domingo, 6 de marzo de 2016
viernes, 4 de marzo de 2016
¿Por qué Donald Trump representa un peligro para Mitt Romney?
Sencillo: Donald Trump está luchando por salvar a Estados Unidos de lo que ya se vislumbra como una gran deuda impagable. ¿Y quien se beneficia con el incrementeo de esa deuda y sueña incluso con comprala, para de esa forma adueñarse del país?Mitt Romney y sus aliados.Esa es la verdadera razón por la cual Mitt Romney le regaló las elecciones del 2012 a Barack Husserin Obama y ahora se la está sirviendo en bandeja de plata a Hillary Clinton.
Greed and Debt: The True Story of Mitt Romney and Bain Capital
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The
great criticism of Mitt Romney, from both sides of the aisle, has
always been that he doesn't stand for anything. He's a flip-flopper,
they say, a lightweight, a cardboard opportunist who'll say anything to
get elected.
The critics couldn't be more wrong. Mitt Romney is no tissue-paper man. He's closer to being a revolutionary, a backward-world version of Che or Trotsky, with tweezed nostrils instead of a beard, a half-Windsor instead of a leather jerkin. His legendary flip-flops aren't the lies of a bumbling opportunist – they're the confident prevarications of a man untroubled by misleading the nonbeliever in pursuit of a single, all-consuming goal. Romney has a vision, and he's trying for something big: We've just been too slow to sort out what it is, just as we've been slow to grasp the roots of the radical economic changes that have swept the country in the last generation.
The incredible untold story of the 2012 election so far is that Romney's run has been a shimmering pearl of perfect political hypocrisy, which he's somehow managed to keep hidden, even with thousands of cameras following his every move. And the drama of this rhetorical high-wire act was ratcheted up even further when Romney chose his running mate, Rep. Paul Ryan of Wisconsin – like himself, a self-righteously anal, thin-lipped, Whitest Kids U Know penny pincher who'd be honored to tell Oliver Twist there's no more soup left. By selecting Ryan, Romney, the hard-charging, chameleonic champion of a disgraced-yet-defiant Wall Street, officially succeeded in moving the battle lines in the 2012 presidential race.
Like John McCain four years before, Romney desperately needed a vice-presidential pick that would change the game. But where McCain bet on a combustive mix of clueless novelty and suburban sexual tension named Sarah Palin, Romney bet on an idea. He said as much when he unveiled his choice of Ryan, the author of a hair-raising budget-cutting plan best known for its willingness to slash the sacred cows of Medicare and Medicaid. "Paul Ryan has become an intellectual leader of the Republican Party," Romney told frenzied Republican supporters in Norfolk, Virginia, standing before the reliably jingoistic backdrop of a floating warship. "He understands the fiscal challenges facing America: our exploding deficits and crushing debt."
Debt, debt, debt. If the Republican Party had a James Carville, this is what he would have said to win Mitt over, in whatever late-night war room session led to the Ryan pick: "It's the debt, stupid." This is the way to defeat Barack Obama: to recast the race as a jeremiad against debt, something just about everybody who's ever gotten a bill in the mail hates on a primal level.
Last May, in a much-touted speech in Iowa, Romney used language that was literally inflammatory to describe America's federal borrowing. "A prairie fire of debt is sweeping across Iowa and our nation," he declared. "Every day we fail to act, that fire gets closer to the homes and children we love." Our collective debt is no ordinary problem: According to Mitt, it's going to burn our children alive.
And this is where we get to the hypocrisy at the heart of Mitt Romney. Everyone knows that he is fantastically rich, having scored great success, the legend goes, as a "turnaround specialist," a shrewd financial operator who revived moribund companies as a high-priced consultant for a storied Wall Street private equity firm. But what most voters don't know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. This is the plain, stark reality that has somehow eluded America's top political journalists for two consecutive presidential campaigns: 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.
By making debt the centerpiece of his campaign, Romney was making a calculated bluff of historic dimensions – placing a massive all-in bet on the rank incompetence of the American press corps. The result has been a brilliant comedy: A man makes a $250 million fortune loading up companies with debt and then extracting million-dollar fees from those same companies, in exchange for the generous service of telling them who needs to be fired in order to finance the debt payments he saddled them with in the first place. That same man then runs for president riding an image of children roasting on flames of debt, choosing as his running mate perhaps the only politician in America more pompous and self-righteous on the subject of the evils of borrowed money than the candidate himself. If Romney pulls off this whopper, you'll have to tip your hat to him: No one in history has ever successfully run for president riding this big of a lie. It's almost enough to make you think he really is qualified for the White House.
The unlikeliness of Romney's gambit isn't simply a reflection of his own artlessly unapologetic mindset – it stands as an emblem for the resiliency of the entire sociopathic Wall Street set he represents. Four years ago, the Mitt Romneys of the world nearly destroyed the global economy with their greed, shortsightedness and – most notably – wildly irresponsible use of debt in pursuit of personal profit. The sight was so disgusting that people everywhere were ready to drop an H-bomb on Lower Manhattan and bayonet the survivors. But today that same insane greed ethos, that same belief in the lunatic pursuit of instant borrowed millions – it's dusted itself off, it's had a shave and a shoeshine, and it's back out there running for president.
Mitt Romney, it turns out, is the perfect frontman for Wall Street's greed revolution. He's not a two-bit, shifty-eyed huckster like Lloyd Blankfein. He's not a sighing, eye-rolling, arrogant jerkwad like Jamie Dimon. But Mitt believes the same things those guys believe: He's been right with them on the front lines of the financialization revolution, a decades-long campaign in which the old, simple, let's-make-stuff-and-sell-it manufacturing economy was replaced with a new, highly complex, let's-take-stuff-and-trash-it financial economy. Instead of cars and airplanes, we built swaps, CDOs and other toxic financial products. Instead of building new companies from the ground up, we took out massive bank loans and used them to acquire existing firms, liquidating every asset in sight and leaving the target companies holding the note. The new borrow-and-conquer economy was morally sanctified by an almost religious faith in the grossly euphemistic concept of "creative destruction," and amounted to a total abdication of collective responsibility by America's rich, whose new thing was making assloads of money in ever-shorter campaigns of economic conquest, sending the proceeds offshore, and shrugging as the great towns and factories their parents and grandparents built were shuttered and boarded up, crushed by a true prairie fire of debt.
Mitt Romney – a man whose own father built cars and nurtured communities, and was one of the old-school industrial anachronisms pushed aside by the new generation's wealth grab – has emerged now to sell this make-nothing, take-everything, screw-everyone ethos to the world. He's Gordon Gekko, but a new and improved version, with better PR – and a bigger goal. A takeover artist all his life, Romney is now trying to take over America itself. And if his own history is any guide, we'll all end up paying for the acquisition.
Willard "Mitt" Romney's background in many ways suggests a man who was born to be president – disgustingly rich from birth, raised in prep schools, no early exposure to minorities outside of maids, a powerful daddy to clean up his missteps, and timely exemptions from military service. In Romney's bio there are some eerie early-life similarities to other recent presidential figures. (Is America really ready for another Republican president who was a prep-school cheerleader?) And like other great presidential double-talkers such as Bill Clinton and George W. Bush, Romney has shown particular aptitude in the area of telling multiple factual versions of his own life story.
"I longed in many respects to actually be in Vietnam and be representing our country there," he claimed years after the war. To a different audience, he said, "I was not planning on signing up for the military. It was not my desire to go off and serve in Vietnam."
Like John F. Kennedy and George W. Bush, men whose way into power was smoothed by celebrity fathers but who rebelled against their parental legacy as mature politicians, Mitt Romney's career has been both a tribute to and a repudiation of his famous father. George Romney in the 1950s became CEO of American Motors Corp., made a modest fortune betting on energy efficiency in an age of gas guzzlers and ended up serving as governor of the state of Michigan only two generations removed from the Romney clan's tradition of polygamy. For Mitt, who grew up worshipping his tall, craggily handsome, politically moderate father, life was less rocky: Cranbrook prep school in suburban Detroit, followed by Stanford in the Sixties, a missionary term in which he spent two and a half years trying (as he said) to persuade the French to "give up your wine," and Harvard Business School in the Seventies. Then, faced with making a career choice, Mitt chose an odd one: Already married and a father of two, he left Harvard and eschewed both politics and the law to enter the at-the-time unsexy world of financial consulting.
"When you get out of a place like Harvard, you can do anything – at least in the old days you could," says a prominent corporate lawyer on Wall Street who is familiar with Romney's career. "But he comes out, he not only has a Harvard Business School degree, he's got a national pedigree with his name. He could have done anything – but what does he do? He says, 'I'm going to spend my life loading up distressed companies with debt.' "
Romney started off at the Boston Consulting Group, where he showed an aptitude for crunching numbers and glad-handing clients. Then, in 1977, he joined a young entrepreneur named Bill Bain at a firm called Bain & Company, where he worked for six years before being handed the reins of a new firm-within-a-firm called Bain Capital.
In Romney's version of the tale, Bain Capital – which evolved into what is today known as a private equity firm – specialized in turning around moribund companies (Romney even wrote a book called Turnaround that complements his other nauseatingly self-complimentary book, No Apology) and helped create the Staples office-supply chain. On the campaign trail, Romney relentlessly trades on his own self-perpetuated reputation as a kind of altruistic rescuer of failing enterprises, never missing an opportunity to use the word "help" or "helped" in his description of what he and Bain did for companies. He might, for instance, describe himself as having been "deeply involved in helping other businesses" or say he "helped create tens of thousands of jobs."
The reality is that toward the middle of his career at Bain, Romney made a fateful strategic decision: He moved away from creating companies like Staples through venture capital schemes, and toward a business model that involved borrowing huge sums of money to take over existing firms, then extracting value from them by force. He decided, as he later put it, that "there's a lot greater risk in a startup than there is in acquiring an existing company." In the Eighties, when Romney made this move, this form of financial piracy became known as a leveraged buyout, and it achieved iconic status thanks to Gordon Gekko in Wall Street. Gekko's business strategy was essentially identical to the Romney–Bain model, only Gekko called himself a "liberator" of companies instead of a "helper."
Here's how Romney would go about "liberating" a company: A private equity firm like Bain typically seeks out floundering businesses with good cash flows. It then puts down a relatively small amount of its own money and runs to a big bank like Goldman Sachs or Citigroup for the rest of the financing. (Most leveraged buyouts are financed with 60 to 90 percent borrowed cash.) The takeover firm then uses that borrowed money to buy a controlling stake in the target company, either with or without its consent. When an LBO is done without the consent of the target, it's called a hostile takeover; such thrilling acts of corporate piracy were made legend in the Eighties, most notably the 1988 attack by notorious corporate raiders Kohlberg Kravis Roberts against RJR Nabisco, a deal memorialized in the book Barbarians at the Gate.
Romney and Bain avoided the hostile approach, preferring to secure the cooperation of their takeover targets by buying off a company's management with lucrative bonuses. Once management is on board, the rest is just math. So if the target company is worth $500 million, Bain might put down $20 million of its own cash, then borrow $350 million from an investment bank to take over a controlling stake.
But here's the catch. When Bain borrows all of that money from the bank, it's the target company that ends up on the hook for all of the debt.
Now your troubled firm – let's say you make tricycles in Alabama – has been taken over by a bunch of slick Wall Street dudes who kicked in as little as five percent as a down payment. So in addition to whatever problems you had before, Tricycle Inc. now owes Goldman or Citigroup $350 million. With all that new debt service to pay, the company's bottom line is suddenly untenable: You almost have to start firing people immediately just to get your costs down to a manageable level.
"That interest," says Lynn Turner, former chief accountant of the Securities and Exchange Commission, "just sucks the profit out of the company."
Fortunately, the geniuses at Bain who now run the place are there to help tell you whom to fire. And for the service it performs cutting your company's costs to help you pay off the massive debt that it, Bain, saddled your company with in the first place, Bain naturally charges a management fee, typically millions of dollars a year. So Tricycle Inc. now has two gigantic new burdens it never had before Bain Capital stepped into the picture: tens of millions in annual debt service, and millions more in "management fees." Since the initial acquisition of Tricycle Inc. was probably greased by promising the company's upper management lucrative bonuses, all that pain inevitably comes out of just one place: the benefits and payroll of the hourly workforce.
Once all that debt is added, one of two things can happen. The company can fire workers and slash benefits to pay off all its new obligations to Goldman Sachs and Bain, leaving it ripe to be resold by Bain at a huge profit. Or it can go bankrupt – this happens after about seven percent of all private equity buyouts – leaving behind one or more shuttered factory towns. Either way, Bain wins. By power-sucking cash value from even the most rapidly dying firms, private equity raiders like Bain almost always get their cash out before a target goes belly up.
This business model wasn't really "helping," of course – and it wasn't new. Fans of mob movies will recognize what's known as the "bust-out," in which a gangster takes over a restaurant or sporting goods store and then monetizes his investment by running up giant debts on the company's credit line. (Think Paulie buying all those cases of Cutty Sark in Goodfellas.) When the note comes due, the mobster simply torches the restaurant and collects the insurance money. Reduced to their most basic level, the leveraged buyouts engineered by Romney followed exactly the same business model. "It's the bust-out," one Wall Street trader says with a laugh. "That's all it is."
Private equity firms aren't necessarily evil by definition. There are many stories of successful turnarounds fueled by private equity, often involving multiple floundering businesses that are rolled into a single entity, eliminating duplicative overhead. Experian, the giant credit-rating tyrant, was acquired by Bain in the Nineties and went on to become an industry leader.
