Reagan OMB Director Questions Romney’s Ability To Create Jobs, And Romney Interview Isn’t Reassuring

One story which will be interesting to watch between now and November is the degree to which Romney’s years at Bain Capital become a meaningful issue in the presidential race. I see this period as one of testing issues and arguments by each side to prepare for the fall  when people are paying more attention. It doesn’t help Romney that the Bain issue was raised by his Republican opponents for the nomination. Nor does it help that former Reagan OMB Director David Stockton provided a rare moment of truth on Fox: “I don’t think that Mitt Romney can legitimately say that he learned anything about how to create jobs in the LBO business. The LBO business is about how to strip cash out of old, long-in-the-tooth companies and how to make short-term profits…” (Video above)

Obama has also had difficulties with comments from some Democrats on this topic. Unfortunately, money and the need for contributions plays a huge role in what politicians feel safe to admit about the system.

There are also two different issues–whether Romney’s actions were improper and,  as David Stockton raised, whether his success at Bain provided him any experience with regards to creating jobs or handling the economy. Steven Rattner, a former treasury official under Obama, had reservations when the story was first raised but now agrees that Obama is handling the issue appropriately:

On Monday, Mr. Obama struck the right balance, emphasizing that he wasn’t attacking private equity but was questioning Mitt Romney’s Bain Capital credentials to be the job creator in chief.

That’s fair, particularly because Mr. Romney himself has been foolishly reweaving history to claim, as recently as last week, that he helped create 100,000 jobs during his time at Bain.

In fact, Bain Capital — like other private equity firms — was founded and managed for profit: ideally, huge amounts of gain earned legally and legitimately. Any job creation was a welcome but secondary byproduct.

The language in one prospectus seeking Bain Capital investors was clear: “The objective of the Fund is to achieve an annual rate of return on invested capital in excess of the returns generated” by other investments. Any job creation was accidental…

Under Mr. Romney’s leadership, Bain Capital engaged in the less attractive practice of putting more debt on seemingly successful investments in order to take dividends out. In at least four instances of Bain Capital investments during Romney’s tenure, these “recapped” companies, of which two were featured in the Obama ads, subsequently went bankrupt, costing thousands their jobs.

To be sure, some of Bain’s large leveraged buyouts — notably, Domino’s Pizza — added jobs. But Mr. Romney left Bain Capital two months after the Domino’s investment (7,900 new jobs claimed) was finalized.

Aware of private equity’s reputation, Mr. Romney still trots around the country erroneously calling himself a “venture capitalist.”

And in a further effort to deflect attention from the Bain Capital debate, Mr. Romney last week argued that President Obama was responsible for the loss of 100,000 jobs in the auto industry over the past three years.

That’s both ridiculously false (auto industry and dealership jobs have increased by about 50,000 since January 2009) and a remarkable comment from a man who said that the companies should have been allowed to go bankrupt and that the industry would have been better off without President Obama’s involvement.

Adding jobs was never Mitt Romney’s private sector agenda, and it’s appropriate to question his ability to do so.

Mitt Romney’s experience in the private sector is totally different from what is done in government. Challenging Romney’s ability to create jobs based upon his experience at Bain raises a legitimate point, especially when Romney has made this his main qualification to replace Obama. In contrast, Barack Obama has a very good record at turning around an economy heading into depression and creating jobs.

Romney uses his experience at Bain to claim non-existent expertise in handling the economy. Romney failed to provide any sign that he has any ideas as to improving the economy in an interview with Mark Halperin. Steve Benen also pointed out how Mitt’s promises are becoming more modest and less meaningful:

“Over a period of 4 years, by virtue of the policies that we put in place, we get the unemployment rate down to 6 percent, perhaps a little lower,” the Republican said.

There are, of course, two glaring problems with this. The first is that Romney told voters any unemployment rate above 4 percent is a problem. He didn’t say this years ago; he set this standard earlier this month.

The second is that Romney doesn’t realize what we’re on track to reach that standard anyway. The self-described “numbers guy” told Halperin that his “policies” will “get the unemployment rate down to 6 percent,” but as Travis Waldron noted, “The Congressional Budget Office predicts that unemployment will average 6.3 percent in 2016; the Office of Management and Budget, meanwhile, projects unemployment will hit 6.1 percent and ultimately fall below 6 percent the same year.”

In other words, Romney is promising to deliver results we’re likely to get anyway. The myth of this guy’s competence has been greatly exaggerated.

Perhaps we should be satisfied with six percent, and happy that the availability of jobs doesn’t drop as it did the last time a Republican was in the White House.

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3 Comments

  1. 1
    Martha Ramirez says:

    Reagan OMB Director Questions Romney's Ability To Create Jobs, And Romney Interview Isn't Reassuring #p2 #topprog http://t.co/msPLdiNY

  2. 2
    adjordan says:

    Reagan OMB Director Questions Romney's Ability To Create Jobs, And Romney Interview Isn't Reassuring #p2 #topprog http://t.co/msPLdiNY

  3. 3
    Cain S. LaTrans says:

    » Reagan OMB Director Questions Romney’s Ability To Create Jobs, And Romney Interview Isn’t Reassuri http://t.co/4V1pW0x8

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