http://news.linktv.org Link TV News Videos (Filtered by topics: Bain Capital) en-us Thu, 09 Aug 2012 11:56:00 -0700 Copyright 2011 Link Media, Inc. http://news.linktv.org/videos/pro-obama-ad-links-womans-cancer-death-to-mitt-romney?start=0 Things are turning ugly on the US presidential campaign trail. A new ad from Priorities USA, a pro-Obama super PAC. links a woman's cancer death to Mitt Romney and Bain Capital, the private equity firm he co-founded -- but critics are crying foul. Thu, 09 Aug 2012 11:56:00 -0700 http://news.linktv.org/videos/pro-obama-ad-links-womans-cancer-death-to-mitt-romney Mitt Romney, US presidential election, 2012, Attack ad, Joe Soptic, Priorities USA, Bain Capital, Barack Obama, Political action committee, Politics of the United States, Health insurance Things are turning ugly on the US presidential campaign trail. A new ad from pro-Obama super PAC Priorities USA links a woman's cancer death to Mitt Romney and Bain Capital, the private equity firm he co-founded -- but critics are crying foul. http://news.linktv.org/videos/democracy-now-july-11-2012?start=788 Republican presidential hopeful Mitt Romney is on the hot seat over where he stashes his vast personal fortune, estimated at up to $250 million. A new article reveals loopholes that allowed Romney to skirt tax laws and store millions in foreign tax havens. Wed, 11 Jul 2012 11:00:00 -0700 http://news.linktv.org/videos/democracy-now-july-11-2012 Mitt Romney, Mitt Romney presidential campaign, 2012, Tax avoidance and tax evasion, Tax haven, US presidential election, 2012, 2011-2013 Spanish Protests, American Legislative Exchange Council (ALEC), Anti-austerity protests, Israeli settlement, Israeli-occupied territories Republican presidential hopeful Mitt Romney is on the hot seat over where he stashes his vast personal fortune, estimated at up to $250 million. We speak with reporter Nick Shaxson, whose new Vanity Fair article, "Where the Money Lives," delves into the murky world of offshore finance and reveals loopholes that allowed Romney to skirt tax laws and store millions in foreign tax havens. The article has sparked the latest round of questions about Romney's taxes and offshore accounts, amplified by Romney's refusal so far to release more than one year's worth of tax returns. We begin today's show with a look at the fortune of Mitt Romney, one of the richest men to ever run for U.S. president. Where Romney stashes his personal wealth, estimated at up to $250 million, has been the focus of Democrats since Vanity Fair published a new piece called "Where the Money Lives." It delves into the murky world of offshore finance and reveals loopholes that allowed Romney to skirt tax laws and store millions in foreign tax havens. President Obama has tweeted three times about the article, saying, quote, "I don't know of any American president who has had a Swiss bank account," end-quote. That's originally a comment made by Romney's former Republican presidential rival, Newt Gingrich. The Vanity Fair article also draws attention to Romney's refusal so far to release more than one year's worth of tax returns. On Tuesday, the Obama campaign and top Democrats took to the airwaves and the internet with videos like this one. BRIAN ROSS: Romney has gone to great lengths to keep secret many important details about his wealth, including whether he uses tax loopholes available only to the super rich. A.B. STODDARD: This is really something that is not going to appeal to Americans, unless Mitt Romney comes out and says, "We must change our tax code because it is so gameable. I am one of the people who learned how to make an end run around the system. I have my money in other places around the world to avoid taxes. And so, we have to fix this problem." That's not what he's doing, and so people are going to react negatively to this. JOHN KING: Your father, he released his tax returns, and for not one year, but for 12 years. And when he did that, he said one year could be a fluke, perhaps done for show. Will you follow your father's example? Maybe. That Obama campaign video includes a clip of Romney from a CNN Republican presidential primary debate in South Carolina in January, responding to the moderator, CNN's John King. Now such ads have put Romney back on the hot seat. Despite reports of a still struggling economy and high unemployment, a new poll shows Obama has extended his lead over Romney to 6 percentage points. Speaking to Radio Iowa late Monday, Romney answered his critics about his secretive accounting. I realize that the president's failure to actually reignite the economy makes it hard for him to discuss his own record, and so he's going to try and attack me on every personal basis he can come up with. With regards to any foreign investments, I understand—and you understand, of course—that my investments have been held by a blind trust, have been managed by a trustee. I don't manage them, don't even know where they are. Those—that trustee follows all U.S. laws. All the taxes are paid, as appropriate. All of them have been reported to the government. There's nothing hidden there. There's nothing—if, for instance, you own shares in, let's say, Renault or in Fiat, you still have to pay taxes, you still have to disclose that in the United States. So, you know, I understand. The president is going to try and do anything he can to divert attention from the fact that his jobs record is weak and he has no plan to make things better. Well, for more, we're joined by investigative reporter Nick Shaxson, whose new article for Vanity Fair magazine is what began this latest round of questions about Romney's taxes and offshore accounts. It's called "Where the Money Lives." Nick Shaxson is also author of Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens. He's joining us via Democracy Now! video stream from Zurich, Switzerland. Nick Shaxson, welcome to Democracy Now! OK, tell us, where does the money live? Hi, good morning. Really, what my article explored was a series of questions. I mean, what—what you come out with is a series of questions. This is a very secretive set of investments. I mean, there is a lot of information available. He's required to make public disclosures. He's required to—well, he's released a tax return, one year's tax return. So there is a certain amount of information out there. But that information, in turn, has generated a lot questions. There are investments all over the place, in the United States and overseas. There are a number of investments that are routed through tax havens. You have to do a bit of digging to find that, to find out where a lot of those investments are. There was, as you mentioned, a Swiss bank account that came up that didn't have any particular tax resonance, because it was disclosed. But, you know, it didn't look good, and it made a big splash. My article also found some—found some—a corporation, for example, based in Bermuda that had not been disclosed before, that only suddenly popped