I wrote in my previous post that I would blog on carried interest shortly.
Hedge funds earn income in two ways. First, they charge their customers a management fee, usually something on the order of 1.5 percent. Second, they take a hefty slice of the capital gains earned in successful investments, often 25 percent.
I know that the conventional wisdom is that in answering last night’s question from CNN’s John King, about whether he had asked his then-wife to enter into an open marriage, Newt Gingrich “hit it out of the park.” He certainly brought the GOP audience to its feet. He’s winning praise from all sides for how he turned the question into an assault on the mainstream media.
I accept the fact that Gingrich helped himself politically with his answer. He may even win the South Carolina primary tomorrow. (Indeed, I think it’s quite likely that will occur.) But I do think that it’s useful to excerpt the debate transcript and analyze what it might tell us.
One of the interesting sidebars of last night’s debate was the fiery exchange between Rick Santorum and Newt Gingrich over the latter’s “grandiose” ideas and unstable leadership style. During the course of this rhetorical dustup during which Gingrich took Santorum’s bait and took credit for the Reagan presidency, the defeat of the Soviet Union and the 1994 Republican Congressional victory. While the first two claims are the stuff of self-satire, Gingrich is surely entitled to puff his chest at the memory of his role in the GOP’s taking back the House for the first time in 40 years.
But as Santorum aptly noted, the willingness of some GOP backbenchers — a group that the former Pennsylvania senator was quick to point out included himself — to turn the House Bank scandal into a cause célèbre had as much to do with turning the tide in the years leading up 1994 as any of Gingrich’s plans. Santorum chided Gingrich for knowing about the problem but choosing not to make a stink about it. But, as Politico reports today, there was more to it than just Gingrich’s faulty judgment about whether the scandal had legs.
Mitt Romney’s annual income and the tax rate he pays has now become a major discussion point in the campaign. Liberals will, of course, be trying their level best to make his economic success a political liability for him and his tax rate a matter of moral turpitude.
Naturally, Paul Krugman was first out of the gate with his column this morning in the New York Times. He writes:
And the public has a right to see the back years: By 2011, with the campaign looming, Mr. Romney may have rearranged his portfolio to minimize awkward issues like his accounts in the Cayman Islands or his use of the justly reviled “carried interest” tax break.
Isn’t that neat? Without a shred of evidence, Krugman asserts the possibility that Romney has accounts in the Cayman Islands (a notorious tax haven with very convenient banking laws) and has been taking advantage of “carried interest,” which allows hedge fund managers and such to pay only capital gains on their income. I agree that the carried interest loophole should be repealed forthwith (I’ll blog about it in the near future), but how many people think that were, say, Paul Krugman or John Steele Gordon, eligible to use it, that either would decline to do so out of a sense of tax justice? I know I wouldn’t. I will take whatever deductions the law—however unconscionable—allows.
Mitt Romney’s bad week – which looks like it may get much worse before it’s over – just took another hit from a gloomy Gallup poll. Unlike other recent surveys, which have shown Romney dropping below Newt Gingrich in South Carolina, this one was a poll of national voters (via HotAir):
Gallup’s Editor-in-chief Frank Newport appeared on MSNBC to talk about the polling organization’s national tracking poll of the GOP primary race, which is changing rapidly in the last few days of the campaign for South Carolina. Newport said when their new data comes out at 1 pm eastern, “…we’ll see this gap closing more. Romney was up 23 points over Newt Gingrich. Now it will be down about ten points, so clearly things are collapsing.” …
“We have seen more movement, more roller coaster kind of effect this year than any other Republican primary in our history of tracking,” Newport said. “I think anything is possible. It wouldn’t be out of the realm of possibility if Romney recovers. We’ll wait and see.”
Ed Morrissey notes two reasons for reading this poll with caution: it was a survey of registered voters, not likely voters, and it was also taken before the interview with Gingrich’s wife aired.
