New Obama Ad Attacks Romney’s Bain ‘Job Creator’ Record
A tough new Obama campaign ad highlights people who lost their jobs after a Bain Capital takeover--at a time Mitt Romney was not at Bain Capital.
A tough new Obama campaign ad highlights people who lost their jobs after a Bain Capital takeover–at a time Mitt Romney was not at Bain Capital.
The ad, which I saw this morning on MSNBC’s “Morning Joe,” is brutal, if reminiscent of Newt Gingrich’s ads during the primary campaign:
AP‘s Ken Thomas (“Obama seeks to undercut Romney’s record on jobs“) explains:
President Barack Obama is casting Mitt Romney as a greedy, job-killing corporate titan with little concern for the working class in a new, multi-pronged effort that seeks to undermine the central rationale for his Republican rival’s candidacy: his business credentials.
At the center of the push – the president’s most forceful attempt yet to sully Romney before the November election – is a biting new TV ad airing Monday that recounts through interviews with former workers the restructuring, and ultimate demise, of a Kansas City, Mo., steel mill under the Republican’s private equity firm.
“They made as much money off of it as they could. And they closed it down,” says Joe Soptic, a steelworker for 30 years. Jack Cobb, who also worked in the industry for three decades, adds: “It was like a vampire. They came in and sucked the life out of us.”
The ad, at the unusual length of 2 minutes, will run in five battleground states: Iowa, Ohio, Pennsylvania, Virginia and Colorado. The campaign declined to describe the size of the ad buy though it’s in the middle of running a $25 million, month-long ad campaign in nine states. A longer version of the ad was being posted online Monday.
The Hill‘s Justin Sink (“Obama targets Romney tenure at Bain Capital with new ad, website“) adds:
President Obama is taking dead aim at Mitt Romney’s record helming Bain Capital, debuting a new television ad, online video, and website that each depict the private equity firm as predatory and having engaged in “questionable business practices.
“The campaign is releasing a six-minute video featuring the story of GST Steel, which was purchased by Bain Capital and subseuently shuttered after more than 100 years of business. After purchasing the company, Mitt Romney and his partners loaded it with debt, closed the Kansas City plant and walked away with a healthy profit, leaving hundreds of employees out of work with their pensions in jeopardy,” the campaign said in a statement.
In the commercial, former GST employees blast Romney as a “job destroyer” who looked to pad his own pockets by liquefying the steel company.
“It was like a vampire. They came in and sucked the life out of us,” said Joe Cobb, one of the steelworkers featured in the ad.
The Obama campaign is planning a series of corresponding events in swing states where high-profile surrogates — including Vice President Joe Biden — are expected to criticize the presumptive Republican nominee’s business record. In addition, the campaign is hosting a conference call with reporters with former employees of the steel company Monday morning.
This is a predictable and wholly legitimate tactic by the Obama campaign. Their guy is ahead on likability and empathy and even holds a lead in foreign policy, which is practically unheard of for the Democrat. Obama’s chief vulnerability–and Romney’s chief strength–is on the jobs front. So, naturally, they’re trying to turn Romney’s main asset against him.
Gingrich tried this in the primaries but he had the wrong target audience. For blue collar voters in swing states, however, the brutality behind creative destruction is an obvious issue. It not only undermines Romney’s key asset but it further magnifies his main vulnerability–his seeming inability to connect with normal people.
From a purely analytic standpoint, however, the ad is unfair.
As Politico‘s Byron Tau points out (“Ex-Obama adviser: Latest anti-Romney ad is ‘unfair’“) the ad is getting push-back even from people on Obama’s team.
Former Obama administration auto czar Steven Rattner said Monday that the Obama campaign’s renewed attack on Mitt Romney’s time in private equity was “unfair.”
“I think the ad is unfair.” Rattner said. “Mitt Romney made a mistake ever talking about the fact that he created 100,000 jobs.”
[…]
But Rattner, who himself was a private equity investor before joining the administration, said it’s unfair to hold Bain to the standard of creating jobs.
“Bain Capital’s responsibility was not to create 100,000 jobs or some other number. It was to create profits for its investors,” Rattner said.
“It did it superbly well, acting within the rules, acting very responsibly,’ Rattner said. “This is part of capitalism, this is part of life. I don’t think there’s anything Bain Capital did that they need to be embarrassed about.”
More importantly, as came out during the byplay between Rattner and show host Joe Scarborough, it’s actually illegal for ownership to strip a firm of its assets and then sell it knowing they’ve doomed it to bankruptcy. There’s simply no evidence that they did that here.
Moreover, as Katrina Trinko points out for NRO (“New Obama Attack Ad Features Steelworkers Blaming Bain for Job Losses“), there’s a more significant problem: Romney had actually left Bain to run the Olympics two years prior to GS Technologies going bankrupt. Perhaps more to the point, it was hardly unusual for steel companies to go bankrupt in that era: 43 others did so, too.
As her colleague Robert Costa notes (“The Hypocrisy of Obama’s Bain Bundler“), there’s also the wee problem that Jonathan Lavine, a top Obama campaign bundler, was a managing director at Bain at the same time. I’m not sure that’s likely to do much harm to Obama, though; the fact that he’s just as much in bed with Big Finance as Romney may hurt him with the hard core Progressives in the base but they’re not going anywhere. And to the extent voters care about the GST mess, they’re certainly going to attribute more of it to Romney, Bain’s founder and the man facing Obama on the ballot, than to some guy they’ve never heard of who works as an Obama money man.
