Monday, May 14, 2012

Romney Economics

(revised and updated)

Here is a new Obama campaign video describing what happened at GST Steel after it was acquired by Bain Capital (more on new website):


I expected an outcry from Romney supporters and from the media about how unfair and shameful it is that the Obama campaign is now resorting to negative advertising. That complaint might have had some force given that Obama has staked his reputation, in the 2008 campaign, and during his presidency, on keeping the tone generally positive and constructive, no matter what the provocation. To descend into attack ads risks that reputation.

On the other hand, no one should expect Governor Romney to be allowed to spend his entire stump speeches and endless numbers of campaign commercials attacking the president, using whatever lies and distortions he chooses (these have been documented), without also expecting President Obama to respond by talking about Romney's record.

Anyway, instead of acting offended by the Obama campaign's resort to negative advertising, the Romney campaign and its supporters appear to have taken the bait (thus accepting the legitimacy of talking about Romney's legacy at Bain Capital).  First Steve Rattner went on Morning Joe this morning claiming the ad was unfair because Bain Capital did nothing wrong by closing companies and laying off workers. Bain was supposed to be making money for investors, not worrying about workers' jobs. Exactly right, Steve! This is probably the response the campaign was hoping for. Nobody said Bain did anything illegal. They just want Romney to acknowledge that he cares more about profits than people. Remember it was Mitt Romney who claims his experience at Bain qualifies him to be President of the United States, a job which is supposed to have different priorities than he did at Bain. Yet Romney claims his experience will help reduce unemployment. How, Mitt?

Another line of attack on the new Obama ad asserts that Romney should not be held responsible for closing GST Steel because he had already left Bain by the time GST Steel closed. In fact, however, Romney retained ownership of Bain for two years after he took a leave of absence in 1999. In any case, this deal was put in place while Romney was actively involved in Bain, and followed the model Romney established during his tenure there.

One can make the argument that companies like Bain Capital serve a useful purpose by maximizing the value of the assets of struggling companies. In many cases, the new owners can achieve the greatest return on investment by closing the company down and selling off the assets. So partners in companies like Bain can certainly say with a straight face they are serving the interests of creating efficiencies in the economy by their strategies, while they are enriching themselves in the process. They can say they are doing nothing wrong, but what they can't argue at the same time is that their actions are designed to maximize employment and protect the investments of the employees of those shuttered companies. Because one of the ways that the owners are able to maximize their return is to deprive employees of their pensions and other benefits which they thought were vested entitlements. That loss had to be made up in part by taxpayers, while Bain partners got rich by avoiding it.

Unless the prospective Romney administration is planning on selling off the assets of the United States of America and stripping workers of their rights and benefits, it is hard to see how Mitt Romney's experience at Bain qualifies him to be President of the United States. Everything Romney learned at Bain he would have to un-learn as president. To retain any credibility as a potential guardian of the livelihoods of American workers, he would have to pledge to follow exactly the opposite philosophy that companies like Bain employ. This Romney has not promised to do.

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