The Mediasphere

File photo: US food stamps. (photo: Public Domain)

By Matt Gertz, Media Matters for America 30 January 12

nother day, another dishonest Fox News chart. This time Fox is twisting the data to support Newt Gingrich’s claim that President Obama is the “food stamp president” because “more people have been put on food stamps by Barack Obama than any president in American history.” On today’s edition of Your World with Neil Cavuto, Mike Huckabee agreed, saying that “what Newt says remains factual: more people have gotten on food stamps under Barack Obama as he’s president than ever before. So it’s true.” Guest host Eric Bolling agreed, adding that “under Obama the program has increased by 45 percent in three years.” During the segment, Fox amplified the point with the following chart:

This chart adds to Fox News’ record of using misleading chartsto deceive their viewers. It features mismatched data that does not answer the question of whether “more people have gotten on food stamps” under Obama than any under other president (spoiler alert: they haven’t). The data for Presidents Richard Nixon through George W. Bush comes from this table of average food stamp participation by fiscal year, but the reason each specific fiscal year’s data was selected for each president is a mystery. It appears that Fox’s intention was to select the year of each presidency with the highest participation. However, the fact that the data is compiled by fiscal year seems to have caused their employees some confusion, which we will detail below. Moreover, the chart does not compare those fiscal year averages to a comparable figure, the average number of beneficiaries in a fiscal year of the Obama presidency. Instead, the 46.2 million figure Fox labels “Obama (2012)” refers to the number of beneficiaries inOctober 2011, the first month of fiscal year 2012 and the most recent month in which data is available. Fox’s data does not show how many people were added to the rolls under the tenures of the various presidents, which would indicate whether Gingrich, Huckabee, and Bolling are correct in stating that “more people have been put on food stamps by Barack Obama than any president in American history.” Instead, the data appears to attempt to answer the question of whether more people are currently enrolled in food stamps than were enrolled under any other president. FactCheck.org, by contrast,created a chart aimed at determining whether the “food stamp president” claim is accurate, based on month-to-month figures rather than the more confusing fiscal year data. Their chart shows that more recipients were added to the rolls under George W. Bush’s tenure than under Obama’s:

But Gingrich goes too far to say Obama has put more on the rolls than other presidents. We asked the U.S. Department of Agriculture’s Food and Nutrition service for month-by-month figures going back to January 2001. And they show that under President George W. Bush the number of recipients rose by nearly 14.7 million. Nothing before comes close to that. 

And under Obama, the increase so far has been 14.2 million. To be exact, the program has so far grown by 444,574 fewer recipients during Obama’s time in office than during Bush’s. 

It’s possible that when the figures for January 2012 are available they will show that the gain under Obama has matched or exceeded the gain under Bush. But not if the short-term trend continues. The number getting food stamps declined by 43,528 in October. And the economy has improved since then. A look at the data further reveals that Obama’s tenure also has not seen the largest increase in food stamp participants by percentage. CBS News noted that the increase in food stamps enrollment “hardly makes Obama the ‘best food stamp president in American history,’ “ pointing out that the “percent increase in beneficiaries during Mr. [George W.] Bush’s presidency was higher than it has been under Mr. Obama.” In addition to answering the wrong question, Fox selects data on an inconsistent and frankly confusing basis. The figures selected show that the network either did not apply a consistent standard as to whether or not fiscal years that feature a change of president are counted for the outgoing president, or were not seeking to provide the year of each presidency featuring the highest number of food stamp beneficiaries. Fox uses fiscal year 1993’s figure of 27 million beneficiaries for George H.W. Bush; that period ran from October 1, 1992 through September 30, 1993, largely covering a period in which Bill Clinton was president. This suggests that Fox is including any fiscal year in which a president served at all as qualifying for inclusion. Under that standard, Fox should have used fiscal year 2009 for George W. Bush, when the food stamps program had 33.5 million beneficiaries. That would have created a substantially smaller gap between that bar and Obama’s. Note that by featuring the peak food stamp enrollments of the Clinton and first Bush presidencies, the chart wipes out how participation plummeted from fiscal year 1994 through the end of Clinton’s second term, and subsequently rose dramatically under the second Bush presidency. Whichever standard Fox is using, Reagan’s figure of 21.6 million in fiscal year 1983 is not the highest of his presidency. Of course, both the chart and the Fox segment ignore the reasonso many Americans are currently on food stamps: the economic downturn that began during the George W. Bush administration. That isn’t data we’ll see on Fox any time soon.

 

newsweek:

apsies:

“To protest a bill that would require women to undergo an ultrasound before having an abortion, Virginia State Sen. Janet Howell (D-Fairfax) on Monday attached an amendment that would require men to have a rectal exam and a cardiac stress test before obtaining a prescription for erectile dysfunction medication.”

—

Huff Po (via rachelfershleiser)

This is the most beautiful thing. Can we send her flowers?

(via jaimealyse)

Ha - wow. Congressional warfare.

 

During Tuesdays State of the Union Address President Obama said that he would tackle the issue of rising college tuition cost. Here is his plan:

• Reforming student aid to promote affordability and value: To keep tuition from spiraling too high and drive greater value, the President will propose reforms to federal campus-based air programs to shift aid away from colleges that fail to keep net tuition down, and toward those colleges and universities that do their fair share to keep tuition affordable, provide good value, and serve needy students well. These changes in federal aid to campuses will leverage $10 billion anually to keep tuition down.

• Creating a Race to the Top for college affordability and completion: The president will create incentives for states and colleges to keep costs under control through a $1billion investment in a new challenge to states to spur higher education reform focused on affordability and improved outcomes across state colleges and universities. The Race to the Top: College Affordability and Completion will reward states who are willing to drive systemic change in their higher education policies and practices, while doing more to contain their tuition and make it easier for students to earn a college degree.

• A first in the World competition to model innovation and quality on college campuses: The president will invest $55 million in a new First in the World competition, to support the public and private colleges and non-profit organizations as they work to develop and test the next breakthrough strategy that will boost higher education attainment and student outcomes. The new program will also help scale-up those innovative and effective practices that have been proven to boost productivity and enhance teaching and learning on college campuses.

• Better data for families choose the right college for them: The president will call for a College Scorecard for all degree-granting institutions, designed to provide the essential information about college costs, graduation rates, and potential earnings, all in an easy-to-read format that will help students and families choose a college that is well suited to their needs, priced affordably and consistent with their career and educational goals.

• Federal support to tackle college costs: The president has already made the biggest investments in student aid since the G.I Bill through increases to the Pell grant, and by shoring up the direct loan and income-based repayment programs. In his State on the Union Address, the President called on Congress to: keep interest rates low for 7.4 million student loan borrowers to reduce future debt, make the American Opportunity Tax Credit permenant, and double the number of work-study jobs over the next 5 years to better assit college students who are working their way through school.

Shared Responsibility to Tackle Rising College Costs

Rewarding Schools that Keep College Affordable

• The President’s proposal to reform student aid to keep tuition from spiraling too high and drive greater value will improve distribution of federal financial aid and increase campus-based aid. This reform will reward colleges that are succeeding in meeting the following principles:

1) Setting responsible tuition policy, offering relatively lower net tuition prices and/or restraining tuition growth.
2) Providing good value to students and families, offering quality education and training that prepares graduates to obtain employment and repay their loans.
3) Serving low-income students, enrolling and graduating relatively higher numbers of Pell-eligible students.

The campus-based aid that the federal government provides to colleges through Supplemental Educational Opportunity Grants (SEOG), Perkins Loans, and Work Study is distributed under an antiquated formula that rewards colleges for longevity in the program and provides no incentive to keep tuition costs low. The President is proposing to change how those funds are distributed by implementing an improved formula that shifts aid from schools with rising tuition to those acting responsibly, focused on setting responsible tuition policy, providing good value in education, and ensuring that higher numbers of low-income students complete their education. He is also proposing to increase the amount of campus-based aid to $10 billion annually. The increase is primarily driven by an expansion of loans in the federal Perkins program – which comes at no additional taxpayer cost.

Colleges that can show that they are providing students with good long-term value will be rewarded with additional dollars to help students attend. Those that show poor value, or who don’t act responsibly in setting tuition, will receive less federal campus-based aid.  Students will receive the greatest government grant and loan support at colleges where they are likely to be best served, and little or no campus aid will flow to colleges that fail to meet affordability and value standards.

Creating New Incentives to Promote Affordability and Quality

• The Race to the Top: College Affordability and Completion will promote change in state systems of higher education. The President is proposing a program that would spur systemic state reforms to reduce costs for students and promote success in our higher education system at public colleges. This $1 billion investment would incentivize states to:

o Revamp the structure of state financing for higher education.
o Align entry and exit standards with K-12 education and colleges to facilitate on-time completion.
o Maintain adequate levels of funding for higher education in order to address important long-term causes of cost growth at the public institutions that serve two-thirds of four-year college students.

The Race to the Top for College Affordability and Completion would incentivize governors and state legislatures around the nation to act on spurring this innovative reform. Through cost-saving measures like redesigning courses and making better use of education technology, institutions can keep costs down to provide greater affordability for students.

• The First in the World competition will improve long-term productivity in higher education by investing $55 million to enable individual colleges (including Minority-Serving Institutions) and nonprofit organizations to develop, validate, or scale up innovative and effective strategies for boosting productivity and enhancing quality on campuses. This initiative would provide modest start-up funding for individual colleges, including private colleges, for projects that could lead to longer-term and larger productivity improvements among colleges and universities – such as course redesign through the improved use of technology, early college preparation activities to lessen the need for remediation, competency-based approaches to gaining college credit, and other ideas aimed at spurring changes in the culture of higher education.

Empowering Families and Students to be Informed Consumers

• New actions to provide consumers with clearer information about college costs and quality will improve the decision-making process in higher education for American students and allow families to hold schools accountable for their tuition and outcomes.  President Obama is proposing new tools to provide students and families with information on higher education, presented in a comparable and easy-to-understand format:

o The Administration will create a College Scorecard for all degree-granting institutions making it easier for students and families to choose a college that is best suited to their needs, priced affordably, and consistent with their career and educational goals.
o We will also make an updated version of the ‘Financial Aid Shopping Sheet,’ announced in October, a required template for all colleges, rather than a voluntary tool, to make it easier for families to compare college financial aid packages.
o The President is also proposing to begin collecting earnings and employment information for colleges, so that students can have an even better sense of the post post-graduation outcomes they can expect.

Redoubling Federal Support to Tackle College Costs

• As highlighted by the President in his State of the Union address, we are calling on Congress to:

o Keep student loan interest rates low: This summer, the interest rates on subsidized Stafford student loans are set to double from 3.4% to 6.8% – a significant burden at a time when the economy is still fragile and students are taking on increasing amounts of debt to earn a degree. The President is asking Congress to prevent that hike from taking place for a year to keep student debt down, a proposal that will keep interest rates low for 7.4 million student loan borrowers and save the average student over a thousand dollars.
o Double the number of work-study jobs available:  The President also proposes to double the number of career-related work-study opportunities so that students are able to gain valuable work-related experience while in school.
o Maintain our commitment to college affordability: Over 9 million students and families per year take advantage of the Obama Administration’s American Opportunity Tax Credit – supporting up to $10,000 over four years of college.  In his State of the Union address, the President called on Congress to make this tax credit permanent and prevent it from expiring in 2012. 

Building on Progress

President Obama has worked throughout his Administration to expand access to college and provide greater resources and support so that more students graduate with the skills and knowledge they need to succeed in the workforce:

• Helping students and families pay for college: The Obama Administration has raised the maximum Pell Grant award to $5,635 next year – a $905 increase since 2008.

Making college loans more affordable: The Obama Administration’s “Pay as You Earn” plan will enable 1.6 million students to take advantage of a new option to cap student loan repayments at 10% of monthly income as soon as this year. Borrowers looking to determine whether or not income-based repayment is the right option for them should visit http://studentaid.ed.gov/ibr.

25 January 2012 Cybersecurity Law Jim Giles, consultant

(Image: Patrick George/Ikon Images/Getty) The US Federal Bureau of Investigation has quietly released details of plans to continuously monitor the global output of Facebook, Twitter and other social networks, offering a rare glimpse into an activity that the FBI and other government agencies are reluctant to discuss publicly. The plans show that the bureau believes it can use information pulled from social media sites to better respond to crises, and maybe even to foresee them.

The information comes from a document released on 19 January looking for companies who might want to build a monitoring system for the FBI. It spells out what the bureau wants from such a system and invites potential contractors to reply by 10 February.

The bureau’s wish list calls for the system to be able to automatically search “publicly available” material from Facebook, Twitter and other social media sites for keywords relating to terrorism, surveillance operations, online crime and other FBI missions. Agents would be alerted if the searches produce evidence of “breaking events, incidents, and emerging threats”.

 Agents will have the option of displaying the tweets and other material captured by the system on a map, to which they can add layers of other data, including the locations of US embassies and military installations, details of previous terrorist attacks and the output from local traffic cameras.

The document suggests that the bureau wants to use social media to target specific users or groups of users. It notes that agents need to “locate bad actors…and analyze their movements, vulnerabilities, limitations, and possible adverse actions”. It also states that the bureau will use social media to create “pattern-of-life matrices” — presumably logs of targets’ daily routines — that will aid law enforcement in planning operations.

The use of the term “publicly available” suggests that Facebook and Twitter may be able to exempt themselves from the monitoring by making their posts private. But the desire of the US government to watch everyone may still have an unwelcome impact, warns Jennifer Lynch at the Electronic Frontier Foundation, a San Francisco-based advocacy group.