A Reuters report (“Romney’s steel skeleton in the Bain closet“) from back in January is worth a read. It paints a very complicated picture that both critics and advocates for Romney, Bain, and venture capitalism can find solace in. Essentially, Bain took over a very troubled company, made substantial investments in it, but ultimately failed to make a go of it in an environment that was quite inhospitable to the American steel industry. At the same time, though, the investors made out pretty well while the workers got hosed.
The bottom line is that, while the ad’s likely unfair, it’s within the acceptable bounds of campaign spin. Whether it’s effective remains to be seen.
Is it really acceptable, though, to air an the highlights an incident that Romney had no connection to at all, and which occurred after he’d left Bain?
Well, it’s politics so I suppose anything is acceptable in politics
@Doug Mataconis: It’s a tough call. On the one hand, Romney left Bain two years earlier and never came back. But the Bain takeover of the company took place under his helm and he did quite well in the subsequent sell-off. So, while I think it’s unfair, it’s not a completely manufactured issue, either.
Katrina Trinko has an update to her post that is more telling of this story. A comment from a reader who worked at GST
UPDATE: A reader who used to work at GST e-mails some context about the union situation there:
Those poor long term union workers were milking the company dry and it couldn’t remain a viable entity.
Your honor, the defense raised the issue and opened the door for cross political bullshit. If the defendant wished to engage in beanbag, he should have kept his yap shut about “creating” all those “jobs”.
@sam: I think that’s fair. I think Bain saved and created some jobs but that was a byproduct of their efforts, not the goal. Similarly, Obama’s restructuring of the auto industry directly cost a hell of a lot of jobs–but likely saved many more that would have otherwise been lost. It’s silly to focus on the sob stories rather than the gross results, but that’s just the way this game’s played.
I’ll be the first to admit that I’m not well-informed in this area… but when I think of companies like Bain, I think of white-collar easy-money work, outsourcing, and vultures picking over bones. Hardly the “started his company in a garage and turned it into a billion dollar business” kind of success story. For many independents, his greatest strength won’t seem all that compelling, I bet.
Did Team Obama save any overall auto industry jobs? Most likely not. The largest auto producing state is Indiana. More over, the auto industry is doing well in places like Tennesse and Alabama with names like Toyota, and Honda.
Obama did not move to save an industry. Obama was not acting to save jobs. He was acting to pick the winners, the unions, and the losers, senior bond holders and republican dealers.
Ratner is 100% correct. Romney should never have told any lies about creating 100,000 jobs.
Which he then changed to 10’s of thousands of new jobs.
http://www.washingtonmonthly.com/political-animal/2012_01/i_once_caught_a_job_this_big034692.php\
Which he then changed to thousands of jobs.
http://www.washingtonpost.com/blogs/plum-line/post/the-morning-plum/2012/01/13/gIQArsXuvP_blog.html
Mr. Etch-a-Sketch opened the door. Obama walked through.
Romney’s job at Bain was not to create jobs. It was to create wealth with other peoples money. A task at which he was apparently very good at. But that’s not what he is touting in his run for President. Keep in mind that he has to is tout his record at Bain because he cannot tout his record as Governor.
James raises an interesting point about many other steel companies going out of business concurrently. But Romney is supposed to “know how the economy works”. Is’t it reasonable to assume he would be able to save a steel company from bankruptcy given that knowledge? And why should we believe he could do a better job with the economy, and our recovery from the Bush Contraction, when he could not save said steel company? Anyone?
@David Lentz:
The aftermarket industries would beg to differ.
Given that Romney mentioned his job creation record with Bain Capital, it is certainly fair to point out how Bain operates. Frankly if the Romney people can’t get past the depiction of Bain Capital as a predatory job killing operation, then Romney is toast.
The bigger issue beyond the bankrupcty, but more abstract and harder to convey, is that Bain failed to honor the pension obligations of the steel company. The investors walked away with plenty…but the workers got f’ed. What do we see in the Romney/Ryan economic plan? Increase tax cuts for the wealthy…cut anything that benefits the lower classes.
Skunks can’t change their stripe.
This ad shows you exactly what you can expect out of a Romney administration. If that’s the America you desire…vote for him.
@David Lentz: “Obama did not move to save an industry. Obama was not acting to save jobs. He was acting to pick the winners, the unions, and the losers, senior bond holders and republican dealers. ”
Umm, David? You might want to read up a little on what a union is, because despite what your tutors at Fox tell you, they’re not really cabals of two or three billionaires who exist to steal money from Job Creators. In fact, a union is made up of the workers in an industry, and if Obama “picked” the union as a “winner,” it means he was saving the jobs of those very workers who make up the union.
@ WR…
well put…
All’s fair in love, war and politics.
That aside, in reading that blog the following sentence made me stop dead in my tracks:
.
Why is Florida not on that list? Granted, Florida doesn’t have any steel mills or busted steel towns, but by that token neither do Virginia and Colorado. I would love to see the internal polling for Florida.
Then there’s Pennsylvania. Obviously there’s the steel connection. But to me the larger story is that Team Obama apparently feels they already need to spend big TV ad dollars there. Last time around Obama obliterated McCain in PA by over 600,000 net votes, and it goes without saying that this time around he’ll yet again receive 95-plus percent of the black vote there on heavy turnout.
The plot thickens.
So Tsar…
Your point is that Obama should take Pennsylvania for granted?
Really?
Remind me not to hire you as a campaign strategist.
