Kevin Drum - June 2012

Mitt Romney Knows About Crony Capitalism

| Fri Jun. 1, 2012 5:20 AM EDT

Mitt Romney has been playing the crony capitalism card lately, talking up the Solyndra stimulus-money debacle and falsley accusing the Obama administration of lining the pockets of "friends and family." But it turns out that Romney may need to take a long, hard look in a mirror:

When Romney was governor, the state handed out $4.5 million in loans to two firms run by his campaign donors that have since defaulted, leaving taxpayers holding the bag.

The two companies—Acusphere and Spherics Inc.—stiffed the state on nearly $2.1 million in loans provided through the state's Emerging Technology Fund, a $25 million investment program created while Romney was governor in 2003 that benefitted 13 local firms.

Acusphere, a biotechnology firm headed by a Romney campaign donor, got $2 million in 2004 that it was supposed to put toward a $20 million manufacturing facility in Tewksbury, which never became fully operational...

The loans were approved by a seven-person advisory board that included two Romney appointees and three Romney campaign contributors, a Herald review found.

Meanwhile, stimulus funds have actually been remarkably well managed. Michael Grunwald at Time's Swampland blog writes:

The Department of Energy has handled $37 billion in stimulus money, more than its annual budget. Overall, the federal government has distributed over $800 billion in stimulus money. Where are the sweetheart deals? Where are the actual outrages that are provoking outrage? During the debate over the stimulus, experts warned that as much as 5% to 7% of the stimulus could be lost to fraud. But by the end of 2011, independent investigators had documented only $7.2 million in fraud, about 0.001%. As I've written, reasonable people can disagree whether the stimulus was a good thing, but it's definitely been a well-managed thing.

If you want to talk about actual crony capitalism at the federal level, the problem isn't so much a vast conspiracy as it is a magnificently complex web of elected officials who want to keep their own jobs by keeping jobs in their home districts and states. That bland reality makes the real problems with more equitable spending at the federal level even more intractable.

Meanwhile, Romney's broader argument against the stimulus is incoherent. He blasts Obama for job losses during his administration, but under a Romney administration during that same period of economic crisis, with no stimulus money, job losses almost certainly would have been much more severe. There's a time for austerity, and it isn't during a recession.

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New York City Should Tax Soda, Not Ban It

| Fri Jun. 1, 2012 5:00 AM EDT

John Cole reacts to the new anti-large-soda ban that Mayor Michael Bloomberg is pushing in New York City:

Stupid, paternalistic, and completely unenforceable. My old platoon sergeant once told me that when it comes to keeping the guys in line, you never make a rule you won't enforce, you never make a rule you can't enforce, and you never make a rule you shouldn't enforce. This new ban fails on at least the first two.

Cole's platoon sergeant gives the same advice parents get. Don't make rules for kids that you can't or won't enforce, and if you do make rules then you'd better stick to them or your kids will just ignore them entirely.

Majiscup - The Papercup & Sleeve Log/FlickrI get the feeling we'll see a lot of that kind of ignoring going on in New York City when this ban goes into effect. As John points out, people can just buy two 16-ounce sodas instead of one 32-ounce soda. So what's next? A ban on the number of sodas you can buy at one time?

Whatever public-health costs the ban may defer could be offset by the costs of attempting to enforce it in the first place. Meanwhile, Bloomberg lends credence to the "nanny state" alarmists who will rightfully hold this up as a bad example of government interfering in the economy.

Rather than banning soda, how about having the government just raise taxes on it? Taxing sugary drinks would put downward pressure on consumption of those drinks without any enforcement, and revenue could be pumped into public health and education efforts, effectively killing two birds with one stone.

The other day George Will said: "Donald Trump is redundant evidence that if your net worth is high enough, your IQ can be very low and you can still intrude into American politics." I don't think Bloomberg has fallen quite so low as Trump, but his reckless policies have more dire implications for the people of New York than the birther-bloviations of a reality TV star.

Money can buy a lot of things, but it can't buy common sense.

Erik Kain is guest blogging while Kevin Drum is on vacation.