I'm writing this before the second presidential debate, so I can't tell you now whether you heard a lot or a little about Sensata. It's an automotive parts company in Illinois whose manufacturing operation is being moved to China by Bain Capital, reportedly going so far as to have its American workers train their Chinese counterparts.
Mitt Romney detractors have jumped on the videos and stories coming from Sensata employees, saying it paints Romney and his old firm in a bad light. The American workers have asked Romney to intervene with his Bain buddies; he's declined.
Romney supporters say he isn't accountable for Bain, because money he makes from the company is held in a blind trust.
As a Saints fan, I'm forced to point out that there is no "commissioner" of Wall Street; unlike Sean Payton under BountyGate, it's my understanding that Mitt Romney is perfectly free to contact the management of Bain and discuss business.
He just doesn't want to. The ethic appears to be that since Romney only profits from what Bain does--instead of deciding how those profits are made--then he's somehow squeaky clean.
This new mention of Bain brings renewed scrutiny to Romney's claims as a "job creator"--a boast he makes while pointing to his years at Bain Capital and to his record as a one-term governor of Massachusetts.
Both, it turns out, offer a shaky support for the "job creator" claim.
Two points about Romney as governor. First, he's made hay recently of the idea that he "worked across the aisle" when he was governor, conjuring the image of Ronald Reagan and Tip O'Neill rolling up their shirtsleeves in the Oval Office.
According to reporters and columnists who witnessed it, though, Romney's one term in Massachusetts went a little differently. "He put a velvet rope across the door to keep people from walking into the governor's offices," wrote Rick Holmes of the MetroWest Daily News, quoting Massachusetts Rep. David Linsky. "He commandeered an elevator for his exclusive use," in the capitol, so as not to mix with the chattel.
Romney vetoed more than 800 bills sent to him by the Democratic Legislature, which overrode them all. By the time he announced he wouldn't seek a second term, Romney was 16 points down in the polls to his Democratic opponent; he ended his term with a 34-percent approval rating.
As for jobs? Remember that Romney was in office from 2003-2007, at a time wedged between two recessions and marked by considerable job growth in the country. Under his leadership, the unemployment rate in Massachusetts did fall--but much slower than in most other states. The state averaged 47th in job creation over his term. That put Massachusetts ahead of three states--rust-belt states Ohio and Michigan, and Louisiana, which Katrina hit in 2005.
Unemployment went down by one percentage point while Romney was governor, but it turns out a considerable chunk of that single-digit drop was due to the out-migration of working-aged adults. The Los Angeles Times reported that Massachusetts saw a net loss of 220,000 residents during Romney's term in office, one of the highest population losses in the country.
One of the bright spots was health care, where the implementation of "Romneycare" effected a 7.6 percent increase in positions in Massachusetts, the strongest growth in that sector in the country. This is, oddly, something that Romney now opposes replicating at a national level, despite its success.
Romney's other justification for being a "job creator" is his time spent in the private sector as CEO and owner of Bain Capital. Bain Capital specializes in leveraged buyouts (LBOs)--getting a controlling stake in companies by putting up a small percentage of their own money, then taking out massive loans against the company's own credit line (the "leverage" part). Bain takes fees throughout the process for the "management services" rendered to the acquired company.
The debt stays with the company; if it can weather crushing new debt, it'll continue to function. If not, it goes bankrupt.
This all started back in the "Greed is Good" Gordon Gecko 1980s, but, as Matt Taibbi in Rolling Stone pointed out in September, Bain's approach isn't a "hostile takeover." Instead, it generally promises current management lucrative bonuses to sign off on the deal--and get on board the gravy train. Then, the newly procured company pays Bain--typically--millions of dollars a year in fees, plus whatever dividends or stock payouts Bain can "harvest"--literally Romney's word--from the company.
Taibbi notes that this approach to LBOs is compared to a mob tactic called a "bust out"--taking over a legitimate business, buying a bunch of stuff on credit and then bankrupting it (or, in the case of the mob, burning it to the ground for the insurance money). If you select the right target and credit, it's easy money. It just takes a sell-job to bring Wall Street banks on board and willingness to part-out the company and send its workers packing. (Romney's phrase is "creative destruction.")
So now the leveraged company is saddled with loan repayments, and it owes Bain millions a year. Solution? Cut jobs, cut wages, outsource, sell off machines; do whatever it takes to generate a return for the shareholder--Bain. And Mitt Romney.
But we're talking about whether he created jobs, right? Then it's worth asking what Mitt Romney, himself, said about his job-creating prowess at Bain. According to Taibbi, Romney wrote in his book, "Turnaround," that "I never actually ran one of our investments. That was left to management."
Real "job creators" run their businesses. They have business plans, they execute strategies, they sell, they hire and fire. But that's not what companies like Bain Capital do. "(Job creation) was not his or Bain's or the industry's primary objective. The objective of the LBO business is maximizing returns for investors," said Marc Wolpow, a former Bain colleague of Romney's, in Taibbi's story.
Taibbi writes that Romney has never once taken any responsibility for an acquisition's failure, despite some big blowouts--Stage Stores (a merger of Bealls Brothers and Palais Royal) ended up bankrupt in 2000, while Bain took $175 million in returns from the investment. Romney bought Ampad in 1992, loaded it with debt, took Ampad public and made $100 million before the company was bankrupt and hundreds lost their jobs. KB Toys went bankrupt by 2004; Bain made $83 million in fees and "dividend recapitalization."
Which is to say this: Comparing Mitt Romney to a businessman who creates jobs is like comparing a junkyard owner to Ford. Sure, they both know a little something about making money from steel and wires.
But if both tried to sell you a car, which would you drive?