Mitt Romney: The Corporate ‘Person’ And The One Percent
For Mitt Romney, the fundamental argument underpinning his presidential candidacy is his experience as a top executive at Bain Capital, the huge Boston-based private equity firm. That is especially true now because he must disown his most important achievement as Massachusetts governor — health care reform — in order to assuage the Tea Party extremists in his own party. But what does his business career tell us about the economic policies that might be pursued by the Republican front-runner — and about his worldview? Much could have been gleaned from the career history of George W. Bush, if only voters had paid closer attention to the unflattering reports of his experience as oilman and baseball team owner that accumulated in 1999 and 2000.
As the stories behind Romney’s success unfold in the coming campaign, the answer is likely to be that Bain Capital has prospered during the past quarter-century promoting a harsher brand of enterprise — one that ruins communities, impoverishes workers, and exports American jobs, all in the name of shareholder “value.”
In the current issue of New York Magazine, reporter Benjamin Wallace-Wells begins the process of unpacking what Romney and his colleagues in management consulting and private equity have wrought upon the U.S. economy. Wallace-Wells opens his narrative with a telling recent anecdote from the campaign trail in Iowa, where Romney lectured a disbelieving crowd on the issue of corporate personhood. When a heckler urged raising taxes on corporations, Romney replied with condescension: “Corporations are people too, my friend….”
Of course in the strictest sense he was right: The management, shareholders, and workers of every corporation are indeed human beings, and it is to those human beings that the money earned by corporations, after taxes, is paid. But as Wallace-Wells discovers, Romney and company have done much to change how those earnings are apportioned, encouraging massive increases in the amount appropriated by management and huge reductions in wages and benefits paid to workers. Creating incentives for managers to maximize stock prices — which would explode their own compensation — simultaneously undermined old-fashioned corporate responsibility toward employees, communities, and the nation as a whole. The deepest implication of the consultant creed that Romney represents is an ugly Darwinism — or so Wallace-Wells suggests.
But as consultants, there was only so much that Romney and the Bain crowd could do to change any corporation. Wanting to put their theories into practice, and sensing that big profits could ensue, they formed Bain Capital, whose record in corporate takeovers and turnarounds became the envy of the industry — and the ruin of thousands of workers and their families unlucky enough to become collateral damage.
The improved efficiency and productivity of private enterprise over the past two decades certainly were not without benefit to society, in lower prices, better technology and even, for a while, higher employment. But the perfect “alignment” of incentives between corporate managers and shareholders, without any regulatory brakes, led to worsening economic inequality, executive recklessness, stock manipulation, and a laser-like focus on the short term — in short, all of the ills that underlie American economic decline. Those same incentives have been trained on the political system to ensure decisions that benefit those same overpaid, seemingly sociopathic bankers and investors — now known as the “one percent.” They could scarcely hope for a more sympathetic candidate than the man from Bain.
By: Joe Conason, The National Memo, October 25, 2011
Why Democratic Strategists Have Begun To Root For Mitt Romney
It wasn’t long ago that conventional wisdom among Democratic strategists handicapped Mitt Romney as President Obama’s toughest potential Republican challenger. But lately there has been a big shift.
In fact, it is becoming clearer and clearer that Mitt Romney is the very embodiment of the political narrative that will likely define the 2012 Presidential race. Unless there is a miracle, the outcome of next year’s election will likely be determined by whom the public blames for the lousy economy.
Of course the Republicans will argue that the culprit is the “overreaching,” “innovation-stifling” big government and its leader, President Obama. Their prescription to solve the country’s economic woes: eliminate every regulation in sight, cut taxes for the wealthy and free Wall Street bankers that lead us into the promised land.
Democrats, on the other hand, will pin the blame exactly where it belongs — on the reckless speculation of the big Wall Street banks, their Republican enablers — and the stagnant middle class incomes that have resulted from the top one percent of Americans siphoning off virtually all of the country’s economic growth since 1980. They will fault the “do-nothing Republican Congress” for their insistence on defending the status quo, and their refusal to create jobs.
