Mitt Romney’s career at Bain Capital buying up and restructuring companies — sometimes with major job cuts along the way — has been a glaring vulnerability since his earliest political runs. But it’s rarely come up in his two presidential campaigns, where the GOP’s investor-friendly ethos has made rivals hesitant to use it against him. Until now, that is.
Newt Gingrich got the toughest shot in on Monday, suggesting that Romney’s time at Bain showed he was heartless and out of touch with the average American.
“I would just say that if Gov. Romney would like to give back all of the money he’s earned from bankrupting companies and laying off employees over his years at Bain, that I would be glad to listen to him,” Gingrich told reporters.
Jon Huntsman’s been hinting at Romney’s investment capital years as well, albeit more subtly, making extensive use of a now infamous photo of Bain-era Romney awash in dollar bills in his new website 10kbet.com and an accompanying web video (This is the same Huntsman whose father is a billionaire).
Why is the issue coming up all of a sudden? Despite the Tea Party’s anti-bailout streak, it isn’t because Republicans have suddenly decided they hate investors — Gingrich, for example, got pilloried in the conservative press as anti-capitalist over his “layoffs” line and conspicuously rededicated himself to a “positive” campaign the very next day.
The real subtext is electability. President Obama has made it absolutely clear that this race is going to be about the 99% vs. the 1% on taxes, entitlements, and regulation. Sure we think Bain Capital is a paragon of free market values, Romney’s Republican critics argue, but what about those swing voters who are all too easily swayed the first time they see an ad featuring workers Romney laid off?
“If you can make the argument either directly or indirectly that this makes him unelectable, then you have fundamentally undermined the rationale of his candidacy,” one unaligned Republican strategist skeptical of Romney told TPM.
Behind the scenes, Republicans opposed to Romney have long whispered that Bain is the candidate’s glass jaw, that it killed his Senate campaign in 1994, that he’s shown no sign he’s learned to handle the issue on a national stage because it’s not a big factor in the Republican primaries.
“A main argument Romney has made to Republicans has been that they should hold their noses and vote for him because he has the best chance of beating Obama,” one Republican operative at a rival campaign told TPM. “But a lot of Republicans who have thought through how his record at Bain could be used against him, especially in nasty campaign ads in economically depressed parts of swing states, think Bain is a huge liability and that Democrats will bludgeon him with it. Expect to see a lot more scrutiny of Romney’s record in business, and of Bain, in the next month.”
Influential RedState blogger (and Romney detractor) Erick Erickson has brought up the Bain days in exactly that context, warning voters that “if you are foolish, given that the President intends to campaign on a moral case against success and a lot of people are receptive to it, you might want to put up a candidate who made his money doing leveraged buy outs, laying off people, and restructuring companies.”
Erickson is certainly right that Democrats are waiting to pounce on Romney’s business record. Perhaps the biggest sign of how much oomph Democratic strategists ascribe to the Bain Capital angle, is that they’ve barely used it at all. Even while the DNC and Obama campaign frequently bring up Romney’s wealth (see: bet, $10,000), Bain’s layoffs almost never come up. That’s not an oversight: they’re keeping the powder dry for the general.
The Romney campaign has been preparing for these attacks for years, however. As soon as Gingrich went after Romney, they trotted out the founder of Bain success story Staples, Tom Stemberg, to tout the candidate’s job creation bonafides. Romney’s campaign did not respond to requests for comment on this piece, but his staff have argued to reporters that, like any investment business, some of Bain’s picks panned out and others didn’t, and finding isolated examples is missing the forest for the trees. Andrea Saul, a spokeswoman, told the New York Times that “while not every business was successful, the firm had an excellent overall track record and created jobs with well-known companies.”
Brad Blakeman, a former advisor to President Bush, told TPM the attacks on Romney’s Bain days were “unfair,” and unlikely to resonate in the general given the focus on Obama’s economic record.
“Attacks on Romney are geared at showing that he is not the job creating business leader that he touts himself to be and that instead he is all about the bottom line of profiteering,” he said. “The facts are that Romney is a businessman who made tough decisions to protect jobs and create profitable businesses. Newt was not a businessman. By his own definition, he is a historian, a politician and a thinker.”
Bain’s success is undeniable and owes much to Romney’s leadership and innovative strategy — one recent New York Magazine profile called him a “business revolutionary” — but articles examining his time there as CEO have noted that “job creation” was hardly the company’s primary function. It also may be tough for Romney to explain the nuances of deals in which Bain ultimately profited from failed companies by extracting management fees. A New York Times profile of Romney’s Bain career brought up one such representative case, medical company Dade in Illinois:
Bain and a small group of investors bought Dade in 1994 with mostly borrowed money, limiting their risk. They extracted cash from the company at almost every turn — paying themselves nearly $100 million in fees, first for buying the company and then for helping to run it. Later, just after Mr. Romney stepped down from his role, Bain took $242 million out of the business in a transaction that, according to bankruptcy documents and several former Dade officials, weakened the company.
FactCheck.org notably took issue with an ad by pro-Romney independent group Restore Our Future claiming the candidate created “thousands of jobs,” saying they couldn’t find a solid number to back it up and noting examples in which layoffs ultimately led to profits.
“I never thought of what I do for a living as job creation,” Marc Walpow, a managing partner who worked with Romney at Bain, told the Los Angeles Times for a story last month. “The primary goal of private equity is to create wealth for your investors.”
Benjy Sarlin is a reporter for Talking Points Memo and co-writes the campaign blog, TPM2012. He previously reported for The Daily Beast/Newsweek as their Washington Correspondent and covered local politics for the New York Sun.