From the Citizen

It Sure Pays to Run with the Big Dogs

Mitt Romney is the presumptive candidate for the Republican nomination, having outspent all other contenders by enormous amounts. Money opens doors, even if you are not a favorite. Top contributors to the Romney campaign and Romney political action committees (PACS) read like a Who’s Who of Wall Street. According to,  the power brokers behind his campaign are, in order of giving:  Goldman Sachs, JP Morgan Chase, Bank of America, Morgan Stanley, Credit Suisse Group, Citigroup, Barclays, Price Waterhouse, HIG Capital, Wells Fargo, and UBS, among others. Even Ernst and Young, the highly-regarded and oh-so-capable auditors and bookkeepers for now defunct Lehmann Brothers are on the list of monetary supporters. Remember them?  Lehmann’s shenanigans and ultimate downfall started the domino effect that brought about the crisis and recession of 2008. The taxpayers are still on the hook for that one, but the ones who escaped bankruptcy, many listed above, are making more money, now, than ever. Never mind, we have short memories. It sure pays to run with the Big Dogs.

Wait a sec…How does he know these contributors?  How do they know him and why would they support him?  What’s in it for them? Geez, maybe they belong to the same clubs, do business together, have a history, friendships. Maybe he is one of them. That would explain their largesse. His net worth and yearly income sure put him in the 1% bracket; that’s a given, though his reluctance to release more than a couple of years worth of tax records suggest previous income even greater than what’s reported. Still, success is an attribute in this country and, as Mr. Romney likes to point out, he’s a successful businessman, a wealthy man, something we all strive for, through hard work, fair dealings and a strong moral compass. He makes no excuses for his wealth. In fact, Mitt points to his success as a businessman as a major qualification for the office of president. Apparently, he believes in running the country like a business. Of course, government is not a business, and is not designed to make a profit for the friends and contributors of the elected. That business approach was tried, already, with dire consequences. No matter; let’s look at how Romney made his fortune and what kind of business he ran. That may open the curtain, a bit, on those who are financing his political aspirations.

Romney was co-founder and CEO of Bain Capital and ran a private-equity firm that specialized in leveraged buyouts of distressed or under-performing companies for 15 years, ending in 1999. It is one of the largest such firms in the nation. More than any other source, his wealth is derived from that venture, and his association with that firm is still paying dividends (and campaign contributions). This background acted as a springboard for his political life.

Simply stated, here’s how that type of business operates:

Private Equity Partnerships are formed and the partners raise money from outside investors (equity). Then they invest this money, along with securing bank loans to purchase distressed or under-performing companies that they think might be profitable to them. Once they have a controlling interest in a company, they restructure the operation to show a profit. Since the highest cost in any operation is the workforce, the cuts begin there. They cut wages, pensions and health benefits, lay off people, and even go so far as to fire everyone and hire some back at lower wages. Cost cutting, rather than revenue enhancement is paramount (ring any bells?). The company starts to show a profit on the bottom line, due to reduced personnel costs. Once it appears profitable, they use the company as collateral to borrow additional money from banks. Like any loan, the banks charge interest, but this interest is deductable from the company’s income. This makes the company look even more profitable. With the borrowed money, some of it goes to pay a special dividend to repay the original investors with interest; 20% is the norm. The partners also get a generous cut for putting the deal together. Now that they’ve covered the cost of buying the company, anything they make thereafter is pure profit. The company can be sold or broken up and the assets sold off.  Either way, the partners profit handsomely.

If the now-profitable (on paper) company can be sold for more than they paid for it – which is generally the case – the tax code treats these earnings as capital gains and the partners pay only a 15% income tax. Although the tax code was intended to give that 15% break to those who risk their own money, in this case the partners risk nothing but get the tax break anyway, along with those who invest.  Everybody’s happy. The bankers make money, the investors make money and the partners make money. As far as the raided company is concerned, some make it, but some go bankrupt, under a burden of outstanding debt. Those that make it treat the debt as a write-off and can actually end up paying no corporate taxes on their profits. In any case, the partners don’t care; they’ve walked away with the spoils. It sure pays to run with the Big Dogs.