Earlier this summer — when Republicans had succeeded in making “fiscal responsibility” and “deficit reduction” the touchstone of American political discourse — a businessman like Romney appeared to many to be just the ticket. But the tide has turned.
Once they got the debt ceiling “hostage taking” episode behind them, the administration has used its jobs package — and its own budget proposals — to draw a sharp line in the sand. The President has demanded that Congress take action on jobs and pay for it by raising taxes on millionaires.
Then came the Occupy Wall Street Movement — and the worldwide response — that has tapped into the public’s fundamental understanding, and anger, at the real nature of the economic crisis. The fact is that one of the only people around more unpopular than politicians are Wall Street bankers.
Finally, of course, the economic facts on the ground have made it clearer and clearer that right wing economic theories that blame “bloated entitlements” to seniors who make an average of $14,000 a year — and demand “fiscal austerity” — are just plain stupid. According to the Washington Post, even the International Monetary Fund (IMF) — long the world’s leading advocate of deficit reduction and “austerity” — has now warned that “austerity may trigger a new recession and is urging countries to look for ways to boost growth.”
As the national economic dialogue has shifted, the public’s view of Mitt Romney has also come into focus. His out-of-touch “1% moments” proliferated.
On August 11, the blog Think Progress captured the now-famous video of Romney opining, “Corporations are people, my friend.” Of course, given his record of dismembering and bankrupting companies at his old firm, Bain Capital, if “corporations are people,” then Romney is guilty of murder.
On August 29th Romney disputed an account about the expansion of his beach front home. “Romney: Beachfront home is being doubled in size, not quadrupled,” The Hill reported.
Then, just a few days ago, the Center for Responsive Politics reported that Wall Street donors had abandoned President Obama in droves and flocked to Romney.
Finally, an extraordinary photo surfaced from Romney’s days as CEO of Bain Capital, where he made massive profits while five of the companies under his firm’s direction went bankrupt and thousands of workers lost their jobs.
Apparently their difficulties in finding places to stash their profits became a joke among the young hotshots at Bain. They posed for a photograph with money stuffed in their pockets — even their mouths. There at the center of the picture was the grinning CEO, Mitt Romney, with money overflowing from his pockets and his suit jacket.
There he is — posing as the poster child for the 1%.
The picture could be the iconic image of the iconic line from the film Wall Street: “Greed is Good.”
Increasingly, many Democratic strategists have begun to feel that Romney could be the best possible opponent for President Obama next year.
Think about the way swing voters make political decisions. They don’t make their judgments about how to vote based on “policies or programs.” They evaluate the personal qualities of the candidates.
In determining who is on their side and shares their values — do swing voters choose Romney — the poster child for the 1% — or President Obama?
In the coming campaign, who is more likely to appear as an insider defending the status quo that people don’t like — and who will appear to be an outsider trying to bring change? Normally you’d have to say that the consummate “insider” is the guy who is President of the United States. Not necessarily so if his opponent is Wall Street’s own Mitt Romney.
And several factors unique to Romney make his situation even worse:
Voters want leaders with strong core values. That’s not a description of Mitt Romney who has flip-flopped on just about every position he’s ever taken in public life. When Karl Rove ran George Bush’s campaign against John Kerry he said that Kerry’s statement that he voted for the War in Iraq before he voted against it was the gift that kept on giving. Rove took a Senator with strong convictions and convinced swing voters that he had none. If Rove could do that to Kerry, think about the easy time Democrats will have in convincing America that Romney’s values shift with the wind.
Voters want to connect emotionally with their leaders. Ask Al Gore how important it is for candidates to “connect” with the voters. Romney has the personality of a statue. He just doesn’t make emotional contact.
Much of the Republican smart money is going to Romney because it thinks he is increasingly likely to be the nominee. I can understand why the Wall Street money is going to Romney — they want their guy to be President.