up in the tax return, the 2010 tax return, which he released under pressure during the Republican primaries. And this Bermuda corporation raises a lot of questions which journalists before have asked him, and I've asked him, and there has been no reasonable answer about this. So—and there are a number of investments by Bain Capital, the company that he set up and left in—nominally left in 1999, that invests through places such as the Cayman Islands, so that it's a very, very complex picture. He has—on his tax return, he has page after page after page of foreign entities reported, and it is—you know, it's been a sort of Byzantine task trying to unravel what's going on in there. Nicholas Shaxson, you mentioned Bain Capital, that Romney left Bain Capital in 1999. But as you point out in your piece, as recently as this June, he earned two million—Romney earned $2 million in new income from Bain, despite having left the company 13 years ago. How is that possible? Well, he was—he was running Bain Capital from—he set it up in 1984 and ran it 'til 1999, where he left to run the Salt Lake City Olympic program. After he left in '99, there is some question as to whether or not he left full operation—operational management. The Romney camp said he did. There's a bit of stuff in the media at the moment questioning that. Until 2001, it appears that he may have had some operational management over the—over the Bain Capital itself. After that, he did leave—definitely, for sure, left operational management of Bain Capital, but he continues to receive income from it. Bain Capital has a number of—lots of funds, investing in all sorts of different things, many of them routed through the Cayman Islands. And those funds will generate returns. They will generate profits interest, which he receives over time, and he has been receiving—he has been receiving money. And as you mentioned, there's a new payment, became—came to light fairly recently. So he's continuing to receive a stream of income. There has been no release of information about what exactly his severance agreement was with Bain Capital. What is his relationship with the company? He has been asked this. His campaign has been asked this, and they have not come back with any good answer. So it may be that—you know, there was a new entity that appeared on his tax return, new Bain Capital entity, that appears to give him the potential to receive more income for many years to come, but there's been no clarity about this. So, we just don't know exactly how long his relationship is going to be with Bain Capital. If he's elected president, then it may be that he'd continue to receive substantial income from them while he's president. So, a lot of questions arising. I want to play clip of Vice President Biden joking about Romney's reluctance to release more than two years of tax returns. This is Biden on Tuesday addressing the National Council of La Raza's annual conference. VICE PRESIDENT JOE BIDEN: When his father was a candidate for president in 1968, his father released 12 years of tax returns, because he said — and I quote — "One year could be a fluke, perhaps done for show," end of quote. That was his father. His son has released only one year of his tax returns, making a lie of the old adage, "Like father, like son." He wants you to show your papers, but he won't show us his. It's kind of fascinating. Vice President Joe Biden. Nick Shaxson, let's talk about this issue of taxes. As you write in your article, it was Mitt Romney's father, George Romney, in 1967, ahead of his presidential campaign, who released 12 years of tax returns, saying, when explaining why so many years he released, "One year could be a fluke, perhaps done for show." That was Mitt's father, George Romney. Why is releasing tax returns so significant? What do you learn from them, and what don't we know about Mitt Romney? Well, I think that point about releasing only one year is very significant. I mean, for example, the Swiss bank account that pops up on the 2010 tax return, then—it was closed again after that, and it's now closed. The 2011 estimate that was produced revealed that that had been closed. And so, that was something that just kind of popped up and then went out of existence. So, you know, one year just gives you a snapshot. But the thing about income and taxes, income is a very flexible thing. When you're rich and you have wealthy tax advisers, you can massage your income. You can shift it around from year to year. You can play all sorts of games with it. So, unless you have a pattern, unless you're able to establish a pattern over a number of years to see what is—you know, what is—where the income is going and establish that, you know, as a sort of regular pattern, then it's very difficult to say anything for sure. I mean, he could have—you know, he could have shoveled a lot of income from one year into another year and made it look a particular way. We just don't know. So it's very important to get, you know, a lot more information than has been produced by Mitt Romney. We're going to break and then come back to this discussion. Our guest is Nick Shaxson. He has written a very interesting piece in Vanity Fair called "Where the Money Lives." We'll be back with him in just a minute. [break] Our guest is Nick Shaxson. His latest piece in Vanity Fair has created quite a firestorm, "Where the Money Lives." In fact, President Obama has tweeted it several times. And you've been accused of being a Obama stooge, just, you know, writing this piece for Obama. Your thoughts about President Obama, Nick? Well, personally, I—when Obama was elected, I guess I was quite hopeful. I mean, as a British person, I'm an outside observer to all of this. I must say I've been somewhat disappointed in him since he was elected, particularly because of his closeness to Wall Street. I think, you know, he's done some good things, for sure, but I'm—you know, the sort of high hopes I—and, I know, many others—had of him have been rather, you know, not—he hasn't followed through. And I think the closeness to Wall Street is a particular problem. And I think this is very relevant to the debate about Mitt Romney. I think one of the things that Mitt Romney epitomizes is the kind of—the whole financialization of corporations, where corporations, instead of—you know, where managers kind of turn their attention away from producing, you know, better goods and better services and for better prices and, you know, building productivity and long-term growth of companies. There has been a turn toward seeing companies through financial lenses, through Wall Street lenses, where, you know, you can extract—you know, shareholder value is the kind of god of everything, and you view everything through that prism, so it doesn't matter if you start extracting big loans out of—you know, borrow huge amounts of money out of the companies and pay yourself a special dividend, as Bain Capital and many other private equity companies have