It was only a matter of time. After staying mostly quiet through the Republican primaries, Democrats are kicking off a new campaign to convince voters that Mitt Romney earned his fortune by exploiting workers at Bain Capital.
But if Romney and Democrats alike were caught off guard when the topic came up in the otherwise finance-friendly GOP contest, they’ve had years to prepare for a general election fight on the issue, which came up in both Romney’s 1994 and 2002 statewide runs. So what are Romney and his allies doing to shut down the populist attack that many believe has already cost him a Senate seat and the South Carolina primary? Let’s review the emerging counterattacks so far.
1) What About All The Workers Who Weren’t Laid Off?
This has been Romney’s favorite response to Bain questions so far: playing up the company’s more voter-friendly success stories. He rebutted attacks from Gingrich during the primary with a statement from the founder of Staples, whose company used a small initial investment from Bain to grow into the office empire it is today.
This time around, Romney’s campaign was ready Monday with a feel-good web video about Steel Dynamics, an Indiana company that also used an investment from Bain to expand into a larger business and hire more workers.
Part of this strategy relies on carefully distinguishing between two aspects of Bain — and Romney’s — business practices. Most of Romney’s favorite success stories are examples of venture capital investments, like Staples, in which Bain helped a fledgling company take their business to the next level. But the bulk of Bain’s portfolio is private equity, a practice that is often less pretty in which existing companies are often bought up by an investor and stripped down to make them more appealing to investors in the short term. These are the stories Democrats like to highlight, like GST Steel, where Bain made millions in profit even as the company was on the path to bankruptcy.
2) Obama Hearts Private Equity
The Obama campaign has insisted repeatedly that its beef with Romney is about his specific business dealings and not private equity in general. But it can sound like a pretty thin distinction at times, especially to prominent Democratic donors who’ve worked in private equity themselves and are sensitive about being vilified as greedy corporate raiders.
Republicans looked to exploit this tension on Monday, circulating comments from former Obama adviser Steve Rattner, who co-founded the Quadrangle Group, a successful private equity firm. Rattner, hardly a fan of Romney in most circumstances, defended Bain Capital on MSNBC’s “Morning Joe” as a model company and called Obama’s attacks “unfair” (though he did disagree with Romney’s claim that private equity creates jobs).
In a case of awkward timing, Obama attended a fundraiser Monday hosted by Tony James, a top executive at the world’s largest private equity firm, Blackstone Group. Like Rattner, James is on the record defending private equity from the “layoff artist” attacks that the Obama campaign now employs.
3) Let’s Talk About Solyndra Instead
The Romney campaign’s very first reaction to Obama’s Bain ad on Monday was to attack the president over Solyndra, the solar energy company that went bankrupt despite receiving over $500 million in loan guarantees from the federal government.
“President Obama has many questions to answer as to why his administration used the stimulus to reward wealthy campaign donors with taxpayer money for bad ideas like Solyndra, but 23 million Americans are still struggling to find jobs,” said Romney spokeswoman Andrea Saul in a statement.
This is another counterattack that Romney dusted off from the Republican primaries to deploy again in the general election. It doesn’t exactly make much sense beyond putting two stories next to each other that both involved the word “bankruptcy.” In the primaries, Republicans like RNC Chairman Reince Preibus tried to make the case that somehow Obama was no different than Romney because workers at Solyndra are now losing their jobs, too. But that was an investment in an independent company that went wrong, not a decision by the Obama administration to give out pink slips. By contrast, Bain’s business strategy was to take over companies and install their own manager to carry out a new plan that often involved laying off workers and cutting benefits in order to trim costs. Perhaps aware that they’re skating on thin ice with the analogy, Romney’s spokeswoman mostly used it as a non sequiter change of subject rather than a direct comparison.
4) Obama Lays People Off, Too
Conservative columnist Byron York previewed on Monday what he claimed was Romney officials’ long-prepared counterattack to the Bain story: Obama likes to fire people, too.
Given that Republicans usually complain the White House hires too many people, this is not an angle you hear often. Their logic: As part of the 2009 auto bailout, General Motors and Chrysler were forced to cut costs and produce a new plan to return to profitability with a leaner business. One area where the White House pushed them to find savings was in getting rid of hundreds of car dealerships. A report by the TARP inspector general found that this process was handled sloppily and resulted in the tens of thousands of lost jobs. Republicans complained that more of the savings should have come from unionized auto workers, who made their own concessions, instead. York says this proves that given the same circumstances Romney faced at Bain Capital after buying a troubled company like GST Steel, Obama will end up pursuing the same ugly downsizing that he did out of necessity.
This approach gets into similarly tricky territory. Politically, the auto rescue, which industry experts believe may have saved as many as 1 million jobs or more, is literally Obama’s favorite topic on the campaign trail and one where Romney has unique vulnerabilities. Romney can and does complain the unions got too much of the spoils (which they dispute heavily), but since it all worked out overall it’s much harder to point to the whole enterprise as a job-killer.
Another is that the two stories differ in key ways. One aspect of Romney’s Bain days that critics emphasize is that Bain actually made a profit in some of its most notorious bankruptcies, rewarding their own investors with dividends and fees even while workers ended up out on the street. In the auto bailout, the federal government reluctantly put up tens of billions of dollars, none of which they had any hope of recovering unless the industry recovered. It did, allowing them to recoup its costs, and allowing Obama to proudly tout his emergency measures as a success story. There just isn’t the same exploitation angle.
