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The Obama Campaign’s Digital Masterminds Cash In

June 20, 2013 by Leave a Comment

The potential client was Caesars. The casino chain was looking for ways to induce semiregular visitors to show up more routinely at its other casinos around the country and to keep regulars from defecting to new competitors. A.M.G. was making the pitch that keeping gamblers loyal to Caesars was not all that different from keeping onetime Obama voters from straying to Mitt Romney. It was all a matter of figuring out how to get their message in front of the right customers at the right time. It was not lost on the Obama strategists that the “change” they were talking about was not the kind “you can believe in” but rather the kind you can put in a slot machine. “I kind of felt like the Devil’s advocate,” Chauncey McLean, 31, the Democratic Party’s director of media tracking during the campaign and now A.M.G.’s chief operating officer, wryly told me.

A.M.G. was founded in late December by a splinter group of longtime Obama advisers: Larry Grisolano, who oversaw how the campaign spent its advertising dollars; Grisolano’s direct-mail partners Terry Walsh and Pete Giangreco; Jeff Link, a seasoned Iowa veteran who was an outside adviser in 2012; and Erik Smith, an advertising consultant for the 2012 campaign, whose work running one of the biggest 2004 pro-Kerry outside groups gave him an inside track with party donors from the corporate world.

McLean was their first hire. During the campaign he proved himself to be particularly deft at translating between the old hands of the political world, who talk about “message” and “narrative,” and the quants in their 20s, who speak of “code” and “algorithms.”

McLean was so moved by Obama’s 2004 convention speech — the one that called for an end to a red-state America and a blue-state America — that when Obama decided to run in 2008, he took a leave from law school and joined the campaign. He had just spent the last 18 months of the 2012 presidential race bouncing between a couch in Washington and a small, shared apartment in Chicago where a colleague slept in the dining room. So he was experiencing considerable culture shock in the high life of Vegas.

Arriving at Caesars Palace after a first-class flight (only the second of his life), he was shown to his room. “I open the door and there’s just this huge, like, double, wall-to-wall window with a view of the strip and a huge king bed,” he said. Over room service, he met with his deputy, Chris Frommann, now 26, and made some last-minute revisions to their proposal. McLean took an iPhone picture of his kung pao chicken and sent it to his wife back in Brooklyn, “to show her that I’d made it,” he joked.

The next morning McLean, Frommann, Grisolano, Smith and a couple of others were escorted through a maze of doors that led them to the casino’s marble-and-glass executive offices, where their meeting went well enough that they scheduled another, to discuss a deal. Later that night they celebrated with a red-meat-and-red-wine dinner at Old Homestead, Caesars’ upscale steakhouse.

Recalling that Vegas trip while sitting at a MacBook Pro-dotted coffee shop in Brooklyn in March, McLean treated his shift from selling Obama to selling Caesars as a small discomfort that was necessary if he wanted to keep working on the technological advancements he and his colleagues developed on the campaign. In a nonpresidential year, no political effort would have the money to finance what he described as the “huge R. D. project” that the Obama campaign effectively became. The resources for that kind of project could now be found only in corporate America. If companies with big budgets wanted members of Obama’s team to do for them whatever it was that they did for the president, McLean couldn’t see why they shouldn’t answer the call.

Jim Rutenberg is a national political correspondent for The New York Times.

Editor: Ilena Silverman

Article source: http://www.nytimes.com/2013/06/23/magazine/the-obama-campaigns-digital-masterminds-cash-in.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,

Larry Summers and Glenn Hubbard Square Off on Our Economic Future

May 2, 2013 by Leave a Comment

After practice, Tommy Amaker, the Harvard basketball coach, invited Summers into a lounge to address his team. Over pizza — his gluten-free pie sat off to the side — Summers delivered a 30-minute speech that was part motivational and mostly scholarly. (Imagine what Bobby Knight might sound like if he had an advanced degree in public economics.) The theme was adjustments. Summers began by recalling a recent Harvard game against Brown. The Crimson had blown a 22-point lead in the second half but came back and eked out a win in double overtime. “It’s not that people who win never make mistakes,” Summers said. Then he transitioned to his old boss, President Barack Obama, who botched his first debate against Mitt Romney before adjusting his plan and winning the next two. “Like the president,” he said, “you finished strong!”

Summers segued to an explanation for how he chose a career in economics. The field, he said, provided tools that can be used to make the world, or a basketball team, better. The key is reading data and recognizing what it tells you. Then Summers paused and asked the assembled players a rhetorical question: Did they believe a shooter could get a “hot hand” and go on a streak in which he made shot after shot after shot? All the players nodded uniformly. Summers paused again, relishing the moment. “The answer is no,” he said. “People apply patterns to random data.” A statistical analysis of player performance reveals that streaks are random events. The players listened respectfully. They perked up when it was noted that Summers grew up in the same school district as Kobe Bryant.

A few days later, I witnessed an equally unusual discussion of basketball and economics. Before a crowded lecture hall at Columbia University, the economist and former adviser to both Bush presidents, Glenn Hubbard, wrote a series of words on the blackboard. Among them: Milton Friedman, Yeats, basketball. Hubbard, a mild and genial man, looks as if he entered the world fully formed, wearing a conservative suit with a side part in his hair and an accountant’s pair of thick eyeglasses. Close your eyes and picture an economist — that’s Hubbard. For the next hour, he maintained an oddly cheery tone as he laid out a dystopian vision of the United States’ economic future. He ticked off a series of empires — Rome, medieval China, Spain, 19th-century Britain — and argued that they fell because their leadership ossified and squashed free trade, technological progress or other forces of economic growth.

Hubbard fears that the United States is also veering away from the forces that made it grow into the world’s most powerful economy. Rather than corrupt Roman senators or courtly Spanish twits, he argued, our culprits are myopic politicians who are creating a middle-class entitlement state. If those politicians don’t make fundamental changes to lower our debt — especially by changing the rules governing increasingly expensive Social Security and Medicare policies — the United States may collapse, too.

