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Thursday, April 26, 2012

Why Is Mitt Romney So Incredibly Weird?

AlterNet.org


TEA PARTY AND THE RIGHT  
Everything you need to know about Willard Mitt Romney. An excerpt from Salon's new e-book, "The Rude Guide to Mitt" 

Photo Credit: C-SPAN
The following is an excerpt from Alex Pareene’s new e-book for Salon, “The Rude Guide to Mitt.” It can be purchased atAmazonBarnes & Noble and the Sony Reader Store.

Mitt Romney is weird. When the Obama reelection campaign early in the cycle made the mistake of indicating that its strategy would be to imply that Mitt Romney is weird by repeatedly telling Politico that it planned on calling Mitt Romney weird, Romney’s camp countered by causing a brief and not particularly sincere media brouhaha over whether “weird” is code for “Mormon.” Plenty of Americans think Mormons are weird, yes, but in this case, the simple fact is Mitt Romney is weird, entirely apart from his religion.

He seems incapable of natural conversation and frequently uncomfortable in his own skin. He’s simultaneously dorkily earnest and ingratiatingly insincere. He suggests a brilliantly designed politician android with an operating system still clearly in beta. He once tied a dog to the roof of his car and drove for hundreds of miles without stopping and some years later thought that was an endearing story. All video of him attempting to interact with normal humans is cringe-inducing, as a cursory YouTube search quickly demonstrates. (Martin Luther King Day, Jacksonville, Fla., 2008: Mitt poses for a picture with some cheerful young parade attendees. As he squeezes in to the otherwise all-black group, he says, apropros of nothing, “Who let the dogs out? Woof, woof!”) He seems to have been told that “small talk” is mostly made up of cheerfully delivered non sequiturs.

Every good Romney profile has a “Romney says something bizarre” moment. In Sridhar Pappu’s 2005 profile for the Atlantic, Romney produced a commemorative plate featuring the likenesses of Dwight and Mamie Eisenhower, and announced: “Not only was Eisenhower one of my favorite presidents; when we became grandparents, you get to choose what the kids will call you. Some call you Papa. I chose Ike. I’m Ike, and Ann is Mamie.”

Leaving aside that Eisenhower worship is not particularly widespread in the modern GOP (he failed to kill the New Deal programs and didn’t particularly love Israel), it is not “a thing” that you can make your grandchildren call you by the name of a random dead president. There are a wide variety of names for grandparents based on family traditions and cultures and adorable toddler malapropisms, but I have never heard of a grandparent asking to be called some other non-related person’s name. (“Make the children call me ‘Horatio’ because I so admire ‘CSI: Miami’s’ David Caruso.”)

Even Romney’s family seems to have found this weird: Of his eight grandchildren, only the oldest ever called him “Ike,” according to Tagg, and she stopped when everyone else evinced a preference for “Papa.”

This odd Eisenhower admiration seems like some sort of carefully calculated (but poorly thought out) way to highlight “moderateness” while also appealing to pious sentiment. Romney explains that he admires Ike as much for his personal morals as for his actual acts, and says he feels disappointed in Jefferson, for his affair with Sally Hemings. “What for me makes people like Teddy Roosevelt and Franklin Roosevelt and John Adams and George Washington and Dwight Eisenhower and Ronald Reagan such extraordinary leaders is that they had integrity through and through,” he says. (I guess it’s OK to have an affair, like FDR, and own slaves, like Washington, but Romney draws the line at combining the two.)

He has an odd habit of bragging, or sort of bragging, when dealing with regular folk on the campaign trail. The New York Times (in a feature, by Ashley Parker and Michael Barbaro, entirely about how weird Mitt Romney is) has him telling a woman at a diner that he “stayed at a Courtyard hotel last night,” adding, “it’s LEED-certified.”

In his 2007 New Yorker profile, Ryan Lizza refers to it as “one-upmanship.”
After a voter at the New Hampshire diner told Romney, “My daughter goes to Michigan State,” he replied, “Oh, does she, really? My brother’s on the board of Michigan State.” When another patron said that she was from Illinois, Romney told her, “I won the straw poll at the Illinois Republican convention!”
His off-kilter interpretation of casual conversation also involves guessing at the ethnic background of strangers, poorly (“are you French-Canadian?”), and awkward joking (pretending a waitress pinched his ass). And he enjoys congratulating people, seemingly for the feat of existing and being in the vicinity of Mitt Romney.

If Nixon was epically, operatically weird — the sort of president the nation that produced Charles Manson should expect, let’s say — Romney is uninterestingly weird. First reel of “Blue Velvet” weird, without a hint of that subterranean layer of rot and perversion underlying the whole thing. Upon returning to his childhood home in Michigan for a 2012 campaign event, Romney noted that the trees were “the right height.”

Another fun — and weird — Romney fact: He models his hair not on that of his father, or that of Leland Palmer, but on his father’s top religious aide in Romney’s boyhood. From the Globe:
Mitt had grown up hearing people comment on his father’s sweep of slicked-back black hair, white at the temples. But since his early teens, Mitt had patterned his own hairstyle after a man named Edwin Jones, who served as his father’s top aide in running the Detroit operations of the Mormon Church.
“He sat up front, to the side at a desk, keeping records,” Mitt would recall years later. “I remember that he had very dark hair, that it was quite shiny, and that you could see it in from front to back. Have you looked at my hair? Yep, it’s just like his was some 40 years ago.”
“Have you looked at my hair?” There is perhaps some psychological insight there: Romney is worshipful of his father, and has apparently modeled himself on a man his father trusted.

Romney’s commitment to clean living is less an individual quirk than one prescribed by his religion, but it is always amusing when a grown adult acts like a character in an Archie comic. A 2003 Boston Magazine piece has the new governor pouring Diet Vanilla Coke and regular Vanilla Coke for a family taste test. (I can only assume the sodas are caffeine-free, though there is some debate in LDS circles about the letter versus the spirit of the prohibition against “hot beverages,” which does not explicitly mention caffeine.) It also notes Romney’s regular breakfast: “cereal, egg whites, and toast without butter.” At Bain Capital, he refused to put his own money in a company that produced R-rated movies. (He did consent to allow Bain to invest.)

Even the stories of Romney’s supposed temper are ridiculous. He was arrested, in June of 1981, for disorderly conduct while attempting to launch his family boat in Cochituate State Park. He got in a heated argument with a cop who noted that the boat was not displaying its registration. Romney was hauled in in his swim trunks. Charges were dropped when he threatened to sue for false arrest. At the 2002 Salt Lake Winter Olympics Romney got in a public confrontation with a volunteer police officer directing traffic outside an Olympic venue. Police allege Romney said “fuck” multiple times while berating the cop. Romney declined to apologize to the cop, Shaun Knopp, and while the public berating did happen — he mentions it in his book — Romney made a big point of specifically denying that he used a bad word. (In fact, Romney insisted at the time that he specifically said “H-E double hockey sticks.” Like a child. A remarkably well-behaved child speaking in earshot of his second grade teacher.) He told the Boston Globe that he had two witnesses to corroborate his denial. “I have not used that word since college — all right? — or since high school,” he said.

His mother got a bit TMI when Romney was running against Ted Kennedy in 1994. From the Times: “Where Senator Kennedy, who remarried two years ago, is still known for his hard-drinking, hard-living bachelor days after his 1981 divorce, Mr. Romney’s mother, Lenore Romney, who is 85, volunteered in an interview last week that her son and Ann waited until they were married to have sex.”

Romney recently told People magazine, “I tasted a beer and tried a cigarette once, as a wayward teenager, and never did it again.” I’m not sure we should believe him. There’s no way in hell I can imagine Mitt Romney loosening up enough to have a beer.

Alex Pareene writes about politics for Salon. Email him at apareene@salon.com and follow him on Twitter @pareene

Wednesday, April 25, 2012

Decoding the Secret Agenda in Mitt Romney’s Better America Tonight Speech


Decoding the Secret Agenda in Mitt Romney’s Better America Tonight Speech


better-america-romney



A little discussed excerpt in Mitt Romney’s Better America Tonight speech revealed his true intentions using the White House to attack public schools and unions.

Here’s the video:

Romney said,


I see an America with a growing middle class, with rising standards of living. I see children even more successful than their parents – some successful even beyond their wildest dreams – and others congratulating them for their achievement, not attacking them for it.
This America is fundamentally fair. We will stop the unfairness of urban children being denied access to the good schools of their choice; we will stop the unfairness of politicians giving taxpayer money to their friends’ businesses; we will stop the unfairness of requiring union workers to contribute to politicians not of their choosing; we will stop the unfairness of government workers getting better pay and benefits than the taxpayers they serve; and we will stop the unfairness of one generation passing larger and larger debts on to the next.
In the America I see, character and choices matter. And education, hard work, and living within our means are valued and rewarded. And poverty will be defeated, not with a government check, but with respect and achievement that is taught by parents, learned in school, and practiced in the workplace.
Notice that Mittens managed work a little self-pity in there with the line about children who were more successful than their parents being attacked. Poor Mitt just doesn’t get the fact that he isn’t being attacked. It is merely being pointed out that Romney made his quarter billion dollar fortune by ruthlessly killing the jobs of middle class Americans. Romney may not like that fact, but it’s the truth.

However, the most revealing part of the soon to be Republican nominee’s entire speech focused on what Romney considers inequality to be. Inequality according to Mitt Romney is not the wealthy paying less in taxes than everyone else. Inequality is not corporations who get to dodge their tax bills, while the burden is passed on to those who can afford it least. Inequality is not Citizens United, which has allowed a few wealthy billionaires and corporations to spend unlimited amounts of money to drown out the influence of everyday Americans. Inequality is not ALEC writing legislation in secret behind closed doors that is designed to marginalize entire segments of the population.

Inequality according to Mitt Romney is the fact that we fund a public education system with taxpayer dollars. Inequality is the fact that unions are allowed to collect dues are allowed to use that money to engage in political free speech. Inequality is the fact that public sector employees belong to unions, and inequality is also the deficit, which has been created and exploded by Republicans.

Mitt Romney who never attended public school is determined to defund them. It is rather amazing that Romney is promising to defund public schools, when federal funding only makes up 10.8% of public school system budget. Much like Scott Walker and Rick Snyder, Mitt Romney is using the language of a moderate to hide an extremist conservative agenda. Romney wants to take Scott Walker’s union busting plan national.

What Mitt Romney unveiled tonight was a far right agenda coded in the language of the center. Romney tried to do positive, but the aw, shucks I’m just a family guy, please don’t look at my record at Bain shtick was insincere. He quickly pivoted back to the negative realm where he is most comfortable.
At one point Mitt Romney told America that he doesn’t think we’re stupid, but he must believe that we are dumb enough to buy what he tried to sell tonight. Romney can’t talk about the true intentions of his agenda, so he is speaking in code.

The problem for Romney is that code was cracked after the 2010 elections, and America isn’t going to be tricked into going down that road again.

Saturday, April 21, 2012

Romneynomics: Vulture Capitalism


New York Magazine

The Romney Economy

At Bain Capital, Romney remade one American business after another, overhauling management and directing vast sums of money to the top of the labor pyramid. The results made him a fortune. They also changed the world we live in.