@Hey Norm: Yes, but the people who killed the company and walked off with millions deserved what they got because they’re Job Creators. The workers deserved to have their pensions stolen, because they’re Parasites.
Remember, workers don’t create wealth. Only rich investors are capable of creating wealth. Which is why it’s accurate to say that Romney created jobs by destroying companies and vacuuming up the profits — he was left with the ability to create billions of job if he ever chose to do so. And those parasites whose pensions went into his deserving pocket? Well, just look, once they were fired they all turned to the government teat to survive, proving them to be the leeches we all know they always were.
Welcome to the Republican economy.
@WR:
This cartoon remains the best depiction of the fallacy of Republican economics I’ve seen.
@ WR…
Was it JWest that said anyone who works for someone else is a parasite?
@Hey Norm: Read that comment again. You missed the point. Badly.
@WR: FYI, unions are not made up “of the workers in an industry.” Unions consist of whichever slate of workers vote to join the relevant union. Every industry has unionized and non-union workers. The auto industry is no exception. Toyota alone, merely by way of example, has various non-union plants in various parts of the country, each of which has outperformed its unionized cousins, for reasons that should be obvious. Then even within the ambit of a given union there often are night-and-day dichotomies between the leadership (wealthy and untouchable) and the rank and file (struggling to make ends meet and disposable).
What Lentz said is absolutely correct. The auto bailouts specifically were designed to give a boost to the UAW, which of course is a huge contributor to the DNC and to Democrat candidates. Do you actually believe it was a coincidence that after GM’s “managed” bankruptcy the UAW wound up in charge of that entire company? Come on, man, connect the dots.
@James Joyner:
“Similarly, Obama’s restructuring of the auto industry directly cost a hell of a lot of jobs–but likely saved many more that would have otherwise been lost”
False
The key word is MORE. Obama’s restructuring of the auto industry was, in itself, an effort to accomplish the GOAL of saving and creating MORE jobs in the longer run. You can’t lump what Obama did with what Romney did and say they’re similar simply becuase jobs were lost and created in both instances. In reality, they both had different goals which was describes so eloquently by Steven Rattner. Obama goals was for sustaining jobs. Romney’s goal was to create value for shareholders. And as you put it, any jobs created by Romney’s actions were simply a byproduct of his efforts.
Rattner is correct, what they did was perfectly legal. However, that isn’t saying much when everyone here can agree that large corporations benefit from an access of laws slanted in their direction after decades of lobbying. They should, however, definitely be embarrassed. I’m just happy that Romney’s candidacy will finally enlighten many on just who really runs this country – big corporations. To them, jobs is a secondary issue and Romney is the prototypical example of this. So Romney will have some explaining to do if he continues to say that he knows what it takes to creat jobs based on his experience in the private sector. This ad does it’s job which is to get the people/media to start asking some questions.
Tsar…
Maybe you should re-write it.
You read investing money in PA as a signal of bad news for Obama.
I read it as covering your bases in an important state. Yes, Obama spanked McCain/Palin there last time. But he also expended significant resources to do so, including a lot of time from Clinton and other surrogates. And no one is arguing that this election is going to be easier than the last.
@Tsar Nicholas: “Do you actually believe it was a coincidence that after GM’s “managed” bankruptcy the UAW wound up in charge of that entire company? Come on, man, connect the dots. ”
Oh, noes, you mean there was a chance that the auto workers would stand a chance of collecting their pensions — which are nothing but deferred compensation agreed to under a legal contract — instead of being thrown out on the streets while the heads of the company looted the plan? That the auto workers would be allowed a say in the company they helped to build even as top management ran it into the ground? The horror, the horror.
@LaMont: “Romney will have some explaining to do if he continues to say that he knows what it takes to creat jobs based on his experience in the private sector.”
Actually, it’s quite easily done:
Every time I took over a company, I knew exactly how I could create jobs there, and I would have, except it was always a better idea just to loot the place so I could cram a few million extra dollars in my pocket. But as your president, I’ll be completely different.
@Hey Norm: Well, Norm, you and I have different opinions on what constitutes covering one’s political bases. If I won a state 55-45 last time around but this time around I’m spending major TV ad dollars there, six months prior the election no less, I would not consider that to be a case merely of covering my bases. I would be crapping in my shorts.
Along those lines why is Florida not on that list of TV ad buys? Are you saying that Obama needs to “cover his bases” in PA but not in Florida?
@Tsar Nicholas: Some ads are better for certain markets, so it’s not surprising the rust belt states are getting this one. The campaign will probably release one that ‘ll be better for Florida and not air it PA, so I don’t think it means too much right now.
@WR: How were their pensions at risk? Don’t we have the Pension Benefit Guarantee Corp.? Hasn’t the PBGC for decades been the public-money backstop to threatened pension plans? Why didn’t Team Obama merely use PBGC money to shore up the UAW’s pension? Why give the UAW a controlling equity stake in GM? Come on, man, connect the dots…
@WR:
Exactly my sentiment. This is Romney’s only case for being the President. and the faster the general public can become knowledgeable enough to call BS on it – the more better-off everyone will be. Indeed, many already have it made up in their minds who they will vote for. But I can not stand it when people vote off misinformation.
Oops, spell check alert: Pension Benefit Guaranty Corp.
@ Tsar…
I’m curious about Fla as well and think you have a point there.
I don’t see investing heavily in what everyone agrees is a must win state as any indication of anything but investing heavily in a must win state. It’s not like his campaign has limited resources.
