A look back at 2011: Taxes, bailouts, and American idiots
FORTUNE — Different people have different year-end traditions. Mine include distributing my wife’s delightful Chanukah cookies to my colleagues, and leaving singing messages to the tunes of “Jingle Bells” or “Auld Lang Syne” on my office voice mail. On the professional front, I re-read what I’ve written during the year, a sometimes painful exercise, own up to mistakes I haven’t already corrected, and follow up on things I’ve previously written.
My journalistic specialty is dealing with chaos and complexity, which were in plentiful supply in 2011. In normal years, my columns are my major year-end subject. This year, though, it’s three longer pieces that deal with complex and chaotic topics.
The first, published in July, discussed how the federal bailout of the financial system is actually turning a profit for taxpayers, rather than costing vast amounts of money as almost everyone, including me, assumed. My colleague Doris Burke and I researched this topic to death, because we couldn’t believe what we had found, and kept looking for bailout costs that I’d missed.
This article (Surprise! The big bad bailout is paying off) drew a strong and largely negative reaction, I think largely because it upset so many preconceptions that the government is always incompetent. Besides, in a culture that’s gone from speaking to shrieking, bad news is more welcome than good news.
The one valid point critics made was that if you adjust for the risk taxpayers incurred, the $40 billion profit that I estimated the bailout would yield isn’t all that much. I had made that point in early versions of the article, but my editors—correctly—said it was one element too many in an already-complex piece. I wish I’d worked harder to find a way to simplify and include it.
To my surprise and amusement, Federal Reserve Chairman Ben Bernanke, whose policies I’ve criticized for harming prudent savers in order to bail out imprudent lenders and borrowers, cited my piece in a public hearing to rebut Rep. Ron Paul’s claim that the bailout cost taxpayers tons of money. Does being cited by Bernanke mean I’ve gone from gadfly to Establishment? Stop the presses!
The second piece, which I wrote in August, was the polar opposite of the long-in-the-making bailout piece. I wrote this one in a rage over a weekend at a rented vacation house because I was furious about how fanatics, financial illiterates, incompetents, and cowards in Washington were screwing up our country. My bosses called it “American Idiots,” and, to my surprise, put it on Fortune’s cover. Unlike the bailout piece, which I had to be reminded several times that Fortune really wanted, “American Idiots” was totally my idea. I volunteered to write it—on my own time! From the beach!—because I was so angry at what I’d seen happening in Washington.
“Idiots” played prominently in both Fortune and the Washington Post, drew thousands of e-mails and comments, the biggest response I’ve gotten for anything I’ve written recently, or maybe ever. It clearly touched a nerve.
Unfortunately, the piece contained a mistake. My bailout piece stressed that TARP was only about 3% of the bailout, which I put at about $14 trillion, and that conflating TARP with the bailout was a mistake. (Given some recent Bloomberg stories, my $14 trillion may be too low). So what did I do in “American Idiots”? I conflated TARP with the bailout. Dumb, dumb, dumb. The downside of writing when I’m angry, angry, angry.
To complete my 2011 trifecta, a third long piece, which I co-wrote with Jeff Gerth of ProPublica, landed me in a public dispute with the New York Times about the income tax General Electric (GE) incurred on its $5.1 billion of U.S. profits in 2010 (The truth about GE’s tax bill). I’ve tried to move past that navel-gazing journalist-on-journalist dispute, which I’m tired of discussing, by proposing a solution to the underlying problem: that companies don’t have to disclose their U.S. income tax for a given year. I’ve asked the Financial Accounting Standards Board to solve this problem by requiring companies to disclose key numbers from their federal tax returns (Hey corporate America: Show us your tax returns). This has gotten some resonance—but FASB probably won’t do anything unless big-time legislators or corporate chief executives demand it. Alas, that seems unlikely. Meanwhile, we’ll continue debating corporate tax policy without having reliable numbers.
In September, I wrote a column using the term “ObamaCare” (The health care system of the future looks grim). When some readers complained, I dismissively told them that it didn’t strike me as a derogatory term. I now realize that it was. I dislike large parts of the plan for reasons we may discuss some other time. But I shouldn’t have called it ObamaCare.
The column I’m proudest of was a tribute to the late Boston banker, Arthur F.F. Snyder (A fond farewell to a bigtime banking hero). I finally got to give Art his due, almost 40 years after meeting him when our careers overlapped briefly in Detroit. He exemplified the good side of banking by making loans that helped establish companies that ultimately employed lots of people and made investors rich. It’s important to remind people that bankers like Art, a wonderful and helpful and irreverent guy, existed, and are still out there. Warren Hellman of Hellman & Friedman, who died in December, was a San Francisco member of the good-banker club. May their tribe increase.
Okay, that will do it. Have a happy, healthy, peaceful, and prosperous new year. We’ll reconvene in 2012.