done. That is seen to be a good thing. But, you know, this is part of a whole kind of process of financialization, which I think is something that Mitt Romney really epitomizes. And I think, you know, Obama is certainly not—he doesn't epitomize that, but I think, still, his closeness to the financial sector is a worry for me. One of the things that you point out, Nicholas Shaxson, in your piece is Romney's average personal tax rate, which you say is 15 percent, substantially lower than what most middle-income Americans pay. Can you explain how that's possible? Yeah, the main reason for that is the way—this is about the U.S. tax code. This is the way that privileged people like Mitt Romney and other—and hedge fund managers and private equity titans receive their income. They receive it as a thing called carried interest, where—which many people would argue is just like ordinary income. It's just like a salary earned by anybody else and should earn, you know, the top tax rate, but instead, for historical reasons and reasons of lobbying, it is taxed at a very low rate of 15 percent. And Mitt Romney's tax rate is a little bit lower than that. He has—for various other reasons, he has deductions and earns other kinds of income, as well. But it's not too far off 15 percent. But carried interest is—the tax treatment of carried interest is the sort of central reason why his tax rate is so much lower than many Americans. Let's play a clip of reporter Ryan Grim on MSNBC saying the deficit Romney opposes is caused in part by the use of offshore tax havens to dodge U.S. taxes. RYAN GRIM: One reason we don't have that money is that so many rich people can afford sophisticated accountants who can hide the money in offshore tax havens, and then they can hire lobbyists who then write loopholes into the tax code. And now he wants to run for president, complaining about the deficit and saying that the tax code is too complicated. I mean, at some point, you know, you've just got to say, "Wait a minute. What you talking about here?" How common is Mitt Romney's use of these tax havens? How does the tax code shape what he and the extremely wealthy pay in taxes and what they're able to avoid paying, Nick Shaxson? Well, it is pretty common, and particularly for financial players. There is this kind of image that has grown up over the years of tax havens as kind of exotic side shows to the global economy. What my research discovered was that tax havens are much, much, much bigger than almost anybody realizes, that the offshore system has grown absolutely enormous. It is now right at the heart of the global economy. If you look at all of the stuff that Wall Street is doing, if you look at the number—you know, which companies have got the biggest number of subsidiaries in offshore tax havens, it's banks, it's the financial sector, it's Wall Street, the city of London. So, tax havens, if you want to understand the power—if you're worried about the power of the financial sector, as I and many other people are, then you have to look at tax havens. Tax havens are essentially, in many ways, a kind of escape route. And it's not just about taxes. There is this—you know, it has been estimated that the United States is losing 100 billion U.S. dollars a year to tax havens, through legal and illegal tax games that are played by individuals and corporations. But there is much more to it than that. There is this issue of the complexity of the tax code. And essentially, what happens is, is tax havens, what they are is they provide escape routes, escape routes from the responsibilities of society, whether those responsibilities are taxes or financial regulations or criminal laws or disclosure rules or whatever. And so, financial sector players, in particular, are able to take their money offshore and to do things they're not allowed to do at home. What happens next is that the supposedly onshore country will then put in place a defense against that, so United States has all sorts of defenses against tax haven erosion. But then the lawyers and the accountants and the financial players will find ways around those new laws, those defenses. And bit by bit, the whole game becomes more and more complicated. And these—so these places, such as the Cayman Islands, are zero tax kind of platforms where financial players put their money, and then they start kind of playing this game of trying to find ways through the U.S. tax code. And, you know, and trying to stop this—trying to stop the erosion of tax haven is like kind of playing—trying to play a game of whack-a-mole. You know, you knock one thing down, and then one pops up elsewhere. So they're very, very slippery kind of entities to deal with, slippery jurisdiction to deal with. And politically, they're very difficult to deal with, as well, in countries around the world, because it is generally the wealthiest and most influential members of society who use tax havens, and so they are quite often the biggest supporters of tax havens. So, politically, it's very difficult to get real change that really cracks down properly on this. And so, what you have is a reduction of the tax bill and reduction of the regulatory burden on the wealthiest members of society, the biggest corporations. And as a result, other people, you know, smaller companies, small businesses, individuals have to pay higher tax as a result. It's a great big kind of distortion in the whole economic system. And the fact that Mitt Romney is so kind of steeped in this system and is such a friend to this system is, for me, profoundly worrying. But, Nicholas Shaxson, is it in fact unclear, then, whether Mitt Romney has broken any laws in paying the tax rate that he has? OK, in paying the tax rate that he has, what we get down to—and this is kind of the crux of my article. It has been asserted repeatedly by the Romney camp and by the Republican Party and by many others that Romney, OK, he's a kind of clever financial acrobat—he can do all these backflips and has fantastic accountants—but he's never actually broken any laws. That's the kind of assertion, that's the mantra, and it has been generally accepted in the U.S. media, that assertion. What my article—one of the things—the main things my article sought to do was to question that, say, "Is that really true? Is that actually true?" And the answer to that question of whether or not he broke any laws is not completely straightforward. Essentially, in the area of tax and in various other areas, the dividing line between what's legal and what's illegal is usually not very clear. There's usually a kind of fuzzy grey zone between the two. And when you're talking about offshore tax havens, that grey zone is often quite big. And I think one of the reasons my article has been so widely read is that it kind of establishes a pattern—in the area of tax but in other areas, too—that Mitt Romney appears to be very confident striding into this grey zone, where you can't directly say, "OK, you've broken