Mitt Romney, Bain Capital and a ‘profit-first’ presidency
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By James Downie *
[Early in June, 2012,] three different newspapers published three different articles about Mitt Romney’s tenure at Bain Capital. While each article looked at a different portion of Romney’s time at Bain, all three shared a consistent picture of how Mitt Romney’s approach to leadership, one that should remind voters just who will benefit from a Romney presidency. Hint: It won’t be the voters.
The first, from Friday’s Post, described how Romney’s Bain was an early supporter of companies that outsourced American jobs. “While Bain was not the largest player in the outsourcing field,” The Post reported, “the private equity firm was involved early on, at a time when the departure of jobs from the United States was beginning to accelerate and new companies were emerging as handmaidens to this outflow of employment.” That outsourcing damaged American job creation was no matter; Bain made its profit.
The second, in Saturday’s New York Times, outlined how, again and again, Romney’s Bain reaped revenue from companies even as they were failing. “At least seven [of the 40 U.S.-based companies that Bain held a majority stake in while Romney was active at Bain] eventually filed for bankruptcy while Bain remained involved, or shortly afterward .?.?. In some instances, hundreds of employees lost their jobs. In most of those cases, however, records and interviews suggest that Bain and its executives still found a way to make money.” In several of the bankruptcies, companies made their situation worse by borrowing more to return money to Bain and its investors. And even when both outside investors and the companies themselves failed to do well, “lucrative fees helped insulate Bain and its executives.” Again, Bain made its profit.
The third, and perhaps most damning article, came from Sunday’s Boston Globe, depicting Romney’s work with disgraced junk-bond king Michael Milken. In 1988, Romney was searching for money to finance a heavily-leveraged buyout of two small department store chains. “At the time of the deal, it was widely known that Milken and his company were under federal investigation” for insider trading and stock manipulation. Despite this, Romney and his partners, though, after personally meeting with Milken, went ahead with the deal. With financing from Milken’s shady business, Romney and Bain were able to make a $10 billion investment, not long before Milken was sentenced to 22 months in prison. Bain eventually profited to the tune of $175 million (although the merged department stores later went bankrupt, shortly after dumping its Bain-appointed chief executive). Sure, an important chunk of the financing may have come from questionable sources, but Bain made its profit.
The Romney these three articles portray is not new to us, but the common trait is nevertheless worth repeating. The Romney of Bain Capital had little time for anything beyond profits. Efficiency and the bottom line ruled. Who cared about the jobs lost, the livelihoods destroyed and the lines crossed, as long as Bain got its money?
While there is room for debate about the effect of Romney’s business approach on the health of the American economy, what’s important for the election is how Romney’s approach to running Bain translates to what he’d do as president. Politicians from both sides, but especially Republicans, declare time and again that government should be run like a business. (That running a government as a business ignores numerous principles of statecraft is of no concern to them.) There’s no reason to think Romney believes otherwise — observers of his political career agree Romney lies in the technocratic wing of the Republican Party. It is reasonable to conclude, then, that a Romney presidency would have as its top priority returning a profit for its investors.
Now, no doubt some voters will assure themselves that they are like the Bain investors: If they vote for Romney, he will get them their returns. But, particularly in this post-Citizens United world, the voters of America are not Bain’s investors; but the workers at companies Romney’s Bain took over. The wealthy donors who are financing Romney’s campaign are the investors. No doubt many of you have seen story after story about Romney’s reliance on a small group of rich donors, but the numbers continue to grow: Republican super PACs now plan to spend $1 billion this election cycle. Yes, $1,000 million. Compared to this avalanche of money, one person’s vote pales into nothingness. The donors and the profit will once again come first, even if citizens’ livelihoods must be sacrificed. We’ve seen this script play out at the state level already, in Wisconsin, Florida and elsewhere: Rich donors invested in governors Scott Walker, Rick Scott and others, and then demanded returns, without regard to the lines crossed (as demonstrated by Republicans’ widespread campaign to keep largely Democratic blocs from voting). The same will happen at the presidential level. (Indeed, investors will be first priority whatever side wins, but at least President Obama’s voters overlap far more with his donors.) And if his record as a business leader is any indication, don’t think for a moment President Romney will put your vote, or our laws, above his investors.