As he wrapped up, Hubbard pointed to the good news: results can change when the right adjustments are made. This is where he brought up basketball. By the 1940s, he said, the sport had become boring, dominated by extremely tall players who planted themselves next to the rim. Then a Columbia University graduate student who also coached basketball wrote a Ph.D. dissertation arguing that the game could be saved by innovations, like the 3-point shot, which created an incentive to move action away from the hoop. It took decades for the N.B.A. to adopt the 3-pointer, but since its implementation, it has helped make basketball one of the most popular and lucrative sports on earth.

The U.S. economy, in other words, desperately needs to find its own 3-point shot.

Article source: http://www.nytimes.com/2013/05/05/magazine/larry-summers-and-glenn-hubbard-square-off-on-our-economic-future.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Today’s Economist: Simon Johnson: A Hollow Case for Big Banks

February 7, 2013 by Leave a Comment

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Simon Johnson, former chief economist of the International Monetary Fund, is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”

An interesting debate is developing within the Republican Party on how to approach the problem of too-big-to-fail financial institutions.

Today’s Economist

Perspectives from expert contributors.

On the one hand, a growing number of influential voices are pushing for measures that would limit the size of megabanks or even push them to become smaller. Richard Fisher, president of the Federal Reserve Bank of Dallas, continues to draw a lot of attention, as does Thomas Hoenig, the former president of the Federal Reserve Bank of Kansas City and now vice chairman of the Federal Deposit Insurance Corporation. And Jon Huntsman planted a strong conservative flag on this issue during his run for the presidency in 2011.

This assessment is now shared much more broadly across the right, as seen in recent opinion pieces by George Will and Peggy Noonan, as well as regular analysis by James Pethokoukis of the American Enterprise Institute, some of it on the issue I write about today. See this Holiday 2012 survey, provided by the Dallas Fed, with links to views in favor of and against breaking up the big banks.

Senator David Vitter of Louisiana and Jim DeMint, the former senator from South Carolina who now heads the Heritage Foundation, have also come out hard against very big banks. Both men are usually considered to be in the right wing of the party.

But some other Republicans are pushing back, as seen this week in a paper by Hamilton Place Strategies, a group headed in part by communications professionals who previously worked with President George W. Bush, John McCain and Mitt Romney. (The people involved insist that it is not a Republican firm. Of its five partners, four previously had senior Republican jobs, while the fifth worked for Hillary Clinton and other Democrats. Of its three managing directors, two have worked for Democrats and one was a senior staff member on the Romney campaign. Historically, of course, deference to big banks is bipartisan.)

Can Hamilton Place Strategies help turn the tide within Republican thinking? This is not likely, because its paper is not credible and should not be taken seriously for three reasons.

First, it fails to deal with the most important recent work showing the problems with big banks. For example, it essentially ignores the analysis of Andrew Haldane and his colleagues at the Bank of England, which finds no economies of scale and scope for the world’s largest financial institutions (the paper mentions the finding that economies of scale do not exist above about $100 billion but does not go into the specifics of this result). I see no mention of Richard Fisher and Harvey Rosenblum of the Dallas Fed, who explain clearly how megabanks weaken the effectiveness of monetary policy and undermine United States influence over all aspects of our financial system (a direct counter to one main point of the Hamilton Place Strategies paper).

The paper makes vague assertions that bank equity capital is now sufficient to withstand future adverse shocks, but it fails to take on any of the many concerns raised by Anat Admati and her co-authors, which are increasingly gaining traction. Professor Admati and Martin Hellwig have a new book, “The Bankers’ New Clothes,” which will be introduced on Monday at the Peterson Institute for International Economics (where I am a senior fellow); excerpts have been posted on Bloomberg. Anyone who wants to be taken seriously in this debate needs to read the book (and the technical papers already available).

Second, Hamilton Place Strategies denies the existence of too-big-to-fail subsidies for global megabanks. This is laughable. Has it talked to anyone in credit markets about how they price various kinds of risk – and assess the willingness and ability of the government and the Fed to support troubled megabanks? Or have its authors read thethe report on the Safe Banking Act, produced by the staff of Senator Sherrod Brown, Democrat of Ohio? The International Monetary Fund, the Bank of England and other sources cited there put the funding advantage of too-big-to-fail banks at 50 to 80 basis points (0.5 to 0.8 of a percentage point, which is a lot in today’s market).

Such subsidies encourage big banks to borrow more – to take more risk and to become even larger. The damage when such a bank fails is generally proportional to its size. So this implicit taxpayer subsidy creates serious risks for the macroeconomy and contributes to the further buildup of taxpayer liabilities – when any financial system crashes, that causes a recession, reduces tax revenue, and pushes up government debt.

Even William Dudley, the former Goldman Sachs executive who now heads the Federal Reserve Bank of New York, acknowledges that too-big-to-fail and its associated subsidies continue. Daniel Tarullo, the lead Fed governor for financial regulation, is in the same place. (Again, neither is cited in the Hamilton Place Strategies document.)

Hamilton Place Strategies contends that large banks can be resolved – taken through liquidation by the F.D.I.C. without difficulties – and that the “living wills” process helps to provide a meaningful road map. I talk to people closely involved with these issues, officials and private-sector participants (as a member of the F.D.I.C.’s Systemic Resolution Advisory Committee and as a member of the Systemic Risk Council, led by Sheila Bair, the former chairwoman of the F.D.I.C.). Hamilton Place Strategies is completely wrong on the substance here.

Hamilton Place Strategies also asserts that global megabanks are an essential part of a well-functioning international economy. Again, I don’t know where this comes from. As part of my work at the Massachusetts Institute of Technology and at the Peterson Institute, I talk with people who run companies, large and small, operating around the world; they emphasize that they need financial services provided by well-run institutions and markets that have integrity.

Putting too-big-to-jail banks in charge of financial flows helps no one – except, presumably, the executives at those banks that the Department of Justice has determined are immune from criminal prosecution.

