The political climate after the Citizens United is baffling to me in this age of social media. How can any American be influenced by a political campaign ad when it’s easy to fact-check anything shown in a campaign ad?
How can anyone believe Mitt Romney is a job creator when is easy to do online research and discover his record at Bain Capital and his job record as Governor of Massachusetts proves what he is saying is false?
Mitt Romney says, “The fact is that I spent 25 years in the private sector. And that obviously teaches you something that you don’t learn if you haven’t spent any time in the private sector … You learn through life’s experience,” Romney said, in his first public response to Obama’s criticism. “The president’s experience has been exclusively in politics and as a community organizer. Both of those are fine areas of endeavor, but right now we have an economy in trouble, and someone who spent their career in the economy is more suited to help fix the economy than someone who spent his life in politics and as a community organizer.”
“Romney campaigned for Governor on the promises of more jobs, decreased debt and smaller government,” Axelrod wrote in a five-page public memo previewing his message. “When he left office, however, state debt had increased, the size of government had grown, and over his four years, Massachusetts’ record of job creation was among the worst in the nation.”
“But when it comes to Mitt Romney and his economic philosophy the facts are clear—it didn’t work then, and it won’t work now,” Axelrod wrote.
Romney’s campaign, which hopes voters will see the election as a referendum on the economy, wasted no time hitting back.
“If President Obama had even half of Mitt Romney’s record on jobs and the economy, he’d be running on it,” spokeswoman Amanda Henneberg said in an emailed statement that accused Obama of “years of broken promises and job-destroying policies.”
A close examination of the prospectus for Bain Capital paints a different picture of Bain’s operation. Under Romney’s leadership, Bain became one of the nation’s top leveraged-buyout firms, helping lead a trend in which companies were acquired using debt often pledged against their own assets or earnings.
Bain expanded many of the companies it acquired. But like other leveraged-buyout firms, Romney and his team also maximized returns by firing workers, seeking government subsidies, and flipping companies quickly for large profits. Sometimes Bain investors gained even when companies slid into bankruptcy.
Romney himself became wealthy at Bain. He is now worth between $190 million and $250 million, much of it derived from his time running the investment firm, his campaign staffers have said.
Bain managers said their mission was clear. “I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. “The primary goal of private equity is to create wealth for your investors.”
Bain’s top 10 dollar investments under Romney — averaging $53 million — spanned a number of sectors, including healthcare, entertainment and manufacturing. The firm’s largest investment was its 1999 buyout of Domino’s Pizza, into which Bain put $188.8 million, eventually reaping a fivefold return.
Leveraged buyouts allow investors to purchase businesses with the acquisition funded sometimes by significant amounts of debt. To critics, these leveraged deals can make acquired companies more vulnerable to economic downturns, leading to a greater likelihood of bankruptcy and job cuts. At the same time, the deals sometimes introduce discipline to firms and even whole industries that need it.
Either way, Bain investors typically profited.
That was true in the case of GS Industries, the 10th-biggest Bain investment in the Romney years. Bain formed GSI in the early 1990s by spending $24 million to acquire and merge steel companies with plants in Missouri, South Carolina and other states.
Company managers cut jobs and benefits almost immediately. Meanwhile, Bain and other investors received management fees from GSI and a $65-million dividend in the first years after the acquisition, according to interviews with company employees.
In 1999, as economic challenges mounted, GSI sought a federal loan guarantee intended to help steel companies compete internationally. The loan deal was approved, but in 2001, before it could be used, the company went bankrupt, two years after Romney left Bain.
More than 700 workers were fired, losing not only their jobs but health insurance, severance and a chunk of their pension benefits. GSI retirees also lost their health insurance and other benefits. Bain partners received about $50 million on their initial investment, a 100% gain.
“It makes me sick,” said Steve Morrow, a retired GSI steelworker, recalling what happened to his fellow workers after the Kansas City shutdown. Some top managers received bonuses from Bain, he said. “But the salaried and hourly people ended up with the shaft.”