But there's a key difference between private equity firms and the businesses that were America's original industrial cornerstones, like the elder Romney's AMC. Everyone had a stake in the success of those old businesses, which spread prosperity by putting people to work. But even private equity's most enthusiastic adherents have difficulty explaining its benefit to society. Marc Wolpow, a former Bain colleague of Romney's, told reporters during Mitt's first Senate run that Romney erred in trying to sell his business as good for everyone. "I believed he was making a mistake by framing himself as a job creator," said Wolpow. "That was not his or Bain's or the industry's primary objective. The objective of the LBO business is maximizing returns for investors." When it comes to private equity, American workers – not to mention their families and communities – simply don't enter into the equation.
Take a typical Bain transaction involving an Indiana-based company called American Pad and Paper. Bain bought Ampad in 1992 for just $5 million, financing the rest of the deal with borrowed cash. Within three years, Ampad was paying $60 million in annual debt payments, plus an additional $7 million in management fees. A year later, Bain led Ampad to go public, cashed out about $50 million in stock for itself and its investors, charged the firm $2 million for arranging the IPO and pocketed another $5 million in "management" fees. Ampad wound up going bankrupt, and hundreds of workers lost their jobs, but Bain and Romney weren't crying: They'd made more than $100 million on a $5 million investment.
To recap: Romney, who has compared the devilish federal debt to a "nightmare" home mortgage that is "adjustable, no-money down and assigned to our children," took over Ampad with essentially no money down, saddled the firm with a nightmare debt and assigned the crushing interest payments not to Bain but to the children of Ampad's workers, who would be left holding the note long after Romney fled the scene. The mortgage analogy is so obvious, in fact, that even Romney himself has made it. He once described Bain's debt-fueled strategy as "using the equivalent of a mortgage to leverage up our investment."
Romney has always kept his distance from the real-life consequences of his profiteering. At one point during Bain's looting of Ampad, a worker named Randy Johnson sent a handwritten letter to Romney, asking him to intervene to save an Ampad factory in Marion, Indiana. In a sterling demonstration of manliness and willingness to face a difficult conversation, Romney, who had just lost his race for the Senate in Massachusetts, wrote Johnson that he was "sorry," but his lawyers had advised him not to get involved. (So much for the candidate who insists that his way is always to "fight to save every job.")
This is typical Romney, who consistently adopts a public posture of having been above the fray, with no blood on his hands from any of the deals he personally engineered. "I never actually ran one of our investments," he says in Turnaround. "That was left to management."
In reality, though, Romney was unquestionably the decider at Bain. "I insisted on having almost dictatorial powers," he bragged years after the Ampad deal. Over the years, colleagues would anonymously whisper stories about Mitt the Boss to the press, describing him as cunning, manipulative and a little bit nuts, with "an ability to identify people's insecurities and exploit them for his own benefit." One former Bain employee said that Romney would screw around with bonuses in small amounts, just to mess with people: He would give $3 million to one, $3.1 million to another and $2.9 million to a third, just to keep those below him on edge.
The private equity business in the early Nineties was dominated by a handful of takeover firms, from the spooky and politically connected Carlyle Group (a favorite subject of conspiracy-theory lit, with its connections to right-wingers like Donald Rumsfeld and George H.W. Bush) to the equally spooky Democrat-leaning assholes at the Blackstone Group. But even among such a colorful cast of characters, Bain had a reputation on Wall Street for secrecy and extreme weirdness – "the KGB of consulting." Its employees, known for their Mormonish uniform of white shirts and red power ties, were dubbed "Bainies" by other Wall Streeters, a rip on the fanatical "Moonies." The firm earned the name thanks to its idiotically adolescent Spy Kids culture, in which these glorified slumlords used code names, didn't carry business cards and even sang "company songs" to boost morale.
The seemingly religious flavor of Bain's culture smacks of the generally cultish ethos on Wall Street, in which all sorts of ethically questionable behaviors are justified as being necessary in service of the church of making money. Romney belongs to a true-believer subset within that cult, with a revolutionary's faith in the wisdom of the pure free market, in which destroying companies and sucking the value out of them for personal gain is part of the greater good, and governments should "stand aside and allow the creative destruction inherent in the free economy."
That cultlike zeal helps explains why Romney takes such a curiously unapologetic approach to his own flip-flopping. His infamous changes of stance are not little wispy ideological alterations of a few degrees here or there – they are perfect and absolute mathematical reversals, as in "I believe that abortion should be safe and legal in this country" and "I am firmly pro-life." Yet unlike other politicians, who at least recognize that saying completely contradictory things presents a political problem, Romney seems genuinely puzzled by the public's insistence that he be consistent. "I'm not going to apologize for having changed my mind," he likes to say. It's an attitude that recalls the standard defense offered by Wall Street in the wake of some of its most recent and notorious crimes: Goldman Sachs excused its lying to clients, for example, by insisting that its customers are "sophisticated investors" who should expect to be lied to. "Last time I checked," former Morgan Stanley CEO John Mack sneered after the same scandal, "we were in business to be profitable."
Within the cult of Wall Street that forged Mitt Romney, making money justifies any behavior, no matter how venal. The look on Romney's face when he refuses to apologize says it all: Hey, I'm trying to win an election. We're all grown-ups here. After the Ampad deal, Romney expressed contempt for critics who lived in "fantasy land." "This is the real world," he said, "and in the real world there is nothing wrong with companies trying to compete, trying to stay alive, trying to make money."
In the old days, making money required sharing the wealth: with assembly-line workers, with middle management, with schools and communities, with investors. Even the Gilded Age robber barons, despite their unapologetic efforts to keep workers from getting any rights at all, built America in spite of themselves, erecting railroads and oil wells and telegraph wires. And from the time the monopolists were reined in with antitrust laws through the days when men like Mitt Romney's dad exited center stage in our economy, the American social contract was pretty consistent: The rich got to stay rich, often filthy rich, but they paid taxes and a living wage and everyone else rose at least a little bit along with them.
But under Romney's business model, leveraging other people's debt means you can carve out big profits for yourself and leave everyone else holding the bag. Despite what Romney claims, the rate of return he provided for Bain's investors over the years wasn't all that great. Romney biographer and Wall Street Journal reporter Brett Arends, who analyzed Bain's performance between 1984 and 1998, concludes that the firm's returns were likely less than 30 percent per year, which happened to track more or less with the stock market's average during that time. "That's how much money you could have made by issuing company bonds and then spending the money picking stocks out of the paper at random," Arends observes. So for all the destruction Romney wreaked on Middle America in the name of "trying to make money," investors could have just plunked their money into traditional stocks and gotten pretty much the same returns.
The only ones who profited in a big way from all the job-killing debt that Romney leveraged were Mitt and his buddies at Bain, along with Wall Street firms like Goldman and Citigroup. Barry Ritholtz, author of Bailout Nation, says the criticisms of Bain about layoffs and meanness miss a more important point, which is that the firm's profit-producing record is absurdly mediocre, especially when set against all the trouble and pain its business model causes. "Bain's fundamental flaw, at least according to the math," Ritholtz writes, "is that they took lots of risk, use immense leverage and charged enormous fees, for performance that was more or less the same as [stock] indexing."
'I'm not a Romney guy, because I'm not a Bain guy," says Lenny Patnode, in an Irish pub in the factory town of Pittsfield, Massachusetts. "But I'm not an Obama guy, either. Just so you know."
I feel bad even asking Patnode about Romney. Big and burly, with white hair and the thick forearms of a man who's stocked a shelf or two in his lifetime, he seems to belong to an era before things like leveraged debt even existed. For 38 years, Patnode worked for a company called KB Toys in Pittsfield. He was the longest-serving employee in the company's history, opening some of the firm's first mall stores, making some of its canniest product buys ("Tamagotchi pets," he says, beaming, "and Tech-Decks, too"), traveling all over the world to help build an empire that at its peak included 1,300 stores. "There were times when I worked seven days a week, 16 hours a day," he says. "I opened three stores in two months once."
Then in 2000, right before Romney gave up his ownership stake in Bain Capital, the firm targeted KB Toys. The debacle that followed serves as a prime example of the conflict between the old model of American business, built from the ground up with sweat and industry know-how, and the new globalist model, the Romney model, which uses leverage as a weapon of high-speed conquest.
In a typical private-equity fragging, Bain put up a mere $18 million to acquire KB Toys and got big banks to finance the remaining $302 million it needed. Less than a year and a half after the purchase, Bain decided to give itself a gift known as a "dividend recapitalization." The firm 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. "The dividend recap is like borrowing someone else's credit card to take out a cash advance, and then leaving them to pay it off," says Heather Slavkin Corzo, who monitors private equity takeovers as the senior legal policy adviser for the AFL-CIO.
Bain ended up earning a return of at least 370 percent on the deal, while KB Toys fell into bankruptcy, saddled with millions in debt. KB's former parent company, Big Lots, alleged in bankruptcy court that Bain's "unjustified" return on the dividend recap was actually "900 percent in a mere 16 months." Patnode, by contrast, was fired in December 2008, after almost four decades on the job. Like other employees, he didn't get a single day's severance.
I ask Slavkin Corzo what Bain's justification was for the giant dividend recapitalization in the KB Toys acquisition. The question throws her, as though she's surprised anyone would ask for a reason a company like Bain would loot a firm like KB Toys. "It wasn't like, 'Yay, we did a good job, we get a dividend,'" she says with a laugh. "It was like, 'We can do this, so we will.' "
At the time of the KB Toys deal, Romney was a Bain investor and owner, making him a mere beneficiary of the raping and pillaging, rather than its direct organizer. Moreover, KB's demise was hastened by a host of genuine market forces, including competition from video games and cellphones. But there's absolutely no way to look at what Bain did at KB and see anything but a cash grab – one that followed the business model laid out by Romney. Rather than cutting costs and tightening belts, Bain added $300 million in debt to the firm's bottom line while taking out more than $120 million in cash – an outright looting that creditors later described in a lawsuit as "breaking open the piggy bank." What's more, Bain smoothed the deal in typical fashion by giving huge bonuses to the company's top managers as the firm headed toward bankruptcy. 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.
And what did Bain bring to the table in return for its massive, outsize payout? KB Toys had built a small empire by targeting middle-class buyers with value-priced products. It succeeded mainly because the firm's leaders had a great instinct for what they were making and selling. These were people who had been in the specialty toy business since 1922; collectively, they had millions of man-hours of knowledge about how the industry works and how toy customers behave. KB's president in the Eighties, the late Saul Rubenstein, used to carry around a giant computer printout of the company's inventory, and would fall asleep reading it on the weekends, the pages clasped to his chest. "He knew the name and number of all those toys," his widow, Shirley, says proudly. "He loved toys."
Bain's experience in the toy industry, by contrast, was precisely bupkus. They didn't know a damn thing about the business they had taken over – and they never cared to learn. The firm's entire contribution was $18 million in cash and a huge mound of borrowed money that gave it the power to pull the levers. "The people who came in after – they were never toy people," says Shirley Rubenstein. To make matters worse, former employees say, Bain deluged them with requests for paperwork and reports, forcing them to worry more about the whims of their new bosses than the demands of their customers. "We took our eye off the ball," Patnode says. "And if you take your eye off the ball, you strike out."
In the end, Bain never bothered to come up with a plan for how KB Toys could meet the 21st-century challenges of video games and cellphone gadgets that were the company's ostensible downfall. And that's where Romney's self-touted reputation as a turnaround specialist is a myth. In the Bain model, the actual turnaround isn't necessary. It's just a cover story. It's nice for the private equity firm if it happens, because it makes the acquired company more attractive for resale or an IPO. But it's mostly irrelevant to the success of the takeover model, where huge cash returns are extracted whether the captured firm thrives or not.
"The thing about it is, nobody gets hurt," says Patnode. "Except the people who worked here."
Romney was a prime mover in the radical social and political transformation that was cooked up by Wall Street beginning in the 1980s. In fact, you can trace the whole history of the modern age of financialization just by following the highly specific corner of the economic universe inhabited by the leveraged buyout business, where Mitt Romney thrived. If you look at the number of leveraged buyouts dating back two or three decades, you see a clear pattern: Takeovers rose sharply with each of Wall Street's great easy-money schemes, then plummeted just as sharply after each of those scams crashed and burned, leaving the rest of us with the bill.
In the Eighties, when Romney and Bain were cutting their teeth in the LBO business, the primary magic trick involved the junk bonds pioneered by convicted felon Mike Milken, which allowed firms like Bain to find easy financing for takeovers by using wildly overpriced distressed corporate bonds as collateral. Junk bonds gave the Gordon Gekkos of the world sudden primacy over old-school industrial titans like the Fords and the Rockefellers: For the first time, the ability to make deals became more valuable than the ability to make stuff, and the ability to instantly engineer billions in illusory financing trumped the comparatively slow process of making and selling products for gradual returns.
Romney was right in the middle of this radical change. In fact, according to The Boston Globe – whose in-depth reporting on Romney and Bain has spanned three decades – one of Romney's first LBO deals, and one of his most profitable, involved Mike Milken himself. Bain put down $10 million in cash, got $300 million in financing from Milken and bought a pair of department-store chains, Bealls Brothers and Palais Royal. In what should by now be a familiar outcome, the two chains – which Bain merged into a single outfit called Stage Stores – filed for bankruptcy protection in 2000 under the weight of more than $444 million in debt. As always, Bain took no responsibility for the company's demise. (If you search the public record, you will not find a single instance of Mitt Romney taking responsibility for a company's failure.) Instead, Bain blamed Stage's collapse on "operating problems" that took place three years after Bain cashed out, finishing with a $175 million return on its initial investment of $10 million.
