“Offshored And Outsourced”: Mitt Romney’s Bain problem
While the Supreme Court’s upholding of the health-care law was last week’s most important event in historical terms, it will not be the decisive event of the 2012 election. In the long run, polling in swing states suggesting that Mitt Romney’s tenure at Bain Capital is hurting him could have larger implications for where this campaign will move.
It’s certainly true that had the court knocked down President Obama’s signature domestic achievement, the defeat would have been woven into a narrative of ineffectual leadership and mistaken priorities. Instead, the president found vindication not only from the court’s liberals but also from Chief Justice John Roberts.
But precisely because the decision saved the president from disaster on health care, it only reinforced the importance of the economic argument Obama and Romney have been having for months. And here is where Romney’s Bain problem kicks in.
As Democrats, mostly from Washington and New York, debated the efficacy of attacks on Romney’s role in Bain, an entirely different conversation was being driven in the swing states, courtesy of ads broadcast by the Obama campaign and especially by Priorities USA Action, the pro-Obama super PAC. The ads portray highly sympathetic workers who lost their jobs and companies that collapsed even as Bain’s principals made substantial profits.
An NBC News/Wall Street Journal poll last week provided surprisingly dramatic evidence of how much these commercials are wounding Romney.
In the country as a whole, 23 percent said they viewed Romney more positively because of his experience “managing a firm that specializes in buying, restructuring and selling companies,” while 28 percent said this made them view Romney more negatively. But in this year’s 12 battleground states, many of which have gotten a heavy run of the anti-Bain ads, only 18 percent viewed Romney’s business experience positively; 33 percent viewed it negatively. Obama led Romney by three points nationally but by eight in the battlegrounds.
This is disturbing news for Romney, who hoped his business experience would be an unalloyed asset. The numbers also underscore voter resistance to the core conservative claim that job creation is primarily about rewarding wealthy investors and companies through further tax cuts and less regulation. Americans are not anti-business, but they are skeptical that everything that is good for corporations is also good for their employees, and for job creation itself.
The Bain ads have done double-duty, specifically undermining Romney but also serving as a parable for how aspects of the current financial system hurt workers and local communities. Profits and productivity can rise even as real wages stagnate or fall, and jobs can be offshored and outsourced. The Romney campaign’s response to a recent Washington Post story describing Bain’s record on outsourcing — the campaign sought to “differentiate between domestic outsourcing versus offshoring” — sounded more like bureaucratic gobbledygook than an effective answer. Obama picked up on the story immediately, calling Romney an “outsourcing pioneer.”
But can the Obama campaign turn the argument over Romney and Bain into a broader challenge to the Republican claim that the only thing government can do to spur job creation is to get out of the way? “Jobs” will remain the Romney battle cry for the rest of the campaign, but the success of the anti-Bain offensive points to an opportunity for Obama to engage in a kind of political jujitsu. He can argue that Romney’s primary interest is not in job creation at all but in low-tax and deregulatory policies he would favor whether the economy was soaring or flat.
In a recent talk at the Center for American Progress, Stefan Löfven, the new leader of the Swedish Social Democratic Party, outlined a way to turn the debate around, arguing that job creation worldwide should be the focus of center-left parties. New policies on job creation should also be concerned with the quality and conditions of the jobs, how quickly the unemployed can be moved to new work and how the unemployed are treated and assisted toward new opportunities.
Here are the questions voters should be encouraged to ask in 2012: Should government focus directly on innovative approaches to creating good jobs in a new economy? Or should it be relegated to a position of powerlessness in which its only option is to concede ever more benefits to those — including the financial wizards at Bain — who are already doing very well indeed?
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, July 1, 2012
“Chum In The Water”: Romney’s Economic Plan Is Deregulation Plus The Ryan Budget
As Mike Allen of Politico explains today, the Romney campaign and American Crossroads are undertaking a sustained attack (uncoordinated, of course, since coordination would be illegal) on the Obama administration’s economy policies
Mitt Romney’s campaign events and the firepower of American Crossroads will both focus this week on President Barack Obama’s jobs record as a way to fight off charges about the Republican candidate’s private-sector experience, with a Romney aide attacking the stimulus as “the mother of all earmarks….”
A senior campaign aide said Romney will argue that Obama has actually subtracted jobs: “Were these investments the best return on tax dollars, or given for ideological reasons, to donors, for political reasons? He spent $800 billion of everybody’s money. How’d it work out?”
“It was the mother of all earmarks, not a jobs plan,” the aide said. “By wasting all of this money, you had the worst of all worlds: It destroyed confidence in the economy and makes people less likely to borrow money. Dodd-Frank has been a disaster for the economy. Where are the steady hands? Who’s in charge of energy? Where’s the strong, confident voice on the economy?”
At WaPo’s Plum Line, Greg Sargent makes the point that this offensive presents an almost impenetrable pack of lies:
So Romney will now go back to claiming Obama subtracted jobs. But there’s a new twist: Romney will claim that the effect of the stimulus has been to destroy jobs. As it has in the past, the Romney camp will justify this by pointing to a bogus metric — the net jobs lost on Obama’ watch. That includes the hundreds and hundreds of thousands of jobs lost before the stimulus went into effect. Really: The Romney camp’s claim is that we can calculate that the stimulus destroyed jobs overall with a metric that factors in all the jobs destroyed before the stimulus took effect. That’s not an exaggeration. It really is the Romney campaign’s position. It’s time to ask Romney himself to justify it.
The Romney camp will also begin claiming that Obama has “never created a job.” Will anyone ask Romney about the two dozen straight months of private sector job creation we’ve seen?