But I’m guessing that if he gets the nomination, by this time next year, Wall Street’s investment in Romney will look about as “smart” as all that money they put into sub-prime mortgages and credit default swaps four years ago.
They Don’t Like You, Mitt. They Really Don’t Like You
Republican moneymen and pundits are starting to flock to the Mitt Romney banner, sending forth the word that it is time to bow to the inevitable. But the Republican voters just do not like Mitt Romney.
The depth the of the base’s resistance to falling in behind next-in-line Romney has continuously shocked observers, resulting first in the rise of Donald Trump, then Michele Bachmann, then Rick Perry. Now Perry is swooning, and his support has gone to … Herman Cain!
In the latest Washington Post poll, Perry’s support has halved over the last month, but Romney remains stuck at 25 percent. Cain has risen to 16 percent. The new CBS poll has Cain tied, at 17 percent, for first place with Romney. PPP polled Republicans in North Carolina, Nebraska, and West Virginia, and found Cain leading in all three states.
I don’t think Cain can win the nomination, and I’m not sure he really wants it (as opposed to a nice Fox News gig.) Saying you might vote for Herman Cain for president — of the United States, not of a pizza chain — can only be read as a cry of protest.
I don’t see how Republicans could be making this any more plain. They do not want to nominate Mitt Romney.
His problem is summed up neatly by today’s The Wall Street Journal editorial:
The main question about Mr. Romney is whether his political character matches the country’s huge current challenges. The former Bain Capital CEO is above all a technocrat, a man who believes in expertise as the highest political virtue. The details of his RomneyCare program in Massachusetts were misguided enough, but the larger flaw it revealed is Mr. Romney’s faith that he can solve any problem, and split any difference, if he can only get the smartest people in the room. …Republicans need a nominee who can make the opposing case on practical and moral grounds, not shrink from it out of guilt or excess political caution.
This encapsulates the main difference between the two parties. I’ve made this point many times before, but I think it’s pretty fundamental. The conservative movement is committed to a series of strong philosophical principles about government. They believe in a smaller government that takes less from the rich on moral grounds, as the Journal says. The Democratic Party does not have the same kind of deeper philosophical commitment, and is much more comfortable with technocracy.
Romney’s technocratic skills are not only not a plus for him. For many conservatives, they are something close to a disqualification. On many of the largest public issues, the technocratic consensus binds the center-right with the center-left and excludes the Republican position. Technocrats generally agree that we should increase short-term deficits while simultaneously decreasing long-term deficits through a combination of reducing tax expenditures and entitlement spending. There’s a somewhat less strong technocratic consensus that we should find a way to put a price on carbon emissions. These are all policies supported by the Obama administration and fiercely opposed by the GOP because they do violence to conservative anti-government principles.
Conservatives don’t want a president who’s open to different means of achieving ends (ending the recession, controlling health care costs.) They want somebody who’s set in stone on using the right means — less government.
Romney, because of the bizarre succession of real and potential foes removing themselves from consideration, may win the nomination by default. But the mismatch between him and the party he wants to lead is not going away.
By: Jonathan Chait, Daily Inte, New York Magazine, October 5, 2011
Big Business Has Been Very, Very Good To Mitt Romney
As the noted philosopher and rock ‘n’ roll irritant David Lee Roth once said, “Money can’t buy you happiness, but it can buy you a yacht big enough to pull up right alongside it.”
I often think of his sage words as I watch the early days of the 2012 political campaigns. For the phrase “buy you a yacht,” simply substitute “buy you an election.” Then behold the havoc wrought by Citizens United and other court decisions that have unleashed a mudslide of corporate cash into our electoral system, much of it anonymous, hurling the average citizen out of the democratic equation.
An estimated $40 million will be spent in those nine Wisconsin state Senate recall elections — most of it from outside, third-party interest groups and twice what was spent last year on all 116 of the state’s legislative races. Most believe President Obama will raise a billion dollars or even more for his reelection bid; enough, as NPR’s Peter Overby observed, to buy up all the TV ads on the Super Bowl — four times.
