Don't Fall for the Liberal Smoke Screen

by Gerri Willis

These days it seems politicians are on TV 24-7, which means at one time or another, one of them is going to say something that gets them into trouble.

Like this gem from Mitt Romney:

“I'm not concerned about the very poor. We have a safety net there, if it needs a repair, I’ll fix it."

It was one brief comment in a long answer on a CNN interview, but boy did his critics pounce.

Ed Schultz of MSNBC said this: "the message there for Mr. Romney is, I think, he feels the country has done enough for the very poor."

And here's what Dana Milbank of the Washington Post said on that same network: "what more could he be doing to please the one percent?"

But here's the thing: He was just trying to make the point that "safety net" tax credits, Medicaid, unemployment benefits, food stamps, etc is 50 percent greater than five years ago!

The overall cost of these programs has tripled since the start of the recession!

Here's the rest of the statement that you may not have heard because the elite media missed it: "...the middle-income Americans, they're the folks that are really struggling right now and they need someone that can help get this economy going for them."

A point many on both sides of the aisle have made.

But that explanation came too little too late for the 24 hour news cycle.

The damage had already been done, but here's the thing.

Whether he meant what he said or not, it's not the point.

We're focusing on the wrong things, people!

What we should be talking about is a question I posed earlier this week: "Are you better off now than four years ago?"

Four years after the recession began, and two and a half years after it ended, real gross domestic product is down more than a thousand dollars per person, and nearly six million fewer Americans are working.

That, too, is according to the Wall Street Journal.

Never before have these indicators still been so low four years after a recession.

In fact, if we did things like we've done after the last ten recessions, GDP per person should be more than 45 hundred dollars higher, and more than 13 and a half million more Americans should be working.

Obviously, the great depression is a different story. The worst economic crisis ever in this country, and while the level of despair during the depression was different from the most recent crisis, the “recovery” is very similar.

As the paper points out, it's not because of the depth of the problem, but the inane government policies following each crash.

In the 1930s, FDR increased spending by more than three and a half percent of GDP, which looking at it now, is peanuts.

President Obama obliterated that number by increasing spending by four and a half percent of GDP.

The two leaders had similarly destructive tax policies: the top individual income tax rate eventually rose to 79 percent under Roosevelt and Herbert Hoover.

Under Obama, the highest marginal tax rate will rise by more than 21 percent by the end of his term.

Instead of focusing on what Mitt Romney did or didn't mean, why don't we focus on the fact: this President and his failed policies have kept this economy from growing for the last four years.

Let's focus on how another four years of this spending spree will only make things worse.

Romney's Achilles' Heel?

by Gerri Willis

On this first in the nation primary day, the “Nomneys” on the attack, trying to score votes by blasting Mitt Romney and his tenure as the head of Bain Capital, a private equity firm.

Here's a portion of a recent ad by “Winning Our Future”, a pro-Gingrich Super PAC, that'll give you the flavor of these attacks:

“A story of greed, playing the system for a quick buck… a group of corporate raiders led by Mit Romney, more ruthless than Wall Street. For tens of thousands of Americans, the suffering began when Mitt Romney came to town."

Sounds scary, right?

Is Bain in particular and private equity investing in general morally bankrupt?

Is Romney a corporate raider more ruthless than Wall Street?

To answer the question, you first have to understand what private equity is, which the critics clearly don't.

Private equity firms look for companies that have lost value.

They buy those companies, and then invest more in them.

That means everything from new strategy to new equipment to new paint on the walls.

That investment costs more money, and usually that leads to borrowing, but it is borrowing the company could never have gotten in its previous state.

Consider Axle Tech -- an manufacturer in Michigan that supplies our soldiers in Afghanistan.

Since Carlyle Group took over the company in 2005, it has doubled both production and employment, 30 percent of which is a unionized workforce.

Likewise, the "victims" of Bain were out of favor and performing poorly.

Which is to say, if Bain hadn't come along, these companies might have closed their doors and shut down entirely.

Not a recipe for job gains.

What about the charge that Bain was a hit and run investor -- in it for a quick buck?

Not if you look at the facts.

The Wall Street Journal analyzed 77 of the companies Bain invested in - their relationship lasted as long as eight years.

That ain't short term to me.

Look, the real critics of private equity believe the targets of private equity firms would have been better off struggling along on their own.

But doesn't it make more sense to transform a business into a thriving entity rather than watching them hang on by their fingernails hoping things get better? That's really what the critics are talking about. Wishing, hoping, and waiting. The charge that private equity firms fire people is true.

Often, the first out the door is senior management. Others may follow.

But if the firm is successful more people are hired.

Even the Federal Government knew enough to try slim down the automakers they bailed out three years ago, pressuring them to slim their bloated dealership networks.

Slashing thousands of jobs.

I don't have a problem with critics discussing how well Bain performed -- 22 percent of its investments went belly up.

But the firm also launched Staples, Dominos Pizza and Sports Authority.

Today those companies employ a total of nearly 116 thousand people.

And, Bain investors tripled their money.

Other companies that have benefitted from private equity investors include the following that you might have heard of GNC, Burger King, and HCA.

So was Bain greedy? Maybe.

Ruthless -- well -- in their quest for profits, yes.

But many people benefitted from their efforts.

In other words, I'd say companies like Bain do more good than harm.

Romney Adviser: Kill Payroll Tax Cut

by Gerri Willis

Republican presidential candidate and former Massachusetts Governor Mitt Romney speaks at the Devine Millimet-Manchester Chamber of Commerce Forum in Manchester on the 18th of Nov.Mitt Romney's economic adviser Glenn Hubbard tells The Willis Report tonight that the economy will continue to suffer from "a rough and tumble year from events all over the world," but that the best stimulus for an anemic American economy is not a payroll tax cut.

"In the near term, the question is what is the most effective stimulus for our economy. I don't think it's a payroll tax cut," he said. "You can consider lower long-term payroll taxes, but that would have to be a part of tax reform."

When asked whether the U.S. should be counseling Europe on how to handle its debt problems, Hubbard, who is also the dean of Columbia Business School, said, "we don't have standing" to advise the continent on a problem afflicting the U.S. economy as well.

Hubbard continued to back his plan for a mass refinancing of homeowners who are current on their mortgage but underwater - that is they owe more than their home is worth. He said the program could pump an additional $70 billion into the economy and would be paid for by mortgage securities holders who are currently benefitting from homeowners inability to refinance. "There is no free lunch," he said.

Hubbard's long career as a financial policy maker included stints as deputy assistant secretary at the U.S. Treasury Department and a consultant to the Federal Reserve Board.

In terms of the European debt crisis, Hubbard had the following to say: "What the Europeans need to do are a handful of things," he said. "First, getting fiscal probity back in the periphery, second is to make sure the European Financial Stability Facility is large enough to wall off contagion, and third get support if those two things happen from the European Central Bank. If that does not happen, the Euro does stand a good chance of coming off the rails, particularly if Italy's troubles widen."

Hubbard says the chances of a double-dip recession for the country is modest but doesn't see very robust growth over the next year. "And, if we had a full-blown European financial crisis, it would definitely tip the likelihood more toward recession in the US."


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