Sunday, July 15, 2012

In which I agree with a Dish reader

I more or less agree with this Dish reader, sloppy writer though he be:
I am a wimp and Romney tries to have everything both ways, and he should have proudly owned the full spectrum of Bain's investments at any given time, including '99-02. But still, the Obama attack path makes me queasy, for two reasons 1) there's nothing really wrong with offshoring (though there is something wrong with loading companies with debt and driving them into the ground while you clean up), and 2) while I could be proved wrong sometime soon, I think the basic Romney/Bain narrative for '99-02 holds together.

I've been looking at old clips [e.g., these?]. At first they called it a leave of absence, sometimes a part-time leave, and kept Romney's place warm for him. Once he announced he was leaving in mid-2001, they retroactively made his resignation effective Feb '99. That's having it both ways, as Romney also did re Massachusetts residency. But he probably was not operationally involved with Bain from 2/99 on. He had responsibility, and probably a degree of oversight, and shouldn't try to weasel out of that, but he wasn't managing the funds. Keeping his board seat warm for a portfolio company or two is different.

Some weeks ago you worried that Obama could lose his rep for integrity, being above the fray, better than his opponents. I've flipped places with you a bit. I worry about blowback now, even as I deilght in hearing O cooly say that Romney has some 'splainin to do. I still don't like the ads, and I think the intimation that there was anything criminal in those SEC filings is way over the top.
I also agree with the main thrust of Sullivan's response, though it doesn't entirely engage the point of the dissent:
I don't. For me the core point is that Romney's retaining the title of sole owner, chairman and CEO of Bain through 2002 means unequivocally that he is responsible for what happened in those years at his own company, whatever the level of his practical involvement. I don't think he was anything more than part time at most - but it's the responsibility that matters - and the accountability that goes with it. A man who refuses to take responsibility for his own company and says he is not accountable for anything that happened there even as he remained CEO is not someone who would be an accountable president.

More to the point, these attacks are not merely personal. When the Obama campaign says that Romney is not the solution, but the problem, they are arguing that the extremes to which our economy and culture have gone in the last two decades - e.g. the money-grubbing, tax-evading and reckless financial sector - will not be tackled by a man who made a fortune by engaging in it. And this is not over the top. Bain is at the center of Romney's own argument for his candidacy. And the attacks on Romney's foreign bank accounts are much less incendiary than arguing that Obama does not understand his own country or apologized for it.
The reader did not say that connecting Romney's conduct at Bain to the plutocratic policies he now advocates is over the top -- rather that suggesting that the SEC filings may have been criminal is over the top, because it's not close to true. More broadly, I think the reader objects not to pinning Bain's conduct in 1999-2002 to Romney but to the substance of the attack: that Bain "shipped jobs overseas." So what? What private equity firm -- what investor -- would rule out investing in a company because it facilitated or availed itself of offshoring?  The fair attack on Bain and the mode of investment it pioneered is that Bain played -- and helped invent -- a rigged game, in which the investor can in some instances buy a company, load it with debt, pay itself huge fees, drive the company into bankruptcy, and still make huge profits. 

Offshoring is a part of that dynamic: the private equity owners effectively arbitrage the difference between wages in the U.S. and developing companies, making companies more profitable by reducing their labor costs and then paying the owners -- themselves and their investors -- the resulting difference in the company's value. The tax cuts Romney advocates exacerbate that difference in who gets paid what. But it seems to me that the real asset stripping lies in loading a company with debt and then using that debt to pay the leveraged buyers.

I admit that "shipped jobs to China" is easier to get a handle on.

What's fascinating about the way this issue blew up is that the blowup has nothing to do with the substance of the attack -- that Bain "shipped jobs overseas."  By disowning responsibility for Bain's conduct from 1999-2002, Romney effectively conceded that Bain was guilty as charged. Suppose he'd proudly owned the full spectrum of Ban's investments and denounced the attacks as demagogic?  As in, "I know why jobs come and why they go"?  Well how do they, Mitt? Having helped them go, what's your insight into changing the incentives for U.S. employers?  Offer vouchers for evangelical schools that teach 'science' with coloring books about Genesis?  Cut taxes for Bain partners so that they can hire...more Bain partners?  Why aren't we now talking about that, instead of the degree of oversight you exercised over Bain for a 3-year period 20 years ago?

UPDATE: Kevin Drum cites former Bain partner Ed Conard (he of the quaint theory that the superrich in America don't get to keep enough of their earnings) trying to nudge Romney in the direction suggested above --owning Bain's whole history. Drum then looks back on how Romney slipped into his current chickenshit position:
Conard also said that he did not believe Romney was “ashamed” of any part of Bain Capital’s record. “You say ashamed, I see great pride,” Conard said of Romney's position on Bain Capital's entire record. He added that he believed Romney would embrace Bain Capital’s record rather than try to distance himself from it once the campaign intensifies in the fall. “When the debate really starts, in August, September and October, we’ll see. I think he’ll own it.”
Bain is Bain. Even if Romney wasn't much involved in management after 1999, it was still the company he built. The only problem is that back during the primaries he became so desperate to avoid being tainted by the unpopular aspects of running a ruthless private equity firm that he panicked when the inevitable attacks came and started insisting that he shouldn't be held responsible at all for anything Bain-related after precisely February 1999. This has since been followed by increasingly wobbly towers of nonsense, like Ed Gillespie's claim today that Romney "retired retroactively." This was never really tenable from the start, and all of Romney's problems have flowed from that original miscalculation. He can't run from Bain, and he shouldn't have tried.


  1. Andrew, what really bugs me about this whole offshoring funds angle, legal though it is, is the fact that Romney took measures to shelter his income. That a candidate for POTUS would do this seems obscene, somehow... I can't articulate well, but I think you understand what I mean?

    The other issue that bothers me is the fact that he is not releasing his tax returns. Why not? As Sen. Dick Durbin said on 'Meet the Press' this morning, Romney's candidacy fails the minimum requirements Republican senators insisted upon for Obama's cabinet nominees, and we're talking about the POTUS here!

  2. When you talk about Conard and being proud of what you've done, you really have to cite the fact that he was the first person we discovered who created a dummy shell corporation just to hide his $1 million contribution to the Romney Super PAC. ( That's a man with some very strange priorities.