Both the House and Senate have indefinitely postponed action on the SOPA/PIPA legislation, which would make it easier for the government to shut down online intellectual property thieves, but could have unintended negative consequences for websites. Harry Reid spun this as a temporary setback for the bill, but after the massive online protests this week it’s doubtful that legislators will want to bring this issue up again during an election year:
SOPA sponsor Lamar Smith, the Republican chairman of the House Judiciary Committee, said his committee won’t take up the bill as planned next month — and that he’d have to “wait until there is wider agreement on a solution” before moving forward.
Senate Majority Leader Harry Reid, meanwhile, said he was calling off a cloture vote on PIPA he’d scheduled for Tuesday.
Reid tried to put on a brave face, saying in a statement that he was optimistic that progress could be made in the coming weeks. But there’s no mistaking what happened.
Many of the Senate bill’s co-sponsors have since come out against it, leaving Reid a no-win choice: Go forward with the cloture vote he’d planned for Tuesday and lose, or send the bill off into back-burner purgatory.
Getting SOPA/PIPA through congress at this point seems undoable – even if the bill’s backers manage to corral enough support from legislators, this is the last issue Obama would want resurfacing during his reelection campaign. It pits Silicon Valley against Hollywood, and Obama showed during the Keystone XL that he’ll do anything to avoid taking a stance that alienates one of his core support groups.
Many Jewish liberals have been in denial about the anti-Israel and often anti-Semitic tone of much of the Occupy Wall Street movement since its inception. As our colleague Jonathan Neumann wrote in the January issue of COMMENTARY, the leftist hatred for Israel is thoroughly integrated into the Occupy worldview even though some mainstream sympathizers with the movement would prefer to ignore it. But their tolerance for the way this virus has attached itself to a movement that is supposedly about “social justice” will soon be put to the test again.
The so-called U.S. Campaign to End the Israeli Occupation is organizing an Occupy AIPAC event set to coincide with the annual national conference in Washington, D.C. of the American Israel Public Affairs Committee in March. The group, an anti-Zionist organization dedicated to promoting boycott, divestment and sanctions (BDS) on Israel is hoping to piggyback on the popularity of the Occupy movement to try to sabotage or at least overshadow the AIPAC event. Though the odds are, it will fail, as most such anti-Israel efforts generally do, the manner with which this BDS group has commandeered the Occupy brand name ought to alert liberals to the direction the movement is headed with respect to Israel and the Jews.
The Romney campaign is out with a new attack on Newt Gingrich this morning which, if taken in the right direction, could be absolutely toxic for the former speaker’s campaign. Romney’s press release, headlined “I Think Grandiose Thoughts” (a direct quote from Gingrich at last night’s debate), lists a multitude of celebrated statesmen and historical figures who Gingrich has compared himself to over the years, including Abraham Lincoln, Charles de Gaulle, and the Duke of Wellington. Here’s Newt likening himself to The Great Compromiser:
Henry Clay: “Putting his tumultuous four years in the speaker’s chair into historical perspective, the former history professor compared himself to 19th century statesman Henry Clay, ‘the great compromiser’ who lost three bids for the presidency and served as speaker and secretary of state. Gingrich said that like Clay, he did more than just preside over the House. ‘I was not a presider, I was the leader,’ Gingrich said in the interview. ‘I think Henry Clay’s probably the only other speaker to have been a national leader and a speaker of the House simultaneously.’” (William Welch, “Gingrich: I’ll Go Down As Leader, Clinton As Tragedy,” USA Today, 8/30/99)
Seventy years ago today, some of the German government’s top bureaucrats gathered in a Berlin suburb. The event, known to history as the Wansee Conference, after the name of the neighborhood in which these Nazi technocrats came together, was remarkable for the commonplace way in which the participants approached their problem as if it were a normal matter in which inter-governmental agency cooperation was necessary. But there was nothing normal about their task: the extermination of the Jews of Europe.
Lawrence Kadish notes the event today in an important article in the New York Post. But the point of the piece isn’t merely commemoration of a milestone event in the Holocaust. Rather, Kadish wisely compares the bureaucratic thoroughness with which much of the considerable power of the German state was put at the disposal of the Nazi death machine with the way Iran is currently marshalling its resources for a similar purpose: the construction of a bomb that might be used to eradicate the state of Israel.
