Friday, December 15, 2017
Business

Look closer at rich and really rich who want to become president

Every one of the leading contenders in the Republican presidential primary is a millionaire. That level of wealth seems standard these days for anyone seeking the nation's highest public office.

But Mitt Romney's personal net worth, valued at close to a quarter-billion dollars, makes his wealthy Republican competitors, as well as President Barack Obama, look like paupers.

To help capture the magnitude of this difference, consider this. For every $100 personally owned by Romney, President Obama has $4.20, Newt Gingrich has $2.70 and Ron Paul has $2. And Rick Santorum, closely trailing a victorious Romney in last week's Iowa caucus, has but a single buck.

Romney's estimated $250 million makes him the third-richest candidate to run for the White House in the past 20 years. Only third-party candidate Ross Perot, a Texas billionaire who made his money building a technology business, and Steve Forbes, who inherited much of his wealth from father Malcolm Forbes and Forbes magazine, were richer candidates. Neither Perot nor Forbes, of course, won their elections despite such deep pockets.

Why should we care in the 2012 presidential race? Because we are watching the start of a campaign cycle populated by rich and, in Romney's case, extremely rich candidates at the same time that the United States is embroiled in a growing public debate about income inequality. U.S. wealth has become so skewed in this country that the wealthiest 25 percent of American households control nearly 90 percent of the nation's assets.

By a wide margin, Romney belongs to that 1 percent that the country's remaining 99 percent seems deservedly so concerned about.

Even the other presidential candidates live wealthy lives or, at the least, very upper-middle-class lifestyles.

As Floridians, of course, we've encountered the superwealthy candidate before in Rick Scott. His wealth was valued at $218 million before he spent upward of $70 million on his successful campaign to become Florida governor.

Now we're in a bigger race: for president. Florida's Republican primary is Jan. 31. If you're going to vote for one of these candidates, you should know more about where their personal money came from.

• • •

Mitt Romney grew up in patrician style as the son of George Romney, who served as Michigan's governor as well as CEO of American Motors and was himself a presidential candidate in the 1960s. Mitt Romney inherited plenty of family money, but he insists he has passed it on to his kids and charity. Romney's big personal money was made as a founder of Bain Capital, a leveraged-buyout firm that has become well known for buying undervalued businesses, slashing costs (and often firing staff), then rebuilding the companies to sell off or take public. Romney racked up many millions using the Bain formula. And he's still profiting from it to the tune of millions of dollars every year.

How? By cutting a retirement deal that continues to pay him a share of Bain's profits.

The Bain experience may give Romney some standing to his claim he knows how to fix businesses, even though leveraged buyouts typically burden takeover companies with enormous debts. Romney earns less credibility in his ability to create jobs in such a complex economy.

Romney has not helped himself seem less elitist by arguing on the campaign trail that "corporations are people, too" or trying to make an offhand wager with Texas Gov. Rick Perry for $10,000, as if it were pocket change.

Romney's assets are spread among more than 160 funds controlled by such major investment firms as BNP Paribas, Goldman Sachs, Rabobank Nederland and Bain Capital. Romney also reported up to $500,000 in Ford Motor stock and up to $250,000 in Marriott International, where he served as a director until a year ago.

• • •

Newt Gingrich grew up an Army brat but turned his political career in Congress and gift of gab into a nest egg estimated near $7 million and climbing. His many businesses, dubbed Newt Inc., include the making of public policy and historical documentaries and a network of "Gingrich Group" political consulting, writing (including historical fiction) and advocacy organizations (like a for-profit health care think tank).

The candidate ran into a public relations buzzsaw in 2011 after reports he received $1.6 million in "consulting fees" from the troubled Freddie Mac. The mortgage giant is considered informally backed by the U.S. government but was widely blamed for the collapse of the mortgage and housing markets.

Gingrich's financial character took another hit earlier when it was reported he had established zero-interest lines of credit topping $1 million at upscale jeweler Tiffany's, presumably with the blessing of his third wife, Callista. Those credit lines have since been closed.

• • •

Ron Paul, a congressman and physician, is worth about $5.2 million, and his investments are, like Paul, out of the mainstream. A recent analysis of Paul's portfolio by the Wall Street Journal found that while he has some holdings in real estate and cash, Paul owns no bonds. And while he has only 0.1 percent in stock funds, those funds all "short" (or make bets against) U.S. stocks, the WSJ found. Two thirds of Paul's assets are tied up in gold and silver mining stocks.

"We've looked at hundreds of the annual financial-disclosure forms in which the members of Congress reveal their assets and trades — and we've never seen a more unorthodox portfolio than Ron Paul's," WSJ personal finance reporter Jason Zweig wrote last month.

• • •

Rick Santorum's net worth is the smallest of the leading presidential contenders at about $2.5 million. The blue-collar-styled candidate likes to call himself frugal and a man of limited means.

But since his re-election defeat in 2006, the former U.S. senator from Pennsylvania has gone, says Bloomberg News, "from being one of the poorer members of the U.S. Senate to earning $1.3 million between January 2010 and August 2011." In 2007, he spent $2 million to buy a 5,000-square-foot home in Great Falls, Va., in the D.C. suburbs.

Most of his newfound wealth comes courtesy of consulting contracts with the big coal and natural gas producer Consol Energy, the faith advocacy group Clapham Group, the Washington lobbying firm American Continental Group, a Washington consultancy as well as media engagements. One company, Universal Health Services, based in King of Prussia, Pa., paid Santorum nearly $400,000 in director fees and stock options.

The federal government sued the health care management company in 2010 for alleged Medicaid fraud.

• • •

President Obama is now worth some $10.5 million and earns $400,000 a year as president. His greatest source of wealth has come from the handful of popular books he has written in recent years. They include Dreams From My Father and The Audacity of Hope. The bulk of his investments are in U.S. Treasury securities.

Robert Trigaux can be reached at [email protected] Read his Venture blog at tampabay.com/blogs/venturebiz and on Twitter at twitter.com/VentureTampaBay.

     
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