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Saturday, January 14, 2012

Ripping Romney's Record

The attacks themselves were nothing new; we've all heard the hits on Mitt Romney's past--the millions he made at Bain & Co. and Bain Capital, the businesses they tried to save but couldn't, the people who were thrown out of work--that have become a familiar rallying cry for political hacks trying to gin up popular opposition to what was in reality a record of leadership and job creation. What was different about this round of attacks was the source(s). The latest round of smears on Romney's private-equity exploits came not from the White House or the Obama re-election campaign, nor from MSNBC or some leftist blog. (I guess it's kind of hard to tell the difference between these different entities though.) Rather, they came from Mitt's fellow Republicans--specifically, his rivals for the GOP nomination, their campaigns, their surrogates in the media and independent groups who run ads on their behalf.

Following a pathetic showing in the Iowa caucuses, Gingrich and Perry had started grumbling about Romney's past in advance of the New Hampshire primary, but things really got heated after Romney himself dropped a catalyst into an already volatile elixir of eleventh-hour barnstorming. On the eve of the critical New Hampshire primary, Romney made an unfortunate statement that, when taken out of context, sounds really, really bad (I'm not going to come up with a colorful way to say everything.):

"I like being able to fire people who provide services to me."

Actually, it's the first seven words of that sentence that stirred up so many talking heads across the political spectrum. Mitt Romney, already under fire for not being able to save every job in every business Bain invested in while he was CEO (and, according to his detractors, thereby "firing" a bunch of workers) and anticipating a similar line of attack in the general election, said that he liked "being able to fire people."

On the surface, that remark wouldn't seem to be problematic for a presidential candidate, but because of Mitt Romney's background and the image of him as a ruthless corporate baron that his enemies are trying so hard to cultivate, his words gave pols, pundits and pettifoggers the world over something to fuss about.

"Mitt Romney likes to fire people," declared the Daily Beast, an online symposium for talentless hacks seeking a repository for their insightful prose that most of us common folk are too stupid/unsophisticated to appreciate.

Loony Larry O'Donnell told his audience that night, "I think Bain Capital is the greatest ... private equity firm in the World ever." (You can never really be sure where that guy is coming from.)

DNC Chairwoman and part-time gargoyle Debbie Wasserman-Schultz said ... well, who cares what she said? The point is, we expected the left to pounce on (and distort) Romney's words, but the most distrubing vitreol spewed from the mouths of those who seek to carry the mantle of a party that is supposed to be pro-capitalist, pro-free enterprise, meritocratic and, above all, honest. Newt Gingrich accused Romney of "looting a company, leaving behind behind broken families and broken neighborhoods and ... a factory that should be there." Rick Perry called the former Massachusetts governor a "vulture capitalist". (His campaign even turned Romney's words into a ring tone.) Even Jon Huntsman, Jr., got off his high horse and said, "Governor Romney enjoys firing people. I enjoy creating jobs."

The above-listed quotes are just a sampling of the many, many shots Mitt Romney took this past week, and the stinging disappointment I felt at seeing so-called conservatives (or "classical liberals", if you'd prefer) attack one of their own for his successful career in the private-equity business was mitigated by the outpouring of support for Romney, not just from the voters of New Hampshire, but from conservative journalists who were rightly disgusted by the Obama-style tripe being peddled by so-called Republicans who for months had been denouncing similar rhetoric by Democrats. Washington Post blogger Jennifer Rubin wrote that the "anti-capitalistic pandering" by Romney's Republican rivals "will likely go down as a text-book example of political stupidity." Michelle Malkin (definitely not a Romney fan, for those of you who didn’t know) blogged that "incompetent non-Romneys have morphed into Michael Moore propagandists — throwing not just Bain Capital under the bus, but wealth creators of all kinds who take risks in the private marketplace." The Wall Street Journal excoriated Gingrich and Perry "for their crude and damaging caricatures of modern business and capitalism." To be fair, Gingrich and Huntsman later walked back their comments lambasting Romney for his work at Bain Capital.

All of this would warrant concern beyond this week if anyone other than Mitt Romney stood a fighting chance of winning the GOP nomination. This is not the case, however, so we must turn our attention to the irritating chatterboxes who we will have to put up with in the general election campaign and who will continue to attack Romney, fairly or unfairly, for anything they can connect him to, no matter how manufactured the tragedy or how tenuous the link.

