Democrat Star Cory Booker Goes Off Script..With Truth.
Sadly, the Democrat leaders we have today are decidedly anti free market and capitalism. Most regular folk Democrats I know are not. So, there is a disconnect there. But, every once in awhile, you can find a Democrat leader willing to break from the pack, and show disgust over those that demonize what made this country the most prosperous nation on earth, the free market.
Newark (N.J.) Mayor Cory Booker did this during an appearance on NBC’s “Meet the Press” on Sunday. Booker went off message big time when he defended Mitt Romney’s time at Bain Capital. The Obama administration’s main tactic against Romney has been his time at Bain Capital being an evil capitalist, making *gasp* money, and creating jobs. Booker described the negative tone of the campaign as “nauseating”. He went on:
“I have to just say from a very personal level, I’m not about to sit here and indict private equity,” Booker said, referring to the ad which spotlighted the story of a Kansas City steel company that went bankrupt after Bain Capital’s involvement.
“If you look at the totality of Bain Capital’s record, they’ve done a lot to support businesses, to grow businesses,” he added. “And this, to me, I’m very uncomfortable with.”
Booker tied the choices he faced as mayor to those faced by companies Bain dealt with.
“This is not about what happened at Bain Capital. Heck, I’ve reduced the employees in my city 25 percent because it’s the only way my government would survive. Call me a job-cutter, if you want,” he said.
Wow. An astonishing display of honesty from the Obama side. I have to say, my respect for Cory Booker, which was high for a Democrat to begin with, just got higher. Now, he did walk it back a bit later with a four-minute follow up video for his social media followers explaining that Romney’s business record was fair game, and that he was simply frustrated by negative campaigning, BUT he didn’t refute any of what he said about Bain doing a lot to support and grow business.
Another Democrat known to be independent, former Tennessee Rep. Harold Ford Jr, said he agreed with what Booker said:
Former Tennessee Rep. Harold Ford Jr. said Monday that he would not have walked back New Jersey Mayor Cory Booker’s surprising comments criticizing the Obama campaign for attacking private equity.
“I would not have backed off the comments if I were Mayor Booker,” Ford, a Democrat, said on MSNBC’s “Morning Joe.” “The substance of his comments on ‘Meet the Press,’ I agree with the core of it. I would not have backed them out… private equity’s not a bad thing. As a matter of fact, private equity is a good thing in many, many instances.”
But the thing with Booker gets even BETTER:
“The last point I’ll make is this kind of stuff is nauseating to me on both sides,” Mr. Booker continued. “It’s nauseating to the American public. Enough is enough. Stop attacking private equity. Stop attacking Jeremiah Wright.”
So, in other words, attacking Bain is the same as our side attacking Jeremiah Wright. Ouch. Even better??? The GOP has put up a “I Stand With Cory” website.
Update: The Romney campaign has a video up already.
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The Romney video is effective and refutes the Bain Capital attacks.
I have to admit that I had expected, all the claims about how Republicans are purging moderates not withstanding, the treatment of Mr. Booker on this blog to be negative (calling him a “liar”, “sell out”, etc. etc.). So, in all fairness, I have to admit that I am surprised and pleased to see that at least the one article here (this is the first one I read) recognizes that lock-step adherence to the Democratic platform is no better than lock-step adherence to the Republican one.
(Though, as expected, is seems that Mr. Booker is being pressured to walk back his comments by his “side”).
There is more to capitalism than loading companies with debt, gutting them of resources necessary for longterm survival, making huge dividend payments for yourself, and letting those companies go under. This is really an attack on a specific model that some private equity firms engage in (in this case, Bain Capital).
This article seems grounded in several unsupported claims. I’ll go over two:
“Sadly, the Democrat leaders we have today are decidedly anti free market and capitalism. Most regular folk Democrats I know are not.”
Most regular fold Democrats (like most regular folk Republicans) simply want an economy where they have a fair shot at making a decent living where they can support themselves and perhaps a family. The difference between Democratic and Republican lawmakers are well within the parameters of capitalism. It’s just that Republicans want a more unfettered market with less regulation and even lower taxes on the wealthy. What the Democrats are after is a market economy that’s a bit closer to the one we had after the post world war 2 years. Higher taxes on the rich and stronger unionization created an economy where the average worker could make a living wage, as they were taking home a higher percentage of their productivity, as it wasn’t simply going to a select few at the top.
“The Obama administration’s main tactic against Romney has been his time at Bain Capital being an evil capitalist, making *gasp* money, and creating jobs.”
Actually, the attack has been specifically on Bain Capital’s leverage buyouts, loading companies with debt and coming out with huge profits while the companies went under. This was certainly a display of genius financial engineering but it was done for short term profit and it would appear that this slashed far more jobs than it created.
