Mitt Romney on Corporations
Former Republican Governor (MA); presidential nominee-apparent
But those strengths played into Obama's hands in 2012. The Democrats and their allies in the media were determined to turn the election, using the policies of envy, into the decisive battle of the great class war. And the Republican establishment obliged by nominating what turned out to be the perfect opponent.
As filtered through the media, Romney was wrongly portrayed to America as an aloof Wall Street millionaire-like the guy "who fired your dad," as Jon Stewart put it. Obama, by contrast, was the one who cared.
ROMNEY: Nothing could be further from the truth. I was born in Detroit. My dad was head of a car company. I like American cars. And I would do nothing to hurt the US auto industry. My plan to get the industry on its feet when it was in real trouble was not to start writing checks. I said these companies need to go through a managed bankruptcy, and in that process they can get government help and government guarantees.
OBAMA: Governor Romney, that's not what you said.
ROMNEY: Fortunately, you can take a look at the op-ed [NY Times Nov. 18, 2008, "Let Detroit Go Bankrupt"]. I said that we would provide guarantees, to allow these companies to go through bankruptcy. Under no circumstances would I do anything other than to help this industry get on its feet. And the idea that has been suggested that I would liquidate the industry--of course not.
ROMNEY: The place where we've seen manufacturing go has been China. One of the reasons for that is that people think it's more attractive in some cases to go offshore than to stay here. I want to make America the most attractive place in the world for entrepreneurs.
GOODE: When Romney was with Bain Capital, they sent all kinds of jobs to China and other foreign countries because of lower wages, no employment commission restrictions, no Department of Labor restrictions. If I were president, our trade measures would be totally renegotiated in favor of manufacturing and more jobs in this country, instead of seeing how many we could send overseas that benefit many of those behind the super PACs that are pouring so much money into the Obama and Romney ads. Virgil Goode will stand up for jobs in the United States for U.S. citizens first.
ROMNEY: Why is it that I don't want to raise taxes? And actually, you said it back in 2010. You said, "When we're in recession, you shouldn't raise taxes on anyone." Well, the economy is still growing slow. And so if you believe the same thing, you just don't want to raise taxes on people. And the reality is it's not just wealthy people--you mentioned Donald Trump. It's not just Donald Trump you're taxing. It's all those businesses that employ one-quarter of the workers in America; these small businesses that are taxed as individuals. You raise taxes and you kill jobs.
ROMNEY: Look, I've been in business for 25 years. I have no idea what you're talking about. I maybe need to get a new accountant. The idea that you get a break for shipping jobs overseas is simply not the case. What we do have right now is a setting where I'd like to bring money from overseas back to this country.
Q: Do you want to repeal Dodd-Frank?
ROMNEY: Well, I would repeal and replace it. We're not going to get rid of all regulation. You need transparency, you need to have leverage limits.
OBAMA: The reason we have been in such an enormous economic crisis was prompted by reckless behavior across the board. It wasn't just on Wall Street. Gov. Romney wants to repeal Dodd-Frank. Does anybody think that there was too much oversight and regulation of Wall Street? Because if you do, then Gov. Romney is your candidate. But that's not what I believe.
It is not by growing a bigger and bigger government, that takes from some to give from others. That's what happens in other parts of world. If it doesn't work there, it'll never work here. The right course for America is to believe in free people & free enterprises. I don't want to redistribute wealth in America, I want to build wealth in America.
It's a critical time for our country. Where you're going to decide what kind of an America we're going to have. I know what it takes to get jobs back in this country. To see rising incomes again. I know how to work on both sides of the aisle. I was elected Governor of a state where 87% of my legislature was in the opposition party. But we worked together.
Some of the companies we helped start are names you know. An office supply company called Staples; The Sports Authority; an early childhood learning center called Bright Horizons that First Lady Michelle Obama rightly praised.
These are American success stories. And yet the centerpiece of the President's entire re-election campaign is attacking success. Is it any wonder that someone who attacks success has led the worst economic recovery since the Great Depression? In America, we celebrate success, we don't apologize for it.