One day early this August, Mitt Romney gripped a microphone at the Iowa State Fair, faced a crowd of a few hundred people, and began, a little joylessly and therefore a little rapidly, to give a speech. It is the opinion of some of Romney’s friends, some of the men with whom he made his fortune, that the repetitive business of campaigning simply bores him and that this boredom is responsible for the fairly sizable gap between the charismatic man they know in private and the battery-powered figure who often appears in public.

Romney, of course, is not the only person bored by Romney’s campaign appearances, and in the glazed reaction of the crowds you can see some skepticism about whether a candidacy predicated on bringing a businesslike efficiency to the WhiteHouse—a candidacy, basically, of process—could be something to rally around. “Over the coming decades,” Romney said at the fair, barely pausing between each idea, “to balance our budget and not spend more than we take in, we have to make sure that the promises we make in Social Security, Medicaid, and Medicare are promises we can keep. And there are various ways of doing that. One is we could raise taxes on people …”


“Corporations!” a man cried out from the midst of the crowd. Romney was halfway through his next sentence, but he stopped and pivoted, noticing the hecklers, one of whom (it turned out) was a 71-year-old former Catholic priest from Des Moines. Morality incarnate. “Corporations!” a heckler cried again.
Romney grinned. “Corporations are people, my friend,” he said, neatly, flatly, and looked back to the crowd, eager to press on. Suddenly there were loud objections coming from all over, catcalls and cries of disbelief. But the cameras detected a splash of interest on Romney’s face.

“Of course they are,” Romney said, and he began to explain his logic. “Everything corporations earn ultimately goes to ­people. So—” Another heckler started ­ostentatiously laughing, a kind of mock disbelief. The candidate tried another tack. “Where do you think it goes?” Romney said. “In their pockets!” someone cried out.

Romney was already a step ahead. “Whose pockets?” he said, now almost gleeful. “Whose pockets? People’s pockets! Okay. Human beings, my friend!”
In his quick, casual reply—corporations are people—Romney had seemed to give something away, though it wasn’t immediately clear what. The press chose to play the episode as a “gaffe,” as ABC’s Jake Tapper described it, a moment in which the weakness in Romney’s political pitch, the gap between his own privileged experience of the world and that of working-class voters, had been exposed. ­MSNBC, in a spate of giddy incredulity, seemed to keep the clip on loop for a week. But Romney’s own campaign managers did not try to obscure the episode at the state fair, to say he had been misunderstood or to secret it away. Instead they promoted it, as an advertisement of principle, and made the confrontation the centerpiece of a solicitation to supporters. A few days later, Romney’s communication director, Gail Gitcho, told the press that the exchange had raised $25,000 within 24 hours.

The incident, in retrospect, did less to peg Romney as a creature of privilege than it did to reveal something deeper. For Romney, the corporation has long been an object of a certain idealism. It is something he has spent much of his adult life—first as a management-strategy consultant, then as CEO of the private-equity firm Bain Capital—working to perfect, to strip of its inefficiencies until it might function as a perfectly frictionless economic unit.

The political genuflection to businessmen is so gauzy and generic that praise for a candidate’s private-sector acumen can often sound phony. But Mitt Romney is the real thing. He was, by any measure, an astonishingly successful businessman, one who spent his career explaining how business might operate better, and who leveraged his own mind into a personal fortune worth as much as $250 million. But much more significantly, Romney was also a business revolutionary. Our economy went through a remarkable shift during the eighties as Wall Street reclaimed control of American business and sought to remake it in its own image. Romney developed one of the tools that made this possible, pioneering the use of takeovers to change the way a business functioned, remaking it in the name of efficiency. “Whatever you think of his politics, you have to give him credit,” says Steven Kaplan, a professor of finance and entrepreneurship at the University of Chicago. “He came up with a model that was very successful and very innovative and that now everybody uses.”
The protests going on at Zuccotti Park now have raised the question of whether that transition was worth it. What emerged from that long decade of change was a system that is more productive, nimble, and efficient than the one it replaced; it is also less equal, less stable, and more brutal. These evolutions were not inevitable. They were the result, in part, of particular innovations developed by a few businessmen beginning a quarter century ago. Now one of them has a good chance of becoming president.
Mitt Romney and Bill Bain, a founder of Bain & Company. 
Right now, a decade into the 21st century, the character of the management consultant is so ubiquitous a part of the global economy that McKinsey more or less guards the gate of the modern financial world. There is a study currently ­concluding in India, for instance, in which Accenture consultants are parachuted in to village textile factories, while a control group of factories is being kept virtually consultant-free, to see how much the strategists can improve operations. (The early results look good for the consultants.)

But in 1975, when Mitt Romney graduated in the top 5 percent of his Harvard Business School class, consulting was still a novel field. As Walter Kiechel’s entertaining history The Lords of Strategy documents, the three most prestigious consultancies (then, as now, McKinsey, the Boston Consulting Group, and Bain & Company) believed they were bringing a newly sophisticated, quantitative approach to business, using theories and techniques to help American industry modernize. They regarded themselves as intellectuals, and they also paid better than anyone else—this being a decade before Wall Street salaries started to really climb—and so Romney made what was, at the time, an obvious career choice. He became a consultant, first at the Boston Consulting Group and then, three years later, at Bain & Company.

The Bain & Company consultants who traveled the circuit of American business in the late seventies and early eighties experienced a mass of frustrations. The efficient, data-driven theory of business the consultancies had developed did not in any real way cohere with the practice of business that they saw in executive suites in St. Louis, Rochester, Houston. The theory said that companies should focus on their core business, but everywhere corporations were developing misguided plans to become conglomerates. The ­theory said management should measure everyone’s productivity in a firm, down to the lowliest employee, and every last worker should be rewarded or punished depending upon his performance, but the social relationships of business seemed to have decayed into a long, amicable golf-course lunch. There was a loyal, almost paternalistic attitude toward workers, protecting them even when they seemed to be drags on growth. When I interviewed Romney’s early colleagues about the business world that they surveyed during this period, they tended to adopt an attitude of high disdain. “Sloppy,” one told me. “Complacent,” said another. “Lazy,” said a third, “and out of tune with the change that was going on in the world.”

These men are still around—it is an unusually small and tight group, and many of them have continued to work on and off for Romney as he has moved into public life. They are mostly immensely rich, and if they give a collective impression, it is tanned, engaged, upbeat, as if it is always 8 a.m. on a Saturday and they are the fathers of shortstops. But when they began their careers, in their own telling, they were outsiders on the make. “If you think about that era—I grew up in the sixties and seventies—business wasn’t a particularly noble profession,” Geoffrey Rehnert, an early Bain partner, told me. “The best brains went into medicine, the next best went into law.” American business, he said, “had a thinner bench.” Those who gravitated to Bain built a culture that was “not entitled at all. Not a single person was born with money in their family. Every single person came from a blue-collar or middle-class background.”
“Except for Mitt,” I said. (Romney’s ­father had been the head of American Motors Corporation, the governor of Michigan, and a member of the Nixon cabinet; there is no credible way to describe the American elite that excludes Mitt Romney.)

“Even he didn’t come from affluence,” Rehnert insisted. “He wasn’t a trust-fund guy.”

Perhaps what he meant was: Romney wasn’t a Wasp. He never really talked to his co-workers about his Mormonism, but he sometimes joked with Jewish colleagues about how their religions made them all outsiders. Even for those who worked with him, Romney had an inscrutable quality: They never cursed around him and didn’t drink, and they understood that his social life would be his family life. “I always felt that Mitt viewed himself as one of the chosen few,” one of Romney’s colleagues at Bain Capital told me. “I don’t think it ever affected his ­decision-making, but there was that overhang.” Romney was, in the late seventies and early eighties, heavily involved in Bain’s recruiting, and this is how many of his cohort still view him, as a handsome guy with a great handshake. Bill Bain, the consultancy’s titular founder, once told the New York Times that Romney seemed a decade older than he actually was.
Of all the business theories developing at the time, Romney and his cohort were particularly influenced by one that played to their sense of detachment from the business Establishment. In 1976, two business scholars, Harvard’s Michael Jensen and the University of Rochester’s William Meckling, published an important paper elaborating a new idea of the firm, one that would come to be called “agency theory.” Previous corporate theory had emphasized a separation of powers between shareholders (who own a company) and management (the executives who run it). This situation, Jensen and Meckling pointed out, introduces a “principal-agent” problem, in which each agent has incentives that run contrary to the shareholders’ interests and could hamper the firm’s ability to function.
                                                                         
If you were looking across the landscape of American business 30 years ago, you could see agency problems everywhere. In the sixties, companies had become conglomerates so frequently that 20 percent of the Fortune 500 underwent a merger or an acquisition in a three-year period. CEOs had enjoyed building empires, and their shareholders, satisfied by decent returns, had often deferred to management control. But during the stagnant seventies, CEOs seemed loath to close factories and lay off workers. By the early eighties, as growth once again seemed possible, shareholders had become more restive, and innovative thinkers on Wall Street had begun to press the case that these companies had grown inefficient and timid, that management was underperforming.

Bain consultants did what they could, during their assignments, to improve their clients’ operations, but they were often frustrated by an agent problem of their own: Bain was just a consulting firm, and “a consulting firm,” says David Dominik, an early Romney colleague, “can’t make anything happen.” But Jensen and Meckling had sketched out one potential solution: If managers could secure financing to run their own companies, they might be able to build a better corporation, one that delivered stronger returns to its owners.

You could view this idea at least two different ways. One was as a chance to change the way American business is run. Another was as a business opportunity to exploit. Romney saw both.

Every business story begins with a proposition, and the one that launched Bain Capital was the notion that the partners might do better if they stopped simply advising companies and starting buying and running the firms themselves. When Bill Bain asked Romney to run the new spinoff, in 1983, the idea made sense from the perspective of Bain & Company. The senior partners were awash in cash that they were looking to invest; its more junior partners needed something to do. The original plan was vague in the details, but a bowl was soon passed around the Bain & Company boardroom so each partner could write his first name and the amount he wanted to invest on a scrap of paper and slip it in. Romney’s reputation was strong enough that he picked up $12 million in pledges in that meeting alone.

Finding outside investors wasn’t as easy. Romney went on the road, traveling to meet with billionaire families—an investment arm of the Rockefeller fortune, a Rothschild heir—arguing that Bain’s work in consultancy had prepared them to turn businesses around themselves. But Romney and his cohort were young men in their thirties with no experience investing money or running companies, and for nearly a year the pitch kept failing. Romney finally found some takers from Latin America, most important the enormously wealthy Poma family, and by 1984, he and six consultants he’d picked were staging a photo shoot for the brochure accompanying their first fund; grinning and geeky, they posed for an outtake with dollar bills stuffed in their mouths, their sleeves, their collars.
The leveraged-buyout industry in its early days functioned as a laboratory for reinventing business. Most of the promising firms were based in New York and specialized in financial innovation—reengineering a balance sheet or making use of new tools like junk bonds. Romney’s team in Boston looked down on them as “just deal guys,” and at financial engineering as a “commodity product.” Bain Capital focused instead on the way a business runs.

