Mitt Romney Got Filthy Rich Firing Workers, Not Creating Jobs


Mitt Romney with Capital founder William W. Bain Jr. in 1990

As economic flapdoodle goes, the notion that trickle down economics creates jobs and otherwise helps the middle class has been so thoroughly debunked that Republicans have rebranded it as “wealth redistribution.”

Still, the Republican message is pretty much the same less than a month before the all-important Iowa Republican caucuses and New Hampshire primary: Thou shalt not criticize the wealthy, let alone make them pay higher taxes, because they’re creating jobs.

That message may resonate positively with deeply conservative GOP voters in those two states considering that the unemployment rate is 6.0 percent in Iowa and 5.3 percent in New Hampshire.

But voters in other states — Nevada (13 percent unemployment) and Michigan (10.5 percent) to name but two — won’t be so easily fooled. They know that the wealthy are not creating jobs and the Greed Is Good mantra being huckstered by Mitt Romney, among other Republican wannabes, is not going to win their votes.

Romney is particularly vulnerable to criticism because as the CEO of Bain Capital, a private equity group, from 1984 to 1999, he and his investors got filthy rich while hurting ordinary workers by buying companies, jacking up their profits at the expense of workers and then reselling them.

A Los Angeles Times investigation found that Bain acquired more than 115 companies during Romney’s tenure and its estimated returns were more than five times that of the Dow Jones Industrial Average during the same period.

But while Romney likes to boast that Bain’s investment in a then-little-known office supply store called Staples has resulted in more than 90,000 jobs worldwide, under his leadership workers were fired, government subsidies were received that padded earnings, and companies often were flipped quickly for large profits. In some cases, Bain investors made money even when companies declared bankruptcy.

Bain managers said their mission was clear.

“I never thought of what I do for a living as job creation,” Marc B. Walpow told the Times. The former managing partner at Bain, who worked closely with Romney for nine years before forming his own firm, was unequivocal: “The primary goal of private equity is to create wealth for your investors.”

Bain’s top 10 dollar investments under Romney — averaging $53 million — spanned sectors including healthcare, entertainment and manufacturing. The firm’s largest investment was its 1999 buyout of Domino’s Pizza, into which Bain put $188.8 million, eventually reaping a fivefold return.

Four of these 10 companies declared bankruptcy, shedding thousands of jobs, yet Bain investors profited in eight of the 10 deals, including three of the four that ended in bankruptcy.

GS Industries was the 10th-biggest Bain investment in the Romney years.

Bain formed the company in the early 1990s by spending $24 million to acquire and merge steel companies with plants in Missouri, South Carolina and other states. Company managers cut jobs and benefits almost immediately. Meanwhile, Bain and other investors received management fees from GSI and a $65-million dividend in the first years after the acquisition, according to Times interviews with company employees.

In 1999, GSI sought a federal loan guarantee intended to help steel companies compete internationally. The loan deal was approved, but in 2001, before it could be used, the company went bankrupt.

More than 700 workers were fired, losing not only their jobs but health insurance, severance and a chunk of their pension benefits. GSI retirees also lost their health insurance and other benefits. But Bain partners received about $50 million on their initial investment, a 100 percent gain.

Romney himself became wealthy at Bain. He is now worth between $190 million and $250 million, much of it derived from his time running the investment firm, his campaign staffers have confirmed.

Barack Obama is certainly vulnerable because of the lingering effects of the Bush Recession, including unemployment that is just below 9 percent nationally, but if Romney is the eventual nominee the president will eat him alive during debates when the subject of jobs creation comes up.

         

8 Comments

  1. Well hells bells! No wonder he can throw out 10K bets like it’s chump change. More of the soulless wankering we’ve come to expect from that end of the spectrum – sorry to say. Thanks for the revealing (damning) post Shaun.

  2. this whole ridiculous notion of seeing rockstar businessmen as automatically great for government is like watching Godzilla destroy Tokyo and declaring “wow look at all those reconstruction jobs he’s creating!”

    yeah, maybe. for some. but at what cost?

    man. imagine if we could sell off Alabama to Mexico because it was underperforming…

  3. Welcome to the world of Capitalism. That’s what capitalists do – increase the bottom line for their stockholders.

    Mr. Romney wants to return to the Personal Reemployment Accounts that were initiated in 2003 under the Bush II administration and ended in 2004 with mixed results.

    He is also interested in increasing immigration of highly skilled workers and high-tech graduates.

    http://www.mittromney.com/jobs/human-capital

    Those OWS college grads might be interested in that last bit of information.

  4. I live in Massachusetts, so I knew about Romney’s business record. I get really, really pissed whenever anyone used the term, “Job creators” for wealthy people. If they were so damned good at creating jobs, then why aren’t they doing it?

  5. Rcoutme +1

    Also massachusetts resident here.

    Romney was never well liked here.
    His candidacy is a mystery to many of us.

  6. Ok, I’m convinced, bigger is not better, therefore I am backing a real businessman, Tony.
    Tony runs a flower shop and garden supply store, employing about 5 people, some part time.
    He told me his favorite movie was Other Peoples Money (OPM): http://www.imdb.com/title/tt0102609/.
    Seems a guy used to come in to buy flowers for his many girl friends and paid cash (no paper trail)and touted the film. Tony had so many names and addresses that Mr. B, saw the wisdom of cutting Tony in on his next deal, a company that made pizza boxes (coincidence, eh). By some quirk, really it was an accident, instead of buying the company with OPM, and then stripping out all of the profits leaving the company with a pile of debts, the company flourished under an infusion of new management, Tony’s sons. Mr. B. couldn’t sell the company cause Tony had those addresses. Moral: it takes a crook to catch a crook.
    Mitt could actually work out, after all, he put in the mandate into the Mass. HCP.

  7. I can’t really knock Mitt for making money. That was his job and he helped the company do just that. There is nothing wrong with having someone that understands business in the WH.
    ..and we all know he is a closet RINO.

  8. Well, of course he did. That’s how it works, that’s how you make a company work. Cost cutting, efficiency, technology deveopment to reduce labor — yeah, has to happen. In cases where labor is expensive, you do everything you can to reduce that labor — same as with any other cost. As the business grows, you often need to hire more people, to meet growing demand, but that is only done if necessary. It’s a smart way to do business, and making money is the purpose of business.

    The problem with someone who is very good at business is that in government, you can’t just fire people when you no longer require or want their labor. In a company, you pay a severance, and they basically go away; disappeared, for all the company cares, or should care. That doesn’t happen with a country or state or locality.

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