Quinnipiac currently has Obama extending his lead to 8 points in PA, and within the margin of error in Ohio and Fla. where Romney has made it tight after being down in March.
Again…it’s 6 months out.
@Tsar Nicholas: somehow that sounds like “privatize the benefits, hand over to government the losses.” And then Republicans whine that government is “inefficient”.
The PBGC isn’t supposed to be the reason that a bunch of vulture capitalists have a right to loot pension plans.
@Tsar Nicholas:
I thought part of the PBGC responsibility is to secure the people’s pensions and benefits even if it meant liquidating a company’s assets to do so. This was clearly not the case for the auto industry bail-out/loans.
@Tsar Nicholas: You mean, Obama should have used government dollars to bail out a pension plan that needed bailing out because the GM executives had chosen to enrich themselves and the stockholders instead of living up to their contractual duty to fund it? Maybe we should just have the government start writing billion dollar checks to corporate executives and cut out all this messy “business” stuff.
But under Obama’s plan, GM was forced to live up to its own obligations instead of foisting them off on the taxpayers. Usually, I’d think you’d be in favor of such a plan. I can’t imagine why you’d have a problem with it here.
@Tsar Nicholas:
In also, being closer to the situation as a metro Detroiter, I know that part of keeping their pensions meant cuts accross the union in wages and benefits as part of the restructuring efforts. Anyone insinuating that the unions got some “sweet deal” always makes me cringe!
Does UAW have a controlling equity stake in GM?
Doh…
As of Feb. ’12 an independent health care trust for UAW beneficiaries holds a 10.3 percent stake in General Motors.
If you position is based on factual errors and mis-information your position is factually incorrect and mis-informed.
Just sayin’
The key accusation, for me, in this paragraph is “loaded up with debt.”
That’s a red flag that you are moving profits off-book in some way, and sticking someone else with a problem.
I guess we have to wait to see if “loaded it with debt … and walked away with a healthy profit” is contested or defended.
As to Florida, Jon Chait had an entry on Friday about the Obama campaign running an ad about the auto bailout there. The Obama campaign is competing in Florida.
Now, as to the larger question, this certainly seems in-bounds to me. Romney was at Bain when the company was purchased. He was still on the payroll – heck, he is still on the payroll now, I believe – and I don’t think there is anything about this particular closure that is different from Bain’s transactions with multiple companies through the years.
Romney’s entire campaign is based around the idea that his business experience qualifies him to help turn around the nation’s economy. It strikes me as entirely fair to tell the story about how that business experience would interact with the issues likely to face the winner of this election. It would be malpractice not to do this or something very close to it.
Romney is out with an ad countering Obama’s ad about GST Steel and touting Bain’s investment in Steel Dynamics, which is a successful plant. What Romney doesn’t say in that ad is that Bain was a minority stake holder in SD, not an owner as with GST…and Romney’s ad also doesn’t mention over something like $34M in corporate welfare SD recieved. I’m not sure whay he would forget to mention that.
James:
Various people have explained why the “not at Bain Capital” doesn’t mean much, and various people (e.g., Rattner) have mentioned Mitt’s claim about creating 100,000 jobs. But I don’t think anyone has put those two things together.
The glaring thing about Mitt’s claim (about creating 100,000 jobs) is that he is taking credit for jobs created long after he left Bain. For example, the biggest component of that number is Staples, and what Mitt has done is essentially take credit for jobs that Staples is creating currently. That is, long after Mitt left Bain, and also long after Bain helped Staples get started.
Mitt wants to take credit for job gains that occurred long after he was involved, but doesn’t want to be held responsible for job losses that occurred after he was directly involved. How does that make sense? That game is called ‘heads I win tails you lose.’
In the highly relevant Forbes article cited by sam, we see this:
(Emphasis added.) Exactly. Mitt has already taken credit for job gains that occurred in these companies as late as 2010 and 2011, but now his supporters want to claim that he’s not responsible for job losses at GST in 2001. How does that make sense? It doesn’t.
Boy-howdy that’s a lot of $8 an hour jobs.
Both rounds of bond issues happened before Romney left Bain in ’99 as did the severance pay, health insurance, life insurance and pension supplement guarantees that Bain later reneged upon.
This ad probably isn’t all that relevant in Florida, however, an ad talking about Paul Ryan and his plans for Social Security and his connection to Romney, on the other hand…
There’s something else about this that’s important, and rarely mentioned: the vast majority of the jobs at a place like Staples were probably not ‘created.’ To a great extent, Staples succeeded by putting a lot of smaller companies out of business. How many jobs disappeared when those companies went under? Those losses need to be taken into account before you can make a statement about jobs ‘created’ by Staples.
If that analysis was done, the odds are high that the actual number of jobs ‘created’ by Staples would be a number below zero. That is, it’s entirely possible that Staples was more of a job destroyer than a job creator.
Does this mean that it’s always wrong to destroy jobs, or that the broader economy can’t benefit when certain jobs are destroyed? No, it doesn’t mean that. However, it does mean this: don’t brag about your career as an alleged ‘job creator’ if your actual career was much more focused on enriching yourself by being a job destroyer.
This is a predictable and wholly legitimate tactic by the Obama campaign. Their guy is ahead on likability and empathy and even holds a lead in foreign policy, which is practically unheard of for the Democrat. Obama’s chief vulnerability–and Romney’s chief strength–is on the jobs front. So, naturally, they’re trying to turn Romney’s main asset against him.