Their new firm reflected some aspects of Romney’s own personality: his mania for detail and for process. He was a cautious executive. “Mitt was always worried that things weren’t going to work out—he never took big risks,” one of his colleagues told me. “Everything was very measurable. I think Mitt had a tremendous amount of insecurity and fear of failure.” Romney never worked from any particular “macro theme,” any philosophy of how the economy was moving. What he employed instead was an exhausting habit of playing devil’s advocate, proposing sequential objections to a particular project or idea, until eventually, through a kind of Darwinian process, consensus was reached. “I never viewed Mitt as very decisive,” says one of his Bain Capital colleagues. “The idea was that if there’s enough argument around an issue by bright people, ultimately the data will prevail.” Romney may have been, as another early Bain Capital partner puts it, a “very case-by-case, reactive thinker,” but he was also an extremely hard worker and an egalitarian boss. He inspired intense loyalty, and there are still members of his circle who describe him as a perfect CEO. He was prone to profuse sweating, and the imagery of the era is heavy on the CEO’s drenched, stained shirts.
Romney, center, and six other founding members of Bain Capital, in an outtake of their photo shoot for a 1984 brochure that surfaced this month.  
In the mid-eighties, a European retail outfit called Makro, a kind of continental Costco, was looking for an executive to help run its U.S. business, and it called a Boston supermarket executive named Tom Stemberg, inviting him to tour a pilot store outside of Philadelphia. The store didn’t impress him much, but he noticed that the office-supply aisle was absolutely packed with shoppers. He told the Makro executives to abandon their model and concentrate solely on office supplies; when they declined, he decided to give it a try himself. Boston business is a small world, and when he went looking for a venture-­capital partner, he eventually found his way to Mitt Romney and his new $37 million fund. “Most V.C.’s thought it was ridiculous,” Stemberg says. “Mitt was highly unusual in that he went to the research level to study it.”

The trouble with the idea, to Romney’s subordinates at Bain Capital, was that the small businesses Stemberg needed to draw weren’t accustomed to visiting a store for office supplies; they got them from separate vendors, some who ­delivered—one supplier for pens and paper, one for printer cartridges, and so on. “Some of us were worried that we needed to change consumer behavior,” recalls Robert F. White, one of the firm’s managing directors. Romney persisted. As members of the group surveyed more and more small businesses in suburban Massachusetts, they discovered that if you asked a small-business manager how much he spent on office supplies, he would give you a low estimate and tell you it wasn’t worth it to send someone in a car to buy them. But if you asked the bookkeepers, you got a far higher number, about five times as much—high enough, Romney and Stemberg thought, to get them to come to the store. The idea became Staples. Romney’s Bain Capital colleagues were soon helping to select a cheaper, more efficient computer system for the first store; they were helping stock the shelves themselves. As Staples succeeded, and began to expand, they looked at analytics for everything—the small-business population around a proposed store site, traffic flow—and gamed out exactly how big a customer would need to be before it demanded delivery. Romney sat on the Staples board for years, and his company made nearly seven times what it invested in the start-up.
“These Bain Capital guys were agents of the shareholder-value revolution.”
Romney and his team did this sort of thing again and again, sometimes in venture­-capital deals but more often through buyouts—Brookstone, Domino’s, Sealy, Duane Reade. In their more complex deals, they couldn’t rely on their own team to seek out every inefficiency. They needed a more powerful lever, and they turned to the solution Jensen and Meckling had begun to explore a decade earlier: offering CEOs large equity stakes in the company in the form of stock or stock options. This was a relatively new idea, mostly untried in American business. At the same time, a board formed in part of Bain Capital appointees who had put up their own money in the deal would be more engaged in management details. “You have the total alignment of incentives of ownership, board, and management—everyone’s incentives are aligned around building shareholder value,” Dominik says. “It really is that simple.”

In 1986, Bain Capital bought a struggling division of Firestone that made truck wheels and rims and renamed it ­Accuride. Bain took a group of managers whose previous average income had been below $100,000 and gave them performance incentives. This type and degree of management compensation was also unusual, but here it led to startling results: ­According to an account written by a Bain & Company fellow, the managers quickly helped to reorganize two plants, consolidating operations—which meant, inevitably, the shedding of unproductive labor—and when the company grew in efficiency, these managers made $18 million in shared earnings. The equation was simple: The men who increased the worth of the corporation deserved a bigger and bigger percentage of its spoils. In less than two years, when Bain Capital sold the company, it had turned an initial $5 million investment into a $121 million return.

Even by the standards of the times, Bain Capital grew tremendously fast: from $37 million under management in 1984 to $500 million in 1994 (and $65 billion today). To other businesses, the buyout industry both presented a model for better profits and posed a take-over threat. “Having the private-equity guys out there disciplined other companies,” says Nick Bloom, a Stanford economist. Some techniques developed in the buyout laboratory spread. Productive workers and managers were rewarded, while unproductive ones were cut loose. Corporations realigned themselves to deliver more value to their shareholders, increasing dividend payments and stock buybacks. Within a decade, ordinary businesses were giving large stock and option packages to CEOs. Executive compensation soared. “These Bain Capital guys,” says Neil Fligstein, an economics-sociology professor at the University of California, Berkeley, “were agents of the shareholder value revolution.” By the mid-nineties, The Business Roundtable had changed its definition of the role of a company, winnowing a broad set of responsibilities down to a single one: increasing shareholder value.
In October 1994, a machine operator named Harold Kellogg gathered five of his colleagues; borrowed a brown van from a used-car dealership in Marion, ­Indiana; and began to drive east on I-90, headed for Boston, where Romney, in his first political race, had suddenly begun to threaten Ted Kennedy. Kellogg had worked, for eleven years, for an office-supplies manufacturer called SCM, but a few months earlier his plant had been acquired by a Texas-based company called American Pad and Paper, in which Bain Capital had a majority stake. AmPad fired all of the union workers at Kellogg’s plant, more than 250 people in total, then hired most of them back at much lower wages; for years, they had gotten health-care coverage as part of their pay package, but now AmPad asked them to pay half of the costs. The whole plant walked out.

The narrative that the Kennedy campaign had been trying to build through the summer was that Romney was a ­Gordon Gekko type, but it didn’t really catch until Kellogg and his five friends started touring Massachusetts, visiting manufacturing plants, and then confronted Romney during an appearance at an East Boston Columbus Day parade. Kennedy’s campaign commercials were suddenly filled with flat midwestern accents. Romney promised, tepidly, to meet with the Indianans, “to see if there’s anything I can do.” Kennedy held on, and the line among political consultants was that the Kellogg stunt had helped turn the election.

It didn’t do much to help Kellogg. The plant in Marion closed down six months later, and the machine operator went to work at a nearby glass company. Management sent in Pinkerton guards and, according to a union source, took away machinery and moved it to nonunion plants in Utah and Massachusetts. “You had an industry where the only thing they did was converting paper to make Siegel pads, notebooks, and copy paper,” says Marc Wolpow, who was at the time the Bain Capital partner who worked on the AmPad deal. Labor in the plants, he says, was nearly a commodity ­product—the only thing Kellogg and his co-workers did was to move paper from one machine to another. This could be done more cheaply at plants in China or Indonesia. “Those jobs were going to get destroyed internationally. That plant was going to go out of business, and there was nothing Mitt should have done, or could have done, to prevent it.” But it is harder to be so charitable when you look at the broader moral contours of the arrangement. By 2001, five years after the company had been taken public, it had filed for bankruptcy and liquidated its assets. But Bain Capital made more than $100 million from AmPad for itself and its investors.

After the plant closed, the head of its union, Randy Johnson, tried to keep track of where everyone went. He assembled a roster of the destinations of his former colleagues—some moved to Tennessee, some to Texas—but the effort was incomplete, and what Johnson compiled was only a partial catalogue of loss. It’s difficult to track the fallout of any one private-equity firm’s work, but scholars have been able to look at the conesquences of the industry as a whole. These studies have consistently found that private-equity takeovers improve productivity and shed jobs. But one interesting nineties study, by two academics, Don Siegel at SUNY Stony Brook and Frank Lichtenberg at Columbia, found something surprising: White-collar workers, for the first time, were more vulnerable than blue-collar workers. “Part of what the private-equity firms were doing was replacing office workers with information ­technology—that’s where they were getting some of their gains,” says Siegel, now the dean of the University of Albany’s business school.

Here, too, private equity seemed to provide an early warning of broader changes. In three years during the early nineties, the Princeton economist Henry Farber has found, roughly 10 percent of American white-collar male managers lost their jobs. For the first time, according to data collected through the General Social Survey, white-collar workers were nearly as worried about losing their jobs as blue-collar workers. Those white-collar workers who kept their jobs worked harder, and the compensation that had once been spread through the broader middle ranks of corporations now collected at the top. In 1980, a CEO had earned about 35 times the wages of an average worker; by 1990, it was about 80; and by 2000, it was about 300. The portion of America’s gross national product that ended up in the hands of workers declined by more than 10 percent between 1979 and 1996; the portion that went to investors rose by a similar amount. “What you end up with is a choice between a bigger cake less equally split and a smaller cake equally split,” says Bloom, the Stanford economist. “But that’s a social question.”
There is no doubt that the tools of this efficiency movement helped to build the economy of the nineties, and this fact makes Bloom’s social question somewhat more complicated. That booming decade, with unemployment declining by 3.5 percent and real GDP growing by nearly 4 percent each year during the Clinton administration, depended heavily on a spike in productivity, which itself had hinged on the wide deployment of computer technology to displace more expensive forms of labor. Economists believe there was a clear connection between the labor-market changes in the early nineties and the great profits that soon followed. “Could we have had the productivity boom without displacement? My answer would be no,” says Frank Levy, an MIT economist.

The trouble, Levy believes, was that this new shareholder-value-driven system had no built-in mechanism of regulation, and its incentives geared CEOs toward shortsightedness and recklessness. “Any profit-making organization was going to take advantage of the opportunities to lower costs and become more efficient by taking advantage of foreign producers and installing technology, both of which meant losing jobs,” he says. “But decision-makers fully exploited at every turn the market power that they had. The question is, why were we so willing to exploit everything?”

The obvious answer is financial reward. But there may have been a cultural component, too. By the time Mitt Romney left Bain Capital for good, in 1999, American CEOs looked very different from the predecessors he had met in the seventies—the genial paternalists, spending their careers at a single company. More and more, they were pure meritocrats—well-educated, well-compensated, moving frequently between jobs and industries, trained to look ruthlessly for efficiency everywhere. They look a great deal more, in other words, like Mitt Romney.

If you trace the public controversies over Bain Capital over time, you can see how the obsession over shareholder value and efficiency proved not just inequitable but destabilizing. A half-­decade after Harold Kellogg showed up in Boston, Bain Capital and others were sued by shareholders of Stage Stores, a Texas retailer, charging Bain of helping to manipulate the stock. The lawsuit accused the company of giving misleadingly optimistic performance projections, which sent the retailer’s stock soaring past $50 a share, at which point Bain Capital unloaded virtually all of its stock. When more realistic earnings projections were released, Stage Store’s stock plunged 58 percent in a single day. The lawsuit was later dismissed. But then, shortly after Romney left came the KB Toys fiasco, in which, another lawsuit alleged, Bain Capital and KB executives took a dividend recap of over $120 million two years before the ­company collapsed into bankruptcy.

No court found that Bain Capital did anything illegal in these cases. But these episodes still give a glimpse of the evolving problems of the shareholder-value model, and some consequences of the trade-off we made of stability for growth. In some economic moments, a program of radical efficiency can be good for society; at other times, when there is less fat to trim, the same instincts can lead a company to cannibalize itself. “We’re living in a crueler capitalism,” Fligstein says. By some measures, he adds, “we’ve gone really quite a long ways. And nobody really knows what the tipping point is, or how you go back.”