Yeah, everybody got a piece of the action – except the company, the worker and the taxpayer; apparently those don’t matter. Taxpayers subsidize these businesses. When they lay off workers and cut medical benefits, we’re stuck with the bill for unemployment and medical costs, in the form of higher insurance premiums for those not covered.  When they deduct the interest on their loans, to increase their profits, we pay the difference in lost tax revenue or reduced social programs. In the same vein, when they pay only a 15% capital gains tax on profits not arising from their own investments, we make up the difference. When laid-off and unemployed families qualify for food stamps, we are handed the bill. Of course, all this follows the “letter of the law”.  Hmmm, I wonder who wrote those laws and what was the motivation? Another time perhaps…

But I digress, back to those contributors to Mr. Romney. They must be members of the same club. They compare notes and know how to work the system. They, likely, invented it.  Remember those bank loans that the private equity partners took out to buy those companies and to boost their profits?  Well, it turns out that the lenders can insure their loans against default by selling credit derivatives, including credit default swaps and collateralized loan obligations to other institutions, such as hedge funds. They have it figured out. Yes, sir, they’re smart; in fact, they’re too big to fail.  They privatize profit and socialize risk, while producing nothing. Once again, the taxpayer is left to clean up after the party.  The party has moved on, now, to the political arena, but, to understand the candidate, remember, he’s a successful businessman. Monkey business.  Forget running with the Big Dogs. Watch your peanuts.

Laird Bagnall is a military retiree since 1993 and a Columbus resident since 1995. He is a 2002 MUW graduate, with a degree in Fine Arts. His interests include: visual and performance arts, photography, biking, travel, kayaking, camping and national politics.

 Originally Published in the May 2, 2012 Print Edition


The Beauty of Spring

Ahh…spring in Columbus, Mississippi…could there be anything as good for the soul as stepping out of one’s door, into the cool morning sunshine of the coming day, thick with flowering scents and the pastel colors of March?  Pilgrimage is around the corner, crappie fishermen are holding spring tournaments, and visitors are flocking to our town, in search of discovery and diversion from routine.  Dogwoods, azaleas, and redbuds’ brilliant purple stand out against the clear blue sky.  Renewal is everywhere; even dandelions are welcome, popping through the winter soil and reflecting the hues of the sun. All around us our environment is bursting forth, given as a gift, a visual delight…….

But wait….what’s that eyesore?  I’ll pretend that I didn’t see it; yeah, ignore it!  Maybe my visitor didn’t see it …I can only hope. What an embarrassment on our streets. It’s as bad as an unclean toilet in my house. A negative reflection on us all.  Everyone knows that an unsightly mess in the corner cancels a houseful of charm, and has a more lasting impact. This is our home.

There is so much ugliness in life that we have no control over– politics, world affairs, disasters, famine, drought and war– but we do have control over the environment where we live.  We spend a lot of money and effort in Columbus, trying to make it an attractive and welcoming place, a place we can be proud of and enjoy. But what some of us strive for, others squander and despoil. Why? What’s the point?  Is it carelessness, ignorance, stupidity, laziness or just a disregard for others and the natural world that would explain such callous treatment for one’s surroundings? My mother told me that there is no shame in being poor, but there is shame in being a slob. Look around, Lowndes County. Rich or poor, we are slobs.  Litter is ubiquitous.

 Now, in the spring, before the grasses grow tall along our highways and hide last year’s refuse, it is evident everywhere I look. I walk through my neighborhood and pick up litter, stagnant in front of neighbor’s homes for weeks, until I get my collection bag out. How deep would it get if I overlooked it?  Like cancer, it worsens if something is not done, yet nobody seems to care. Too busy, I guess. Businesses are carelessly surrounded by the litter of the products that they sold. Every road I drive is lined with litter. As a kayaker on our rivers, lakes and tributaries, I have yet to launch my small boat without having to shove plastic bottles, cans or even rotting carcasses, aside. Once on the water, there is trash everywhere – from tires, plastic and paper detritus to metal tanks, barrels and rusting washing machines. Our effluent is seen even in protected backwaters and estuaries – snagged in deadfall, washed onto the shoreline or floating downstream on the current. It never ceases to amaze me how much garbage is discarded and remains forever in our local waters…among our pristine wildlife.  Sad, really, to see nature’s abundance – deer, possum, beaver, nutria, egrets, herons, white pelicans, grebes, ducks, turtles and fish – all living, nesting and feeding in our filth and floating garbage. Much of it was washed into gutters, only to end in the wild. This is supposed to be a sanctuary, not a sewer. They don’t deserve to live like this; it is a violation of their natural state. The situation worsens as the litter piles up, year after year after year.

