The rich are different from you and me. They have Swiss bank accounts.
Well, at least Mitt Romney does.
That was one of the big revelations when Romney released his tax records in January -- a revelation that Vanity Fair recently looked into, along with the rest of his finances. Of course, it's no secret that Mr. Romney is a man of means. But what is still secret is just how Romney has invested those means.
Maybe not so much secret as secretive. Romney has released his return for 2010 and an estimate for 2011. So we have a broad outline of what his personal finances look like. And they look something like an Epcot of financial investments: There is a blind trust with offshore accounts in Switzerland, Bermuda, and the Cayman Islands -- not to mention an almost comically large IRA account. None of this is illegal. But it has raised questions about Romney's Caribbean tax havens and his Swiss bank account. The former makes sense. The latter not as much.
Question #1: Remind me: Why does Romney have money in the Caribbean?
Let's take a quick detour. Imagine that a tax-exempt entity -- like a university endowment -- buys or otherwise acquires a business. Maybe a macaroni company. That company would have a nice little competitive edge. It wouldn't have to pay taxes. That's exactly what happened when some wealthy alums donated the Mueller Macaroni Company to the New York University Law School in 1948. This loophole prompted Congress to close it 1950. Only a tax-exempt entity's "related" businesses would in fact be tax exempt. Everything else would be taxed as "unrelated business income".
What does this have to do with Mitt Romney? Well, university endowments and public pensions are some of the biggest investors in private equity funds like Romney's Bain Capital. Those investors don't want to be hit with the unrelated business tax -- so Bain Capital sets up shop in the Caymans where it can avoid the unrelated business income tax. You might still be wondering: What does this have to do with Mitt Romney -- at least now? He left Bain Capital in 1999 (or 2001). He did, but he didn't. He still gets a share of Bain Capital's profits every year as part of his retirement package. And Bain still has corporate blockers in the Caymans. That's why Romney has investment income from the Caymans.
Question #2: Why does Romney have a Swiss bank account? And what's so great about a Swiss bank account versus any other tax haven?
Swiss banks are the gold standard of tax havens because of their secrecy and stability. Actually, that sentence should be in the past tense. Swiss banks are not nearly as secret as they used to be. Time was, the Swiss government jealously guarded its banks' reputation for never revealing client information. It was a crime to do so. High-net individuals the world over flocked to the Alps to hide money from tax collectors back home. But that started to change in 2008. A former UBS banker came forward with tales of how he helped wealthy American clients evade taxes -- including such charming details as smuggling diamonds in tubes of toothpaste. The IRS launched an investigation, and came up with a list of 52,000 names it wanted from the Swiss banking giant. A settlement followed, and then a new U.S. law. Now foreign banks have to cooperate with the IRS or face fairly tough penalties. Auf Wiedersehen, Swiss banking secrecy über alles.
But Swiss banks still have plenty going for them. They can thank the Swiss franc for that. It's a safe-haven currency -- and that makes their banks safe havens too. The Swiss are famous for their fiscal prudence and low inflation, which makes their currency particularly strong. That's even more true now thanks to the euro crisis. Demand for Swiss francs is so great that the Swiss National Bank had to cap the value of their currency last year. It was getting so expensive that it threatened to push the Swiss economy into deflation.
The Romney camp has hinted that he only had a Swiss bank account because he wanted Swiss francs. In other words, he was hedging against the dollar declining in value. That's fair, even if it's a bit odd for someone with $250 million. But you don't need a Swiss bank account to get Swiss francs. You can just buy Swiss francs.
Another possibility is that Romney had the Swiss bank account to make it easier to wire money from one European investment to another. We can't say without seeing more tax returns. All we do know is his lawyer closed this Swiss bank account in 2010.
That's the final point. Mitt Romney's long-time lawyer, R. Bradford Malt, has managed Romney's personal finances since Romney was elected governor of Massachusetts. That's when Romney set up a blind trust, to avoid any possible conflicts of interest. Still, there are questions about just how blind the trust has been. And, besides, Romney is ultimately responsible for his own money.
Question #3: Is it fair for the Obama campaign to go after the Swiss bank account?
When most people hear the words "Swiss bank account" they think "tax evasion". That's not always fair. There are plenty of good reasons an American might have a Swiss bank account. Maybe they live abroad. Or work for a Swiss company. But those are good reasons that don't apply to Mitt Romney. He didn't live abroad. And he didn't work for a Swiss company.
