January 12, 2012
Occupy Wall Street has come to the Republican presidential campaign – only it isn’t because of anything the protesters have done. It’s because of withering populist attacks against Mitt Romney and his tenure at Bain Capital now being lobbed by his Republican rivals for the 2012 presidential nomination.
From Newt Gingrich: “Is capitalism really about the ability of a handful of rich people to manipulate the lives of thousands of other people and walk off with the money, or is that somehow a little bit of a flawed system?” And from Rick Perry: “Now I have no doubt that Mitt Romney was worried about pink slips — whether he was going to have enough of them to hand out because his company Bain Capital with all the jobs that they killed, I’m sure he was worried that he’d run out of pink slips.”
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It’s a surprising line of attack for representatives of a party that, as the Romney campaign has worked hard to remind people, claims to be for free-market capitalism – a party that, not all that long ago, touted the virtues of having a CEO in the Oval Office. And it smacks of hypocrisy coming from candidates who, across the board, espouse smaller, more efficient government – which, by definition, also means fewer government jobs. Those attacks, as others have noted, seem particularly disingenuous coming from Newt Gingrich, who had been on the advisory board of leveraged buyout firm Forstmann Little.
“President Obama wants to put free enterprise on trial and in the last few days we’ve seen some desperate Republicans join forces with him,” Romney said in his victory speech after the New Hampshire primary. “This is such a mistake for our party, and for our nation.”
But as the campaign moves on to South Carolina, the Bain bashing is bound to continue. Perry, who has staked his campaign on the primary taking place in two weeks, has already been hammering the theme there. On Tuesday, he compared Bain Capital’s buyout practices to “vultures that are sitting out there on the tree limb, waiting for the company to get sick, and then they sweep in, they eat the carcass, they leave with that, and they leave the skeleton.”
The problem for Romney is that whether jobs were lost or created, he made millions from most of those investments.
Gingrich, with financial help from casino magnate Sheldon Adelson, plans to run a series of ads using a documentary called “When Mitt Romney Came to Town,” a scathing look at Romney’s record with Bain. “Mitt Romney became CEO of Bain Capital the day the company was formed,” the movie says. “His mission: To reap massive rewards for himself and his investors.”
Of course it was. Just about every CEO will tell you the same thing – their goal is to maximize rewards for shareholders. Romney did precisely what he was supposed to do at Bain. As a private equity investor, he sought to make failing companies more efficient, even if it meant cutting hundreds of jobs. Reengineering corporations in order to make them leaner and meaner – and, ultimately, to help them survive – is nothing new.
Romney and other private equity investors have pointed out in recent days that in some cases, cutting some jobs can keep a company alive, and save many more jobs in the process. So "fixing" a company often starts with layoffs and buyouts to reduce the workforce. That gives a company a chance to set a strategy that allows for growth and investment.
The problem for Romney is that whether jobs were lost or created, he made millions from most of those investments. Creating jobs was not his top priority; generating a return on Bain’s investment had to be. “Every case that we invested, we invested to try and make the business more successful, more sustainable, to provide growth for it,” Romney said Wednesday morning on CNBC, before going on to make a more tenuous assertion: “And I’m pretty happy to show my record of job creation. Actually, my job creation record in the private sector has created more jobs than President Obama has created in the entire country.”
Romney has built his case for the presidency on being a "business guy" – the candidate with real-world business experience who knows what it takes to succeed and can craft a turnaround strategy to undo the damage caused by Obama and a bloated bureaucracy run by career politicians.
And yet the perception of a chief executive coming from the business world has changed substantially since 2000. When George W. Bush ran for president that year – and even well into his first term in office – much was made of the idea that he would be the nation’s first “CEO president.” Bush was lauded as the first commander-in-chief to hold an M.B.A., and the idea was that he could set goals and a vision for achieving them, build a world-class executive team and delegate the details.
“I don’t think we understand the political effects of what happened to the nation during the financial crisis,” says Dante Scala, a political analyst at the University of New Hampshire. “George Bush was seen in a different light than Mitt Romney, and in part that’s because of what happened to the economy in the last decade.”
The prThe luster of a “CEO president” has long worn off, dulled by Enron, Wall Street scandals, the financial crisis, the bank bailouts, and a painfully slow jobs recovery.
Conservatives including Rush Limbaugh, South Carolina Gov. Nikki Haley and many others have been rallying to Romney’s defense. “Newt Gingrich, Rick Perry, and Jon Huntsman seem to be engaged in a perverse contest to be the Republican presidential candidate to say the most asinine thing about Mitt Romney’s tenure at Bain Capital,” the conservative National Review wrote in an editorial published Tuesday.