When Romney was elected governor of Massachusetts in 2002, one of the members of his transition team was Tom Stemberg, the founder of Staples. The two men were talking one day, and Romney asked Stemberg if he had any ideas for how he ought to govern. Stemberg, thinking off the top of his head, had two ideas. “One was to blow up Logan airport and start over.” That didn’t make it far. The other one did.

Stemberg served then (as now) on the president’s council of Massachusetts General Hospital, and he remembered a conversation he’d had with a doctor named Peter Slavin, who has been the chief executive of that hospital system for most of the last decade. “[Slavin] mentioned this huge problem,” Stemberg told me, “which is all these uninsured people clog the ER.” The hospital had to treat them. “There was a law that said that all the insurance companies had to fund the free care. That system made absolutely no sense. “It was, as Stemberg told Romney, “the least efficient way to serve them.” The conversation moved on, and Stemberg figured his ten-minute-long career as a policy maven was over. “I figured that’s the end of that.” But Romney’s staffers, consulting with experts, began to work out a fix, requiring almost every citizen in the state to carry insurance, and providing subsidies for those who couldn’t afford it. Eventually he was heading down to Ted Kennedy’s office in Washington to explain the program, Power­Points in hand. Three and a half years later, Romney introduced his ­universal-health-care plan, and in the press he credited Stemberg with suggesting it.

The punch line, of course—the punch line to Romney’s campaign so far—is that the plan he built was an almost exact model for Obama’s national plan, designed by some of the same experts.

But what separates Romney’s plan from Obama’s—and gives some clues about his potential presidency—is its almost-accidental origin. Romney did not begin with a philosophical quest to improve American health care. He began with the idea of himself as a problem solver and asked those around him for a problem that he might usefully solve. I remembered, when I was told this story, an anecdote I’d heard from a former political staffer of Romney’s. On even basic philosophical questions like abortion, the staffer said, Romney did not try to resolve the question in the abstract, as a matter of principle, and would consider instead various hypothetical cases—for instance, a late-term abortion—and build from them a politics. The line that Romney is a flip-flopper may vastly understate the depth of the condition.

It is arresting to imagine a Romney White House, inevitably filled with as many former Bain colleagues as each of his other public ventures have been: The ­PowerPoints, the 80-20 jargon, the clinical separation of decision-making from ideology, the detachment of those decisions from moral consequence, a persistent blind spot for people as people. It would represent the final ascension of a perfectly American type, one that has already remade the culture of business. I once asked a Bain colleague of Romney’s how Romney thought of his own core competence. “I think Mitt thinks he’s good at being Mitt Romney,” the colleague said.

But Romney’s career-long commitment to his own particular brand of impersonal decision-making might suggest something personal after all. One great mystery about Romney has been where his Mormonism comes in and what it explains. Maybe the clearest answer comes from taking at their word the businessmen with whom he came up, who say they never saw its influence. Romney’s religion constitutes a minority set of beliefs. Poorly understood and widely mocked, it can provoke suspicions about his motives. Perhaps it is not surprising, then, that he has adopted a public persona that contains no detectable motives at all, one that is buried in objectivity, in data, in process. The best evidence of how important Romney’s religion is to him could be how far he has kept it from view. But the character that remains visible is at once uniquely American and a little strange: a perfectly objective efficiency machine.





Monday, April 16, 2012

Mitt Romney: Mothers Should Be Required To Work Outside Home Or Lose Benefits

politics
The Huffington Post


Mitt Romney: Mothers Should Be Required To Work Outside Home Or Lose Benefits  

Posted: 04/15/2012 7:04 am Updated: 04/15/2012 2:08 pm 


WASHINGTON -- Poor women who stay at home to raise their children should be given federal assistance for child care so that they can enter the job market and "have the dignity of work," Mitt Romney said in January, undercutting the sense of extreme umbrage he showed when Democratic strategist Hilary Rosen quipped last week that Ann Romney had not "worked a day in her life."

The remark, made to a Manchester, N.H., audience, was unearthed by MSNBC's "Up w/Chris Hayes," and aired during the 8 a.m. hour of his show Sunday.
Ann Romney and her husband's campaign fired back hard at Rosen following her remark. "I made a choice to stay home and raise five boys. Believe me, it was hard work," Romney said on Twitter.

On Sunday, Romney spokeswoman Amanda Henneberg told The Huffington Post in an email, "Moving welfare recipients into work was one of the basic principles of the bipartisan welfare reform legislation that President Clinton signed into law. The sad fact is that under President Obama the poverty rate among women rose to 14.5 percent in 2011, the highest rate in 17 years. The Obama administration's economic policies have been devastating to women and families."

Mitt Romney, however, judging by his January remark, views stay-at-home moms who are supported by federal assistance much differently than those backed by hundreds of millions in private equity income. Poor women, he said, shouldn't be given a choice, but instead should be required to work outside the home to receive Temporary Assistance for Needy Families benefits. "[E]ven if you have a child 2 years of age, you need to go to work," Romney said of moms on TANF.
Recalling his effort as governor to increase the amount of time women on welfare in Massachusetts were required to work, Romney noted that some had considered his proposal "heartless," but he argued that the women would be better off having "the dignity of work" -- a suggestion Ann Romney would likely take issue with.

"I wanted to increase the work requirement," said Romney. "I said, for instance, that even if you have a child 2 years of age, you need to go to work. And people said, 'Well that's heartless.' And I said, 'No, no, I'm willing to spend more giving day care to allow those parents to go back to work. It'll cost the state more providing that daycare, but I want the individuals to have the dignity of work.'"
Regardless of its level of dignity, for Ann Romney, her work raising her children would not have fulfilled her work requirement had she been on TANF benefits. As HuffPost reported Thursday:


As far as Uncle Sam is concerned, if you're poor, deciding to stay at home and rear your children is not an option. Thanks to welfare reform, recipients of federal benefits must prove to a caseworker that they have performed, over the course of a week, a certain number of hours of "work activity." That number changes from state to state, and each state has discretion as to how narrowly work is defined, but federal law lists 12 broad categories that are covered. Raising children is not among them.

According to a 2006 Congressional Research Service report, the dozen activities that fulfill the work requirement are:
(1) unsubsidized employment
(2) subsidized private sector employment
(3) subsidized public sector employment
(4) work experience
(5) on-the-job training
(6) job search and job readiness assistance
(7) community services programs
(8) vocational educational training
(9) job skills training directly related to employment
(10) education directly related to employment (for those without a high school degree or equivalent)
(11) satisfactory attendance at a secondary school
(12) provision of child care to a participant of a community service program

The only child-care related activity on the list is the last one, which would allow someone to care for someone else's child if that person were off volunteering. But it does not apply to married couples in some states. Connecticut, for instance, specifically prevents counting as "work" an instance in which one parent watches a child while the other parent volunteers.

The federal government does at least implicitly acknowledge the value of child care, though not for married couples. According to a 2012 Urban Institute study, a single mother is required to work 30 hours a week, but the requirement drops to 20 hours if she has a child under 6. A married woman, such as Romney, would not be entitled to such a reduction in the requirement. If a married couple receives federally funded child care, the work requirement increases by 20 hours, from 35 hours to 55 hours between the two of them, another implicit acknowledgment of the value of stay-at-home work.
Romney's January view echoes a remark he made in 1994 during his failed Senate campaign. "This is a different world than it was in the 1960s when I was growing up, when you used to have Mom at home and Dad at work," Romney said, as shown in a video posted by BuzzFeed's Andrew Kaczynski. "Now Mom and Dad both have to work whether they want to or not, and usually one of them has two jobs."

This article has been updated to reflect comment from the Romney campaign.

Romney offers policy details at closed-door fundraiser

firstread.msnbc.msn.com/


Romney offers policy details at closed-door fundraiser


PALM BEACH, Fla. — Mitt Romney went well beyond his standard stump speech at a closed-door fundraiser on Sunday evening, and offered some of the most specific details to date about the policies he would pursue if elected.

Karen Bleier / AFP - Getty Images

GOP presidential hopeful Mitt Romney floated the idea of eliminating the Department of Housing and Urban Development, the cabinet-level agency once led by the candidate's father.
In a speech to donors in the backyard of a private home here, the former Massachusetts governor and presumptive GOP presidential nominee outlined his plans to potentially eliminate or consolidate federal agencies, win back Latino voters and reform the nation's tax code.

And even Ann Romney, the subject of a national debate last week over the role of women in the workplace, was more direct than usual. She sounded like a political tactician when she described a Democratic consultant's criticism of her decision to be a stay-at-home mom as "an early birthday gift."

Romney went into a level of detail not usually seen by the public in the speech, which was overheard by reporters on a sidewalk below. One possibility floated by Romney included the elimination of the Department of Housing and Urban Development, the Cabinet-level agency once led by Romney's father, George.
"I'm going to take a lot of departments in Washington, and agencies, and combine them. Some eliminate, but I'm probably not going to lay out just exactly which ones are going to go," Romney said. "Things like Housing and Urban Development, which my dad was head of, that might not be around later. But I'm not going to actually go through these one by one. What I can tell you is, we've got far too many bureaucrats. I will send a lot of what happens in Washington back to the states."

Asked about the fate of the Department of Education in a potential Romney administration, the former governor suggested it would also face a dramatic restructuring.

"The Department of Education: I will either consolidate with another agency, or perhaps make it a heck of a lot smaller. I'm not going to get rid of it entirely," Romney said, explaining that part of his reasoning behind preserving the agency was to maintain a federal role in pushing back against teachers' unions. Romney added that he learned in his 1994 campaign for Senate that proposing to eliminate the agency was politically volatile.

At that time, Sen. Ted Kennedy ran ads against Romney — then a political neophyte — accusing him of being uncaring for saying he wished to eliminate the agency.

Romney told the audience here tonight (along with the Weekly Standard in an interview in early April) that that experience remains fresh in his mind. It's contributed to his caution in publicly naming federal agencies and programs he would eliminate or dramatically curtail.

Romney's wife Ann also spoke briefly, where she described her role in a controversy over women in the workplace and Republicans' efforts to make inroads with female voters.

Mrs. Romney acknowledged Republicans' deficit at present with female voters, and urged the women in attendance to talk to their friends, particularly about the economy. She also discussed the criticism she faced this week, and her pride in her role as a mother.

"It was my early birthday present for someone to be critical of me as a mother, and that was really a defining moment, and I loved it," Mrs. Romney said.
Gov. Romney went further in engaging the so-called "war on moms" that followed in the media — upon which his campaign has been aggressively fundraising — calling it a "gift" that allowed his campaign to show contrast with Democrats in the general election's first week.

Romney also went into greater detail than he has on the campaign trail in describing how he would maintain the progressive structure in the tax code after implementing his 20 percent across-the-board tax cut.

Democrats have argued that Romney's tax proposals would disproportionately help the wealthy, but on Sunday, Romney identified specific loopholes and deductions for the wealthy that he would eliminate in order to both finance his tax cut, and ensure that the nation's top earners face the same tax burden they do today.

"I'm going to probably eliminate for high income people the second home mortgage deduction," Romney said, adding that he would also likely eliminate deductions for state income and property taxes as well.

