive policy towards Iran and other Israeli “enemies” like Syria, Lebanon, the Palestinians, and just about the whole middle east.
In short, a disaster. So while earlier I had suggested that it might be time for progressives to start thinking in terms of third-party candidates, the situation has become too dire for that. Obama must win a second term. Otherwise, we will be buried beneath a deluge of corporate money and power the likes of which we haven’t seen since Rockefeller, Carnegie, Morgan and their fellow robber barons ran the government as their own private fiefdom—though not even then would they have dared put one of their own, nakedly proclaiming his greed, in the White House.