Romney, Bain Capital, and job creation
The Obama campaign team is running a new TV ad blaming Romney and his firm, Bain Capital, for launching a vampire attack on GST Steel in Kansas, destroying over 700 jobs in a blind spasm of corporate greed:
The discerning viewer will notice a number of important facts Team Obama decided to leave out, such as the timing of GST Steel’s layoffs and bankruptcy… which occurred several years after Romney left Bain Capital to work on the Salt Lake City Olympics in 1999. This isn’t the first time Obama has banked on voter ignorance by trying to blame Romney for decisions made after he left Bain, and it won’t be the last.
You know who was working at Bain Capital when the GST layoffs hit? Top Obama campaign bundler Jonathan Lavine. “Lavine, who has raised over $100,000 for the president, was at the firm when GST Steel declared bankruptcy,” recalls Robert Costa at National Review. “So according to the Obama team’s logic, Romney, who had left Bain, is responsible for GST Steel’s demise, but Lavine, who was there, is not?”
Furthermore, the Washington Examiner notes that GST employee Joe Soptic, featured prominently in the video, was actually offered a buyout when Bain moved in. Most helpless little guys ground beneath the corporate heel don’t get buyout offers.
It’s a mighty long stretch for President Solyndra to be criticizing anyone’s investment strategy. Unlike Obama, Romney and Bain Capital were not using the force of law to loot taxpayers and control industries.
One might also note the similarity between the activity Obama criticizes Romney for, and Obama’s takeover of General Motors, which wiped out tens of thousands of jobs. One person drawing this comparison is Steve Rattner, who actually ran the GM bailout for President Obama. He calls the new Obama ad an “unfair” attack on Romney:
Taxpayers are still $26 billion in the hole on the GM bailout, and yet President Obama constantly touts it as a marvelous “success,” and speaks often of GM’s “profits.” I doubt the folks at Bain Capital sit around the boardroom pretending that $26 billion losses are “successful investments.” Of course, they don’t have the power to force taxpayers to cover their losses, as Barack Obama has done.
The Obama campaign would doubtless respond by pointing to whatever number of jobs they’ve “created or saved” with bailouts. That’s obviously not a concession they’re willing to offer Romney, or any other free-market investor. Buyouts and restructuring, with attendant job losses, are somehow sanctified by passing through government. Votes cast once every four years, based on a wide range of policy positions and extraneous personal issues, are supposed to be a more pure and moral mechanism for economic guidance than billions of dollars spent freely by millions of people.
Stasis is being presented as morally superior to dynamic growth. Are we supposed to pass a law that says private-sector investments can only be made if the investors agree to retain 90, 95, or 100 percent of the workforce, as well as vowing not to declare bankruptcy? How long would that moratorium have to last?
Who would be willing to make an investment under rules like that? Bain borrowed a good $250 million to buy out several companies, create GST Steel through a merger, and upgrade their equipment. It’s a matter of some debate whether they actually made a profit at all, since some of the figures have not been publicly disclosed. They did realize a $36 million dividend after the merger, but they immediately reinvested $17 million of it. When Bain first got involved, the operation was carrying $376 million in debt.
That sounds like a costly effort to make a difficult investment work out, or perhaps a foolish gamble that didn’t pay off, not corporate piracy. What’s the Obama alternative? Taxpayer-subsidized guarantees that nobody in a preferred corporation or industry will lose their jobs, or suffer reductions in their benefits? The President of the United States at the time Bain became involved in GST Steel happens to have been a Democrat, Bill Clinton. Why didn’t he swoop in and save all those jobs? How much in interest would the rest of us have paid on the ensuing 17 years of accumulated debt if he had?
At any rate, there’s an enormous difference between private investors firing people to make a troubled company solvent, and a failed President who makes millions of other peoples’ jobs disappear. The entire point of economic freedom is the liberty to take risks in the pursuit of profit. Obamanomics is all about imposing ideology, and forcing the public to cover the costs.
The last thing free-market America needs is a tribunal of politicians declaring that certain jobs can never be lost, no matter what the cost. We can bet that such decisions would not be guided by sound investment strategies, designed to maximize return on taxpayer-shareholder investments. Of course, a President who has never had to make a payroll wouldn’t understand the distinction.
Update: The Romney campaign counters with a different story about steel mill investments. “When others shied away, Mitt Romney’s private sector leadership team stepped in.”