Now that I created a headline that got your attention. Sorry, this is a 140 character headline world, right?
I couldn’t resist writing about the irony of the race to be POTUS.
What are two of the biggest, if not the biggest issues in this presidential election? Healthcare and the Economy
Consider the following:
1. Who invented ObamaCare and has the most successful implementation to date?
2. We are in a period where the government is borrowing money at a net effective rate of less than zero percent. Who has made hundreds of millions of dollars and a career of borrowing significant amounts of money to acquire companies in heavily leveraged deals?
It’s crazy, but true.
1. Of course Governor Romney basically invented Obamacare for the state of Massachusetts.
Imagine the following conversation from a Democratic candidate Romney with a hypothetical Republican candidate:
“Business in the US needs certainty over healthcare costs. With my RomneyCare program instituted across the country big businesses will no longer have to deal with the variability and uncertainty from state to state in healthcare costs and benefits. They will no longer have to face the uncertainty of state and local politicians pushing their agendas that can create annual changes and huge cost increases at the expense of well negotiated and time tested plans like RomneyCare. Ask my Republican opponent which state, other than Massachusetts has been able to get their Healthcare costs and services under control? It’s not like they all haven’t been trying. Massachusetts is the only state which has been able to create any level of certainty in healthcare costs and services. Which is exactly what businesses want and why we need RomneyCare as a national program.“
2. As the head honcho at Bain Capital, a private equity firm, Governor Romney made huge profits by borrowing heavily to acquire companies and then operating them with the goal of getting an operating return on capital or selling the companies for a profit. He turned the art of using leverage into an art form. I should add here that I fully understand that Bain was not and is not a slash and burn Private Equity firm. They put people in their acquired companies to try to improve operations rather than just slash costs. But that is not really the issue here. Governor Romney knows how to invest using debt.
The real issue is that rather than saying that he thinks its a horrible idea for the government to invest in companies and that he would not permit it, I really, really would love to see him take the opposite approach and own and crow about the fact that he is a MASTER of USING DEBT.
Lets get back to our debate with a Democratic candidate Romney and a hypothetical Republican candidate:
“No one knows how to get a return on capital better than I do. I’m great at it. Look at my history. With the government’s ability to borrow at an effective tax rate of less than zero, I promise you as President that I will know better than anyone how to get a return on investment for the American people. In this time when we need to grow the economy and create jobs, we need to cut ineffective and inefficient government spending in bureaucracy and administrative and increase investment where we can get the greatest return for the American people. And you know what makes my approach all the sweeter? We are borrowing money from China DIRT CHEAP and I will invest that to create American jobs!
We need to invest in American companies. We need to invest in new technologies. We need to invest in Research and Development. We need to invest in new medicines and healthcare options. Now some people might say that it will be very difficult to pick winners and losers and they are right. It will be very difficult. There will be losers. More importantly there will be winners. Winning investments will create jobs. Winning investments will create new technologies and medicines that improve the standard of living for all of us and does so at a lower cost. We won’t compete with private investment, we will complement it.
Right now my friends the economy is growing. No its not growing as fast as we like and too many people don’t have jobs or are underemployed, but it is growing and that growth is accelerating, led by an improvement in the housing market. My plan is to let that growth continue to accelerate and to also continue the existing Bush Tax Cuts with the exception of an increase in individual taxes from 35pct to 39pct for those earning more than 1mm dollars. I will also increase capital gains from 15 pct to 20pct and eliminate the advantages of carried interest.
I believe in America. I believe our future is bright. I will do what corporate America is not doing and no amount of effort to manipulate the tax code will make them change, I will invest in America and create jobs.
My Republican friends on the other hand, believe that if you reduce tax rates, large corporations hoarding cash will miraculously bring that cash back to the US and invest and hire . Trust me. I know investment. That won’t do it. They can borrow money so cheaply there is no reason to bring it home and it certainly won’t lead to jobs. If they had something to invest in that would generate a return, they would. They haven’t.
Again, they won’t invest in America. I will.
As a long time investor, I have never turned down an investment because of tax rates. I was just as successful investing when capital gains were much higher. I was just as successful investing when individual tax rates were much higher. No smart investor turns down a good deal because of tax rates. I always remind people you only pay taxes on profits. And if you make more than 1mm dollars in profits, whether through capital gains or ordinary income, you should pay more taxes.
Now look at the alternative my Republican opponents are proposing. The Republican candidate is trying to convince us all that it is going to be easy to convince both sides of Congress to come together and figure out at what number they can cap individual tax deductions. He is also saying that he is going to reduce corporate taxes AFTER he is able to get consensus on which corporate deductions to eliminate. That is not going to happen unless we outlaw corporate lobbyists. Everyone is for eliminating all deductions other than their own. The idea that everyone will happily agree to compromise is not consistent with the actions of this Congress and not going to happen.
(It’s not going to happen. He is not going to be able to get anyone to agree on which deductions to eliminate. Not only that, he believes that the net result of these improbable actions is that tax revenues from corporations will go up. Do we really believe that corporations will gladly accept an increase in their net tax bill? I don’t think so.)
So my friends it comes down to this. Do you trust my Republican opponent to convince Congress to do the right thing and work together like a big happy family and do it quickly, or do you trust my track record and ability to get this economy back on track through smart investments in the ingenuity and ambition of the America people. There is no greater opportunity than here in America. Lets invest in America. Let’s create jobs.
Now is the time to vote Democrat. Now is the time to Vote for Romney.”
Hey, this is all fiction but hopefully you can see the same irony I did.
Damn, I am so ready for a 3rd party.
Maybe I will start one on KickStarter.