Is it legitimate? Romney was not even working at Bain at the time this plant closed. He had left the company.
However, there were plants started when Romney was at Bain that are still in operation and that provided people with thousands of jobs. Needless to say Obama will not mention that.
Nor will Obama mention the fact that he pressured GM to shut down more than 700 dealerships costing thousands of people their jobs. After all, Obama has a D behind his name and therefor it is not necessary for him to live by the same rules he shoves down everyone else’s throats.
Bain had both successes and failures, but more successes than failures. That is how it is business…the problem is most people on the left do not have a clue about how the real world works and so they are oblivious to that.
BTW, I do not believe that Obama holds a lead on foreign policy. I do not know which silly poll you got that from, but it is not true. I also do not think the likeability thing matters that much. This is not Mr. Congeniality these guys are running for.
@Terrye:
Name the last time the less likable candidate won.
Is it legitimate? Romney was not even working at Bain at the time this plant closed. He had left the company.
Ah, Republicans. That’s the same rationale as you’re trotting out for the economy generally. “Hey, the worst of the recession came after Mr. Bush was out of office!” In other words, you can push a man out of a window so long as you’re gone by the time he hits the sidewalk.
I love this “job creator” bullsh*t. How many jobs created net under Mr. Bush? Um. . . zero?
I’ve sold, give or take, 40 million books at an average retail of say $6-8, somewhere in there. (Very rough numbers.) So at least 240 million dollars which must have “created” a whole mess of jobs. Yay me!
Except of course what I really did was take space on store shelves away from someone else who’d have sold those 40 million books if I hadn’t. Maybe I get a few points worth of credit for boosting sales year-to-year, I don’t know. But I suspect I did not create a quarter billion dollars’ worth of jobs.
Of course, if I were Mitt Romney, I’d be claiming that. But I’m not as full of sh*t as he is, so I can’t.
Probably over-thinking this, but by incorporating an error this is more likely to gain traction in the media. Real intent being engaging the talking heads in a lengthy
examinationargument about Bain, and the type of business they do.Related:
Economists are rethinking the view that capital should not be taxed
Where’s the guy who thinks The Economist shills for the overlords?
The Romney campaign set the honesty in advertising bar about as low as it could go with their ad quoting Obama as saying “If we run on the economy, we loose”.
Man, the OTB drones really need to get out of the hive more often if they really think it’s smart for Barack “Great Depression” Obama to even MENTION unemployment or jobs during this election.
The more time people spend thinking about the economy and asking themselves if they’re better off now than they were 4 years ago, the bigger Romney’s victory margin is going to be.
@Buzz Buzz:
Let me help you out here. The nearly catastrophic crash of the financial and housing markets (the one that nearly plunged us into another Great Depression) happened in 2008, which was prior to the inauguration of Barack Obama.
There, you just learned something.
Romney has been attacked for Bain going back to Kennedy and that run for Senator he lost. He’s been running for President for 7 years. And he still does not have an answer. This guy is inept. Of course we elected G. W. Bush twice so clearly competence is not important.
@ Terrye
Really? What do you do for a living? What are your awe inspiring “real world” credentials that we lack? I am willing to bet there are several people “on the left” in this single thread who are more successful in business than you are, and who have more “real world experience” than you, some quite a bit, and yet they disagree with you.
Do you have anything to add to this discussion beyond right wing boilerplate?
(ps, “boilerplate” is a term with a business context, if you don’t know what it is, you can look it up on the Googles…)
Sorry sweetie, but you are the one who is incorrect…
Tell that to George “rather have a beer with” Bush…
Romney fires back: Meet the steel company that Bain helped build.
There are usually two sides to every story, especially if it is politically induced.
@ Jan
I don’t think that anyone is going to argue that Bain does not have a win or two under it’s belt. But face it – even prominent Republicans refer to Romney as a “vulture capitalist”.
Meet the steel company that Bain helped build while collecting corporate welfare paid for by taxpayers:
The number of cleans wins seems to be amazingly small, if Mitt can’t find an example where corporate welfare wasn’t a factor. Especially since he bragged about Steel Dynamics before, and the corporate welfare angle was pointed out at that time. He’s scraping the bottom of the barrel.
Mitt’s new ad also paints a phony picturing by implying that Bain was the only investor: “when others shied away, Mitt Romney’s private-sector leadership team stepped in.” Trouble is, “Bain was just one of eight financiers for the project — hardly the lone white knight” (link).
What a surprise: Mitt taking credit that belongs to somebody else.
(It’s actually possible that Bain was the first investor, and the others followed their lead, but this is a generous assumption I’m not inclined to make without seeing proof that it actually happened that way.)
Here’s American Spectator discussing Mitt and Steel Dynamics, during primary season:
Emphasis added. The GOP thinks welfare is a terrible thing, except when people like Mitt get to collect it.
It is important that we don’t miss the underlying point here. Mitt Romney and Bain Capital’s only concern was to please their shareholders. As James put it, jobs created (or lost for that matter) were only a byproduct of what they were trying to do. In other words, jobs, pensions, and company assets were only used as the means to an end. “Success” from the perspective of jobs gained is and was never part of their business model. They were successful rather jobs were gained or lost. Everybody’s (stakeholders) pockets were being lined up in spite of many who lost their jobs anyway. It may be legal but there is something inherently wrong with this picture. And this is what Romney has to explain away.
@ Jan…
As I pointed out in my comment above (Monday, 16:15) Bain was a minority stake holder in Steel Dynamics and not the owner as at GST. In addition Steel Dynamics recieved some $34M in corporate welfare.