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* Source: Washington Post / Opinions (06/25/2012)
The first, from Friday’s Post, described how Romney’s Bain was an early supporter of companies that outsourced American jobs. “While Bain was not the largest player in the outsourcing field,” The Post reported, “the private equity firm was involved early on, at a time when the departure of jobs from the United States was beginning to accelerate and new companies were emerging as handmaidens to this outflow of employment.” That outsourcing damaged American job creation was no matter; Bain made its profit.
The second, in Saturday’s New York Times, outlined how, again and again, Romney’s Bain reaped revenue from companies even as they were failing. “At least seven [of the 40 U.S.-based companies that Bain held a majority stake in while Romney was active at Bain] eventually filed for bankruptcy while Bain remained involved, or shortly afterward .?.?. In some instances, hundreds of employees lost their jobs. In most of those cases, however, records and interviews suggest that Bain and its executives still found a way to make money.” In several of the bankruptcies, companies made their situation worse by borrowing more to return money to Bain and its investors. And even when both outside investors and the companies themselves failed to do well, “lucrative fees helped insulate Bain and its executives.” Again, Bain made its profit.
The third, and perhaps most damning article, came from Sunday’s Boston Globe, depicting Romney’s work with disgraced junk-bond king Michael Milken. In 1988, Romney was searching for money to finance a heavily-leveraged buyout of two small department store chains. “At the time of the deal, it was widely known that Milken and his company were under federal investigation” for insider trading and stock manipulation. Despite this, Romney and his partners, though, after personally meeting with Milken, went ahead with the deal. With financing from Milken’s shady business, Romney and Bain were able to make a $10 billion investment, not long before Milken was sentenced to 22 months in prison. Bain eventually profited to the tune of $175 million (although the merged department stores later went bankrupt, shortly after dumping its Bain-appointed chief executive). Sure, an important chunk of the financing may have come from questionable sources, but Bain made its profit.
The Romney these three articles portray is not new to us, but the common trait is nevertheless worth repeating. The Romney of Bain Capital had little time for anything beyond profits. Efficiency and the bottom line ruled. Who cared about the jobs lost, the livelihoods destroyed and the lines crossed, as long as Bain got its money?
While there is room for debate about the effect of Romney’s business approach on the health of the American economy, what’s important for the election is how Romney’s approach to running Bain translates to what he’d do as president. Politicians from both sides, but especially Republicans, declare time and again that government should be run like a business. (That running a government as a business ignores numerous principles of statecraft is of no concern to them.) There’s no reason to think Romney believes otherwise — observers of his political career agree Romney lies in the technocratic wing of the Republican Party. It is reasonable to conclude, then, that a Romney presidency would have as its top priority returning a profit for its investors.
Now, no doubt some voters will assure themselves that they are like the Bain investors: If they vote for Romney, he will get them their returns. But, particularly in this post-Citizens United world, the voters of America are not Bain’s investors; but the workers at companies Romney’s Bain took over. The wealthy donors who are financing Romney’s campaign are the investors. No doubt many of you have seen story after story about Romney’s reliance on a small group of rich donors, but the numbers continue to grow: Republican super PACs now plan to spend $1 billion this election cycle. Yes, $1,000 million. Compared to this avalanche of money, one person’s vote pales into nothingness. The donors and the profit will once again come first, even if citizens’ livelihoods must be sacrificed. We’ve seen this script play out at the state level already, in Wisconsin, Florida and elsewhere: Rich donors invested in governors Scott Walker, Rick Scott and others, and then demanded returns, without regard to the lines crossed (as demonstrated by Republicans’ widespread campaign to keep largely Democratic blocs from voting). The same will happen at the presidential level. (Indeed, investors will be first priority whatever side wins, but at least President Obama’s voters overlap far more with his donors.) And if his record as a business leader is any indication, don’t think for a moment President Romney will put your vote, or our laws, above his investors.
______________________________________________
* Source: Washington Post / Opinions (06/25/2012)