The Republican nominee may also raise and spend a billion. If it turns out to be former Massachusetts Gov. Mitt Romney, buying that electoral yacht will be a tad easier than for others. Back in 2007, the New York Times estimated his worth at nearly $350 million, and he plowed a reported $44.5 million of his own money into his 2008 presidential campaign.
Certainly, there has been a deep strain of noblesse oblige throughout the history of American governance, the wealthy feeling the urge (and having the disposable income and free time) to come to the aid of their country, both for good and ill. But with Romney, so much a complaisant creature of the corporate culture that dropped us into our current mess without a parachute, we have a tsunami-in-waiting.
As he scurries to the right, running away from his moderate record as Massachusetts governor (although there’s no escaping the irony of this week’s reports that the state’s upgrade to an AA rating from Standard & Poor’s during his tenure was achieved, in part, through tax hikes), it’s illuminating to remember not only how Romney amassed his personal fortune but also how the fundraising apparatus surrounding him probes for yet more ways to scam the system. Not content with the freewheeling liberties already granted by the courts, his money machine relentlessly pursues ever more insidious routes to the fattest wallets and checkbooks.
The opening chapters may be familiar to you. As a June 2007 article in the Times reported, Romney’s personal fortune was amassed from his leadership at the private equity firm Bain Capital. “Mr. Romney’s Bain career — a source of money and contacts that he has used to finance his Massachusetts campaigns and to leap ahead of his presidential rivals in early fund-raising … exposes him to criticism that he enriched himself excessively, sometimes by cutting jobs to increase profits.” The newspaper quoted Boston University business professor James E. Post: “Increasingly, this world of private equity looks like a world of robber barons, and Romney comes out of that world.”
A similar article that same month and year in the Boston Globe noted that Bain Capital specialized in leveraged buyouts and cited MIT Sloan School of Management professor Howard Anderson. Bain, he said, would do “everything they can” to increase the value of the companies it bought. “The promise [to investors] is to make as much money as possible. You don’t say we’re going to make as much money as possible without going offshore and laying off people.”
Stephen Colbert may have summed it up best:
“Mitt Romney knows just how to trim the fat. He rescued businesses like Dade Behring, Stage Stories, American Pad and Paper, and GS Industries, then his company sold them for a profit of $578 million after which all of those firms declared bankruptcy. Which sounds bad, but don’t worry, almost no one worked there anymore.”
Another of the companies sucked into Bain’s gravitational pull was the medical testing firm Damon Corp. that, according to the Globe,
“later pleaded guilty to defrauding the federal government of $25 million and paid a record $119 million fine.
“Romney sat on Damon’s board. During Romney’s tenure, Damon executives submitted bills to the government for millions of unnecessary blood tests. Romney and other board members were never implicated… But court records suggest that the Damon executives’ scheme continued throughout Bain’s ownership… Bain, meanwhile, tripled its investment. Romney personally reaped $473,000.”
But unlike the companies it bought, at Bain itself, even failure could be rewarded — even if your name was Mitt. Take a look at the sweetheart deal Romney got when he took over Bain Capital, a spinoff of consulting firm Bain & Company where he had been an executive. In an arrangement any start-up enterpriser would kill for, as per the Globe, founder Bill Bain guaranteed that if the Bain Capital experiment tanked, “Romney would get his old job and salary back, plus any raises handed out during his absence.” What’s more, if he proved unfit for the task, “Bain agreed to craft a cover story if necessary, promising to bring Romney back to the consulting firm and explain Romney’s return as a matter of his being more valuable to Bain as a consultant.”
Nice. No wonder Romney told an Iowa crowd this week that, “Corporations are people, my friend.” Like Garrett Morris’ Chico Escuela in the early days of “Saturday Night Live,” big business been berry berry good to him. Would that it had been berry berry good to the hundreds fired at companies taken over by Bain Capital.