And that’s just the half of it, since the Romney campaign is also basing its attacks on the “confidence fairy” (Obama has killed jobs just by being a Democrat; Romney will generate them by his very aura, which makes other rich people feel like goin’ out and creatin’ them some jobs!), and on the phony premise that “the stimulus” (designed in no small part in response to Republican demands for more tax cuts and less direct public-sector spending) represented some sort of grand left-wing “industrial policy” instead of a demand-boosting effort to accelerate federal spending on projects and priorities already in the works.
It’s beginning to become apparent that Team Mitt will throw vast amounts of chum into the water to avoid the fundamental reality that its candidate’s own Economic Plan is basically deregulation plus the Ryan Budget. Perhaps if Romney is going to traipse around the country mocking individual federally-funded projects, someone should follow him around pointing out what the Ryan Budget would do to the same locales. It would not look pretty.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, May 29, 2012
“There Are Known Unknowns And Unknown Unknowns”: What We Don’t Need To Know About Bain Capital
We’re asking the wrong questions about private equity.
The debate over Mitt Romney’s tenure at Bain Capital has moved through a number of phases, from “Did Mitt Romney do awful things at Bain Capital?” to “Should the Obama campaign be criticizing Mitt Romney for what he did at Bain Capital?” and now, “Is private equity a good thing or a bad thing?” Shockingly, people in the private equity business think the answer to the last is that it’s quite good. The predominant opinion from other people is that it’s sometimes good and sometimes bad, which from what I can tell it’s a pretty good summation of Romney’s PE career. At times, he helped start companies that went on to thrive, or helped companies perform better and survive. And at other times, he acted as what Rick Perry called a “vulture capitalist.”
But while it may be an interesting discussion for economists and economic writers to mull over, “Is private equity good or bad?” really isn’t a question we need to answer in the context of this presidential campaign. The question we need to answer is, “Does running a successful private equity firm mean you’ll be a successful president?” Mitt Romney’s answer to this question is, “Yes, because running a successful private equity firm means you know how to create jobs.” Barack Obama’s answer to this question is, “No, because being president is nothing like running a private equity firm. And also, Mitt Romney is a jerk for profiting while all those people got pink slips.”
It would actually help us understand this better if Mitt Romney talked more specifically about what exactly he learned at Bain that he’ll bring to the Oval Office. Unfortunately, he doesn’t get into much detail about his time there. If you asked him the question, he’d almost certainly say he learned that taxes should be cut and regulations should be scaled back, and that will create jobs. In other words, he’d repeat the standard Republican economic arguments, which really tells us nothing. But maybe I’m not giving him enough credit. Maybe there are some surprising insights about the working of the economy that he could only have gleaned at Bain. If there are, he hasn’t shared them yet.
And that’s really the rub. President Obama is right when he says that the presidency is a very different job from being a private equity CEO. Just when it comes to the economy, creating the right conditions for widely shared growth is not only a matter of wanting to do the correct things, it’s also about being able to accomplish them–convincing Congress to go along with your agenda, insuring that it’s implemented properly, balancing the competing interests that press on a president, and so on. Romney says he knows what to do because of his time at Bain (even if the substance of what he wants to do is the standard Republican wish list) but he hasn’t explained how his time at Bain taught him how to do it. He might argue that he learned that being governor of Massachusetts. But he almost never talks about his time as governor—it’s his time in the private sector that he says is the reason he can be a good president. And that’s not even mentioning all the other aspects of the presidency, like foreign policy, that I assume not even he would claim you prepare for by buying and selling companies.
Chances are slim that Romney is going to get too far into the details of what a private equity firm like Bain does, because the picture is mixed. Yes, he can point to some successes, companies Bain helped build or saved from decline. But that means he’ll also be asked about the failures. And as Tim Noah explains, the whole genius of private equity is that guys like Mitt Romney win either way. If the company they buy succeeds, they’ll get spectacularly rich. But if the company fails, they’ll still get rich, because the money they used to buy it was borrowed, and they were raking in huge management fees all along the way. That’s a story Romney would rather not tell. So he’ll stick to simple assertions, like “I know how the economy works.” Which leave us not knowing what he really knows, or doesn’t.
By: Paul Waldman, Contributing Editor, The American Prospect, May 23, 2012
The Grand Delusion: Higher Taxes “Soak” The Rich
Squeezing, gouging, soaking, it’s all the same, and it’s all wrong. The richest Americans, we hear it said, pay most of the federal income taxes. That’s true. But since 1980 their AFTER-TAX SHARE of America’s income has TRIPLED. That’s a trillion dollars a year in extra income for the wealthiest 1%.
A trillion dollars is seven times more than the budget deficits of all 50 states combined.
A trillion dollars, if it hadn’t been redistributed to the rich, would provide an extra $10,000 a year for every family that has contributed to American productivity since 1980.
The defenders of unlimited wealth insist that the very rich have earned their money. But what does EARN mean? Does it mean that the million richest families worked harder than the other 99 million families for thirty years? Does it mean that one man can bet against the mortgage industry and make enough money to pay the salaries of 100,000 health care workers? Does it mean using American research and infrastructure and national security to build a corporation that pays zero federal income taxes?
Most of the fortunate 1% benefited from tax cuts, financial system de-regulation, ownership of 50% of the stock market, and a 15% capital gains tax. According to a study by the University of California, in 2008 only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries.
The very rich claim that their income growth stimulates the economy. But it hasn’t happened. Low-income earners spend a greater percentage of their overall income on consumption, but they have less purchasing power than they had thirty years ago.
What the very rich won’t admit is that they benefit the most from government-funded research, national security, infrastructure, property rights, and a financial industry tailored to their pleasure and profit.
Instead, they claim that anyone can be rich if only they work hard. Much of America wouldn’t know if this is true. They haven’t had a chance to work lately.
By: Paul Buchheit, CommonDreams.org, May 10, 2011
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