We weren't always successful at Bain. But no one ever is in the real world of business. That's what this President doesn't seem to understand. Business and growing jobs is about taking risk, sometimes failing, sometimes succeeding, but always striving. It is about dreams.
He stayed in Massachusetts after graduate school and got a job. I saw the long hours that started with that first job. I was there when he and a small group of friends talked about starting a new company. I was there when they struggled and wondered if the whole idea just wasn't going to work. Mitt's reaction was to work harder and press on. Today that company has become another great American success story.
Has it made those who started the company successful beyond their dreams? Yes, it has.
But because this is America, that small company which grew has helped so many others lead better lives. The jobs that grew from the risks they took have become college educations, first homes. That success has helped fund scholarships, pensions, and retirement funds. This is the genius of America: dreams fulfilled help others launch new dreams.
ROMNEY: Let's go back to the auto industry in 2008. The three CEOs of the three major auto companies got in their private planes and flew to Washington and said, please write us a check. I think they wanted $50 billion. And I wrote an Op-Ed and said, absolutely not. These companies need to go through a managed bankruptcy, just like other industries have. And if they shed the excessive cost that's been put on them by the UAW and by their own mismanagement, then if they need help coming out of bankruptcy, the government can provide guarantees. No way would we allow the auto industry in America to totally implode and disappear. With TARP, there were some pretty high risks that not just Wall Street banks, but all banks would collapse
ROMNEY: I know we're going to get attacked from the left, from Barack Obama, on capitalism. My view is, capitalism works. Free enterprise works. And I find it kind of strange, on a stage like this, with Republicans, having to describe how private equity and venture capital create jobs. I think Adam Smith was right, and I'm going to stand and defend capitalism across this country,
Q: You claimed Bain Capital created 120,000 jobs. Could you do the math?
ROMNEY: We started a number of businesses; four in particular created 120,000 jobs. There are others lost jobs: about 10,000. So 120,000 less 10,000 means that we created something over 100,000 jobs. Some businesses we acquired grew, like Domino's Pizza and Duane Reade and others.
Romney vs. Perry on Economic Issues
It seemed that Romney had been stung into silence again, this time by the Ampad story, even though he apparently had not been a direct party to the deal. He had taken leave of the relatively independent Bain Capital years earlier.
"That attack on part-time workers not having health insurance is the height of hypocrisy," Romney snarled, disdainfully. "Senator Kennedy and his family have a multiple real-estate empire. Senator, I'm sure you know that your workers who are part-time employees don't have health insurance there, don't you?" Kennedy had no ready answer.
Romney: "We have to make sure that the promises we make--and Social Security, Medicaid, and Medicare--are promises we can keep. And there are various ways of doing that. One is, we could raise taxes on people."
Romney: "Corporations are people, my friend. We can raise taxes on -"
Heckler: "No, they're not!"
Romney: "Of course they are. Everything corporations earn also goes to people."
Romney: "Where do you think it goes?"
Heckler: "It goes into their pockets!"
Romney: "Whose pockets? Whose pockets? People's pockets! Human beings, my friend. So number 1, you can raise taxes. That's not the approach that I would take."
What Romney means is that revenues earned by corporations end up in the pockets of people; corporations provide jobs that pay people money. What Romney doesn't discuss is what kinds of corporate employees benefit most from low taxes.
A: I'm not interested in bailing out individual institutions that have wealthy people that want to make sure that their shares are worth something. I am interested in making sure that we preserve our financial system.
Q: So would you not be open to another Wall Street bailout?
A: Well, no one likes the idea of a Wall Street bailout. I certainly don't.
Q: But you said in 2008 that it prevented financial collapse.
A: There's no question but that Bush's action was designed to keep the entire currency worth something and to make sure we didn't all lose our jobs. My experience tells me that we were on the precipice. Was it perfect? No. Was it well-implemented? No, not particularly. Should they have used the funds to bail out GM and Chrysler? No. But this approach of saying, look, we're going to have to preserve our currency and maintain America and our financial system is essential.