Yes, corporate people power has served Romney well, especially when it comes to political fundraising. As Huffington Post reported this week, “According to disclosure reports filed at the end of July, 61 registered lobbyists and five lobbyist-linked political action committees contributed $137,650 to Romney’s campaign between Jan. 1 and June 30, 2011. The former Massachusetts governor raised more money from lobbyists during this period than all of his competitors combined … Craig Holman, legislative representative for the watchdog group Public Citizen, told HuffPost that Romney’s lead in lobbyist cash ‘strongly suggests that Romney is the favored candidate for wealthy special interest groups, especially K Street. They clearly think that they can get their foot in the door with Mitt Romney.’”
Then there’s this in the July 20 Washington Post:
“The largest corporate sources of money for Romney are mostly finance industry leaders, including Morgan Stanley and Bank of America. Goldman Sachs employees have given nearly a quarter of a million dollars in contributions… The keys to his success appear to be large donors and contributors from the New York area. Nearly three-quarters of Romney’s money came from donors giving the maximum $2,500 contribution, and one in eight of Romney’s donors live in New York City and its suburbs.”
Of the $18 million raised by his campaign in the second quarter this year, one million came from a single trip to New York in May, including a University Club event crammed to its poshly appointed walls with banking executives.
So it’s not surprising that in the Romney camp, the creative accounting techniques perfected by Wall Street are a specialty. It was again The Boston Globe — which seems to have covered Romney’s political ambitions since they first danced in his head — that wrote back on April 15, “The former Massachusetts governor has become a master of a controversial but legal fund-raising technique that relies on a network of loosely regulated state political action committees to collect those funds.”
Example: Four members of the Marriott hotel family, close friends with the Romneys and fellow Mormons, wrote checks totaling $215,000 to Romney’s campaign, far more than an individual is allowed to give to federal political committees. According to the Globe:
“Romney, more fully exploiting the system he employed in the 2008 election cycle, got around those restrictions by taking in contributions through political committees set up under the rules of individual states. Most of the money was then transferred to Romney’s federal political action committee, Free and Strong America, and used to pay the salaries of top aides, political consultants, and traveling expenses.”
Consider, too, the super PAC Restore Our Future, supposedly independent, but run by former Romney political aides in support of their man’s candidacy. Restore Our Future raised $12.2 million in the first half of 2012. Under the new, relaxed rules it can raise unlimited funds but must disclose who contributes and cannot legally coordinate with the candidates themselves or the candidates’ official campaign committees. Of Restore Our Future’s 90 wealthy donors so far, the ubiquitous Marriotts among them, four gave a million dollars apiece. One was John Paulson, described by the website Politico as “a New York hedge fund billionaire who became famous for enriching himself by betting on the collapse of the housing industry.”
The other three allegedly are corporations but none of them conduct any real business. Two, Eli Publishing and something called F8 LLC, each list the same Provo, Utah, address as trusts set up by the families of two executives at the anti-aging product company Nu Skin Enterprises. Nu Skin founders and fellow Mormons Stephen Lund and Blake Roney were big contributors to Romney’s first White House campaign in 2008. (For what it’s worth, twice in the ’90s, Nu Skin was hauled before the Federal Trade Commission and paid a total of $2.5 million to settle allegations of unsubstantiated product claims.)
The other shell company, W Spann LLC, was even more mysterious. As first reported by Michael Isikoff of NBC News, it was dissolved only months after it was created, and just two weeks before Restore Our Future reported the company’s donation. As Isikoff wrote, “Campaign finance experts say the use of an opaque company like W Spann to donate large sums of money into a political campaign shows how post-Watergate disclosure laws are now being increasingly circumvented.”
After days of media demands and questions, the man behind W Spann finally came forward: Edward Conard, a retired managing director of — surprise — Bain Capital. But he only stepped up after the groups Democracy 21 and the Campaign Legal Center requested investigations by the Justice Department and the Federal Elections Commission. He made his donation “after consulting prominent legal counsel regarding the transaction,” Conard said, “and based on my understanding that the contribution would comply with applicable laws.”