What’s more is, the thesis here is “Mitt Romney says he’s a job creator, here’s why he’s not” as opposed to “We think Mitt Romney and Capitalism are evil.”
Huxley,
I think the problem with your analysis is that by the unbiased accounts of the descriptions of what Bain did that I’ve heard (and that includes Booker’s description on MTP) are not compatible what you describe. While there were some cases that went bad, and Bain certainly made sure they came out well in the black in those cases, there are other cases–and, from what I’ve seen, many more–where the companies did well and did create many jobs. The assertion that Bain “slashed far more jobs than it created” is not supported by facts.
The Democrats criticism that Romney is ignoring the jobs lost in these cases in his calculation may be true. If the criticism ended there, I’d have no problem with it. But to imply that these cases are *all there is* in Bain’s history, or that these tactics were central to Bain’s strategy, is at least equally bad, and I’d say worse since they represent a minority of cases.
In short, Booker was right the first time.
In this brave new world of hearing the perspective of the “other side”, perhaps you will find this piece amusingly partisan, not that you are guilty of that.
http://online.wsj.com/article/SB10001424052702303360504577410573651845802.html
GST, an already failing company, was bought for $80 million and Bain invested an additional $100 million to modernize the operation.
Sorry if these facts conflict with this: “To hear the Obama campaign, this is a tale of greed: GST was a healthy, happy, quality steelmaker until Bain plundered its worth and stripped its 750 workers of their due. “It was like a vampire,” laments one former employee in the ad. “They came in and sucked the life out of us.”
Adeline’s Dad,
My analysis was really more intended to show the article’s skewed analysis, but I guess I did get deeper into Bain than I intended. Booker appeared to be defending private equity in general, and that is fine. It should not be assumed that all PE is the same. Some PE firms do appear to make money by growing businesses and making profits from actual growth. Others seem to load companies with debt and gut their long term viability for the short gain, and this is what Bain, so far as I can tell, mostly did. The point is, it’s not necessary to create jobs for PE firm partners to come out ahead, and unfortunately this is what’s often assumed by those who feel they are defending the values of free enterprise by providing cover for such instances of vulture capitalism.
Having said that, none of the above is illegal and doesn’t make Mitt Romney an evil person. This is simply an ongoing rebuttal to Mitt Romney’s assertion that his private sector background makes him a qualified job creator. It does not; it makes him a genius financial engineer who knows how to take advantage of the tax code and drive a profit regardless of the health of a company.
It is indeed difficult to find objective analysis’ of Bain Capital. Here are some of the more objective versions I found.
http://www.factcheck.org/2012/01/romneys-shaky-job-claims/
http://www.newyorker.com/talk/financial/2012/01/30/120130ta_talk_surowiecki
http://www.mittromneyjobcreation.com/
Here is an excellent debate between people with differing views on Bain.
http://www.pbs.org/newshour/bb/business/jan-june12/privateequity_01-18.html
Dduck,
Thanks for the link. I think that’s the best defense I’ve seen. In regards to the money Bain “invested” in GST, the question becomes (and this is a common theme with private equity): How much of that money was actually Bain’s own investment? Was it simply purchased through a loan which they then placed GST steel on the hook for? This is part of the “financial engineering” aspect of leverage buyouts. You ‘purchase’ a company (usually through borrowed money) then place that company on the hook to pay off the loan. Sometimes you take out a loan (and again, place the company on the hook to pay it off) that is then used to pay dividends to the partners. You gut the company of operating capital in order to cut costs in order to pay off the loan. Even if the company goes under in the process, the partners still made their money.
So again, I’d be interested in seeing an actual breakdown of those investments and how they were paid for.
Yes, so in response to the WSJ article post, the PolitiFact article I linked to (that comment is awaiting moderation–I guess that’s what happens when you post links) does claim that little of the investment was made by Bain itself, and that the debt was passed onto GST Steel–which without, it could have possibly weathered the downturn in the steel industry. Burdening a company with a loan from a leveraged buyout is no different than loading it with debt for any other reason. The laws of business still apply. If a company is not financially poised to handle a downturn it will go under. In this case, those who loaded it with debt still walk with huge profits. I don’t think this is the type “capitalism” that makes us all better off. It’s financially creative destruction for the workers and financial socialism for the partners.
“But Kosman, the book author, argues that the debt acquired under Bain was the overriding problem.
“After quickly raising profits, (Bain) had the company, less than one year after the buyout, borrow another $61 million to pay themselves a dividend. This left little room for error as profit, $32 million in 1995, could barely cover the increased interest expenses, rising from $9 million to $24 million,” Kosman told us in an email.
“Even when profits fell below interest payments in 1998 and 1999 due to cheap imports, there was enough operating profit to survive if not for the interest expense.”
In its 2001 bankruptcy filing, GS Industries listed total debts of $554 million.”