These cases are apples and oranges.
Steel Dynamics is a case of Bain participating in Venture Capital…investing money to take a business to the next level. This is the case in Staples. Bain doesn’t create anything…they just give other people’s money to other people so that they can create something.
GST is a case of Private Equity…or more appropriately…Vampire Capitalism. This is where companies are bought up and stripped of any assets with value…including pension funds…before being allowed to go bankrupt.
@ Jan…
So let’s boil this down to simple terms so you can follow it.
Businessman Romney’s participation in Venture Capital almost always relied on Corporate Welfare. In the case of Steel Dynamics, which you brought up, to the tune of $34M. But Candidate Romney is against Corporate Welfare….for instance the very successful DOE Green Energy program. So there are the two sides to that story.
Businessman Romney’s participation in Private Equity more often than not came down to screwing the workers and the communities where the companies were located in order to maximize wealth for the owners and investors. Candidate Romney is proposing the same thing with his economic plan, which calls for huge tax cuts for the wealthy and pays for them by slashing programs that benefit the middle and lower classes…investment in infrastructure, education, etc. So there are the two sides to that story.
Is the purpose of business to create jobs, or to enrich investors? There’s nothing inherently wrong with a philosophy that chooses the latter. Trouble is, it’s utterly disingenuous to choose the latter philosophy and then label yourself as a ‘job creator.’ That’s what Mitt has done with regard to himself, and that’s what the GOP has done with regard to the overall concept of business and investment. The GOP wants everyone to think that ‘investor’ and ‘job creator’ are synonyms. This is a big problem, because Mitt embodies a style of investing that specifically focuses on job destruction as a means of getting rich. And the GOP is all about encouraging that style of investing.
Correct, and this is an important distinction that gets lost quite often. ‘Venture capital’ and ‘private equity’ are two different animals, but in talking about Mitt many people (including major journalists) use those terms interchangeably, which is wrong.
VC happened mostly at the beginning of Mitt’s career at Bain Capital. Staples is the classic example of Mitt and Bain doing VC. But later they mostly did PE and not much VC.
http://en.wikipedia.org/wiki/Venture_capital
http://en.wikipedia.org/wiki/Private_equity
Strictly speaking, VC is “is a broad subcategory of private equity.” This adds to the confusion. But the term PE usually means leveraged buyout, which is something quite different from VC.
“This is a big problem, because Mitt embodies a style of investing that specifically focuses on job destruction as a means of getting rich.”
That’s pure crap. You dont know what you are talking about. Growth potential is the number one consideration in both venture capital and laterstage investments like LBO’s.
“Growth” as defined by quick returns to investors. Not “growth” in jobs.
One more thing about the relationship between jobs and investing. Contrary to what Mitt and the GOP are telling everyone, jobs don’t exist as a result of investing. They exist as a result of demand. This is one reason why it’s important to have a middle class. These are people who can afford to spend money, which means demand, which means jobs.
When so much money is diverted from the middle class to the rich (and that’s the story of Reaganomics), the rich end up with much more than they can spend. Theoretically, they then invest the excess, but investment doesn’t lead to jobs unless there’s demand. No middle class, no demand.
The Marxist Henry Ford understood this very well. He said that higher wages would lead to higher sales, because they would support the development of a prosperous middle class:
From “My Life and Work” by Henry Ford.
Ford understood that business thrives when there is a prosperous middle class. (And democracy also depends on the existence of a strong middle class.) Reaganism is all about destroying the middle class, and creating a two-class society: rich and poor. And the GOP has had a great deal of success in this regard.
Reaganites are too short-sighted to understand what Henry Ford understood: when you destroy the middle class, ultimately you also undermine the rich. That’s the road we’ve been on, and Romney is all about taking us further down that road.
Also relevant to this are the words of another great Marxist, Abe Lincoln:
I had Morning Joe in my DVR and watched a bit of it last night. It’s true that Joe came out strong opposing the piece, but it’s interesting the ground he chose to defend. It was probably not obvious to most listeners, but he did basically yield “Romeny as job creator” and indeed “rich men as job creators.”
The place he defended was “capitalism is good” and “sometimes unemployment is a short-term necessity.”
That was interesting. It is a sign of how effective the ad really is. Joe was not out in front arguing (as he has in the past) that Romney (and rich men) will hire given the chance. He had fallen back, to the charge that rich men should hire being unfair.
That’s fairly huge.
(I think my “related” piece above really is strongly related for that reason. It is about .. heh … rich men want to say that they will hire if you just cut their taxes, but the also want to make it clear that there is no social contract, and that they are under no obligation to do so.)
Drew…
Jukebox spoke specifically to Mitt’s “style”.
You used the business generalities of “venture capital and laterstage investments like LBO’s” to defend Mitt.
I think it’s cute that you self-proclaimed “World’s Greatest Corporate Financiers” stick together.
But Romney’s record is Romney’s record. And it is more vampire capitalism than it is growth potential.
This canard of “job creators” needs to stop- corporations are sitting in the largest capital asset it has ever had and unemployment is at very high levels. How many jobs did Dillon’s trade create? As to Bain and its ad- well as Somerby would say- the truth is out there- we need to start at the Pension Benefit Guarantee corporation-JJ- as to you saying that since no charges have been brought no illegalities occurred- what is the Latin phrase exposing this logical fallacy? Post facto ad argumentum (sic)
@ Norm, at 10:13
To be clear I do not have any real problem with Bain. It’s not my idea of a great business to be in, but that’s immaterial.