the law there," but you can say, you know, "Come on, that's going a little bit—pushing it a little bit far." And in some cases, he seems to have been really quite robust, quite even aggressive, in pushing into this grey zone. And I think that's something that hasn't really yet—you know, hadn't really yet been properly appreciated, and I think it is an important pattern to look at. Mitt Romney makes more than the median U.S. household income in just five hours. In an average work year, there are 2,080 work hours. He made $21.7 million in 2010. The median household income is about $50,000. It will take the median household 433 years to make what Romney made in 2010. And, Nick Shaxson, now that's not illegal, by any means. It puts him certainly in a very different category than other Americans. But you end your piece by talking about—saying that "Bain Capital has said it did everything required by the U.S. government ... U.S. law doesn't require Bain to enforce the tax laws of its investors' home countries, but the presence of Swiss trustees, Bahamas trusts, [and] Panama corporations would raise red flags with any tax authority." It's what Mitt Romney says about this, you say, is what's of concern. Nicholas? Yes. This is a very important point. People see offshore tax havens as kind of, you know, shady little islands somewhere, and there's certain element of truth to that. But one of the things that I explore in my book, Treasure Islands, is that, over the decades, over the past few decades, particularly since the 1970s, the United States has itself been turning itself, quite deliberately, into a tax haven in its own right, a gigantic tax haven, attracting foreign money, a lot of illicit foreign money, from overseas through offering things such as special tax exemptions and secrecy, financial secrecy. The United States is one of the biggest offerers of financial secrecy in the world. Both at a federal level, these facilities are offered, and at a state level, with states such as Delaware and Nevada and Wyoming kind of offering very, very low-cost, but very strong forms of secrecy through corporations. And this is a profoundly difficult thing. And one of the—one of many vehicles through which this illicit money can come in is the private equity business. There is no requirement on private equity companies to enforce the tax laws of other countries. A filing that I uncovered during my research was—showed exactly these strange entities in the Bahamas and in, you know, Swiss trustees and Panama. All of these places are renowned tax havens, renowned places where—which offer—one of their big selling points is secrecy. And these investors that came in, we don't know exactly who they are. We have some ideas. We know that some of them came from El Salvador, a country which at the time was suffering a terrible civil war. We don't know if these investors were evading their home countries' taxes, but it's possible. And the presence of these, you know, Panama, Swiss and Bahamas entities certainly does raise red flags, and it is profoundly worrying. Nick Shaxson, we want to thank you very much for being with us. His latest piece in Vanity Fair about Romney's fortune is called "Where the Money Lives." Nicholas Shaxson is also author of the book, Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens_. You can go to our website at democracynow.org to see our have">interview with him about this. He was joining us from Zurich, Switzerland. Thanks so much for being with us. http://news.linktv.org/videos/democracy-now-june-6-2012?start=1746 Joseph Stiglitz talks about how economic inequality is now greater in the United States than any other industrialized nation. "What's even more disturbing is we've [also] become the country with the least equality of opportunity," he says. Wed, 06 Jun 2012 10:01:00 -0700 http://news.linktv.org/videos/democracy-now-june-6-2012 Wisconsin gubernatorial recall election, 2012, Scott Walker (politician), Joseph Stiglitz, United States, Politics of the United States, Economic inequality, Wisconsin, Tom Barrett, Occupy movement, Campaign finance Several months before Occupy Wall Street, the Nobel Prize-winning economist Joseph Stiglitz wrote "Of the 1%, by the 1%, for the 1%," an article for Vanity Fair. He returns to the subject in his new book looking at how inequality is now greater in the United States than any other industrialized nation. He notes that the six heirs of the Wal-Mart fortune command wealth equivalent to the entire bottom 30 percent of American society. "It's a comment both on how well off the top are and how poor the bottom are," Stiglitz says. "It's really emblematic of the divide that has gotten much worse in our society." On Tuesday, Bloomberg News reported that pay for the top CEOs on Wall Street increased by more than 20 percent last year. Meanwhile, census data shows nearly one in two Americans, or 150 million people, have fallen into poverty or could be classified as low-income. "United States is the country in the world with the highest level of inequality [of the advanced industrial countries], and it's getting worse," Stiglitz says. "What's even more disturbing is we've [also] become the country with the least equality of opportunity." We turn now to an issue that's gained increasing prominence in the last year: increasing inequality in the United States and the divide between the richest 1 percent and the rest of the country. Bloomberg News reported Tuesday that pay for the top CEOs on Wall Street increased by over 20 percent last year. The article is based on analysis of data reported to the Securities and Exchange Commission and finds that the substantial rise comes after a 26 percent jump in CEO salaries in 2010. Meanwhile, census data shows nearly one in two Americans, or 150 million people, have fallen into poverty or could be classified as low-income. Thirty-eight percent of African-American children and 35 percent of Latino children live in poverty. Well, our next guest has helped to popularize the expression "the 1 percent" and brought to light the causes behind increasing inequality in the United States. Joseph Stiglitz is a Nobel Prize-winning economist. During the Clinton administration from '93 to '97, he served on the Council of Economic Advisers. His May 2011 Vanity Fair article, "Of the 1%, by the 1%, for the 1%," serves as the basis of his new book, _The Price of Inequality: How Today's Divided Society Endangers Our Future_. Joseph Stiglitz teaches at Columbia University. We welcome you back to Democracy Now! Nice to be here. I mean, this figure you have on page eight of your book, when you say, "Consider the Walton family: the six heirs to the Wal-Mart empire command wealth of $69.7 billion, which is equivalent to the wealth of the entire bottom 30 percent of U.S. society." It's a comment both on how well off the top are and how poor the bottom are. And it's really emblematic of the divide that has gotten much worse in our society. One of the