“It’s Not An Attack On Capitalism When Done By Republicans”: Mitt Romney’s GOP Primary Opponents On Bain Capital
Romney has placed his record at Bain at the center of his campaign. In April for example, Romney said, “You might have heard that I was successful in business. And that rumor is true…And after 25 years, I know how to lead us out of this stagnant Obama economy and into a job-creating recovery!” (Multiple independent fact checkershave concluded that Romney’s claims on job creation at Bain are simply false.)
On Monday, President Obama took Romney at his word and noted that the former Massachusetts governor’s record at Bain Capital is “not a distraction” but “what this campaign is going to be about.” Romney’s Republican primary opponents agreed, and in the last six months offered criticism of his tenure at Bain that make Obama’s remarks sound tame by comparison.
Here are the top 10 comments about Bain from Romney’s Republican rivals:
1. “The idea that you’ve got private equity companies that come in and take companies apart so they can make profits and have people lose their jobs, that’s not what the Republican Party’s about.” — Rick Perry [New York Times, 1/12/12]
2. “The Bain model is to go in at a very low price, borrow an immense amount of money, pay Bain an immense amount of money and leave. I’ll let you decide if that’s really good capitalism. I think that’s exploitation.” — Newt Gingrich [New York Times, 1/17/12]
3. “Instead of trying to work with them to try to find a way to keep the jobs and to get them back on their feet, it’s all about how much money can we make, how quick can we make it, and then get out of town and find the next carcass to feed upon” — Rick Perry [National Journal, 1/10/12]
4. “We find it pretty hard to justify rich people figuring out clever legal ways to loot a company, leaving behind 1,700 families without a job.” — Newt Gingrich [Globe and Mail, 1/9/12]
5. “Now, I have no doubt Mitt Romney was worried about pink slips — whether he was going to have enough of them to hand out because his company, Bain Capital, of all the jobs that they killed” — Rick Perry [New York Times, 1/9/12]
6) “He claims he created 100,000 jobs. The Washington Post, two days ago, reported in their fact check column that he gets three Pinocchios. Now, a Pinocchio is what you get from The Post if you’re not telling the truth.” — Newt Gingrich [1/13/12, NBC News]
7. “There is something inherently wrong when getting rich off failure and sticking it to someone else is how you do your business, and I happen to think that’s indefensible” — Rick Perry [National Journal, 1/10/12]
8. “If Governor Romney would like to give back all the money he’s earned from bankrupting companies and laying off employees over his years, then I would be glad to then listen to him” — Newt Gingrich [Mediaite, 12/14/11]
9. “If you’re a victim of Bain Capital’s downsizing, it’s the ultimate insult for Mitt Romney to come to South Carolina and tell you he feels your pain, because he caused it.” — Rick Perry [New York Times, 1/8/12]
10. “They’re vultures that sitting out there on the tree limb waiting for the company to get sick and then they swoop in, they eat the carcass. They leave with that and they leave the skeleton” — Rick Perry [National Journal, 1/10/12]
Just last night, Newt Gingrich defended his attacks, saying “I think there are things you can legitimately look at in Bain Capital. I think there are things you can legitimately look at in anybody’s record, including Mitt Romney’s record.”
By: Judd Legum, Think Progress, May 22, 2012
“A Choice Of Capitalisms”: Creative Acts vs Acts of Betrayal
In this election, we’re not having an argument that pits capitalism against socialism. We are trying to decide what kind of capitalism we want. It is a debate as American as Alexander Hamilton, Andrew Jackson and Henry Clay — which is to say that we have always done this. In light of the rise of inequality and the financial mess we just went through, it’s a discussion we very much need to have now.
The back-and-forth about Bain Capital, Mitt Romney’s old company, is part of something larger. So is the inquest into the implications of multibillion-dollar trading losses at JPMorgan Chase. Capitalism can produce wonders. It is also capable of self-destruction, and it can leave a lot of wounded people behind. The trick is to get the most out of what capitalism does well, while containing or preventing the problems it can cause.
