The Bain Chronicles: If the election centers on job creation, Obama loses
posted at 11:23 am on May 22, 2012 by Howard Portnoy
President Obama is expending a good bit of capital—real and political—on Mitt Romney’s claim that he created 100,000 jobs while CEO of Bain Capital. The re-election campaign has launched a series of ads profiling companies that laid off employees and/or went belly up after Bain took control of their business operations. The president has also made a fanciful version of Romney’s record at Bain the centerpiece of recent whistle stops.
This tack is a fight, to borrow a phrase from Obama, that the Romney camp should be willing to have. And it seems they are. They came back with an ad of their own on Monday that features three Democrats—Newark Mayor Cory Booker, former Tennessee Rep. Harold Ford, and Obama’s own former car czar Steven Rattner—extolling the virtues of private equity firms like Bain.
Of course, successful equity investment takes some measure of business acumen, as the president learned at the American taxpayers’ expense. You can’t merely throw darts at a list of companies and expect to hit a winner. Chances are better than not that you will blow more than half a million dollars on a Solyndra or $100 million on an Ener1.
But Obama’s losing bets on green energy are are not his only problem. If the national conversation that helps voters decide the next president focuses on job creation, Obama flat out loses.
Consider that on Feb. 17, the third anniversary of his signing into law the $787-billion American Reinvestment and Recovery Act (aka, the stimulus), the unemployment rate set a new record, remaining above 8% for the longest continuous stretch—36 straight months—since the end of World War I. Those numbers come from the Bureau of Labor Statistics (BLS).
Obama can make the claim that Romney at Bain created wealth for investors, not jobs, but that argument turns the spotlight back on the president, who has created debt for Americans and not jobs.
Then there is the ticklish matter of Jonathan Lavine. Lavine is currently a managing director at Bain, where he is CEO of affiliate Sankaty Advisors, which he helped found in 1997.He is also a chief Obama bundler, having raised between $100,000 and $200,000 for the re-election campaign.
Still another pitfall for Team Obama is that the more they talk about private equity investment, the more voters are going to learn about what firms like Bain actually do and that popular slurs like vulture capitalism and corporate raider tell just one side of the story—and a grossly distorted one at that. They will hear that many financial gurus view private equity investment is a net positive for the economy. Finally, they will learn that Bain, which Romney founded with two partners in 1984 and has since grown to be one of the nation’s biggest private-equity firms, is a remarkable success story.
UPDATE (12:02, 5-22-12): As an interesting coda to this article, The Hill cites a report from OpenSecrets.org noting that in 2008 candidate Obama raised more cash from hedge fund and private equity donors than any other candidate. Obama took in nearly $3.5 million from large private-equity donors that year—twice the amount that general-election rival John McCain pocketed.
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