Meet Ted Cruz’s Secretive $11 Million Donor
January 24, 2016 8:50 PM   Subscribe

Critics warned that Citizens United would bring about a new era of corporate influence in politics, with companies and businesspeople buying elections to promote their financial interests. So far, that hasn’t happened much… Instead, a small group of billionaires has flooded races with ideologically tinged contributions. Zachary Mider profiles the enigmatic Bob Mercer, the single biggest donor of the current campaign, for Bloomberg: “What Kind of Man Spends Millions to Elect Ted Cruz?”

A follow-up video: “Meet Ted Cruz's $11 Million Money Man, Bob Mercer”

Prior coverage of Mercer in other outlets:
posted by Going To Maine (62 comments total) 10 users marked this as a favorite
 
Oh, I looked that dude up a long time ago when I saw his name in "biggest donor" reports. I have no idea about his personality, but he's certainly very, very smart. And his company relies on obscure tax rules to make money. So... probably just evil self-interest?
posted by miyabo at 9:05 PM on January 24, 2016 [2 favorites]


“What Kind of Man Spends Millions to Elect Ted Cruz?”

From the article, about one of the candidates that received support from Mercer: He has some unusual ideas. According to his monthly newsletter, nuclear radiation can be good for you and climate science is a hoax.

So, the answer to the question is: a dangerous idiot.
posted by His thoughts were red thoughts at 9:13 PM on January 24, 2016 [36 favorites]


I dunno, he seems like he's obviously brilliant. That's what makes it bizarre, why does someone so smart throw some money to a guy with a bunch of freezers full of urine?
posted by bradbane at 9:19 PM on January 24, 2016


I read that as Rick Mercer and was confused.
posted by blue_beetle at 9:20 PM on January 24, 2016 [4 favorites]


I read it as Roy D. Mercer and immediately thought "How big a boy are ya?"
posted by infinitewindow at 9:22 PM on January 24, 2016 [4 favorites]


People who are brilliant in one area can nonetheless be incredibly dumb in other domains. For instance, brilliant pediatric neurosurgeons can believe that the pyramids were built to store grain.
posted by 1adam12 at 9:24 PM on January 24, 2016 [81 favorites]


Oh, the poor bastard. If you give a man $11 million dollars, he's going to want to show you his gratitude. And pretty much nobody who has interacted closely with Ted Cruz has enjoyed the experience.
posted by jackbishop at 9:25 PM on January 24, 2016 [8 favorites]


Just another asshole who thinks being a billionaire financier who equates his ability to make money to the power to run the country. Nothing special, every rightwing candidate has one of these guys nowdays. It's a prerequisite to running to have a shadowy money man who made his name ripping off the government, teacher's pensions funds, the working class or all of the above bankrolling the whole operation. That's the real constituency of the Republican party, after all.

The interesting and more dangerous story is why the Supreme Court agrees with the billionaire class that their votes are the only ones that should count.
posted by T.D. Strange at 9:26 PM on January 24, 2016 [19 favorites]


...why does someone so smart throw some money to a guy with a bunch of freezers full of urine?

I don't know what this particular guy is doing, but running Mass Spec on urine samples is how metabolomics is done, and it is a genuine technique that is producing important results.
posted by 445supermag at 9:28 PM on January 24, 2016 [2 favorites]


The interesting and more dangerous story is why the Supreme Court agrees with the billionaire class that their votes are the only ones that should count.

Honestly, to me the more interesting story is how the seemingly pervasive idea that corporations, not the rich, would be the ones leveraging super PACs has proven entirely false. It’s a story that I’ve heard far more often and seems to be generally wrong.
posted by Going To Maine at 9:35 PM on January 24, 2016 [4 favorites]


I don't know what this particular guy is doing, but running Mass Spec on urine samples is how metabolomics is done, and it is a genuine technique that is producing important results.

It’s also worth remembering that, while these are large sums of money, they aren’t large sums of money for Mercer. So if there’s a plausible chance that something might work, he can afford to throw money at it as a test.
posted by Going To Maine at 9:36 PM on January 24, 2016 [1 favorite]


“What Kind of Man Spends Millions to Elect Ted Cruz?”