Lynch says that many people post to social media in the expectation that only their friends and followers are reading, which gives them “the sense of freedom to say what they want without worrying too much about recourse,” says Lynch. “But these tools that mine open source data and presumably store it for a very long time, do away with that kind of privacy. I worry about the effect of that on free speech in the US”.

The document also suggests that the FBI thinks it can use social media to peer into the future. It notes that agents need to use social media to “[p]redict likely developments in the situation or future actions taken by bad actors (by conducting, [sic] trend, pattern, association, and timeline analysis)”.

The bureau declined to immediately comment on how this analysis might work, or on any other aspect of the document, but the idea of turning agents into digital soothsayers is plausible: researchers working at Facebook and in academia have shown that social media can be used to infer many things about an individual, including the existence of friendships that are not declared on social networking sites and the location of users who have not revealed where they are based.

 

AMANDA HESS
Lifestyle Editor, GOOD
January 25, 2012

Internet entrepreneur Meg Hourihan says she has “more stuff than I could ever possibly use or need.” So this year, she’s resolved to wear out her resources—she will not buy anything new until she uses up, wears out, and makes do with the stuff she already owns.

The concept—buy what you really need—seems obvious. But in the United States, “society constantly encourages us all to keep buying,” Hourihan writes on Make It Do, the website she’s started about curbing her conspicuous consumption. “I could cook from every cookbook on my shelves and feed my family until the end of time, yet I still feel I ‘need’ new cookbooks. I have 26 (?) pairs of shoes, don’t wear most of them, and somehow think I need more shoes.” For the next 12 months, she’s pledged to use up the last reaches of her pantry before she invests in more “dried fruits” or “exotic grains,” never “wander around Sephora and get three new lipsticks,” and borrow and barter when times get tough.

To hold herself accountable, Hourihan is tracking every purchase she makes in 2012, sharing it on a public spreadsheet and asking herself to justify every investment with the world. She’s already made a few exceptions—like back-country camping supplies to feed her favorite hobby—but mostly, she’s finding creative solutions for scaling down and using up. Since starting the project this month, she’s had to stop walking through stores, unsubscribe from Martha Stewart Living, and get into sock darning.

Hourihan’s project is less about saving money or saving the world than it is about saving her own mind: “There’s a yearning for ‘better’ or ‘perfect’ in my life, and often it seems the next purchase could be just the thing to ‘finish’ the living room and make it perfect,” she writes. “I’m curious to see what happens when the solution to these gaps isn’t buying something.’”

JANUARY 4, 2012 | ISSUE 48•01

President Obama urges voters to give him one reason—one goddamn reason—why he should run for president in 2012.

• One Of Those Fucking People Wins New Hampshire Primary
  01.10.12
• Report: Crooked Border Guards Planting Illegal Immigrants In Cars
  10.14.10

PITTSBURGH—Citing three years of exhausting partisan politics, constant gridlock in Congress, and an overall feeling that the entire nation has “completely lost it,” President Barack Obama openly asked a campaign-rally crowd Tuesday why he’d want to serve another term as president of “this godforsaken country.”

“My fellow Americans, I come to you today to ask, why?” Obama said to 1,200 people gathered inside a gymnasium at Taylor Allderdice High School. “Why can’t our congressional leaders work together to create jobs? Why can’t Wall Street ever be held accountable? And most important, why on God’s green earth would I voluntarily subject myself to this nonsense for another four years?”

“I’m dead serious,” the president continued, saying that any reasonable person would have walked away the moment the Senate minority leader announced his main priority—above creating jobs and improving American health care—was to make Obama a one-term president. “I’m asking if anybody out there can come up with even one reason why I’d want to endure this unmitigated shit show for another minute, let alone through 2016. What’s in it for me, ex­actly? Can anyone answer that? Anyone at all?”

After a long silence during which crowd members mostly just shuffled their feet and stared at the ground, Obama said, “Yeah, that’s what I thought.”

Arguing he’d have to be certifiably insane or some kind of sadistic freak to extend his presidency, Obama asked why anyone with half a brain would willingly open himself up to constant vilification by media strategists, or place himself in a situation that involves so much work for such little reward. He also asked the audience how “messed up and sick” he’d have to be to devote nearly a decade of his life to an unending cycle of political gamesmanship that stifles progress at every turn.

At one point during the 40-minute address, Obama wondered aloud if anyone could blame him for wanting to avoid another four years of idiotic questions about his birth certificate, racist immigration laws, Eric Cantor, citizens who know in their hearts the country must switch to renewable energy but simply refuse to do so, the South, antigay bigotry, and “just all of it, really.”

“Today this nation faces difficult questions,” Obama said. “For one, how bad must it have gotten for a politician to gladly—gladly—give up the most sought-after elected position in the world? And also, of all the people listening to me right now, is there even one of you who would honestly want to trade places with me? There isn’t, is there? And I don’t blame you.”

In the coming weeks, Obama will reportedly continue to take his anti-second-term message across the country, asking ordinary Americans if they agree that his being on the ballot in November would make him a complete and total moron. Sources within the president’s new “One Goddamn Reason” campaign confirmed he is genuinely curious to see if one American citizen can tell him why leaving the White House isn’t the best thing he could possibly do for himself and his family.

“I have a pen and some paper right here,” Obama said Wednesday morning at a town hall meeting in Ohio. “Let’s list the pros and cons of being president. Con: There are people out there who literally want to shoot you dead. Con: We live in a country seriously considering a Newt Gingrich White House. Con: You can help 40 million Americans receive health care, sign legislation that regulates a financial system run amok, give the order to kill Osama bin Laden, help topple Muammar Qaddafi’s tyrannical regime without losing the life of one American soldier, end the war in Iraq, repeal Don’t Ask, Don’t Tell, stave off a second Great Depression, take out more than 30 top al- Qaeda leaders, and somehow everyone still calls you the next Jimmy Carter.”

“Can anyone out there name a pro?” continued Obama, gesturing at the silent crowd with his pen. “That’s okay. I asked a bunch of people in Pittsburgh the same exact question yesterday, and they couldn’t, either.”

While many Beltway observers questioned Obama’s new strategy, saying the president could hurt his chances of serving a second term by saying he doesn’t want to serve a second term, others argued Obama seems to have finally rediscovered his voice.

“Whenever I watch him on the stump asking a crowd, ‘Why am I fucking here right now?’ or saying things like, ‘I think I’d rather die than do this job again,’ he’s so fiery and passionate I’m reminded of the 2007 Obama,” Democratic strategist Karen Finney said. “The one who thought he could make a difference before a broken, nonsensical political system and an insane populace robbed him of his humanity, ripped out his heart, and left him for dead.

By Jon Lackman 

  January 20, 2012  |   3:17 pm  |   Wired February 2012

A mysterious band of hacker-artists is prowling the network of tunnels below Paris,
secretly refurbishing the city’s neglected treasures.
Photo: UX

Thirty years ago, in the dead of night, a group of six Parisian teenagers pulled off what would prove to be a fateful theft. They met up at a small cafè near the Eiffel Tower to review their plans—again—before heading out into the dark. Lifting a grate from the street, they descended a ladder to a tunnel, an unlit concrete passageway carrying a cable off into the void. They followed the cable to its source: the basement of the ministry of telecommunications. Horizontal bars blocked their way, but the skinny teens all managed to wedge themselves through and ascend to the building’s ground floor. There they found three key rings in the security office and a logbook indicating that the guards were on their rounds.

But the guards were nowhere to be seen. The six interlopers combed the building for hours, encountering no one, until they found what they were looking for at the bottom of a desk drawer—maps of the ministry’s citywide network of tunnels. They took one copy of each map, then returned the keys to the security office. Heaving the ministry’s grand front door ajar, they peeked outside; no police, no passersby, no problem. They exited onto the empty Avenue de Sègur and walked home as the sun rose. The mission had been so easy that one of the youths, Natacha, seriously asked herself if she had dreamed it. No, she concluded: “In a dream, it would have been more complicated.”

This stealthy undertaking was not an act of robbery or espionage but rather a crucial operation in what would become an association called UX, for “Urban eXperiment.” UX is sort of like an artist’s collective, but far from being avant-garde—confronting audiences by pushing the boundaries of the new—its only audience is itself. More surprising still, its work is often radically conservative, intemperate in its devotion to the old. Through meticulous infiltration, UX members have carried out shocking acts of cultural preservation and repair, with an ethos of “restoring those invisible parts of our patrimony that the government has abandoned or doesn’t have the means to maintain.” The group claims to have conducted 15 such covert restorations, often in centuries-old spaces, all over Paris.

What has made much of this work possible is UX’s mastery, established 30 years ago and refined since, of the city’s network of underground passageways—hundreds of miles of interconnected telecom, electricity, and water tunnels, sewers, catacombs, subways, and centuries-old quarries. Like computer hackers who crack digital networks and surreptitiously take control of key machines, members of UX carry out clandestine missions throughout Paris’ supposedly secure underground tunnels and rooms. The group routinely uses the tunnels to access restoration sites and stage film festivals, for example, in the disused basements of government buildings.

UX’s most sensational caper (to be revealed so far, at least) was completed in 2006. A cadre spent months infiltrating the Pantheon, the grand structure in Paris that houses the remains of France’s most cherished citizens. Eight restorers built their own secret workshop in a storeroom, which they wired for electricity and Internet access and outfitted with armchairs, tools, a fridge, and a hot plate. During the course of a year, they painstakingly restored the Pantheon’s 19th- century clock, which had not chimed since the 1960s. Those in the neighborhood must have been shocked to hear the clock sound for the first time in decades: the hour, the half hour, the quarter hour.

Eight years ago, the French government didn’t know UX existed. When their exploits first trickled out into the press, the group’s members were deemed by some to be dangerous outlaws, thieves, even potential inspiration for terrorists. Still, a few officials can’t conceal their admiration. Mention UX to Sylvie Gautron of the Paris police—her specialty is monitoring the city’s old quarries—and she breaks into a wide smile. In an era when ubiquitous GPS and microprecise mapping threaten to squeeze all the mystery from our great world cities, UX seems to know, and indeed to own, a whole other, deeper, hidden layer of Paris. It claims the entire city, above- and belowground, as its canvas; its members say they can access every last government building, every narrow telecom tunnel. Does Gautron believe this? “It’s possible,” she says. “Everything they do is very intense.”

It is not at all hard to steal a Picasso, Lazar Kunstmann tells me. One of UX’s early members and the group’s unofficial spokesman, Kunstmann—the name is almost certainly a pseudonym, given its superhero-like German meaning, “Art-man”—is fortyish, bald, black-clad, warm, and witty. We’re sitting in the back room of a student cafè, downing espressos and discussing the spectacular theft in May 2010 of 100 million euros’ worth of paintings from the Museum of Modern Art of the City of Paris. He disputes the contention of a police spokesperson that this was a sophisticated operation. According to an article published in Le Monde, a solitary individual unscrewed a window frame at 3:50 am, cut a padlock from a gate, and strode through the galleries lifting one work each by Lèger, Braque, Matisse, Modigliani, and Picasso. “The thief was perfectly informed,” the officer told the newspaper. If he hadn’t known the window had a vibration detector, he would’ve just broken it. If he hadn’t known the alarm and part of the security system were broken, he wouldn’t have wandered throughout the museum. If he hadn’t known the schedule of night rounds, he wouldn’t have arrived in the middle of the longest quiet period.

Impressive, right? No, Kunstmann says. “He ascertained that nothing was working,” Kunstmann sighs, knowing full well the shoddy security of the museum in question. “The exterior is full of graffiti artists, the homeless, and crack smokers,” he goes on. This would have made it easy for the thief to blend in and surreptitiously watch the windows all night, observing how the guards circulated.

UX members restored the Pantheon’s 19th-century clock.
Photo: UX

A serious thief, Kunstmann says, would have taken an entirely different approach. In the same building, a sprawling and grand old structure called the Palais de Tokyo, is a restaurant that stays open until midnight. An intelligent thief would order a coffee there and then wander off through the building. “Lots of things have alarms,” Kunstmann goes on. “But you try to set them off and they don’t sound! Why? Because they don’t get turned on until 2 am.” (The museum claims that the alarms work 24 hours a day.) Moreover, there are whole stretches of wall where all that separates the museum from the rest of the building is a flimsy drywall partition. “You just—” Kunstmann makes a punching motion with his hand. “If the guy had been at all professional, that’s what he would have done.”

UX has made a study of museum security, in keeping with its concern for Paris’ vulnerable treasures—a concern not always shared by the city’s major cultural institutions. Once, after a UX member discovered appalling security lapses in a major museum, she wrote a memo detailing them—and left it, in the middle of the night, on the desk of the security director. Rather than fix the problems, the director went to the police, demanding they press charges against the perpetrators. (The police declined, though they did tell UX to cool it.) Kunstmann feels sure that nothing has changed since the break-in at the Museum of Modern Art; the security remains just as subpar as ever, he says.

Kunstmann has a gloomy view of contemporary civilization, and in his eyes this affair illustrates many of its worst faults—its fatalism, complacency, ignorance, parochialism, and negligence. French officials, he says, bother to protect and restore only the patrimony adored by millions—the Louvre, for example. Lesser-known sites are neglected, and if they happen to be out of public view—underground, say—they disintegrate totally, even when all that’s needed is a hundred-dollar leak repair. UX tends the black sheep: the odd, the unloved, the forgotten artifacts of French civilization.

