This story originally appeared at Truthdig. Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books).
Obviously Barack Obama was right in criticizing Mitt Romney’s stewardship of Bain Capital. How else to evaluate the business experience that Romney has made a central tenet of his campaign?
As Obama put it all too accurately: “My opponent, Governor Romney—his main calling card for why he thinks he should be president is his business experience. He’s not going out there touting his experience in Massachusetts. He’s saying: ‘I’m a business guy. I know how to fix it.’ ”
And the fixing of the beleaguered companies acquired under Romney’s leadership at Bain Capital involved the very practices that have led to the loss of good American jobs to ensure the outrageous rewards that made Romney so wealthy.
Although Romney presents his activities as a form of venture capitalist investment, giving life to new enterprises, his practice has been quite the opposite. Ninety percent of Bain Capital’s deals by the end of his tenure involved dismembering once-thriving enterprises and selling off the parts, along with the jobs connected to them. “He made his money mainly through leveraged buyouts,” the New York Times reported five years ago in a detailed survey of Bain Capital’s practices under Romney, “mortgaging companies to take them over in the hope of reselling them at big profits in just a few years.”
Those immense profits were taxed at the capital gains rate of 15 percent instead of the 35 percent that income earners at that level were otherwise required to fork over. “The amounts of money are so vast that it is truly a matter of time before the taxation of private equity is front and center of the public agenda,” noted James E. Post, an expert on such matters at Boston University. He added, “Increasingly, this world of private equity looks like a world of robber barons, and Romney comes out of that world.”
Those comments were made back in 2007, when Romney was gearing up for an ultimately failed run at the Republican presidential nomination. But the expected outrage over the pirate practices of the hedge fund hustlers never much materialized, and the Romneys of the world have sailed through the subsequent years of economic implosion free of any serious accountability. The money they are able to dispense to politicians is that good.
Take the case of Newark Mayor Cory Booker, whose comments about being nauseated by Obama’s Bain Capital remarks were quickly exploited in Republican ads. What is truly nauseating is that Booker did not reveal that his own rise to power was floated by contributions from Bain and other leading financial hustlers.
As Josh Israel wrote on Think Progress, an “examination of New Jersey finance records for Booker’s first run for mayor—back in 2002—suggests a possible reason for his unease with attacks on Bain Capital and venture capital. They were among his earliest and most generous backers.”
Indeed, what is surprising is not that Democrats like Booker are on the take from the hedge funds, as Obama himself has been, but rather that the president has dared to criticize those who have been so supportive of his campaigns.
Although Obama is to be applauded for questioning Romney’s legacy, his motives seem to be as opportunistic as those of Romney’s opponents in the Republican primaries who took the same tack. After all, Obama has had three years to regulate the unbridled power of private equity funds and he has done nothing in that regard. The president chose as his key economic adviser Lawrence Summers, who was paid $4.5 million as a consultant to the D.E. Shaw hedge fund while counseling then-candidate Obama.
Then there’s Rahm Emanuel, who was appointed Obama’s chief of staff despite the fact that his rise to power as an Illinois congressman was financed by Magnetar Capital, a hedge fund that had trafficked in subprime mortgage-backed securities. Emanuel’s replacement as chief of staff was no improvement. William M. Daley was paid $5 million a year by JPMorgan Chase—not a hedge fund but a financial institution that has proved to be no less reckless and exploitative in its banking practices.
The point is not that the Democrats are virtuous—they are not. The power of finance capital has corrupted both parties ever since Bill Clinton collaborated with the Republicans in Congress to reverse the New Deal of Franklin Delano Roosevelt, the last truly great president of either party. The difference is that the Democrats must still respond to the demands of the party’s base for a modicum of economic justice for those who are hurting most. With the selection of hedge fund grifter Romney, the Republicans are now irredeemably defined as the party of the rapacious plutocrats.
Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books).