The Devil, that's who. There can be no other answer than the Devil.
posted by lesbiassparrow at 9:39 PM on January 24, 2016 [5 favorites]


What Kind of Man Spends Millions to Elect Ted Cruz?

A time traveler from the President Trump future.
posted by betweenthebars at 9:42 PM on January 24, 2016 [40 favorites]


When you have a kajillion dollars, a mere $11 million is pocket change. See also: why the Kochs can spend more money than thousands of families on the election and not feel a thing.
posted by fifteen schnitzengruben is my limit at 9:50 PM on January 24, 2016 [5 favorites]


Network TV is getting a bit stale, look at all of this inspiration for new villains!
posted by yueliang at 9:52 PM on January 24, 2016 [1 favorite]


At a certain point in time though you have to give money to all the puppets because otherwise you'll be frozen out when your hand picked guy fails to garner enough looney support. Furthermore if you give 10 million to one candidate you want to be reasonably certain he is beholden to you as kingmaker but if there are multiple billionaires all trying to take command of the puppet at the same time the puppet doesn't always do what you want.

And of course you have to be worried if some guy with the ability to self finance comes along and makes a vanity run because your well groomed puppet might not be able to compete.
posted by vuron at 9:59 PM on January 24, 2016 [10 favorites]


otherwise you'll be frozen out when your hand picked guy fails to garner enough looney support

I don't see anyone in the current Republican field turning down tens of millions of dollars from anyone, regardless of whether that donor supported an opponent previously. (except maybe Trump, which may be the only good thing about him.)
posted by LooseFilter at 10:37 PM on January 24, 2016


At a certain point in time though you have to give money to all the puppets because otherwise you'll be frozen out when your hand picked guy fails to garner enough looney support.

Perhaps the more concerning situation isn’t that the person wants a puppet, but -more terrifyingly- they would be happy if the candidate just did what he promised to do.
posted by Going To Maine at 10:38 PM on January 24, 2016 [4 favorites]


his company relies on obscure tax rules to make money

It's a more complicated than that. The fund he's a top guy at was founded by Jim Simons, a former Veblen Prize winner and a key theorist of string theory. Its (astoundingly successful) strategy is mathematical prediction of the market based on identification of trading patterns. The use of barrier options--questionable as it might be--was just a way to eke out a higher yield on the underlying strategy. In a world where everyone devoted their energies to their highest and best use, a fund like Medallion wouldn't exist, but, as hedge funds go, it's much more intelligence- and much less piracy-driven than most.

That said, that Mercer is backing the creepiest of the candidates doesn't surprise me.
posted by praemunire at 10:48 PM on January 24, 2016 [8 favorites]


This is what real eccentric billionaires actually do with their money instead of becoming Batman.
posted by Halloween Jack at 4:31 AM on January 25, 2016 [18 favorites]


Yeah, the fund is extraordinarily successful because of the economics of the trades. The tax position is just a way to get a little more after-tax return.

That tax position, though, is probably wrong. They're in the middle of an audit now, and I think it's likely the IRS will win. ( and the IRS has already effectively banned it)
posted by jpe at 4:36 AM on January 25, 2016 [3 favorites]


If I had that kind of money I wouldn't spend $2 million on a train set, I'd just buy a fucking train. Or private train car. Which is still a thing you can do, and then pay Amtrak to haul your Gilded Age private train car with chef's quarters around the country.

$10,000 on the train set, the rest on ACTUAL TRAINS.
posted by Eyebrows McGee at 4:36 AM on January 25, 2016 [17 favorites]


A shadowy figure called Mercer whose true nature is utterly ambiguous yet whose influence on reality is profound? Hand me my empathy box, I'm going in...

(I'm increasingly of the opinion that at some point in the past twenty years, we segued into Philip Dick's brain. Previously, on the green.)
posted by Devonian at 4:48 AM on January 25, 2016 [5 favorites]


He has some unusual ideas. According to his monthly newsletter, nuclear radiation can be good for you and climate science is a hoax.

