Arkady
President
Mitt Romney, in an attempt to reboot his campaign after a disastrous couple weeks, is refocusing on the economy. He says "I know how to balance budgets. We balanced our budget in my business, in the Olympics, and every year in my state."
In a very technical sense, that's true. Budgets are always balanced, in that technical sense -- any spending on one side of the sheet must, technically, be balanced either by revenues or borrowing on the other side. But, given that his rhetoric is part of an attack on deficit spending, one assumes he's not talking about balancing budgets in that very technical sense. Rather, he's claiming that spending was balanced by revenues, without the need for borrowing.
The problem with that claim, of course, is the Bain Capital didn't have "balanced" budgets, in that sense. It was a leveraged buyout operation. Leverage is just another term for debt. Bain borrowed money to invest. There's nothing particularly wrong with that. If you borrow money to invest, and your investment pays dividends that more than cover the interest on the loan, that's a good move. But the same is true at the national level. Of course, in Bain's case, it managed to borrow money and stick others with the bill:
http://www.rollingstone.com/politic...mney-bain-capital-and-private-equity-20120829
http://www.buyoutofamerica.com/
I have trouble picturing how that same trick would work on the national level.
As for the Salt Lake City Olympics, it was financed in significant part by federal spending:
http://www.motherjones.com/politics/2012/07/mitt-romney-expensive-olympics-federal-funding
http://www.huffingtonpost.com/2012/08/06/mitt-romney-olympics_n_1748235.html
Again, there's nothing particularly wrong with that, but it doesn't do much to bolster Romney's claim to be able to balance the federal budget. It's not like he can balance our budget by getting NATO or the UN to come in and hand us hundreds of billions of dollars, which is the equivalent to what he did for the 2002 Winter Olympics.
In a very technical sense, that's true. Budgets are always balanced, in that technical sense -- any spending on one side of the sheet must, technically, be balanced either by revenues or borrowing on the other side. But, given that his rhetoric is part of an attack on deficit spending, one assumes he's not talking about balancing budgets in that very technical sense. Rather, he's claiming that spending was balanced by revenues, without the need for borrowing.
The problem with that claim, of course, is the Bain Capital didn't have "balanced" budgets, in that sense. It was a leveraged buyout operation. Leverage is just another term for debt. Bain borrowed money to invest. There's nothing particularly wrong with that. If you borrow money to invest, and your investment pays dividends that more than cover the interest on the loan, that's a good move. But the same is true at the national level. Of course, in Bain's case, it managed to borrow money and stick others with the bill:
http://www.rollingstone.com/politic...mney-bain-capital-and-private-equity-20120829
http://www.buyoutofamerica.com/
I have trouble picturing how that same trick would work on the national level.
As for the Salt Lake City Olympics, it was financed in significant part by federal spending:
http://www.motherjones.com/politics/2012/07/mitt-romney-expensive-olympics-federal-funding
http://www.huffingtonpost.com/2012/08/06/mitt-romney-olympics_n_1748235.html
Again, there's nothing particularly wrong with that, but it doesn't do much to bolster Romney's claim to be able to balance the federal budget. It's not like he can balance our budget by getting NATO or the UN to come in and hand us hundreds of billions of dollars, which is the equivalent to what he did for the 2002 Winter Olympics.