But here's the interesting twist: Romney made the Bealls-Palais deal just as the federal government was launching charges of massive manipulation and insider trading against Milken and his firm, Drexel Burnham Lambert. After what must have been a lengthy and agonizing period of moral soul-searching, however, Romney decided not to kill the deal, despite its shady financing. "We did not say, 'Oh, my goodness, Drexel has been accused of something, not been found guilty,' " Romney told reporters years after the deal. "Should we basically stop the transaction and blow the whole thing up?"
In an even more incredible disregard for basic morality, Romney forged ahead with the deal even though Milken's case was being heard by a federal district judge named Milton Pollack, whose wife, Moselle, happened to be the chairwoman of none other than Palais Royal. In short, one of Romney's first takeover deals was financed by dirty money – and one of the corporate chiefs about to receive a big payout from Bain was married to the judge hearing the case. Although the SEC took no formal action, it issued a sharp criticism, complaining that Romney was allowing Milken's money to have a possible influence over "the administration of justice."
After Milken and his junk bond scheme crashed in the late Eighties, Romney and other takeover artists moved on to Wall Street's next get-rich-quick scheme: the tech-Internet stock bubble. By 1997 and 1998, there were nearly $400 billion in leveraged buyouts a year, as easy money once again gave these financial piracy firms the ammunition they needed to raid companies like KB Toys. Firms like Bain even have a colorful pirate name for the pools of takeover money they raise in advance from pension funds, university endowments and other institutional investors. "They call it dry powder," says Slavkin Corzo, the union adviser.
After the Internet bubble burst and private equity started cashing in on Wall Street's mortgage scam, LBO deals ballooned to almost $900 billion in 2006. Once again, storied companies with long histories and deep regional ties were descended upon by Bain and other pirates, saddled with hundreds of millions in debt, forced to pay huge management fees and "dividend recapitalizations," and ridden into bankruptcy amid waves of layoffs. Established firms like Del Monte, Hertz and Dollar General were all taken over in a "prairie fire of debt" – one even more destructive than the government borrowing that Romney is flogging on the campaign trial. When Hertz was conquered in 2005 by a trio of private equity firms, including the Carlyle Group, the interest payments on its debt soared by a monstrous 80 percent, forcing the company to eliminate a third of its 32,000 jobs.
In 2010, a year after the last round of Hertz layoffs, Carlyle teamed up with Bain to take $500 million out of another takeover target: the parent company of Dunkin' Donuts and Baskin-Robbins. Dunkin' had to take out a $1.25 billion loan to pay a dividend to its new private equity owners. So think of this the next time you go to Dunkin' Donuts for a cup of coffee: A small cup of joe costs about $1.69 in most outlets, which means that for years to come, Dunkin' Donuts will have to sell about 2,011,834 small coffees every month – about $3.4 million – just to meet the interest payments on the loan it took out to pay Bain and Carlyle their little one-time dividend. And that doesn't include the principal on the loan, or the additional millions in debt that Dunkin' has to pay every year to get out from under the $2.4 billion in debt it's now saddled with after having the privilege of being taken over – with borrowed money – by the firm that Romney built.
If you haven't heard much about how takeover deals like Dunkin' and KB Toys work, that's because Mitt Romney and his private equity brethren don't want you to. The new owners of American industry are the polar opposites of the Milton Hersheys and Andrew Carnegies who built this country, commercial titans who longed to leave visible legacies of their accomplishments, erecting hospitals and schools and libraries, sometimes leaving behind thriving towns that bore their names.
The men of the private equity generation want no such thing. "We try to hide religiously," explained Steven Feinberg, the CEO of a takeover firm called Cerberus Capital Management that recently drove one of its targets into bankruptcy after saddling it with $2.3 billion in debt. "If anyone at Cerberus has his picture in the paper and a picture of his apartment, we will do more than fire that person," Feinberg told shareholders in 2007. "We will kill him. The jail sentence will be worth it."
Which brings us to another aspect of Romney's business career that has largely been hidden from voters: His personal fortune would not have been possible without the direct assistance of the U.S. government. The taxpayer-funded subsidies that Romney has received go well beyond the humdrum, backdoor, welfare-sucking that all supposedly self-made free marketeers inevitably indulge in. Not that Romney hasn't done just fine at milking the government when it suits his purposes, the most obvious instance being the incredible $1.5 billion in aid he siphoned out of the U.S. Treasury as head of the 2002 Winter Olympics in Salt Lake – a sum greater than all federal spending for the previous seven U.S. Olympic games combined. Romney, the supposed fiscal conservative, blew through an average of $625,000 in taxpayer money per athlete – an astounding increase of 5,582 percent over the $11,000 average at the 1984 games in Los Angeles. In 1993, right as he was preparing to run for the Senate, Romney also engineered a government deal worth at least $10 million for Bain's consulting firm, when it was teetering on the edge of bankruptcy. (See "The Federal Bailout That Saved Romney")
But the way Romney most directly owes his success to the government is through the structure of the tax code. The entire business of leveraged buyouts wouldn't be possible without a provision in the federal code that allows companies like Bain to deduct the interest on the debt they use to acquire and loot their targets. This is the same universally beloved tax deduction you can use to write off your mortgage interest payments, so tampering with it is considered political suicide – it's been called the "third rail of tax reform." So the Romney who routinely rails against the national debt as some kind of child-killing "mortgage" is the same man who spent decades exploiting a tax deduction specifically designed for mortgage holders in order to bilk every dollar he could out of U.S. businesses before burning them to the ground.
Because minus that tax break, Romney's debt-based takeovers would have been unsustainably expensive. Before Lynn Turner became chief accountant of the SEC, where he reviewed filings on takeover deals, he crunched the numbers on leveraged buyouts as an accountant at a Big Four auditing firm. "In the majority of these deals," Turner says, "the tax deduction has a big enough impact on the bottom line that the takeover wouldn't work without it."
Thanks to the tax deduction, in other words, the government actually incentivizes the kind of leverage-based takeovers that Romney built his fortune on. Romney the businessman built his career on two things that Romney the candidate decries: massive debt and dumb federal giveaways. "I don't know what Romney would be doing but for debt and its tax-advantaged position in the tax code," says a prominent Wall Street lawyer, "but he wouldn't be fabulously wealthy."
Adding to the hypocrisy, the money that Romney personally pocketed on Bain's takeover deals was usually taxed not as income, but either as capital gains or as "carried interest," both of which are capped at a maximum rate of 15 percent. In addition, reporters have uncovered plenty of evidence that Romney takes full advantage of offshore tax havens: He has an interest in at least 12 Bain funds, worth a total of $30 million, that are based in the Cayman Islands; he has reportedly used a squirrelly tax shelter known as a "blocker corporation" that cheats taxpayers out of some $100 million a year; and his wife, Ann, had a Swiss bank account worth $3 million. As a private equity pirate, Romney pays less than half the tax rate of most American executives – less, even, than teachers, firefighters, cops and nurses. Asked about the fact that he paid a tax rate of only 13.9 percent on income of $21.7 million in 2010, Romney responded testily that the massive windfall he enjoys from exploiting the tax code is "entirely legal and fair."
Essentially, Romney got rich in a business that couldn't exist without a perverse tax break, and he got to keep double his earnings because of another loophole – a pair of bureaucratic accidents that have not only teamed up to threaten us with a Mitt Romney presidency but that make future Romneys far more likely. "Those two tax rules distort the economics of private equity investments, making them much more lucrative than they should be," says Rebecca Wilkins, senior counsel at the Center for Tax Justice. "So we get more of that activity than the market would support on its own."
Listen to Mitt Romney speak, and see if you can notice what's missing. This is a man who grew up in Michigan, went to college in California, walked door to door through the streets of southern France as a missionary and was a governor of Massachusetts, the home of perhaps the most instantly recognizable, heavily accented English this side of Edinburgh. Yet not a trace of any of these places is detectable in Romney's diction. None of the people in any of those places bled in and left a mark on the man.
Romney is a man from nowhere. In his post-regional attitude, he shares something with his campaign opponent, Barack Obama, whose background is a similarly jumbled pastiche of regionally nonspecific non-identity. But in the way he bounced around the world as a half-orphaned child, Obama was more like an involuntary passenger in the demographic revolution reshaping the planet than one of its leaders.
Romney, on the other hand, is a perfect representative of one side of the ominous cultural divide that will define the next generation, not just here in America but all over the world. Forget about the Southern strategy, blue versus red, swing states and swing voters – all of those political clichés are quaint relics of a less threatening era that is now part of our past, or soon will be. The next conflict defining us all is much more unnerving.
That conflict will be between people who live somewhere, and people who live nowhere. It will be between people who consider themselves citizens of actual countries, to which they have patriotic allegiance, and people to whom nations are meaningless, who live in a stateless global archipelago of privilege – a collection of private schools, tax havens and gated residential communities with little or no connection to the outside world.
Mitt Romney isn't blue or red. He's an archipelago man. That's a big reason that voters have been slow to warm up to him. From LBJ to Bill Clinton to George W. Bush to Sarah Palin, Americans like their politicians to sound like they're from somewhere, to be human symbols of our love affair with small towns, the girl next door, the little pink houses of Mellencamp myth. Most of those mythical American towns grew up around factories – think chocolate bars from Hershey, baseball bats from Louisville, cereals from Battle Creek. Deep down, what scares voters in both parties the most is the thought that these unique and vital places are vanishing or eroding – overrun by immigrants or the forces of globalism or both, with giant Walmarts descending like spaceships to replace the corner grocer, the family barber and the local hardware store, and 1,000 cable channels replacing the school dance and the gossip at the local diner.
Obama ran on "change" in 2008, but Mitt Romney represents a far more real and seismic shift in the American landscape. Romney is the frontman and apostle of an economic revolution, in which transactions are manufactured instead of products, wealth is generated without accompanying prosperity, and Cayman Islands partnerships are lovingly erected and nurtured while American communities fall apart. The entire purpose of the business model that Romney helped pioneer is to move money into the archipelago from the places outside it, using massive amounts of taxpayer-subsidized debt to enrich a handful of billionaires. It's a vision of society that's crazy, vicious and almost unbelievably selfish, yet it's running for president, and it has a chance of winning. Perhaps that change is coming whether we like it or not. Perhaps Mitt Romney is the best man to manage the transition. But it seems a little early to vote for that kind of wholesale surrender.
This story is from the September 13, 2012 issue of Rolling Stone.
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The critics couldn't be more wrong. Mitt Romney is no tissue-paper man. He's closer to being a revolutionary, a backward-world version of Che or Trotsky, with tweezed nostrils instead of a beard, a half-Windsor instead of a leather jerkin. His legendary flip-flops aren't the lies of a bumbling opportunist – they're the confident prevarications of a man untroubled by misleading the nonbeliever in pursuit of a single, all-consuming goal. Romney has a vision, and he's trying for something big: We've just been too slow to sort out what it is, just as we've been slow to grasp the roots of the radical economic changes that have swept the country in the last generation.
The incredible untold story of the 2012 election so far is that Romney's run has been a shimmering pearl of perfect political hypocrisy, which he's somehow managed to keep hidden, even with thousands of cameras following his every move. And the drama of this rhetorical high-wire act was ratcheted up even further when Romney chose his running mate, Rep. Paul Ryan of Wisconsin – like himself, a self-righteously anal, thin-lipped, Whitest Kids U Know penny pincher who'd be honored to tell Oliver Twist there's no more soup left. By selecting Ryan, Romney, the hard-charging, chameleonic champion of a disgraced-yet-defiant Wall Street, officially succeeded in moving the battle lines in the 2012 presidential race.
Like John McCain four years before, Romney desperately needed a vice-presidential pick that would change the game. But where McCain bet on a combustive mix of clueless novelty and suburban sexual tension named Sarah Palin, Romney bet on an idea. He said as much when he unveiled his choice of Ryan, the author of a hair-raising budget-cutting plan best known for its willingness to slash the sacred cows of Medicare and Medicaid. "Paul Ryan has become an intellectual leader of the Republican Party," Romney told frenzied Republican supporters in Norfolk, Virginia, standing before the reliably jingoistic backdrop of a floating warship. "He understands the fiscal challenges facing America: our exploding deficits and crushing debt."
Debt, debt, debt. If the Republican Party had a James Carville, this is what he would have said to win Mitt over, in whatever late-night war room session led to the Ryan pick: "It's the debt, stupid." This is the way to defeat Barack Obama: to recast the race as a jeremiad against debt, something just about everybody who's ever gotten a bill in the mail hates on a primal level.
Last May, in a much-touted speech in Iowa, Romney used language that was literally inflammatory to describe America's federal borrowing. "A prairie fire of debt is sweeping across Iowa and our nation," he declared. "Every day we fail to act, that fire gets closer to the homes and children we love." Our collective debt is no ordinary problem: According to Mitt, it's going to burn our children alive.