I wouldn’t normally respond to a piece by PolitiFact, but because I’m quoted as a source for a recent piece on Mitt Romney, I think it’s worthwhile offering a bit of context. On Tuesday, I got the same email Tom Busciano received from Louis Jacobson at PolitiFact, asking my take on Romney’s recent debate claim the U.S. Navy is smaller than it’s been since 1917, and the U.S. Air Force is smaller and older than it’s been since 1947. What struck me about Jacobson’s message was it asked if Romney’s statement was “technically true” and “what context does this ignore,” which carried the clear implication – as I warned Jacobson in my reply – that he’d already decided what he was going to write.
Jacobson responded that he “didn’t mean to look biased; I was simply trying to elicit critical thinking.” Sadly, my trust was misplaced. Jacobson’s piece is critical indeed: full of overheated rhetoric, uncomprehending of basic points, and carrying a “pants on fire” rating. Jacobson sums up Romney’s contention as being: “The U.S. military has been seriously weakened compared to what it was 50 and 100 years ago.” Since the Truman Doctrine of 1947 is as good a marker as any of the moment when the U.S. assumed the global security responsibilities that formerly belonged to Britain, the fact that our Air Force is smaller and older than it has been at any point since that date might give immediately give cause for concern.
There is some consensus around the campaign blogosphere this morning–on both the left and the right–that Mitt Romney is giving up so much ground to Newt Gingrich because Romney is in the classic “prevent defense”–the formation that football teams use when they want to prevent long scoring plays to try and run out the clock.
This is a sensible analogy, but probably too kind to Romney’s latest debate performances. Romney’s mind doesn’t seem to be on the play clock, but rather the alarm clock. These debates have been the campaign equivalent of Romney waking up to find that it’s not time for the general election yet, and hitting the snooze button. Part of this stems from the fact that Romney is usually on his game when the subject is Barack Obama, but seems to have lost interest in the reality show spectacles the debates have become.
Far be it for me to claim there is no problem with Afghan soldiers attacking coalition troops in Afghanistan. Obviously the problem is real—and so is the fallout. Witness French President Nicolas Sarkozy’s threat to pull French forces out of the country after four French soldiers were killed by an apparent Afghan soldier, or at least a gunman in an Afghan uniform. But the New York Times still appears to be overhyping the threat with its lead article this morning which proclaims:
American and other coalition forces here are being killed in increasing numbers by the very Afghan soldiers they fight alongside and train, in attacks motivated by deep-seated animosity between the supposedly allied forces, according to American and Afghan officers and a classified coalition report obtained by the New York Times.
Would the world be a better place right now if Syrian President Bashar Assad had nuclear weapons? Most reasonable people would say “no.” One of Western policymakers’ enduring nightmares is that unrest in a nuclear power like Pakistan might result in nuclear materiel being looted and trafficked, just as Libyan arms looted during that country’s civil war are now being trafficked worldwide. If Syria had nuclear weapons today, its developing civil war could easily result in precisely that nightmare proliferation scenario.
What brought the question to mind was the unnamed intelligence official quoted in Mark Perry’s latest anti-Israel slur at Foreign Policy, who said that while Israel is “supposed to be a strategic asset … There are a lot of people now, important people, who just don’t think that’s true.” For unless you think the world would be a better place if Syria had nukes right now, it’s pretty hard to argue Israel isn’t a strategic asset for America – not only because Israel is the one that destroyed Syria’s reactor in 2007, but because, as the New York Times reported last month, Washington didn’t even know the North Korean-built reactor existed “until Meir Dagan, then the head of the Mossad, Israel’s intelligence service, visited President George W. Bush’s national security adviser and dropped photographs of the reactor on his coffee table.” Only then did U.S. intelligence conduct its own investigation and confirm it.
President Obama gives his third State of the Union Address on Tuesday, and he will have to speak about Iran as it heads toward an obvious goal. The “tough” and “tight” sanctions he touted in last year’s SOTU Address did not cripple the regime, stop its nuclear weapons program, or produce any talks. Three years of attempted engagement have been a failure.