Yet even there, the support for Romney was followed immediately by a downplaying of the relevance of having a business executive in the White House: “We are largely immune to the charms of the CEO who promises to sweep into Washington and run the government like a business, mainly because the government is not a business. At the same time, private-sector expertise and experience is an invaluable thing in a chief executive, and Romney has nothing to regret on that front.”
The luster of a “CEO president” has long worn off, dulled by Enron, Wall Street scandals, the financial crisis, the bank bailouts, a painfully slow jobs recovery, and most recently, Occupy Wall Street. Republicans, Scala notes, still support small businesses, but blue-collar and middle-class GOPers may have grown more skeptical of large companies that are “moving lots of money around, moving lots of jobs around.” So while Romney – who, like Bush, has a Harvard M.B.A. – plays up the need for a president with real-world business experience, rivals like Rick Santorum have been challenging that premise. “We’re not looking for a chief executive officer,” Santorum keeps saying. “We’re looking for a commander in chief.”
Romney’s specific experience at Bain presents an even greater problem, allowing critics to paint him as a corporate raider rather than a business builder. More than a fifth of the companies Bain invested in during Romney’s tenure filed for bankruptcy or shut down within eight years after Bain first invested, according to a report in The Wall Street Journal this week, though in many of those cases Bain was no longer involved in the business by the time they again ran into serious trouble. In one example, that of Illinois-based medical supplier Dade International, Bain invested $30 million and reaped $242 million while reportedly laying off 1,700 U.S. workers. Dade filed for bankruptcy protection in 2002, eight years after Bain bought it and some three years after Romney had left the buyout firm.
The privileged son of an automobile company CEO turned politician, Romney has long battled the characterization that he’s a modern-day, buttoned-down version of Gordon Gekko. So even pro-business Republicans could balk at Romney’s line of work. “I do draw a distinction between looting a company, leaving behind broken families and broken neighborhoods, and leaving behind a factory that should be there,” Gingrich said this week.
Former General Electric CEO Jack Welch, who thinks Romney is “perfect,” was dubbed Neutron Jack for cutting more than 100,000 people jobs from GE’s workforce.
Romney has often reinforced the view of him as rich and out-of-touch with his own gaffes, like offering Perry a $10,000 bet during a December debate in Iowa. The photo of a younger Romney and his fellow Bain Capital executives suited up and stuffed to the gills with cash didn’t help. And given the current line of attack, neither did the praise Romney received Monday from another high-profile businessman. Former General Electric CEO Jack Welch, who told CNN he thinks Romney is “perfect,” was dubbed Neutron Jack for cutting more than 100,000 people from GE’s workforce in the early 1980s.
While stumping in New Hampshire this week, Romney provided his rivals with more ammunition. In a Monday morning speech to the Nashua Chamber of Commerce, Romney tried to make a larger point about consumers being able to shop for their own health insurance companies. But in doing so, he offered up a sound bite that perfectly played in to the narrative that he’s just a cold-hearted capitalist – the guy who fired your father for fun and profit. “I like being able to fire people who provide services to me,” he said, almost instantly setting off a new wave of attacks. Huntsman, for example, shot back that the line makes Romney “un-electable” and said, “Governor Romney enjoys firing people. I enjoy creating jobs.”
Some analysts suggest Romney’s campaign might be strengthened by facing these charges now, as he’s sure to hear them again in a general election race against President Obama. Democrats have already jumped in, reportedly handing out “pink slips” terminating Romney’s candidacy at events in New Hampshire. “If nothing else we’re doing Mitt a favor by exposing him early on so that he can either figure out how to defend that or, more importantly and better from my perspective, he’s not the nominee to begin with,” Rick Perry said on CNN Tuesday night.
Romney himself has agreed that he’ll face much worse attacks in the months ahead. Vice President Joe Biden has already reportedly told New Hampshire Democrats that Romney “thinks it’s more important for the stockholders and the shareholders and the investors and the venture capital guys to do well than for those employees to be part of the bargain.”
On the other hand, if the class warfare continues into the fall campaign, Obama may have a hard time convincing middle-class Americans that he’s any less “elite” than his opponent. And Romney has been testing a way of defusing those attacks on his record at Bain, or at least turning the tables on Obama:
“The vice president and the president, for instance, oversaw General Motors and Chrysler and what did they do?” Romney told ABC News’s George Stephanopoulos after the New Hampshire vote. “They came in and closed factories, closed dealerships, laid people off. They did it to try and save the business and every time we had a reduction in employment it was designed to try and make the business more successful and, ultimately, to grow it.”