points I try to make in the book is, none of this is inevitable. It's not just market forces. United States is the country in the world with the highest level of inequality, and it's getting worse. The highest level? Of the advanced industrial countries. The highest level. Highest level of the advanced industrial countries. And to me, what's even more disturbing is, we've become the country with the least equality of opportunity of all the advanced industrial countries for which there's data. You know, we think of ourselves as a land of opportunity, American Dream. And there are all examples that we know of where people have made it—you know, immigrants, other people who have made it to the top. But what matters really are the numbers, the chances. You know, what are your life chances if you had the misfortune of being born to a poor family or somebody whose parents are not well educated? What are your chances of going from the bottom to the middle or the bottom to the top? And they are lower in the United States than in other advanced industrial countries. I mean, it's a striking fact, because you talk about it a few times in your book, that now in old Europe there is more class mobility than there is in the U.S. And, of course, we always here think of Europe as being very class rigid. That's right. And this is a change, in many respects. And one of the other points I try to emphasize in the book is it has consequences. It has consequences for our sense of identity, of what we are, but it also has even more, you know, you might say, narrow economic consequences, because what it means is that if you have the—you know, make the mistake of choosing the wrong parents, the likelihood is that you're not going to live up to your potential. And we are, in that sense, wasting our most important assets: our human resources. You also say that, ultimately, the rich will also pay an extraordinary price for this inequality. How? Well, we're all in the same boat together. You know, there are a lot of people who are very bright, who work very hard in developing countries, emerging markets, who have very low incomes. The point is that all of us benefit from our education system, our legal system, the way our whole society functions. In those parts of the world where there's a large divide, mainly in, you know, emerging markets, developing countries, where there's a large divide, societies fall apart. There's political, social, economic turmoil. And in that context, not even the 1 percent can do that well. I wanted—I wanted to ask you about the people we value and the people we don't. You have an amazing set of examples. You say, "Few are inventor" — you say, "By looking at those at the top of the wealth distribution, we can get a feel [for] the nature of this aspect of America's inequality. Few are investors who have reshaped technology, or scientists who have reshaped our understandings of the laws of nature. Think of Alan Turing, whose genius provided the mathematics underlying the modern computer. Or of Einstein. Or of the discoverers of the laser (in which Charles Townes played a central role) or John Bardeen, Walter Brattain, and William Shockley, the inventors of transistors. Or of Watson and Crick, who unraveled the mysteries of DNA, upon which rests so much of modern [medicine]. None of them, who made such large contributions to our well-being, are among those most rewarded by our economic system." We have very different names that are tied to these so-called inventions, like of the internet. That's right. And the point is that the theory that was developed in the 19th century to justify the inequality that was emerging with capitalism was marginal productivity theory. It was the notion that those who contributed the most to society will get bigger rewards. It was a sense, you might say, of moral justification, but also an argument for economic efficiency. And what we now realize is the individuals who have made the most important contributions are not those that are at the top. The people—many of the people who are at the top, for instance, are those financiers who brought the world to the brink of ruin. And the moment of Great Recession, I think, was a really telling moment in our rethinking of what was going on. You know, we all sort of understood that there was something wrong. But in that crisis where you saw so many bankers who had brought the world to the brink of ruin, who actually brought their companies to the brink of ruin, walk off with pay in the millions of dollars, it was very clear there was a disconnect between private rewards and social returns, really undermining the theory that was the basis of the justification of inequality in our society. So when did financiers, though, come to have this kind of power? Well, it's been an evolution. But I think, in my mind, a really telling change was the repeal of Glass-Steagall, where we told the banks, you know, "Don't focus on what you're supposed to be doing, which is providing credit to new businesses to expand businesses." We brought together the commercial banks, which were the basis of the kind of prudent lending, and investment banks, who took rich people's money and gambled. And we put it together. We created these financial institutions that were too big to fail. And the result of that was they grew larger and larger, and the risk taking, gambling, speculation dominated, rather than the lending, which is the basis of a growing, productive economy. But in a way, the evolution of our economy, more generally, began about 1980. That's—if I would say, where's there a dividing point—where the CEOs began to realize that they could take a larger and larger share of the corporate income. They understood that we have deficient corporate governance laws. And so, we didn't require a say in pay. We didn't require—you know, shareholders are supposed to own the firms, but the shareholders had no say in the pay of the companies—of the managers of the companies that they were supposed to own. A very strange situation. I mean, if you have somebody working for you, you would say you ought to have some say in their pay. And the result of that is they took a larger and larger share. And if you look at those at the top—as I say, they're not the Watson and Cricks, the people who made these big changes—they're corporate CEOs. Who is Berners-Lee? Well, these are people who, you know, made the internet, the people who— But we think Mark Zuckerberg. We think Gates. We think Jobs. You know, all of these played an important role. You know, we shouldn't underestimate the importance of that. But all these rest on a foundation, and that foundation was largely publicly provided, publicly funded. You couldn't have a program if you didn't have a computer. And you don't have a computer unless you do the mathematical research that is—provided the foundation. That was the—Turing. Alan Turing. That was Alan Turing. You don't have internet programs unless you have the internet. And