Mitt Romney: The Bailout King Of American Politics
This should go without saying, but criticizing Mitt Romney is not criticizing “capitalism” or “free enterprise.” Moreover, Mitt’s not the man any conservative should want out in the public arena, defending capitalism or free enterprise as a spokesman on our behalf. Going beyond that, let me note that everything that was done at Bain Capital wasn’t worthy of praise. Instituting a leveraged takeover of a business, loading it up with debt, and making a killing off looting its assets while you put a lot of people out of work may be part of capitalism, but it’s not something that conservatives should be madly applauding.
“Oh, but it’s capitalism!”
So’s owning a chain of strip clubs, being a spam king, a collections agency mogul, or a factory owner who puts all of your workers out of jobs while you hire people in China. For that matter, when Newt Gingrich’s firm got paid for consulting with Fannie and Freddie, that was “capitalism” and “free enterprise,” too. I certainly haven’t heard anyone using that defense for him although I have no doubt that 98% of the people criticizing Newt would take six figures in consulting fees from Fannie and Freddie tomorrow if it was offered up. Not everything that makes money deserves applause, nor, for that matter, is it the least bit unusual for “business candidates” to be unable to translate their success in private industry to success in politics. The political battlefield is littered with the bones of much more successful people than Mitt who didn’t turn out to be all that “electable” after all despite, or in some cases, because of their business experience. Look at Carly Fiorina, Meg Whitman, and Linda McMahon, all of whom were moderate, more accomplished than Mitt, and lost in the last election cycle.
Setting that argument aside, Mitt made big profits more than once by sticking other people with the tab.
A company that laid off hundreds of employees. A federal “bailout” to rescue a failing bank. Mitt Romney, at the center of it all.
…“The way the company was rescued was with a federal bailout of $10 million,” the ad says. “The rest of us had to absorb the loss … Romney? He and others made $4 million in this deal. … Mitt Romney: Maybe he’s just against government when it helps working men and women.”
The facts of the Bain & Co. turnaround are a little more complicated, but a Boston Globe report from 1994 confirms that Bain saw several million dollars in loans forgiven by the FDIC, which had taken over Bain’s failed creditor, the Bank of New England.
Romney aides pushed back strongly on the Democratic charge that Bain & Co. received anything like a TARP-style “bailout.” While the FDIC is a government agency, it is funded by deposit insurance payments rather than taxes. The agency agreed to reduce Bain & Co.’s liability to the Bank of New England, but didn’t pump new funds into the flagging firm. Other Bain creditors also took a haircut in order to avert the company’s collapse.
Soon after, in October 1993, Bain Capital, co-founded by Mitt Romney, became majority shareholder in a steel mill that had been operating since 1888.
It was a gamble. The old mill, renamed GS Technologies, needed expensive updating, and demand for its products was susceptible to cycles in the mining industry and commodities markets.
Less than a decade later, the mill was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health insurance they’d been promised, and their pension benefits were cut by as much as $400 a month.
What’s more, a federal government insurance agency had to pony up $44 million to bail out the company’s underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.
Is that legal? Yes. Since Mitt’s goal was to make a profit and this was legal, did it make sense for Bain to take the money. Yes. Is it admirable? No. Is it moral? No. Is it something that the people who were stuck with the bill should resent? Yes.
Moreover, not only did Mitt support TARP, he has admitted during the debates that he’s open to EVEN MORE bailouts. Put it all together and even Barack Obama is to Mitt’s right on bailouts.
Does it really make sense to have someone like this as the GOP nominee? Isn’t this exactly the sort of capitalism on the way up and socialism on the way down mentality a big part of the reason why the Tea Party was formed? Isn’t it the primary reason that the American people aren’t booing the Occupy hand-out hippies off the planet? Is this what conservatives will have to defend in 2012 in the name of “capitalism” because Mitt Romney’s the nominee?