It’s difficult, though, to give an accounting of just how extensive those labors of love have been: The group cherishes its secrecy, and its known successes have been revealed only inadvertently. The public learned of the group’s underground cinema after a member’s bitter ex-girlfriend told the police. Reporters caught wind of the Pantheon operation because UX members erred in supposing they could safely invite the building’s director to maintain his newly fixed clock (more on that later). In general, UX sees communicating with outsiders as perilous and unrewarding. Kunstmann does tell me a story from a recent job, but even that is shrouded in misdirection. Some members had just infiltrated a public building when they noticed kids horsing around on the scaffolding at a construction site across the street, climbing through open windows, and doing dangerous stunts on the roof. Pretending to be a neighbor, one member phoned the foreman to warn him but was chagrined at the response: “Instead of saying, ‘Thanks, I guess I’ll close the windows,’ the guy says, ‘What the fuck do I care?’”

They also hosted an underground art show featuring replicas of paintings stolen in a 2010 heist.
Photo: UX

An outsider might wonder whether the teens who founded UX were really so different from those thrill seekers across the street today. Would they rat out their former selves? But when UX members risk arrest, they do so with a rigorous, almost scientific attitude toward the various crafts they aim to preserve and extend. Their approach is to explore and experiment all through the city. Based on members’ interests, UX has developed a cellular structure, with subgroups specializing in cartography, infiltration, tunneling, masonry, internal communications, archiving, restoration, and cultural programming. Its 100-odd members are free to change roles and are given access to all tools at the group’s disposal. There is no manifesto, no charter, no bylaws—save that all members preserve its secrecy. Membership is by invitation only; when the group notices people already engaged in UX-like activities, it initiates a discussion about joining forces. While there is no membership fee, members contribute what they can to projects.

I can’t help but ask: Did UX steal the paintings from the Museum of Modern Art? Wouldn’t that be the perfect way to alert the French to the appalling job their government does protecting national treasures? Kunstmann denies it with a convincing curtness. “That,” he says, “is not our style.”

The first experiment by UX, in September 1981, was an accidental one. A Parisian middle schooler named Andrei was trying to impress a couple of older classmates, boasting that he and his friend Peter often snuck into places and were about to hit the Pantheon, an enormous former church that towers over the fifth arrondissement. Andrei got in so deep with his boast that to save face he had to follow through—with his new friends in tow. Like Claudia and Jamie in that famous children’s book From the Mixed-Up Files of Mrs. Basil E. Frankweiler, they hid out inside the building until it closed. Their nocturnal occupation turned out to be shockingly easy—they encountered no guards or alarms—and the experience electrified them. They thought: What else could we do?

Kunstmann, a classmate of Andrei and Peter’s, joined the group early on. They quickly branched out from mere infiltration. Obtaining the tunnel maps from the ministry of telecommunications and other sources greatly expanded their access. Many Parisian buildings connect to these passages through their basements, which are as badly secured as the tunnels themselves. Most officials, Kunstmann says, act as if they believe in this absurd principle: Tunnel access is forbidden, thus people don’t go there. This, he adds sardonically, is “a flawless conclusion—and what’s more, a very practical one, because if people don’t go there, then it’s unnecessary to do more than lock the entrances.”

The unauthorized cinema that UX built beneath the Palais De Chaillot.
Photo: UX

It wasn’t until I went down into the tunnels myself—which is illegal and punishable by a fine of up to 60 euros, though explorers rarely get caught—that I understood why French officials are so complacent. Finding an unlocked entrance, without UX’s know-how, required a 45-minute walk from the nearest subway. UX has access to dry and spacious tunnel networks, but the more easily entered ones that I traveled that day were often tiny and half-flooded. By the time I’d retraced my steps, I was exhausted, filthy, and bleeding all over from scrapes.

In some places, UX has been able to create covert connections between networks, using (among other tricks) an invention they call the rolling basin. This is a passage in the bottom of a tunnel that appears to be a grate with water under it; in fact, both grate and water are part of a movable tray on rollers. Voilè0—a trapdoor to another tunnel in a different network. The tray itself is made of concrete, so even if someone raps it with a stick, it sounds solid. Kunstmann says UX has a certain weakness for such contrivances but will never possess enough time and cash to build them as extensively as he’d like. “If tomorrow everyone in UX became billionaires, we’d set dues at a billion euros,” he jokes. (But, he adds, “we’ll never be billionaires, because we’re working as little as possible so we can spend as much time as possible on UX.”)

So what does the group do with all this access? Among other things, it has mounted numerous clandestine theater productions and film festivals. On a typical festival evening, they screen at least two films that they feel share a nonobvious yet provocative connection. They don’t explain the connection, leaving it up to the audience to try to discover it. One summer, the group mounted a film festival devoted to the theme of “urban deserts”—the forgotten and underutilized spaces in a city. They naturally decided the ideal venue for such a festival would be in just such an abandoned site. They chose a room beneath the Palais de Chaillot they’d long known of and enjoyed unlimited access to. The building was then home to Paris’ famous Cinèmathèque Franèaise, making it doubly appropriate. They set up a bar, a dining room, a series of salons, and a small screening room that accommodated 20 viewers, and they held festivals there every summer for years. “Every neighborhood cinema should look like that,” Kunstmann says.

The restoration of the Pantheon clock was carried out by a UX subgroup called Untergunther, whose members are devoted specifically to restoration. The Pantheon was a particularly resonant choice of site, since it’s where UX began, and the group had surreptitiously screened films, exhibited art, and mounted plays there. During one such event in 2005, UX cofounder Jean-Baptiste Viot (one of the few members who uses his real name) took a close look at the building’s defunct Wagner clock—an engineering marvel from the 19th century that replaced an earlier timepiece. (Records indicate the building had a clock as far back as 1790.)

Viot had admired the Wagner ever since he first visited the building. He had meanwhile become a professional horologist working for the elite firm Breguet. That September, Viot persuaded seven other UX members to join him in repairing the clock. They’d been contemplating the project for years, but now it seemed urgent: Oxidation had so crippled the works that they would soon become impossible to fix without re-creating, rather than restoring, almost every part. “That wouldn’t be a restored clock, but a facsimile,” Kunstmann says. As the project began, it took on an almost mystical significance for the team. Paris, as they saw it, was the center of France and was once the center of Western civilization; the Latin Quarter was Paris’ historic intellectual center; the Pantheon stands in the Latin Quarter and is dedicated to the great men of French history, many of whose remains are housed within; and in its interior lay a clock, beating like a heart, until it suddenly was silenced. Untergunther wanted to restart the heart of the world. The eight shifted all their free time to the project.

They first established a workshop high up in the building, just below its dome, on a floor where no one (including guards) ever went anymore—”a sort of floating space,” as Kunstmann describes the room, punctuated by narrow slits for windows. “It looked down on all of Paris from a height of 15 stories. From the outside it resembled a kind of flying saucer; from the inside, a bunker.” The workshop was outfitted with eight overstuffed armchairs, a table, bookshelves, a minibar, and red velvet drapes to moderate the ambient temperature. “Every element had been conceived to fold up into wooden crates, like the ones visible throughout the monument,” Kunstmann says. In the dead of night, they climbed endless stairs, hauling up the lumber, drills, saws, clock repair equipment, and everything else required. They updated the workshop’s outdated electrical wiring. They spent 4,000 euros on materials, in all, out of their own pockets. On the terrace outside they set up a vegetable garden.

A mechanism that UX uses to pick locks.
Photo: UX

Like at the Museum of Modern Art, where a thief made off with millions in precious art with shocking ease, security at the Pantheon was slipshod. “No one, neither police nor passersby, worried over people entering and leaving the Pantheon by the front door,” Kunstmann says. Nevertheless, the eight equipped themselves with official-looking fake badges. Each had a photograph, a microchip, a hologram of the monument, and a barcode that was “totally useless but impressive,” Kunstmann says. Only very rarely did passing policemen ask questions. At most, it went something like this:

“You’re working at night? Can we see your badges?”

“Here.”

“OK, thanks.”

Once the workshop was complete and thoroughly cleaned, the eight got to work. The first step was to understand how the clock had gotten so degraded—”a sort of autopsy,” Kunstmann says. What they discovered looked like sabotage. It appeared that someone, presumably a Pantheon employee tired of winding the clock once a week, had bludgeoned the escape wheel with an iron bar.

They brought the clock’s mechanism up to the workshop. Viot trained the group in clock repair. First, they cleaned it with what’s called the clockmaker’s bath. This started with 3 liters of water carried up from the public bathrooms on the ground floor. To that was added 500 grams of soft, highly soluble soap, 25 centiliters of ammonia, and 1 tablespoon of oxalic acid—all mixed at a temperature of more than 280 degrees Fahrenheit. With this solution, the group scrubbed and polished every surface. Then they repaired the mechanism’s glass cabinet, replaced broken pulleys and cables, and re-created from scratch the sabotaged escape wheel (a toothed wheel that manages the clock’s rotation) and missing parts like the pendulum bob.

As soon as it was done, in late summer 2006, UX told the Pantheon about the successful operation. They figured the administration would happily take credit for the restoration itself and that the staff would take over the job of maintaining the clock. They notified the director, Bernard Jeannot, by phone, then offered to elaborate in person. Four of them came—two men and two women, including Kunstmann and the restoration group’s leader, a woman in her forties who works as a photographer—and were startled when Jeannot refused to believe their story. They were even more shocked when, after they showed him their workshop (“I think I need to sit down,” he murmured), the administration later decided to sue UX, at one point seeking up to a year of jail time and 48,300 euros in damages. Jeannot’s then-deputy, Pascal Monnet, is now the Pantheon’s director, and he has gone so far as to hire a clockmaker to restore the clock to its previous condition by resabotaging it. But the clockmaker refused to do more than disengage a part—the escape wheel, the very part that had been sabotaged the first time. UX slipped in shortly thereafter to take the wheel into its own possession, for safekeeping, in the hope that someday a more enlightened administration will welcome its return.

Meanwhile, the government lost its lawsuit. It filed another, which it also lost. There is no law in France, it turns out, against the improvement of clocks. In court, one prosecutor characterized her own government’s charges against Untergunther as “stupid.” But the clock is still immobile today, its hands frozen at 10:51.

The members of UX are not rebels, subversives, guerrillas, or freedom fighters, let alone terrorists. They didn’t repair the clock to embarrass the state, nor do they entertain dreams of overthrowing it. Everything they do is intended for their own consumption; indeed, if they can be accused of anything, it’s narcissism. The group is partly responsible for the fact that it is misunderstood. Its members acknowledge that most of its external communications are intended as misdirection—a way to discourage public officials or others from meddling in its operations. They try to hide themselves within the larger mass of Parisians who venture into the city’s recesses simply as partiers or tourists.

Why do they care about these places? Kunstmann answers this question with questions of his own. “Do you have plants in your home?” he asks impatiently. “Do you water them every day? Why do you water them? Because,” he goes on, “otherwise they’re ratty little dead things.” That’s why these forgotten cultural icons are important—”because we have access to them, we see them.” Their goal, he says, isn’t necessarily to make all these things function once again. “If we restore a bomb shelter, we’re certainly not hoping for new bombardments so people can go use it again. If we restore an early 20th-century subway station, we don’t imagine Electricitè de France will ask us to transform 200,000 volts to 20,000. No, we just want to get as close as possible to a functioning state.”

UX has a simple reason for keeping the sites a secret even after it has finished restoring them: The same anonymity that originally deprived them of caretakers “is paradoxically what’s going to protect them afterward” from looters and graffiti, Kunstmann says. They know they’ll never get to the vast majority of interesting sites that need restoration. Yet, “despite all that, the satisfaction of knowing that some, maybe a tiny fraction, won’t disappear because we’ll have been able to restore them is an extremely great satisfaction.”

I ask him to elaborate on their choice of projects. “We can say very little,” he replies, “because to describe the sites even a bit can give away their location.” That said, one site is “belowground, in the south of Paris, not very far from here. It was discovered relatively recently but elicited very strong interest. It totally contradicts the history of the building above it. In examining what’s belowground, one notices that it doesn’t correspond to the information one can obtain about the history of the site. It’s history in reverse, in a way; the site was dedicated to an activity, structures were placed there, but in fact the site had been dedicated to this activity for quite a long time.”

Walking across the Latin Quarter alone on a balmy evening, I try to guess what site Kunstmann is describing, and the city transforms before my eyes, below my feet. Did counterfeiters once operate out of the basement of the Paris Mint? Was the Saint-Sulpice church founded on the site of an underground pagan temple? Suddenly, all of Paris seems ripe with possibility: Every keyhole a peephole, every tunnel a passageway, every darkened building a theater.

But it’s also clear that UX retains its love affair with its first and best canvas, the Pantheon. While this story was closing, a colleague needed to reach Kunstmann about a fact-checking question. Kunstmann had told her to call “any time,” so even though it was 1 am in Paris, she rang. When he picked up the phone, he was panting—from moving a couch, he said. She asked her question: When the clock had stopped chiming after the repair, what time remained frozen on its face? As it happened, Kunstmann was in the Pantheon at that very moment. “Hold on,” he said. “I’ll look.”

Jon Lackman (jonlackman.com) is a journalist and art historian.

Mitt Romney has long been a front-runner for the G.O.P. nomination—even if no one really knows who he is. Digging into the candidate’s record as a Mormon leader, his business deals at Bain Capital, and that infamous car trip with the family dog strapped to the roof, Michael Kranish and Scott Helman pierce the Mitt bubble in an adaptation from their new book, The Real Romney, to find that the contradictions, question marks, and ambivalence go deeper than his politics. By Michael Kranish and Scott Helman Illustration by André Carrilho

THE 1 PERCENT SOLUTION “He has that invisible wall between ‘me’ and ‘you,’” says a fellow Republican. Adapted from The Real Romney, by Michael Kranish and Scott Helman, to be published this month by HarperCollins; © 2012 by The Boston Globe.