Phony businesses set up for the sole purpose of laundering campaign money and shielding who’s really behind massive contributions? The donors responsible for the dummy corporations all say they have nothing to hide. So why hide it? Maybe to keep their distance, because Restore Our Future could be planning attack ads on Republican rivals and President Obama that will be harsher and more truth bending than anything Romney and his nearest and dearest can officially support.
We need to discover this and other answers before the money machine completely supplants the voting machine, and any last chance to have our voices heard is permanently stilled by cold hard cash.
By: Michael Winship, Senior Writing Fellow, Demos, published in Salon, August 12, 2011
Mitt Romney: The Anti-Jobs Candidate
My friend Peter Daou had an item the other day, noting the potency of the Republican presidential frontrunner’s message: “Romney is a threat because he can focus on a dead simple message: ‘I’m a successful businessman, I’ll create jobs and fix the economy.’”
That’s exactly right. Mitt Romney, at least this latest version of him, has an entire campaign rationale that fits comfortably into a tweet. Better yet, it’s a message that voters are eager to hear.
Ed Kilgore had a related piece on this the other day, summarizing the argument that Romney and his backers are likely to push aggressively: “Romney has an extensive corporate background, looks the part of a CEO, and without question, he would prefer an issues environment focused on anything other than health care reform or the cultural issues on which he’s never inspired trust among conservatives.”
Romney doesn’t want to talk about health care or the fact that he was a pro-choice moderate who supported gay rights and gun control. Indeed, he would just as soon hope people forget he was even a governor. This is Businessman Mitt, running as a less ridiculous version of Herman Cain.
Kilgore’s argument is that this message is simple and straightforward, but it probably won’t help him in a competitive Republican primary. That’s compelling, but my take is a little different: I think Romney’s biggest problem is that the message brings to the fore his key weaknesses — Romney’s record on jobs is atrocious.
Stephen Colbert devoted a terrific segment to this the other day, highlighting Romney’s “real claim to business fame,” which is “founding a private equity company called BainCapital.” The embed won’t fit the column length of the redesigned website, but here’s heart of Colbert’s take:
“You see, Romney made a Mittload of cash using what’s known as a leveraged buyout. He’d buy a company with ‘money borrowed against their assets, groomed them to be sold off and in the interim collect huge management fees.’ Once Mitt had control of the company, he’d cut frivolous spending like jobs, workers, employees, and jobs. Just like America’s sweetheart, Gordon Gecko. […]
“Because Mitt Romney knows just how to trim the fat. He rescued businesses like Dade Behring, Stage Stories, American Pad and Paper, and GS Industries, then his company sold them for a profit of $578 million after which all of those firms declared bankruptcy. Which sounds bad, but don’t worry, almost no one worked there anymore.
“Besides, a businessman can’t be weighed down with a bleeding heart, as one former Bain employee put it, ‘It was very clinical…. Like a doctor. When the patient is dead, you just move on to the next patient.’ See? Mitt Romney is like a doctor! [On screen: Dr. Kevorkian]”
And this is the part of Romney’s record he’s most proud of. Romney slashed American jobs as if his career depended on it — and it did.
Complicating matters, during Romney’s only service in public office, his state’s record on job creation was “one of the worst in the country.” Adding insult to injury, “By the end of his four years in office, Massachusetts had squeezed out a net gain in payroll jobs of just 1 percent, compared with job growth of 5.3 percent for the nation as a whole.”
How bad is Romney’s record? During his tenure, Massachusetts ranked 47th out of 50 states in jobs growth.
Yes, Romney has a simple message: “I’m a successful businessman, I’ll create jobs and fix the economy.” It also comes with an equally simple response: “Mitt Romney is the anti-jobs candidate.”
By: Steve Benen, Contributing Writer, Washington Monthly-Political Animal, June 12, 2011
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