that was something that the U.S. government helped to develop, and these other people that helped develop the World Wide Web. So, you know, the irony is that the people who provided the foundation on which our entire modern economy is based are not the people who have done well. I want to ask you about the presidential race and about Republican candidate Mitt Romney's record. Newark Mayor Cory Booker, a supporter of President Obama, generated controversy last month when he defended Romney's former company, Bain Capital. Booker spoke on Meet the Press. MAYOR CORY BOOKER: I have to just say, from a very personal level, I'm not about to sit here and indict private equity. It's—to me, it's just this—we're getting to a ridiculous point in America, and especially that I know. I live in a state where pension funds, unions and other people are investing in companies like Bain Capital. If you look at the totality of Bain Capital's record, it ain't—they've done a lot to support businesses, to grow businesses. And this, to me—I'm very uncomfortable. Joseph Stiglitz, your comments on the role of private equity, and on Bain Capital, in particular? Well, let me first say, the financial sector is very important. A financial—you know, no economy can work well without a well-functioning financial sector. The problem with the United States is that our financial sector hasn't been doing what it's supposed to be doing. It's supposed to provide finance to create jobs, not to destroy jobs. It's supposed to allocate capital, manage risk. The concern about Bain Capital are twofold. One is that much of what they were doing was financial restructuring, which meant not creating jobs, taking money out of companies, putting them in a very fragile situation in which, a few years later, they go over the cliff, and jobs get destroyed. So, it is important to restructure firms to make them sustainable, efficient. But that wasn't what a lot of the enterprises that they were engaged in doing. The second problem, and I think most people find very disturbing, is that we have a tax law that says that those who are engaged working for this kind of restructuring—an important activity if it's done well and done in a way that creates more productivity, more jobs—why should those people pay so little taxes? And that—you know, going back to the upper 1 percent, their average tax rate is about 15 percent. We tax speculators at a lower rate than we tax people who work for a living. It makes no sense. Mayor Booker got a lot of flak for saying, sort of, "Back off Bain." But a number of Democrats have been saying that, and there's a war in the Obama administration now. Do you attack Romney on Bain, the company that he is running on, more than being governor of Massachusetts? And a lot of the Democrats are involved with Bain or have support from people at Bain or other similar companies. Your president, President Clinton—you served as the chief of economic advisers—he said, "Back off Bain." And you can see this tug-of-war going on, not only about Bain, though, and now you see them not really talking about Bain and talking about what you were just mentioning, Joe Stiglitz, but also about his offshore investments, offshore bank accounts, himself and his company. Can you talk about this and the fact that Clinton is one of the champions of saying, "Don't raise this. He's a good businessman"? Yeah. Well, first, we should understand, you know, that Romney is running on the platform: it's good to have a businessman running the White House; we do a better job. You know, the last MBA president we had was George Bush, and I don't think anybody would say that the economy was well run in those eight years. Deficits soared, and the economy finally went over the brink and into the Great Recession. So that qualification that he's touting, if I looked at that, you know, a Harvard MBA, I'm not sure I would say that that is a kind of certification that I would want for running the country. You have to understand public policy, not just how to make money for yourself, which they do a good job of doing, but that's not what's entailed in running the country. I have some sympathy and say, let's not make this personal. Let's try to keep this at the basic level of principles. And, you know, the basic level of principles are relatively simple: people should be paying their share of the taxes. And paying share of taxes mean you don't pay half the rate of other people who are working for a living. It means you don't use offshore centers to escape taxes. You know, why is so much banking going on in the Cayman Islands? It's not that the weather there is really particularly suited for moving electrons and running banks. You know, it's there for one reason only: to escape regulation, to escape taxation, to undermine the basic principles of our economy. And it's wrong for somebody who is trying to run for the president, who should be symbolizing, you know, making their fair share, to be using offshore accounts to avoid taxes and to avoid regulation. The other point is, businesses are supposed to be creating value, creating jobs in America, and new American business. Now, this is where we have a tax system that's distorted. But when you're running for the president, you should be out there and saying we don't want a distorted tax system that encourages jobs to move abroad, that encourages speculation over real wealth creation. If he had come out and said, like Warren Buffett, that it's wrong for him—that Warren Buffett to have a lower tax rate than his secretary—if he came out and said it's wrong to have a tax structure that encourages jobs to move abroad, you know, then I might have a little bit more sympathy. But so far, I haven't heard that. Ed Conard, the former managing director at Bain Capital, who has contributed to Romney, advises Romney, and argues explicitly for doubling income inequality? Yeah. I find that astounding. I debated him yesterday, actually. The point is, he believes in trickle-down economics, a notion you throw a lot of money at the top and everybody does a lot better because of their innovation. Given the level of inequality in the United States, I wish it were true, because if it were true, we'd all be doing very well. But the evidence is, you know, overwhelmingly against that. We've had a growth at the top, but what's been happening to the average American? He's not doing very well. Most Americans today are worse off than they were a decade-and-a-half ago. And the people at the bottom have done even worse. If you started looking at, say, male workers, a full-time male worker, people who work for a living, for a male worker today, the average, typical—half above, half below—his income today is lower than it was in 1968, almost a half-century ago. So the American economy has been delivering for the people at the very top, but it's not been delivering for most Americans. And you can see it in another way in the data. In the periods like the period after World War II, we grew together, inequality was shrinking, and we grew much more rapidly than we have since 1980, where we've been growing apart. So the notion that more inequality leads to more growth, to put it quite frankly, is nonsense. http://news.linktv.org/videos/democracy-now-june-1-2012?start=2638 The Justice Department has ordered Florida to end a controversial voter purge that has primarily targeted Latino and Democratic voters. New constitutional amendment aims to overturn the Citizens United decision by banning corporate campaign cash. In victory for marriage equality, appeals court rules Defense of Marriage Act discriminates against same-sex couples. And "Inside Job" director Charles Ferguson asks: where are the criminal prosecutions for the financial crisis? Plus headlines, and more.