Third, the Hamilton Place Strategies “report” reads as if it is either some form of paid advertising or a sales pitch to potential clients — but the firm refuses to disclose for whom it is working and on what basis.

In response to an e-mail request for such information, Patrick Sims of Hamilton Place Strategies replied:

While we don’t publicly disclose our individual clients, we make no secret that we do work for large financial institutions, both foreign and domestic, and related associations. It would be fair for you to note that in your writing. But the views expressed in the paper represent the longstanding views of the firm.

I’m not sure what “longstanding” means, as the firm was founded in 2010. But in any case, this lack of disclosure completely destroys the credibility of Hamilton Place Strategies and its work in this area.

The firm is in the business of influencing opinion. As it says prominently on its Web site, “We show clients how to shape opinion, navigate challenges, make informed decisions and create opportunities.”

While the firm’s clients in this area may not be clear, the language in its report strongly resembles arguments being made by the Financial Services Forum and other lobbying groups for large banks. For example, an unsigned blog post on the Financial Services Forum’s Web site from November 2011 has the same arguments and similar wording to what is in the Hamilton Place Strategies report. (It also objects to an earlier commentary I wrote.)

Perhaps all this is a coincidence; the firm has not yet been willing to discuss these points. When I acquainted the firm with what I was writing in this post and sought comment, the only substantive reaction was a request not to characterize it as a Republican firm.

We have seen deceptive lobbying, posing as objective research, many times in the financial reform debate – for example, the case of Keybridge Research on derivatives, which I wrote about in 2011.

If a company’s lawyer is quoted in the press, the report will always include mention of the client-lawyer relationship. Everyone is entitled to a spokesperson.

Law firms are not afraid to tell you whom they represent. After Charles Ferguson’s Oscar-winning movie, “Inside Job,” many academics now disclose when they produce a paper on behalf of an industry association (e.g., Darrell Duffie of Stanford disclosed that he was paid $50,000 by the Securities Industry and Financial Markets Association, a lobbying group, to write a paper opposing the Volcker Rule). Karen Shaw Petrou, a leading banking analyst with whom I have also disagreed on too-big-to-fail issues, discloses “selected clients and subscribers” in some detail.

Upton Sinclair once quipped, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”

Hamilton Place Strategies’ decision not to disclose who is paying for its “research” is far more significant than all the errors in its white paper.

Article source: http://economix.blogs.nytimes.com/2013/02/07/a-hollow-case-for-big-banks/?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Who Do Online Advertisers Think You Are?

December 1, 2012 by Leave a Comment

Safari became the home of Democratic Jeff. I started by spending time on Barack Obama’s re-election Web site and then visited some travel, car and shopping sites to search for flights to Los Angeles, Volvos and Birkenstocks. On Firefox, as Republican Jeff, I went to Mitt Romney’s site and then searched for Cadillacs, flights to Hawaii and diamond rings.

Having created my new digital identities as heavy-handedly as possible, I returned to my usual Web sites. At first, the ads on my favorite Washington neighborhood blog, the Prince of Petworth, were the same on both browsers. But less than two days later, an ad for Mitt Romney suddenly appeared next to a story I was reading on Firefox about Gore Vidal’s burial. When I opened that page on Safari, the ad in the exact same spot was for Catholic University’s master’s program in human resources management.

How did Republican Jeff and Democratic Jeff end up seeing entirely different ads? The answer is real-time bidding, a technology that’s transforming advertising, politics, news and the way we live online. Advertisers compete in an auction for the opportunity to send ads to individual consumers. Each time a company buys access to me, it can bombard me with an ad that will follow me no matter where I show up on the Web.

To dig deeper into my new identities, I visited the Web site of BlueKai, one of the leading online data aggregators. The company’s software enables its customers to sort consumers into 30,000 market segments like “light spenders” and “safety-net seniors,” and this fine-grained categorization helps make real-time bidding possible. According to BlueKai, Republican Jeff is someone who makes between $60,000 and $74,999 a year, lives in Portland, Me., is interested in luxury cars, celebrities and TV, may have bought a cruise ticket, is an ideal candidate to take out a mortgage and a “midscale thrift spender.” Democratic Jeff is someone who lives in Los Angeles, Long Beach or Santa Ana, runs a large company with more than 5,001 employees and cares about advertising and marketing. Neither of these profiles is accurate. Nevertheless, the pigeonholing of Republican Jeff and Democratic Jeff represents our digital future.

Google and Facebook have each been expanding their use of real-time bidding. In June, Facebook announced that it would introduce a new service called Facebook Exchange, which will enable advertisers to send promotions for Spanish hotels, say, to Facebook users who have searched for trips to Spain.

Should we worry about ads aimed specifically at us everywhere we go on the Web and, increasingly, on our mobile devices too? Yes, and not just because the ads can be invasive and annoying. Real-time bidding also makes the online marketplace less of an even playing field, allowing companies to send loyalty points or discounts — or price increases — to individuals based on their perceived spending power. The travel site Orbitz, after learning that Mac users spend 30 percent more on hotel rooms than P.C. users, has started to send Mac users ads for hotels that are 11 percent more expensive than the ones that P.C. users are seeing, according to a recent Wall Street Journal article.

Of course, many consumer breaks are unfair, and we readily accept that the cost of airline tickets, for example, varies from one passenger to another on the same flight. But our consumer profiles are beginning to define us in all of our online interactions, and a result may be that we get different prices at the mall — or different news articles and campaign ads on our mobile devices — based on a hidden auction system that we’re unable to alter or control.

Article source: http://www.nytimes.com/2012/12/02/magazine/who-do-online-advertisers-think-you-are.html?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

Concerns Over Europe and Congressional Gridlock Shake Markets

November 8, 2012 by Leave a Comment

The abruptness of the fall seemed to indicate that despite the fact that polls had been indicating for some time that President Obama was likely to win, that expectation was not shared by many financiers.

