Posted on May 23, 2012
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| AP/Jae C. Hong |
Republican
presidential candidate and former Massachusetts Gov. Mitt Romney walks
past an arrow mark at a town hall-style meeting in Euclid, Ohio.
|
Obviously Barack Obama was right in
criticizing Mitt Romney’s stewardship of Bain Capital. How else to
evaluate the business experience that Romney has made a central tenet of
his campaign?
As Obama put it all too accurately: “My
opponent, Governor Romney—his main calling card for why he thinks he
should be president is his business experience. He’s not going out there
touting his experience in Massachusetts. He’s saying: ‘I’m a business
guy. I know how to fix it.’ ”
And the fixing of the beleaguered companies
acquired under Romney’s leadership at Bain Capital involved the very
practices that have led to the loss of good American jobs to ensure the
outrageous rewards that made Romney so wealthy.
Although Romney presents his activities as a
form of venture capitalist investment, giving life to new enterprises,
his practice has been quite the opposite. Ninety percent of Bain
Capital’s deals by the end of his tenure involved dismembering
once-thriving enterprises and selling off the parts, along with the jobs
connected to them. “He made his money mainly through leveraged
buyouts,” The New York Times reported five years ago in a detailed
survey of Bain Capital’s practices under Romney, “mortgaging companies
to take them over in the hope of reselling them at big profits in just a
few years.”
Those immense profits were taxed at the
capital gains rate of 15 percent instead of the 35 percent that income
earners at that level were otherwise required to fork over. “The amounts
of money are so vast that it is truly a matter of time before the
taxation of private equity is front and center of the public agenda,”
noted James E. Post, an expert on such matters at Boston University. He
added, “Increasingly, this world of private equity looks like a world of
robber barons, and Romney comes out of that world.”
Those comments were made back in 2007, when Romney was gearing up for an
ultimately failed run at the Republican presidential nomination. But
the expected outrage over the pirate practices of the hedge fund
hustlers never much materialized, and the Romneys of the world have
sailed through the subsequent years of economic implosion free of any
serious accountability. The money they are able to dispense to
politicians is that good.
Take the case of Newark Mayor Cory Booker,
whose comments about being nauseated by Obama’s Bain Capital remarks
were quickly exploited in Republican ads. What is truly nauseating is
that Booker did not reveal that his own rise to power was floated by
contributions from Bain and other leading financial hustlers.
As Josh Israel wrote on Think Progress, an
“examination of New Jersey finance records for Booker’s first run for
mayor—back in 2002—suggests a possible reason for his unease with
attacks on Bain Capital and venture capital. They were among his
earliest and most generous backers.”
Indeed, what is surprising is not that
Democrats like Booker are on the take from the hedge funds, as Obama
himself has been, but rather that the president has dared to criticize
those who have been so supportive of his campaigns.
Although Obama is to be applauded for
questioning Romney’s legacy, his motives seem to be as opportunistic as
those of Romney’s opponents in the Republican primaries who took the
same tack. After all, Obama has had three years to regulate the
unbridled power of private equity funds and he has done nothing in that
regard. The president chose as his key economic adviser Lawrence
Summers, who was paid $4.5 million as a consultant to the D.E. Shaw
hedge fund while counseling then-candidate Obama.
Then there’s Rahm Emanuel, who was
appointed Obama’s chief of staff despite the fact that his rise to power
as an Illinois congressman was financed by Magnetar Capital, a hedge
fund that had trafficked in subprime mortgage-backed securities.
Emanuel’s replacement as chief of staff was no improvement. William M.
Daley was paid $5 million a year by JPMorgan Chase—not a hedge fund, but
a financial institution that has proved to be no less reckless and
exploitative in its banking practices.
The point is not that the Democrats are
virtuous— they are not. The power of finance capital has corrupted both
parties ever since Bill Clinton collaborated with the Republicans in
Congress to reverse the New Deal of Franklin Delano Roosevelt, the last
truly great president of either party. The difference is that the
Democrats must still respond to the demands of the party’s base for a
modicum of economic justice for those who are hurting most. With the
selection of hedge fund grifter Romney, the Republicans are now
irredeemably defined as the party of the rapacious plutocrats.
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