To describe this grand debate is not to deny that President Obama’s campaign has some, shall we say, narrower motives in going after Bain. Obama’s lieutenants need to undermine Romney’s claim that his experience in the private equity business makes him just the guy to get our economy back on track.
The Bain conversation has already been instructive. Romney’s friends no less than his foes have had to face the fact that Bain’s purpose was never about job-creation. Its goal was to generate large returns to Bain’s partners and investors. It did that, which is why Romney is rich.
Romney wants to focus on the positive side of his business dealings that did create jobs. He wants to brag about the companies Bain helped bring to life, among them Staples, Sports Authority and Domino’s.
That’s fair enough. But having made an issue of Bain on the plus side, he also has to answer for the pain and suffering — or, as defenders of capitalism like to call it, the “creative destruction” — that some of Bain’s deals left in their wake.
This leads naturally to the question of how creative the destruction wrought by our current brand of capitalism actually is. Since the dawn of the leveraged buyout era three decades ago, many friends of capitalism have questioned whether loading companies with debt as part of these deals is good for companies and for the economy as a whole.
Does this approach cause unnecessary suffering among the employees of the companies in question and the communities that often lose plants and jobs as a result? Sucking pension and health funds dry to aggrandize investors seems less like a creative act than a betrayal of workers who made bargains with their employers in good faith.
More generally, while some of the innovations in the financial sphere have been beneficial to growth, it’s far from clear that this is true of all or even most of them. Some of them helped cause the downturn we are still trying to escape and created incentives for the dangerous risk-taking that led to JPMorgan’s troubles. And there’s little doubt that our new financial system has transferred wealth from other sectors of the economy to the people at the top of the financial business.
Vice President Biden’s speech last week in Youngstown, Ohio, drew wide attention for its criticism of Romney as someone who just doesn’t “get it.” But when Biden moved beyond Romney, he offered an energetic broadside against the new world of finance, and he picked the right venue to make his case: a noble blue-collar town that has been battered by the winds of globalization and economic change.
“You know the difference between having an economy that makes things that the rest of the world wants, and having an economy that is based on financialization of every product,” Biden told his listeners. “You know the difference between an economy . . . that’s built on making things rather than on collateralized debt, creative credit-default swaps, financial instruments like subprime mortgages. That’s not how you build an economy.”
Romney, by contrast, is wary of dismantling any of these nifty new Wall Street inventions, one reason why he wants to repeal the Dodd-Frank financial reforms.
We need to have this great national argument. To borrow a term pioneered by Germany’s Christian Democrats, we can try to build a social market. Or we can have an anti-social market. An election is the right venue for deciding which it will be.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, May 20, 2012
“Creative Destruction Of Capitalism”: Mitt Romney Is No Economic Savior
Republicans say they’re eager for the presidential campaign to turn away from “distractions” and focus instead on the economy. Someone should warn them that if they’re not careful, they might get their wish.
It is true that voters’ unhappiness with high unemployment and slow growth poses a challenge for President Obama as he seeks reelection. But for Mitt Romney and the GOP to take advantage of this potential opening, they’ll have to do more than chant the word “economy” like a mantra. They have to make the case that their policies will work better than Obama’s.
And what might Romney’s proposed economic policies be? Why, they’re basically the same as those of George W. Bush, only worse.
Just as Obama owns the recession and the slow recovery, Bush owns the financial crisis that sent the slumping economy over a cliff. But for all his sins — the gratuitous tax cuts, the off-budget wars, the defiance of basic arithmetic — Bush at least demonstrated a certain empathy for Americans who struggle to make ends meet. One of his budget-busting initiatives, for example, was expanding Medicare to cover prescription drugs without worrying about how this much-needed new benefit would be paid for.
It’s safe to predict that Romney would never make such a gesture out of compassion for the beleaguered middle class. To this day, he refuses to take back his criticism of Obama for bailing out General Motors and Chrysler — even though letting the companies fail would have meant the extinction of the U.S. auto industry and the elimination of hundreds of thousands of jobs.
It is a measure of Romney’s ideological stubbornness that, even with Chrysler rebounding under new ownership and GM reporting record profits, he still insists that his view — let the companies go bankrupt so the “creative destruction” of capitalism could work its magic — was correct.