While the stock market has done well since it bottomed early in Mr. Obama’s term, he aroused great hostility among Wall Streeters who opposed his call to increase taxes on high-income Americans and were concerned about increased regulation.

At a conference sponsored late last month by Wall Street’s chief lobbying group, the Securities Industry and Financial Markets Association, an adviser to Mitt Romney was not challenged when he said Mr. Obama had only a one-third chance of winning.

During the election campaign, it had appeared to some analysts that the market was rooting for Mr. Obama. Share prices generally rose this fall, but they slipped in early October after Mr. Romney showed gains in the polls after his first debate with the president. But the sell-off on Wednesday indicated that some shareholders were worried about what would happen now.

Some industry sectors, like finance and managed care, were particularly hard hit on Wednesday amid worries they would be hurt by tougher regulations and other adverse policies in Mr. Obama’s second term. Some also pointed to concerns that taxes on dividends and capital gains were likely to increase, making stocks less attractive.

The Standard Poor’s 500-stock index recorded its worst performance since June, falling 33.86, or 2.4 percent, to 1,394.53. The Dow Jones industrial average fell 312.95 to 12,932.73. It was the Dow’s first close below the 13,000 level since August.

If history is any guide, the one-day loss does not necessarily bode poorly.The stock market has often sold off on the day after Democratic victories in presidential elections, particularly when there had been doubt going into the election over who would win. But the market has tended to perform better under Democratic administrations than Republican ones.

Since 1928, there have been four postelection days when the market did worse than it did this year, with the worst showing coming four years ago, when the index dropped 5.3 percent after Mr. Obama won. It fell 4.6 percent after Truman won in 1948, 4.4 percent after Roosevelt was elected in 1932 and 3.3 percent after he won a third term in 1940. But in each case, stocks rose in the following four years.

By contrast, the market climbed 1.5 percent the day after Roosevelt was re-elected in 1936, but lost value during the next four years. It rose 1.1 percent in 2004, after George W. Bush won a second term, but lost 12 percent the next four years.

Many market strategists expect that the market will remain volatile between now and mid-January. If Congress and the president cannot come up with a plan to cut the deficit, hundreds of billions of dollars in Bush-era tax cuts are set to expire in early 2013 and automatic spending cuts will sharply cut the defense budget and other programs.

The tax increases and spending cuts, known as the fiscal cliff, could push the economy into recession in 2013, economists say they fear.

A Barclays analyst, Ajay Rajadhyaksha, said the “the worst outcome for the fiscal cliff negotiations was a status quo election,” because each party could see the result as a mandate for its own policies. “Unless one side softens its stance,” he added, “the chances of going off the cliff, at least temporarily, are higher” than markets were prepared for.

But Sherry Cooper, the chief economist of the BMO Financial Group, said she expected a compromise to be reached. “Obama is in a much stronger negotiating position now,” she said, adding that she expected a deal that included tax increases and spending cuts.

Article source: http://www.nytimes.com/2012/11/08/business/fiscal-impasse-leads-to-caution-after-election.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

G.O.P. Turns Fire on Obama Pillar, Auto Bailout

October 30, 2012 by Leave a Comment

And so began the latest, and perhaps most important, attempt by Mitt Romney to wrest Ohio into his column. His effort to do so is now intently focused, at times including statements that stretch or ignore the facts, on knocking down what is perhaps the most important component of President Obama’s appeal to blue-collar voters in Ohio and across the industrial Midwest: the success of the president’s 2009 auto bailout.  

Mr. Obama’s relatively strong standing in most polls in Ohio so far has been attributed by members of both parties to the recovery of the auto industry, which has helped the economy here outperform the national economy. At the same time, the industry’s performance and the president’s claim to credit for it appear to have helped Mr. Obama among the white working-class voters Mr. Romney needs.

With the race under most expected circumstances coming down to Ohio, and Ohio potentially coming down to perceptions of how the candidates view the auto industry, Mr. Romney has spent the last few days aggressively trying to undercut Mr. Obama’s auto bailout narrative.

In the past few days his running mate, Representative Paul D. Ryan, has accused Mr. Obama of allowing the bailout to bypass nonunion workers at Delphi, a big auto parts maker with operations in Ohio; Mr. Romney has characterized Mr. Obama’s bailout plan as based on his approach; and Mr. Romney incorrectly told a rally in Defiance, Ohio, late last week outright that Jeep was considering moving its production to China. (Jeep is discussing increasing production in China for sales within China; it is not moving jobs out of Ohio or the United States, or building cars in China for export to the United States.)

It is a high-risk strategy: Jeep’s corporate parent, Chrysler, had already released a scathing statement calling suggestions that Jeep was moving American jobs to China “fantasies” and “extravagant”; news media outlets here and nationally have called the Romney campaign’s statements — initially based on a poorly worded quotation from Chrysler in a news article that was misinterpreted by blogs — misleading.

Mr. Obama’s campaign, seeking to maintain what it sees as its advantage in Ohio, responded on Monday by releasing a commercial calling Mr. Romney’s ad false and reiterating that Mr. Romney had opposed the bailout on the terms supported by Mr. Obama. And on Sunday it dispatched the investment banker who helped develop the bailout, Steven Rattner, here to discuss Jeep’s plans and the auto rescue with local news organizations.

Democrats are hoping that Mr. Romney’s latest move will draw a backlash in a city so dependent on Jeep, which has announced plans to add 1,100 jobs to an assembly plant here that is currently being refitted for the next iteration of what is now called the Jeep Liberty.

Bruce Baumhower, the president of the United Auto Workers local that oversees the major Jeep plant here, said Mr. Romney’s initial comments on moving production to China drew a rash of calls from members concerned about their jobs. When he informed them Chrysler was, in fact, is expanding its Jeep operation here, he said in an interview, “The response has been, ‘That’s pretty pitiful.’ ”

The fight over the auto bailout shows the enduring power of the issue but also its complexities in a campaign that is about both the strength of the economy and the size and role of government.

The auto bailout was one of the first major moves of Mr. Obama’s presidency, and gave Mr. Romney an early chance in opposing it to prove his conservative credentials.

