The Romneys: Mitt takes the high road, Tagg gets down and dirty
Mitt Romney’s son Tagg has been gathering some of his father’s richest friends into a private-equity fund called Solamere, writes Froma Harrop. It’s a clever instrument for pursuing government subsidies, contracts and tax breaks should Romney win.
Have you been following the career of Mitt Romney’s boy Tagg? As his dad runs for president denouncing “crony capitalism” and “big government,” Tagg has been gathering some of Mitt’s richest friends into a private-equity fund called Solamere — a clever instrument for pursuing government subsidies, contracts and tax breaks should Romney win.
You see, disclosure laws would make it hard for a President Romney to hide many conflicts of interest. But if the money guys are in Tagg’s Solamere, we don’t know what conflicts of interest the Romney contributors are profiting from. We may not even know the investors’ names.
“The close relationship with Romney and this investment opportunity looks to me like people are investing to buy access,” Bob Edgar, head of Common Cause, told me. “People are (literally) speculating that Romney may become the next president of the United States. It doesn’t smell good.”
Before Solamere, Tagg’s main claim to business fame was as a marketer for the Los Angeles Dodgers. Now he’s playing financier. The interesting part is that whether Mitt wins or loses (and he and his wife have given Solamere $10 million), Tagg and Spence Zwick — his campaign’s finance chairman and a Solamere partner — make a pile.
Here’s an example of the awful possibilities: One of Solamere’s founding partners is Marc Leder, whose Sun Capital owns the Scooter Store. (It was at a fundraiser in Leder’s Boca Raton, Fla., home that Romney dismissed 47 percent of Americans as wards of the government.)
You can’t have missed those annoying Scooter Store ads. A senior citizen rolls around on her motorized wheelchair, proclaiming, “... and I didn’t pay a penny out of pocket for my power chair!” The message is that Medicare will pay. For a while, it did.
The Centers for Medicare and Medicaid Services found that 80 percent of the Scooter Store’s sales did not meet Medicare rules. In money terms, the Scooter Store had bilked taxpayers of nearly half a billion dollars.
The Scooter Store has spent nearly $900,000 on lobbyists trying to stop Medicare from disqualifying its wares for taxpayer subsidies. Leder has also given a total of $525,000 to Romney’s campaign and a Republican PAC, and he’s letting Tagg enrich himself by managing his money in Solamere. Do you believe for one minute that Leder will want nothing back from a Romney administration?
Fracking and other energy interests have put their money with Tagg. So have military contractors. Dental-management companies have been targeted for pressuring dentists to perform expensive work on low-income children, the bill sent to Medicaid. They’re in Solamere. So are the investor-owners of for-profit colleges, which Romney has praised from the stump. Known for providing weak education, the for-profit schools draw 85 percent of their revenues from taxpayers. Romney a small-government president? My foot.
Solamere’s private-equity partners, meanwhile, would surely object to tax reform that messes with the outrageous deal that taxes their earnings at only 15 percent — the sort of loophole that served Romney well at Bain Capital. True to form, Solamere has set up shop in the Cayman Islands to shield its investors from U.S. tax liabilities.
Let’s not play the innocent here. In every administration, Republican or Democrat, campaign contributors seek favors. What’s different is the awesome scope of the money involved and the unblushing sales pitch linking investments to an inside track that — via Solamere — would go under the radar.
Last June, Solamere held an investor conference in a Salt Lake City building next door to a fundraising retreat for wealthy Romney donors. That Solamere touts its “unparalleled networks” so openly is the scariest part. Politicians used to do these things in secret.
© 2012, The Providence Journal Co.
Providence Journal columnist Froma Harrop's column appears regularly on editorial pages of The Times. Her email address is email@example.com