The issue is the application of the Bain Business model to the US economy and whether Romney’s experience at Bain has any bearing on the sort of President he would make. To the extent it does I fail to see Romney as a President that moves us on a positive trajectory…especially when considered with his economic plans. The Bush tax cuts are the biggest continuing driver of the deficit. To extend them, and add to them, is crazy. Combined with massive increases in military spending it is economic suicide. The only Bain model that is applicable to the resulting situation is the GST model…fu** the workers and pay off the investors…or in the case of the US economy…screw absolutely everyone but the wealthiest. We saw how that works in December of ’08 when the economy contracted at 9%.
Yup. And when they have extra money because you cut their taxes, they’ll use that money to create jobs only if they see that as the best way to enrich themselves further. Bain proved that often the best way to make a quick buck is by killing jobs instead of creating them.
Don’t expect the self-proclaimed ‘job creators’ to actually start creating jobs when their record shows that they find it easier to invest in killing jobs.
Nice try jukebox. No cigar.
99.9% of all offering memos from investment bankers who are peddling companies, brokers who are peddling companies, or owners conducting their own processes are centered on revenue growth. And thats what investors seek above all else. And revenue growth means job growth. More production lines, more salesmen, more administrative people, more people to staff the new warehouse and on it goes. Not very business savvy, are you?
As for your other inane observation, that its just demand, why dont you get your ignorant ass in gear, start a private equity firm and start investing………if its so easy, just sitting there on a plate. Oh, thats right, its easy to be a bonehead commenter on some internet site, but you wouldnt have the slightest clue about how to go about private equity investing. No competancy. No clue. No chance.
As for your observation, Norm, Bain is actually one of the top 3 firms of its type in history. KKR gets alot of press, as does Blackstone. But Bain did it best. And not by shrinking businesses as a “style.” Jan correctly pointed out Steel Dynamics. You ignorant little skamps focus on the investments that didnt work out. Its the nature of the business. Winners and losers. But in the aggregate Bain has an incredible overall track record. They are the kings. (By the way, in the aggregate, how are Obama and Chu’s most excellent solar investments working out? Snicker.)
And all of you ignoramouses have failed to note that the biggest chunk of the investment gains go to their limited partners. And who are PE firm’s limited partners? Oh, the endowments of academic institutions, that pay for new facilities and professors salaries. To the endowments that fund medical research. To the pension funds of teachers, firemen, policemen and such. And so on and so forth.
It would be impossible to measure or prove, but I’d bet my life savings that I have personally created more jobs and value for worthy causes than the the entire group of commenters here combined…….by a wide margin. And Mitt Romney blows me away on that score.
It doesn’t mean that what other people do for a living isn’t worthy. It just means if its financial/investment/value and job creating acumen you seek, you guys are just talking pure unadulterated crap. The truth is that Romney should be knighted on his . All of your objections are just adolescent political babble, complete with your standard issue Obama knee pads. By the way, with the real unemployment rate hovering around 12%, hows that community organizer experience working out?
@Drew: “99.9% of all offering memos from investment bankers who are peddling companies, brokers who are peddling companies, or owners conducting their own processes are centered on revenue growth. ”
And 99.9% of the emails in my inbox guarantee instant weight loss or millions of dollars from Kenya. What you’re describing is something that’s known to us non-financial geniuses as a “sales pitch.” I guess only if you’re a true master of the universe are you brilliant enough to understand that everything a salesman says is guaranteed to be true.
“You ignorant little skamps focus on the investments that didnt work out.”
This is the part that all of the financial geniuses out there refuse to answer or even acknowledge: It’s not about “investments that didn’t work out.” It’s about investments where Romney and co destroyed the company, threw thousands of people out of work after wiping out their pension funds — and walked away with millions in profit. If Romney invested in a company but couldn’t turn it around, either because it was too damaged or because he mishandled it, and the company went bust and he lost money, I don’t think anyone here would have a problem with that. But that’s not what happened. Bain found ways to profit in the millions while destroying the lives and livelihoods of workers who’d been doing just fine until Romney came around. That’s why he has my complete disdain. If you want to convince me that this is good and honorable business practice, I’d love to hear your defense. But if you just ignore this issue and say “markets are good! Soshulism is bad!”, then there’s no point in wading through your chest beating about your financial genius just to get boilerplate talking points cribbed from some wingnut site.
Drew:
100% wrong. “What investors seek above all else” is not revenue growth. “What investors seek above all else” is return on investment. Yes, they pay a lot of attention to revenue growth, because only it tends to coincide with increased ROI.
Sometimes. Not always. Productivity is up over the last few decades, which means higher revenue without higher employment. And most of the benefit of that increased productivity has been collected by the rich, and not the middle.
ROI, revenue growth and job growth are three different things. “What investors seek above all else” is the first item on that list. The other two items are of interest only to the extent that they can be used as a means to increase ROI.
Here’s what Bain did best: they figured out how to make a killing by killing jobs. Bain-style financial engineering is all about making huge profits by screwing workers.
I wouldn’t be able to spend so much time educating jokers like you if I hadn’t already made plenty of money doing all sorts of things you think I don’t understand.
Ah…the world’s greatest corporate financier blowing his own horn again, and again, and again. It’s just that I tend to not believe self-aggrandizing blowhards.