ROMNEY: What's happened in this country, [is] the absolute wrong time to have the absolute wrong people put together a financial regulatory bill was right now and Barney Frank and Chris Dodd. They were the wrong guys at the wrong time. Because what they did with this new bill is usher in what will be thousands of pages of new regulations. The big banks, the big money center banks in Wall Street, they can deal with that. They have hundreds of lawyers working on that legislation. For community banks that provide loans to business like yours, they can't possibly deal with a regulatory burden like that. Small community banks across this country are starving and struggling because of inspectors that are making their job impossible. It's a killer for the small banks. And those small banks loaning to small businesses and entrepreneurs are what have typically gotten our economy out of recession.
Romney, speaking to a crowd at the Iowa State Fair, was being pressed about raising taxes to help cover entitlement spending. When one mentioned raising corporate tax rates, Romney responded by saying corporations were no different than people. The line earned him a sustained round of applause from the crowd.
But the Democratic National Committee fired off emails almost immediately after the remarks, as part of a continuing effort to frame the GOP frontrunner as an out-of-touch elitist, writing: "This is what Mitt Romney is going to run on?"
A small band of hecklers, positioned near the stage, continually quarreled with Romney about whether wealthy Americans should pay higher taxes. "There was a time in this country when we didn't attack people based on their success," Romney said.
All of these measures are meant to confront the current economic peril. Properly guided, Washington could in fact speed the recovery. So far, some of the actions it has taken will help, and some will hurt. But we can be certain that the American economy will recover. The invisible hand of the market is more powerful than the lumbering machinery of government. The private sector--entrepreneurs and businesses large and small--will create the millions of jobs our country needs.
A: Well, there’s a great deal that is effective in his plan. First, he’s getting money back to consumers. That makes sense to me I just think we need to go further. We go to corporate support and helping corporations have the incentive to buy more capital equipment. That he also does. I do it more aggressively by writing off a larger amount of capital expenditures--getting companies to buy more stuff so that other companies will hire people. If you want to turn an economy around, the key thing is to grow jobs. It’s not just to get checks in the hands of consumers; it’s consumers & companies buying things that create jobs.
A: It is a good idea. It’s something I’ve been proposing for many months. We have a roughly 35% corporate income tax rate. It’s almost tied with Japan, which is the highest in the world. Nations like Ireland have learned the game. They’ve put the rate down at half of ours or less and have attracted a lot of jobs. The challenge with a corporate tax cut is that it takes a while to have an impact. It has a significant positive impact over time. It’s probably not likely to have an immediate boost because it takes a while for companies to make investment decisions. But it is a good idea.
A: Well, you know, as it’s been said for a long time, you don’t help the wage-earner by attacking the wage-payer. And this kind of divisive, populist approach is like he’s channeling John Edwards. It is not working for John Edwards. It’s not going to work for Mike Huckabee. The Republican Party is one where people recognize opportunity, and they welcome individuals who have gone out and taken risks and tried to create jobs. Small companies in this country create the vast majority of jobs in America. I began a very small business that’s grown. My business has not laid people off. It’s grown and grown and grown.
Moreover, Romney ignores the $174 million that his own administration figures he raised through “closing loopholes” in the corporate tax structure, which amounted to a tax increase for those who were using them.
Nor is it true that all of Romney’s fee increases were aimed at providing services. The Massachusetts Taxpayers Foundation says, “It’s been disingenuous to say there’s no new taxes, in the sense that there’s very little connection to the fee increases and the cost of services that the fees are supposed to represent.”
A: Is London going to replace New York? Of course not. Should we fix Sarbanes-Oxley and take out Section 404 as it applies to smaller companies? Of course we should. Is this country the hope of the world? Absolutely.
This was doubly wrong. In the first instance, without the governor's investment, which Romney condemned, there would have been no auto industry left to save. Second, it was the government's intervention and the high-speed bankruptcy orchestrated by the Treasury Department that saved GM and Chrysler. A traditional bankruptcy without the US government's participation would likely have meant liquidation and the loss of the backbone of American manufacturing.