And this is where we get to the hypocrisy at the heart of Mitt Romney. Everyone knows that he is fantastically rich, having scored great success, the legend goes, as a "turnaround specialist," a shrewd financial operator who revived moribund companies as a high-priced consultant for a storied Wall Street private equity firm. But what most voters don't know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. This is the plain, stark reality that has somehow eluded America's top political journalists for two consecutive presidential campaigns: 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.
By making debt the centerpiece of his campaign, Romney was making a calculated bluff of historic dimensions – placing a massive all-in bet on the rank incompetence of the American press corps. The result has been a brilliant comedy: A man makes a $250 million fortune loading up companies with debt and then extracting million-dollar fees from those same companies, in exchange for the generous service of telling them who needs to be fired in order to finance the debt payments he saddled them with in the first place. That same man then runs for president riding an image of children roasting on flames of debt, choosing as his running mate perhaps the only politician in America more pompous and self-righteous on the subject of the evils of borrowed money than the candidate himself. If Romney pulls off this whopper, you'll have to tip your hat to him: No one in history has ever successfully run for president riding this big of a lie. It's almost enough to make you think he really is qualified for the White House.
The unlikeliness of Romney's gambit isn't simply a reflection of his own artlessly unapologetic mindset – it stands as an emblem for the resiliency of the entire sociopathic Wall Street set he represents. Four years ago, the Mitt Romneys of the world nearly destroyed the global economy with their greed, shortsightedness and – most notably – wildly irresponsible use of debt in pursuit of personal profit. The sight was so disgusting that people everywhere were ready to drop an H-bomb on Lower Manhattan and bayonet the survivors. But today that same insane greed ethos, that same belief in the lunatic pursuit of instant borrowed millions – it's dusted itself off, it's had a shave and a shoeshine, and it's back out there running for president.
Mitt Romney, it turns out, is the perfect frontman for Wall Street's greed revolution. He's not a two-bit, shifty-eyed huckster like Lloyd Blankfein. He's not a sighing, eye-rolling, arrogant jerkwad like Jamie Dimon. But Mitt believes the same things those guys believe: He's been right with them on the front lines of the financialization revolution, a decades-long campaign in which the old, simple, let's-make-stuff-and-sell-it manufacturing economy was replaced with a new, highly complex, let's-take-stuff-and-trash-it financial economy. Instead of cars and airplanes, we built swaps, CDOs and other toxic financial products. Instead of building new companies from the ground up, we took out massive bank loans and used them to acquire existing firms, liquidating every asset in sight and leaving the target companies holding the note. The new borrow-and-conquer economy was morally sanctified by an almost religious faith in the grossly euphemistic concept of "creative destruction," and amounted to a total abdication of collective responsibility by America's rich, whose new thing was making assloads of money in ever-shorter campaigns of economic conquest, sending the proceeds offshore, and shrugging as the great towns and factories their parents and grandparents built were shuttered and boarded up, crushed by a true prairie fire of debt.
Mitt Romney – a man whose own father built cars and nurtured communities, and was one of the old-school industrial anachronisms pushed aside by the new generation's wealth grab – has emerged now to sell this make-nothing, take-everything, screw-everyone ethos to the world. He's Gordon Gekko, but a new and improved version, with better PR – and a bigger goal. A takeover artist all his life, Romney is now trying to take over America itself. And if his own history is any guide, we'll all end up paying for the acquisition.
Willard "Mitt" Romney's background in many ways suggests a man who was born to be president – disgustingly rich from birth, raised in prep schools, no early exposure to minorities outside of maids, a powerful daddy to clean up his missteps, and timely exemptions from military service. In Romney's bio there are some eerie early-life similarities to other recent presidential figures. (Is America really ready for another Republican president who was a prep-school cheerleader?) And like other great presidential double-talkers such as Bill Clinton and George W. Bush, Romney has shown particular aptitude in the area of telling multiple factual versions of his own life story.
"I longed in many respects to actually be in Vietnam and be representing our country there," he claimed years after the war. To a different audience, he said, "I was not planning on signing up for the military. It was not my desire to go off and serve in Vietnam."
Like John F. Kennedy and George W. Bush, men whose way into power was smoothed by celebrity fathers but who rebelled against their parental legacy as mature politicians, Mitt Romney's career has been both a tribute to and a repudiation of his famous father. George Romney in the 1950s became CEO of American Motors Corp., made a modest fortune betting on energy efficiency in an age of gas guzzlers and ended up serving as governor of the state of Michigan only two generations removed from the Romney clan's tradition of polygamy. For Mitt, who grew up worshipping his tall, craggily handsome, politically moderate father, life was less rocky: Cranbrook prep school in suburban Detroit, followed by Stanford in the Sixties, a missionary term in which he spent two and a half years trying (as he said) to persuade the French to "give up your wine," and Harvard Business School in the Seventies. Then, faced with making a career choice, Mitt chose an odd one: Already married and a father of two, he left Harvard and eschewed both politics and the law to enter the at-the-time unsexy world of financial consulting.
"When you get out of a place like Harvard, you can do anything – at least in the old days you could," says a prominent corporate lawyer on Wall Street who is familiar with Romney's career. "But he comes out, he not only has a Harvard Business School degree, he's got a national pedigree with his name. He could have done anything – but what does he do? He says, 'I'm going to spend my life loading up distressed companies with debt.' "
Romney started off at the Boston Consulting Group, where he showed an aptitude for crunching numbers and glad-handing clients. Then, in 1977, he joined a young entrepreneur named Bill Bain at a firm called Bain & Company, where he worked for six years before being handed the reins of a new firm-within-a-firm called Bain Capital.
In Romney's version of the tale, Bain Capital – which evolved into what is today known as a private equity firm – specialized in turning around moribund companies (Romney even wrote a book called Turnaround that complements his other nauseatingly self-complimentary book, No Apology) and helped create the Staples office-supply chain. On the campaign trail, Romney relentlessly trades on his own self-perpetuated reputation as a kind of altruistic rescuer of failing enterprises, never missing an opportunity to use the word "help" or "helped" in his description of what he and Bain did for companies. He might, for instance, describe himself as having been "deeply involved in helping other businesses" or say he "helped create tens of thousands of jobs."
The reality is that toward the middle of his career at Bain, Romney made a fateful strategic decision: He moved away from creating companies like Staples through venture capital schemes, and toward a business model that involved borrowing huge sums of money to take over existing firms, then extracting value from them by force. He decided, as he later put it, that "there's a lot greater risk in a startup than there is in acquiring an existing company." In the Eighties, when Romney made this move, this form of financial piracy became known as a leveraged buyout, and it achieved iconic status thanks to Gordon Gekko in Wall Street. Gekko's business strategy was essentially identical to the Romney–Bain model, only Gekko called himself a "liberator" of companies instead of a "helper."
Here's how Romney would go about "liberating" a company: A private equity firm like Bain typically seeks out floundering businesses with good cash flows. It then puts down a relatively small amount of its own money and runs to a big bank like Goldman Sachs or Citigroup for the rest of the financing. (Most leveraged buyouts are financed with 60 to 90 percent borrowed cash.) The takeover firm then uses that borrowed money to buy a controlling stake in the target company, either with or without its consent. When an LBO is done without the consent of the target, it's called a hostile takeover; such thrilling acts of corporate piracy were made legend in the Eighties, most notably the 1988 attack by notorious corporate raiders Kohlberg Kravis Roberts against RJR Nabisco, a deal memorialized in the book Barbarians at the Gate.
Romney and Bain avoided the hostile approach, preferring to secure the cooperation of their takeover targets by buying off a company's management with lucrative bonuses. Once management is on board, the rest is just math. So if the target company is worth $500 million, Bain might put down $20 million of its own cash, then borrow $350 million from an investment bank to take over a controlling stake.
But here's the catch. When Bain borrows all of that money from the bank, it's the target company that ends up on the hook for all of the debt.
Now your troubled firm – let's say you make tricycles in Alabama – has been taken over by a bunch of slick Wall Street dudes who kicked in as little as five percent as a down payment. So in addition to whatever problems you had before, Tricycle Inc. now owes Goldman or Citigroup $350 million. With all that new debt service to pay, the company's bottom line is suddenly untenable: You almost have to start firing people immediately just to get your costs down to a manageable level.
"That interest," says Lynn Turner, former chief accountant of the Securities and Exchange Commission, "just sucks the profit out of the company."
Fortunately, the geniuses at Bain who now run the place are there to help tell you whom to fire. And for the service it performs cutting your company's costs to help you pay off the massive debt that it, Bain, saddled your company with in the first place, Bain naturally charges a management fee, typically millions of dollars a year. So Tricycle Inc. now has two gigantic new burdens it never had before Bain Capital stepped into the picture: tens of millions in annual debt service, and millions more in "management fees." Since the initial acquisition of Tricycle Inc. was probably greased by promising the company's upper management lucrative bonuses, all that pain inevitably comes out of just one place: the benefits and payroll of the hourly workforce.
Once all that debt is added, one of two things can happen. The company can fire workers and slash benefits to pay off all its new obligations to Goldman Sachs and Bain, leaving it ripe to be resold by Bain at a huge profit. Or it can go bankrupt – this happens after about seven percent of all private equity buyouts – leaving behind one or more shuttered factory towns. Either way, Bain wins. By power-sucking cash value from even the most rapidly dying firms, private equity raiders like Bain almost always get their cash out before a target goes belly up.
This business model wasn't really "helping," of course – and it wasn't new. Fans of mob movies will recognize what's known as the "bust-out," in which a gangster takes over a restaurant or sporting goods store and then monetizes his investment by running up giant debts on the company's credit line. (Think Paulie buying all those cases of Cutty Sark in Goodfellas.) When the note comes due, the mobster simply torches the restaurant and collects the insurance money. Reduced to their most basic level, the leveraged buyouts engineered by Romney followed exactly the same business model. "It's the bust-out," one Wall Street trader says with a laugh. "That's all it is."
Private equity firms aren't necessarily evil by definition. There are many stories of successful turnarounds fueled by private equity, often involving multiple floundering businesses that are rolled into a single entity, eliminating duplicative overhead. Experian, the giant credit-rating tyrant, was acquired by Bain in the Nineties and went on to become an industry leader.
But there's a key difference between private equity firms and the businesses that were America's original industrial cornerstones, like the elder Romney's AMC. Everyone had a stake in the success of those old businesses, which spread prosperity by putting people to work. But even private equity's most enthusiastic adherents have difficulty explaining its benefit to society. Marc Wolpow, a former Bain colleague of Romney's, told reporters during Mitt's first Senate run that Romney erred in trying to sell his business as good for everyone. "I believed he was making a mistake by framing himself as a job creator," said Wolpow. "That was not his or Bain's or the industry's primary objective. The objective of the LBO business is maximizing returns for investors." When it comes to private equity, American workers – not to mention their families and communities – simply don't enter into the equation.
Take a typical Bain transaction involving an Indiana-based company called American Pad and Paper. Bain bought Ampad in 1992 for just $5 million, financing the rest of the deal with borrowed cash. Within three years, Ampad was paying $60 million in annual debt payments, plus an additional $7 million in management fees. A year later, Bain led Ampad to go public, cashed out about $50 million in stock for itself and its investors, charged the firm $2 million for arranging the IPO and pocketed another $5 million in "management" fees. Ampad wound up going bankrupt, and hundreds of workers lost their jobs, but Bain and Romney weren't crying: They'd made more than $100 million on a $5 million investment.
To recap: Romney, who has compared the devilish federal debt to a "nightmare" home mortgage that is "adjustable, no-money down and assigned to our children," took over Ampad with essentially no money down, saddled the firm with a nightmare debt and assigned the crushing interest payments not to Bain but to the children of Ampad's workers, who would be left holding the note long after Romney fled the scene. The mortgage analogy is so obvious, in fact, that even Romney himself has made it. He once described Bain's debt-fueled strategy as "using the equivalent of a mortgage to leverage up our investment."
Romney has always kept his distance from the real-life consequences of his profiteering. At one point during Bain's looting of Ampad, a worker named Randy Johnson sent a handwritten letter to Romney, asking him to intervene to save an Ampad factory in Marion, Indiana. In a sterling demonstration of manliness and willingness to face a difficult conversation, Romney, who had just lost his race for the Senate in Massachusetts, wrote Johnson that he was "sorry," but his lawyers had advised him not to get involved. (So much for the candidate who insists that his way is always to "fight to save every job.")
This is typical Romney, who consistently adopts a public posture of having been above the fray, with no blood on his hands from any of the deals he personally engineered. "I never actually ran one of our investments," he says in Turnaround. "That was left to management."
In reality, though, Romney was unquestionably the decider at Bain. "I insisted on having almost dictatorial powers," he bragged years after the Ampad deal. Over the years, colleagues would anonymously whisper stories about Mitt the Boss to the press, describing him as cunning, manipulative and a little bit nuts, with "an ability to identify people's insecurities and exploit them for his own benefit." One former Bain employee said that Romney would screw around with bonuses in small amounts, just to mess with people: He would give $3 million to one, $3.1 million to another and $2.9 million to a third, just to keep those below him on edge.
The private equity business in the early Nineties was dominated by a handful of takeover firms, from the spooky and politically connected Carlyle Group (a favorite subject of conspiracy-theory lit, with its connections to right-wingers like Donald Rumsfeld and George H.W. Bush) to the equally spooky Democrat-leaning assholes at the Blackstone Group. But even among such a colorful cast of characters, Bain had a reputation on Wall Street for secrecy and extreme weirdness – "the KGB of consulting." Its employees, known for their Mormonish uniform of white shirts and red power ties, were dubbed "Bainies" by other Wall Streeters, a rip on the fanatical "Moonies." The firm earned the name thanks to its idiotically adolescent Spy Kids culture, in which these glorified slumlords used code names, didn't carry business cards and even sang "company songs" to boost morale.