Now I can only see him as Dr. Parnell from Repo Man.

"Ever been to Utah? Ra-di-a-tion. Yes, indeed. You hear the most outrageous lies about it. Half-baked goggle-box do-gooders telling everybody it's bad for you. Pernicious nonsense. Everybody could stand a hundred chest X-rays a year. They ought to have them, too. "
posted by Pope Guilty at 5:07 AM on January 25, 2016 [11 favorites]


I think campaign donations are the best evidence that extreme wealth has more to do with dumb luck than any kind of meritocracy.
posted by srboisvert at 5:37 AM on January 25, 2016 [3 favorites]


> According to his monthly newsletter, nuclear radiation can be good for you

Ever been to Utah? Ra-di-a-tion. Yes, indeed. You hear the most outrageous lies about it. Half-baked goggle-box do-gooders telling everybody it's bad for you. Pernicious nonsense. Everybody could stand a hundred chest X-rays a year. They ought to have them, too. When they canceled the project it almost did me in. One day my mind was full to bursting. The next day - nothing. Swept away. But I'll show them. I had a lobotomy in the end.
posted by kcds at 5:53 AM on January 25, 2016 [2 favorites]


I love the fact that we know how much Mercer's model train set costs (2.7 million) because he's suing the designer. I guess it wasn't "coolest train set EVAH!" enough.
posted by jabah at 6:07 AM on January 25, 2016 [1 favorite]


Oh, the poor bastard. If you give a man $11 million dollars, he's going to want to show you his gratitude. And pretty much nobody who has interacted closely with Ted Cruz has enjoyed the experience.

The article mentions that Cruz had to prod the man at a fundraising dinner to say three syllables. My gut feeling is that the man doesn't give a shit enough to care whether he enjoys interacting with Cruz or not as long as he does his bidding.
posted by blucevalo at 7:41 AM on January 25, 2016


1adam12: People who are brilliant in one area can nonetheless be incredibly dumb in other domains. For instance, brilliant pediatric neurosurgeons can believe that the pyramids were built to store grain.

From this weekend's meetup, a fellow MeFite (sorry, it's early and my memory is not yet sharp) said PhDs can make people think they know everything, when they are really just smart in one niche field. This is true of most brilliant people - they know a lot about something, but "Renaissance" people are truly rare. That won't stop such smart people from spouting off as if they know everything about everything.
posted by filthy light thief at 7:51 AM on January 25, 2016 [1 favorite]


Also: from NPR this morning (currently audio only with a short blurb, transcript coming later today) - some people, including Republican politicians, are turning from Trump to look for their next option, only to find Cruz, and because no politicians like Cruz, they're turning back to Trump, hoping they can work with him.

I hope that after Ted Cruz fails to get the Republican bid, he starts and stars in a reality show called Nobody Likes Ted, which follows him around as he tries to work with people and they all realize he's a huge jerk, and he just feels like no one really understands him.
posted by filthy light thief at 7:57 AM on January 25, 2016 [3 favorites]


Eleven million dollars? So, like a week's income then?
It's not even funny.
posted by fullerine at 8:17 AM on January 25, 2016


I dunno, he seems like he's obviously brilliant. That's what makes it bizarre, why does someone so smart throw some money to a guy with a bunch of freezers full of urine?

Mercer seems to have a pretty good grasp on what he personally believes, but I think he also takes an approach where he doesn't know what methods and ideas are going to take off, so he finds a LOT of them and hopes that something works. He has a loathing of government research, so he finds people whose private research he finds intriguing and throws money at it. He has strong ideas about the gold standard and other conservative economic shibboleths, so he throws money at whoever supports his ideas and hopes that one of the advocates has a successful model for promoting his ideas.

