In fairness, there's a Fox News poll from yesterday showing Romney down by nine points. That poll is nonsense. I don't believe that the spread is anything close to that wide. It might be five, but even that's stretching it for me. As a matter of fact, I always said that the only logic behind nominating Romney in the first place is that he loses by less than five, whereas someone like Newt Gingrich, Sarah Palin or Rick Santorum would be destroyed by ten or more.
While the Fox, and to a lesser extent, the CNN-Opinion Research, polls are probably wrong, Romney clearly is losing. It's very difficult to deny that at this point. He's trending the wrong way in almost all of the swing states. If you go by the 2004 map, you see that Romney needs to win almost all of them, while Obama only needs to win one or two of them.
With each passing day, it's getting harder and harder to see a winning map for Romney. Always remember, Obama just has to hold John Kerry's 2004 states (which seems probable) and hold either Ohio, Florida or some combination of the smaller states he picked up in '08 to be re-elected. Romney, on the other hand, needs to massively improve on John McCain's performance. And at this point, Romney isn't running away with even North Carolina or Virginia, both traditionally Republican states.
I think that Barack Obama could very well have lost this election, but it would have had to have been against someone with fewer potential negatives than the incumbent. In my opinion, Mitch Daniels or Jon Huntsman (and the Obama campaign feared Huntsman above all, which is why they sent him to China) could have won by the margin that Romney's going to lose.
Daniels and Huntsman are both well to the right of Romney, have better records and fewer prior positions to explain away, and are generally likable personalities. Those are all things that are killing Romney.
For example, every Republican that Mitt has faced off against in the last two cycles despises him. Conservatives within the party - and especially the Tea Party - still don't trust him, primarily for his celebrated ability to take six positions on a two-sided issue. Romney only ran for the 2008 nomination because he knew that there was no way for him to be re-elected in Massachusetts. He ran for exactly the same reason John Edwards did in 2004: He could either build a national brand or face the end of his career.
The conventional wisdom, along with the entirety of the conservative-leaning media has been saying for years now that Obama can't help but lose this election. The economy sucks and will almost certainly go back into recession, the President is struggling to hit just 50% job approval, and the only thing he's done that anyone remembers is massively unpopular.
As I've said over and over again, the conventional wisdom is massively fucking stupid. In the last hundred years, incumbents have only ever lost when they have faced a strong primary challenge (Taft, Ford, Carter and Bush 41,) a strong third-party challenge (Taft, Carter and Bush 41) or been Herbert Hoover in the midst of a Great Depression. Up until about this time last year, I thought it was entirely possible that Obama would face one or both of the first two possibilities. He didn't.
But even that doesn't fully explain why Romney is losing.
I have a theory that somebody put something in the water Boston during the Kennedy administration that makes their politicians horrible national nominees. Michael Dukakis and John Kerry were both historically well-positioned to win the presidency. George H.W. Bush was the first nominee to carry a third-term for his party since FDR and the first sitting vice-president to win the White House since Martin Van Buren. Bush's son had a weak economy and weaker approval numbers, and war that was rapidly going south to boot. The Bushes didn't so much win against Dukakis and Kerry as much as the Massachusetts dreams managed to lose. And the second Bush won by the thinnest re-election margin of any president in American history.
I'm pretty sure that the Obama campaign has studied the two relevant Bush campaigns (2000 was an anomaly for obvious reasons) because they're doing exactly the same thing to Romney that the Bushes did to Dukakis and Kerry - relentlessly keeping him on the defensive and making this a choice election, not a referendum.
As was true in 2004, if this year turns out to be a referendum on the incumbent, the incumbent will lose. The only way to avoid a referendum is dirty up the challenger so much that the electorate doesn't have a choice but to choose between the lesser of two evils. And in such scenarios, the electorate usually chooses the devil they know instead of the one that they don't.
If anything (and I wasn't even sure this was possible,) Romney's faring even worse than Dukakis and Kerry did. Dukakis at least went into his campaign with a seventeen point lead and Kerry was behind, but only slightly outside the margin of error.
Unlike Dukakis and Kerry, Romney isn't facing new attacks. Pretty much everything that Obama is throwing at Romney is recycled from the primaries earlier this year. Rick Perry, Newt Gingrich and Rick Santorum previewed Barack Obama's general election tactics for him. The only similarity is that Al Gore hit Dukakis with Willie Horton months before Bush 41 did, but most Democrats stupidly ignored it.
And just as you would expect that Romney would, he learned exactly the wrong lesson from the experience.
If Mitt knew anything about politics (which, even today, is a debatable question,) he knew that Perry, Gingrich and Santorum were all fatally flawed candidates with hardly a hope of winning the nomination. Accordingly, when they hammered him on Bain and his personal taxes, he did what anybody in his position would do: He carpet-bombed them with money and waited for their campaigns to implode, which they very quickly did.
What Romney seems to have failed to do is devise a strategy for defending against the attacks that he must have known would be coming in the general election. No serious person thinks that you can bury a sitting President of the United States in money for the simple fact that he gets so much free media for everything he does.
Worse than not trying to bury Obama in money, Romney's not even trying very hard to respond, thereby making exactly the same mistake that Kerry made during the Swift Boat Veterans for Truth debacle. Instead, his surrogates are coming up with ridiculous excuses to the attacks like "Romney retroactively resigned from Bain" three years after the fact and that he's "complying with the law" on his tax returns.
Is Obama running the sleaziest campaign that he can? Of course he is. What did anyone expect him to do, given the circumstances? But Romney is only half-heartedly defending himself, and therefore doing the President's job for him.