The seemingly religious flavor of Bain's culture smacks of the generally cultish ethos on Wall Street, in which all sorts of ethically questionable behaviors are justified as being necessary in service of the church of making money. Romney belongs to a true-believer subset within that cult, with a revolutionary's faith in the wisdom of the pure free market, in which destroying companies and sucking the value out of them for personal gain is part of the greater good, and governments should "stand aside and allow the creative destruction inherent in the free economy."
That cultlike zeal helps explains why Romney takes such a curiously unapologetic approach to his own flip-flopping. His infamous changes of stance are not little wispy ideological alterations of a few degrees here or there – they are perfect and absolute mathematical reversals, as in "I believe that abortion should be safe and legal in this country" and "I am firmly pro-life." Yet unlike other politicians, who at least recognize that saying completely contradictory things presents a political problem, Romney seems genuinely puzzled by the public's insistence that he be consistent. "I'm not going to apologize for having changed my mind," he likes to say. It's an attitude that recalls the standard defense offered by Wall Street in the wake of some of its most recent and notorious crimes: Goldman Sachs excused its lying to clients, for example, by insisting that its customers are "sophisticated investors" who should expect to be lied to. "Last time I checked," former Morgan Stanley CEO John Mack sneered after the same scandal, "we were in business to be profitable."
Within the cult of Wall Street that forged Mitt Romney, making money justifies any behavior, no matter how venal. The look on Romney's face when he refuses to apologize says it all: Hey, I'm trying to win an election. We're all grown-ups here. After the Ampad deal, Romney expressed contempt for critics who lived in "fantasy land." "This is the real world," he said, "and in the real world there is nothing wrong with companies trying to compete, trying to stay alive, trying to make money."
In the old days, making money required sharing the wealth: with assembly-line workers, with middle management, with schools and communities, with investors. Even the Gilded Age robber barons, despite their unapologetic efforts to keep workers from getting any rights at all, built America in spite of themselves, erecting railroads and oil wells and telegraph wires. And from the time the monopolists were reined in with antitrust laws through the days when men like Mitt Romney's dad exited center stage in our economy, the American social contract was pretty consistent: The rich got to stay rich, often filthy rich, but they paid taxes and a living wage and everyone else rose at least a little bit along with them.
But under Romney's business model, leveraging other people's debt means you can carve out big profits for yourself and leave everyone else holding the bag. Despite what Romney claims, the rate of return he provided for Bain's investors over the years wasn't all that great. Romney biographer and Wall Street Journal reporter Brett Arends, who analyzed Bain's performance between 1984 and 1998, concludes that the firm's returns were likely less than 30 percent per year, which happened to track more or less with the stock market's average during that time. "That's how much money you could have made by issuing company bonds and then spending the money picking stocks out of the paper at random," Arends observes. So for all the destruction Romney wreaked on Middle America in the name of "trying to make money," investors could have just plunked their money into traditional stocks and gotten pretty much the same returns.
The only ones who profited in a big way from all the job-killing debt that Romney leveraged were Mitt and his buddies at Bain, along with Wall Street firms like Goldman and Citigroup. Barry Ritholtz, author of Bailout Nation, says the criticisms of Bain about layoffs and meanness miss a more important point, which is that the firm's profit-producing record is absurdly mediocre, especially when set against all the trouble and pain its business model causes. "Bain's fundamental flaw, at least according to the math," Ritholtz writes, "is that they took lots of risk, use immense leverage and charged enormous fees, for performance that was more or less the same as [stock] indexing."
'I'm not a Romney guy, because I'm not a Bain guy," says Lenny Patnode, in an Irish pub in the factory town of Pittsfield, Massachusetts. "But I'm not an Obama guy, either. Just so you know."
I feel bad even asking Patnode about Romney. Big and burly, with white hair and the thick forearms of a man who's stocked a shelf or two in his lifetime, he seems to belong to an era before things like leveraged debt even existed. For 38 years, Patnode worked for a company called KB Toys in Pittsfield. He was the longest-serving employee in the company's history, opening some of the firm's first mall stores, making some of its canniest product buys ("Tamagotchi pets," he says, beaming, "and Tech-Decks, too"), traveling all over the world to help build an empire that at its peak included 1,300 stores. "There were times when I worked seven days a week, 16 hours a day," he says. "I opened three stores in two months once."
Then in 2000, right before Romney gave up his ownership stake in Bain Capital, the firm targeted KB Toys. The debacle that followed serves as a prime example of the conflict between the old model of American business, built from the ground up with sweat and industry know-how, and the new globalist model, the Romney model, which uses leverage as a weapon of high-speed conquest.
In a typical private-equity fragging, Bain put up a mere $18 million to acquire KB Toys and got big banks to finance the remaining $302 million it needed. Less than a year and a half after the purchase, Bain decided to give itself a gift known as a "dividend recapitalization." The firm 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. "The dividend recap is like borrowing someone else's credit card to take out a cash advance, and then leaving them to pay it off," says Heather Slavkin Corzo, who monitors private equity takeovers as the senior legal policy adviser for the AFL-CIO.
Bain ended up earning a return of at least 370 percent on the deal, while KB Toys fell into bankruptcy, saddled with millions in debt. KB's former parent company, Big Lots, alleged in bankruptcy court that Bain's "unjustified" return on the dividend recap was actually "900 percent in a mere 16 months." Patnode, by contrast, was fired in December 2008, after almost four decades on the job. Like other employees, he didn't get a single day's severance.
I ask Slavkin Corzo what Bain's justification was for the giant dividend recapitalization in the KB Toys acquisition. The question throws her, as though she's surprised anyone would ask for a reason a company like Bain would loot a firm like KB Toys. "It wasn't like, 'Yay, we did a good job, we get a dividend,'" she says with a laugh. "It was like, 'We can do this, so we will.' "
At the time of the KB Toys deal, Romney was a Bain investor and owner, making him a mere beneficiary of the raping and pillaging, rather than its direct organizer. Moreover, KB's demise was hastened by a host of genuine market forces, including competition from video games and cellphones. But there's absolutely no way to look at what Bain did at KB and see anything but a cash grab – one that followed the business model laid out by Romney. Rather than cutting costs and tightening belts, Bain added $300 million in debt to the firm's bottom line while taking out more than $120 million in cash – an outright looting that creditors later described in a lawsuit as "breaking open the piggy bank." What's more, Bain smoothed the deal in typical fashion by giving huge bonuses to the company's top managers as the firm headed toward bankruptcy. 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.
And what did Bain bring to the table in return for its massive, outsize payout? KB Toys had built a small empire by targeting middle-class buyers with value-priced products. It succeeded mainly because the firm's leaders had a great instinct for what they were making and selling. These were people who had been in the specialty toy business since 1922; collectively, they had millions of man-hours of knowledge about how the industry works and how toy customers behave. KB's president in the Eighties, the late Saul Rubenstein, used to carry around a giant computer printout of the company's inventory, and would fall asleep reading it on the weekends, the pages clasped to his chest. "He knew the name and number of all those toys," his widow, Shirley, says proudly. "He loved toys."
Bain's experience in the toy industry, by contrast, was precisely bupkus. They didn't know a damn thing about the business they had taken over – and they never cared to learn. The firm's entire contribution was $18 million in cash and a huge mound of borrowed money that gave it the power to pull the levers. "The people who came in after – they were never toy people," says Shirley Rubenstein. To make matters worse, former employees say, Bain deluged them with requests for paperwork and reports, forcing them to worry more about the whims of their new bosses than the demands of their customers. "We took our eye off the ball," Patnode says. "And if you take your eye off the ball, you strike out."
In the end, Bain never bothered to come up with a plan for how KB Toys could meet the 21st-century challenges of video games and cellphone gadgets that were the company's ostensible downfall. And that's where Romney's self-touted reputation as a turnaround specialist is a myth. In the Bain model, the actual turnaround isn't necessary. It's just a cover story. It's nice for the private equity firm if it happens, because it makes the acquired company more attractive for resale or an IPO. But it's mostly irrelevant to the success of the takeover model, where huge cash returns are extracted whether the captured firm thrives or not.
"The thing about it is, nobody gets hurt," says Patnode. "Except the people who worked here."
Romney was a prime mover in the radical social and political transformation that was cooked up by Wall Street beginning in the 1980s. In fact, you can trace the whole history of the modern age of financialization just by following the highly specific corner of the economic universe inhabited by the leveraged buyout business, where Mitt Romney thrived. If you look at the number of leveraged buyouts dating back two or three decades, you see a clear pattern: Takeovers rose sharply with each of Wall Street's great easy-money schemes, then plummeted just as sharply after each of those scams crashed and burned, leaving the rest of us with the bill.
In the Eighties, when Romney and Bain were cutting their teeth in the LBO business, the primary magic trick involved the junk bonds pioneered by convicted felon Mike Milken, which allowed firms like Bain to find easy financing for takeovers by using wildly overpriced distressed corporate bonds as collateral. Junk bonds gave the Gordon Gekkos of the world sudden primacy over old-school industrial titans like the Fords and the Rockefellers: For the first time, the ability to make deals became more valuable than the ability to make stuff, and the ability to instantly engineer billions in illusory financing trumped the comparatively slow process of making and selling products for gradual returns.
Romney was right in the middle of this radical change. In fact, according to The Boston Globe – whose in-depth reporting on Romney and Bain has spanned three decades – one of Romney's first LBO deals, and one of his most profitable, involved Mike Milken himself. Bain put down $10 million in cash, got $300 million in financing from Milken and bought a pair of department-store chains, Bealls Brothers and Palais Royal. In what should by now be a familiar outcome, the two chains – which Bain merged into a single outfit called Stage Stores – filed for bankruptcy protection in 2000 under the weight of more than $444 million in debt. As always, Bain took no responsibility for the company's demise. (If you search the public record, you will not find a single instance of Mitt Romney taking responsibility for a company's failure.) Instead, Bain blamed Stage's collapse on "operating problems" that took place three years after Bain cashed out, finishing with a $175 million return on its initial investment of $10 million.
But here's the interesting twist: Romney made the Bealls-Palais deal just as the federal government was launching charges of massive manipulation and insider trading against Milken and his firm, Drexel Burnham Lambert. After what must have been a lengthy and agonizing period of moral soul-searching, however, Romney decided not to kill the deal, despite its shady financing. "We did not say, 'Oh, my goodness, Drexel has been accused of something, not been found guilty,' " Romney told reporters years after the deal. "Should we basically stop the transaction and blow the whole thing up?"
In an even more incredible disregard for basic morality, Romney forged ahead with the deal even though Milken's case was being heard by a federal district judge named Milton Pollack, whose wife, Moselle, happened to be the chairwoman of none other than Palais Royal. In short, one of Romney's first takeover deals was financed by dirty money – and one of the corporate chiefs about to receive a big payout from Bain was married to the judge hearing the case. Although the SEC took no formal action, it issued a sharp criticism, complaining that Romney was allowing Milken's money to have a possible influence over "the administration of justice."
After Milken and his junk bond scheme crashed in the late Eighties, Romney and other takeover artists moved on to Wall Street's next get-rich-quick scheme: the tech-Internet stock bubble. By 1997 and 1998, there were nearly $400 billion in leveraged buyouts a year, as easy money once again gave these financial piracy firms the ammunition they needed to raid companies like KB Toys. Firms like Bain even have a colorful pirate name for the pools of takeover money they raise in advance from pension funds, university endowments and other institutional investors. "They call it dry powder," says Slavkin Corzo, the union adviser.
After the Internet bubble burst and private equity started cashing in on Wall Street's mortgage scam, LBO deals ballooned to almost $900 billion in 2006. Once again, storied companies with long histories and deep regional ties were descended upon by Bain and other pirates, saddled with hundreds of millions in debt, forced to pay huge management fees and "dividend recapitalizations," and ridden into bankruptcy amid waves of layoffs. Established firms like Del Monte, Hertz and Dollar General were all taken over in a "prairie fire of debt" – one even more destructive than the government borrowing that Romney is flogging on the campaign trial. When Hertz was conquered in 2005 by a trio of private equity firms, including the Carlyle Group, the interest payments on its debt soared by a monstrous 80 percent, forcing the company to eliminate a third of its 32,000 jobs.
In 2010, a year after the last round of Hertz layoffs, Carlyle teamed up with Bain to take $500 million out of another takeover target: the parent company of Dunkin' Donuts and Baskin-Robbins. Dunkin' had to take out a $1.25 billion loan to pay a dividend to its new private equity owners. So think of this the next time you go to Dunkin' Donuts for a cup of coffee: A small cup of joe costs about $1.69 in most outlets, which means that for years to come, Dunkin' Donuts will have to sell about 2,011,834 small coffees every month – about $3.4 million – just to meet the interest payments on the loan it took out to pay Bain and Carlyle their little one-time dividend. And that doesn't include the principal on the loan, or the additional millions in debt that Dunkin' has to pay every year to get out from under the $2.4 billion in debt it's now saddled with after having the privilege of being taken over – with borrowed money – by the firm that Romney built.