Mr. Romney has portrayed himself as an automobile maven. As he frequently says in his stump speeches, his father was credited with keeping American Motors in business during the 1950s and early 1960s. (The company, it happens, owned Jeep from 1970 to 1987.)

Before the incoming Obama administration was beginning to contemplate a bailout, Mr. Romney wrote an opinion article that he asked The New York Times to publish. The article carried the headline “Let Detroit Go Bankrupt”; in it, Mr. Romney wrote that in the event of a bailout, “you can kiss the American automotive industry goodbye.”

The plan the administration settled on first helped Fiat buy Chrysler and then put both Chrysler and General Motors into managed bankruptcies as part of a program that brought total government assistance for Detroit to almost $80 billion between the Obama and Bush administrations. Coming as the Tea Party was beginning to form, it seemed like risky politics for Democrats being accused of taking big government to an extreme.

At the third and last debate last week in Boca Raton, Fla., Mr. Romney emphasized his position that “these companies need to go through a managed bankruptcy, and in that process they can get government help and government guarantees.”

Mr. Romney has stepped up his offense on the issue since.

So it was that he told those at the exuberant rally on Thursday in Defiance, “I saw a story today that one of the great manufacturers in this state, Jeep, now owned by the Italians, is thinking of moving all production to China.”

Mr. Romney was apparently referring to a Bloomberg News article that said Jeep would return to manufacturing in China that had been misinterpreted by several conservative blogs to mean Jeep was shifting its production to China; the company made clear in a statement that Chrysler was only resuming production in China for Chinese consumers, which it had done for years before halting in 2009 before its sale to Fiat.

Mr. Romney’s ad treads carefully, with an announcer saying Mr. Obama “sold Jeep to the Italians, who are going to build Jeeps in China” and the screen flashing, “Plans to return Jeep output to China.”

Calling it “blatant attempt to create a false impression,” former Gov. Ted Strickland of Ohio, a Democrat, demanded Mr. Romney take it down on Monday. Stuart Stevens, a senior Romney adviser, disputed that the ad is misleading.

“Right now every Jeep built is built in America by an American and sold to the world,” he said. “Now instead of adding jobs in Toledo, they will be making Jeeps in China by the Chinese and selling them in China.”

Jeep began a joint manufacturing venture in China in 1984 and today makes some vehicles in Egypt and Venezuela. While it does produce cars for Chinese export here now, it has discussed returning some production to China since last year.

Jim Rutenberg reported from Toledo, and Jeremy W. Peters from New York. Richard A. Oppel Jr. contributed reporting from Sabina, Ohio.

Article source: http://www.nytimes.com/2012/10/30/us/politics/gop-turns-fire-on-obama-pillar-auto-bailout.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

You’re the Boss Blog: This Week in Small Business: About That Replacement Ref

October 1, 2012 by Leave a Comment
Dashboard

A weekly roundup of small-business developments.

What’s affecting me, my clients and other small-business owners this week.

Economy: What Fiscal Cliff?

A new survey finds chief financial officers less optimistic about economic growth. Brad Plumer explains why fears of a fiscal cliff are not hurting the economy, and Jared Bernstein reveals important new research on a fiscal cliff issue. Defense contractors brace for federal budget cuts. Economic advisers to President Obama and Mitt Romney squabble. Zachary A. Goldfarb says that under Ben Bernanke the Federal Reserve has become more open and forceful. The chief of the San Francisco Federal Reserve Bank anticipates that the economy will “gain momentum over the next few years.” A new book tries to help entrepreneurs reignite the economy. A bacon shortage threatens the world.

The Data: A Seven-Month High

Manufacturing growth improves in Texas and the central Atlantic region. Home prices notch their biggest gains in seven years. Consumer confidence rises to a seven-month high, and consumers step up their spending. But new home sales fall slightly and orders for durable goods plunge. And revised gross domestic product increased at an annual rate of 1.3 percent in the second quarter of 2012.

Finance: Could It Get Any Worse for B. of A.?

A new Visa study says cash flow concerns top the list of small-business worries. One of the biggest lenders to small businesses will soon be on the auction block. Even when consumers are comfortable using new payment technologies, studies show they sometimes prefer paying cash. Here’s why used car prices are rising. The replacement ref who made that controversial call last Monday is a vice president for small business at Bank of America. Did Iran attack our banks (and lose its sense of humor)?

Start-Ups: A Start-Up That Helps Start-Ups

Tim Ferriss explains Y Combinator’s contribution to the start-up scene. This is a start-up that helps start-ups. A solar panel start-up will tap a $197 million loan guarantee. Amazon may be getting into the wine business — and it’s also lending money to small businesses. A San Francisco start-up offers scooter rentals. The Wall Street Journal names the top 50 start-ups.

Selling: Replace Your Reps

Jill Konrath suggests cold-calling strategies. Matthew Bellows explains how small companies can stand out when selling to big companies: “Showing your prospects the characteristics that set your company apart is key to moving the conversation beyond a checklist comparison.” To sell well, John Jantsch says, you must tell stories. Laura Spencer has some advice for dealing with tire-kickers and other bad clients. Lars Lofgren explains why you should replace your sales representatives with ambassadors.

Marketing: Are You a Jerk?

These are the top cities in America for social-media-savvy small businesses. Jessica Levko says there are 10 signs that you’re a social media jerk, including: “You’re attached to your smartphone.” A show with Martin Sheen explains how small businesses can use social media to find new customers. These are the most important local business directories for search engine optimization. A new Facebook service facilitates the creation of “couponlike” promotions. Erica Ayotte explains how to use Instagram to promote your business. These are five types of images that will enhance your online marketing. A few entrepreneurs share their promotional swag secrets. Annette Du Bois thinks your marketing may be a turnoff. Here’s a case study on how a clothing company lifted its sales 205 percent with daily deal e-mails. This is what a Las Vegas casino can teach you about marketing. These are the five most effective business-to-business word-of-mouth marketing techniques.

