Wednesday, May 23, 2012

Booker, Bain, Obama

Heh. You know, I was going to partially focus this post on Corey Booker...but you problably have, or should be keyed into enough to politics to hear about that business. Let's leave it at this. He was wrong. It puts him in a bad light to my eyes.

But fuck it, that was Sunday. We are crawling towards the election and their are more serious issues, like why he was wrong to initially give Bain and Romney a pass.

So let's get to that.

Let's talk about BAIN.

We need to focus in on Bain, at least until people in this country understand just what it has done, and what, in turn Romney has done. Romney has made Bain a centerpiece of his campaign, he wants to try and take any good numbers that can be taken from it and take credit for them, while it noting those heavy costs to businesses and the workforce. He wants it to be a symbol of how he's the Great Rich Businessman here to fix the world we simpletons have broken. So let's understand him, so we can tell him just why he's not needed, and he can move onto the next door, put his foot in the door, and try selling his bullshit there.

Let's acknowledge the positive numbers he likes to wave around as the cable news folks jump up on his knees yapping. They can look like nice numbers. Trouble is groups like FactCheck.Org aren't so impressed. Seems his job creator mantle is in question. Even old compatriots from Bain balk at being thought of as job creators.
“The primary goal of private equity is to create wealth for your investors.”
Nothing wrong with that. Profit isn't evil. Trouble is how you gain that wealth. Do you do any harm?

Seems even some Republicans don't buy the claims either, like all the other candidates he shared debate space with. Think Progress cobbled together 10 of the better critiques on Romney and Bain:
1. “The idea that you’ve got private equity companies that come in and take companies apart so they can make profits and have people lose their jobs, that’s not what the Republican Party’s about.” — Rick Perry [New York Times, 1/12/12] 

2. “The Bain model is to go in at a very low price, borrow an immense amount of money, pay Bain an immense amount of money and leave. I’ll let you decide if that’s really good capitalism. I think that’s exploitation.” — Newt Gingrich [New York Times, 1/17/12]  
9. “If you’re a victim of Bain Capital’s downsizing, it’s the ultimate insult for Mitt Romney to come to South Carolina and tell you he feels your pain, because he caused it.” — Rick Perry [New York Times, 1/8/12] 
10. “They’re vultures that sitting out there on the tree limb waiting for the company to get sick and then they swoop in, they eat the carcass. They leave with that and they leave the skeleton” — Rick Perry [National Journal, 1/10/12] 
Obviously no fan of Gingrich or Perry, but nothing like seeing how disgusted they were with Romney and Bain's business.

But finance can be difficult. And what Romney and Bain did can get obfuscated in jargon. If you want a nice explanation of what Bain is doing, Andrew Sullivan had a reader explain it well.

... You take the Cash Cow, paying, say, 30% in taxes, and use various strategies to drive the tax rate to near-zero without killing the cash flow. Then you pocket the 30%, and the investors pay lower capital gains and "carried interest" tax rates on those extracted "tax savings." 
For roughly half of the companies receiving this "operation" will die because of the high debt and other obligations brought on by the Tax Arbitrage strategy. But you, the equity capital firm, get your investment out early. Half of the companies will prosper under this treatment (though not for existing employees who are outsourced or downsized), and you flip those to new owners for huge profits, taxed at capital gains rates. 
This is NOT "Capitalism." This is manipulation of the tax code for profit for some, at the expense of others. Millions of Americans work for years for Cash Cow companies. Slow growth is not a sin; it is a reality in many businesses, and a good Cash Cow can provide employment and community stability to generations of workers and their families.

So businesses were reconfigured, so as to offer big payout to investors while destroying or crippling many of the businesses. This is not good business, for those that Bain comes to. It can be doom. Which is what has been seen is the to the point Obama ad.

And President Obama nicely further explained why ads like this are needed. From AMERICAblog:

“The reason why this is relevant to the campaign is that 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, and I know how to fix it, and this is his business. And when you're president, as opposed to the head of a private equity firm, your job is not simply to maximize profits.  
Your job is to figure out how everybody in the country has a fair shot.  
Your job is to think about those workers who get laid off, and how are we paying for their retraining.  
And so if your main argument for how to grow the economy is "I knew how to make a lot of money for investors then you're missing what this job is about." It doesn't mean you weren't good at private equity. But that's not what my job is as president. 
My job is to take into account everybody, not just some. ...

And that is what Bain shows us. To put it politely, the lessons and skills that Romney brings out of Bain are distinctly ill-suited to lead a nation.

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