If you haven't heard much about how takeover deals like Dunkin' and KB Toys work, that's because Mitt Romney and his private equity brethren don't want you to. The new owners of American industry are the polar opposites of the Milton Hersheys and Andrew Carnegies who built this country, commercial titans who longed to leave visible legacies of their accomplishments, erecting hospitals and schools and libraries, sometimes leaving behind thriving towns that bore their names.
The men of the private equity generation want no such thing. "We try to hide religiously," explained Steven Feinberg, the CEO of a takeover firm called Cerberus Capital Management that recently drove one of its targets into bankruptcy after saddling it with $2.3 billion in debt. "If anyone at Cerberus has his picture in the paper and a picture of his apartment, we will do more than fire that person," Feinberg told shareholders in 2007. "We will kill him. The jail sentence will be worth it."
Which brings us to another aspect of Romney's business career that has largely been hidden from voters: His personal fortune would not have been possible without the direct assistance of the U.S. government. The taxpayer-funded subsidies that Romney has received go well beyond the humdrum, backdoor, welfare-sucking that all supposedly self-made free marketeers inevitably indulge in. Not that Romney hasn't done just fine at milking the government when it suits his purposes, the most obvious instance being the incredible $1.5 billion in aid he siphoned out of the U.S. Treasury as head of the 2002 Winter Olympics in Salt Lake – a sum greater than all federal spending for the previous seven U.S. Olympic games combined. Romney, the supposed fiscal conservative, blew through an average of $625,000 in taxpayer money per athlete – an astounding increase of 5,582 percent over the $11,000 average at the 1984 games in Los Angeles. In 1993, right as he was preparing to run for the Senate, Romney also engineered a government deal worth at least $10 million for Bain's consulting firm, when it was teetering on the edge of bankruptcy. (See "The Federal Bailout That Saved Romney")
But the way Romney most directly owes his success to the government is through the structure of the tax code. The entire business of leveraged buyouts wouldn't be possible without a provision in the federal code that allows companies like Bain to deduct the interest on the debt they use to acquire and loot their targets. This is the same universally beloved tax deduction you can use to write off your mortgage interest payments, so tampering with it is considered political suicide – it's been called the "third rail of tax reform." So the Romney who routinely rails against the national debt as some kind of child-killing "mortgage" is the same man who spent decades exploiting a tax deduction specifically designed for mortgage holders in order to bilk every dollar he could out of U.S. businesses before burning them to the ground.
Because minus that tax break, Romney's debt-based takeovers would have been unsustainably expensive. Before Lynn Turner became chief accountant of the SEC, where he reviewed filings on takeover deals, he crunched the numbers on leveraged buyouts as an accountant at a Big Four auditing firm. "In the majority of these deals," Turner says, "the tax deduction has a big enough impact on the bottom line that the takeover wouldn't work without it."
Thanks to the tax deduction, in other words, the government actually incentivizes the kind of leverage-based takeovers that Romney built his fortune on. Romney the businessman built his career on two things that Romney the candidate decries: massive debt and dumb federal giveaways. "I don't know what Romney would be doing but for debt and its tax-advantaged position in the tax code," says a prominent Wall Street lawyer, "but he wouldn't be fabulously wealthy."
Adding to the hypocrisy, the money that Romney personally pocketed on Bain's takeover deals was usually taxed not as income, but either as capital gains or as "carried interest," both of which are capped at a maximum rate of 15 percent. In addition, reporters have uncovered plenty of evidence that Romney takes full advantage of offshore tax havens: He has an interest in at least 12 Bain funds, worth a total of $30 million, that are based in the Cayman Islands; he has reportedly used a squirrelly tax shelter known as a "blocker corporation" that cheats taxpayers out of some $100 million a year; and his wife, Ann, had a Swiss bank account worth $3 million. As a private equity pirate, Romney pays less than half the tax rate of most American executives – less, even, than teachers, firefighters, cops and nurses. Asked about the fact that he paid a tax rate of only 13.9 percent on income of $21.7 million in 2010, Romney responded testily that the massive windfall he enjoys from exploiting the tax code is "entirely legal and fair."
Essentially, Romney got rich in a business that couldn't exist without a perverse tax break, and he got to keep double his earnings because of another loophole – a pair of bureaucratic accidents that have not only teamed up to threaten us with a Mitt Romney presidency but that make future Romneys far more likely. "Those two tax rules distort the economics of private equity investments, making them much more lucrative than they should be," says Rebecca Wilkins, senior counsel at the Center for Tax Justice. "So we get more of that activity than the market would support on its own."
Listen to Mitt Romney speak, and see if you can notice what's missing. This is a man who grew up in Michigan, went to college in California, walked door to door through the streets of southern France as a missionary and was a governor of Massachusetts, the home of perhaps the most instantly recognizable, heavily accented English this side of Edinburgh. Yet not a trace of any of these places is detectable in Romney's diction. None of the people in any of those places bled in and left a mark on the man.
Romney is a man from nowhere. In his post-regional attitude, he shares something with his campaign opponent, Barack Obama, whose background is a similarly jumbled pastiche of regionally nonspecific non-identity. But in the way he bounced around the world as a half-orphaned child, Obama was more like an involuntary passenger in the demographic revolution reshaping the planet than one of its leaders.
Romney, on the other hand, is a perfect representative of one side of the ominous cultural divide that will define the next generation, not just here in America but all over the world. Forget about the Southern strategy, blue versus red, swing states and swing voters – all of those political clichés are quaint relics of a less threatening era that is now part of our past, or soon will be. The next conflict defining us all is much more unnerving.
That conflict will be between people who live somewhere, and people who live nowhere. It will be between people who consider themselves citizens of actual countries, to which they have patriotic allegiance, and people to whom nations are meaningless, who live in a stateless global archipelago of privilege – a collection of private schools, tax havens and gated residential communities with little or no connection to the outside world.
Mitt Romney isn't blue or red. He's an archipelago man. That's a big reason that voters have been slow to warm up to him. From LBJ to Bill Clinton to George W. Bush to Sarah Palin, Americans like their politicians to sound like they're from somewhere, to be human symbols of our love affair with small towns, the girl next door, the little pink houses of Mellencamp myth. Most of those mythical American towns grew up around factories – think chocolate bars from Hershey, baseball bats from Louisville, cereals from Battle Creek. Deep down, what scares voters in both parties the most is the thought that these unique and vital places are vanishing or eroding – overrun by immigrants or the forces of globalism or both, with giant Walmarts descending like spaceships to replace the corner grocer, the family barber and the local hardware store, and 1,000 cable channels replacing the school dance and the gossip at the local diner.
Obama ran on "change" in 2008, but Mitt Romney represents a far more real and seismic shift in the American landscape. Romney is the frontman and apostle of an economic revolution, in which transactions are manufactured instead of products, wealth is generated without accompanying prosperity, and Cayman Islands partnerships are lovingly erected and nurtured while American communities fall apart. The entire purpose of the business model that Romney helped pioneer is to move money into the archipelago from the places outside it, using massive amounts of taxpayer-subsidized debt to enrich a handful of billionaires. It's a vision of society that's crazy, vicious and almost unbelievably selfish, yet it's running for president, and it has a chance of winning. Perhaps that change is coming whether we like it or not. Perhaps Mitt Romney is the best man to manage the transition. But it seems a little early to vote for that kind of wholesale surrender.
This story is from the September 13, 2012 issue of Rolling Stone.
Related
• Taibbi Responds: On Mitt Romeny, Bain Capital and Private Equity
• Mitt Romney's Federal Bailout: The Documents
• Right-Wing Billionaires Behind Mitt Romney
• How the GOP Became the Party of the Rich
jueves, 3 de marzo de 2016
Healthcare Reform to Make America Great Again
Since March of 2010, the American people have had to suffer under the incredible economic burden of the Affordable Care Act—Obamacare. This legislation, passed by totally partisan votes in the House and Senate and signed into law by the most divisive and partisan President in American history, has tragically but predictably resulted in runaway costs, websites that don’t work, greater rationing of care, higher premiums, less competition and fewer choices. Obamacare has raised the economic uncertainty of every single person residing in this country. As it appears Obamacare is certain to collapse of its own weight, the damage done by the Democrats and President Obama, and abetted by the Supreme Court, will be difficult to repair unless the next President and a Republican congress lead the effort to bring much-needed free market reforms to the healthcare industry.
But none of these positive reforms can be accomplished without Obamacare repeal. On day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare.
However, it is not enough to simply repeal this terrible legislation. We will work with Congress to make sure we have a series of reforms ready for implementation that follow free market principles and that will restore economic freedom and certainty to everyone in this country. By following free market principles and working together to create sound public policy that will broaden healthcare access, make healthcare more affordable and improve the quality of the care available to all Americans.
Any reform effort must begin with Congress. Since Obamacare became law, conservative Republicans have been offering reforms that can be delivered individually or as part of more comprehensive reform efforts. In the remaining sections of this policy paper, several reforms will be offered that should be considered by Congress so that on the first day of the Trump Administration, we can start the process of restoring faith in government and economic liberty to the people.
Congress must act. Our elected representatives in the House and Senate must:
- Completely repeal Obamacare. Our elected representatives must eliminate the individual mandate. No person should be required to buy insurance unless he or she wants to.
- Modify existing law that inhibits the sale of health insurance across state lines. As long as the plan purchased complies with state requirements, any vendor ought to be able to offer insurance in any state. By allowing full competition in this market, insurance costs will go down and consumer satisfaction will go up.
- Allow individuals to fully deduct health insurance premium payments from their tax returns under the current tax system. Businesses are allowed to take these deductions so why wouldn’t Congress allow individuals the same exemptions? As we allow the free market to provide insurance coverage opportunities to companies and individuals, we must also make sure that no one slips through the cracks simply because they cannot afford insurance. We must review basic options for Medicaid and work with states to ensure that those who want healthcare coverage can have it.
- Allow individuals to use Health Savings Accounts (HSAs). Contributions into HSAs should be tax-free and should be allowed to accumulate. These accounts would become part of the estate of the individual and could be passed on to heirs without fear of any death penalty. These plans should be particularly attractive to young people who are healthy and can afford high-deductible insurance plans. These funds can be used by any member of a family without penalty. The flexibility and security provided by HSAs will be of great benefit to all who participate.
- Require price transparency from all healthcare providers, especially doctors and healthcare organizations like clinics and hospitals. Individuals should be able to shop to find the best prices for procedures, exams or any other medical-related procedure.
- Block-grant Medicaid to the states. Nearly every state already offers benefits beyond what is required in the current Medicaid structure. The state governments know their people best and can manage the administration of Medicaid far better without federal overhead. States will have the incentives to seek out and eliminate fraud, waste and abuse to preserve our precious resources.
- Remove barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products. Congress will need the courage to step away from the special interests and do what is right for America. Though the pharmaceutical industry is in the private sector, drug companies provide a public service. Allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers.
Providing healthcare to illegal immigrants costs us some $11 billion annually. If we were to simply enforce the current immigration laws and restrict the unbridled granting of visas to this country, we could relieve healthcare cost pressures on state and local governments.
To reduce the number of individuals needing access to programs like Medicaid and Children’s Health Insurance Program we will need to install programs that grow the economy and bring capital and jobs back to America. The best social program has always been a job – and taking care of our economy will go a long way towards reducing our dependence on public health programs.
Finally, we need to reform our mental health programs and institutions in this country. Families, without the ability to get the information needed to help those who are ailing, are too often not given the tools to help their loved ones. There are promising reforms being developed in Congress that should receive bi-partisan support.
To reform healthcare in America, we need a President who has the leadership skills, will and courage to engage the American people and convince Congress to do what is best for the country. These straightforward reforms, along with many others I have proposed throughout my campaign, will ensure that together we will Make America Great Again.
https://www.donaldjtrump.com/positions/healthcare-reform
miércoles, 2 de marzo de 2016
Still Report #668 - The Truth About Trump University
- February 29, 2016 -
Donald J. Trump Demands Retraction of Misleading Ads Produced by Marco Rubio’s Super PAC
Trump University Civil Case Plaintiffs Featured in Ads Misrepresenting the Facts
(New York, NY) February 29th, 2016 – Today, Donald J. Trump released the surveys completed by two of the three (the third survey is being obtained and is of similar nature) individuals featured in recent ads released by American Future Fund regarding Trump University. The previously unreleased documents show overwhelming support for the school from the individuals featured in the ads.
Donald J. Trump is requesting the immediate retraction of the ads created by American Future Fund, which clearly was unlawfully coordinated with lightweight Senator Marco Rubio on these misleading commercials. The ads feature three individuals who are part of a lawsuit against Trump University, an educational program that has a 98% approval rating from all attendees. These individuals provided written praise of their experience in school surveys (View Kevin Scott & Bob Guillo).
Mr. Trump stated, “Trump University has a 98% approval rating and an “A” rating from the Better Business Bureau. New York Attorney General, Eric Schneiderman continues to waste taxpayer money trying to smear me, but the fact is that the overwhelming majority of students had a great experience. It’s a minor civil case I have not settled out of principle. Lightweight Marco Rubio is grasping at straws and produced terrible ads featuring three people who all provided written statements praising the program. I demand an immediate retraction of this false and libelous ads. It just shows how low a failing campaign will go to help their failing candidate.”