To the extent that Mitt's business background is a liability, it poses a grave threat largely because most Americans don't know the details of it, and hence it is ripe for distortion. From my vantage point, it appears that most of the people using Bain to attack Romney don't even understand what the company does/did. This is evident in their nonsensical, absurd and often incoherent criticisms of the firm's investment ventures in the 1980s and '90s, while Romney was C.E.O. Most of them pile on Mitt for shuttering unprofitable businesses and laying off workers while drawing a hefty salary for himself. Sometimes, though, whatever reasonable shot his detractors might be able to take at him is clouded by their visceral dislike of the man and everything he stands for. As Matt Bai wrote on his New York Times blog, "the attacks lobbed at Mr. Romney have been disparate and not terribly persuasive."

Case in point: Forbes columnist Robert Lenzner accused Romney of "firing more people than he hired." Not only is this not supported by the facts, Lenzer didn't even try to back it up. Matt Bai's fellow New York Times blogger Paul Krugman made a similarly unsubstantiated (and oversimplified) claim when he wrote that Romney "was a buyer and seller of businesses, often to the detriment of their employees." (This was still less inane than his assertion in an earlier column that “Mr. Romney and those like him ... enrich themselves while helping to destroy the American middle class.”) The aforementioned Debbie Wasserman Schultz took the attacks on Mitt and his work at Bain to a new level of crazy when she claimed that Romney “bankrupted companies deliberately.” (She also echoed a new Democratic talking point that “Mitt Romney said ... that he likes firing people,” a lie so blatant that even Andrea Mitchell called her out on it.)

I’m not sure if Congresswoman Wasserman-Schultz has some mental disorder that just compels her to lie, or if she just doesn’t understand what bankruptcy is or why companies enter Chapter 11, but no matter. This is, again, just a sampling of the left-wing lunacy on display in the media coverage of Romney's past. I've noticed that a lot of Romney's critics cite a recent Wall Street Journal piece in support of their attacks, which they laughably maintain are neither anti-capitalist nor anti-business. I read the entire Journal story, which was written by Mark Maremont, and I was a little surprised at some of the information that no one--not even Romney surrogates--had trumpeted in defense of the candidate and his former employer. Here's the gist of the article: The Journal examined 77 businesses Bain invested in while Mitt Romney led the firm from 1984 until 1999 "to see how they fared during Bain's involvement and shortly afterward." A figure repeated (and distorted) by the haters was that "22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses." Another "8% ran into so much trouble that all of the money Bain invested was lost," according to the Journal, which means that 70% of Bain's ventures during the time frame of the study were successful. If our president had a 70% approval rating, then he'd be viewed as unbeatable.

Another point that those propagating the Romney-got-rich-killing-jobs-and-destroying-lives meme have omitted is something that really should be widely known but doesn't always dawn on your simple, self-styled blue-collar, working-class voter who might be swayed by this rhetoric: companies can emerge from bankruptcy. Often times, bankruptcy is not the end of a business; it's a reorganization. Seeking the protection of a bankruptcy court isn't necessarily a sign of long-term business failure. As Maremont noted: Not only that, but a lot of the businesses that entered bankruptcy despite Bain's involvement went bankrupt after Romney had left the company. One such company, American Pad & Paper (a.k.a. AmPad), has been a favorite of the Left as an example of the ruthless, cutthroat capitalism that is apparently bad. After Bain's initial investment in 1992, two of AmPad's American plants were closed and hundreds of employees were laid off. Bain and its investors made a lot of money. The company went bankrupt.

Many of the Bain companies emerged from reorganization healthier, just as, for instance, General Motors did a few years ago. But while bankruptcy filings aren't a perfect measure of performance, they provide a way to assess a disparate array of target businesses that in many cases weren't required to make public financial filings.

If that doesn't exactly make sense to you, then it's because I've omitted several relevant facts, just like the anti-Romney prattlers have. One of the plants was shut was shut down because of a union strike, not exactly something the Romney-bashers, most of whom carry a lot of water for big labor, would want the public to know. Also, everyone who lost their job was offerred a job at one of the other facilities. Perhaps most importantly, AmPad was acquired out of bankruptcy. It is now owned by Esselte, a Connecticut-based global office supplies manufacturer, and still employs thousands of people.

As for the companies that didn't make it out of bankruptcy, a quote from one of Romney's former co-workers sheds some light on why so many of Bain's business ventures went belly-up. There are two paragraphs in the Journal article that everyone--and I mean everyone--who has heard it referenced in any context ought to read: In other words, Mitt Romney was not a ruthless corporate shark who did whatever he could to make money, as so many pinkoes are trying to make him out to be, but he was the very thing they're trying to convince people he's not, "an excellent CEO."

