As we've explored at length, some conservatives have aided and abetted the Left's class warfare drumbeat in recent days by attacking Mitt Romney's tenure as a capitalist in the private sector. Now Romney is getting some unlikely cover of his own -- from a former Obama administration official and the Washington Post. Steven Rattner was the president's point person on the auto bailouts and served as counselor to Treasury Secretary Tim Geithner. He also has an extensive background in private equity, and has taken to the pages of Politico to offer a qualified but stirring defense of Romney's dealings at Bain. Although he says Romney deserves criticism for embracing "hard-right conservatism" (many conservatives would dispute that characterization) and for his myriad flip-flops (a subject that likely garners bipartisan agreement), Rattner argues that Romney's record at Bain was spectacularly successful:
Bain Capital is not now, nor has it ever been, some kind of Gordon Gekko-like, fire-breathing corporate raider that slashed and burned companies, immolating jobs wherever they appear in its path. Wall Street has its share of the “vulture capitalists” that Texas Gov. Rick Perry enjoyed mocking in South Carolina earlier this week. But Romney was almost the furthest thing from Larry the Liquidator. Instead, with modest exceptions (keep reading to learn more about these), Bain Capital was a thoroughly respectable — nay, eminent — investment manager that successfully discharged its responsibility of earning high returns for its investors by deploying capital in companies privately rather than by buying shares in the public market.
After running through a few now-familiar examples of Bain's successes in venture capitalism (Staples) and leveraged buy-outs (Domino's Pizza), Rattner examines Romney's overall "batting average" as an investor:
Overall, Bain Capital’s record was extraordinary, among the best in the business. According to a Bain placement document, through the end of 1999 (effectively, when Romney left), the firm had achieved annual returns of 88 percent per year. That is not only wildly more than the single-digit returns most investors achieve by buying stocks or bonds, it is far higher than those of typical private equity or venture capital firms. Of course, a number of its early stage investments failed. That is the nature of venture capital — an industry not unlike baseball in that a .300 batting average can be an excellent performance. But who can quarrel with an investment firm trying to nurture and finance young companies?
The story of the private equity business is somewhat more complicated. Almost by definition, a private equity investment is made with the hope of improving the profitability of the “portfolio company,” as it is known in the parlance. Often, this means replacing management or reducing unnecessary head count — firing people. While no one likes seeing jobs disappear, eliminating unnecessary overhead and even entire divisions if they cannot be made sufficiently profitable is at the heart of a successful economy — the process Joseph Schumpeter famously described as “creative destruction.” How strange for conservatives like Newt Gingrich and Perry to be questioning the core of free market economics.
Welcome to Bizarro World: An Obama acolyte feels compelled to defend free market economics against malicious attacks from within the Republican Party. After addressing a handful of Bain's fumbles, Rattner concludes by summarizing Romney's run at the firm:
Let’s be sure to keep these few problem children in perspective. During the Romney years, Bain made 77 significant investments — and a number of smaller ones. It made billions for worthy investors and, yes, doubtless created some incalculable number of net new jobs for the U.S. economy … I have no idea whether Bain Capital created 100,000 net new jobs, and I think Romney was silly to even engage in that debate. What we know for certain is that Bain Capital more than fulfilled its responsibility to a gaggle of investors, who were mostly foundations, endowments, pension funds and the like. That’s the story of Bain Capital. It’s certainly fair game for any candidate’s opponents to dig into his record. But in Romney’s case, focusing on questions about his principles — and his current, staunchly conservative ones — could be more productive than trying to rewrite the firm’s history.
Over at the Washington Post, fact-checker Glenn Kessler reviews 'The King of Bain,' the anti-Romney film funded by a pro-Newt SuperPAC and frequently promoted by Gingrich himself. Kessler has awarded the project "Four Pinocchios" for its mendacity:
The 29-minute video “King of Bain” is such an over-the-top assault on former Massachusetts governor Mitt Romney that it is hard to know where to begin. It uses evocative footage from distraught middle-class Americans who allege that Romney’s deal-making is responsible for their woes. It mixes images of closed factories and shuttered shops with video clips of Romney making him look foolish, vain or greedy. And it has a sneering voice-over that seeks to push every anti-Wall Street button possible.
Kessler reveals that some of the interview subjects in the film had no idea the movie had anything to do with Mitt Romney, and that they agreed to speak on camera in exchange for money. Not only is the timeline completely askew, at least one of the featured horror stories turns out to be not so horrific, after all:
The chronology is all jumbled. Bain Capital bought the business from Raytheon in 1998, and Romney left Bain a year later to run the Winter Olympics in Salt Lake City. In 2005, Bain sold UniMac (also called Alliance Laundry) to a Canadian entity known as Teachers’ Private Capital. The factory was moved from Marianna to Ripon, Wisc., in 2006, after Bain’s involvement ended — a fact made clear on the Web site of a laundry repair business co-owned by the people featured in the film. In fact, Mike Baxley, who was interviewed for the film, said that he and his partner had “absolutely no idea” that the interviews were for a film about Romney and Bain. He said they thought they were being interviewed for a documentary about the factory closing.
“They said they wanted to know what it was like when the factory closed down,” he said, and he, his partner and his partner’s wife agreed to interviews after “they flashed a little money at us.” (Baxley, a Republican who said he had not yet thought much about the nomination contest, declined to reveal the amount.) After watching “King of Bain” at The Fact Checker’s request, he said: “We were pretty shocked. Our quotes were seriously taken out of context. There is a real lack of facts.” Indeed, Baxley, Tommy Jones and Tammy Jones barely mention Romney and Bain as they talk about their angst about the factory closing; the narrator of the film inserts suggestions that Romney was responsible. The film suggests that UniMac is out of business, but Baxley noted that UniMac is still going strong at its new headquarters in Wisconsin.
Those are just the errors and distortions in one segment of the movie. Kessler runs through and destroys additional examples later in his column, which closes with this summary:
Romney may have opened the door to this kind of attack with his suspect job-creation claims, but that is no excuse for this highly misleading portrayal of Romney’s years at Bain Capital. Only one of the four case studies directly involves Romney and his decision-making, while at least two are completely off point. The manipulative way the interviews appeared to have been gathered for the UniMac segment alone discredits the entire film. Four Pinnochios.
It's worth repeating what I wrote earlier today: Pointing out opponents' lies and mischaracterizations won't be sufficient to corral this narrative in the fall, if Romney secures the nomination. His campaign needs to devise air-tight responses to Bain's critics, and craft a compelling narrative about why Romney's Bain record is an asset rather than a liability. And always finish by turning the fire back onto President Obama, whose record of failure, waste, and statism is the overriding issue in 2012.