Around the Country: Hipster Neighborhoods

Friday is Manufacturing Day, and the United States unveils a “Make It in America” contest. HLN introduces a new weekday series about “Making It In America.” Nissan invites “Edisons in training” to win a $50,000 grant (as well as a brand new 2013 Altima). FedEx introduces a small-business grant competition. Brooklyn booms as record rents drive construction. These are America’s hippest hipster neighborhoods. New York’s first chief digital officer discusses how she achieved 80 percent of the goals laid out in her “digital road map.” A supply chain management firm wins an award for small business from the Air Traffic Control Association. A cash mob hits a small business in San Antonio. A small-business owner in Dallas gives 240 customers a month the opportunity to “act like psychopaths.”

Your People: Happier and Healthier

Norm Brodsky says it’s cost of goods sold that determines whether you can afford another employee: “Once you know your gross margin, it’s easy to figure out the new sales you’ll need in order to break even on the addition of another employee to the payroll. You simply add up all the new costs associated with that new person — salary, benefits, extra phone usage, travel and entertainment, whatever — and divide by your gross margin.” A lawyer suggests that if you’re going to fire employees, you should let them know. Barclays’ chief executive plans to pay his employees based in part on whether they are good citizens. Executives at Research in Motion thank their developers with this awful video. New research concludes that the argument that a chief executive will leave if he or she isn’t well compensated is bogus. Freelancers are happier and healthier than full-time employees. Here are 13 office trends that will disappear in the next five years. These communication tips will make your business buzz with productivity. A Wisconsin news station uses a replacement weather guy.

Red Tape: On Taxes and Cheating

A workplace pregnancy bill is introduced in the Senate. Clint Stretch discusses taxes and cheating: “The I.R.S. estimates that in 2006 alone, the Treasury missed out on $385 billion in revenue due under the current tax law from a combination of underreporting of income, overstatement of deductions or other benefits, or nonpayment of taxes owed. To put that in perspective, increased revenue of $385 billion annually likely would be enough to make the Bush tax cuts permanent and to permanently patch the alternative minimum tax.” The Small Business Administration wants to help entrepreneurs over the age of 50. Thomas P. Hanrahan suggests 10 safeguards against consumer lawsuits, including: “The more variety there is in how you promote, the harder it is for a class-action plaintiff to prove that every consumer was taken in by the same misleading message.” Deborah Sweeney offers her small-business checklist for September.

Management: The Return of Myspace

This article discusses the benefits of being done versus being perfect. Mr. Sexy tries to bring back Myspace. The Queen of the Fuzzy Slippers warns us that problem solving is a productivity issue. Nadia Goodman shares three easy exercises to increase your creativity. Here are five incredibly useful tips from TED Talks. Cassie Mogilner says you will feel less rushed if you give time away. Here’s how to find the peak time to do everything. Going for a coffee is among the top 20 time-wasting activities. “The Daily Show” weighs in on the replacement refs.

Technology: Verizon’s iPhone Secret

Google introduces a new service for entrepreneurs and reports that its Play Store hit 25 billion app downloads (thankfully, it’s not run by the National Football League). Here’s how smartphones are changing health care. A puppet shares 10 useful mobile apps for businesses. A woman gives a dubious explanation for why she is waiting in a line to buy an iPhone. Jim Ditmore suggests six things he’d like to see in a future smartphone. Verizon’s iPhone 5 has a secret feature. Here are the 12 best practices for mobile device management for your company. Consumers will soon be able to get their hands on a much-talked-about light field camera. October is National Cyber Security Awareness Month. In the near future, developers say car apps will be big and Facebook may be the social network of the past. An 11-year-old girl wins $20,000 from ATT for a road safety app. Toyota reveals a new robot to help around the house.

Tweets of the Week

@smallbiztrends: I am getting my car serviced and guy says “you’ve only driven 5K miles in 10 months.” I reply “I run a Web business!”

@gitomer: They don’t want your brochure. They want answers to their situations and concerns.

The Week’s Bests

Jeet Banerjee says that when finding a business idea there’s nothing wrong with imitating: “Some of the greatest business ideas have been imitations of others in different ways. If a certain solution has a large market share and not enough competition, you can definitely create a successful business. … If you find a business with a solid business model, feel free to implement their model into other industries. Many ideas are so strong that they have the ability to work in different niches with just a bit of fine tuning.”

Brett Martin explains how to avoid being cheated by a contractor: “Know who’s on the job site. You might sign a contract and make payments with a person who isn’t doing all of the work. Ask upfront if your crew will subcontract parts of the job to somebody else. If so, do the same research into that person’s business as you did for the general contractor. It’s awkward to have a perfect stranger show up on your doorstep ready to swing a hammer, but beyond that, the balance between contractors and subs can lead to some of the biggest headaches on a big project — delays, incorrect installations, damage to finished work and all sides blaming the others for errors while no one takes accountability.”

This Week’s Question: What would you do to revive Myspace?

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2012/10/01/this-week-in-small-business-about-that-replacement-ref/?partner=rss&emc=rss

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Economix Blog: Bruce Bartlett: Republicans Champion ‘Voluntary Taxes’

September 25, 2012 by Leave a Comment

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform — Why We Need It and What It Will Take.”

The Republican-controlled House of Representatives took a break last week from doing nothing to pass a bill to facilitate voluntary taxation. Almost simultaneously, Mitt Romney released his final tax return for 2011, showing that he voluntarily overpaid his taxes by taking less of a deduction for his charitable contributions than he was permitted.

Today’s Economist

Perspectives from expert contributors.

The legislation was H.R. 6410, “The Buffett Rule Act of 2012.” Those not acquainted with the misleading titles often given to Congressional bills might at first glance think this one has something to do with raising taxes on the ultrawealthy.

Of course, Republicans would never actually raise taxes on the ultrawealthy; they think, or at least assert publicly, that the deficit results from too many poor people not paying taxes. But it would be very helpful to them to have a fig leaf that looks as if they had found a way of getting the rich to pay more. That is by encouraging them to voluntarily pay more, as Mr. Romney did.

