By all accounts, former Massachusetts Gov. Mitt Romney is poised to win the South Carolina primary and go on to win big in Florida. Very soon this lady will have sung. But now — at the seeming moment of his triumph — things are suddenly getting rockier for Romney. You can see it in three development.
DEVELOPMENT ONE: The Democratic National Committee was apparently ecstatic over his performance at last night’s South Carolina debate. So much so that they quickly put out a video. This video not only has excerpts from Romney’s debate answers, but parts of an extended Fox News report that showed people on Twitter really didn’t like Romney’s answers. This suggests — again — that he may win the nomination because many Republicans feel he is the best bet to beat Barack Obama but he won’t have the safety net of good will to fall back on. Here’s the DNC piece:
DEVELOPMENT TWO: He was mired in the tax return issue and finally told reporters his effective tax rate is 15% –which means rightly or wrongly Democrats will portray him as the perfect representative of the 1%. CNN:
Mitt Romney said Tuesday he pays roughly a 15% effective tax rate on his income – an acknowledgment that the multi-millionaire pays a smaller percentage of taxes on his income than many middle-income Americans.
“It’s probably closer to the 15 percent rate than anything,” Romney told reporters when asked about his effective tax rate. “The last ten years my income comes overwhelmingly from investments made in the past rather than ordinary income or rather than earned annual income.”
If you see some liquid seeping under your door, it may be from the DNC salivating as it considers the campaign ads they’ll do noting that Romney pays far less in taxes than middle-income Americans. MORE:
The information came as his opponents ratcheted up pressure on the GOP front-runner to release his tax returns in a debate Monday night – a disclosure that is not required by law and one Romney has been reluctant to make. Some Americans of far more modest means pay a 15% marginal tax rate on income, while the highest tax bracket tops out at a 35% marginal rate. Because Romney’s income comes primarily from investments, it is taxed at a much lower rate.
The candidate, a former chief of private equity firm Bain Capital, went a step further Tuesday and committed to releasing his tax returns in April if he were to become the GOP nominee.
“We’ll wait until the tax returns for the most recent year are completed, then release them,” he said.
Romney said he had donated the “little bit of income” he earned from his book, “No Apologies,” and said occasionally he had been paid fees to speak at events.
The candidate was also elaborated on his views on super PACs, independent political action committees that can raise unlimited funds to advertise on behalf of a candidate. A campaign cannot share strategy with a super PAC.
Romney said he had both encouraged and raised money for his super PAC, and said both former Sen. Rick Santorum and former House Speaker Newt Gingrich had done so as well. He added that although he did not like the existence of super PACs, he would not “disadvantage” his campaign by not taking advantage of the process.
Translation:Rich PACs help him and it’s legal, so he intends to use them under the existing legalistic ballet that he has no idea what they’re doing.
Reaction to his taxes will likely be according to party lines, with independents reacting in varying ways. Here’s a sampling of weblog and website reaction:
The big news this afternoon is that Mittens admitted his effective tax rate is only about 15 percent, This is not a big surprise to those who’ve been paying attention. And that clacking sound you hear is coming from the rightie blogosphere furiously defending the right of the obscenely wealthy to hang on to their dough while benefiting from the taxes paid by the rest of us. Still, I doubt it will help Romney much.
Mitt Romney’s private equity problem is taking a backseat today to Mitt Romney’s tax problem. The GOP frontrunner acknowledged that his effective tax rate is around 15%, thanks to the tax code’s preferential treatment of income from investments and private equity firms.
As Pat Garofalo explained for The Atlantic, a considerable portion of Romney’s income comes from a retirement deal with Bain Capital that continues to pay him a small share of the firm’s profits. The wonky term for this cool stream of money is “carried interest” — the share of investor gains “carried” by the private equity or hedge fund manager.*
You might expect that Mitt’s millions would be treated as earned income, because it represents gains from a service rendered by a private equity manager. Normally, that sort of money would be taxed at the top 35% marginal rate. Instead, the tax code treats Romney’s retirement payout as carried interest — investment income from a private equity firm shared among its managers. As a result, Romney pays Uncle Sam only 15% of his Bain Capital income.
The vast majority of Mr. Romney’s income this year came in the form of investment income, whether dividends or capital gains on mutual funds and retirement accounts, or his post-retirement share of profits and investment returns from Bain Capital, which would be subject to the same 15 percent tax rate.
President Obama paid an effective federal tax rate of just over 26 percent on his 2010 returns, the most recent available.