And I pointed out that Bain only had a minority share of SD…and they relied heavily on Corporate Welfare…which you go on to bash in the case of Solyndra. Now Solyndra was about 1% or a very succesful portfolio from the DoE. In addition you are willing to forgive Romney his losses, which number far more that same DoE portfolio. So, basically, you are a self-aggrandizing blowhard that wanst it both ways.
If the real UE rate is at 12%…that means it’s down from about 17%…so yeah…it’s better. 26 months of private sector job creation. Given that Republicans left an economy shedding 700,000 jobs a month in their wake…not bad…and certainly not enough to make me want to go back to the failed economic theories that you believe in.
Oops, this:
Should be this:
@ Norm…
Actually I said “go back” the failed economic theories. Thanks to a reflexively obstructionist Congress we are still struggling under those theories. Romney only promises the same and more.
I’m sure Drew and others are pleased when they can grow a company, hire US employees, and benefit investors. But they are quick to remind us that both their fiduciary and moral responsibility is to investors first.
That leads to unfortunate scenarios. What if a capitalist looks at a struggling company, and determines that the path to profit is offshoring? He may benefit “unions, retirement funds, and the elderly” who own his shares by doing that, but (a) it creates a loss of jobs, and (b) if repeated often enough, it creates a structural problem.
So this leaves Drew and the capitalists without a guarantee, but with an assertion of correlation. That is, if we free them in general, then in general they will create plenty of jobs.
As jukeboxgrad shows, the data don’t necessarily point that way. We have had many rounds of tax cuts, but over the last few (and not just this one) recessions we’ve come to see “jobless recoveries.”
Why?
I don’t think it is scary Democrats. I think it is the globalization, automation, productivity thing. A tax “fix” to that might be fulfilling to the Drews of this world, without really changing the job creation thing.
Same old Drew. Lots of bluster, no meat on the bone…
@David Lentz: Are you dumb?
@Tsar Nicholas: “How were their pensions at risk? Don’t we have the Pension Benefit Guarantee Corp.? Hasn’t the PBGC for decades been the public-money backstop to threatened pension plans? ”
Yes, and Romney has thrown many people onto its rolls due to looting their pension funds.
However workers take a huge hit.
@Terrye: “Nor will Obama mention the fact that he pressured GM to shut down more than 700 dealerships costing thousands of people their jobs. After all, Obama has a D behind his name and therefor it is not necessary for him to live by the same rules he shoves down everyone else’s throats.”
Do you have proof of this?
@Terrye, @Barry:
For whatever reason (influx of foreign brands?) the US automakers ended up with a surplus of dealers. To move cars they needed fewer, gain, low-overhead operations. Unfortunately they had contracts which forced them to support more dealers than they wanted.
Now, did “Obama make” them close them? Really?
Or did the not that good but quasi-bankruptcy allow the auto companies to do what THEY wanted?
s/gain/giant/
john personna,
“Unfortunately they had contracts which forced them to support more dealers than they wanted.”
And state laws pushed by the local dealers which made terminating the contracts difficult at best.
@Moosebreath:
Dealers had (have?) great power. There was actually a city out in the California desert sprawl (Victorville?) that did direct loans to their auto dealers during the 2008-2009 downturn. I don’t know how that worked out for them in the long term …
I am as guilty as anyone. I just needed a couple little camping items. I found that I could get them via ebay/paypal directly from china and save 3/4 over a US source. Free shipping.
2 bucks each for an led headlamp and a fire steel.
You know, in the new thread “Thomas Friedman Is An Enormous Mustache” some slacker makes fun of Tom, because all he keeps repeating is “China, Jobs, and the Internet.”
Well …
@john personna:
A big part of the reason there were state laws protecting independent car dealers was that the auto companies had a cute habit of letting an independent invest, build up a business and then essentially run them out of business by starting competing corporate-owned dealerships
The only reason I happen to know this is that I was asked to sit in on one such trial — Marquis v. Chrysler — back a million years ago when I was law librarian at a San Francisco law firm. My job at the trial? To stare at the jury using what I can only assume the lawyers thought was my psychic ability to discern their votes.
http://openjurist.org/577/f2d/624/marquis-v-chrysler-corporation-marquis
@michael reynolds:
What I was picturing were the small dealers who had been around since the 60’s, perhaps making steady income on a regional exclusivity agreement, but without really competing with the new auto mall at the other end of town.
I see that in your case the deals were signed in ’61 and ’62, and the maker was trying to get out by ’68. That’s a bit fast. Given dealer investment and etc, I’d think a 10 or 20 year relationship would be expected.
In longer term, big shifts like the arrival of mega dealers and auto malls do happen though, and if the maker wants to move cars, they have to play that game.
I’ve just read all the comments that followed my last one. And I’ve noted the 8 negative check box. I’m proud.
Because I’ve ago long come to the conclusion that the commenters here are basically a bunch of ignorant, malcontented bozos. Nothing has changed my view in recent comments.
Thats why I dont come here very often anymore.
Good Day.
I’m sure most of the regulars here are devastated by the absence of your financial genius…perhaps a support group could be formed to help everyone cope with the loss…
“Ignorant” is a good word for someone who says something like this:
From the perspective of an investor, revenue growth is more important than return on investment? You would learn how wrong that is on the first day of a middle-school class on investing. Let us know if you ever get that far. Bozo.
Shorter Drew…
I don’t have any actual answers to the excellent points y’all raised, so I’ll fall back on ad hominem attacks and go away pouting.
May I’ll ring up GA and Jenos and we can all compare notes.
Good day.