"By virtue of doing that, we'll get the same tax revenue, but we'll have lower rates," Romney explained. "The nice thing about lower rates is that small businesses not get to keep a larger share of what they're earning and plow it back in to hire more people and expand their business."

Romney covered much of the ground he does in his standard stump speech before a crowd of several dozen donors, who were gathered to contribute to his new general election "Victory Fund." But Romney also offered, over fried chicken and snapper, a simpler way of understanding his economic policies.
"I'm asked — how do you boil it down, how do you encapsulate this into a campaign message: Two things, jobs and kids," Romney said, explaining that restarting job growth and preserving a better future for the next generation were the campaign's guiding principles.

Though the general election campaign has only begun in earnest — and the policy proposals floated by Romney on Sunday evening were far from formal platform items — the former governor's remarks marked the campaign's acute sense of what awaits them in the coming months.

That sense was represented in Ann and Mitt Romney's discussion of how they might win back women. The former governor also addressed how he might make strides toward winning back Hispanic voters, another crucial voting bloc with whom he and other Republicans lag, according to recent polls.

Predicting that immigration would become a much larger issue in the fall campaign, Romney told his audience, "We have to get Hispanic voters to vote for our party," warning that recent polling showing Hispanics breaking in huge percentages for President Obama "spells doom for us."

Romney said the GOP must offer its own policies to woo Hispanics, including a "Republican DREAM Act," referring to the legislative proposal favored by Democrats that would offer illegal immigrants a limited path to citizenship, to give Hispanic voters a real choice between parties.

Romney nonetheless predicted that, by November, the economy would trump immigration as a driving issue for Hispanic voters, and he vowed also to remind the Hispanic community that, despite promises of comprehensive immigration reform by Obama, Democrats ultimately fell short in passing legislation in their two years in control of Congress and the White House at the start of the president's term.

Romney also described his media strategy going forward, including his views on so-called "earned media," and how the campaign might pair surrogates with complimentary news outlets.

He said his campaign had been well-covered by Fox News, but that Fox was watched by "the true believers," and that he knew he would have to reach out to a broader audience in order to win over independents and women voters that will decide the election in November. He painted a picture of a media landscape in which liberal voices won out on television, but conservatives were strongest online.

"We are behind when it comes to commentators on TV. They tend to be liberal," Romney said. "Where we are ahead or even is on twitter and on the Internet."

The Dark Side of Mitt Romney

Vanity Fair


The Meaning of Mitt

Mitt Romney has long been a front-runner for the G.O.P. nomination—even if no one really knows who he is. Digging into the candidate’s record as a Mormon leader, his business deals at Bain Capital, and that infamous car trip with the family dog strapped to the roof, Michael Kranish and Scott Helman pierce the Mitt bubble in an adaptation from their new book, The Real Romney, to find that the contradictions, question marks, and ambivalence go deeper than his politics.

THE 1 PERCENT SOLUTION “He has that invisible wall between ‘me’ and ‘you,’” says a fellow Republican.
Adapted from The Real Romney, by Michael Kranish and Scott Helman, to be published this month by HarperCollins; © 2012 by The Boston Globe.

Mitt Romney’s privileged pedigree was common knowledge to his classmates at Harvard Business School and Harvard Law School, where he was simultaneously enrolled in 1971 through a joint-degree program. By that time, his father, George Romney, had run a major corporation (American Motors), been elected three times as Michigan’s governor, sought the presidency, and been appointed to President Nixon’s Cabinet. Despite strongly resembling the elder Romney—the full head of strikingly dark hair, square jaw, dazzling smile—Mitt did little to draw attention to his parentage. The only hint was George’s faded gold initials on a beat-up old briefcase that Mitt carried around.
In truth, Mitt cherished his father’s example and endeavored to follow it. George became more than just a mentor to his youngest son. He was a pathfinder, showing the way of their Mormon faith through the thickets of politics and business, home life, and character. Through his achievements and mistakes, George had bestowed many lessons, and Mitt soaked them up. “His whole life,” said John Wright, a close family friend, “was following a pattern which had been laid out by his dad.” So with his wife, Ann, as a partner and his father as an inspiration, Mitt set out to build a family, a career, and a place in the church that he loved.

The Romneys’ Mormon faith, as Mitt and Ann began their life together, formed a deep foundation. It lay under nearly everything—their acts of charity, their marriage, their parenting, their social lives, even their weekly schedules. Their family-centric lifestyle was a choice; Mitt and Ann plainly cherished time at home with their children more than anything. But it was also a duty. Belonging to the Mormon Church meant accepting a code of conduct that placed supreme value on strong families—strong heterosexual families, in which men and women often filled defined and traditional roles. The Romneys have long cited a well-known Mormon credo popularized by the late church leader David O. McKay: “No other success can compensate for failure in the home.” They had arrived in the Boston area with one son, Taggart, and soon had a second, Matthew. Over the next decade, the Romneys would have three more boys: Joshua was born in 1975, Benjamin in 1978, and then Craig in 1981.

To Mitt, the special one in the house was Ann, with her wide smile, piercing eyes, and steadying domestic presence. And woe was the boy who forgot it. Tagg said there was one rule that was simply not breakable: “We were not allowed to say anything negative about my mother, talk back to her, do anything that would not be respectful of her.” On Mother’s Day, their home would be fragrant with lilacs, Ann’s favorite flowers. Tagg didn’t get it back then, but he came to understand. From the beginning, Mitt had put Ann on a pedestal and kept her there. “When they were dating,” Tagg said, “he felt like she was way better than him and he was really lucky to have this catch. He really genuinely still feels that way.” What makes his parents’ relationship work, he said, is their distinct characters: Mitt is driven first by reason, while Ann operates more on emotion. “She helps him see there’s stuff beyond the logic; he helps her see that there’s more than just instinct and feeling,” Tagg said. Mitt and Ann’s relationship would grow and change as their family entered the public eye. But she has remained his chief counselor and confidante, the one person who can lead Mitt to a final decision. Though she did not necessarily offer detailed input on every business deal, friends said, she weighed in on just about everything else. “Mitt’s not going to do something that they don’t feel good about together,” said Mitt’s sister Jane. Tagg said they called their mom “the great Mitt stabilizer.” Ann would later be mocked for her claim that she and Mitt had never had an argument during their marriage, which sounded preposterous to the ears of many married mortals. Tagg said it’s not that his parents never disagree. “I know there are things that she says that he doesn’t agree with sometimes, and I see him kind of bite his tongue. But I know that they go and discuss it in private. He doesn’t ever contradict my mother in public.” Friends of the Romneys’ back up that account, saying they cannot recall Mitt ever raising his voice toward Ann. Nowhere was Ann’s special status more evident than on long family car trips. Mitt imposed strict rules: they would stop only for gas, and that was the only chance to get food or use the restroom. With one exception, Tagg explained. “As soon as my mom says, ‘I think I need to go to the bathroom,’ he pulls over instantly and doesn’t complain. ‘Anything for you, Ann.’” On one infamous road trip, though, it wasn’t Ann who forced Mitt off the highway. The destination of this journey, in the summer of 1983, was his parents’ cottage, on the Canadian shores of Lake Huron. The white Chevy station wagon with the wood paneling was overstuffed with suitcases, supplies, and sons when Mitt climbed behind the wheel to begin the 12-hour family trek from Boston to Ontario. As with most ventures in his life, he had left little to chance, mapping out the route and planning each stop. Before beginning the drive, Mitt put Seamus, the family’s hulking Irish setter, in a dog carrier and attached it to the station wagon’s roof rack. He had improvised a windshield for the carrier to make the ride more comfortable for the dog.

Then Mitt put his sons on notice: there would be pre-determined stops for gas, and that was it. Tagg was commandeering the way-back of the wagon, keeping his eyes fixed out the rear window, when he glimpsed the first sign of trouble. “Dad!” he yelled. “Gross!” A brown liquid was dripping down the rear window, payback from an Irish setter who’d been riding on the roof in the wind for hours. As the rest of the boys joined in the howls of disgust, Mitt coolly pulled off the highway and into a service station. There he borrowed a hose, washed down Seamus and the car, then hopped back onto the road with the dog still on the roof. It was a preview of a trait he would grow famous for in business: emotion-free crisis management. But the story would trail him years later on the national political stage, where the name Seamus would become shorthand for Romney’s coldly clinical approach to problem solving.

The Book of Mitt

If Romney is exceedingly comfortable around family and close friends, he’s much less so around those he doesn’t know well, drawing a boundary that’s difficult to traverse. It’s a strict social order—us and them—that has put co-workers, political aides, casual acquaintances, and others in his professional circles, even people who have worked with or known him for years, outside the bubble. As a result, he has numerous admirers but, by several accounts, not a long list of close pals. “He’s very engaging and charming in a small group of friends he’s comfortable with,” said one former aide. “When he’s with people he doesn’t know, he gets more formal. And if it’s a political thing where he doesn’t know anybody, he has a mask.” For those outside the inner circle, Romney comes across as all business. Colleagues at work or political staffers are there to do a job, not to bond. “Mitt is always the star,” said one Massachusetts Republican. “And everybody else is a bit player.” He has little patience for idle chatter or small talk, little interest in mingling at cocktail parties, at social functions, or even in the crowded hallway. He is not fed by, and does not crave, casual social interaction, often displaying little desire to know who people are and what makes them tick. “He wasn’t overly interested in people’s personal details or their kids or spouses or team building or their career path,” said another former aide. “It was all very friendly but not very deep.” Or, as one fellow Republican put it, “He has that invisible wall between ‘me’ and ‘you.’” Referring to the time later when Romney was governor of Massachusetts, a Democratic lawmaker recalls, “You remember Richard Nixon and the imperial presidency? Well, this was the imperial governor.” There were the ropes that often curtailed access to Romney and his chambers. The elevator settings restricted access to his office. The tape on the floor told people exactly where to stand during events. This was the controlled environment that Romney created. His orbit was his own. “We always would talk about how, among the legislators, he had no idea what our names were—none,” the lawmaker said, “because he was so far removed from the day-to-day operations of state government.”

This sense of detachment is a function partly of his faith, which has its own tight social community that most outsiders don’t see. Indeed, the stories of Romney’s humanity and warmth come mostly from people who know him as a fellow Mormon. His abstention from drinking also makes parties and other alcohol-fueled functions distinctly less appealing. He is the antithesis of the gregarious pol with a highball in one hand and a cigar in his mouth. Romney’s discomfort around strangers would later become more than just a curiosity; it would be an impediment on the campaign trail. Lacking an easy rapport with voters, he would come across as aloof, even off-putting. “A lot of it is he is patrician. He just is. He has lived a charmed life,” said one former aide. “It is a big challenge that he has, connecting to folks who haven’t swum in the same rarefied waters that he has.” His growing wealth, the deeper he got into his career, only widened the disconnect. Even as he began shouldering more responsibility at work, Romney would assume several leadership positions in the Mormon Church. But he could handle it. “Mitt,” said Kem Gardner, a fellow church official from this period, “just had the capacity to keep all the balls up in the air.” Or, as Tagg put it, “Compared to my dad, everyone’s lazy.” Helen Claire Sievers, who served in a church leadership position under Romney, got a glimpse of his work habits during weekend bus trips to the Mormon temple near Washington, D.C. Church groups would leave late on a Friday, drive all night, and arrive early on Saturday morning. Then they’d spend all day Saturday in temple sessions before turning around and driving home, to be back by Sunday morning. It was a grueling itinerary, Sievers said, so everyone used the time on the bus to sleep or read quietly. Everyone but Romney. “Mitt was always working. His light was on,” she said.