Mitt Romney’s privileged pedigree was common knowledge to his classmates at Harvard Business School and Harvard Law School, where he was simultaneously enrolled in 1971 through a joint-degree program. By that time, his father, George Romney, had run a major corporation (American Motors), been elected three times as Michigan’s governor, sought the presidency, and been appointed to President Nixon’s Cabinet. Despite strongly resembling the elder Romney—the full head of strikingly dark hair, square jaw, dazzling smile—Mitt did little to draw attention to his parentage. The only hint was George’s faded gold initials on a beat-up old briefcase that Mitt carried around.

In truth, Mitt cherished his father’s example and endeavored to follow it. George became more than just a mentor to his youngest son. He was a pathfinder, showing the way of their Mormon faith through the thickets of politics and business, home life, and character. Through his achievements and mistakes, George had bestowed many lessons, and Mitt soaked them up. “His whole life,” said John Wright, a close family friend, “was following a pattern which had been laid out by his dad.” So with his wife, Ann, as a partner and his father as an inspiration, Mitt set out to build a family, a career, and a place in the church that he loved.

The Romneys’ Mormon faith, as Mitt and Ann began their life together, formed a deep foundation. It lay under nearly everything—their acts of charity, their marriage, their parenting, their social lives, even their weekly schedules. Their family-centric lifestyle was a choice; Mitt and Ann plainly cherished time at home with their children more than anything. But it was also a duty. Belonging to the Mormon Church meant accepting a code of conduct that placed supreme value on strong families—strong heterosexual families, in which men and women often filled defined and traditional roles. The Romneys have long cited a well-known Mormon credo popularized by the late church leader David O. McKay: “No other success can compensate for failure in the home.” They had arrived in the Boston area with one son, Taggart, and soon had a second, Matthew. Over the next decade, the Romneys would have three more boys: Joshua was born in 1975, Benjamin in 1978, and then Craig in 1981.

To Mitt, the special one in the house was Ann, with her wide smile, piercing eyes, and steadying domestic presence. And woe was the boy who forgot it. Tagg said there was one rule that was simply not breakable: “We were not allowed to say anything negative about my mother, talk back to her, do anything that would not be respectful of her.” On Mother’s Day, their home would be fragrant with lilacs, Ann’s favorite flowers. Tagg didn’t get it back then, but he came to understand. From the beginning, Mitt had put Ann on a pedestal and kept her there. “When they were dating,” Tagg said, “he felt like she was way better than him and he was really lucky to have this catch. He really genuinely still feels that way.” What makes his parents’ relationship work, he said, is their distinct characters: Mitt is driven first by reason, while Ann operates more on emotion. “She helps him see there’s stuff beyond the logic; he helps her see that there’s more than just instinct and feeling,” Tagg said. Mitt and Ann’s relationship would grow and change as their family entered the public eye. But she has remained his chief counselor and confidante, the one person who can lead Mitt to a final decision. Though she did not necessarily offer detailed input on every business deal, friends said, she weighed in on just about everything else. “Mitt’s not going to do something that they don’t feel good about together,” said Mitt’s sister Jane. Tagg said they called their mom “the great Mitt stabilizer.” Ann would later be mocked for her claim that she and Mitt had never had an argument during their marriage, which sounded preposterous to the ears of many married mortals. Tagg said it’s not that his parents never disagree. “I know there are things that she says that he doesn’t agree with sometimes, and I see him kind of bite his tongue. But I know that they go and discuss it in private. He doesn’t ever contradict my mother in public.” Friends of the Romneys’ back up that account, saying they cannot recall Mitt ever raising his voice toward Ann. Nowhere was Ann’s special status more evident than on long family car trips. Mitt imposed strict rules: they would stop only for gas, and that was the only chance to get food or use the restroom. With one exception, Tagg explained. “As soon as my mom says, ‘I think I need to go to the bathroom,’ he pulls over instantly and doesn’t complain. ‘Anything for you, Ann.’” On one infamous road trip, though, it wasn’t Ann who forced Mitt off the highway. The destination of this journey, in the summer of 1983, was his parents’ cottage, on the Canadian shores of Lake Huron. The white Chevy station wagon with the wood paneling was overstuffed with suitcases, supplies, and sons when Mitt climbed behind the wheel to begin the 12-hour family trek from Boston to Ontario. As with most ventures in his life, he had left little to chance, mapping out the route and planning each stop. Before beginning the drive, Mitt put Seamus, the family’s hulking Irish setter, in a dog carrier and attached it to the station wagon’s roof rack. He had improvised a windshield for the carrier to make the ride more comfortable for the dog.

Then Mitt put his sons on notice: there would be pre-determined stops for gas, and that was it. Tagg was commandeering the way-back of the wagon, keeping his eyes fixed out the rear window, when he glimpsed the first sign of trouble. “Dad!” he yelled. “Gross!” A brown liquid was dripping down the rear window, payback from an Irish setter who’d been riding on the roof in the wind for hours. As the rest of the boys joined in the howls of disgust, Mitt coolly pulled off the highway and into a service station. There he borrowed a hose, washed down Seamus and the car, then hopped back onto the road with the dog still on the roof. It was a preview of a trait he would grow famous for in business: emotion-free crisis management. But the story would trail him years later on the national political stage, where the name Seamus would become shorthand for Romney’s coldly clinical approach to problem solving.

The Book of Mitt

If Romney is exceedingly comfortable around family and close friends, he’s much less so around those he doesn’t know well, drawing a boundary that’s difficult to traverse. It’s a strict social order—us and them—that has put co-workers, political aides, casual acquaintances, and others in his professional circles, even people who have worked with or known him for years, outside the bubble. As a result, he has numerous admirers but, by several accounts, not a long list of close pals. “He’s very engaging and charming in a small group of friends he’s comfortable with,” said one former aide. “When he’s with people he doesn’t know, he gets more formal. And if it’s a political thing where he doesn’t know anybody, he has a mask.” For those outside the inner circle, Romney comes across as all business. Colleagues at work or political staffers are there to do a job, not to bond. “Mitt is always the star,” said one Massachusetts Republican. “And everybody else is a bit player.” He has little patience for idle chatter or small talk, little interest in mingling at cocktail parties, at social functions, or even in the crowded hallway. He is not fed by, and does not crave, casual social interaction, often displaying little desire to know who people are and what makes them tick. “He wasn’t overly interested in people’s personal details or their kids or spouses or team building or their career path,” said another former aide. “It was all very friendly but not very deep.” Or, as one fellow Republican put it, “He has that invisible wall between ‘me’ and ‘you.’” Referring to the time later when Romney was governor of Massachusetts, a Democratic lawmaker recalls, “You remember Richard Nixon and the imperial presidency? Well, this was the imperial governor.” There were the ropes that often curtailed access to Romney and his chambers. The elevator settings restricted access to his office. The tape on the floor told people exactly where to stand during events. This was the controlled environment that Romney created. His orbit was his own. “We always would talk about how, among the legislators, he had no idea what our names were—none,” the lawmaker said, “because he was so far removed from the day-to-day operations of state government.”

This sense of detachment is a function partly of his faith, which has its own tight social community that most outsiders don’t see. Indeed, the stories of Romney’s humanity and warmth come mostly from people who know him as a fellow Mormon. His abstention from drinking also makes parties and other alcohol-fueled functions distinctly less appealing. He is the antithesis of the gregarious pol with a highball in one hand and a cigar in his mouth. Romney’s discomfort around strangers would later become more than just a curiosity; it would be an impediment on the campaign trail. Lacking an easy rapport with voters, he would come across as aloof, even off-putting. “A lot of it is he is patrician. He just is. He has lived a charmed life,” said one former aide. “It is a big challenge that he has, connecting to folks who haven’t swum in the same rarefied waters that he has.” His growing wealth, the deeper he got into his career, only widened the disconnect. Even as he began shouldering more responsibility at work, Romney would assume several leadership positions in the Mormon Church. But he could handle it. “Mitt,” said Kem Gardner, a fellow church official from this period, “just had the capacity to keep all the balls up in the air.” Or, as Tagg put it, “Compared to my dad, everyone’s lazy.” Helen Claire Sievers, who served in a church leadership position under Romney, got a glimpse of his work habits during weekend bus trips to the Mormon temple near Washington, D.C. Church groups would leave late on a Friday, drive all night, and arrive early on Saturday morning. Then they’d spend all day Saturday in temple sessions before turning around and driving home, to be back by Sunday morning. It was a grueling itinerary, Sievers said, so everyone used the time on the bus to sleep or read quietly. Everyone but Romney. “Mitt was always working. His light was on,” she said.

Mormon congregations, typically groups of 400 to 500 people, are known as wards, and their boundaries are determined by geography. Wards, along with smaller congregations known as branches, are organized into stakes. Thus a stake, akin to a Catholic diocese, is a collection of wards and branches in a city or region. Unlike Protestants or Catholics, Mormons do not choose the congregations to which they belong. It depends entirely on where they live. In another departure from many other faiths, Mormons do not have paid full-time clergy. Members in good standing take turns serving in leadership roles. They are expected to perform their ecclesiastical duties on top of career and family responsibilities. Those called to serve as stake presidents and bishops, or leaders of local wards, are fully empowered as agents of the church, and they carry great authority over their domains. Mitt Romney first took on a major church role around 1977, when he was called to be a counselor to Gordon Williams, then the president of the Boston stake. Romney was essentially an adviser and deputy to Williams, helping oversee area congregations. His appointment was somewhat unusual in that counselors at that level have typically been bishops of their local wards first. But Romney, who was only about 30 years old, was deemed to possess leadership qualities beyond his years. Romney’s responsibilities only grew from there; he would go on to serve as bishop and then as stake president, overseeing about a dozen congregations with close to 4,000 members altogether. Those positions in the church amounted to his biggest leadership test yet, exposing him to personal and institutional crises, human tragedies, immigrant cultures, social forces, and organizational challenges that he had never before encountered.

The Church of Jesus Christ of Latter-Day Saints is far more than a form of Sunday worship. It is a code of ethics that frowns on homosexuality, out-of-wedlock births, and abortion and forbids pre-marital sex. It offers a robust, effective social safety net, capable of incredible feats of charity, support, and service, particularly when its own members are in trouble. And it works hard to create community, a built-in network of friends who often share values and a worldview. For many Mormons, the all-encompassing nature of their faith, as an extension of their spiritual lives, is what makes belonging to the church so wonderful, so warm, even as its insularity can set members apart from society.

But a dichotomy exists within the Mormon Church, which holds that one is either in or out; there is little or no tolerance for those, like so-called cafeteria Catholics, who pick and choose what doctrines to follow. And in Mormonism, if one is in, a lot is expected, including tithing 10 percent of one’s income, participating regularly in church activities, meeting high moral expectations, and accepting Mormon doctrine—including many concepts, such as the belief that Jesus will rule from Missouri in his Second Coming, that run counter to those of other Christian faiths. That rigidity can be difficult to abide for those who love the faith but chafe at its strictures or question its teachings and cultural habits. For one, Mormonism is male-dominated—women can serve only in certain leadership roles and never as bishops or stake presidents. The church also makes a number of firm value judgments, typically prohibiting single or divorced men from leading wards and stakes, for example, and not looking kindly upon single parenthood.

The portrait of Romney that emerges from those he led and served with in the church is of a leader who was pulled between Mormonism’s conservative core views and practices and the demands from some quarters within the Boston stake for a more elastic, more open-minded application of church doctrine. Romney was forced to strike a balance between those local expectations and the dictates out of Salt Lake City. Some believe that he artfully reconciled the two, praising him as an innovative and generous leader who was willing to make accommodations, such as giving women expanded responsibility, and who was always there for church members in times of need. To others, he was the product of a hidebound, patriarchal Mormon culture, inflexible and insensitive in delicate situations and dismissive of those who didn’t share his perspective.

In the spring of 1993, Helen Claire Sievers performed a bit of shuttle diplomacy to resolve a thorny problem confronting church leaders in Boston: resentment among progressive Mormon women at their subservient status within the church. Sievers was active in an organization of liberal women called Exponent II, which published a periodical. The group had been chewing over the challenges of being a woman in the male-led faith. So Sievers went to Romney, who was stake president, with a proposal. “I said, ‘Why don’t you have a meeting and have an open forum and let women talk to you?’” she recalled. The idea was that, although there were many church rules that stake presidents and bishops could not change, they did have some leeway to do things their own way.

Romney wasn’t sure about holding such a meeting, but he ultimately agreed to it. Sievers went back to the Exponent II group and said they should be realistic and not demand things Romney could never deliver, such as allowing women to hold the priesthood. On the day of the meeting, about 250 women filled the pews of the Belmont Chapel. After an opening song, prayer, and some housekeeping items, the floor was open. Women began proposing changes that would include them more in the life of the church. In the end, the group came up with some 70 suggestions—from letting women speak after men in church to putting changing tables in men’s bathrooms—as Romney and one of his counselors listened and took careful notes.

Romney was essentially willing to grant any request he couldn’t see a reason to reject. “Pretty much, he said yes to everything that I would have said yes to, and I’m kind of a liberal Mormon,” Sievers said. “I was pretty impressed.” (Ann Romney was not considered to be sympathetic to the agitation of liberal women within the stake. She was invited to social events sponsored by Exponent II but did not attend. She was, in the words of one member, understood to be “not that kind of woman.”)

