Siddhartha Mahanta

Siddhartha Mahanta

Editorial Fellow

Siddhartha came to Mother Jones from the National Journal, where he produced videos for the web and wrote for the magazine. He's also worked for the PBS NewsHour, freelanced for Al Jazeera English, and grew up in Sugar Land, Texas.

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Private Equity's New Champion

| Mon Jan. 30, 2012 1:40 PM PST
romneyFormer private equity executive and current GOP presidential candidate Mitt Romney.

The rapidly increasing chance that former private equity executive Mitt Romney will be the GOP nominee for president hasn't been all wonderful for the private equity industry. That's because voters are growing hip to just how much investors and money managers at firms like Bain Capital—the private equity firm Romney co-founded—actually make, and the elaborate tax gimmicks that help them avoid paying what's arguably their fair share. Whether that added scrutiny translates into tax reform is anyone's guess. But the financial industry sees the writing on the wall, and is manning its defenses.

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Romney's Crony Capitalism

| Mon Jan. 23, 2012 8:57 PM PST

In Monday night's NBC debate, Mitt Romney continued to peddle the myth that he's a titan of free enterprise—the sort of master of the private sector who has never once benefited from tax breaks or government subsidies.

Yet Romney's time at Bain Capital was ridden with numerous episodes of Bain-acquired companies leaning heavily on state tax packages, as the Los Angeles Times reported just a few weeks ago: 

Bain Capital began looking at investing in the steel start-up [called Steel Dynamics] in late 1993. At the time, Steel Dynamics was weighing where to locate its first plant, based in part on which region offered the best tax incentives. In June 1994, Bain put $18.2 million into Steel Dynamics, making it the largest domestic equity holder. It sold its stake five years later for $104 million, a return of more than $85 million.

As Bain made its investment, the state and county pledged $37 million in subsidies and grants for the $385-million plant project. The county also levied a new income tax to finance infrastructure improvements to benefit the steel mill over the heated objections of some county residents. . . .

Another steel company in which Bain invested, GS Industries, went bankrupt in 2001, causing more than 700 workers to lose their jobs, health insurance and a part of their pensions. Before going under, the company paid large dividends to Bain partners and expanded its Kansas City plant with the help of tax subsidies. It also sought a $50-million federal loan guarantee.

"This is corporate welfare," said Tad DeHaven, a budget analyst with the Washington-based Cato Institute, which encourages free-market economic policies. DeHaven, who is familiar with corporate tax subsidies in Indiana and other states, called the incentives Steel Dynamics received "an example of the government stepping into the marketplace, picking winners and losers, providing profits to business owners and leaving taxpayers stuck with the bill."

On the campaign trail, Romney's made a habit of denouncing "crony capitalism" and government intervention in the private sector. He's tried to convince Republican voters that he's never engaged in it, doesn't like it, and that real American businessmen won't practice it.

But there's plenty of evidence in Romney's record that the fine art of crony capitalism is a crucial piece of making it big in the sort-of free market. In other words: it's part of doing business in a democracy.

Reid Caves on PIPA, For Now

| Fri Jan. 20, 2012 10:01 AM PST
Sen. Harry Reid (D-Nev.)

Senate Majority Leader Harry Reid (D-Nev.) has postponed Tuesday's scheduled procedural vote on the controversial Protect IP Act, or PIPA. Here's his statement:

In light of recent events, I have decided to postpone Tuesday's vote on the PROTECT I.P. Act.

There is no reason that the legitimate issues raised by many about this bill cannot be resolved. Counterfeiting and piracy cost the American economy billions of dollars and thousands of jobs each year, with the movie industry alone supporting over 2.2 million jobs. We must take action to stop these illegal practices. We live in a country where people rightfully expect to be fairly compensated for a day's work, whether that person is a miner in the high desert of Nevada, an independent band in New York City, or a union worker on the back lots of a California movie studio.

I admire the work that Chairman Leahy has put into this bill. I encourage him to continue engaging with all stakeholders to forge a balance between protecting Americans' intellectual property, and maintaining openness and innovation on the internet. We made good progress through the discussions we've held in recent days, and I am optimistic that we can reach a compromise in the coming weeks.

Minority Leader Mitch McConnell's (R-Ky.) request to delay the vote and Rep. Lamar Smith's (R-Tex.) decision to postpone work on SOPA, PIPA's counterpart in the House, surely contributed to Reid's decision. The calculated retreats of a number of both bills' original co-sponsors and the blackout on Wednesday mattered, too.

So what happens next? Reid will probably continue his doomed quest for a non-existent compromise between content providers (Hollywood) and the tech community (Silicon Valley). Remember, Sen. Dianne Feinstein (D-Calif.)—an original co-sponsor of PIPA whose state hosts both communities—tried and failed to broker a compromise between the two groups in December. Nothing that's happened since would improve the odds of a deal.  

As last night's presidential debate showed, Republicans seem to understand that anti-SOPA/PIPA sentiment aligns rather handsomely with conservative values like free speech, fewer regulations, and less government. And the GOP knows full well that Hollywood—traditionally a core, generous constituency for Democrats—will be none too pleased with Reid's decision to bow before the might of web geekdom.

For Republicans, opposing SOPA is a win/win. The only question is why they didn't understand that earlier.

Romney Hits Obama on Solyndra, But Bain Got Government Subsidies, Too

| Thu Jan. 19, 2012 7:47 PM PST
Mitt, doin' work.