One of the things you have to remember about Renaissance technologies is that it is based near Stony Brook, NY, out on Long Island, 60 miles from New York City. It's both very successful AND very isolated, which means that the place is made up basically of brilliant people who only have experience dealing with each other. They only have to listen to each other, and the only metric they are evaluated on is whether their trading strategies pay off. It's no wonder that the place becomes a crucible for weird ideas about the rest of the world.
posted by deanc at 8:48 AM on January 25, 2016 [1 favorite]


Is it possible that this guy is so freaking smart that he can discern strategies that on the surface make no sense at all? Like if you support really nasty politician to the tune of x, that gets his malevolent message more mainstream and affects national opinion in order to maximize the chances of more a benevolent politician? I mean, with all the wizardry and brilliance and poker-playing fooforah, I can't imagine that he just wants to buy Cruz out-right. I mean, that's why he doesn't just buy a train, right? He's gotta set up a microcosm train that he drives from a simulator in his basement. Plus that diagram of his contributions reminds me of that complex ooda chart thingy.
posted by valkane at 8:49 AM on January 25, 2016 [1 favorite]


Let's not buy into his framing that just because the guy with the most money necessarily has to be the smartest guy on the planet and attribute pure motives to 11th dimensional chess, when it's much more easily explained by malevolence.
posted by T.D. Strange at 8:54 AM on January 25, 2016 [7 favorites]


Did I read this right in the article?? Has the author looked at any "top contributor lists" for PACs or quasi-PACs? It sure looks like big corporations leading the way for contributions.

"Critics warned that Citizens United would bring about a new era of corporate influence in politics, with companies and businesspeople buying elections to promote their financial interests. So far, that hasn’t happened much; big corporations, for instance, still play a negligible role in presidential election spending. Instead, a small group of billionaires has flooded races with ideologically tinged contributions."
posted by Muncle at 10:11 AM on January 25, 2016 [1 favorite]


"Everyone hates Ted" is kind of silly. He's a 45 year old US Senator from the second largest state in the US and is running second in the polls for the Republican Nomination for President of the United States. He's married to a Goldman Sachs managing director. He clearly is very good at being liked by the people he needs to like him.
posted by MattD at 10:56 AM on January 25, 2016


Yeah, no one's tried to beat him to death on the Senate floor, so he must not be as bad as people say.
posted by Etrigan at 11:02 AM on January 25, 2016 [1 favorite]


Is it possible that this guy is so freaking smart that he can discern strategies that on the surface make no sense at all?

Entirely possible. But, the simplest explanation is most likely to be true (it's selfishness), and if he is really that smart, he would realize that such a strategy has far too many uncontrollable variables to succeed.
posted by LooseFilter at 11:17 AM on January 25, 2016


“Everyone hates Ted” is kind of silly. He's a 45 year old US Senator from the second largest state in the US and is running second in the polls for the Republican Nomination for President of the United States. He's married to a Goldman Sachs managing director. He clearly is very good at being liked by the people he needs to like him.

It’s not hard to understand how or why voters like him - combative, anti-establishment candidates have won in a lot of places. I would, however, love to hear details about how Cruz’s personal life works. There are surely charms there that his wife perceives that the rest of us don’t, and I imagine that they’d add some interesting nuance to the man. (Certainly more nuance than the stories of his friend Craig, which all read to me like “I was popular in college and my roommate was a CRAZY WOMAN-HATING NEEEEERRD,” and that isn’t a great look.)
posted by Going To Maine at 11:31 AM on January 25, 2016 [1 favorite]


the simplest explanation is most likely to be true (it's selfishness), and if he is really that smart, he would realize that such a strategy has far too many uncontrollable variables to succeed.

Ted Cruz is upfront about his intentions if elected. He doesn't play hide the ball, everything he says he really believes. Government bad, always, except for war. Social services bad, always. Moochers, moochers, moochers and more moochers. War good, always. Way more guns, way less butter, preferably no butter at all. Oh, and because no butter, no need for taxes, at all. Except maybe on the poor, because they're moochers.

It's not a stretch to think that his major donors want to see the same things, because it benefits them personally.
posted by T.D. Strange at 11:35 AM on January 25, 2016 [1 favorite]


It was previously mentioned about the litigation over tax dodges for clients of Bob Mercer's hedge fund. But there is a more personal tax dodge that allows Bob Mercer, his cohorts at Renaissance and their heirs to become wealthy in perpetuity.