This disclosure may fuel the continuing debate about Mr. Romney’s leadership at Bain Capital, a private equity firm. Democrats and his Republican rivals have sought to cast him as a corporate raider and, in the words of Gov. Rick Perry of Texas, a “vulture” capitalist.
In Monday night’s Republican debate, Mr. Romney was pressed about releasing his income tax returns, which he has not yet done, and he hinted that he would release them closer to April. On Tuesday, Mr. Romney again said that April’s tax season seemed to be the appropriate month for such a disclosure, and that he was following “tradition” from previous presidential races.
Such loopholes in the tax code aren’t Romney’s creation, however, and, honestly, it’s highly rational of him — and of any member of the ultra-rich — to obey the incentives created by the tax code. No one argues the tax code is not in need of reform. The question becomes: Do we close loopholes to raise rates or do we close loopholes to lower rates? By all means, let’s make the tax code fairer — but let’s do it in a way that still encourages earning and investment.
Meantime, Romney’s tax returns matter far less than his policy proposals. May Romney’s “I probably pay 15 percent” quip please suffice to satisfy curiosity about his personal taxes so we can return to the real issues — even if one of those issues is itself tax reform?
Mitt Romney isn’t the candidate of the 1 percent. He’s the candidate of the 0.01 percent. The 1 percent category begins four or five hundred thousand per year in income. They’re what’s called “the little people” in Romney circles.
Is all this talk “envy,” as Romney suggests? Not at all, unless we “envy” the people who take our things without paying for them. (“I wish I had a nice car like that … Hey, that’s my car!”)
People like Romney became wealthy thanks to our government’s laws, its favoritism, and its tax-paid efforts to educate the population, build our infrastructure, and preserve the peace. They’re exploiting the system without paying their fair share. It’s time for that to end.
DEVELOPMENT THREE: A new poll finds President Barack Obama has widened his previous lead over Romney — not because Obama is more popular, but because some voters are concluding they don’t like Mitt Romney:
PPP’s first national poll of 2012 finds Barack Obama with his best standing against Mitt Romney since last May, right after the killing of Osama bin Laden. Obama leads Romney 49-44.
It’s not as if Obama’s suddenly become popular. He remains under water with 47% of voters approving of him to 50% who disapprove. But Romney’s even less popular, with only 35% rating him favorably while 53% have a negative opinion of him. Over the last month Romney’s seen his negatives with independents rise from 46% to 54%, suggesting that the things he has to say and do to win the Republican nomination aren’t necessarily helping him for the general. Obama’s turned what was a 45-36 deficit with independents a month ago into a 51-41 advantage.
One thing that really stands out in this poll is the extent to which Obama has claimed the middle. He’s up 68-27 on Romney with moderates. He also leads by 20 points with voters under 45, a group there’s been some concern about slippage with, and he has a 66-30 advantage with Hispanics.
Ron Paul matches Romney’s performance against Obama, also trailing by 5 points at 47-42. Beyond those two Newt Gingrich trails by 7 at 49-42, Rick Santorum has an 8 point deficit at 50-42, and Rick Perry trails by 11 points at 51-40.
Here’s another reason why Romney faces rocky waters ahead:
Obama has been around now for several years and has been “vetted” and survived a slew of things thrown at him to discredit him. Romney is just now entering that phase. Can he deflect negative stories, mega-scrutiny, the media covering his every flub? Note to Romney advisers: It’s pretty clear now that when Romney has a prepared speech or talking points or reads from a teleprompter he does well; when he is talking more spontaneously or is under fire he tends to mess up and give his critics ammunition.
But Romney has one trend that is hopeful. As Nate Silver points out, many Republicans in the Repubican swing voter cateogry are settling on Romney, indicating the media narrative about a nearly obsessive anybody-but-Romney candidate may not be accurate:
They are not necessarily doing so enthusiastically: a recent Pew poll found that there has been little improvement in Republican voters’ overall views of their candidates, which is unusual but not unprecedented. (The 2004 Democratic presidential race, which parallels this one in many ways, was another such example.)
Whether this is a bad omen for Republican turnout in November is hard to say, but be wary when you see pundits making snap judgments about it. Democratic turnout was reasonably strong in November 2004, for instance, despite voters’ initial lack of enthusiasm for John Kerry. The opportunity to beat a polarizing incumbent is a powerful motivating force.
Nevertheless, the pattern should not be surprising. These voters were telling pollsters all along that Mr. Romney was an acceptable option. It may be for want of a better alternative, but they are now exercising that choice.