Mormon congregations, typically groups of 400 to 500 people, are known as wards, and their boundaries are determined by geography. Wards, along with smaller congregations known as branches, are organized into stakes. Thus a stake, akin to a Catholic diocese, is a collection of wards and branches in a city or region. Unlike Protestants or Catholics, Mormons do not choose the congregations to which they belong. It depends entirely on where they live. In another departure from many other faiths, Mormons do not have paid full-time clergy. Members in good standing take turns serving in leadership roles. They are expected to perform their ecclesiastical duties on top of career and family responsibilities. Those called to serve as stake presidents and bishops, or leaders of local wards, are fully empowered as agents of the church, and they carry great authority over their domains. Mitt Romney first took on a major church role around 1977, when he was called to be a counselor to Gordon Williams, then the president of the Boston stake. Romney was essentially an adviser and deputy to Williams, helping oversee area congregations. His appointment was somewhat unusual in that counselors at that level have typically been bishops of their local wards first. But Romney, who was only about 30 years old, was deemed to possess leadership qualities beyond his years. Romney’s responsibilities only grew from there; he would go on to serve as bishop and then as stake president, overseeing about a dozen congregations with close to 4,000 members altogether. Those positions in the church amounted to his biggest leadership test yet, exposing him to personal and institutional crises, human tragedies, immigrant cultures, social forces, and organizational challenges that he had never before encountered.

The Church of Jesus Christ of Latter-Day Saints is far more than a form of Sunday worship. It is a code of ethics that frowns on homosexuality, out-of-wedlock births, and abortion and forbids pre-marital sex. It offers a robust, effective social safety net, capable of incredible feats of charity, support, and service, particularly when its own members are in trouble. And it works hard to create community, a built-in network of friends who often share values and a worldview. For many Mormons, the all-encompassing nature of their faith, as an extension of their spiritual lives, is what makes belonging to the church so wonderful, so warm, even as its insularity can set members apart from society.
But a dichotomy exists within the Mormon Church, which holds that one is either in or out; there is little or no tolerance for those, like so-called cafeteria Catholics, who pick and choose what doctrines to follow. And in Mormonism, if one is in, a lot is expected, including tithing 10 percent of one’s income, participating regularly in church activities, meeting high moral expectations, and accepting Mormon doctrine—including many concepts, such as the belief that Jesus will rule from Missouri in his Second Coming, that run counter to those of other Christian faiths. That rigidity can be difficult to abide for those who love the faith but chafe at its strictures or question its teachings and cultural habits. For one, Mormonism is male-dominated—women can serve only in certain leadership roles and never as bishops or stake presidents. The church also makes a number of firm value judgments, typically prohibiting single or divorced men from leading wards and stakes, for example, and not looking kindly upon single parenthood.

The portrait of Romney that emerges from those he led and served with in the church is of a leader who was pulled between Mormonism’s conservative core views and practices and the demands from some quarters within the Boston stake for a more elastic, more open-minded application of church doctrine. Romney was forced to strike a balance between those local expectations and the dictates out of Salt Lake City. Some believe that he artfully reconciled the two, praising him as an innovative and generous leader who was willing to make accommodations, such as giving women expanded responsibility, and who was always there for church members in times of need. To others, he was the product of a hidebound, patriarchal Mormon culture, inflexible and insensitive in delicate situations and dismissive of those who didn’t share his perspective.
In the spring of 1993, Helen Claire Sievers performed a bit of shuttle diplomacy to resolve a thorny problem confronting church leaders in Boston: resentment among progressive Mormon women at their subservient status within the church. Sievers was active in an organization of liberal women called Exponent II, which published a periodical. The group had been chewing over the challenges of being a woman in the male-led faith. So Sievers went to Romney, who was stake president, with a proposal. “I said, ‘Why don’t you have a meeting and have an open forum and let women talk to you?’” she recalled. The idea was that, although there were many church rules that stake presidents and bishops could not change, they did have some leeway to do things their own way.
Romney wasn’t sure about holding such a meeting, but he ultimately agreed to it. Sievers went back to the Exponent II group and said they should be realistic and not demand things Romney could never deliver, such as allowing women to hold the priesthood. On the day of the meeting, about 250 women filled the pews of the Belmont Chapel. After an opening song, prayer, and some housekeeping items, the floor was open. Women began proposing changes that would include them more in the life of the church. In the end, the group came up with some 70 suggestions—from letting women speak after men in church to putting changing tables in men’s bathrooms—as Romney and one of his counselors listened and took careful notes.

Romney was essentially willing to grant any request he couldn’t see a reason to reject. “Pretty much, he said yes to everything that I would have said yes to, and I’m kind of a liberal Mormon,” Sievers said. “I was pretty impressed.” (Ann Romney was not considered to be sympathetic to the agitation of liberal women within the stake. She was invited to social events sponsored by Exponent II but did not attend. She was, in the words of one member, understood to be “not that kind of woman.”)

Romney’s leadership was not so rosy for everyone, though. As both bishop and stake president, he at times clashed with women he felt strayed too far from church beliefs and practice. To them, he lacked the empathy and courage that they had known in other leaders, putting the church first even at times of great personal vulnerability. Peggie Hayes had joined the church as a teenager along with her mother and siblings. They’d had a difficult life. Mormonism offered the serenity and stability her mother craved. “It was,” Hayes said, “the answer to everything.” Her family, though poorer than many of the well-off members, felt accepted within the faith. Everyone was so nice. The church provided emotional and, at times, financial support. As a teenager, Hayes babysat for Mitt and Ann Romney and other couples in the ward. Then Hayes’s mother abruptly moved the family to Salt Lake City for Hayes’s senior year of high school. Restless and unhappy, Hayes moved to Los Angeles once she turned 18. She got married, had a daughter, and then got divorced shortly after. But she remained part of the church.

By 1983, Hayes was 23 and back in the Boston area, raising a 3-year-old daughter on her own and working as a nurse’s aide. Then she got pregnant again. Single motherhood was no picnic, but Hayes said she had wanted a second child and wasn’t upset at the news. “I kind of felt like I could do it,” she said. “And I wanted to.” By that point Mitt Romney, the man whose kids Hayes used to watch, was, as bishop of her ward, her church leader. But it didn’t feel so formal at first. She earned some money while she was pregnant organizing the Romneys’ basement. The Romneys also arranged for her to do odd jobs for other church members, who knew she needed the cash. “Mitt was really good to us. He did a lot for us,” Hayes said. Then Romney called Hayes one winter day and said he wanted to come over and talk. He arrived at her apartment in Somerville, a dense, largely working-class city just north of Boston. They chitchatted for a few minutes. Then Romney said something about the church’s adoption agency. Hayes initially thought she must have misunderstood. But Romney’s intent became apparent: he was urging her to give up her soon-to-be-born son for adoption, saying that was what the church wanted. Indeed, the church encourages adoption in cases where “a successful marriage is unlikely.”
Hayes was deeply insulted. She told him she would never surrender her child. Sure, her life wasn’t exactly the picture of Rockwellian harmony, but she felt she was on a path to stability. In that moment, she also felt intimidated. Here was Romney, who held great power as her church leader and was the head of a wealthy, prominent Belmont family, sitting in her gritty apartment making grave demands. “And then he says, ‘Well, this is what the church wants you to do, and if you don’t, then you could be excommunicated for failing to follow the leadership of the church,’ ” Hayes recalled. It was a serious threat. At that point Hayes still valued her place within the Mormon Church. “This is not playing around,” she said. “This is not like ‘You don’t get to take Communion.’ This is like ‘You will not be saved. You will never see the face of God.’ ” Romney would later deny that he had threatened Hayes with excommunication, but Hayes said his message was crystal clear: “Give up your son or give up your God.”

Not long after, Hayes gave birth to a son. She named him Dane. At nine months old, Dane needed serious, and risky, surgery. The bones in his head were fused together, restricting the growth of his brain, and would need to be separated. Hayes was scared. She sought emotional and spiritual support from the church once again. Looking past their uncomfortable conversation before Dane’s birth, she called Romney and asked him to come to the hospital to confer a blessing on her baby. Hayes was expecting him. Instead, two people she didn’t know showed up. She was crushed. “I needed him,” she said. “It was very significant that he didn’t come.” Sitting there in the hospital, Hayes decided she was finished with the Mormon Church. The decision was easy, yet she made it with a heavy heart. To this day, she remains grateful to Romney and others in the church for all they did for her family. But she shudders at what they were asking her to do in return, especially when she pulls out pictures of Dane, now a 27-year-old electrician in Salt Lake City. “There’s my baby,” she said.

In the fall of 1990, Exponent II published in its journal an unsigned essay by a married woman who, having already borne five children, had found herself some years earlier facing an unplanned sixth pregnancy. She couldn’t bear the thought of another child and was contemplating abortion. But the Mormon Church makes few exceptions to permit women to end a pregnancy. Church leaders have said that abortion can be justified in cases of rape or incest, when the health of the mother is seriously threatened, or when the fetus will surely not survive beyond birth. And even those circumstances “do not automatically justify an abortion,” according to church policy.

Then the woman’s doctors discovered she had a serious blood clot in her pelvis. She thought initially that would be her way out—of course she would have to get an abortion. But the doctors, she said, ultimately told her that, with some risk to her life, she might be able to deliver a full-term baby, whose chance of survival they put at 50 percent. One day in the hospital, her bishop—later identified as Romney, though she did not name him in the piece—paid her a visit. He told her about his nephew who had Down syndrome and what a blessing it had turned out to be for their family. “As your bishop,” she said he told her, “my concern is with the child.” The woman wrote, “Here I—a baptized, endowed, dedicated worker, and tithe-payer in the church—lay helpless, hurt, and frightened, trying to maintain my psychological equilibrium, and his concern was for the eight-week possibility in my uterus—not for me!”

Romney would later contend that he couldn’t recall the incident, saying, “I don’t have any memory of what she is referring to, although I certainly can’t say it could not have been me.” Romney acknowledged having counseled Mormon women not to have abortions except in exceptional cases, in accordance with church rules. The woman told Romney, she wrote, that her stake president, a doctor, had already told her, “Of course, you should have this abortion and then recover from the blood clot and take care of the healthy children you already have.” Romney, she said, fired back, “I don’t believe you. He wouldn’t say that. I’m going to call him.” And then he left. The woman said that she went on to have the abortion and never regretted it. “What I do feel bad about,” she wrote, “is that at a time when I would have appreciated nurturing and support from spiritual leaders and friends, I got judgment, criticism, prejudicial advice, and rejection.”

One woman who had been active in the Exponent II organization was Judy Dushku, a longtime scholar of global politics at Suffolk University in Boston. At one point while Romney was stake president, Dushku wanted to visit the temple outside Washington to take out endowments, a sacred rite that commits Mormons to a lifetime of faithfulness to the church. She had never entered a temple before and was thrilled at the chance to affirm her dedication to a faith she’d grown up with and grown to love. Earlier in her life, temples had been off limits to Mormons who, like Dushku, were married to non-Mormons. Now that rule had changed, and she was eager to go. But first she needed permission from her bishop and stake president.