At Thursday night's CNN debate, Mitt Romney attacked the Obama administration's loan guarantees for the now-bankrupt solar panel manufacturer Solyndra as a prime instance of the government picking winners and losers in business, and losing big. But Bain Capital, the private equity firm Romney founded, frequently received similar help from state governments, including subsidies and tax breaks. The subsidy-tracking folks over at Good Jobs First compiled a vast database on just how much states have bailed out companies that were bought and—in a number of cases—gutted by Bain Capital. Some of the highlights:

Sealy. A year after the 1997 buyout of this leading mattress company by Bain and other private equity firms, Sealy received $600,000 from state and local authorities in North Carolina to move its corporate offices, a research center and a manufacturing plant from Ohio (Greensboro News & Record, March 31, 1998). In 2004 Bain and its partners sold Sealy to another private equity group.

GS Industries. In 1996 American Iron Reduction LLC, a joint venture of GS Industries (which had been taken private by Bain in 1993) and Birmingham Steel, sought some $20 million in tax breaks in connection with its plan to build a plant in Louisiana’s St. James Parish (Baton Rouge Advocate, April 6, 1996). As the United Steelworkers union noted recently, GS Industries later applied for a federal loan guarantee, but before the deal could be implemented the company went bankrupt.

AMC Entertainment. After being promised more than $40 million in subsidies, this movie chain (bought in 2004 by Bain and other private equity firms) agreed to move its headquarters from downtown Kansas City, Missouri to a nearby suburb across the state line in Kansas. The deal was criticized as an egregious case of taxpayer-financed sprawl. [Even though Romney left Bain in 1999, he's continued reaping millions in lightly taxed investment income since then.]

As for the office supply store Staples, a supposed success Romney frequently touts? In 1996, the company chose to move its distribution center to Maryland in exchange for a healthy $4.2 million subsidy deal.

Romney says that President Obama's record of aiding private enterprise proves the president doesn't have a clue about how capitalism works—that, in the Obama's view, capitalism necessarily relies on the generosity of government largesse. But if we're to judge Romney's understanding of capitalism based on how he ran the show at Bain, it's tough to see how business success doesn't often rely on government help.

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Gingrich Ally Declares War on...Christians?

| Thu Jan. 19, 2012 3:05 PM PST
Newt prays, hard.

With revelations of Newt Gingrich's zeal for the sanctity of open marriage now dominating the news cycle, the former House Speaker may soon need to consult a higher power to help him field the tough family values questions that South Carolina's bedrock conservative Republican voters are likely to ask him.

Luckily, Gingrich has someone much closer to home to help out: long-time friend Michael Youssef, an Atlanta-based televangelist who was just named the national co-chair of Gingrich's Faith Leaders Coalition. Youssef is an ardent pro-lifer, a virulent Islamophobe, and a gay-hater who has compared Mormonism to Islam (unfavorably).

It's unclear if Gingrich's people did all their homework on Youssef, who has a history of attacking not only Muslims and gay people, but also Presbyterians and Episcopalians. Via the People for the American Way, here's an excerpt from a column Youssef wrote for the American Family Association last January:

Dodd to Internet: You And Your Blackout Can Drop Dead

| Tue Jan. 17, 2012 4:00 PM PST
Sen. Chris DoddSen. Chris Dodd (D-Conn.)

Netroots and tech industry pressure has dramatically slowed the progress of the Stop Online Piracy (SOPA) and Protect IP (PIPA) Acts, the sweeping anti-piracy bills backed by the lobbying might of the entertainment industry. As we wrote today, both SOPA and PIPA are on the ropes, thanks in part to a recent flurry of Internet activism. Tomorrow, a number of sites, including Reddit and Wikipedia, plan to "blackout" their sites in protest—i.e., go inactive. And this isn't just some wily fringe movement: late on Tuesday, Google also got into the mix, announcing that it will voice its opposition against the bills on its homepage tomorrow.

Former Sen. Chris Dodd (D-Conn.), now the CEO of the Motion Picture Association of America, is decidedly unamused:

Only days after the White House and chief sponsors of the legislation responded to the major concern expressed by opponents and then called for all parties to work cooperatively together, some technology business interests are resorting to stunts that punish their users or turn them into their corporate pawns, rather than coming to the table to find solutions to a problem that all now seem to agree is very real and damaging.

It is an irresponsible response and a disservice to people who rely on them for information and use their services. It is also an abuse of power given the freedoms these companies enjoy in the marketplace today. It’s a dangerous and troubling development when the platforms that serve as gateways to information intentionally skew the facts to incite their users in order to further their corporate interests.

A so-called "blackout" is yet another gimmick, albeit a dangerous one, designed to punish elected and administration officials who are working diligently to protect American jobs from foreign criminals.

It is our hope that the White House and the Congress will call on those who intend to stage this "blackout" to stop the hyperbole and PR stunts and engage in meaningful efforts to combat piracy."

The Cato Institute's Julian Sanchez, a prominent opponent of both bills, summarized Dodd's statement via Twitter, writing, "Shorter MPAA: If you screw with us, our vassals in Congress will be holding hearings on your 'abuse of power' (aka 'speech')." 

Dodd's dismissal of the blackout as a "dangerous" "stunt" betrays one of Washington's most maddening blind spots. Huge portions of the Internet community have  embraced a genuine act of protest—one that doesn't rely on deep-pocketed lobbyists on K Street. Whatever your thoughts on SOPA and PIPA, it's clear that millions of people will be affected by the blackout. This is far more than a mere stunt.

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