Named for the billionaire Warren Buffett, what came to be known as the “Buffett rule” is a proposal by Democrats that all those with incomes of $1 million or more pay at least 30 percent of their income in federal income taxes.

Mr. Romney and his wife had an effective federal income tax rate of just 14 percent, including the voluntary overpayment, on incomes over $13 million in each of the years 2010 and 2011, the only ones for which they have released tax returns.

In April, Senate Republicans filibustered an effort by Democrats to enact a real Buffett rule. Thus there was no chance that Congress would actually legislate higher taxes on the wealthy this year. But apparently, House Republicans feel pressured by voters to respond to the low effective tax rates that many rich people pay, which contribute significantly to historically low federal revenues as a share of the gross domestic product and, hence, to the deficit and the debt.

Republicans recognize that the Buffett rule is politically popular. An April Gallup poll found that Americans favor the Buffett rule by 60 percent to 37 percent, an Ipsos/Reuters poll in March found people supporting it by 64 percent to 30 percent, and a February Associated Press/GfK poll found 65 percent in favor of the Buffett rule and only 26 percent opposed.

H.R. 6410, which was introduced on Sept. 14 and passed the House by voice vote on Sept. 19 with no hearings and just a few minutes of debate, would allow taxpayers to designate on their tax returns a contribution to the federal government, over and above their tax liability, for deficit reduction. Of course, the Treasury has had a fund since 1843 to accept gifts, so the new legislation doesn’t really do anything. So far this year, $7.6 million has been donated.

Representative Chris Van Hollen, Democrat of Maryland, characterized the Republican legislation as a “pretty please” bill. As he put it, “Pretty please, Warren Buffett, pretty please, Mitt Romney, won’t you help contribute a little bit more toward reducing our deficit?”

One could perhaps take the Republican proposal more seriously if it also required a statement on application forms for Social Security and Medicare that those qualified should consider voluntarily forgoing benefits to reduce the deficit. The forms that farmers use to apply for agricultural subsidies could suggest that they put deficit reduction ahead of their personal interest, and so on.

The political reality is that Republicans don’t really support taxation at any level. Of course, none will go on the record saying that they favor abolition of all taxation; they just support every single tax cut and oppose every single tax increase. I have not heard any Republican in recent years acknowledge that the deficit results in any way from lower revenues; rather, they say, the deficit is caused only by excessive spending on everything except the military. Implicitly, therefore, the only kind of taxation a Republican can support is voluntary taxation.

Extreme libertarians, such as the novelist Ayn Rand, have long held that this is the only legitimate form of taxation. As she wrote in a 1964 essay reprinted in her book “The Virtue of Selfishness”:

In a fully free society, taxation – or, to be exact, payment for government services – would be voluntary. Since the proper services of a government – the police, the armed forces, the law courts – are demonstrably needed by individual citizens and affect their interests directly, the citizens would (and should) be willing to pay for such services, as they pay for insurance.

As we know, the Republican vice-presidential nominee Paul D. Ryan has expressed admiration for Rand’s views, and many Republicans in Congress, influenced by the Tea Party movement, support abolition of important government programs along with more tax cuts for the rich.

Interestingly, there actually are instances of voluntary taxation. The New York Times reports that the mayor of Bogotá, Colombia, once asked his citizens to voluntarily pay more taxes and 63,000 of them did. The Times has also reported that cities now often ask tax-exempt organizations to make voluntary payments in lieu of taxes and are turning to parents groups to fill holes in school funding and to community groups to take over park maintenance and other tasks.

Other examples of voluntary methods of financing governmental services include the bond drives of World War II, lotteries, tontines and political campaign contributions. Public universities often solicit private funds to pay for new buildings or programs and remittances by migrants living abroad are a kind of private foreign aid. And of course private charities often engage in social welfare, as well as providing facilities like hospitals and museums (some of which are also provided by government).

While there is no doubt that there are creative methods by which local governments might be able to raise additional revenue and encourage the private sector to take over some of their responsibilities, there is little, if any, scope for this by the federal government. Too much of what it does falls into the category of pure public goods that government must provide, like national defense, or entitlement programs like Social Security and Medicare.

Realistically, voluntary taxation is not a viable alternative to broad-based taxes. Those who oppose raising taxes on the wealthy and are concerned about the number of people exempt from federal income taxes ought to consider a national sales tax, as every other major country has. As Alexander Hamilton explained in Federalist 21, one virtue of consumption taxes is that they are to some extent voluntary.

Article source: http://economix.blogs.nytimes.com/2012/09/25/republicans-champion-voluntary-taxes/?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Economix Blog: Who Pays and Who Takes

September 18, 2012 by Leave a Comment

Comments made by Mitt Romney at a private campaign fund-raiser about the nearly half of Americans who have no income tax liability have heated up a debate over who pays and who takes from the federal government.

Budget experts argue that virtually all Americans – rich and poor – pay into the government revenue system. And most Americans – rich and poor – at some point in their lives receive a form of government benefit.

Only about 8 percent of American households do not pay income or federal payroll taxes, once you discount older people. Most of those households are very poor, earning less than $20,000 a year, according to a study by the nonpartisan Tax Policy Center, which initially derived the 47 percent number Mr. Romney cited. (In 2011, it was actually 46 percent.)

Moreover, almost no families fail to pay taxes of any kind, given the ubiquity of property taxes, sales taxes, sin taxes, state and local levies and other government revenue sources.

A report by the Hamilton Project, a research group within the Brookings Institution, also notes that demographics matter when talking about who pays taxes. In any given year, millions of households will not be liable for federal income taxes. But many of those households are young or old – students or retirees. During their prime working years, the people in those households will almost certainly pay federal income taxes.

Moreover, among those families in their prime working years, many will see their federal income tax liability wiped out by credits for children and child care, including the earned-income tax credit. But once those children grow up, or the family’s income rises, the tax liability reliably returns.