<br /> Fri, 01 Jun 2012 11:06:00 -0700 http://news.linktv.org/videos/democracy-now-june-1-2012 United States, Politics of the United States, Same-sex marriage, Defense of Marriage Act, US Department of Justice, Mitt Romney, Ted Deutch, LGBT rights, Freedom to Marry, United States courts of appeals The Labor Department has just announced the United States economy gained only 69,000 jobs in May and the unemployment rate rose to 8.2 percent. We air part two of our interview with Academy Award-winning director Charles Ferguson, who first examined the network of academic, financial and political players who contributed to the nation's financial crisis in his documentary, "Inside Job." In his new book, "Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America," Ferguson draws on newly released court filings to continue his investigation. Ferguson notes the Clinton administration oversaw the most important financial deregulation, and since then, "We've seen in the Obama administration very little reform and no criminal prosecutions, and the appointment of a very large number of Wall Street executives to senior positions in the government, including some people who were directly responsible for causing significant portions of the crisis." Ferguson also calls for raising the salaries of senior regulators and imposing stricter rules for how soon they can lobby for the private sector after leaving the public sector. The Labor Department has just announced the U.S. economy gained only 69,000 jobs in May and the unemployment rate rose to 8.2 percent. We end today's show with part two of my conversation with the Academy Award-winning director Charles Ferguson. He first examined the network of academic, financial and political players who contributed to the nation's financial crisis in his documentary, Inside Job. Charles Ferguson now has a new book out that's called Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America. It's based on newly released court filings that reveal how major players contributed to the financial crisis. I began by asking Charles Ferguson about a recent comment of Mitt Romney's. President Obama is an old-school liberal whose first instinct is to see free enterprise as the villain and government as the hero. America counted on President Obama to rescue the economy, to tame the deficit and help create jobs. Instead, he bailed out the public sector, gave billions of your dollars to companies of his friends, and added almost as much debt to this country as all the prior presidents combined. The consequence is that we are now enduring the most tepid recovery in modern history. And let's follow that up with the interview he did with CNN's Soledad O'Brien when he talked about not being concerned about the poorest Americans. I'm in this race because I care about Americans. I'm not concerned about the very poor. We have a safety net there. If it needs repair, I'll fix it You just said, "I'm not concerned about the very poor," because they have a safety net. And I think there are lots of very poor Americans who are struggling who would say that sounds odd. Can you explain that? Well, you had to finish the sentence, Soledad. I said I'm not concerned about the very poor that have a safety net, but if it has holes in it, I will repair them. Got it. OK. The challenge right now—we will hear from the Democrat Party the plight of the poor, and—and there's no question, it's not good being poor, and we have a safety net to help those that are very poor. But my campaign is focused on middle-income Americans. My campaign—I mean, you can choose where to focus. You can focus on the rich. That's not my focus. You can focus on the very poor. That's not my focus. My focus is on middle-income Americans. Mitt Romney. Charles Ferguson, your response? Mr. Romney is doing a good job of focusing on the rich, including himself, with a net worth of almost $300 million. Unfortunately, the best way to—in the long run, to help the poor in the United States is to give them fairness and opportunity. And that is not something that Mr. Romney's policies or the direction of the country have been giving us recently. And his comments about the adequacy of America's safety net also seem highly questionable. In fact, in this morning's New York Times, there's an article about the imminent cessation of long-term unemployment benefits for very large numbers of Americans who have been unemployed for, in some cases, up to four years. So, I fear that a Romney administration would not bring us a solution to America's economic problems. And Mitt Romney's advisers you referred to earlier, as you talk about, for example, Larry Summers and President Obama? Who does Mitt Romney turn to? And also talk about the fact that he is running for president not as the former governor of Massachusetts but as the former head of the private equity firm Bain. That is what he is saying is his—are his credentials for the job. Yes, both disturbing. Glenn Hubbard is one of his principal economic advisers, and Hubbard not only has the major financial conflicts of interest that I detail in the film and also in the book, he also, when he was head of the Council of Economic Advisers in the George W. Bush administration, was one of the principal designers of the Bush tax cuts, half of whose benefits went to the upper 1 percent of the population. So, I do not think that Mr. Romney's choice of economic advisers indicates his concern for the middle class, needless to say not for the poor. With regard to his record at Bain Capital, the private equity industry, in general, and including Bain Capital, is an industry that is largely unregulated. And although in some cases private equity deals, private equity transactions, have had benefits for companies that are required, for the most part private equity is an extremely efficient machine for making lots of money for private equity executives, in some cases at the direct expense of the companies themselves or the government. One thing that is not widely discussed about the private equity industry is that it frequently depends on hidden subsidies from the government, of the sort that Mr. Romney says he opposes. For