From the moment Mitt Romney threw his hat in the Republican nomination ring, Barack Obama's reelection campaign has been itching to deliver attacks on the candidate over Bain Capital. They have been teeing up this strategy for months. President Obama began sounding the class warfare alarm last September, and the left followed by rolling out the Occupy movement to attack “income inequality” and demonizing the so-called One Percent. No one could have doubted in which category Romney would be counted.
The first hint that an attack on private equity might backfire came during the Republican primary. Surprisingly, Newt Gingrich adopted the populist attack line just before the Iowa causes, and it utterly failed to dent Romney’s momentum in the primaries. Rick Santorum refused to play along with Gingrich’s attack despite trailing Romney in the polls, and Gingrich only won two states while Santorum won a dozen before both dropped out. Gingrich was buried in criticism for attacking a normal part of capital markets, which had the effect of rallying people to Romney’s defense.
Amazingly, Obama has managed make Bain Capital and private equity in general victims of unfair attacks.
Of course, that took place in the context of a Republican primary, with mostly (but not entirely) Republican voters punishing Gingrich for the attacks on Bain Capital. The failure of the attack to resonate with conservatives and center-right voters did not deter the Obama campaign in the least. Almost as soon as Santorum and Gingrich withdrew, the Obama campaign finally pulled the trigger on their own Bain attacks, in campaign ads and in talking points to surrogates appearing on television and radio shows over the last couple of weeks.
Almost immediately, the plan began to backfire. The campaign rolled out the ad on Monday morning, May 15th. Coincidentally, Barack Obama attended a fundraiser that evening at the home of Tony James, who runs the private-equity firm Blackstone – the very same kind of firm Obama’s ad demonized in the morning. (In fact, in an interview two days later, Romney told me that Bain and Blackstone collaborated occasionally on projects during Romney’s tenure.) The media did not miss the fumble, and the campaign had to field a deluge of questions about hypocrisy in attacking one private-equity firm while shaking down another for donations.
Evena week later, Obama’s campaign surrogates can’t provide an answer to the simple question of why Obama allows Blackstone to fund his campaign while he attacks Bain Capital for earning money in the same manner.
Nor was that the only misstep from their ad launch. The first ad attacked Bain’s shutdown of a Kansas City plant for steel company GS Industries in 2001, resulting in the loss of 750 jobs. There was only one problem: Romney had left Bain two years earlier. By 2001, Romney had been working full time or two years to rescue the 2002 Salt Lake City Olympics. However, Jonathan Lavine worked at Bain at the time of the plant’s closure. Who’s Jonathan Lavine? Why, just a managing director at Bain – and an Obama bundler in both the 2008 and 2012 cycles. Oops!
BOOKER IS MUZZLED
Even worse, the Obama campaign apparently never coordinated its message on Bain Capital and Romney with its surrogates. One of the campaign’s best assets, the heroic mayor of Newark Cory Booker, pronounced himself “nauseated” by the attack on Bain Capital, calling it “crap” on Meet the Press the following Sunday, although Booker tried to walk back his criticism later, under pressure from the White House. Former Democratic Rep. Harold Ford of Tennessee also rebuked the Obama campaign for making an issue out of normal private-equity deals, followed by former Pennsylvania Governor Ed Rendell (“very disappointing”) and current Senator Mark Warner (D-VA) on Tuesday.
Desperate to find a way to use Bain while avoiding criticism within Democratic ranks, Vice President Joe Biden recast Romney’s Bain experience as irrelevant after all. “That doesn’t mean that the private-equity guys are bad guys,” Biden told a Keene State College audience on Tuesday. “They’re not. But that no more qualifies you to be president than being a plumber.”
Thus did the Obama campaign yet again set a trap for its opponent – and fall into it themselves. First, the Obama campaign has spent more than a week arguing about the relevance of Romney’s track record at Bain. If it was so irrelevant, why have they spent the last week talking about almost nothing else? Obama himself insisted that the Bain attacks were “not a distraction,” but “what this campaign is going to be about.”
Worse for the Obama campaign, though, this brings to the forefront the question of experience and qualifications all over again. Perhaps one can argue that running a government isn’t the same as running a private-equity firm, but then again, Mitt Romney ran a government, too, as governor of Massachusetts for one four-year term. In both careers, Romney balanced budgets and set priorities. In the private sector, he had decades of practical experience in economics, job creation, and business growth, experience he put to use in Massachusetts, with arguable results.
In contrast, what experience did Obama have? He worked as a legislator during the entirety of his political career. Obama never ran a business and therefore had no practical economic experience at all. His first executive and economics position came as President of the United States, and as a result we have fewer jobs in the US than when Obama started, according to the Bureau of Labor Statistics.
In 2008, the prevailing Bush fatigue and the financial crisis made qualifications seem less important, but the political environment is very different in 2012. The last thing Biden and Obama want is a debate on qualifications.
Even apart from that, though, Biden may be entirely wrong about the relevance of private-equity experience. New York Times Columnist David Brooks recently wrote that Romney’s best argument on Bain is that he has precisely the experience needed to reform government, a promise made by Obama that has been lost in pork-laden stimulus bills and crony-benefiting subsidies.
Most Americans see the federal government’s bloat and astronomical budgets as clear signs of inefficiency and waste, and unfunded liabilities in Medicare and Social Security as rapidly approaching disasters that threaten to bankrupt the nation. Private-equity processes may be painful and harsh, but Romney might be the most well prepared candidate in decades to solve the acute and chronic fiscal crises that face the US. A recent Rasmussen poll shows that voters might respond to that argument, with 44% believing that Romney’s experience at Bain is a reason to support him, while only 33% see it as a reason to oppose him.
If they do, Romney should send a big thank-you card to Team Obama for making his resumé a key focus of the presidential campaign. Their ineptitude might end up making the case for a Romney rescue – and a thorough, private-equity approach to government efficiency.