That doesn't mean Mitt Romney was up to no good. There's no evidence of that. It's entirely possible that Romney really was just hedging against the dollar. That's the legitimate reason a very wealthy person would want a Swiss bank account. The not-so-legitimate reason is the secrecy -- to hide money from the IRS. It's unfair for the Obama campaign to insinuate Romney was doing the latter. But it'd be a lot more unfair if Romney was more transparent. We just don't know enough to say anything definitively. We don't know how long the account existed. We don't know whether Romney's lawyer or Romney himself set it up.
What we do know is that this kind of stuff doesn't seem weird to Romney. It's what the über-wealthy do. But it is weird to most everyone else. It's not what the 99 percent do. Actually, we know one more thing. Romney can end this controversy whenever he wants. He just has to release more tax records. He's running for office for Pete's sake. He should say something.
In other words, Romney should take a page from the Swiss. Even they're less secretive nowadays.
A mix of patriotic balladeers and apolitical acts will take the stage on Thursday and Friday.
It is not true, as a lot of commentary would have it, that Donald Trump’s inauguration will feature “no stars.” Some of the entertainers who have signed on to play have, in fact, built their success on entertaining millions of people. But it is true that what’s considered “the A-list” will be conspicuously absent, as will be acts from other lists: The B-Street Band, a Bruce Springsteen tribute group, backed out from an unofficial inaugural party after outcry; Broadway singer Jennifer Holliday reneged from the main concert event.
The mix of entertainers lined up for Thursday’s “Make America Great Again! Welcome Celebration” on the National Mall and Friday’s swearing-in ceremony represents a hodgepodge of ideology and expediency. In a savvy MTV essay about Trump’s national-anthem singer Jackie Evancho, Doreen St. Félix argued that booking the 16-year-old America’s Got Talent runner up was “a matter of scavenging, and then gilding over the spoils”—a description that could apply across the lineup given the many headlines about Trump’s team getting turned down by celebrities then saying that not having famous people is a good thing. But in its relative lack of glitz, and in its coalition of performers well familiar to state-fair stages, this week’s bill may inadvertently achieve the stated inaugural goal of projecting an image not of Trump but of the people who elected him.
Why Nixon's former lawyer John Dean worries Trump could be one of the most corrupt presidents ever—and get away with it
Sometime early last fall, John Dean says he began having nightmares about a Trump presidency. He would wake in the middle of the night, agitated and alarmed, struggling to calm his nerves. “I’m not somebody who remembers the details of dreams,” he told me in a recent phone call from his home in Los Angeles. “I just know that they were so bad that I’d force myself awake and out of bed just to get away from them.”
Few people are more intimately acquainted than Dean with the consequences of an American presidency gone awry. As White House counsel under President Richard Nixon from 1970 to 1973, he was a key figure in the Watergate saga—participating in, and then helping to expose, the most iconic political scandal in modern U.S. history. In the decades since then, Dean has parlayed that resume line into something of a franchise, penning several books and countless columns on the theme of presidential abuses of power.
The president-elect’s lawyers have explained why they don’t think he’ll violate the Constitution’s foreign emoluments clause—but their arguments fall apart under closer scrutiny.
Last week, President-elect Donald Trump’s lawyers issued a brief, largely unnoticed memo defending Trump’s plan to “separate” himself from his businesses. We believe that memo arbitrarily limits itself to a small portion of the conflicts it purports to address, and even there, presents claims that depart from precedent and common sense. Trump can convince a lot of people of a lot of things—but neither he nor his lawyers can explain away the ethics train wreck that will soon crash into the Oval Office.
It’sbeenwidelyacknowledgedthat, when Trump swears the Oath of Office, he will stand in violation of the Constitution’s foreign-emoluments clause. The emoluments clause forbids any “Person holding any Office of Profit or Trust under [the United States]” from accepting any “any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State” (unless Congress explicitly consents).
When it comes to basic policy questions such as the minimum wage, introductory economics can be more misleading than it is helpful.
In a rich, post-industrial society, where most people walk around with supercomputers in their pockets and a person can have virtually anything delivered to his or her doorstep overnight, it seems wrong that people who work should have to live in poverty. Yet in America, there are more than ten million members of the working poor: people in the workforce whose household income is below the poverty line. Looking around, it isn’t hard to understand why. The two most common occupations in the United States are retail salesperson and cashier. Eight million people have one of those two jobs, which typically pay about $9–$10 per hour. It’s hard to make ends meet on such meager wages. A few years ago, McDonald’s was embarrassed by the revelation that its internal help line was recommending that even a full-time restaurant employee apply for various forms of public assistance.