Look, If Mitt Romney's tax returns were going to favour his campaign, you can bet your ass that he would have released them in April or May. And I can almost guarantee you that he's going to release them anyway. The drumbeat from even Republicans is probably too much to resist. The only real question is if he can do so early enough to contain the damage from whatever's in them. And that window's rapidly closing. If he waits until after the convention - when most voters start paying serious attention to this mess - he's finished.
And there's a strong argument to made that Obama's been going easy on Romney regarding the tax return issue.
The single biggest takeaway from the one return that Romney has released that he paid considerably less than half of what someone in his bracket should be expected to. Because Republicans expect voters to be stupid, they've said that Romney paid a lower rate because the income was a return on an investment for which regular income taxes had already been paid.
Because Republicans are right in expecting voters to be stupid, it's worked somewhat.
The fact is that what Romney and his surrogates are describing is dividend payments. If they were telling the truth, they'd be absolutely right. Dividend payments should be taxed at a lower rate than actual income for obvious reasons. I don't believe that the government should be double-dipping into the investment money that's already been taxed. A plurality of liberals, including even Barack Obama, believe that, too.
Romney's problem is that his income isn't dividend payments, it's what's known in financial parlance as "carried interest." Carried interest is significantly different than dividend payments.
Many tax experts argue that the form of remuneration he receives, known as carried interest, is really just a fee charged by investment managers, so it should instead be taxed at the 35 percent rate. Lee Sheppard, a contributing editor at the trade publication Tax Notes, whose often controversial articles are read widely by tax professionals, is nonplussed that the Obama campaign has been so listless on the issue of carried interest. “Romney is the poster boy, the best argument, for taxing this profit share as ordinary income,” says Sheppard.Most people with a passing acquaintance with the English language will tell you that a dividend is quite different from a fee. A dividend is determined by a return on an investment and a fee is not. A fee, as defined by almost everyone who knows anything about anything, is a payment for services rendered or, as you and I know it, a salary.
The management fee is, of course, determined primarily by how much cash the business in question has on hand. The question then is how best to maximize it.
Private equity operates almost entirely on the basis of accumulating debt. If a company was thriving on it's own, a private equity intervention wouldn't be necessary, now would it? When a private equity firm comes into a business, they borrow massively against that businesses asserts and rake in their management fees.
Sometimes (as in the case of Staples, which is why Romney mentions it so often,) a company can survive the debt imposed on it by their new masters and prosper. More often than not, the business can't service the debt, goes into bankruptcy, fires its workers and sells off it's assets, which further goes into the carried interest fees collected by the private equity firm in question. If a private equity fund holds a company through bankruptcy, it stands to reason that, as a creditor, they'll get carried interest fees through that.
That, teenagers, decidedly ain't "the creative destruction of the marketplace" as much as it deliberately driving business into bankruptcy for no other reason than that they're worth more dead than alive.
You can say a lot about Obama for America, but you pretty clearly can't say that they're stupid. They'll put up an irredeemably sleazy ad that says MItt Romney magically gave some dude's wife cancer six years after the fact, and they'll tell you that Romney made a fortune doing it while paying hardly anything in taxes. Of course they'll do that.
What they absolutely won't tell you is that they tacitly support how Romney made that money and why he pays so little in taxes on it.
Sure, Obama wants you to know that Romney pays a lower effective rate than almost anyone that works for him, but they won't get into the weeds of why. And that's despite the fact that Barack Obama promised four years ago to eliminate the 15% carried interest tax rate.
As Rolling Stone's Matt Taibbi explains, it isn't in Obama's political interest to do so.
The reason the Obama administration hasn’t gone after this aggressively is probably the same reason it hasn’t fought harder to repeal that carried interest tax break (which Obama incidentally promised to do four years ago), and the same reason that everyone from Corey Booker to Bill Clinton has urged Obama to lay off the theme of private equity thuggery in his campaign against Romney. Big-time politicians are still afraid to explain to the American people how exactly it is that many Wall Street firms make their money, because they’re afraid to lose access to the crumbs those firms sometimes toss their way.
In the case of Romney, what we’ve mostly heard is that he’s a turnover specialist who sometimes creates jobs and sometimes eliminates them – a kind of ideologically-neutral efficiency consultant who takes a cut when poorly-run companies cut out the fat. The Obama ads about Bain have been emotionally effective, but they’re still frustratingly vague about the actual mechanics of these takeovers. We learn from these ads that a bunch of rich guys took over plants and fired workers, but what we don’t learn is how companies like Bain raise the money for those takeovers, why the plants subsequently become cash-poor, how this industry works generally, and not just at Bain.
(...)
Barack Obama is one of the few politicians with the communication skills to explain this to middle America, but he’s refusing to go there, probably because he’s still hoping for a post-election rapprochement with Wall Street. He wants to go after Bain Capital, but not private equity in general; he wants to go after Mitt Romney’s missing tax returns, but not the tax returns of all people like Mitt Romney.
That makes him look weak and indecisive, and it makes his message confusing.
If you ever wondered why I don't think that there will ever be meaningful tax reform in the United States, that goes a long way in explaining why.
President Obama could make carried interest and the way private equity funds work an effective populist campaign message, but he won't because he wants their money. And that goes double for the GOP.
Tax reform is predicated on the idea of lowering rates by closing loopholes. If the political class won't close the carried interest loophole, you're hallucinating if you think they'll go after the big ticket deductions, such as home mortgage interest, state and local taxes and employer provided health care. It's just never going to happen.
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