New York Attorney General Eric Schneiderman is a typical politician and just a few weeks before going after Mr. Trump, he was seeking financial support from Mr. Trump’s daughter and others close to the GOP frontrunner. When he did not receive contributions he went after Mr. Trump with this frivolous lawsuit based on less than 2% of Trump University attendees. The law firm suing Mr. Trump made a major contribution to Eric Schneiderman before Schneiderman entered the lawsuit. Mr. Trump has won most of the case, which Schneiderman is now appealing.
For more information regarding Trump University and the status of the politically motivated civil case, visit http://www.98percentapproval.com/
martes, 1 de marzo de 2016
domingo, 28 de febrero de 2016
América, Wake Up! La verdadera cara del senador Marco Rubio
Donald Trump Invites ICE Officer Chris Crane, Fired Disney Workers, to Join Rally
The line-up for Donald Trump’s Sunday rally in Alabama includes victims of the immigration and guest-worker policies favored by
The speakers include two of Rubio’s constituents who were victims of the H-1B outsourcing program, as well as Chris Crane, president of the Immigration and Customs Enforcement (ICE) Council.This rally comes on the heels of a bombshell New York Times report documenting how Rupert Murdoch and Fox News colluded with Rubio to minimize public opposition to the passage of Rubio’s amnesty and guest-worker expansion bill that was backed by President Barack Obama.
The two Disney workers, Leo Perrero and Dena Moore, were laid off last year and forced to train their low-skilled foreign replacements, who were brought in to the country on H-1B guest worker visas. Their foreign replacements are just a small part of the workforce of roughly 650,000 H-1B university-trained foreign workers now holding jobs in the United States.
While Donald Trump has called on Disney to hire back all of its American employees, Rubio has sought to expand the H-1B program. As recently as last year, Sen. Rubio introduced legislation—endorsed by Disney’s CEO Bob Iger via his immigration lobbying firm—to triple the issuances of H-1Bs. Disney is one of Rubio’s top financial donors, having given more than $2 million according to Open Secrets.
Dena Moore, one of those victims, recently told Breitbart News that she is voting for Donald Trump.
Rubio “never reached out” to the hundreds of Disney workers who were replaced by H-1B visas, she said. “I do believe that politicians will always side with who pays them directly or indirectly,” Moore said of Rubio’s financial ties to Disney. “They will say and do whatever it takes because they’re not being held accountable.”
Moore said that she is supporting Trump because “Trump is standing up to the bullies.”
“The American people are now the weak ones being bullied,” and Trump “is the champion who stands up to the bullies … for us,” he said.
ICE Council President Chris Crane is also set to speak at the rally.
Crane is an ICE officer of 13 years, he is a former U.S. Marine, a lifetime member of the Veterans of Foreign Wars and a lifetime member of the American Legion. When President Obama enacted his first executive amnesty in 2012, Crane and nine of his fellow immigration officers sued the President to try to stop the lawless amnesty.
has described Crane as an “American hero” for his whistle blowing on the immigration corruption. Crane was also a vocal opponent of Rubio’s signature Gang of Eight bill. Crane’s primary criticism of Rubio’s immigration plan was that it gutted interior enforcement and would give amnesty to illegal aliens who were sex offenders, gang members and criminal convicts. After Crane documented how Rubio treated law enforcement “like absolute trash” in an interview with Breitbart News last week, Rubio sought to smear Crane’s reputation on national television– falsely asserting that Crane’s criticisms of the bill pertained to “more kind of labor union stuff” rather than keeping the American people safe.
However, a 2013 letter obtained by Breitbart News bolsters Crane’s charges. In 2013 immediately following his meeting with Rubio, Crane wrote a letter to Rubio in which he detailed his specific concerns with the bill:
“Speaking on behalf of our nation’s ICE agents and officers, I believe there are many crucial measures missing from this legislation that must be resolved before it is introduced. Based on news reports, it is my understanding that you are filing the bill today. I hope that can be delayed so that our officers and experts can provide real legislative input on the areas we discussed last night: the lack of ICE resources, how current ICE enforcement practices leave the nation open to tactics used by the 9/11 terrorists, DHS directives that release dangerous criminal aliens back into our communities, the need for biometric exit/entry, the administration’s dangerous abuse of prosecutorial discretion, our inability to make street arrests, the breakdown of enforcement in our jails, the disciplining of officers for doing their jobs—these are only some of the many crucial interior enforcement issues not addressed in this legislation… If these issues are not resolved, I have no doubt—based on my law enforcement experience—that this proposal would further hamstring the ability of our officers to protect the public.”After Rubio began to attack Crane’s reputation, other law-enforcement officers spoke out on Crane’s behalf-– including Sheriff Paul Babeu, Sheriff Tom Hodgson, Sheriff Sam Page, and former U.S. Citizenship and Immigration Services (USCIS) President Ken Palinkas.
http://www.breitbart.com/big-government/2016/02/28/donald-trump-invites-ice-officer-chris-crane-fired-disney-workers-join-rally/
Wake Up!, América ¿Por qué Marco Rubio Si, y Donald Trump No?
Por qué Marco Rubio sí Y Donald Trump no?
Con Rubio la intencion fue marcadamente la contraria: generar la imagen publica de un lider que ARRASTRA MULTITUDES.
Todo los que saben de estas tecnicas saben exactamente que eso es lo que buscan:
EXALTAR LA FIGURA DE RUBIO Y MINIMIZAR LA DE TRUMP.
La pregunta se impone:
Por que Marco Rubio si y Trump no?
Marco Rubio posee una MUY CORTA TRAYECTOEIA POLITICA y ninguna trayectoria administrativa. Por la candidatura republicana desfilaron personas con gran experiencia administrativa y candidatos con experiencia en administrar ciudades y estados completos, ninguno de los cuales llamo al parecer la atencion de stablishment.
Por que Rubio, quiza el de menos trayectoria de todos si llama la atencion?
Por que el stablishment se rinde ante el?
o sera todo lo contrario, esto es:
RUBIO ES QIEN ESTA RENDIDO AL STABLISHMENT.
Lo cierto, para salir lo antes posible de los subjetivismos y las intuiciones, como donores para la campana de Rubio aperecen poderosos grupos, algunos de los cuales POR SUS INTERESES DECLARADOS PUBLICAMENTE niegan claramente el discurso oficial de Marco, a saber, hace poco Marco decia en entrevista publica que NO ACEPTA LAS RELACIONES CON LA DICTADURA CASTRISTA, sin embargo, muchos de sus promotores (fanjul y compania por ejemplo) han sido abiertos promotores publicos de esas relaciones,
QUE RARO, VERDAD?
Esta ultima jugada de la prensa es, sin dudas, LA EVIDENCIA MAS CLARA con la que podemos contar para establecer sin equivocos que TODA LA MAQUINARIA PROPAGANDISTICA DEL STABLISHMENT, hasta donde lo permite la ley (si no siquiera hubiesen dado camara a Trump) HA SIDO PUESTA A DISPOSICION DE RUBIO y en contra de DONALD TRUMP.
Que mas tiene que suceder para comprender que EL DINERO QUE HA ESTADO EROSIONANDO LA POLITICA AMERICANA por varias decadas
PARTICIPA ABIERTAMENTE EN FAVOR DEL CANDIDATO MARCO RUBIO?
https://los4gatos.wordpress.com/2016/02/20/los-motivos-de-obama-o-barack-y-los-frijoles-magicos/
Friend,
This may be the most urgent, critical email I've ever sent to my supporters.
I know I've asked a lot of you during this campaign, and I wouldn't be reaching out today unless it was important: just three days remain until Super Tuesday, and your financial support right now is crucial to our success.
Our future is hanging in the balance of this election, and if we don't act right now we could end up with Donald Trump or Hillary Clinton as our next president.
I am the only candidate who can defeat them both, but I can only do so if I have your immediate support.
I've asked my digital team to set up this personalized donation link just for you right now. Please click the link right now to make an online contribution.
http://landing.marcorubio.com/
An online contribution is the fastest, most secure way to support our campaign. Your donation will instantly hit our system and allow us to afford our final get-out-the-vote efforts in every Super Tuesday state.
I am the only candidate who has presented common-sense conservative plans to help working Americans and has the experience to implement them from Day One. As president, I'll keep us safe and make America prosper again. I will also defeat Hillary Clinton in the fall, but only if I first defeat Donald Trump.
We can win, but it's not going to be easy or inexpensive. In order to defeat Donald Trump, we need all hands on deck from people who want a candidate with real ideas. We need to reach every voter before they hit the polls on Super Tuesday.
http://landing.marcorubio.com/
I know we can STOP Donald Trump from taking over our party, but I need your help RIGHT NOW. Time is running out before Super Tuesday, and whatever you can afford will go a long way.
Thank you for your commitment to our country. I promise I will make you proud.
Marco
P.S. We've got a lot of work to do -- and not much time to do it. Whatever financial support you can provide right now will go immediately towards spreading our message and get-out-the-vote efforts. The next generation is counting on us right now.
http://landing.marcorubio.com/
Romalh
Ciertamente , no hay discurso en que Donald Trump no llame a la
prensa DESHONESTA por la tactica que han usado de hacer un close up de
su cara y jamas mostrar las multitudes que asistieron a sus discursos.
Los que MANDAN en la media saben el efecto psicologico POSITIVO que eso
generaria para Trump, que ha mostrado ser un verdadero lider ARRASTRANDO
PUEBLO.Con Rubio la intencion fue marcadamente la contraria: generar la imagen publica de un lider que ARRASTRA MULTITUDES.
Todo los que saben de estas tecnicas saben exactamente que eso es lo que buscan:
EXALTAR LA FIGURA DE RUBIO Y MINIMIZAR LA DE TRUMP.
La pregunta se impone:
Por que Marco Rubio si y Trump no?
Marco Rubio posee una MUY CORTA TRAYECTOEIA POLITICA y ninguna trayectoria administrativa. Por la candidatura republicana desfilaron personas con gran experiencia administrativa y candidatos con experiencia en administrar ciudades y estados completos, ninguno de los cuales llamo al parecer la atencion de stablishment.
Por que Rubio, quiza el de menos trayectoria de todos si llama la atencion?
Por que el stablishment se rinde ante el?
o sera todo lo contrario, esto es:
RUBIO ES QIEN ESTA RENDIDO AL STABLISHMENT.
Lo cierto, para salir lo antes posible de los subjetivismos y las intuiciones, como donores para la campana de Rubio aperecen poderosos grupos, algunos de los cuales POR SUS INTERESES DECLARADOS PUBLICAMENTE niegan claramente el discurso oficial de Marco, a saber, hace poco Marco decia en entrevista publica que NO ACEPTA LAS RELACIONES CON LA DICTADURA CASTRISTA, sin embargo, muchos de sus promotores (fanjul y compania por ejemplo) han sido abiertos promotores publicos de esas relaciones,
QUE RARO, VERDAD?
Esta ultima jugada de la prensa es, sin dudas, LA EVIDENCIA MAS CLARA con la que podemos contar para establecer sin equivocos que TODA LA MAQUINARIA PROPAGANDISTICA DEL STABLISHMENT, hasta donde lo permite la ley (si no siquiera hubiesen dado camara a Trump) HA SIDO PUESTA A DISPOSICION DE RUBIO y en contra de DONALD TRUMP.
Que mas tiene que suceder para comprender que EL DINERO QUE HA ESTADO EROSIONANDO LA POLITICA AMERICANA por varias decadas
PARTICIPA ABIERTAMENTE EN FAVOR DEL CANDIDATO MARCO RUBIO?
https://los4gatos.wordpress.com/2016/02/20/los-motivos-de-obama-o-barack-y-los-frijoles-magicos/
¿Y qué me dicen de las donaciones vía Internet?
Barack Hussein Obama tuvo mucho éxito en el 2008. Del cielo le cayeron los millones .
A Marco también le caerán millones.
Friend,
This may be the most urgent, critical email I've ever sent to my supporters.
I know I've asked a lot of you during this campaign, and I wouldn't be reaching out today unless it was important: just three days remain until Super Tuesday, and your financial support right now is crucial to our success.
Our future is hanging in the balance of this election, and if we don't act right now we could end up with Donald Trump or Hillary Clinton as our next president.
I am the only candidate who can defeat them both, but I can only do so if I have your immediate support.
I've asked my digital team to set up this personalized donation link just for you right now. Please click the link right now to make an online contribution.
An online contribution is the fastest, most secure way to support our campaign. Your donation will instantly hit our system and allow us to afford our final get-out-the-vote efforts in every Super Tuesday state.
I am the only candidate who has presented common-sense conservative plans to help working Americans and has the experience to implement them from Day One. As president, I'll keep us safe and make America prosper again. I will also defeat Hillary Clinton in the fall, but only if I first defeat Donald Trump.
We can win, but it's not going to be easy or inexpensive. In order to defeat Donald Trump, we need all hands on deck from people who want a candidate with real ideas. We need to reach every voter before they hit the polls on Super Tuesday.
I know we can STOP Donald Trump from taking over our party, but I need your help RIGHT NOW. Time is running out before Super Tuesday, and whatever you can afford will go a long way.
Thank you for your commitment to our country. I promise I will make you proud.
Marco
P.S. We've got a lot of work to do -- and not much time to do it. Whatever financial support you can provide right now will go immediately towards spreading our message and get-out-the-vote efforts. The next generation is counting on us right now.
sábado, 27 de febrero de 2016
miércoles, 24 de febrero de 2016
A dos décadas del derribo de las avionetas de Hermanos al Rescate
Cuatro jóvenes fueron pulverizados sobre
el Estrecho de la Florida el 24 de febrero de 1996. La Organización
Internacional de Aeronáutica Civil y el Consejo de Seguridad de la ONU
condenaron el hecho perpetrado por aviones de guerra del gobierno de
Cuba.