This involves tax loopholes regarding Roth IRAs. As you know, money in a Roth IRA is taxed once when it goes in and then never taxed again regardless how big it grows. The earnings in the Roth are never taxed.

As the Roth IRA law was originally written, it was intended to provide a modest boost to lower income people. Contributions are limited to $6000 per year and prohibited for those above an income threshold. It was never intended as a tax avoidance scheme for the wealthy.

You can also convert a pre-tax traditional IRA to a tax-free Roth IRA, but likewise, this conversion was prohibited to high-income individuals.

The restrictions on Roth conversions were changed by the Bush tax cuts of 2006 and new rules became effective in 2010. This law removed the income restrictions on converting traditional retirement accounts to a tax-free Roth IRA, which turns out to be a giant loophole.

So here is the first thing they do. They still can't contribute to a Roth IRA directly, but anyone can contribute post-tax money to a traditional IRA. So they do the allowed traditional IRA contribution and the very next day they convert that to a Roth IRA, now perfectly legal. It is as if there were no restrictions at all on Roth IRA contributions. This loophole is known as the backdoor Roth IRA.

But they didn't stop there. As you may know, there is an $18,000 limit on 401k tax-deferred contributions. What you may not know is that you can add to that post-tax contributions up to $59,000 per year. While these post-tax contributions grow tax-deferred, there are two downsides. You have to start withdrawing from the funds at age 70 and you have to pay ordinary income taxes on the earnings. Remember that tax-deferred means just postponed. The intent is that you pay those postponed taxes on your 401k sometime before you die.

But they got around these downsides by some more loopholes. They terminated their current 401k plan which allowed them to roll their post-tax contributions into a tax-free Roth IRA. Normally when you roll contributions into an Roth IRA, you have to pay tax on the portion that was tax-deferred. But under the rules for 401k distributions, they were instead allowed to segregate their pre-tax and post-tax contributions, putting the pre-tax into a tradition IRA with no tax consequences and putting their post-tax contributions into the Roth IRA with no tax consequences. This is known as the mega-backdoor Roth IRA, allowing wealthy people to put millions into a Roth IRA that was intended to be limited to $6000 and for lower income people only.

So at this point each partner has hundreds of thousands or perhaps millions of dollars in a completely tax-free Roth IRA.

But they weren't done yet. They then went to the Dept. of Labor for an exemption which allowed them to invest their IRA in their own Renaissance Fund. Normally you aren't allowed to put your own business in your IRA because that would be an obvious way to avoid business taxes. But with their exemption they could do just that, claiming that Renaissance was a mutual fund just like at Vanguard or Fidelity, even though this Renaissance fund limited ownership to just the employees of Renaissance in their special Roth IRA.

Now they have millions of dollars tucked away in a completely tax-free Roth IRA invested in the Renaissance fund. They are never required to withdraw any of the money in their lifetime, unlike a 401k, and pay taxes on the earnings. They never have to pay taxes on the earnings at all.

But even better, unlike a 401k, their heirs can inherit the Roth IRA and live off the dividends their entire lives never paying a penny of taxes either.

This demonstrates the fact that you can have the highest nominal tax rates in the world, which conservatives always complain about, and it is meaningless if there are loopholes that eliminate income from being taxed.

This is just one of the mechanisms by which, as Piketty describes, we have reached a new gilded age of dynastic wealth. It isn't an accident or some physical law of economics. It is a deliberate strategy of the wealthy to bend the laws to their favor. For people like Bob Mercer, hiring hacks like Cruz who write those favorable laws is an investment in the future. A small $11 million investment can return them billions.
posted by JackFlash at 11:56 AM on January 25, 2016 [22 favorites]


I would, however, love to hear details about how Cruz’s personal life works.

I'm sure the national attention is ruining his plans to build a new identity before he kills his current family and starts courting widows again.