Romney’s leadership was not so rosy for everyone, though. As both bishop and stake president, he at times clashed with women he felt strayed too far from church beliefs and practice. To them, he lacked the empathy and courage that they had known in other leaders, putting the church first even at times of great personal vulnerability. Peggie Hayes had joined the church as a teenager along with her mother and siblings. They’d had a difficult life. Mormonism offered the serenity and stability her mother craved. “It was,” Hayes said, “the answer to everything.” Her family, though poorer than many of the well-off members, felt accepted within the faith. Everyone was so nice. The church provided emotional and, at times, financial support. As a teenager, Hayes babysat for Mitt and Ann Romney and other couples in the ward. Then Hayes’s mother abruptly moved the family to Salt Lake City for Hayes’s senior year of high school. Restless and unhappy, Hayes moved to Los Angeles once she turned 18. She got married, had a daughter, and then got divorced shortly after. But she remained part of the church.

By 1983, Hayes was 23 and back in the Boston area, raising a 3-year-old daughter on her own and working as a nurse’s aide. Then she got pregnant again. Single motherhood was no picnic, but Hayes said she had wanted a second child and wasn’t upset at the news. “I kind of felt like I could do it,” she said. “And I wanted to.” By that point Mitt Romney, the man whose kids Hayes used to watch, was, as bishop of her ward, her church leader. But it didn’t feel so formal at first. She earned some money while she was pregnant organizing the Romneys’ basement. The Romneys also arranged for her to do odd jobs for other church members, who knew she needed the cash. “Mitt was really good to us. He did a lot for us,” Hayes said. Then Romney called Hayes one winter day and said he wanted to come over and talk. He arrived at her apartment in Somerville, a dense, largely working-class city just north of Boston. They chitchatted for a few minutes. Then Romney said something about the church’s adoption agency. Hayes initially thought she must have misunderstood. But Romney’s intent became apparent: he was urging her to give up her soon-to-be-born son for adoption, saying that was what the church wanted. Indeed, the church encourages adoption in cases where “a successful marriage is unlikely.”

Hayes was deeply insulted. She told him she would never surrender her child. Sure, her life wasn’t exactly the picture of Rockwellian harmony, but she felt she was on a path to stability. In that moment, she also felt intimidated. Here was Romney, who held great power as her church leader and was the head of a wealthy, prominent Belmont family, sitting in her gritty apartment making grave demands. “And then he says, ‘Well, this is what the church wants you to do, and if you don’t, then you could be excommunicated for failing to follow the leadership of the church,’ ” Hayes recalled. It was a serious threat. At that point Hayes still valued her place within the Mormon Church. “This is not playing around,” she said. “This is not like ‘You don’t get to take Communion.’ This is like ‘You will not be saved. You will never see the face of God.’ ” Romney would later deny that he had threatened Hayes with excommunication, but Hayes said his message was crystal clear: “Give up your son or give up your God.”

Not long after, Hayes gave birth to a son. She named him Dane. At nine months old, Dane needed serious, and risky, surgery. The bones in his head were fused together, restricting the growth of his brain, and would need to be separated. Hayes was scared. She sought emotional and spiritual support from the church once again. Looking past their uncomfortable conversation before Dane’s birth, she called Romney and asked him to come to the hospital to confer a blessing on her baby. Hayes was expecting him. Instead, two people she didn’t know showed up. She was crushed. “I needed him,” she said. “It was very significant that he didn’t come.” Sitting there in the hospital, Hayes decided she was finished with the Mormon Church. The decision was easy, yet she made it with a heavy heart. To this day, she remains grateful to Romney and others in the church for all they did for her family. But she shudders at what they were asking her to do in return, especially when she pulls out pictures of Dane, now a 27-year-old electrician in Salt Lake City. “There’s my baby,” she said.

In the fall of 1990, Exponent II published in its journal an unsigned essay by a married woman who, having already borne five children, had found herself some years earlier facing an unplanned sixth pregnancy. She couldn’t bear the thought of another child and was contemplating abortion. But the Mormon Church makes few exceptions to permit women to end a pregnancy. Church leaders have said that abortion can be justified in cases of rape or incest, when the health of the mother is seriously threatened, or when the fetus will surely not survive beyond birth. And even those circumstances “do not automatically justify an abortion,” according to church policy.

Then the woman’s doctors discovered she had a serious blood clot in her pelvis. She thought initially that would be her way out—of course she would have to get an abortion. But the doctors, she said, ultimately told her that, with some risk to her life, she might be able to deliver a full-term baby, whose chance of survival they put at 50 percent. One day in the hospital, her bishop—later identified as Romney, though she did not name him in the piece—paid her a visit. He told her about his nephew who had Down syndrome and what a blessing it had turned out to be for their family. “As your bishop,” she said he told her, “my concern is with the child.” The woman wrote, “Here I—a baptized, endowed, dedicated worker, and tithe-payer in the church—lay helpless, hurt, and frightened, trying to maintain my psychological equilibrium, and his concern was for the eight-week possibility in my uterus—not for me!”

Romney would later contend that he couldn’t recall the incident, saying, “I don’t have any memory of what she is referring to, although I certainly can’t say it could not have been me.” Romney acknowledged having counseled Mormon women not to have abortions except in exceptional cases, in accordance with church rules. The woman told Romney, she wrote, that her stake president, a doctor, had already told her, “Of course, you should have this abortion and then recover from the blood clot and take care of the healthy children you already have.” Romney, she said, fired back, “I don’t believe you. He wouldn’t say that. I’m going to call him.” And then he left. The woman said that she went on to have the abortion and never regretted it. “What I do feel bad about,” she wrote, “is that at a time when I would have appreciated nurturing and support from spiritual leaders and friends, I got judgment, criticism, prejudicial advice, and rejection.”

One woman who had been active in the Exponent II organization was Judy Dushku, a longtime scholar of global politics at Suffolk University in Boston. At one point while Romney was stake president, Dushku wanted to visit the temple outside Washington to take out endowments, a sacred rite that commits Mormons to a lifetime of faithfulness to the church. She had never entered a temple before and was thrilled at the chance to affirm her dedication to a faith she’d grown up with and grown to love. Earlier in her life, temples had been off limits to Mormons who, like Dushku, were married to non-Mormons. Now that rule had changed, and she was eager to go. But first she needed permission from her bishop and stake president.

After what she described as a “lovely interview” with her bishop and after speaking with one of Romney’s counselors, she went to see Romney. She wasn’t sure what to expect. Despite Romney’s willingness to allow some changes in 1993, he and Dushku had clashed over the church’s treatment of women. “He says something like ‘I suspect, if you’ve gotten through both of the interviews, there’s nothing I can do to keep you from going to the temple,’ ” Dushku recalled. “I said, ‘Well, why would you want to keep me from going to the temple?’ ” Romney’s answer, Dushku said, was biting. “He said, ‘Well, Judy, I just don’t understand why you stay in the church.’ ” She asked him whether he wanted her to really answer that question. “And he said, ‘No, actually. I don’t understand it, but I also don’t care. I don’t care why you do. But I can tell you one thing: you’re not my kind of Mormon.’ ” With that, Dushku said, he dismissively signed her recommendation to visit the temple and let her go. Dushku was deeply hurt. Though she and Romney had had their differences, he was still her spiritual leader. She had hoped he would be excited at her yearning to visit the temple. “I’m coming to you as a member of the church, essentially expecting you to say, ‘I’m happy for you,’ ” Dushku said. Instead, “I just felt kicked in the stomach.”

The Bain of Mitt’s Campaign

By the time Mitt Romney walked into the Faneuil Hall offices of his mentor and boss, Bill Bain, in the spring of 1983, the 36-year-old was already a business-consulting star, coveted by clients for his analytical cool. He was, as people had said of him since childhood, mature beyond his years and organized to a fault. Everything he took on was thought through in advance, down to the smallest detail; he was rarely taken by surprise. This day, however, would be an exception. Bill Bain, the founder of Bain & Company, one of the nation’s premier consulting outfits, had a stunning proposition: he was prepared to entrust an entirely new venture to the striking young man seated before him.

From the moment they’d first met, Bill Bain had seen something special, something he knew, in Mitt Romney. Indeed, he had seen someone he knew when he interviewed Romney for a job in 1977: Mitt’s father. “I remember [George] as president of American Motors when he was fighting the gas guzzlers and making funny ads So when I saw Mitt, I instantly saw George Romney. He doesn’t look exactly like his dad did, but he very strongly resembles his father.” Beyond appearances, Mitt had an air of great promise about him. He seemed brilliant but not cocky. All of the partners were impressed, and some were jealous. More than one partner told Bain, “This guy is going to be president of the United States someday.”

The Bain Way, as it became known, was intensely analytical and data-driven, a quality it shared with some other firms’ methods. But Bill Bain had come up with the idea of working for just one client per industry and devoting Bain & Company entirely to that company, with a strict vow of confidentiality. From the start Romney was perfectly adapted to the Bain Way and became a devoted disciple. Patient analysis and attention to nuance were what drove him. For six years, he delved into numerous unfamiliar companies, learned what made them work, scoped out the competition, and then presented his findings. An increasing number of clients preferred Romney over more senior partners. He was plainly a star, and Bain treated him as a kind of prince regent at the firm, a favored son. Just the man for the big move he now had in mind.

And so Bain made his pitch: Up to that point, Bain & Company could watch its clients prosper only from a distance, taking handsome fees but not directly sharing in profits. Bain’s epiphany was that he would create a new enterprise that would invest in companies and share in their growth, rather than just advise them.

Starting almost immediately, Bain proposed, Romney would become the head of a new company to be called Bain Capital. With seed money from Bill Bain and other partners at the consulting firm, Bain Capital would raise tens of millions of dollars, invest in start-ups and troubled businesses, apply Bain’s brand of management advice, and then resell the revitalized companies or sell their shares to the public at a profit. It sounded exciting, daring, new. It would be Romney’s first chance to run his own firm and, potentially, to make a killing. It was an offer few young men in a hurry could refuse.

Yet Romney stunned his boss by doing just that. He explained to Bain that he didn’t want to risk his position, earnings, and reputation on an experiment. He found the offer appealing but didn’t want to make the decision in a “light or flippant manner.” So Bain sweetened the pot. He guaranteed that if the experiment failed Romney would get his old job and salary back, plus any raises he would have earned during his absence. Still, Romney worried about the impact on his reputation if he proved unable to do the job. Again the pot was sweetened. Bain promised that, if necessary, he would craft a cover story saying that Romney’s return to Bain & Company was needed due to his value as a consultant. “So,” Bain explained, “there was no professional or financial risk.” This time Romney said yes.

Thus began Romney’s 15-year odyssey at Bain Capital. Boasting about those years when running for senator, governor, or president, Romney would usually talk about how he had helped create jobs at new or underperforming companies, and would claim that he had learned how jobs and businesses come and go. He’d typically mention a few well-known companies in which he and his partners had invested, such as Staples. But the full story of his years at Bain Capital is far more complicated and has rarely been closely scrutinized. Romney was involved in about a hundred deals, many of which have received little notice because the companies involved were privately held and not household names. The most thorough analysis of Romney’s performance comes from a private solicitation for investment in Bain Capital’s funds written by the Wall Street firm Deutsche Bank. The company examined 68 major deals that had taken place on Romney’s watch. Of those, Bain had lost money or broken even on 33. Overall, though, the numbers were stunning: Bain was nearly doubling its investors’ money annually, giving it one of the best track records in the business.

Romney was, by nature, deeply risk-averse in a business based on risk. He worried about losing the money of his partners and his outside investors—not to mention his own savings. “He was troubled when we didn’t invest fast enough; he was troubled when we made an investment,” said Bain partner Coleman Andrews. Sorting through possible investments, Romney met weekly with his young partners, pushing them for deeper analysis and more data and giving himself the final vote on whether to go forward. They operated more like a group of bankers carefully guarding their cash than an aggressive firm eager to embrace giant deals. Some partners suspected that Romney always had one eye on his political future. “I always wondered about Mitt, whether he was concerned about the blemishes from a business perspective or from a personal and political perspective,” one partner said years later. The partner concluded that it was the latter. Whereas most entrepreneurs accepted failure as an inherent part of the game, the partner said, Romney worried that a single flop would bring disgrace. Every calculation had to be made with care.

Despite some initial struggles, 1986 would prove to be a pivotal year for Romney. It started with a most unlikely deal. A former supermarket executive, Thomas Stemberg, was trying to sell venture capitalists on what seemed like a modest idea: a cheaper way to sell paper clips, pens, and other office supplies. The enterprise that would become the superstore Staples at first met with skepticism. Small and midsize businesses at the time bought most of their supplies from local stationers, often at significant markups. Few people saw the profit-margin potential in selling such homely goods at discount and in massive volume. But Stemberg was convinced and hired an investment banker to help raise money. Romney eventually heard Stemberg’s pitch, and he and his partners dug into Stemberg’s projections. They called lawyers, accountants, and scores of business owners in the Boston area to query them on how much they spent on supplies and whether they’d be willing to shop at a large new store. The partners initially concluded that Stemberg was overestimating the market. “Look,” Stemberg told Romney, “your mistake is that the guys you called think they know what they spend, but they don’t.” Romney and Bain Capital went back to the businesses and tallied up invoices. Stemberg’s assessment that this was a hidden giant of a market seemed right after all.

