If you run for president on your private sector experience, then it should be examined, judged and open to criticism. Mitt Romney has no trouble blaming President Obama for unemployment, the housing market, gas prices, tight credit, health care and the entire federal deficit.
But he takes offense when his experience as a venture capitalist is questioned. Romney says Obama doesn’t know how the private sector creates jobs and that he does because of his work at Bain Capital. That depends on what happens to your job when private equity comes to your town.
The downside of private equity, aka venture capital, is a much bigger deal if you live in places where people still work in manufacturing or hold a job that doesn’t require staring at a computer all day. These people are “costs” which venture capitalists insist must be squeezed out of a company to improve its balance sheet or share price. Those jobs are often shipped overseas for cheaper labor or they simply disappear. It’s crushing to work at a place for most of your adult life and have some hotshot in a designer suit fly into town and show you the door.
When a private equity firm takes over a business, the fastest way to make it more attractive to potential buyers – Bain doesn’t want to run businesses, they want to flip them for a profit – is to slash payroll and cut costs. Bain investors made money while companies they bought and sold were often forced to fire workers or close down. That didn’t happen 100 percent of the time, but often enough for it to be a painful pattern.
A recent national poll by ABC and the Washington Post shows that Bain is a wash with voters; roughly the same number like and dislike it. Personally, I believe it is a mine that can still be worked in states like Ohio, Michigan and Pennsylvania. Not because people there hate private equity, but because Bain reveals Romney’s cold anti-worker attitude.
The Even Principle
In politics, there’s a communications tactic I’ll call the “Even Principle.” It refers to someone who should be on your side but isn’t. Such as Cory Booker, the black mayor of Newark, N.J. Even he didn’t like the attacks on Bain.
After he appeared on Meet the Press, Booker got two solid days of free publicity when he said Obama’s TV commercial knocking Bain was “nauseating.” He likened it GOP superPAC’s plans to make Obama’s one-time Chicago preacher, Rev. Jeremiah Wright, the subject of televised attacks against the president.
Booker has his reasons. No one outside of New Jersey knew who he was before he decided to excoriate the president. He is said to be interested in running for governor or U.S. senator next year or in 2014. His state is home to more than a few venture capital firms, whose executives are politically active donors. He could also be looking to appear independent, not marching in lockstep with America’s first African American president. Nevertheless, Politico says Booker has angered New Jersey Democrats and may pay a steep price for his high-profile attack.
(Check out Bill Maher and Paul Krugman’s take on Booker’s nausea.)
Even Steven Rattner, who was the White House’s “car czar,” took a sharp right turn against Obama’s ads. Before his government service, Rattner had been an investment banker for three global private equity firms. Do you expect him to question the damage his old firms did to people’s livelihoods? He now manages the assets of New York Mayor Michael Bloomberg. Will he soil that bed?
In a column for the New York Times, Rattner said of Romney, “When Staples went public in 1989, it had 1,100 employees; at the end of 1998, right before Mr. Romney exited Bain, it had 42,000 workers. Yet Mr. Romney takes credit for the 89,000 employed at the close of 2010.”
Even Sarah Palin disputed that Romney has created 100,000 jobs. She said questioning it isn’t negative campaigning; it’s fair for a candidate to be held accountable. For the first time in history, Democrats might find themselves agreeing with Palin.
Even Newt Gingrich said it’s “pretty hard to justify rich people [like Romney] figuring out clever legal ways to loot a company.”
Fast And Furious
Bain is the heart of Romney’s campaign; if he can’t convince us that venture capital creates jobs, the foundation of his candidacy collapses. You can tell the Romneyites know Bain bashing is a potentially life-threatening injury because they fought back fast and furiously when the Obama TV spots began running. They immediately created a TV ad defending private equity using Booker’s gift. Romney’s people have done many focus groups testing how to deal with Bain and have a stockpile of new ads with satisfied employees from companies Bain bought.
When Romney’s handler Eric Fehrnstrom (the Etch A Sketch artist) says using Bain against Romney didn’t work in the primaries, he’s forgetting something. The primaries were for Republicans, not Democrats or Democratic-leaning independents. Making money by deliberately destroying people’s livelihoods isn’t something everyone in swing states accepts as how capitalism should work.
Even venture capitalist Rattner said, “Adding jobs was never Mitt Romney’s private sector agenda, and it’s appropriate to question his ability to do so.”