“Bain and Financial Industry Gave Over $565,000 To Newark Mayor Cory Booker For 2002 Campaign” ?????
http://thinkprogress.org/election/2012/05/21/488002/bain-financial-industy-gave-over-565000-to-newark-mayor-cory-booker-for-2002-campaign/
Have tried to post this before, perhaps too short.
Just wondering if there is any connection.
“Bain and Financial Industry Gave Over $565,000 To Newark Mayor Cory Booker For 2002 Campaign”
http://thinkprogress.org/election/2012/05/21/488002/bain-financial-industy-gave-over-565000-to-newark-mayor-cory-booker-for-2002-campaign/
Huxley,
Booker defended Bain specifically: “If you look at the totality of Bain Capital’s record, they’ve done a lot to support businesses, to grow businesses.”
That’s the essence of Romney’s argument, just without the problematic 100,000 number attached to it, which I’ve said *is* fair game to criticize, but the ad went much further and seeks to demonize the business and Romney’s role in it.
The links you provide do raise questions about the job numbers, but they don’t support your claim Bain had a system centered around profiting by shutting companies down. The sources either talk about private equity in general, not Bain in particular, which ignores the fact that many have cited Bain as a particularly successful private equity firm in terms of investment in some companies that have had *long*-term success. Or, they fairly criticize the 100,000 number (but stop well short of the kind of demonization in the ad) and question how much credit Bain can take (although the same logic can be applied to any investment, including the stimulus), or are clearly biased (a chart showing only Bain’s failures.)
I think Romney is exaggerating the role Bain played in creating jobs, but the portrayal of Bain by the Obama campaign is at least equally as incorrect, and, by my understanding of the facts, as loosely as we know them, and given the extreme demonization in the ads, it seems to me Romney is closer to the truth. The doesn’t excuse Romney, but it doesn’t excuse Obama either.
Huxley, you may be correct, or not, as to the source of the $100 million, but what about the main point that GST was a healthy company. It appears that it was NOT when Bain bought it.
Well, I have to admit it, after finding out CB got 565K in 2002 and Huxley’s brave new facts on GST, my optimistic world is crumbling.
Not willing to accept exaggeration in the anti-Bain ads yet, but I wish the job creation claims were never made by Mitt- they stink.
Adelinesdad,
To keep this in perspective:
1-Mitt Romney cited his record as a job creator
2-The author of this article is arguing that”The Obama administration’s main tactic against Romney has been his time at Bain Capital being an evil capitalist, making *gasp* money, and creating jobs”
So until his record at Bain is released, this is all fair game. I think it’s well substantiated that Bain only invested 8 of that original 100 million in GST, and that Bain loaded the company with debt in order to pay itself dividends. It’s also substantiated that GST faced an ensuing crisis with all of that debt, and went under.
The point of all this: clearly profits are not commensurate with business performance. Private equity is built around being able to take advantage of certain tax laws. It’s financial wizardry no doubt, but Bain’s performance doesn’t deserve the cover of “that’s just free enterprise for you.”
This matters in a time of rampant wealth disparity where workers are finding themselves displaced while those at the financial wheel are able to rig the rules so they come out on top either way.
Mitt should never have made jobs a central issue. By the time November rolls around, the unemployment rate will probably be somewhere in the 7 percentile and he will have lost ground on this subject.
Huxley,
I agree it is fair game. “Fair” being the key word. Something being “fair” game doesn’t give license for distortion. The fact that Romney cited some numbers that seem high without a satisfactory way to confirm them doesn’t give license for Obama to err (even further, I’d argue) in the other direction.
It’s far from proven to me that the company’s demise was Bain’s fault, or even further that they orchestrated it for Bain’s benefit (although they did benefit, it’s seems unlikely to me that they benefited more than had the company been successful). It’s also clear that Bain has many other stories, and I understand most of them have been successful (although your point that the records aren’t clear is well taken–Romney needs to clarify the issue once and for all by putting out clear reports on what Bain did and didn’t do.) And I don’t accept your premise that private equity is primarily built around tax loopholes. That there are tax advantages, I agree, but the basic idea of hooking of investors with companies is legitimate free enterprise.
I think we’ve reached a impasse, so I’m making this my final word. My main point is this: Even if I concede that there are shady things that happen in the world of private equity, the ad campaign is wildly lopsided in its account. For me, this is not so much about Romney and Bain as it is about political campaigning. I’ve been critical of misleading political rhetoric from both sides. I’ve been consistent that one side’s lies don’t justify the other’s. This is just one more example. The American people shouldn’t tolerate it. We don’t tolerate people knowingly misleading us in any other context in our lives, and we shouldn’t tolerate it from our politicians. Romney doesn’t deserve a pass, and he doesn’t deserve my vote, but neither does the President. Someone needs to stand up and be the adult in the room, and it might as well start at the top.