At the White House press conference Wednesday, spokesman Jay Carney was asked whether Obama sent a private letter to the Iranian Supreme Leader proposing direct U.S.-Iranian talks, as two Iranian officials allege. Carney responded that “any communications … with the Iranians are the same in private as they have been in public;” that the only channel is the P5+1 offer to negotiate; and that Iran has “shown no inclination thus far to make that choice”:
“And what we have seen over the three years since this president has been in office is he has — by pursuing the Iranian issue in the way that he has, he has ensured that a world that was in conflict over this issue is now united … He has brought to bear a level of consensus in the international community on the need to pressure Iran and isolate Iran on this issue that did not exist prior to him taking office.”
With Newt Gingrich now leading Mitt Romney in the South Carolina polls, and Rick Santorum officially besting him in the certified Iowa tally, the former Massachusetts governor needed to hit it out of the park in last night’s debate. Unfortunately for Romney, his performance didn’t cut it. He had some great moments – as Michael Barone noted, Romney expertly navigated through tough questions on Bain Capital and Marianne Gingrich’s interview – but his response to queries about his tax returns were painfully inadequate.
It’s true the tax return issue is largely a trumped-up controversy that isn’t nearly as critical as Romney critics make it out to be. And it’s hard to believe that Romney is “hiding something” (other than the fact that he’s very, very rich, as John noted on Twitter) by not disclosing these records. But even his supporters should be worried that the former Massachusetts governor hasn’t been able to come up with a solid way to deflect the issue at this point in the race. This answer is not going to cut it:
This morning, the Washington Post’s Peter Wallsten followed up on never-ending controversy about the Center for American Progress’s anti-Israel bloggers, and what it means for the Obama administration’s close ties to the think tank. (Incidentally, I wrote about this topic yesterday for the New York Post as well.)
According to WaPo, the scandal has caused a lot of hand-wringing in the administration – the White House’s Jewish community liaison reportedly told the Wiesenthal Center’s Rabbi Abraham Cooper that the situation at CAP was “troubling,” adding “that is not this administration.”
The controversy ended almost as soon as it began. Yesterday, Jerusalem Post editor Steve Linde told an audience that Israeli Prime Minister Benjamin Netanyahu had told him a couple of weeks earlier the New York Times and Haaretz were Israel’s “main enemies” because “they set the agenda for an anti-Israel campaign all over the world.” That comment, made during a private meeting with the journalist, set off a minor furor with many, including Linde, saying they thought it odd those two journalistic institutions would outrank Hamas, Hezbollah or Iran as the Jewish state’s main foes and that such a statement reflects Netanyahu’s Nixon-like paranoia about the press. However, the prime minister’s office immediately denied Netanyahu had said it, and Linde soon backtracked, telling Haaretz the words were merely his interpretation and not a direct quote.
Nevertheless, this non-story is a reminder of a great truth about the Arab-Israeli conflict. While it would be absurd to actually rank the Times or Ha’aretz higher in the list of Israel’s foes than actual military and terrorist threats, biased media reports are a not inconsiderable problem for a beleaguered Jewish state. So whatever it is that Netanyahu actually said to Linde, his concern about a distorted vision of Israel’s policies being the lens through which most foreigners view his country is neither foolish nor paranoid.
Newt Gingrich earned the wild applause of the audience in the hall for last night’s Republican presidential debate when he termed the media’s publicizing his ex-wife’s charges against him as “disgusting.” The tactic may have worked, at least in the short run, especially because Marianne Gingrich’s interview on ABC’s “Nightline” Thursday night didn’t contain much that anyone who had followed the story didn’t already know. Those who suspect the motivation for running the piece on the eve of the South Carolina primary may have been to derail Gingrich may not be far off the mark.
Yet for all of the fact that Gingrich may not suffer any negative consequences from the accusations contained in her interview in the coming days, it must be said that his attempt to turn the tables on his accusers seemed as contrived as ABC’s defense of its decision. Gingrich is a past master at conjuring up a spirit of righteous indignation at the drop of a hat, but given the fact that the issue is the result of his own sleazy behavior and hypocrisy and not any actual wrongdoing by his accusers, his assertion that it is the media that is “despicable” sounded a false note.