Romney hadn’t stumbled on Staples on his own. A partner at another Boston firm, Bessemer Venture Partners, had invited him to the first meeting with Stemberg. But after that, he took the lead; he finally had his hands on what looked like a promising start-up. Bain Capital invested $650,000 to help Staples open its first store, in Brighton, Massachusetts, in May 1986. In all, it invested about $2.5 million in the company. Three years later, in 1989, Staples sold shares to the public, when it was just barely turning a profit, and Bain reaped more than $13 million. It was a big success at the time. Yet it was very modest compared with later Bain deals that reached into the hundreds of millions of dollars.

For years Romney would cite the Staples investment as proof that he had helped create thousands of jobs. And it is true that his foresight in investing in Staples helped a major enterprise lift off. But neither Romney nor Bain directly ran the business, though Romney was active on its board. At the initial public offering, Staples was a firm of 24 stores and 1,100 full- and part-time jobs. Its boom years were still to come. Romney resigned his seat on the board of directors in 2001 in preparation for his run for governor. A decade later, the company had more than 2,200 stores and 89,000 employees.

Assessing claims about job creation is hard. Staples grew hugely, but the gains were offset, at least partially, by losses elsewhere: smaller, mom-and-pop stationery stores and suppliers were being squeezed, and some went out of business entirely. Ultimately, Romney would approvingly call Staples “a classic ‘category killer,’ like Toys R Us.” Staples steamrolled the competition, undercutting prices and selling in large quantities. When asked about his job-creation claim during the 1994 Senate campaign—that he had helped create 10,000 jobs at various companies (a claim he expanded during his 2012 presidential campaign to having “helped to create tens of thousands” of jobs)—Romney responded with a careful hedge. He emphasized that he always used the word “helped” and didn’t take full credit for the jobs. “That’s why I’m always very careful to use the words ‘help create,’ ” he acknowledged. “Bain Capital, or Mitt Romney, ‘helped create’ over 10,000 jobs. I don’t take credit for the jobs at Staples. I helped create the jobs at Staples.”

Howard Anderson, a professor at M.I.T.’s Sloan School of Management and a former entrepreneur who has invested with Bain, put it more plainly: “What you really cannot do is claim every job was because of your good judgment,” he said. “You’re not really running those organizations. You’re financing it; you’re offering your judgment and your advice. I think you can only really claim credit for the jobs of the company that you ran.”

The same year Romney invested in Staples—digging into a true start-up—he also inked the biggest transaction, by far, that Bain Capital had put together until then. And with this $200 million deal, he waded full-on into the high-stakes financial arena of the time: leveraged buyouts, or LBOs. Whereas a venture-capital deal bet on a new business, pursuing an LBO meant borrowing huge sums of money to buy an established company, typically saddling the target with big debts. The goal was to mine value that others had missed, to quickly improve profitability by cutting costs and often jobs, and then to sell.

Initially, Romney thought that putting money into young firms “would be just as good as acquiring an existing company and trying to make it better.” But he found that “there’s a lot greater risk in a start-up than there is in acquiring an existing company.” He was much more comfortable in an environment where the issue wasn’t whether an idea would pan out but whether the numbers worked. He knew himself, knew that his powers ran less to the creative than to the analytical; he was not at heart an entrepreneur. Perhaps that was what led him to push the Pause button at the outset with Bill Bain. But he now felt ready to take on much bigger financial risks, mostly by making leveraged bets on existing companies, whose market was known and whose business plans he could parse and master.

Billions of dollars were being made in the field of leveraged buyouts in the roaring 80s, and Romney was fully in the game, continuing to ratchet up his favored strategy. On the campaign trail in 2011, Romney said his work had “led me to become very deeply involved in helping other businesses, from start-ups to large companies that were going through tough times. Sometimes I was successful and we were able to help create jobs, other times I wasn’t. I learned how America competes with other companies in other countries, what works in the real world and what doesn’t.” It was a vague summary of what was a very controversial type of business. In his 2004 autobiography, Turnaround, Romney put it more bluntly: “I never actually ran one of our investments; that was left to management.” He explained that his strategy was to “invest in these underperforming companies, using the equivalent of a mortgage to leverage up our investment. Then we would go to work to help management make their business more successful.”

Romney’s phrase, “leverage up,” provides the key to understanding this most profitable stage of his business career. While putting relatively little money on the table, Bain could strike a deal using largely debt. That generally meant that the company being acquired had to borrow huge sums. But there was no guarantee that target companies would be able to repay their debts. At Bain, the goal was to buy businesses that were stagnating as subsidiaries of large corporations and grow them or shake them up to burnish their performance. Because many of the companies were troubled, or at least were going to be heavily indebted after Bain bought them, their bonds would be considered lower-grade, or “junk.” That meant they would have to pay higher interest on the bonds, like a strapped credit-card holder facing a higher rate than a person who pays off purchases more quickly. High-yielding junk bonds were appealing to investors willing to take on risk in exchange for big payouts. But they also represented a big bet: if the companies didn’t generate large profits or could not sell their stock to the public, some would be crippled by the debt layered on them by the buyout firms.

The arcane domain of corporate buyouts and junk-bond financing had entered the public consciousness at the time, and not always in a positive way. Ivan Boesky, a Wall Street arbitrageur who often bought the stock of takeover targets, was charged with insider trading and featured on the cover of Time magazine as “Ivan the Terrible.” Shortly after Romney began working on leveraged deals, a movie called Wall Street opened. It featured the fictional corporate raider Gordon Gekko, who justified his behavior by declaring, “I am not a destroyer of companies. I am a liberator of them! … Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.”

Romney, of course, never said that greed is good, and there was nothing of Gekko in his mores or style. But he bought into the broader ethic of the LBO kings, who believed that through the aggressive use of leverage and skilled management they could quickly remake underperforming enterprises. Romney described himself as driven by a core economic credo, that capitalism is a form of “creative destruction.” This theory, espoused in the 1940s by the economist Joseph Schumpeter and later touted by former Federal Reserve Board chairman Alan Greenspan, holds that business must exist in a state of ceaseless revolution. A thriving economy changes from within, Schumpeter wrote in his landmark book, Capitalism, Socialism and Democracy,“incessantly destroying the old one, incessantly creating a new one.” But as even the theory’s proponents acknowledged, such destruction could bankrupt companies, upending lives and communities, and raise questions about society’s role in softening some of the harsher consequences.

Romney, for his part, contrasted the capitalistic benefits of creative destruction with what happened in controlled economies, in which jobs might be protected but productivity and competitiveness falters. Far better, Romney wrote in his book No Apology, “for governments to stand aside and allow the creative destruction inherent in a free economy.” He acknowledged that it is “unquestionably stressful—on workers, managers, owners, bankers, suppliers, customers, and the communities that surround the affected businesses.” But it was necessary to rebuild a moribund company and economy. It was a point of view he would stick with in years ahead. Indeed, he wrote a 2008 op-ed piece for The New York Times opposing a federal bailout for automakers that the newspaper headlined, let detroit go bankrupt. His advice went unheeded, and his prediction that “you can kiss the American automotive industry goodbye” if it got a bailout has not come true.

Thanks to a highly leveraged but successful takeover and turnaround of a wheel-rim maker, Accuride, Bain Capital became a hot property. So much money poured into Romney’s second investment fund that the firm had to turn away investors. Romney set out to raise $80 million and received offers totaling $150 million. The partners settled on $105 million, half of it from wealthy customers of a New York bank. During a break at a photo shoot for a brochure to attract investors, the Bain partners playfully posed for a photo that showed them flush with cash. They clutched $10 and $20 bills, stuffed them into their pockets, and even clenched them in their grinning teeth. Romney tucked a bill between his striped tie and his buttoned suit jacket. Everything was different now.

Valley of the LBO Kings

It was time for another road show, but the days of soliciting prospects for scarce cash in obscure locales were mostly over. This time Romney and his partners headed to Beverly Hills, California. Arriving at the intersection of Rodeo Drive and Wilshire Boulevard, they headed to the office of Michael Milken, the canny and controversial junk-bond king, at his company, Drexel Burnham Lambert. Romney knew Milken was able to find buyers for the high-yield, high-risk bonds that were crucial to the success of many leveraged-buyout deals. At the time of Romney’s visit, it was widely known that Drexel and Milken were under investigation by the Securities and Exchange Commission. But Drexel was still the big player in the junk-bond business, and Romney needed the financing.

Romney had come to Drexel to obtain financing for the $300 million purchase of two Texas department-store chains, Bealls and Palais Royal, to form Specialty Retailers, Inc. On September 7, 1988, two months after Bain hired Drexel to issue junk bonds to finance the deal, the S.E.C. filed a complaint against Drexel and Milken for insider trading. Romney had to decide whether to close a deal with a company ensnared in a growing clash with regulators. The old Romney might well have backed off; the newly assertive, emboldened Mitt decided to press ahead.

Romney’s deal with Drexel turned out well for both him and Bain Capital, which put $10 million into the retailer and financed most of the rest of the $300 million deal with junk bonds. The newly constituted company, later known as Stage Stores, refocused in 1989 on its small-town, small-department-store roots. Seven years later, in October 1996, the company successfully sold shares to the public at $16 a share. By the following year, the stock had climbed to a high of nearly $53, and Bain Capital and a number of its officers and directors sold a large part of their holdings. Bain made a $175 million gain by 1997. It was one of the most profitable leveraged buyouts of the era.

Romney sold at just the right time. Shares plunged in value the next year amid declining sales at the stores. The department-store company filed for Chapter 11 bankruptcy protection in 2000, struggling with $600 million in debt, and a reorganized company emerged the following year. So ended the story of a deal that Romney would not be likely to cite on the campaign trail: the highly leveraged purchase, financed with junk bonds from a firm that became infamous for its financial practices, of a department-store company that had subsequently gone into bankruptcy. But on the Bain balance sheet, and on Romney’s, it was a huge win.

Not every deal worked out so well for Romney and his investors. Bain invested $4 million in a company called Handbag Holdings, which sold pocketbooks and other accessories. When a major customer stopped buying, the company failed and 200 jobs were lost. Bain invested $2.1 million in a bathroom-fixtures company called PPM and lost nearly all of it. An investment in a company called Mothercare Stores also didn’t pan out; the firm had eliminated a hundred jobs by the time Bain dumped it. Fellow Bain partner Robert White said Bain lost its $1 million and blamed “a difficult retail environment.”

In some cases, Bain Capital’s alternative strategy of buying into companies also ended in trouble. In 1993, Bain bought GST Steel, a maker of steel-wire rods, and later more than doubled its $24 million investment. The company borrowed heavily to modernize plants in Kansas City and North Carolina—and to pay out dividends to Bain. But foreign competition increased and steel prices fell. GST Steel filed for bankruptcy and shut down its money-losing Kansas City plant, throwing some 750 employees out of work. Union workers there blamed Bain, then and now, for ruining the company, upending their lives, and devastating the community.

Then, in 1994, Bain invested $27 million as part of a deal with other firms to acquire Dade International, a medical-diagnostics-equipment firm, from its parent company, Baxter International. Bain ultimately made nearly 10 times its money, getting back $230 million. But Dade wound up laying off more than 1,600 people and filed for bankruptcy protection in 2002, amid crushing debt and rising interest rates. The company, with Bain in charge, had borrowed heavily to do acquisitions, accumulating $1.6 billion in debt by 2000. The company cut benefits for some workers at the acquired firms and laid off others. When it merged with Behring Diagnostics, a German company, Dade shut down three U.S. plants. At the same time, Dade paid out $421 million to Bain Capital’s investors and investing partners.

The amount of money now being earned at Bain Capital was skyrocketing, and much of it came from a handful of giant deals. During Romney’s 15 years there, the firm invested about $260 million in its 10 top deals and reaped a nearly $3 billion return. That was about three-quarters of its overall profit on roughly 100 transactions during Romney’s tenure. In one of his most specific explanations of how he made his fortune, in his autobiography, Turnaround, Romney wrote that most of the companies he invested in were ones that “no one has heard of—TRW’s credit services, the Yellow Pages of Italy.” Those weren’t just any two deals. They were two of the most lucrative of Romney’s career, and luck played a big part in both. A mere seven weeks after buying TRW, Romney and his partners flipped the company. Bain’s $100 million investment returned at least $300 million. The second deal cited by Romney took longer but involved even more good timing and luck. It began with a renowned Italian investor named Phil Cuneo, who had the idea of buying the Italian version of the Yellow Pages. It seemed a solid investment in a firm with a staid and stable business model. But mere months after closing the deal, Cuneo and his Bain associates realized that they had acquired a company that might benefit from the surging interest in dot-com businesses; the Yellow Pages company owned a Web-based directory that had the potential to be the Italian version of America Online or Yahoo. In just under three years, in September 2000, the partners sold the investment, earning a windfall that far exceeded anyone’s initial expectations. Bain’s $51.3 million investment in the Italian Yellow Pages returned at least $1.17 billion, according to a Romney associate familiar with the deal. There is no public documentation of how the profits were distributed, but at that time at least 20 percent of the return would have gone to Bain Capital. Of that, Romney’s typical payout was then 5 to 10 percent. That means this one obscure deal would have given him a profit of $11 million to $22 million. If Romney made a side investment in the deal, as was standard among Bain partners, he would have made even larger gains. One Romney associate said Romney’s total profit could have been as much as $40 million. (A Romney spokesman did not respond to questions about the deal.)

It was those kinds of deals that enabled Bain Capital to report the highest returns in the business in the 1990s. Romney’s own net worth would grow to at least $250 million, and maybe much more, a trove that would enable him to foot a large part of the bill for his 2008 presidential campaign. Asked about a report that his wealth at one point reached as high as $1 billion, Romney said, “I’m not going to get into my net worth. No estimates whatsoever.”