Finally, the report notes that the recession has skewed these figures. There are about 12.5 million Americans out of work, and millions more who are underemployed or who have dropped out of the labor force. Reductions in income make it easier for the credits and subsidies in the tax code to erase a given family’s income tax liability.

Then, there’s the flip side of the coin: If we’re all paying in, who is getting the payout?

Census data shows that about half of the population lives in a household where at least one member is receiving a government benefit. Many households receive more than one.

As of the second quarter of 2011, 34 million households were receiving Medicare, 38 million Social Security, 15 million food stamps and 23 million Medicaid, for instance.

There are a variety of reasons. The number of Americans relying on the safety net surged during the recession and the sluggish recovery. Unemployment for many and stagnant wages for many more translate into increased need. A person’s age matters as well. Older people tend to draw government benefits like Medicare and Social Security. Increasingly, as my colleagues Binyamin Appelbaum and Robert Gebeloff wrote this year, those benefits go to the middle class, not the poor.

Article source: http://economix.blogs.nytimes.com/2012/09/18/who-pays-and-who-takes/?partner=rss&emc=rss

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The 1 Percent Paint a More Nuanced Portrait of the Rich

January 15, 2012 by Leave a Comment

But when the subject was his position as one of America’s top earners, he balked. Seated at a desk fashioned from a jet fuel cell, wearing a button-down shirt with the company logo, he considered the public relations benefits and found them lacking: “It’s not very popular to be in the 1 percent these days, is it?”

A few months ago, Mr. Katz was just a successful businessman with five children, an $8 million home, a family real estate company in Manhattan and his passion, 10-year-old Talon Air.

Now, the colossal gap between the very rich and everyone else — the 1 percent versus the 99 percent — has become a rallying point in this election season. As President Obama positions himself as a defender of the middle class, and Mitt Romney, the wealthiest of the Republican presidential candidates, decries such talk as “the bitter politics of envy,” Mr. Katz has found himself on the wrong end of a new paradigm.

As a member of the 1 percent, he is part of a club whose name conjures images of Wall Street bosses who are chauffeured from manse to Manhattan and fat cats who have armies of lobbyists at the ready.

But in reality it is a far larger and more varied group, one that includes podiatrists and actuaries, executives and entrepreneurs, the self-made and the silver spoon set. They are clustered not just in New York and Los Angeles, but also in Denver and Dallas. The range of wealth in the 1 percent is vast — from households that bring in $380,000 a year, according to census data, up to billionaires like Warren E. Buffett and Bill Gates.

The top 1 percent of earners in a given year receives just under a fifth of the country’s pretax income, about double their share 30 years ago. They pay just over a fourth of all federal taxes, according to the Tax Policy Center. In 2007, they accounted for about 30 percent of philanthropic giving, according to Federal Reserve data. They received 22 percent of their income from capital gains, compared with 2 percent for everybody else.

Still, they are not necessarily the idle rich. Mr. Katz, who sometimes commutes by amphibious plane and sometimes carries luggage for Talon Air passengers, likes to say he works “26/9.”

Most 1 percenters were born with socioeconomic advantages, which helps explain why the 1 percent is more likely than other Americans to have jobs, according to census data. They work longer hours, being three times more likely than the 99 percent to work more than 50 hours a week, and are more likely to be self-employed. Married 1 percenters are just as likely as other couples to have two incomes, but men are the big breadwinners, earning 75 percent of the money, compared with 64 percent of the income in other households.

Though many of the wealthy lean toward the Republican Party, in interviews, 1 percenters expressed a broad range of views on how to fix the economy. They think that President Obama is ruining it, or that Republicans in Congress have gone off the deep end. They favor a flat tax, or they believe the rich should pay a higher marginal rate. Some cheered on Occupy Wall Street, saying it was about time, while others wished the protesters would just get a job or take a bath. Still others were philosophical — perhaps because they could afford to be — viewing the recession as something that would pass, like so many previous ups and downs.

Of the 1 percenters interviewed for this article, almost all — conservatives and liberals alike — said the wealthy could and should shoulder more of the country’s financial burden, and almost all said they viewed the current system as unfair. But they may prefer facing cuts to their own benefits like Social Security than paying more taxes. In one survey of wealthy Chicago families, almost twice as many respondents said they would cut government spending as those who said they would cut spending and raise revenue.

Even those who said the deck was stacked in their favor did not appreciate anti-rich rhetoric.

“I don’t mind paying a little bit more in taxes. I don’t mind putting money to programs that help the poor,” said Anthony J. Bonomo of Manhasset, N.Y., who runs a medical malpractice insurance company and is a Republican. But, he said, he did mind taking a hit for the country’s woes. “If those people could camp out in that park all day, why aren’t they out looking for a job? Why are they blaming others?”

To many, 99 vs. 1 was an artificial distinction that overlooked hard work and moral character. “It shouldn’t be relevant,” said Mr. Katz , who said he both creates job and contributes to charitable causes. “I’m not hurting anyone. I’m helping a lot of people.”

The Enclave

The placid sliver of Long Island that F. Scott Fitzgerald immortalized in “The Great Gatsby” as West Egg and East Egg seems almost to have shrugged off the recession.

A stretch of northwest Nassau County that includes Great Neck, Manhasset and Port Washington, this area has the country’s highest concentration of 1 percenters, and one of the lowest unemployment rates in the state. Houses in Port Washington are worth only 10 percent less than they were at their peak, according to the Standard Poor’s Case-Shiller Home Price Index, a far smaller decline than in the rest of the country. Yearly sales at the Americana Manhasset, the upscale granite and glass shopping center, have already exceeded their prerecession high. Even in down times, the 1 percent has staying power, being far more likely than any other group to stay where they are rather than slip to lower rungs of the economic ladder.

Article source: http://www.nytimes.com/2012/01/15/business/the-1-percent-paint-a-more-nuanced-portrait-of-the-rich.html?partner=rss&emc=rss

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