(This joke brought to you by the fact that Ted Cruz looks like Terry O'Quinn in The Stepfather.)
posted by Lentrohamsanin at 12:06 PM on January 25, 2016


Holy shit, JackFlash. I didn't understand what the sneaky loophole was but that's brilliant.
posted by a halcyon day at 12:31 PM on January 25, 2016


This demonstrates the fact that you can have the highest nominal tax rates in the world, which conservatives always complain about, and it is meaningless if there are loopholes that eliminate income from being taxed.

But the income was taxed before going into the Roth. In theory, given the same tax rate at investment and withdrawal, not taxing initial contributions but taxing distributions (i.e., a traditional IRA) and taxing initial contributions and not taxing distributions (i.e., a Roth) have about the same effect. It sounds like your issue here is with the existence of Roths at all (or perhaps with the non-taxability of distributions to non-spouse beneficiaries?). About $65,000/yr. is basically a modest hedge against tax rate changes for these guys--Simons is worth something like $16 billion. I don't have any personal knowledge, but I would guess that far more obscure tax strategies have saved them a lot more money.

(I don't mean to defend their approach to taxes; I just think it's important to be clear about the relative priority of problems with the tax system. E.g., tax havens are so much more of an issue generally.)
posted by praemunire at 12:51 PM on January 25, 2016 [1 favorite]


everything he says he really believes. This is impossible for someone who warps climate data to read that there's been a climate cooling trend since one spike point in 1998.
posted by gorgor_balabala at 1:00 PM on January 25, 2016 [1 favorite]


In theory, given the same tax rate at investment and withdrawal, not taxing initial contributions but taxing distributions (i.e., a traditional IRA) and taxing initial contributions and not taxing distributions (i.e., a Roth) have about the same effect.

You are confusing the trade-off of tax-deferred contributions vs post-tax Roth. That isn't the issue here.

We are talking about post-tax contributions that go into a 401k and require mandatory withdrawals and taxes on earnings after age 70. Instead, by moving them directly into a Roth IRA, they convert these post-tax 401k contributions to tax-free Roth earnings forever and for their heirs. That isn't a tax hedge. There is no trade-off. It is a guaranteed win for tax avoidance.
posted by JackFlash at 1:20 PM on January 25, 2016


This is impossible for someone who warps climate data to read that there's been a climate cooling trend since one spike point in 1998.

HAH, like Ted Cruz looks at data. He believes.
posted by T.D. Strange at 1:25 PM on January 25, 2016


Yeah, no one's tried to beat him to death on the Senate floor, so he must not be as bad as people say.

Day Term ain't over yet.
posted by phearlez at 2:46 PM on January 25, 2016


We are talking about post-tax contributions that go into a 401k and require mandatory withdrawals and taxes on earnings after age 70. Instead, by moving them directly into a Roth IRA, they convert these post-tax 401k contributions to tax-free Roth earnings forever and for their heirs. That isn't a tax hedge. There is no trade-off. It is a guaranteed win for tax avoidance.

But those contributions are, as you say, post-tax to begin with. What this maneuver does is (a) increase the amount that can be contributed to a Roth and (b) fiddle with the mandatory withdrawal schedule. (Unless this has changed recently, the non-spouse beneficiaries of Roth IRAs must either take RMDs or else withdraw all the funds within five years.) The initial taxes still are being taken, so (everything else being the same) you should still end up with a wash. The fact that the funds transited through a 401(k) with more onerous rules that would have required taxes on both contributions and distributions doesn't change the initial post-tax status of the funds. Now, if pre-tax 401(k) contributions could be rolled over into a Roth, then you would have actual tax avoidance, as in the taxpayer and his/her heirs would never pay tax on that money or its earnings. But this scheme funnels pre-tax contributions into a traditional IRA for later taxation on distributions and post-tax contributions into a Roth for later non-taxation on distributions.