Romney is something of an expert on creative destruction, I guess, having orchestrated a good deal of it while running the private-equity firm Bain Capital. The Obama campaign recently released an ad about one of Bain’s less successful acquisitions, a small steel mill in Kansas City called GST Steel.
The company, which was more than 100 years old, failed after a decade under Bain’s ownership; GST’s 750 employees lost their jobs, pensions and health benefits. Bain, however, made money, investing $8 million in the company and taking out $4 million in profits and $4.5 million in management fees. The Romney campaign contends that GST, with its unionized workforce, could not compete with cheap foreign steel being dumped on the market. The Obama campaign alleges that Bain burdened GST with crushing debt while sucking the company’s coffers dry.
Is this the genius of free markets at work, or is it “vulture capitalism” run amok? Let’s have that argument. Please.
Let’s also have a long, detailed discussion of Romney’s economic plans versus Obama’s. Romney wants to make tax rates for the wealthy even lower than they are now; Obama wants a small increase for those making more than $1 million a year, whom he challenges to pay “their fair share.” Romney’s entire economic plan, basically, involves tax cuts and deregulation — in other words, a repeat of the Bush-era policies that led to the crisis.
Does Romney have any fresh ideas? Well, when he was governor of Massachusetts, he was smart enough to see that universal health coverage would not only improve the lives of the uninsured but also help rein in runaway medical costs. He found the solution in an innovative idea developed in Republican-leaning think tanks: an individual health insurance mandate.
It worked. In fact, it was Romney’s greatest policy success as a public official. But now he doesn’t talk about it much.
My guess is that Republicans won’t want to talk about the past or the future in much detail. They’d like to keep things blurry, so that we only see Romney in broad outline: a successful businessman who’ll put us back in business. For details, we’ll mail you the prospectus.
I can’t help but think of the “prosperity theology” movement, or scam, in which preachers persuade congregants that God’s will is for Christians to be rich — and that the way to become rich is to put lots of money in the collection plate. It’s not believable unless the preacher looks and acts the part. Maybe he lives in a mansion. Maybe his wife drives “a couple of Cadillacs.”
Actually, it’s not believable even then.
BY: Eugene Robinson, Opinion Writer, May 14, 2012
“Economic Freedom”: Capitalism By Any Other Name
I’ve been thinking about the term “capitalism” since Frank Luntz, the renowned pollster, told Republicans to quit saying it. The Occupy Wall Street movement has turned “capitalism” into a dirty word, he said. If Republicans want to win in 2012, they’d better stop worrying and learn to love “economic freedom” instead.
It’s a stunning turning of the tide. No matter the kind of conservative—Southern, evangelical, libertarian, Tea Party, or old-school Rockefeller patrician—conservatives have never hidden their allegiance to the moneyed class and power elite. I have never in my lifetime seen a conservative counsel against expressing one of the major tenets of conservative ideology. You might as well advise the GOP to stop trying to repeal the New Deal and start defending labor rights.
I’ve been thinking about this rhetorical shift while riding the bus in New Haven every day. The passengers are typically at the bottom of the 99 percent. Some are destitute; some are unemployable. Most are working poor, people with full-time minimum-wage jobs who cannot rise above poverty. I wonder what they’d think of John Mackey’s definition of “economic freedom.” The CEO of Whole Foods wrote in The Wall Street Journal in November that the phrase means “property rights, freedom to trade internationally, minimal governmental regulation … sound money, relatively low taxes, the rule of law, entrepreneurship, freedom to fail, and voluntary exchange.” My guess is they’d think very little of it.
Mackey’s definition is meaningful only if you already have money. Real money. Money you don’t have to spend right away, money that can sit around for a while. But when you don’t have real money, it has nothing to do with “economic freedom.” If Mackey were defining “capitalism,” that would be one thing. The working person might have nothing to say to that. The abstract nature of “economic freedom,” though, invites interpretation, and, for the working person, it has everything to do with making a living.