After what she described as a “lovely interview” with her bishop and after speaking with one of Romney’s counselors, she went to see Romney. She wasn’t sure what to expect. Despite Romney’s willingness to allow some changes in 1993, he and Dushku had clashed over the church’s treatment of women. “He says something like ‘I suspect, if you’ve gotten through both of the interviews, there’s nothing I can do to keep you from going to the temple,’ ” Dushku recalled. “I said, ‘Well, why would you want to keep me from going to the temple?’ ” Romney’s answer, Dushku said, was biting. “He said, ‘Well, Judy, I just don’t understand why you stay in the church.’ ” She asked him whether he wanted her to really answer that question. “And he said, ‘No, actually. I don’t understand it, but I also don’t care. I don’t care why you do. But I can tell you one thing: you’re not my kind of Mormon.’ ” With that, Dushku said, he dismissively signed her recommendation to visit the temple and let her go. Dushku was deeply hurt. Though she and Romney had had their differences, he was still her spiritual leader. She had hoped he would be excited at her yearning to visit the temple. “I’m coming to you as a member of the church, essentially expecting you to say, ‘I’m happy for you,’ ” Dushku said. Instead, “I just felt kicked in the stomach.”

The Bain of Mitt’s Campaign

By the time Mitt Romney walked into the Faneuil Hall offices of his mentor and boss, Bill Bain, in the spring of 1983, the 36-year-old was already a business-consulting star, coveted by clients for his analytical cool. He was, as people had said of him since childhood, mature beyond his years and organized to a fault. Everything he took on was thought through in advance, down to the smallest detail; he was rarely taken by surprise. This day, however, would be an exception. Bill Bain, the founder of Bain & Company, one of the nation’s premier consulting outfits, had a stunning proposition: he was prepared to entrust an entirely new venture to the striking young man seated before him.
From the moment they’d first met, Bill Bain had seen something special, something he knew, in Mitt Romney. Indeed, he had seen someone he knew when he interviewed Romney for a job in 1977: Mitt’s father. “I remember [George] as president of American Motors when he was fighting the gas guzzlers and making funny ads So when I saw Mitt, I instantly saw George Romney. He doesn’t look exactly like his dad did, but he very strongly resembles his father.” Beyond appearances, Mitt had an air of great promise about him. He seemed brilliant but not cocky. All of the partners were impressed, and some were jealous. More than one partner told Bain, “This guy is going to be president of the United States someday.”

The Bain Way, as it became known, was intensely analytical and data-driven, a quality it shared with some other firms’ methods. But Bill Bain had come up with the idea of working for just one client per industry and devoting Bain & Company entirely to that company, with a strict vow of confidentiality. From the start Romney was perfectly adapted to the Bain Way and became a devoted disciple. Patient analysis and attention to nuance were what drove him. For six years, he delved into numerous unfamiliar companies, learned what made them work, scoped out the competition, and then presented his findings. An increasing number of clients preferred Romney over more senior partners. He was plainly a star, and Bain treated him as a kind of prince regent at the firm, a favored son. Just the man for the big move he now had in mind.

And so Bain made his pitch: Up to that point, Bain & Company could watch its clients prosper only from a distance, taking handsome fees but not directly sharing in profits. Bain’s epiphany was that he would create a new enterprise that would invest in companies and share in their growth, rather than just advise them.

Starting almost immediately, Bain proposed, Romney would become the head of a new company to be called Bain Capital. With seed money from Bill Bain and other partners at the consulting firm, Bain Capital would raise tens of millions of dollars, invest in start-ups and troubled businesses, apply Bain’s brand of management advice, and then resell the revitalized companies or sell their shares to the public at a profit. It sounded exciting, daring, new. It would be Romney’s first chance to run his own firm and, potentially, to make a killing. It was an offer few young men in a hurry could refuse.

Yet Romney stunned his boss by doing just that. He explained to Bain that he didn’t want to risk his position, earnings, and reputation on an experiment. He found the offer appealing but didn’t want to make the decision in a “light or flippant manner.” So Bain sweetened the pot. He guaranteed that if the experiment failed Romney would get his old job and salary back, plus any raises he would have earned during his absence. Still, Romney worried about the impact on his reputation if he proved unable to do the job. Again the pot was sweetened. Bain promised that, if necessary, he would craft a cover story saying that Romney’s return to Bain & Company was needed due to his value as a consultant. “So,” Bain explained, “there was no professional or financial risk.” This time Romney said yes.

Thus began Romney’s 15-year odyssey at Bain Capital. Boasting about those years when running for senator, governor, or president, Romney would usually talk about how he had helped create jobs at new or underperforming companies, and would claim that he had learned how jobs and businesses come and go. He’d typically mention a few well-known companies in which he and his partners had invested, such as Staples. But the full story of his years at Bain Capital is far more complicated and has rarely been closely scrutinized. Romney was involved in about a hundred deals, many of which have received little notice because the companies involved were privately held and not household names. The most thorough analysis of Romney’s performance comes from a private solicitation for investment in Bain Capital’s funds written by the Wall Street firm Deutsche Bank. The company examined 68 major deals that had taken place on Romney’s watch. Of those, Bain had lost money or broken even on 33. Overall, though, the numbers were stunning: Bain was nearly doubling its investors’ money annually, giving it one of the best track records in the business.

Romney was, by nature, deeply risk-averse in a business based on risk. He worried about losing the money of his partners and his outside investors—not to mention his own savings. “He was troubled when we didn’t invest fast enough; he was troubled when we made an investment,” said Bain partner Coleman Andrews. Sorting through possible investments, Romney met weekly with his young partners, pushing them for deeper analysis and more data and giving himself the final vote on whether to go forward. They operated more like a group of bankers carefully guarding their cash than an aggressive firm eager to embrace giant deals. Some partners suspected that Romney always had one eye on his political future. “I always wondered about Mitt, whether he was concerned about the blemishes from a business perspective or from a personal and political perspective,” one partner said years later. The partner concluded that it was the latter. Whereas most entrepreneurs accepted failure as an inherent part of the game, the partner said, Romney worried that a single flop would bring disgrace. Every calculation had to be made with care.

Despite some initial struggles, 1986 would prove to be a pivotal year for Romney. It started with a most unlikely deal. A former supermarket executive, Thomas Stemberg, was trying to sell venture capitalists on what seemed like a modest idea: a cheaper way to sell paper clips, pens, and other office supplies. The enterprise that would become the superstore Staples at first met with skepticism. Small and midsize businesses at the time bought most of their supplies from local stationers, often at significant markups. Few people saw the profit-margin potential in selling such homely goods at discount and in massive volume. But Stemberg was convinced and hired an investment banker to help raise money. Romney eventually heard Stemberg’s pitch, and he and his partners dug into Stemberg’s projections. They called lawyers, accountants, and scores of business owners in the Boston area to query them on how much they spent on supplies and whether they’d be willing to shop at a large new store. The partners initially concluded that Stemberg was overestimating the market. “Look,” Stemberg told Romney, “your mistake is that the guys you called think they know what they spend, but they don’t.” Romney and Bain Capital went back to the businesses and tallied up invoices. Stemberg’s assessment that this was a hidden giant of a market seemed right after all.

Romney hadn’t stumbled on Staples on his own. A partner at another Boston firm, Bessemer Venture Partners, had invited him to the first meeting with Stemberg. But after that, he took the lead; he finally had his hands on what looked like a promising start-up. Bain Capital invested $650,000 to help Staples open its first store, in Brighton, Massachusetts, in May 1986. In all, it invested about $2.5 million in the company. Three years later, in 1989, Staples sold shares to the public, when it was just barely turning a profit, and Bain reaped more than $13 million. It was a big success at the time. Yet it was very modest compared with later Bain deals that reached into the hundreds of millions of dollars.

For years Romney would cite the Staples investment as proof that he had helped create thousands of jobs. And it is true that his foresight in investing in Staples helped a major enterprise lift off. But neither Romney nor Bain directly ran the business, though Romney was active on its board. At the initial public offering, Staples was a firm of 24 stores and 1,100 full- and part-time jobs. Its boom years were still to come. Romney resigned his seat on the board of directors in 2001 in preparation for his run for governor. A decade later, the company had more than 2,200 stores and 89,000 employees.

Assessing claims about job creation is hard. Staples grew hugely, but the gains were offset, at least partially, by losses elsewhere: smaller, mom-and-pop stationery stores and suppliers were being squeezed, and some went out of business entirely. Ultimately, Romney would approvingly call Staples “a classic ‘category killer,’ like Toys R Us.” Staples steamrolled the competition, undercutting prices and selling in large quantities. When asked about his job-creation claim during the 1994 Senate campaign—that he had helped create 10,000 jobs at various companies (a claim he expanded during his 2012 presidential campaign to having “helped to create tens of thousands” of jobs)—Romney responded with a careful hedge. He emphasized that he always used the word “helped” and didn’t take full credit for the jobs. “That’s why I’m always very careful to use the words ‘help create,’ ” he acknowledged. “Bain Capital, or Mitt Romney, ‘helped create’ over 10,000 jobs. I don’t take credit for the jobs at Staples. I helped create the jobs at Staples.”

Howard Anderson, a professor at M.I.T.’s Sloan School of Management and a former entrepreneur who has invested with Bain, put it more plainly: “What you really cannot do is claim every job was because of your good judgment,” he said. “You’re not really running those organizations. You’re financing it; you’re offering your judgment and your advice. I think you can only really claim credit for the jobs of the company that you ran.”

The same year Romney invested in Staples—digging into a true start-up—he also inked the biggest transaction, by far, that Bain Capital had put together until then. And with this $200 million deal, he waded full-on into the high-stakes financial arena of the time: leveraged buyouts, or LBOs. Whereas a venture-capital deal bet on a new business, pursuing an LBO meant borrowing huge sums of money to buy an established company, typically saddling the target with big debts. The goal was to mine value that others had missed, to quickly improve profitability by cutting costs and often jobs, and then to sell.

Initially, Romney thought that putting money into young firms “would be just as good as acquiring an existing company and trying to make it better.” But he found that “there’s a lot greater risk in a start-up than there is in acquiring an existing company.” He was much more comfortable in an environment where the issue wasn’t whether an idea would pan out but whether the numbers worked. He knew himself, knew that his powers ran less to the creative than to the analytical; he was not at heart an entrepreneur. Perhaps that was what led him to push the Pause button at the outset with Bill Bain. But he now felt ready to take on much bigger financial risks, mostly by making leveraged bets on existing companies, whose market was known and whose business plans he could parse and master.

Billions of dollars were being made in the field of leveraged buyouts in the roaring 80s, and Romney was fully in the game, continuing to ratchet up his favored strategy. On the campaign trail in 2011, Romney said his work had “led me to become very deeply involved in helping other businesses, from start-ups to large companies that were going through tough times. Sometimes I was successful and we were able to help create jobs, other times I wasn’t. I learned how America competes with other companies in other countries, what works in the real world and what doesn’t.” It was a vague summary of what was a very controversial type of business. In his 2004 autobiography, Turnaround, Romney put it more bluntly: “I never actually ran one of our investments; that was left to management.” He explained that his strategy was to “invest in these underperforming companies, using the equivalent of a mortgage to leverage up our investment. Then we would go to work to help management make their business more successful.”