I'm sure the taxpayers involved consider this maneuver beneficial, or they wouldn't be doing it. As a general rule, one wants to delay recognition of income. And if Bernie Sanders is elected and in 2018 the top marginal tax rate becomes 90% again, then those taxpayers will be very glad that they got significant amounts into Roths. If rich taxpayers like an idea, I'm generally against it--but I don't think the scheme you've described is quite as comprehensively tax-evasive as you're suggesting.
posted by praemunire at 2:48 PM on January 25, 2016 [1 favorite]


Yeah, no one's tried to beat him to death on the Senate floor, so he must not be as bad as people say.

Day Term ain't over yet.


Like he'll be ever again be on the Senate floor long enough for someone to take a swing.
posted by Etrigan at 3:42 PM on January 25, 2016


What this maneuver does is increase the amount that can be contributed to a Roth -- post-tax contributions into a Roth for later non-taxation on distributions.

But that is the entire point. Think about it. Wouldn't be nice if you could contribute all of your post-tax income to a Roth? You have to pay taxes on it anyway so being in a Roth means an investment tax holiday for the rest of your life (and your heirs). You would never pay any taxes on your investment income.

The more money you can contribute to a Roth, the more taxes you avoid. The same would be true if you could contribute an unlimited amount of pre-tax money to a 401k. That isn't true for post-tax money in a 401k unless you use the backdoor loophole to convert it to a Roth.

What these guys have ginned up is a way to shield ten times as much money from taxes each year than was ever envisioned for a Roth. This means no taxes on earnings for their lifetime and most of their heirs' lifetime.
posted by JackFlash at 4:05 PM on January 25, 2016


You know, if you get in the rhythm, you too could probably open-and-convert an IRA in maybe an hour every morning… That is, what’s a loophole for the rich is a loophole for the anyone-with-spare-cash.
posted by Going To Maine at 4:13 PM on January 25, 2016


MattD: ""Everyone hates Ted" is kind of silly."

It is kind of silly. But, it seems like it's also kind of true? Basically, the conventional wisdom looks like outside of a very, very small circle of admirers, everyone who's had to deal with him personally really thinks he's sort of an asshole.

This recent Mother Jones article lays out the high-level summary, highlighting his higher-profile congressional antagonists up top. Josh Marshall from TPM tapped some of his and his wife's own college acquaintances to confirm that, yes, it wasn't just his roommate who thought he was an asshole. This GQ article from a few years ago gives some earlier indications of his friction with other Republican senators. This NYT article about his college debating career doesn't go quite as far, but does portray him as a bit of a prickly sort who rubbed people the wrong way.
posted by mhum at 4:25 PM on January 25, 2016 [2 favorites]


You know, if you get in the rhythm, you too could probably open-and-convert an IRA in maybe an hour every morning… That is, what’s a loophole for the rich is a loophole for the anyone-with-spare-cash.

Not really. Most people are limited to $5500 a year, $6500 if you are over age 50. Most people don't have access to a loophole allowing ten times that much. And pre-Bush tax cuts, high income people were excluded from Roth accounts entirely because why should there be such a big tax loophole for the wealthy? It's just another way of lowering their actual tax burden.

These guys like Bob Mercer need politicians like Ted Cruz to grease the skids for them.
posted by JackFlash at 4:35 PM on January 25, 2016


Not really. Most people are limited to $5500 a year, $6500 if you are over age 50. Most people don't have access to a loophole allowing ten times that much. And pre-Bush tax cuts, high income people were excluded from Roth accounts entirely because why should there be such a big tax loophole for the wealthy? It's just another way of lowering their actual tax burden.

Well, not unless you backdoor Roth it, yeah? That would let you put everything into Roths, regardless of how much you're making.
posted by Going To Maine at 4:51 PM on January 25, 2016


Ah - Never mind. Didn’t get the part where you can’t contribute to a Roth if you make too much.
posted by Going To Maine at 4:53 PM on January 25, 2016


Well, not unless you backdoor Roth it, yeah?