For 15 years, Romney had been in the business of creative destruction and wealth creation. But what about his claims of job creation? Though Bain Capital surely helped expand some companies that had created jobs, the layoffs and closures at other firms would lead Romney’s political opponents to say that he had amassed a fortune in part by putting people out of work. The lucrative deals that made Romney wealthy could exact a cost. Maximizing financial return to investors could mean slashing jobs, closing plants, and moving production overseas. It could also mean clashing with union workers, serving on the board of a company that ran afoul of federal laws, and loading up already struggling companies with debt.

There is a difference between companies run by buyout firms and those rooted in their communities, according to Ross Gittell, a professor at the University of New Hampshire’s Whittemore School of Business and Economics. When it comes to buyout firms, he said, “the objective is: Make money for investors. It’s not to maximize jobs.” Romney, in fact, had a fiduciary duty to investors to make as much money as possible. Sometimes everything worked out perfectly; a change in strategy might lead to cost savings and higher profits, and Bain cashed in. Sometimes jobs were lost, and Bain cashed in or lost part or all of its investment. In the end, Romney’s winners outweighed his losers on the Bain balance sheet. Marc Wolpow, a former Bain partner who worked with Romney on many deals, said the discussion at buyout companies typically does not focus on whether jobs will be created. “It’s the opposite—what jobs we can cut,” Wolpow said. “Because you had to document how you were going to create value. Eliminating redundancy, or the elimination of people, is a very valid way. Businesses will die if you don’t do that. I think the way Mitt should explain it is, if we didn’t buy these businesses and impose efficiencies on them, the market would have done it with disastrous consequences.”

Additional reporting by Beth Healy and Neil Swidey.

 

Tuesday, January 24, 2012 9:37 PM EST

By IBTimes Staff Reporter

Here is the full text of President Obama’s State of the Union Speech 2012, “An America Built to Last,” as prepared for delivery on Jan. 24:

Mr. Speaker, Mr. Vice President, members of Congress, distinguished guests, and fellow Americans:

Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq. Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought - and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world. For the first time in nine years, there are no Americans fighting in Iraq. For the first time in two decades, Osama bin Laden is not a threat to this country. Most of al Qaeda’s top lieutenants have been defeated. The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home.

These achievements are a testament to the courage, selflessness, and teamwork of America’s Armed Forces. At a time when too many of our institutions have let us down, they exceed all expectations. They’re not consumed with personal ambition. They don’t obsess over their differences. They focus on the mission at hand. They work together.

Imagine what we could accomplish if we followed their example. Think about the America within our reach: A country that leads the world in educating its people. An America that attracts a new generation of high-tech manufacturing and high-paying jobs. A future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world. An economy built to last, where hard work pays off, and responsibility is rewarded.

We can do this. I know we can, because we’ve done it before. At the end of World War II, when another generation of heroes returned home from combat, they built the strongest economy and middle class the world has ever known. My grandfather, a veteran of Patton’s Army, got the chance to go to college on the GI Bill. My grandmother, who worked on a bomber assembly line, was part of a workforce that turned out the best products on Earth.

The two of them shared the optimism of a Nation that had triumphed over a depression and fascism. They understood they were part of something larger; that they were contributing to a story of success that every American had a chance to share - the basic American promise that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for retirement.

The defining issue of our time is how to keep that promise alive. No challenge is more urgent. No debate is more important. We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules. What’s at stake are not Democratic values or Republican values, but American values. We have to reclaim them.

Let’s remember how we got here. Long before the recession, jobs and manufacturing began leaving our shores. Technology made businesses more efficient, but also made some jobs obsolete. Folks at the top saw their incomes rise like never before, but most hardworking Americans struggled with costs that were growing, paychecks that weren’t, and personal debt that kept piling up.

In 2008, the house of cards collapsed. We learned that mortgages had been sold to people who couldn’t afford or understand them. Banks had made huge bets and bonuses with other people’s money. Regulators had looked the other way, or didn’t have the authority to stop the bad behavior.

It was wrong. It was irresponsible. And it plunged our economy into a crisis that put millions out of work, saddled us with more debt, and left innocent, hard-working Americans holding the bag. In the six months before I took office, we lost nearly four million jobs. And we lost another four million before our policies were in full effect.

Those are the facts. But so are these. In the last 22 months, businesses have created more than three million jobs. Last year, they created the most jobs since 2005. American manufacturers are hiring again, creating jobs for the first time since the late 1990s. Together, we’ve agreed to cut the deficit by more than $2 trillion. And we’ve put in place new rules to hold Wall Street accountable, so a crisis like that never happens again.

The state of our Union is getting stronger. And we’ve come too far to turn back now. As long as I’m President, I will work with anyone in this chamber to build on this momentum. But I intend to fight obstruction with action, and I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place.

No, we will not go back to an economy weakened by outsourcing, bad debt, and phony financial profits. Tonight, I want to speak about how we move forward, and lay out a blueprint for an economy that’s built to last - an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.

This blueprint begins with American manufacturing.

On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen. In exchange for help, we demanded responsibility. We got workers and automakers to settle their differences. We got the industry to retool and restructure. Today, General Motors is back on top as the world’s number one automaker. Chrysler has grown faster in the U.S. than any major car company. Ford is investing billions in U.S. plants and factories. And together, the entire industry added nearly 160,000 jobs.

We bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back.

What’s happening in Detroit can happen in other industries. It can happen in Cleveland and Pittsburgh and Raleigh. We can’t bring back every job that’s left our shores. But right now, it’s getting more expensive to do business in places like China. Meanwhile, America is more productive. A few weeks ago, the CEO of Master Lock told me that it now makes business sense for him to bring jobs back home. Today, for the first time in fifteen years, Master Lock’s unionized plant in Milwaukee is running at full capacity.

So we have a huge opportunity, at this moment, to bring manufacturing back. But we have to seize it. Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.

We should start with our tax code. Right now, companies get tax breaks for moving jobs and profits overseas. Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it.

So let’s change it. First, if you’re a business that wants to outsource jobs, you shouldn’t get a tax deduction for doing it. That money should be used to cover moving expenses for companies like Master Lock that decide to bring jobs home.

Second, no American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax. And every penny should go towards lowering taxes for companies that choose to stay here and hire here.

Third, if you’re an American manufacturer, you should get a bigger tax cut. If you’re a high-tech manufacturer, we should double the tax deduction you get for making products here. And if you want to relocate in a community that was hit hard when a factory left town, you should get help financing a new plant, equipment, or training for new workers.

My message is simple. It’s time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America. Send me these tax reforms, and I’ll sign them right away.

We’re also making it easier for American businesses to sell products all over the world. Two years ago, I set a goal of doubling U.S. exports over five years. With the bipartisan trade agreements I signed into law, we are on track to meet that goal - ahead of schedule. Soon, there will be millions of new customers for American goods in Panama, Colombia, and South Korea. Soon, there will be new cars on the streets of Seoul imported from Detroit, and Toledo, and Chicago.

I will go anywhere in the world to open new markets for American products. And I will not stand by when our competitors don’t play by the rules. We’ve brought trade cases against China at nearly twice the rate as the last administration - and it’s made a difference. Over a thousand Americans are working today because we stopped a surge in Chinese tires. But we need to do more. It’s not right when another country lets our movies, music, and software be pirated. It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized.

Tonight, I’m announcing the creation of a Trade Enforcement Unit that will be charged with investigating unfair trade practices in countries like China. There will be more inspections to prevent counterfeit or unsafe goods from crossing our borders. And this Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing finance or new markets like Russia. Our workers are the most productive on Earth, and if the playing field is level, I promise you - America will always win.

I also hear from many business leaders who want to hire in the United States but can’t find workers with the right skills. Growing industries in science and technology have twice as many openings as we have workers who can do the job. Think about that - openings at a time when millions of Americans are looking for work.

That’s inexcusable. And we know how to fix it.

Jackie Bray is a single mom from North Carolina who was laid off from her job as a mechanic. Then Siemens opened a gas turbine factory in Charlotte, and formed a partnership with Central Piedmont Community College. The company helped the college design courses in laser and robotics training. It paid Jackie’s tuition, then hired her to help operate their plant.

I want every American looking for work to have the same opportunity as Jackie did. Join me in a national commitment to train two million Americans with skills that will lead directly to a job. My Administration has already lined up more companies that want to help. Model partnerships between businesses like Siemens and community colleges in places like Charlotte, Orlando, and Louisville are up and running. Now you need to give more community colleges the resources they need to become community career centers - places that teach people skills that local businesses are looking for right now, from data management to high-tech manufacturing.

And I want to cut through the maze of confusing training programs, so that from now on, people like Jackie have one program, one website, and one place to go for all the information and help they need. It’s time to turn our unemployment system into a reemployment system that puts people to work.

These reforms will help people get jobs that are open today. But to prepare for the jobs of tomorrow, our commitment to skills and education has to start earlier.

For less than one percent of what our Nation spends on education each year, we’ve convinced nearly every State in the country to raise their standards for teaching and learning - the first time that’s happened in a generation.

But challenges remain. And we know how to solve them.

At a time when other countries are doubling down on education, tight budgets have forced States to lay off thousands of teachers. We know a good teacher can increase the lifetime income of a classroom by over $250,000. A great teacher can offer an escape from poverty to the child who dreams beyond his circumstance. Every person in this chamber can point to a teacher who changed the trajectory of their lives. Most teachers work tirelessly, with modest pay, sometimes digging into their own pocket for school supplies - just to make a difference.

Teachers matter. So instead of bashing them, or defending the status quo, let’s offer schools a deal. Give them the resources to keep good teachers on the job, and reward the best ones. In return, grant schools flexibility: To teach with creativity and passion; to stop teaching to the test; and to replace teachers who just aren’t helping kids learn.

We also know that when students aren’t allowed to walk away from their education, more of them walk the stage to get their diploma. So tonight, I call on every State to require that all students stay in high school until they graduate or turn eighteen.

When kids do graduate, the most daunting challenge can be the cost of college. At a time when Americans owe more in tuition debt than credit card debt, this Congress needs to stop the interest rates on student loans from doubling in July. Extend the tuition tax credit we started that saves middle-class families thousands of dollars. And give more young people the chance to earn their way through college by doubling the number of work-study jobs in the next five years.

Of course, it’s not enough for us to increase student aid. We can’t just keep subsidizing skyrocketing tuition; we’ll run out of money. States also need to do their part, by making higher education a higher priority in their budgets. And colleges and universities have to do their part by working to keep costs down. Recently, I spoke with a group of college presidents who’ve done just that. Some schools re-design courses to help students finish more quickly. Some use better technology. The point is, it’s possible. So let me put colleges and universities on notice: If you can’t stop tuition from going up, the funding you get from taxpayers will go down. Higher education can’t be a luxury - it’s an economic imperative that every family in America should be able to afford.

Let’s also remember that hundreds of thousands of talented, hardworking students in this country face another challenge: The fact that they aren’t yet American citizens. Many were brought here as small children, are American through and through, yet they live every day with the threat of deportation. Others came more recently, to study business and science and engineering, but as soon as they get their degree, we send them home to invent new products and create new jobs somewhere else.

That doesn’t make sense.

I believe as strongly as ever that we should take on illegal immigration. That’s why my Administration has put more boots on the border than ever before. That’s why there are fewer illegal crossings than when I took office.

The opponents of action are out of excuses. We should be working on comprehensive immigration reform right now. But if election-year politics keeps Congress from acting on a comprehensive plan, let’s at least agree to stop expelling responsible young people who want to staff our labs, start new businesses, and defend this country. Send me a law that gives them the chance to earn their citizenship. I will sign it right away.

You see, an economy built to last is one where we encourage the talent and ingenuity of every person in this country. That means women should earn equal pay for equal work. It means we should support everyone who’s willing to work; and every risk-taker and entrepreneur who aspires to become the next Steve Jobs.

After all, innovation is what America has always been about. Most new jobs are created in start-ups and small businesses. So let’s pass an agenda that helps them succeed. Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow. Expand tax relief to small businesses that are raising wages and creating good jobs. Both parties agree on these ideas. So put them in a bill, and get it on my desk this year.

Innovation also demands basic research. Today, the discoveries taking place in our federally-financed labs and universities could lead to new treatments that kill cancer cells but leave healthy ones untouched. New lightweight vests for cops and soldiers that can stop any bullet. Don’t gut these investments in our budget. Don’t let other countries win the race for the future. Support the same kind of research and innovation that led to the computer chip and the Internet; to new American jobs and new American industries.

Nowhere is the promise of innovation greater than in American-made energy. Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my Administration to open more than 75 percent of our potential offshore oil and gas resources. Right now, American oil production is the highest that it’s been in eight years. That’s right - eight years. Not only that - last year, we relied less on foreign oil than in any of the past sixteen years.

But with only 2 percent of the world’s oil reserves, oil isn’t enough. This country needs an all-out, all-of-the-above strategy that develops every available source of American energy - a strategy that’s cleaner, cheaper, and full of new jobs.

We have a supply of natural gas that can last America nearly one hundred years, and my Administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade. And I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use. America will develop this resource without putting the health and safety of our citizens at risk.

The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy. And by the way, it was public research dollars, over the course of thirty years, that helped develop the technologies to extract all this natural gas out of shale rock - reminding us that Government support is critical in helping businesses get new energy ideas off the ground.

What’s true for natural gas is true for clean energy. In three years, our partnership with the private sector has already positioned America to be the world’s leading manufacturer of high-tech batteries. Because of federal investments, renewable energy use has nearly doubled. And thousands of Americans have jobs because of it.