One of the more revealing observations was that our firm’s culture was inconsistent with our stated mission, with stress and dissonance as the result.
At Bain Capital, we aspired to have a firm that put our investors’ interests first, even before our own. But competitive self-interest increasingly figured quite prominently in decision-making.
We went to work to change our culture, to make it more consistent with our personal values and with the objectives we had for our firm. The struggle for integrity between mission and culture was never abandoned. And that made Bain Capital a better place to work.
Use of Olympic symbols, or even the words “Olympic” or “Olympiad” without permission were easy ways for companies to get Olympic association free. The government passed a law making it illegal.
We took public relations hits for our brand protection efforts. It never goes over well when the guys in the suits come down on the little Mom and Pop operations that do not know enough not to use the Olympic rings in their homegrown marketing.
The Bain Way, as it became known, was intensely analytical and data-driven, a quality it shared with other firms' methods. But Bill Bain had come up with the idea of working for just one client per industry and devoting Bain & Company entirely to that company, with a strict vow of confidentiality. As a result, the companies shared more information, and consultants could plow to greater depth. It doesn't sound like a revolutionary notion, but in many ways it was.
From the start Romney was perfectly adapted to the Bain Way and became a devoted disciple. Patient analysis and attention to nuance were what drove him. It took a healthy ego to go into a business and tell an owner how to run his firm better, and most clients lauded Romney's efforts.
Romney was involved in about 100 deals. The Wall Street firm Deutsche Bank examined 68 major deals that had taken place on Romney's watch. Of those, Bain had lost money or broken even on 33. Overall, though, the numbers were stunning: Bain was nearly doubling its investors' money annually, achieving one of the best track records in the business, Most of that success came from a handful of little-known but incredibly successful investments. But the venture had begun with plenty of failures--and lessons.
In his 2004 autobiography, "Turnaround", Romney put it more bluntly: "I never actually ran one of our investments; that was left to management." He explained that his strategy was to "invest in these underperforming companies, using the equivalent of a mortgage to leverage up our investment. Then we would go to work to help management make their business more successful." Romney's phrase "leverage up" meant, while putting relatively little money on the table, Bain could strike a deal using largely debt. That generally meant that the company being acquired had to borrow huge sums.
ROMNEY: The fact that we're both doing as well as we are is we both have a private-sector background. But I just want to set the record straight. I've been chief executive officer four times, once for a start-up and three times for turnarounds. One was a financial services company. That was the start-up. A consulting company, that's a mainstream business. The Olympics, that's certainly mainstream. And, of course, the state of Massachusetts. In all those settings, I've learned how to create jobs.
ROMNEY: Well, my background is quite different than you describe. In the business I was in, we didn't take things apart and cut them off and sell them off. We instead helped start businesses. We started Staples, we started the Sports Authority, we started Bright Horizons children centers. We began businesses. Sometimes we acquired businesses and tried to turn them around--typically effectively--and net-net created tens of thousands of new jobs. And I'm proud of the fact that we were able to do that. That's a big part of the American system. People are not going to be looking for someone who's not successful. They want someone who has been successful and who knows how fundamentally the economy works.
Romney recruited the best of Bain Consulting. Bain Capital invested heavily in struggling businesses or bought them outright. Their modus operandi as simple: find failing companies and apply the proven approach of quality thinking, rigorous analysis, and sound business principles to raise profitability. When the companies sold, Bain partners made fortunes.
Bainiacs, as they are called, are driven to succeed, and are a dogged group of Type AAAs. Bain’s slogan is: “Helping make companies more valuable.” The promise is profit. The promise is usually kept.
Bain became one of the most sought-after landing zones for Harvard Business School’s best and brightest, because Bain mattered; Bain changed things. “The idea that consultancies should not measure themselves by the thickness of their reports, or even the elegance of their writing, but rather by whether or not the report was effectively implemented [as Bain did], was the inflection point in the history of consulting,” Romney told Consulting magazine. Bain’s website cited a press quotation, “Bain delivers results, not theory.”
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