That's the point. The backdoor Roth is only recently available as a result of a rule change in the Bush tax cuts that allows you to bypass the income limits. You contribute post-tax to a traditional IRA and the next day convert it to a Roth IRA because income limits on conversion have be eliminated.
posted by JackFlash at 4:55 PM on January 25, 2016


More fun with IRAs for the wealthy: Mitt Romney and the $100 million IRA
posted by T.D. Strange at 6:00 PM on January 25, 2016 [1 favorite]


That won't stop such smart people from spouting off as if they know everything about everything.

This is known as Engineer's Syndrome.
posted by FatherDagon at 9:47 AM on January 26, 2016


But that is the entire point. Think about it. Wouldn't be nice if you could contribute all of your post-tax income to a Roth?

Leaving out the mandatory distribution issue, it would also be just as nice if I could contribute all my income pre-tax to a 401(k). The tax-sheltered retirement accounts are effectively equivalent in results for me (in theory). You just don't like tax-sheltered retirement accounts, or you think the limits for contribution should be lower. Sure, it's better to have your money in one of those than not in one. That is the incentive these accounts offer for savings. But once you accept that there's only going to be one recognition event for money and/or its earnings in either a 401(k) or a Roth, this particular scheme doesn't allow you to avoid that event. That would be actual tax avoidance. This is just maxing out the system. I suspect there are other considerations at play here that may make the scheme extra-desirable for people in their shoes, but it's just maxing out.

(Keep also in mind that if a person is paid money, pays taxes on that money, and puts that money in a single stock in a plain old brokerage account and leaves it there, the only taxes he pays on that investment will be on any dividends it pays, unless he sells that stock. If he dies without selling that stock and is not so fabulously wealthy as to trigger the current estate tax, his heir will receive that stock with a stepped-up basis of its value at his death. That is, no one will ever pay taxes on the rise of the stock's value between its purchase and the first person's death. In that sense, there is a parity of treatment for beneficiaries in treatment of investments inside and outside a Roth. (If you think about these Roths primarily as a vehicle for conveying assets intergenerationally, then the value vs. an ordinary brokerage account is thus the tax saved on the dividends, or on any capital gains if you're invested in any kind of investment that throws those off.))
posted by praemunire at 10:16 AM on January 26, 2016


Leaving out the mandatory distribution issue ...

Well, that's just waving away one of the most important points. These guys are likely to be in the highest tax bracket even in retirement so mandatory distributions is a really bad thing and their conversion scheme allows them to avoid this plus allows them to pass the tax advantage to their heirs. That's a big deal and can't just be waved away.

It would also be just as nice if I could contribute all my income pre-tax to a 401(k)

Yes, again, that is exactly the point. You can't do that, as an average person. You can only contribute extra money to a 401k as post-tax contributions. And this scheme allows them to bypass the normal limitations on pre-tax contributions by converting post-tax contributions to Roth contributions. Quite a sweet deal.

You seem to be hung up on the theoretical near equivalence of pre-tax 401k and Roth. That isn't disputed and isn't the issue. On the other hand post-tax 401k contributions are not as valuable and what these guys are doing is converting less valuable post-tax contributions to more valuable Roth contributions. If you like, it is as if they erased the different limits for pre-tax and post-tax contributions in a 401k that apply to normal people.

Tax advantaged accounts are quite valuable because they, quite simply, give you a tax advantage. That is the reason that the laws placed limitations on them. By changing the laws and bending the rules, these rich guys can bypass those limitations placed on the average person and make themselves richer.

This is why people like Bob Mercer invest in Ted Cruz. If successful, they return the favor many times over and the rich get richer.
posted by JackFlash at 11:01 AM on January 26, 2016


In other Bob Mercer news, here's The Intercept, “Black Americans for a Better Future” Super PAC 100% Funded by Rich White Guys
New FEC filings show that all of the $417,250 in monetary donations to a Super PAC called “Black Americans for a Better Future” comes from conservative white businessmen — including $400,000, or 96 percent of the total, from white billionaire hedge fund manager Robert Mercer.
posted by mhum at 1:01 PM on January 28, 2016


« Older "Uptown Funk"   |   Surfboard + bells + whirlies + tap Newer »


This thread has been archived and is closed to new comments