Marc Wolpow, a former Bain Capital executive, said the frequency of trouble did indeed stem largely from the firm's strategy early on of investing in smaller, troubled firms it hoped to turn around.
"I don't think you can hold Mitt out as a great investor per se," Mr. Wolpow said, "but he was an excellent CEO of an investment firm, and the results speak for themselves."

Others who actually worked with Mitt Romney and got to know him have similar praiseworthy things to say about him. Before I get to my next example, I need to bring up what appears to be a good-faith but still misleading analysis of Romney's business record. Earlier this week, the Washington Post published their "fact check" of Romney's claim that Bain “invested in over 100 different businesses and net, net, taking out the ones where we lost jobs and those that we added, those businesses have now added over 100,000 jobs.” They called the 100,000 jobs figure "untenable" and gave Romney's comments three pinocchios, which indicates "significant factual error and/or obvious contradictions." While acknowledging that "Romney certainly has a good story to tell about knowing how to manage a business, spotting opportunities and understanding high finance," writes that, "if he is to continue to make claims about job creation, [then] the Romney campaign needs to provide a real accounting of how many jobs were gained or lost through Bain Capital investments while the firm managed these companies — and while Romney was chief executive. Any jobs counted after either of those data points simply do not pass the laugh test."

Among other examples, Kessler points to Staples, one of Bain's most successful ventures, which has added 89,000 jobs since Bain's initial investment. Says Kessler, "Bain may have provided management expertise or money when others would not, but a company such as Staples — one of the biggest contributors to Romney’s job figures — was largely the brainchild of entrepreneur Tom Stemberg." I'm sure Stemberg appreciated that backhanded shout-out, but I know he would dispute the implication that Romney doesn't deserve some credit for Staples's growth and success. How do I know that? Let's just say I can see the future.

I realize that, no matter how much research I do or how many sound, logical arguments I make, there are some people I just won't get through to because I have no credibility with him. So, if you're a Lefty who still thinks Mitt Romney made a fortune as the head of a heartless, avaricious corporate raider that lined its investors' pockets with the gains it reaped from slashing and burning companies, then you ought to read an opinion piece written for POLITICO by none other than Steven Rattner, the investment banker/financier and big-government booster who recently served as the Obama administration's "car czar". While making it clear that he's "all in favor of piling on Mitt Romney for any number of reasons," Rattner makes it clear that, "with modest exceptions (keep reading to learn more about these), Bain Capital was a thoroughly respectable — nay, eminent — investment manager that successfully discharged its responsibility of earning high returns for its investors by deploying capital in companies privately rather than by buying shares in the public market."

In addition to providing an accurate (and, impressively, concise) explanation of what the private-equity business is all about, Rattner's article chronicles the early history of Bain & Co. He provides specific examples of Bain's successes and failures, with objectively verifiable facts and figures detailing what investments the company made, the human cost of saving businesses that would otherwise have gone under, what "success" and "failure" meant in dollars and cents, and, perhaps most importantly, how Bain did right by its investors: So, to recap: Bain Capital, under the leadership of Mitt Romney, sought out struggling companies that needed saving (like AmPad), promising start-ups in need of seed money (think Staples) and older, more developed businesses ripe for leveraged buyouts (e.g., Domino’s Pizza). Some of the ventures were more successful than others, and a handful went into bankruptcy (though I've yet to learn of one that did while Romney was still at the helm). It's beyond dispute that, however incalculable the actual number of jobs created or saved by Bain during Romney's tenure, the net increase of jobs at the companies Bain invested in far exceeds the job losses at all those companies. Finally, and again most importantly, "Bain Capital more than fulfilled its responsibility to a gaggle of investors, who were mostly foundations, endowments, pension funds and the like."

Overall, Bain Capital’s record was extraordinary, among the best in the business. According to a Bain placement document, through the end of 1999 (effectively, when Romney left), the firm had achieved annual returns of 88 percent per year.
That is not only wildly more than the single-digit returns most investors achieve by buying stocks or bonds, it is far higher than those of typical private equity or venture capital firms.

Romney was the CEO of Bain Capital, not of the individual enterprises that Bain invested in, managed and tried to save. But if his critics won't give him credit for any of the jobs that were created in these companies after Romney left Bain, then they can't fairly blame him for anything that happened to these businesses or their employees after 1999, either. The key word there is, of course, "fairly." There's no doubt in my mind that Mitt Romney will win the nomination and the presidency this year if his opponents play fair, which is why they won't.

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