Though “economic freedom” is now synonymous with capital, it used to be synonymous with labor. It makes sense. Government isn’t the largest force in our lives. Corporations are. They dictate when to work, where and how. Or none of the above if you’ve been laid off. They don’t want to pay for full-time work, health care, or pensions. During their golden age, unions were seen as a step toward greater security, which was a step toward greater freedom. If you, as an individual, didn’t have to worry about bargaining for wages, retirement, or life insurance (because your labor posed actual physical risk), you were freed of that burden. In other words, economic freedom wasn’t freedom from the rule of government; it was freedom from the rule of corporations.
More profoundly, labor’s “economic freedom” is in keeping with the grandest narratives of American history, with colonists fighting the British colonizers, slaves fleeing their masters, women struggling for the right to vote, African Americans appealing for their inalienable rights. In each of these, a David battles a Goliath—and the underdog wins. Only in America. Where is the moral thrust of capital’s “economic freedom” narrative? Making more money? Nah.
Some have warned that Luntz is setting a trap. The temptation among progressives has been to talk even more about capitalism since Luntz is “frightened to death” by the Occupy movement. If they do, critics say, Republicans will be able to portray progressives as socialists. No doubt they will, but not because the Occupiers are focused on capitalism. Conservatives are willing to cry socialist anytime something irritates business. It doesn’t take raising a country’s collective consciousness to the dangers of corrupt capitalism to draw rhetorical fire like that.
Talking about capitalism in America is somewhat like talking about class. As a social reality, it’s so familiar as to be invisible, which is convenient for those, like the moneyed class and power elite, who don’t want to talk about it. But once you start talking about an invisible force that can affect anyone, you start wondering why it doesn’t benefit everyone. That, to me, is what the Occupy movement needs to keep doing: pointing out what should be obvious to all of us.
An enormous propaganda machine paid for by capital has made it necessary for thousands of people to march in the streets and camp in public parks to make what should be truly unremarkable observations: Rich people don’t always deserve their riches, and people who work hard often can’t make ends meet. This is about capitalism, because this is about the nature of work—and the enormous constraints faced by Americans employed or not. So, no matter what kind of rhetorical hocus-pocus Republicans come up with next year, no matter what they call capitalism, the elephant is still in the room. There’s no replacing plainspoken truths.
By: John Stoehr, The American Prospect, December 16, 2011
“Capitalists Without Customers Are Out Of Business”: Raise Taxes On Rich To Reward True Job Creators
It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.
Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.
I’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. (MSFT) in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc. (AMZN)
Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.
That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.
Theory of Evolution
When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around.
It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. But it’s equally true that without consumers, you can’t have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do.
That’s why our current policies are so upside down. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer.
And that’s what has been happening in the U.S. for the last 30 years.
Since 1980, the share of the nation’s income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007, from 42 percent at the peak of U.S. productivity in the early 1960s, and about 30 percent during the expansion of the 1990s. In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.
One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.
It’s true that we do spend a lot more than the average family. Yet the one truly expensive line item in our budget is our airplane (which, by the way, was manufactured in France byDassault Aviation SA (AM)), and those annual costs are mostly for fuel (from the Middle East). It’s just crazy to believe that any of this is more beneficial to our economy than hiring more teachers or police officers or investing in our infrastructure.
More Shoppers Needed
I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.
If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.
It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again. Shifting the burden from the 99 percent to the 1 percent is the surest and best way to get our consumer-based economy rolling again.
Significant tax increases on the about $1.5 trillion in collective income of those of us in the top 1 percent could create hundreds of billions of dollars to invest in our economy, rather than letting it pile up in a few bank accounts like a huge clot in our nation’s economic circulatory system.
Consider, for example, that a puny 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut beyond December, preventing a $1,000 increase on the average worker’s taxes at the worst possible time for the economy. With a few more pennies on the dollar, we could invest in rebuilding schools and infrastructure. And even if we imposed a millionaires’ surtax and rolled back the Bush-era tax cuts for those at the top, the taxes on the richest Americans would still be historically low, and their incomes would still be astronomically high.
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
So let’s give a break to the true job creators. Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.
By: Nick Hanauer, Bloomberg, November 30, 2011
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