Is Mitt Romney really a job creator? What his Bain Capital record shows.
Mitt Romney is running for president on his business acumen, saying he knows what it takes to create jobs. He puts less emphasis on what he knows about eliminating jobs. Marion, Ind., has experienced both via Romney and Bain Capital.
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Efforts to tar Romney over his time at Bain are not viewed favorably by voters – at least in South Carolina. An NBC News/Marist poll released Jan. 19 found 48 percent of likely voters there see such criticism as unfair, while only 22 percent say it is fair.Skip to next paragraph
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Certainly, the 1980s and ’90s was a time when Wall Street financiers went on a dog-eat-dog scramble to buy companies. These pin-striped new owners sometimes squeezed workers in a bid to make the acquired company more profitable. They sometimes stacked debt on top of the companies – as Bain Capital did with AmPad – and then wrote themselves dividend checks from the borrowings. The Wall Street Journal calculated Bain made between 50 percent and 80 percent annually on its investments between 1984 and a few years after Romney left the firm to run the Olympic Games in Salt Lake City.
In an analysis of Bain Capital under Romney, the Journal estimated that Bain made $2.5 billion in profits on $1.1 billion invested in 77 separate deals. Of those 77 transactions, 22 percent ended with the firms in bankruptcy after the eighth year of the Bain investment. Bain disputes the Journal’s account as inaccurate.
Romney acknowledges he made millions, but says the reward was for hard work and risk-taking.
“The reality is in the private sector that there are some businesses that are growing and thriving, and we were fortunate enough to be able to be a part of that in a small way,” Romney said in mid-January after a campaign event in South Carolina. But “there are some businesses that have to be cut back in order to survive.... Sometimes we’re successful at that, and sometimes we’re not.”
Romney is the first modern financier to run for the Oval Office, says political scientist William Grover of St. Michael’s College in Colchester, Vt. H. Ross Perot was viewed as a high-tech executive, and Jimmy Carter as a small-scale peanut farmer. George W. Bush had business experience, but he was seen more as governor of Texas (never mind that Romney was governor of Massachusetts).
How will Americans feel about a candidate who made his fortune buying and selling companies? Polls show that the public has a low regard for Wall Street bankers, says Mr. Newport. Romney would be wise to brand himself as an entrepreneur, perhaps of a small business. “That works well,” Newport says.
But that would be changing history.
In the late 1970s, Romney, after graduating from Harvard Business School, went to work at consulting firm Bain & Co., founded by Bill Bain. The Bain method was for its consultants to become intimately familiar with its clients’ work and competitors, and even to make sure clients followed its advice.