July 17, 2012

Romney aide’s hypocritical attack on Obama “crony capitalism”

Romney aide's hypocritical attack on Obama "crony capitalism"

On Sunday’s CNN “State of the Union,” Mitt Romney senior advisor Ed Gillespie explained how a second Obama Administration would reward its rich friends: “If you’re a political donor to Barack Obama, you’re going to do fine, because you’re going to get a payoff.”

This statement was pure hypocrisy: “a feigning to be what one is not or to believe what one does not.” Because, although the Obama Administration has indeed sometimes cozied up to special interests, it is Mitt Romney’s policies that are audaciously skewed to favor his campaign donors. And Ed Gillespie’s regular job, when not advising Romney, is working as a corporate lobbyist, seeking to convince Washington politicians to fix the laws in favor of wealthy businesses.

On the CNN show, Gillespie pushed this argument that Obama is all about crony capitalism: “There’s been many news accounts of these different examples of President Obama’s supporters and friends getting benefits from these political decisions about taxpayers’ dollars that have ended up being wasted, but it’s not been put in one place for people to kind of see the pattern and to see the underlying approach here, which is essentially Chicago-style politics,” Gillespie said.

OK, let’s take that frame and look at just one area of policy, one I follow pretty closely: higher education. Romney’s plan pledges to undo two critical reforms implemented by the Obama Administration: (1) reforming student loans and (2) holding for-profit colleges accountable for waste, fraud, and abuse. In each case, Romney’s proposal would waste taxpayer dollars and benefit major Romney donors, big time.

Start with student loans. In the recent bad old days, the big firms dominating the student loan business — Sallie Mae, Citigroup, Wells Fargo, JPMorgan Chase, etc. — got paid as if they were lenders, when in fact they were merely loan servicers; it was us taxpayers who actually took the risk of students defaulting on loans. These banks then used our money to hire lobbyists to protect their billions in unwarranted profits. The Obama Administration stood up to them, and Congress, with nowhere left to cut spending, finally ended this absurd giveaway.

There’s absolutely no logical reason to restore this massive waste of taxpayer money.  You would only do it if a central principle of your presidency was to hand out gifts to special interests who helped you get elected. Unfortunately it looks like Romney might want to be just that kind of President. JPMorgan Chase, Citigroup, and Wells Fargo employees are ranked numbers 2, 6, and 8 among the top 2012 Romney donors.

Then there’s the issue of the for-profit college sector, whose multiple bad actors have been caught in the act of defrauding our veterans and low-income students with deceptive recruiting practices, and defrauding government with phony reporting.  For-profit colleges have grown rapidly and now account for about 12 percent of students, but their financial footprint is even bigger: With high prices, high dropout rates, and poor job placement, they account for 25 percent of federal financial aid — over $32 billion a year — and 45 percent of student loan defaults.

Romney takes direct aim at the Obama Administration’s “gainful employment” rule — an effort to channel federal student aid to college programs that actually help students learn and get jobs, rather than to programs that leave students deep in debt and ruin their lives. Many of the biggest for-profit schools get 90 percent or more of their revenue from taxpayer funds, and they’ve devoted a big chunk of that money to a lobbying, public relations, and litigation campaign that succeeded in watering down and delaying — but not yet eliminating — the new Obama rule.

Romney has pledged to put the nail in the coffin of this common sense provision. Why?  One possibility is that the for-profit college owners are his friends and business associates. On the campaign trail, Romney has pointed to a for-profit college, Florida’s Full Sail University, as an innovative leader in higher education that knows how to “hold down the cost of their education.” But Full Sail turns out to be the third most expensive college in America, and one of its programs flunked the gainful employment test and could lose eligibility for federal aid under the Obama rule. Romney did not inform voters that his campaign and Super PAC have received about $240,000 from Full Sail CEO Bill Heavener and from C. Kevin Landry, chairman of TA Associates, the private equity firm that owns Full Sail.

Nor did Romney tell voters about the private equity fund Solamere Capital, which is run by Mitt’s son Tagg Romney and Spencer Zwick, who also serves as the top fundraiser on the Romney campaign staff.  Solamere was launched with a $10 million investment from Mitt and Ann Romney, and Mitt also has provided strategic advice. Solamere Capital offered its clients a stake in  TA Associates, which owns not just Full Sail but a number of for-profit schools, including troubled Vatterott Colleges, marked by exploitative recruiting practices and high student loan defaults. Eight of Vatterott’s 39 college programs failed the Obama gainful employment test that Romney now pledges to eliminate.

That’s not all. The political action committee of the Apollo Group, owner of the largest for-profit education business, the University of Phoenix, which Romney has also praised by name on the trail, has contributed $75,000 to Restore Our Future and the maximum $5,000 to Romney’s campaign, the company’s only contribution to a 2012 presidential candidate. Goldman Sachs, the number one source of contributions to Romney, owns 41 percent of EDMC, one of the largest for-profit college businesses, currently being sued by the Justice Department and investigated by state attorneys general for fraud.

So Romney’s higher education agenda seems the embodiment of what Gillespie claims Obama would do: “supporters and friends getting benefits from these political decisions about taxpayers’ dollars that have ended up being wasted.”

If you look at other issues, like Wall Street reform or energy and the environment, you will find a similar dynamic at work.

And Ed Gillespie knows all about that dynamic.  He is a well-paid lobbyist who can trade on his connections as a former George W. Bush White House aide and chairman of the Republican National Committee. His clients have included student loan giant Nelnet, which in 2010 paid $55 million to settle claims that it participated in a scheme to systematically overcharge taxpayers for the very same unwarranted loan subsidies that Mitt Romney has now pledged to restore. Gillespie has lobbied in DC for other oppressed underdogs including Bank of America, AT&T, Verizon, and drug maker Amgen.

Mitt Romney sending Ed Gillespie to rail against crony capitalists ripping off taxpayers is truly breathtaking in its audacity. It’s the political equivalent of Chico Marx, disguised as Groucho, asking Margaret Dumont, “Who you gonna believe, me or your own eyes?”

UPDATE: Wow, Mitt Romney pushed this theme again hard Monday on Fox News:

“There is no question but that when billions upon billions of dollars are given by the Obama administration to the businesses of campaign contributors, that is a real problem particularly at a time when the middle class is really suffering in this country,” Mitt Romney charged this morning on Fox and Friends.

“This is a tough time for the people of America,” Romney added. “But if you are a campaign contributor to Barack Obama, your business may stand to get billions of dollars or hundreds of millions of dollars in cash from the government. I think it’s wrong. I think it stinks to high heaven and I think the administration has to explain how it is they would consider giving money to campaign contributors’ businesses.”

Read those words, and then look at what I documented above about student loans and for-profit colleges, and ask yourself if Romney has any shame at all.