 Maybe there are more important things to worry about; all kinds of problems facing society, but this particular problem seems elemental to me. If we aren’t able to prevent something as simple as trashing our natural environment, what hope is there for dealing with more complex, societal problems?  Start locally. Pick it up; even if you didn’t put it there, it’s yours now – in your neighborhood and town – a community blight in your backyard. Mississippi is the worst I’ve seen for litter; maybe it’s a question of respect for ourselves and where we live – I don’t know. What I do know is that we can do better than this embarrassing display. I love what Mississippi has to offer us all, but it hurts me to the core to see our dirty, discarded laundry hung out along our pathways. As my Mom told me, there is just no excuse for being a slob.

Laird Bagnall is a military retiree since 1993 and a Columbus resident since 1995. He is a 2002 MUW graduate, with a degree in Fine Arts. His interests include: visual and performance arts, photography, biking, travel, kayaking, camping and national politics.

 Originally Published in March 21, 2012 Print Edition


From the Citizen: Raymond Gross

Remember, about three months ago, when the Republican-establishment Governor of South Carolina endorsed Mitt Romney for President, and the media went crazy, talking about how her endorsement was going to insure Mitt a win in South Carolina?   It was thought by the media, including Fox News, that the other candidates didn’t have a chance anymore and that their pick (Romney) would coast on to an easy nomination.  Then, Mr. Newt stepped up to the plate and began to hit multiple home runs in the debates, which made the people take a more serious look at him.  They began looking at and comparing actual records of the candidates, to get the facts about each one.  They discovered Mitt had been running false attack ads against Newt Gingrich and saw where Mitt played the same kind of dirty games in ‘08 against Huckabee and McCain.  Plus, how Mitt was second to not even John Kerry on flip-flopping his position on several issues, while going from Independent to Democrat to Republican.    They also looked at Rick Santorum, who claims to be a conservative and a friend of Newt Gingrich, but was stabbing Newt in the back, every chance he got. They saw where Santorum endorsed Mitt Romney in ’08, instead of Huckabee, and how he lost badly to a Democrat in Pennsylvania in his last election, but was bragging about how he was the best at beating up on Democrats.  It took very little of their time to conclude that those two cannot be trusted, and that Newt Gingrich was head-and-shoulders above everybody else, which was proven in a landslide victory for Newt in South Carolina.

Now, that should be a lesson to other states’ top officials on who is the real conservative running for President and who to endorse and who not to endorse, right?  Well, apparently not, because right here in the Deep South conservative state of Mississippi, our Sec. of State and Lt. Governor have endorsed the flip-flopping former one-term Governor of Massachusetts.  I thought I was voting for two conservatives, Tate and Hoseman, in our last election, but their endorsement of Romney tells me otherwise, and is a very revealing example of bad judgment and poor decision-making.   If Romney is the nominee, Mississippi loses in more ways than one; his 59-point tax plan, for one thing, will increase taxes and the lack of vision he has about space exploration is shown in the childish negative remarks he makes about Newt’s promise to get the USA back to the moon. Not only Mitt is against this, but Santorum is out there doing the same thing; they have no real vision –they just want to “manage the decay”.

On the other hand, a Gingrich presidency would help Mississippi in many ways.  His tax reform plan, for instance, that will give us a “tax cut” is endorsed by all true conservatives, and he will even give the Fair Tax a chance to become law.  Naturally, the Stennis Space Center in Hancock County would be back up and running, with Newt in the White House.  Let’s make it very clear that it was B. H. Obama who put a stop to that program three years ago, and Romney and Santorum thinks it’s a joke to start it up again.  Mississippi loses with Romney and Santorum, but is helped in many ways with a Newt Gingrich nomination.

Many science experts, including some Romney supporters, say Gingrich is right on the mark when it comes to having a first permanent base on the moon.

George Washington University space policy director Scott Pace, who was NASA’s associate administrator in the second Bush administration and is a Romney supporter, said the 2020 lunar base date Gingrich mentioned was feasible.  Pace went on to say that such a return to the moon is doable.

Neal Lane, former head of the National Science Foundation and White House science adviser during the Clinton administration, told the Associated Press that Gingrich’s proposals make sense and that his ideas and actions are “very pro-science,”  Lane also credited Gingrich with protecting federal science research from budget cuts in the 1990s.

Ultimately the endorsement of Romney by a couple of our leaders in Jackson could end up hurting Mississippi and back-fire on them in the next Mississippi state elections.

Raymond Gross is an Air Force veteran who enjoys handball and swimming.  He first became involved in politics in the early 1960s, during the LBJ and Goldwater Presidential campaign.

“From the Citizen” is a column that will appear, periodically, in the print edition of The Real Story, and will feature commentary from members of the community, and from both ends of the political spectrum.

Individuals who are interested in submitting commentary for this column should write to

 Originally Published in February 22, 2012 Print Edition

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