When Bryan Ritterby was laid off from his job making furniture, he said he worried that at 55, no one would give him a second chance. But he found work at Energetx, a wind turbine manufacturer in Michigan. Before the recession, the factory only made luxury yachts. Today, it’s hiring workers like Bryan, who said, “I’m proud to be working in the industry of the future.”

Our experience with shale gas shows us that the payoffs on these public investments don’t always come right away. Some technologies don’t pan out; some companies fail. But I will not walk away from the promise of clean energy. I will not walk away from workers like Bryan. I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here. We have subsidized oil companies for a century. That’s long enough. It’s time to end the taxpayer giveaways to an industry that’s rarely been more profitable, and double-down on a clean energy industry that’s never been more promising. Pass clean energy tax credits and create these jobs.

We can also spur energy innovation with new incentives. The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change. But there’s no reason why Congress shouldn’t at least set a clean energy standard that creates a market for innovation. So far, you haven’t acted. Well tonight, I will. I’m directing my Administration to allow the development of clean energy on enough public land to power three million homes. And I’m proud to announce that the Department of Defense, the world’s largest consumer of energy, will make one of the largest commitments to clean energy in history - with the Navy purchasing enough capacity to power a quarter of a million homes a year.

Of course, the easiest way to save money is to waste less energy. So here’s another proposal: Help manufacturers eliminate energy waste in their factories and give businesses incentives to upgrade their buildings. Their energy bills will be $100 billion lower over the next decade, and America will have less pollution, more manufacturing, and more jobs for construction workers who need them. Send me a bill that creates these jobs.

Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure. So much of America needs to be rebuilt. We’ve got crumbling roads and bridges. A power grid that wastes too much energy. An incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world.

During the Great Depression, America built the Hoover Dam and the Golden Gate Bridge. After World War II, we connected our States with a system of highways. Democratic and Republican administrations invested in great projects that benefited everybody, from the workers who built them to the businesses that still use them today.

In the next few weeks, I will sign an Executive Order clearing away the red tape that slows down too many construction projects. But you need to fund these projects. Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.

There’s never been a better time to build, especially since the construction industry was one of the hardest-hit when the housing bubble burst. Of course, construction workers weren’t the only ones hurt. So were millions of innocent Americans who’ve seen their home values decline. And while Government can’t fix the problem on its own, responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief.

That’s why I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won’t add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust.

Let’s never forget: Millions of Americans who work hard and play by the rules every day deserve a Government and a financial system that do the same. It’s time to apply the same rules from top to bottom: No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody.

We’ve all paid the price for lenders who sold mortgages to people who couldn’t afford them, and buyers who knew they couldn’t afford them. That’s why we need smart regulations to prevent irresponsible behavior. Rules to prevent financial fraud, or toxic dumping, or faulty medical devices, don’t destroy the free market. They make the free market work better.

There is no question that some regulations are outdated, unnecessary, or too costly. In fact, I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his. I’ve ordered every federal agency to eliminate rules that don’t make sense. We’ve already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years. We got rid of one rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that they could contain a spill - because milk was somehow classified as an oil. With a rule like that, I guess it was worth crying over spilled milk.

I’m confident a farmer can contain a milk spill without a federal agency looking over his shoulder. But I will not back down from making sure an oil company can contain the kind of oil spill we saw in the Gulf two years ago. I will not back down from protecting our kids from mercury pollution, or making sure that our food is safe and our water is clean. I will not go back to the days when health insurance companies had unchecked power to cancel your policy, deny you coverage, or charge women differently from men.

And I will not go back to the days when Wall Street was allowed to play by its own set of rules. The new rules we passed restore what should be any financial system’s core purpose: Getting funding to entrepreneurs with the best ideas, and getting loans to responsible families who want to buy a home, start a business, or send a kid to college.

So if you’re a big bank or financial institution, you are no longer allowed to make risky bets with your customers’ deposits. You’re required to write out a “living will” that details exactly how you’ll pay the bills if you fail - because the rest of us aren’t bailing you out ever again. And if you’re a mortgage lender or a payday lender or a credit card company, the days of signing people up for products they can’t afford with confusing forms and deceptive practices are over. Today, American consumers finally have a watchdog in Richard Cordray with one job: To look out for them.

We will also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people’s investments. Some financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender. That’s bad for consumers, and it’s bad for the vast majority of bankers and financial service professionals who do the right thing. So pass legislation that makes the penalties for fraud count.

And tonight, I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.

A return to the American values of fair play and shared responsibility will help us protect our people and our economy. But it should also guide us as we look to pay down our debt and invest in our future.

Right now, our most immediate priority is stopping a tax hike on 160 million working Americans while the recovery is still fragile. People cannot afford losing $40 out of each paycheck this year. There are plenty of ways to get this done. So let’s agree right here, right now: No side issues. No drama. Pass the payroll tax cut without delay.

When it comes to the deficit, we’ve already agreed to more than $2 trillion in cuts and savings. But we need to do more, and that means making choices. Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary.

Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else - like education and medical research; a strong military and care for our veterans? Because if we’re serious about paying down our debt, we can’t do both.

The American people know what the right choice is. So do I. As I told the Speaker this summer, I’m prepared to make more reforms that rein in the long term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors.

But in return, we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes. And my Republican friend Tom Coburn is right: Washington should stop subsidizing millionaires. In fact, if you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions. On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up. You’re the ones struggling with rising costs and stagnant wages. You’re the ones who need relief.

Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.

We don’t begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich. It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit, or somebody else has to make up the difference - like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet. That’s not right. Americans know it’s not right. They know that this generation’s success is only possible because past generations felt a responsibility to each other, and to their country’s future, and they know our way of life will only endure if we feel that same sense of shared responsibility. That’s how we’ll reduce our deficit. That’s an America built to last.

I recognize that people watching tonight have differing views about taxes and debt; energy and health care. But no matter what party they belong to, I bet most Americans are thinking the same thing right now: Nothing will get done this year, or next year, or maybe even the year after that, because Washington is broken.

Can you blame them for feeling a little cynical?

The greatest blow to confidence in our economy last year didn’t come from events beyond our control. It came from a debate in Washington over whether the United States would pay its bills or not. Who benefited from that fiasco?

I’ve talked tonight about the deficit of trust between Main Street and Wall Street. But the divide between this city and the rest of the country is at least as bad - and it seems to get worse every year.

Some of this has to do with the corrosive influence of money in politics. So together, let’s take some steps to fix that. Send me a bill that bans insider trading by Members of Congress, and I will sign it tomorrow. Let’s limit any elected official from owning stocks in industries they impact. Let’s make sure people who bundle campaign contributions for Congress can’t lobby Congress, and vice versa - an idea that has bipartisan support, at least outside of Washington.

Some of what’s broken has to do with the way Congress does its business these days. A simple majority is no longer enough to get anything - even routine business - passed through the Senate. Neither party has been blameless in these tactics. Now both parties should put an end to it. For starters, I ask the Senate to pass a rule that all judicial and public service nominations receive a simple up or down vote within 90 days.

The executive branch also needs to change. Too often, it’s inefficient, outdated and remote. That’s why I’ve asked this Congress to grant me the authority to consolidate the federal bureaucracy so that our Government is leaner, quicker, and more responsive to the needs of the American people.

Finally, none of these reforms can happen unless we also lower the temperature in this town. We need to end the notion that the two parties must be locked in a perpetual campaign of mutual destruction; that politics is about clinging to rigid ideologies instead of building consensus around common sense ideas.

I’m a Democrat. But I believe what Republican Abraham Lincoln believed: That Government should do for people only what they cannot do better by themselves, and no more. That’s why my education reform offers more competition, and more control for schools and States. That’s why we’re getting rid of regulations that don’t work. That’s why our health care law relies on a reformed private market, not a Government program.

On the other hand, even my Republican friends who complain the most about Government spending have supported federally-financed roads, and clean energy projects, and federal offices for the folks back home.

The point is, we should all want a smarter, more effective Government. And while we may not be able to bridge our biggest philosophical differences this year, we can make real progress. With or without this Congress, I will keep taking actions that help the economy grow. But I can do a whole lot more with your help. Because when we act together, there is nothing the United States of America can’t achieve.

That is the lesson we’ve learned from our actions abroad over the last few years.

Ending the Iraq war has allowed us to strike decisive blows against our enemies. From Pakistan to Yemen, the al Qaeda operatives who remain are scrambling, knowing that they can’t escape the reach of the United States of America.

From this position of strength, we’ve begun to wind down the war in Afghanistan. Ten thousand of our troops have come home. Twenty-three thousand more will leave by the end of this summer. This transition to Afghan lead will continue, and we will build an enduring partnership with Afghanistan, so that it is never again a source of attacks against America.

As the tide of war recedes, a wave of change has washed across the Middle East and North Africa, from Tunis to Cairo; from Sana’a to Tripoli. A year ago, Qadhafi was one of the world’s longest-serving dictators - a murderer with American blood on his hands. Today, he is gone. And in Syria, I have no doubt that the Assad regime will soon discover that the forces of change can’t be reversed, and that human dignity can’t be denied.

How this incredible transformation will end remains uncertain. But we have a huge stake in the outcome. And while it is ultimately up to the people of the region to decide their fate, we will advocate for those values that have served our own country so well. We will stand against violence and intimidation. We will stand for the rights and dignity of all human beings - men and women; Christians, Muslims, and Jews. We will support policies that lead to strong and stable democracies and open markets, because tyranny is no match for liberty.

And we will safeguard America’s own security against those who threaten our citizens, our friends, and our interests. Look at Iran. Through the power of our diplomacy, a world that was once divided about how to deal with Iran’s nuclear program now stands as one. The regime is more isolated than ever before; its leaders are faced with crippling sanctions, and as long as they shirk their responsibilities, this pressure will not relent. Let there be no doubt: America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal. But a peaceful resolution of this issue is still possible, and far better, and if Iran changes course and meets its obligations, it can rejoin the community of nations.

The renewal of American leadership can be felt across the globe. Our oldest alliances in Europe and Asia are stronger than ever. Our ties to the Americas are deeper. Our iron-clad commitment to Israel’s security has meant the closest military cooperation between our two countries in history. We’ve made it clear that America is a Pacific power, and a new beginning in Burma has lit a new hope. From the coalitions we’ve built to secure nuclear materials, to the missions we’ve led against hunger and disease; from the blows we’ve dealt to our enemies; to the enduring power of our moral example, America is back.

Anyone who tells you otherwise, anyone who tells you that America is in decline or that our influence has waned, doesn’t know what they’re talking about. That’s not the message we get from leaders around the world, all of whom are eager to work with us. That’s not how people feel from Tokyo to Berlin; from Cape Town to Rio; where opinions of America are higher than they’ve been in years. Yes, the world is changing; no, we can’t control every event. But America remains the one indispensable nation in world affairs - and as long as I’m President, I intend to keep it that way.

That’s why, working with our military leaders, I have proposed a new defense strategy that ensures we maintain the finest military in the world, while saving nearly half a trillion dollars in our budget. To stay one step ahead of our adversaries, I have already sent this Congress legislation that will secure our country from the growing danger of cyber-threats.

Above all, our freedom endures because of the men and women in uniform who defend it. As they come home, we must serve them as well as they served us. That includes giving them the care and benefits they have earned - which is why we’ve increased annual VA spending every year I’ve been President. And it means enlisting our veterans in the work of rebuilding our Nation.

With the bipartisan support of this Congress, we are providing new tax credits to companies that hire vets. Michelle and Jill Biden have worked with American businesses to secure a pledge of 135,000 jobs for veterans and their families. And tonight, I’m proposing a Veterans Job Corps that will help our communities hire veterans as cops and firefighters, so that America is as strong as those who defend her.

Which brings me back to where I began. Those of us who’ve been sent here to serve can learn from the service of our troops. When you put on that uniform, it doesn’t matter if you’re black or white; Asian or Latino; conservative or liberal; rich or poor; gay or straight. When you’re marching into battle, you look out for the person next to you, or the mission fails. When you’re in the thick of the fight, you rise or fall as one unit, serving one Nation, leaving no one behind.

One of my proudest possessions is the flag that the SEAL Team took with them on the mission to get bin Laden. On it are each of their names. Some may be Democrats. Some may be Republicans. But that doesn’t matter. Just like it didn’t matter that day in the Situation Room, when I sat next to Bob Gates - a man who was George Bush’s defense secretary; and Hillary Clinton, a woman who ran against me for president.

All that mattered that day was the mission. No one thought about politics. No one thought about themselves. One of the young men involved in the raid later told me that he didn’t deserve credit for the mission. It only succeeded, he said, because every single member of that unit did their job - the pilot who landed the helicopter that spun out of control; the translator who kept others from entering the compound; the troops who separated the women and children from the fight; the SEALs who charged up the stairs. More than that, the mission only succeeded because every member of that unit trusted each other - because you can’t charge up those stairs, into darkness and danger, unless you know that there’s someone behind you, watching your back.

So it is with America. Each time I look at that flag, I’m reminded that our destiny is stitched together like those fifty stars and those thirteen stripes. No one built this country on their own. This Nation is great because we built it together. This Nation is great because we worked as a team. This Nation is great because we get each other’s backs. And if we hold fast to that truth, in this moment of trial, there is no challenge too great; no mission too hard. As long as we’re joined in common purpose, as long as we maintain our common resolve, our journey moves forward, our future is hopeful, and the state of our Union will always be strong.

Thank you, God bless you, and may God bless the United States of America.