Friday, July 13, 2012

The Bain of Romney's Existence

 Mitt-gomery Burns?

 "Ironic, isn't it Smithers? This anonymous clan of slack-jawed troglodytes has cost me the election, and yet if I were to have them killed, I would be the one to go to jail. That's democracy for you." --C. Montgomery Burns

As the drip, drip, drip of the stories about Bain Capital, tax returns, and overseas tax shelters continue, I keep wondering how, after running for President for 5+ years, did Mitt Romney allow these issues to continue to fester. Certainly you'd think someone like Romney would at least have the self-awareness to know that Swiss Bank accounts, Cayman Islands bank accounts, and a record of closing companies and outsourcing jobs just might not be all that popular with American voters.  

Does someone of Romney's status just think all of this is normal? You might attribute a never-before-seen level of arrogance, entitlement, and privilege to someone who thought he could run for President (twice!) and not have to provide legitimate answers to all of these questions. I think even Gordon Gekko would have the self-awareness to know what he did would not be viewed positively by most voters and would have figured out how to spin it better.

Romney obviously knew as far back as mid-way through his term as Massachusetts governor in the mid-aughts that he was going to run for President. At that point if you were Romney's strategists, wouldn't you advise him to begin shedding the overseas tax shelters and Swiss Bank account and bring that money home? If it wasn't presently happening on recent tax returns, you could always dismiss the charges as "old news." And wouldn't you have been able to mount a coherent, believable defense of your record at Bain Capital? Maybe something a little better than "I'm not going to apologize for my success."

Nobody wants you to apologize for your success, Mr. Romney. You have every legal right to all that money you earned and to the money you saved from the taxes you avoided paying. But the American people don't have to laud you for the way you made your money, nor do they have to appreciate how you used loopholes and shelters to avoid paying your fair share in taxes.

And to try to sell people on the idea that venture-capitalists' goal is to create jobs is laughable. As Washington Post business/economics columnist Steve Pearlstein pointed out a few years ago:
In the real world, businesses exist to create profits for shareholders, not jobs for workers. That's why they call it capitalism, not job-ism. There's no reason to beat up on business owners and executives simply because they're doing what the system encourages them to do.

And I think that's exactly right. Bain Capital, like all businesses, exist to make one thing: money. Job creation only occurs when a company believes the added labor will create more profit. You don't run a business with the goal of creating jobs; you run a business to make a profit. 

And as a guy running a venture-capital firm, it's perfectly reasonable for Romney to have participated in leveraged buyouts, loaded companies up with debt, outsourced jobs, closed companies, etc., all in the name of creating profits for shareholders. I don't like it, but that's what venture-capitalists do. In fact, as a guy running a company such as this, if he didn't try to do everything he could to maximize profits, he should have been relieved of his duties. But again, Americans don't have to like it.  While parents hope the best for their kids, does any parent really have dreams of their kid ascending to an executive job in private-equity?  

That's why CEO's of venture-capital and private-equity firms typically don't run for President - for one it's a huge pay cut. And voters usually want to believe Presidents understand their problems, and can relate to them, and not appear to be, as Mike Huckabee famously noted about Romney, "the guy who fired you."

So from 1977 until the present, Mitt Romney has had five public endeavors: 1)worked at and eventually ran Bain Capital, 2)ran unsuccessfully for MA Senate in 1994, 3)helped run the 2002 Salt Lake City Olympic Games, 4)served as governor of MA for 4 years, and 5)has run for President for 5+ years.

Obviously #2 and #5 aren't really something to emphasize. #3 is a nice story, but not really the kind of thing people look for in a presidential candidate. So that leaves his time as MA governor and his time at Bain. He's doesn't talk much about his time as a technocratic, moderate governor thanks to the right-ward tilt of his party in the last 4 years. So that leaves Bain and he has been reluctant to tell the whole story of his time there.

I'm a little biased here, but it just feels like the whole picture isn't complete. He seemed to bank his entire campaign on being the acceptable generic candidate in an election that was going to be singularly about holding the incumbent accountable for the slowly-recovering economy. Maybe being the "other" in that binary choice will be enough if the economy stays the same or gets worse. But as it is looking now, that strategy came with big risks (letting your opponent define you, economy improving, etc) and the consequences of those risks are on display this week.

I don't see any way Romney can put these stories to rest without releasing several more years of tax returns, along with documents from Bain from 1999-2002 showing what his role in the company was. Releasing the hounds isn't going to work.

1 comment:

  1. Maybe shedding the overseas tax shelters and Swiss Bank accounts is unthinkable because the wealth is astounding?