Bain Capital: A Small Thing In a Big Election

The following quote from Barack Obama’s 2008 campaign speech, was repeated a hundred times in a hundred venues.  He even recycled for his inaugural address:

If you can’t beat your opponent’s ideas, you distort those ideas — maybe you just make some up!  If you don’t have a record to run on, then you paint your opponent as someone people should run away from. If you don’t have any fresh ideas, then you use stale tactics to scare voters. You make big elections about small things.

Virtually everyone agrees 2012 is a big election.  Someday we’ll look back on 2012 as the moment when we either abandoned collectivism and moved toward liberty or continued sliding into a pit of cultural and economic decay.

For the reasons below we offer this chart as a symbol of the big issues in this election.

As Barack Obama assumed office in January 2009 America was suffering from a severe recession.  Rahm Emanuel, his chief of staff revealed in a TV interview what would turn out to be the Administration’s credo for the next two years.

Obama enthusiastically adopted the Emanuel Doctrine, presenting the recession as a pretext to justify new legislation for tired old Democratic Party agenda items:

  • Government run health care;
  • Energy rationing through so-called “cap and trade; and
  • Accumulation of power and loyalty through a gusher of government cash to favored voter constituencies and the politically connected.

Obama’s first initiative was a massive spending bill he called his Recovery Act or stimulus, enacted on his 21st day in office.  The chart above came from a pseudo-academic report, pumped out by Obama’s economic team to embellish his stimulus sales pitch with a patina of intellectual legitimacy.  The Report’s predictions and recommendations were typical of the work of partisan “economists” in Washington who present themselves as wizards, able to create predictable and glorious results through government borrowing, spending and economic intervention.

Based on the chart and the other predictions in the report, and urged on by an exultant media, Congress enacted the trillion dollar stimulus.  Most of the stimulus initiatives were structured to become permanent, annual add-ons to the federal budget “baseline,” adding to Obama’s breathtaking deficits.  The stimulus, while symbolic, was of course only the first step in the Obama agenda of aggressive expansion of the size and cost of government.

The Big Election of 2012 should be a major decision point:

  • Will we vote to continue submitting to politicians and their wizards, like the ones who created the chart above, allowing them to assume more and more power over our business and personal lives, to borrow more and more in our names, and to extract and divert more and more of our resources based on nothing but the predictions of “experts?”


  • Will we vote to put the breaks on government’s relentless accumulation of power and squandering of precious resources?  Will we vote to transition back to what has always proven to produce prosperity, maximum possible individual liberty, with a government of limited power whose mission is to protect and serve, not control the people?

Barack Obama Knows that if voters fully comprehend the stark choices in this big election Mitt Romney will win.  Thus, the Obama campaign is furiously executing the very strategies he denounced in 2008:

  • Paint Romney as someone to run away from,
  • Scare voters in any way possible, and
  • Make this big election about small things.

Swing state voters have endured weeks of wall-to-wall TV ads designed to scare them about a small thing:  Mitt Romney’s role at Bain Capital from 1999 – 2002.  Romney’s bio says he left Bain in 2000 to run the Olympics in Salt Lake City. Democrats claim, falsely, that Bain did something wrong during those three years and have breathlessly disclosed documents indicating that Romney still held the title of CEO. 

To learn more about the Private Equity business and discover what could have happened during those years I did as any reporter in the establishment media could have done, I interviewed a private equity insider.  Drew is a friend, adviser and occasional contributor to Liberty Works.  Drew is also a Partner in a private equity firm.  His bio is on our about us page.    He provided some valuable insights and also recommended  a recent article in Fortune as objective and reasonable.

As a private equity firm Bain combined it’s own capital with capital provided by investors or “Limited Partners,” and with bank loans to create investment funds that acquired and managed businesses, with the goal of improving their performance and then selling them for a gain.

It turns out that in the Private Equity world it’s not unprecedented for a founder such as Mitt Romney to retain an economic interest and the title of CEO on an absentee basis, while internal operating agreements put others in charge of managing the investment funds and the businesses they purchase. 

During the three years in question Bain Capital’s offering circulars – disclosure documents given to potential Limited Partners – named 18 people who would be accountable for investment and management decisions.  Mitt Romney’s name was not on the list.  This is serious business, not an inconsequential clerical matter.  If for any reason the Limited Partners had lost money, Bain would have been vulnerable to a misrepresentation suit if Mitt Romney, or anyone whose name was not in the offering circular, had participated in management of the businesses the funds bought.

So yes, he was still CEO, but no, he did not make business management decisions.

Romney made a serious tactical mistake in not preempting these predictable attacks with a lot more information about his career and accomplishments at Bain Capital, including testimonials from employees and investors.  Had he done so these attacks would have been scorned by the public.  But Romney’s campaign miscalculation does not mean America should accept four more years of ObamaNomics and continue hurtling down the road toward Greece style economic implosion.

Pollsters say the Bain attacks have not significantly moved the needle in Obama’s favor.  However it’s too soon to assess their long-term effect, having negatively influenced voters early in the campaign season. 

In recent days the Obama Campaign has shifted focus from Bain to another small thing, demands that Romney release more tax returns than the one he has already made public. Any small thing will do if it diverts voters from thinking about the chart up above and all it represents.


5 Comments so far

  1. […] Bain Capital: A Small Thing In a Big Election | Liberty Works | Go to this article […]

  2. PWest on July 22nd, 2012

    Where is the graph showing the disaster Obama inherited? You should be greatfull that he did what he did and saved the country from a full-out depression.

  3. SenateStaff on July 24th, 2012

    to PWest that’s a good question. These blind Repubicans tell us everything would have been fine continuing the same trickle down policies that sank the economy.

    Now they want to put this corporate raider, this poster child for predatory Capitalism up as our President! They have to be out of their minds!

    This is the tea party cranks taking over what once was a proud, cautious Republican party, that worked to build concensus around policies for the common good of all, not just the top 2%

  4. SalofSouthCentral on July 24th, 2012

    Obama has proven spending like a drunken sailor only makes things worse. SenateStaff you don’t get it! Let me say it to you slowly and try to focus —

    I T – I S – N O T – W O R K I N G ! ! !

    Obama and the crooks in Congress can not spend us out of this horrible recession. It’s time to admit our mistakes and cut our losses.

    (if you’re a drunken sailor please accept my apology for smearing your reputation)

  5. Wedding Veils on July 26th, 2012

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