It was a stunning performance! No candidate ever boldly told so many cheery, rapid-fire lies in 90 minutes, pushing aggressively to bullet point the base. Romney offered not policies but pledges.
His first pledge stunned America, caught off guard by the bold detail expressed when Romney overlooked Obamacare and leaped forward to announce the first detailed cut included in his budget and tax plan. Kept tightly secret; no leaks, no rumors or predictions; no one was suspicious that something big was about to break.
The self-styled jobs creator’s first announced act, in line with his budget criteria, was to cut Big Bird. Old habits die hard. Always the venture (many say vulture) capitalist, Romney knows how to target and dismantle valuable enterprises to extract value and create outsized capital returns that others miss. He casts a hard eye. With government funds, cuts can reduce the deficit, be used as subsidies, consultant fees, put into private contracts, be given away as tax breaks, or lower debt.
The problem is Big Bird’s annual federal share is less than 1/10th what the Justice Department prosecuted in 2012 federal health care fraud cases against private and corporate doctors and service providers who stole $4 billion in taxpayers’ money. United Technology was fined $75 million early this year for violating US trade laws in selling highly classified, prohibited military materials to China that, if trafficked outside of the company, would have amounted to espionage of state secrets; its fine was 1/6th of Big Bird’s and his whole crew’s annual budget. Big Bird is small potatoes when it comes to federal funding.
As the shock died and recovery began, Romney later emphatically stated his goal to strengthen education. That bullet point offered evidence of the Romney fissure, the old disconnect of his warring, divided vision, the way he separates rather than combines things. He can point out valued pieces, but he can’t put them in combination. Synergy is less his strength than demolition; salvaging, extracting value.
He had just pledged to use the power of government to cut the best the government had to offer in early education—a program in the most crucial time—an innovation so original it stimulated learning, reduced childcare costs for working families, taught life lessons, and moved an eight-year-old after the debate to write a powerful letter pointing out what should have been obvious even by Romney’s blind criteria.
According to Romney, the costumed character and legendary early childhood educator—one of the nation’s best and most cost-effective, the wildly successfully Big Bird—is bad, wasteful, off-target government; Romney implies only private education, offered as public subsidy, is able and effective—and can be strengthened with your taxes. To Romney, their overwhelming broadcast success confirms Big Bird and Sesame Street belong in the private sector; he ignores the suitability and match of the content and purpose of their goals to public and non-profit markets, and the unique protection these markets offer to Sesame Street’s creative ways and means.
Big Bird is a big entrepreneur, but he took a different path than Romney’s. In 40 years, Big Bird has grown. Along the way, he created jobs. Sesame Street, his home place, is exported for broadcast to 140 countries, adapted to each country’s culture; Nigeria, for example, offers Zobi the Cookie Monster. Early countries included New Zealand, Norway, Germany; it was the top children’s program in Kuwait for 15 straight years. Big Bird’s home territory created hundreds of different products, generates income, excise, and sales taxes, meets a high wage payroll, supports ancillary jobs in a wide variety of industries.It has no offices outside of America. It is a universal early foundation of later workforce training.
By exporting broadcast and other products, Sesame Street helps lowers the US trade imbalance. It now offers leading edge, new media products and a full catalogue of traditional fare: games, toys, clothes, and a publishing division that publishes books and magazines, along with DVDs and other media. Approximately 60% of its annual revenues are license-generated.
But one of its broadcast licensing demands directly contradicts the demands of the private market: all of its broadcast materials must be commercial-free. This reinforces the strong social impact of its mission in countries like Israel and South Africa. China wants in—with Big Bird. Frankly, Sesame Street brings a lot to the table for the government. I would be trying to embrace the program the world loves; it’s peanuts in the national PR budget, its good will is inviolate, and I wouldn’t want word to get out around the world that my first act was to put Big Bird on the chopping block, killing the $1.25 a year per capita the program indirectly receives from station fees.
Its low debt and strong annual cash flow makes Sesame Street the perfect takeover target were it not protected as a non-profit.
But most importantly, Sesame Street sets the global standard for media-crafted early childhood education in every region and language. It has won 143 Emmy and 8 Grammy awards. Although the show continually innovates in its markets, it is a lower-cost producer than the private sector.
It began by capitalizing on a vision outside of its highly successful, positive balance sheet, a big idea best suited and pursued in the non-profit marketplace. With large grants from the Carnegie Foundation, and later the Ford Foundation, Sesame Street also established an endowment rather than leveraging its assets through borrowing, a high risk, capital reward and extraction strategy Romney repeatedly employed at Bain. It wisely did not put itself in danger by borrowing against assets—as did Lehman Brothers, JPMorganChase, and others that racked billions in losses and required government bailouts.
In large part, the show’s 40-year stability is because it is outside of the capital markets and does not serve its masters. But Romney doesn’t understand markets focused on value, not profits. He wants to eliminate those markets. He’s okay if the government transfers money through services or contracts, but values mean, for him, picking “winners and losers.” He picks against values. That why Romney wants to punish the Bird’s neighborhood (it can’t be sold or outsourced!) and make it an example of waste rather than an example of huge value and global good will, an amazing American brand reaped from a minor investment of government aid, at a current per capita cost of less than a $1.25 a year.
But Romney sees success as the province of only the private sector balance sheet, claiming in another bullet point that the private sector always lowers costs, increases innovation, and grows jobs, telling Barack he didn’t know of any examples that differed—ignoring the contradictory example he cited in his opening detail of items to cut. Romney, unlike Warren Buffet, was never a buy-and-hold investor. He’s only put nominal money into his own candidacy this time; he’s inclined toward leveraging and short sales, turnovers.
The program is slated for Romney’s ax or red pen, he says, because it does not meet his “one” criterion: being worth the sale of US debt to China at an average rate of 2.1 %. China’s US debt share is 13%, less than the combined 17% shares of Great Britain and Japan, the second and third largest international purchasers of US debt. Number one are the American people and domestic institutions. Apparently selling debt to China to fund battleships and rejected weaponry for the Pentagon to defend against an unforeseen military threat from China is okay. But Big Bird, used to teach China’s children, doesn’t meet that threshold. Continue reading Style Points For Lies