Mitt Romney’s rescue of a business consulting firm was achieved in part by convincing the Federal Deposit Insurance Corp. to forgive roughly $10 million of the company’s debts, according to sources close to the deal and federal records obtained by The Boston Globe.
The $ 10 million cost to the FDIC raises the question of whether Romney’s success, as well as the resurrection of Bain & Co., came partially at the expense of the federal agency that protects US bank deposits.
As Mitt Romney defends his record running a private equity firm, he frequently points to a fast-growing Indiana steel company, financed in part by Bain Capital, that now employs 6,000 workers.
What Romney doesn’t mention is that Steel Dynamics also received generous tax breaks and other subsidies provided by the state of Indiana and the residents of DeKalb County, where the company’s first mill was built.
The story of Bain and Steel Dynamics illustrates how Romney, during his business career, made avid use of public-private partnerships, something that many conservatives consider to be “corporate welfare.” It is a commitment that carried over into his term as governor of Massachusetts, when he offered similar incentives to lure businesses to his state.
Yet as he seeks the GOP presidential nomination, he emphasizes government’s adverse effects on economic growth.
Newt Gingrich says Romney “looted” companies and left workers in the lurch. Rick Perry compared Romney and his Bain Capital partners to economic “vultures,” feeding on the corpses of weak companies. Democratic National Committee Chairwoman Debbie Wasserman Schultz has branded Romney a “job cremator.”
In the face of that seething rhetoric, Romney’s defense of his background in private equity has been approximately this: an attack on Bain is an attack on American free enterprise.
That’s a plausible enough line for a Republican primary — a contest fought among voters who basically trust the market economy. But Romney has grounded his whole campaign on the claim that he understands how to create jobs and spur investment. And now his Republican opponents are slashing away at that political identity, a task made easier by the fact that Romney has typically spoken about his business experience in only the vaguest of terms.
Until he gives a stronger, more detailed and definitive account of what he accomplished in the private sector — and why his critics are wrong — Romney will remain grievously vulnerable to the very same attacks that his opponents are leveling. They could be all the more damaging in a general election. And Romney’s “I like being able to fire people” line — while clearly and obviously taken out of context — only buttresses the caricature of him as a Mr. Potter-type.
Romney defenders say that airing the Bain narrative now could inoculate him for the campaign against President Barack Obama, since the Republican would be able to call the attacks old news. That’s only true if Romney fends off the criticism; if the attack sinks in now, it’ll be even harder to shake off later.
The problem is that even though Romney did not behave unethically, immorally or illegally, voters will view laying off thousands of workers in search of hundreds of millions in profits as thoroughly distasteful and they will be less likely to listen to Romney’s message because they dislike the messenger. Had Romney founded a business that did not rely on laying off thousands of workers as part of its business model, this would never have been an issue. If you were (emphasis on past tense) a factory worker in Ohio or Pennsylvania or the Upper Midwest, all states that should be in play in 2012 because Republicans won statewide elections in 2010, and Mitt Romney or one of his colleagues closed your plant because there was a more efficient use of the capital employed there and made hundreds of millions of dollars in the process, how seriously do you think you will listen to anything Mitt Romney has to say?
The question Republican primary voters need to ask themselves is the following. In a climate of near 10% unemployment, do you want a vulture investor to be the face of your party?
Given that the focus of this election needs to be squarely on Barack Obama and his Marxist rhetoric and policies, it is paramount that Republicans not nominate a candidate that detracts from that.
This election played out in the 2010 Governor’s race in Connecticut and it did not end well for Republicans.