Romney’s phrase, “leverage up,” provides the key to understanding this most profitable stage of his business career. While putting relatively little money on the table, Bain could strike a deal using largely debt. That generally meant that the company being acquired had to borrow huge sums. But there was no guarantee that target companies would be able to repay their debts. At Bain, the goal was to buy businesses that were stagnating as subsidiaries of large corporations and grow them or shake them up to burnish their performance. Because many of the companies were troubled, or at least were going to be heavily indebted after Bain bought them, their bonds would be considered lower-grade, or “junk.” That meant they would have to pay higher interest on the bonds, like a strapped credit-card holder facing a higher rate than a person who pays off purchases more quickly. High-yielding junk bonds were appealing to investors willing to take on risk in exchange for big payouts. But they also represented a big bet: if the companies didn’t generate large profits or could not sell their stock to the public, some would be crippled by the debt layered on them by the buyout firms.

The arcane domain of corporate buyouts and junk-bond financing had entered the public consciousness at the time, and not always in a positive way. Ivan Boesky, a Wall Street arbitrageur who often bought the stock of takeover targets, was charged with insider trading and featured on the cover of Time magazine as “Ivan the Terrible.” Shortly after Romney began working on leveraged deals, a movie called Wall Street opened. It featured the fictional corporate raider Gordon Gekko, who justified his behavior by declaring, “I am not a destroyer of companies. I am a liberator of them! … Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.”
Romney, of course, never said that greed is good, and there was nothing of Gekko in his mores or style. But he bought into the broader ethic of the LBO kings, who believed that through the aggressive use of leverage and skilled management they could quickly remake underperforming enterprises. Romney described himself as driven by a core economic credo, that capitalism is a form of “creative destruction.” This theory, espoused in the 1940s by the economist Joseph Schumpeter and later touted by former Federal Reserve Board chairman Alan Greenspan, holds that business must exist in a state of ceaseless revolution. A thriving economy changes from within, Schumpeter wrote in his landmark book, Capitalism, Socialism and Democracy, “incessantly destroying the old one, incessantly creating a new one.” But as even the theory’s proponents acknowledged, such destruction could bankrupt companies, upending lives and communities, and raise questions about society’s role in softening some of the harsher consequences.

Romney, for his part, contrasted the capitalistic benefits of creative destruction with what happened in controlled economies, in which jobs might be protected but productivity and competitiveness falters. Far better, Romney wrote in his book No Apology, “for governments to stand aside and allow the creative destruction inherent in a free economy.” He acknowledged that it is “unquestionably stressful—on workers, managers, owners, bankers, suppliers, customers, and the communities that surround the affected businesses.” But it was necessary to rebuild a moribund company and economy. It was a point of view he would stick with in years ahead. Indeed, he wrote a 2008 op-ed piece for The New York Times opposing a federal bailout for automakers that the newspaper headlined, let detroit go bankrupt. His advice went unheeded, and his prediction that “you can kiss the American automotive industry goodbye” if it got a bailout has not come true.

Thanks to a highly leveraged but successful takeover and turnaround of a wheel-rim maker, Accuride, Bain Capital became a hot property. So much money poured into Romney’s second investment fund that the firm had to turn away investors. Romney set out to raise $80 million and received offers totaling $150 million. The partners settled on $105 million, half of it from wealthy customers of a New York bank. During a break at a photo shoot for a brochure to attract investors, the Bain partners playfully posed for a photo that showed them flush with cash. They clutched $10 and $20 bills, stuffed them into their pockets, and even clenched them in their grinning teeth. Romney tucked a bill between his striped tie and his buttoned suit jacket. Everything was different now.

Valley of the LBO Kings

It was time for another road show, but the days of soliciting prospects for scarce cash in obscure locales were mostly over. This time Romney and his partners headed to Beverly Hills, California. Arriving at the intersection of Rodeo Drive and Wilshire Boulevard, they headed to the office of Michael Milken, the canny and controversial junk-bond king, at his company, Drexel Burnham Lambert. Romney knew Milken was able to find buyers for the high-yield, high-risk bonds that were crucial to the success of many leveraged-buyout deals. At the time of Romney’s visit, it was widely known that Drexel and Milken were under investigation by the Securities and Exchange Commission. But Drexel was still the big player in the junk-bond business, and Romney needed the financing.
Romney had come to Drexel to obtain financing for the $300 million purchase of two Texas department-store chains, Bealls and Palais Royal, to form Specialty Retailers, Inc. On September 7, 1988, two months after Bain hired Drexel to issue junk bonds to finance the deal, the S.E.C. filed a complaint against Drexel and Milken for insider trading. Romney had to decide whether to close a deal with a company ensnared in a growing clash with regulators. The old Romney might well have backed off; the newly assertive, emboldened Mitt decided to press ahead.

Romney’s deal with Drexel turned out well for both him and Bain Capital, which put $10 million into the retailer and financed most of the rest of the $300 million deal with junk bonds. The newly constituted company, later known as Stage Stores, refocused in 1989 on its small-town, small-department-store roots. Seven years later, in October 1996, the company successfully sold shares to the public at $16 a share. By the following year, the stock had climbed to a high of nearly $53, and Bain Capital and a number of its officers and directors sold a large part of their holdings. Bain made a $175 million gain by 1997. It was one of the most profitable leveraged buyouts of the era.

Romney sold at just the right time. Shares plunged in value the next year amid declining sales at the stores. The department-store company filed for Chapter 11 bankruptcy protection in 2000, struggling with $600 million in debt, and a reorganized company emerged the following year. So ended the story of a deal that Romney would not be likely to cite on the campaign trail: the highly leveraged purchase, financed with junk bonds from a firm that became infamous for its financial practices, of a department-store company that had subsequently gone into bankruptcy. But on the Bain balance sheet, and on Romney’s, it was a huge win.

Not every deal worked out so well for Romney and his investors. Bain invested $4 million in a company called Handbag Holdings, which sold pocketbooks and other accessories. When a major customer stopped buying, the company failed and 200 jobs were lost. Bain invested $2.1 million in a bathroom-fixtures company called PPM and lost nearly all of it. An investment in a company called Mothercare Stores also didn’t pan out; the firm had eliminated a hundred jobs by the time Bain dumped it. Fellow Bain partner Robert White said Bain lost its $1 million and blamed “a difficult retail environment.”

In some cases, Bain Capital’s alternative strategy of buying into companies also ended in trouble. In 1993, Bain bought GST Steel, a maker of steel-wire rods, and later more than doubled its $24 million investment. The company borrowed heavily to modernize plants in Kansas City and North Carolina—and to pay out dividends to Bain. But foreign competition increased and steel prices fell. GST Steel filed for bankruptcy and shut down its money-losing Kansas City plant, throwing some 750 employees out of work. Union workers there blamed Bain, then and now, for ruining the company, upending their lives, and devastating the community.
Then, in 1994, Bain invested $27 million as part of a deal with other firms to acquire Dade International, a medical-diagnostics-equipment firm, from its parent company, Baxter International. Bain ultimately made nearly 10 times its money, getting back $230 million. But Dade wound up laying off more than 1,600 people and filed for bankruptcy protection in 2002, amid crushing debt and rising interest rates. The company, with Bain in charge, had borrowed heavily to do acquisitions, accumulating $1.6 billion in debt by 2000. The company cut benefits for some workers at the acquired firms and laid off others. When it merged with Behring Diagnostics, a German company, Dade shut down three U.S. plants. At the same time, Dade paid out $421 million to Bain Capital’s investors and investing partners.

The amount of money now being earned at Bain Capital was skyrocketing, and much of it came from a handful of giant deals. During Romney’s 15 years there, the firm invested about $260 million in its 10 top deals and reaped a nearly $3 billion return. That was about three-quarters of its overall profit on roughly 100 transactions during Romney’s tenure. In one of his most specific explanations of how he made his fortune, in his autobiography, Turnaround, Romney wrote that most of the companies he invested in were ones that “no one has heard of—TRW’s credit services, the Yellow Pages of Italy.” Those weren’t just any two deals. They were two of the most lucrative of Romney’s career, and luck played a big part in both. A mere seven weeks after buying TRW, Romney and his partners flipped the company. Bain’s $100 million investment returned at least $300 million. The second deal cited by Romney took longer but involved even more good timing and luck. It began with a renowned Italian investor named Phil Cuneo, who had the idea of buying the Italian version of the Yellow Pages. It seemed a solid investment in a firm with a staid and stable business model. But mere months after closing the deal, Cuneo and his Bain associates realized that they had acquired a company that might benefit from the surging interest in dot-com businesses; the Yellow Pages company owned a Web-based directory that had the potential to be the Italian version of America Online or Yahoo. In just under three years, in September 2000, the partners sold the investment, earning a windfall that far exceeded anyone’s initial expectations. Bain’s $51.3 million investment in the Italian Yellow Pages returned at least $1.17 billion, according to a Romney associate familiar with the deal. There is no public documentation of how the profits were distributed, but at that time at least 20 percent of the return would have gone to Bain Capital. Of that, Romney’s typical payout was then 5 to 10 percent. That means this one obscure deal would have given him a profit of $11 million to $22 million. If Romney made a side investment in the deal, as was standard among Bain partners, he would have made even larger gains. One Romney associate said Romney’s total profit could have been as much as $40 million. (A Romney spokesman did not respond to questions about the deal.)

It was those kinds of deals that enabled Bain Capital to report the highest returns in the business in the 1990s. Romney’s own net worth would grow to at least $250 million, and maybe much more, a trove that would enable him to foot a large part of the bill for his 2008 presidential campaign. Asked about a report that his wealth at one point reached as high as $1 billion, Romney said, “I’m not going to get into my net worth. No estimates whatsoever.”

For 15 years, Romney had been in the business of creative destruction and wealth creation. But what about his claims of job creation? Though Bain Capital surely helped expand some companies that had created jobs, the layoffs and closures at other firms would lead Romney’s political opponents to say that he had amassed a fortune in part by putting people out of work. The lucrative deals that made Romney wealthy could exact a cost. Maximizing financial return to investors could mean slashing jobs, closing plants, and moving production overseas. It could also mean clashing with union workers, serving on the board of a company that ran afoul of federal laws, and loading up already struggling companies with debt.

There is a difference between companies run by buyout firms and those rooted in their communities, according to Ross Gittell, a professor at the University of New Hampshire’s Whittemore School of Business and Economics. When it comes to buyout firms, he said, “the objective is: Make money for investors. It’s not to maximize jobs.” Romney, in fact, had a fiduciary duty to investors to make as much money as possible. Sometimes everything worked out perfectly; a change in strategy might lead to cost savings and higher profits, and Bain cashed in. Sometimes jobs were lost, and Bain cashed in or lost part or all of its investment. In the end, Romney’s winners outweighed his losers on the Bain balance sheet. Marc Wolpow, a former Bain partner who worked with Romney on many deals, said the discussion at buyout companies typically does not focus on whether jobs will be created. “It’s the opposite—what jobs we can cut,” Wolpow said. “Because you had to document how you were going to create value. Eliminating redundancy, or the elimination of people, is a very valid way. Businesses will die if you don’t do that. I think the way Mitt should explain it is, if we didn’t buy these businesses and impose efficiencies on them, the market would have done it with disastrous consequences.”