example, for-profit—largely unregulated, for-profit universities depend extremely heavily on subsidized student loans, and there have been very widespread abuses of—by private universities that have been owned by private equity firms, including Goldman Sachs. I want to go to a clip, Charles Ferguson, of your Academy Award-winning film, Inside Job. The clip includes your interview with Scott Talbott, one of the top lobbyists for the Financial Services Roundtable. In the U.S., the banks are now bigger, more powerful and more concentrated than ever before. MARTIN WOLF: There are fewer competitors. A lot of smaller banks have been taken over by big ones. JPMorgan today is even bigger than it was before. NOURIEL ROUBINI: JPMorgan took over first Bear Stearns and then WaMu. Bank of America took over Countrywide and Merrill Lynch. Wells Fargo took over Wachovia. After the crisis, the financial industry, including the Financial Services Roundtable, worked harder than ever to fight reform. The financial sector employs 3,000 lobbyists, more than five for each member of Congress. Do you think the financial services industry has excessive political influence in the United States? No. I think that every person in the—in the country is represented here in Washington. And you think that all segments of American society have equal and fair access to the system? The—you can walk into any hearing room that you would like. Yes, I do. One can walk into any hearing room. One cannot necessarily write the kind of lobbying checks that your industry writes or engage in the level of political contributions that your industry engages in. Between 1998 and 2008, the financial industry spent over $5 billion on lobbying and campaign contributions. And since the crisis, they're spending even more money. That was Matt Damon, the actor, narrating the Academy Award-winning film, Inside Job. Charles Ferguson directed that film and then went on to write Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America. Take the lessons we learn from Scott Talbott, Charles Ferguson, to what we're seeing today, for example, with Jamie Dimon and the $3 billion loss at JPMorgan Chase. Who has access? Who doesn't? His lobbying, for example, JPMorgan Chase and Jamie Dimon, against the Volcker Rule and what this all means? Is it strong enough? The fierce lobbying about the implementation of the Volcker Rule is yet another example of this phenomenon. The banking industry, including and frequently led by JPMorgan and Mr. Dimon, have spent enormous sums of money to push back against strong implementation of the Volcker Rule and other aspects of even the relatively weak regulation embodied in Dodd-Frank legislation. And Mr. Dimon repeatedly has said that he doesn't think that such regulation is required. And indeed, one of the most astounding things about JPMorgan's recent loss is that regulation is still sufficiently weak that we don't know what that trade actually is. We do not know the details of that transaction, because they do not have to be publicly disclosed. It has been said by people who apparently do know something about the transaction that if the situation in Europe worsens, the losses could extend upwards of $5 billion. And this is a loss that occurred in a relatively forgiving economic environment, at least in the United States, and in a bank that is widely regarded, probably correctly regarded, as the best-run bank in the United States. So, it doesn't give one a great deal of security about what could happen if we have another financial crisis and what could happen in other less well-run, less financially strong banks. You talk about the crisis in Predator Nation being not just, you know, a Republican affair or a Democrat affair, it's a bipartisan affair. Talk about the role of Democrats in all of this. The role of Democrats, I would say, has been at least as great as the role of Republicans. The most important deregulatory legislation was actually passed in the Clinton administration, championed by Robert Rubin, who was secretary of the treasury, a former CEO of Goldman Sachs, and then also Larry Summers, who was first deputy treasury secretary and then treasury secretary. First there was the repeal of Glass-Steagall, the law that separated investment from commercial banking. And then, in 2000, the— That was under Clinton. Yes, under the Clinton administration. And then, in the year 2000, also in the Clinton administration, the Commodity Futures Modernization Act, which actually banned regulation of all so-called over-the-counter derivatives, including the credit default swaps and many other instruments that were at the heard of the 2008 crisis. To his credit, President Clinton has actually publicly stated that he now regrets having passed that law. But it was definitely championed by major fractions of the Democratic Party and policy leadership. And then, of course, we've seen in the Obama administration very little reform and no criminal prosecutions, and the appointment of a very large number of Wall Street executives to senior positions in the government, including some people who were directly responsible for causing significant portions of the crisis. You also talk about how the once-revered figures Alan Greenspan and Larry Summers have simply become courtiers of the—to the elite. Unfortunately, I think that's an apt description. Of course, Alan Greenspan was a private economist before he went into the government, and had even taken money in the 1980s for lobbying on behalf of savings and loan executives who were later sent to prison, including Charles Keating. Larry Summers was first an academic and actually did not start working for the financial sector until after he left government for the first time, when he was president of Harvard and then subsequently a professor at Harvard. But he has consistently favored the financial sector's interests in all ways, and now he has made, by this point, tens of millions of dollars from the financial sector. The issue of regulatory capture—you talk about the importance of more regulation, but what about the—that revolving door between business and regulators? Very important problem. Difficult to address, but not impossible. I think that one very important measure that would be very beneficial would be raising the salaries, dramatically raising the salaries, of senior regulators and senior civil service personnel responsible for economic policy. In some other nations, senior regulators are very well paid, hundreds of thousands, even in some cases over a million dollars a year. And if that's the case, their temptation to favor banks, to go to work for banks, is of course much reduced. And I think that increased pay for the public sector should be accompanied by much stricter restrictions on what people can do after they leave government. Of course, people should be permitted to work in the private sector, but, for example, a five- or 10-year ban on lobbying would, I think be a very beneficial thing.