On the eve of the Republican convention, Mitt Romney may have finally figured out that he can run against Barack Obama by running against big business, corporate welfare and crony capitalism.
“Big business is doing fine in many places,” Romney said last Thursday in Minnetonka, Minn. Liberal mainstream reporters were gobsmacked: They think the Republicans’ stated agenda of free markets is simply a big-business agenda. But Romney showed he understands how the regulations, tax carveouts and subsidies of Obamanomics really work.
Large corporations, Romney said, “get the loans they need, they can deal with all the regulation. They know how to find ways to get through the tax code, save money by putting various things in the places where there are low tax havens around the world for their businesses.”
Exactly.
Government loan guarantee programs primarily benefit the big and politically connected. More than 70 percent of Energy Department green-energy loan guarantees went to companies with Obama donors or bundlers in high positions, according to author Peter Schweizer. Most famously, bankrupt solar-subsidy recipient Solyndra was largely owned by Obama bundler and frequent White House guest George Kaiser.
Obama’s other favorite loan guarantee program is the Export-Import Bank of the United States, which has given 75 percent of its loan-guarantee dollars to Boeing sales in the last three fiscal years. Boeing CEO Jim McNerney is Obama’s export czar. Small businesses don’t have that access.
Regulations also tip the scale in favor of big business, Romney pointed out. Rather than curb giant corporations, as Democrats assert and the media believe, regulations crush the small guys, clearing the field for the entrenched incumbents.
When Obama signed a 2009 bill to regulate tobacco, Philip Morris, controlling a full half of the U.S. cigarette market, applauded, while smaller competitors objected — or simply folded. When Obama’s Internal Revenue Service, headed by H&R Block’s former CEO, wrote strict new tax preparer regulations, H&R Block was thrilled, and one investment bank advised clients to buy H&R Block because “new regulations should help Block by … add[ing] barriers to entry (or continuation) for small preparers.”
And Romney is correct that large and well-connected businesses “know how to find ways to get through the tax code.” Look at General Electric, run by Obama jobs czar Jeff Immelt. The multinational conglomerate spends more on lobbying the federal government than any other company, and its tax division of nearly 1,000 scored a $0 U.S. corporate income tax bill for 2011. Mom and Pop can’t pull that off.
Romney suggested Thursday he understands that increasing the government’s role in the economy naturally helps big business — and that this is what Obama has done. The numbers bear it out.
The Fortune 500 raked in a combined $824.5 billion in 2011 — the highest sum ever, and 16.4 percent higher than in 2010. The five largest banks held 56 percent of all U.S. assets — $8.5 trillion — by the end of last year. The number was 43 percent in 2006. And corporate cash holdings are also at record levels.
So, yes, big business is doing fine under Obama. Many liberals point to these data to claim Obama is good for business. Romney’s comments last week, however, help explain why the Fortune 500’s success is the rest of the economy’s loss.
“We’ve got to make it easier for small businesses,” Romney said Thursday in Minnetonka. He’s right. Business startups are at their lowest level since 1994, according to data compiled by Martin Neil Baily at the Brookings Institution.
When Obama says he will make it easier for small business, he’s promising new subsidies and government programs. But Romney last week was talking about getting government out of the way. Kill the subsidies that go overwhelmingly to the biggest competitors. Simplify the tax code that ties up small business. Clear out the regulations that serve as barriers to entry.
Level the playing field by reducing the government’s role as much as possible. GE’s lobbying outlays wouldn’t be worth as much if Washington weren’t picking so many winners and losers.
Romney is not disposed to populism, but if he wants to draw a contrast with Obama, he’ll become a free-market populist. Sure, that requires shedding his technocratic ways and running from his record as governor. But as he’s shown before, Romney has no qualms about shifting positions to fit changing political circumstances.
Romney’s first hints of free-market populism come after weeks of growing focus on Obama’s crony capitalism. This week, Republicans could make the campaign against Obama become a campaign against corporate welfare.
Timothy P.Carney, The Examiner’s senior political columnist, can be contacted at [email protected]. His column appears Monday and Thursday, and his stories and blog posts appear on washingtonexaminer.com.