© ContactoMagazine.com
Revista Digital Latina desde 1998
Los Angeles, California
Revista Digital Latina desde 1998
Los Angeles, California
Cuatro meses
después del derribo de dos avionetas civiles y desarmadas del grupo
Hermanos al Rescate, con sede en Miami, Florida, la Organización
Internacional de Aeronáutica Civil de la ONU y el Consejo de Seguridad
de ese organismo condenaron el ataque perpetrado por dos aviones de
guerra MiG de la Fuerza Aérea de Cuba, 26 kilómetros al norte del
espacio aéreo cubano.
El derribo se produjo el 24 de febrero de 1996
con un saldo de cuatro muertos, tres de ellos ciudadanos estadounidenses
de origen cubano y un cubano residente en Estados Unidos. Sus nombres
eran Armando Alejandre Jr., Mario de la Peña, Carlos Costa y Pablo
Morales.
La confrontación se produjo luego de varias
incursiones de las avionetas en territorio cubano, para lanzar desde el
aire panfletos políticos y copias de la Declaración Universal de
Derechos Humanos de la ONU. El comandante Fidel Castro se responsabilizó
con la orden suprema del derribo de las naves. Documentos divulgados
desde entonces indican que fue el actual presidente de los Consejos de
Estado y de Ministros de Cuba, general Raúl Castro, quien organizó el
ataque.
En su informe del 27 de junio de 1996, la
Organización Internacional de Aeronáutica Civil (ICAO) de la ONU subraya
que “el ilegal derribo de dos avionetas civiles el 24 de febrero de
1996 por la Fuerza Aérea cubana viola el principio de que los Estados no
pueden usar armas contra naves civiles en vuelo y que, al interceptar
naves civiles, las vidas de personas a bordo y la seguridad de las naves
no pueden ser puestas en peligro”.
El principio mencionado por la ICAO en su informe
se refiere a los estándares acordados por la Convención Internacional
sobre Aviación Civil, también conocida como la Convención de Chicago, la
cual fue firmada por decenas de países el 7 de diciembre de 1944.
Durante todo el tiempo, desde entonces, el
gobierno de Cuba ha justificado el derribo con el argumento de que los
vuelos de Hermanos al Rescate representaban una provocación, y que las
avionetas fueron derribadas en espacio aéreo cubano.
El día del ataque, el espía cubano Juan Pablo Roque, que se había hecho pasar por anticastrista unido a Hermanos al Rescate, huyó a Cuba. Posteriormente, en 1998, los servicios de inteligencia de Estados Unidos descubrieron la llamada Red Avispa y arrestaron a cinco espías cubanos, que fueron condenados a varias penas de cárcel. El líder del grupo, Gerardo Hernández, fue sentenciado en 2001 a dos cadenas perpetuas y 15 años de prisión por conspiración para cometer un asesinato, conspiración para espiar, ser agente extranjero no declarado y falsa documentación. Supuestmente, Hernández coordinó la labor de inteligencia que condujo al derribo de las avionetas. Sin embargo, este hombre fue liberado en diciembre de 2014, luego del anuncio de la normalización de relaciones entre Washington y La Habana. Todos los miembros de la Red Avispa también fueron liberados.
Versiones de la prensa estadounidense indican que, tras el derribo de las avionetas, el entonces presidente Bill Clinton exploró la posibilidad de dar una respuesta militar al hecho, pero descartó la medida al percatarse de que cualquier ataque a Cuba podría poner en peligro la vida de civiles. Clinton decidió entonces firmar la Ley Helms-Burton, que codificó el embargo comercial y financiero al régimen castrista.
Hermanos al Rescate fue fundada en 1991 por el veterano de Bahía de Cochinos, José Basulto, devenido un luchador cívico no violento con apego a las doctrinas de Gandhi y Martin Luther King. El propósito de la organización era rescatar "balseros" cubanos hallados en alta mar. En el momento en que se produjo la tragedia, la organización tenía un presupuesto anual de un millón 200 mil dólares, producto de donaciones privadas.
El día del ataque, el espía cubano Juan Pablo Roque, que se había hecho pasar por anticastrista unido a Hermanos al Rescate, huyó a Cuba. Posteriormente, en 1998, los servicios de inteligencia de Estados Unidos descubrieron la llamada Red Avispa y arrestaron a cinco espías cubanos, que fueron condenados a varias penas de cárcel. El líder del grupo, Gerardo Hernández, fue sentenciado en 2001 a dos cadenas perpetuas y 15 años de prisión por conspiración para cometer un asesinato, conspiración para espiar, ser agente extranjero no declarado y falsa documentación. Supuestmente, Hernández coordinó la labor de inteligencia que condujo al derribo de las avionetas. Sin embargo, este hombre fue liberado en diciembre de 2014, luego del anuncio de la normalización de relaciones entre Washington y La Habana. Todos los miembros de la Red Avispa también fueron liberados.
Versiones de la prensa estadounidense indican que, tras el derribo de las avionetas, el entonces presidente Bill Clinton exploró la posibilidad de dar una respuesta militar al hecho, pero descartó la medida al percatarse de que cualquier ataque a Cuba podría poner en peligro la vida de civiles. Clinton decidió entonces firmar la Ley Helms-Burton, que codificó el embargo comercial y financiero al régimen castrista.
Hermanos al Rescate fue fundada en 1991 por el veterano de Bahía de Cochinos, José Basulto, devenido un luchador cívico no violento con apego a las doctrinas de Gandhi y Martin Luther King. El propósito de la organización era rescatar "balseros" cubanos hallados en alta mar. En el momento en que se produjo la tragedia, la organización tenía un presupuesto anual de un millón 200 mil dólares, producto de donaciones privadas.
Hasta el 24 de febrero de 1996, Hermanos al
Rescate tenía cinco avionetas Cessna en las que volaban unos 20 pilotos
de varias nacionalidades. Hasta el día del derribo, los voluntarios de
la organización habían salvado a alrededor de seis mil "balseros"
encontrados a la deriva en las peligrosas aguas del Estrecho de la
Florida con ayuda del Servicio de Guardacostas de Estados Unidos,
organismo que por aquella fecha calculó que de cada cinco cubanos que
intentaban atravesar el estrecho, sólo uno llegaba con vida a territorio
norteamericano.
La siguiente es una cronología de los hechos el día del derribo:
Audio del día del derribo de las avionetas de la
organización humanitaria Hermanos al Rescate con conversaciones y
expresiones de júbilo de los pilotos de la Fuerza Aérea de Cuba durante
el ataque. Este material fue publicado en YouTube por el periodista y
piloto argentino Horacio Cambeiro.
12:15 p.m. a 12: 40 p.m.
Radares de Estados Unidos divisan aviones MiG
cubanos volando al norte de La Habana, según un reporte de la
Organización Internacional de Aeronáutica Civil (ICAO, página 51,
párrafo 2.3.1.2.)
1:15 p.m.
Tres avionetas de Hermanos al Rescate parten en
una misión de rutina de rescate de "balseros". Cuatro instalaciones de
radares de Estados Unidos vigilan las avionetas de la organización, de
acuerdo con el informe de la ICAO.
2:50 p.m. aproximadamente
Avionetas de Hermanos al Rescate divisan un avión
tipo Orion de la inteligencia militar de Estados Unidos, dirigiéndose
hacia el este a su misma altitud, aproximadamente cinco millas al norte
del paralelo 24.
2:57 p.m.
Hermanos al Rescate le comunica a La Habana que
va a cruzar el paralelo 24 rumbo al sur, como se había hecho en otras
misiones de rescate desde el 21 de julio de 1991, según el informe de la
ICAO.
3: 00 p.m.
Dos aviones MiG cubanos despegan con el propósito
de interceptar las avionetas de Hermanos al Rescate. Poco después, jets
F15 de la fuerza aérea de Estados Unidos en la base aérea de Homestead
son puestos en estado de alerta de combate. Luego se desactiva el estado
de alerta. Se dijo que esta decisión se debió a un error de
comunicación, según Hermanos al Rescate.
3:10 p.m.
Aviones MiG cubanos vuelan por encima de las
avionetas de Hermanos al Rescate, según los mapas de radares de la
fuerza aérea de Estados Unidos.
3: 15 p.m.
El mayor Jeffrey Houlihan, del centro de
vigilancia de radares del Servicio de Aduanas de Estados Unidos en la
base aérea March en California, identifica a los MiGs cubanos volando
hacia territorio norteamericano y maniobrando alrededor de las avionetas
de H.R. El mayor Houlihan hace entonces un procedimiento equivalente a
una llamada 911 al Sector de la Defensa Aérea del Sureste en la base de
Tyndall. Esta base le confirma al mayor Houlihan que también ellos
habían divisado los MiGs y le dice: "Estamos manejando esto, no se
preocupe". Estos datos fueron publicados en The Miami Herald el 3 de julio de 1996 con el titular "U.S. Radar Official: 911 Call".
Posteriormente, el mayor Houlihan atestiguó que
hay un procedimiento operativo estandar mediante el cual los jets
interceptores tienen que ser desplegados una vez que los aviones MiGs
cubanos crucen el límite territorial de Cuba de 12 millas. Este
procedimiento no se siguió en este caso, según testimonio del propio
mayor Houlihan en un tribunal de Estados Unidos donde se ventilaba un
conflicto legal entre la Administración Federal de Aviación (FAA) y el
presidene de H.R., José Basulto.
El Centro de Control de Tráfico Aéreo de Miami
también pudo haber sido contactado en cuestión de segundos para que
emitiera una advertencia a las avionetas de Hermanos al Rescate, como se
había hecho en el pasado, o a la base de control de Opalocka, donde
está la sede de H.R., para que ésta emitiera un aviso en menos de 2
minutos, como en el pasado. Estos detalles fueron publicados en The Miami Herald el 3 de julio de 1996 a propósito del testimonio del mayor Houlihan en el juicio FAA vs. Basulto.
3:21 p.m.
Un MiG cubano derriba la primera avioneta de
Hermanos al Rescate, luego de haber confirmado visualmente y haber
descrito el blanco como una avioneta Cessna 337 blanca a los
controladores aéreos militares de Cuba. Esto ocurrió en un lapso de 6 a 7
minutos después de la llamada 911 del mayor Houlihan. Existen
transcripciones de las comunicaciones de los MiGs. en poder del gobierno
de Estados Unidos.
3:28 p.m.
Otro MiG cubano derriba la segunda avioneta de
H.R. siguiendo el mismo procedimiento de visualización y descripción de
la nave civil, 6 a 7 minutos después del derribo de la primera avioneta y
14 minutos después de la llamada 911 del mayor Houlihan.
Para Hermanos al Rescate resulta "alarmante" que
no se haya hecho ningún intento por advertir a las avionetas de la
organización de que estaban en peligro de ser derribadas. De acuerdo con
H.R., en incidentes previos relacionados con vuelos de aviones de
guerra cubanos, las naves de H.R. fueron avisadas en pleno vuelo. Según
Hermanos al Rescate, cuando esto ocurrió en el pasado, las avionetas de
la organización regresaron siempre a su base.
3:35 p.m.
La primera pareja de MiGs regresa a su base en territorio cubano.
3:35 p.m.
La segunda pareja de MiGs persigue a la tercera y
única avioneta sobreviviente de H.R. rumbo al norte, guiadas por un
sistema de control de radares de tierra.
3:41 p.m.
La otra avioneta cruza el paralelo 24 rumbo al norte, según un radar de Estados Unidos.
3:45 p.m.
Los MiGs hacen contacto visual con la avioneta
sobreviviente y piden instrucciones a Cuba. Se les ordena continuar la
persecución, de acuerdo con la transcripción de un informe de la ICAO.
3:47 p.m.
Los MiGs identifican ante los controladores
aéreos cubanos la tercera avioneta de H.R. como una nave Cessna 337 de
color azul claro. Vuelan alrededor de la avioneta perdiendo el contacto
visual dos veces, según el mismo informe.
3:53 p.m.
La avioneta de H.R. está 26 millas al norte del
paralelo 24 en espacio aéreo controlado por Estados Unidos. Los MiGs,
luego de recobrar el contacto visual con la avioneta, reciben la orden
de suspender la persecución por encontrarse "demasiado alto", lo cual se
interpreta como demasiado lejos hacia el norte. En ese momento, los
MiGs cubanos están a tres minutos de las costas de Estados Unidos, de
acuerdo con datos del sistema de radares norteamericano.
Hasta ese momento habían pasado 39 minutos de
persecución sin que las autoridades aéreas de Estados Unidos hayan hecho
intento alguno por contactar a Hermanos al Rescate, como en el pasado.
La Fuerza Aérea de EE.UU. nunca autorizó a sus F15 a despegar luego de
haberlos puesto en estado de alerta de combate, con los motores
encendidos, para detener el ataque de los MiGs, según la revista Tropic de The Miami Herald, en un artículo publicado el 16 de febrero de 1997.
(Parte de esta cronología fue hecha con la
ayuda de Hermanos al Rescate, en cuyo web site (www.hermanos.org) hay
una crolonología similar a ésta, en inglés. También se utilizaron
elementos del informe de la Organización Internacional de Aeronáutica
Civil (ICAO) y de la prensa estadounidense)Para compartir este artículo:
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