The Russian leader tries to claim the role of senior partner in relationship with the U.S.
You have to feel bad for the Moldovan president. The newly elected Igor Dodon had traveled to Moscow to meet Russian president Vladimir Putin for the first Russian-Moldovan bilateral meeting in nine years. Yet here he was, standing side by side with Putin, his hero and model for emulation, at a regal-looking press conference and some reporter has to go and ask about the prostitutes.
“You haven’t yet commented on the report that, allegedly, we or in Russia have been collecting kompromat on Donald Trump, including during his visit to Moscow, as if he were having fun with prostitutes in a Moscow hotel,” said the reporter with the pro-Kremlin LifeNews. “Is that true? Have you seen these files, these videos, these tapes?”
A history of the first African American White House—and of what came next
In the waning days of President Barack Obama’s administration, he and his wife, Michelle, hosted a farewell party, the full import of which no one could then grasp. It was late October, Friday the 21st, and the president had spent many of the previous weeks, as he would spend the two subsequent weeks, campaigning for the Democratic presidential nominee, Hillary Clinton. Things were looking up. Polls in the crucial states of Virginia and Pennsylvania showed Clinton with solid advantages. The formidable GOP strongholds of Georgia and Texas were said to be under threat. The moment seemed to buoy Obama. He had been light on his feet in these last few weeks, cracking jokes at the expense of Republican opponents and laughing off hecklers. At a rally in Orlando on October 28, he greeted a student who would be introducing him by dancing toward her and then noting that the song playing over the loudspeakers—the Gap Band’s “Outstanding”—was older than she was.
Some Democrats, most notably Representative John Lewis, have labeled Donald Trump with the same epithet applied to his two immediate predecessors.
When was the last time America had a “legitimate” president?
You’d have to go back a ways to find a unanimous choice. Certainly not Donald Trump. Representative John Lewis, the civil-rights icon, has sparked a fury by saying, “I don't see this president-elect as a legitimate president.” Had Hillary Clinton won, she would not have fit the bill, either: Trump said repeatedly during the campaign that she should not have been allowed to run. Certainly not Barack Obama. Many opponents—none of them more prominent than Trump, yet again—argued, falsely and preposterously, that he was not even eligible to stand for the presidency because he had not been born in the United States. And certainly not George W. Bush, whom many Democrats viewed as illegitimate for several reasons: his popular-vote loss; questions over the final count in Florida; the fact that the Supreme Court effectively decided the election on a party-line vote.
Surprise remarks by the president-elect, which depart from decades of U.S. policy, sent American currency into a tumble.
On Wednesday morning, currencies in emerging markets across Asia started to rise: The Chinese yuan and the Thai bhat hit two-month highs, while Taiwan’s dollar reached a three-month peak, according to Reuters. Meanwhile, the value of the U.S. dollar had dropped 1.3 percent on Tuesday, to its lowest point in a month.
Those searching for an explanation didn’t have to look very hard. Over the weekend, President-elect Donald Trump delivered some remarks to The Wall Street Journal that took many by surprise. In response to a question about trade with China, Trump declared that the U.S. dollar is “too strong.” He added, “Our companies can’t compete with [China] now because our currency is too strong. And it’s killing us.”
Expanded school choice is a continuation of forced self-determination.
In recent weeks, pundits and scholars have bemoaned the privatization of public education that is likely to occur if Betsy DeVos is confirmed as Donald Trump’s Secretary of Education. Democracy Now!, for instance, billed DeVos as “Public (School) Enemy No. 1.” Randi Weingarten, president of the American Federation of Teachers, in a statement described her as “the most ideological, anti-public education nominee put forward since President Carter created a Cabinet-level Department of Education.” At her confirmation hearing Tuesday evening, Democratic senators grilled her about her track record promoting private control of public education and demanded, to little avail, that she would commit to keeping public-school dollars in public schools.
How America’s best and brightest once again steered the country to failure
They were the best and the brightest. But, most of all, they believed they were right. Although the scale of disaster was considerably different, the same that was said of those who oversaw foreign policy under Presidents John F. Kennedy and Lyndon Johnson could be said of the Obama administration.
These were academics, intellectuals, and technocrats who were not only very smart; they took pride in being practical, grounded in reality, and wedded to facts. After the supposed anti-intellectualism and ideological rigidity of the George W. Bush administration, many of us welcomed the prospect of a president who was cerebral and professorial. Even those sympathetic to President Barack Obama’s foreign-policy instincts, however, will agree that it didn’t quite go as planned.