Obama's Attack on Bain Capital Backfires: The President is Campaigning Against Profit

RUSH: This attack on Bain... I told you this was gonna happen. I told you this is why Obama wanted Romney. Way back during the Republican primaries I said Republicans are gonna nominate Romney. That's what Obama wants because of health care, and because of Wall Street. That's what Occupy Wall Street's about, going after Romney. And Obama has now come out and admitted it, that this campaign is gonna be about Bain Capital. It's backfiring everywhere you look, from Cory Booker to now Fast Eddie Rendell, governor of Pennsylvania

All these Democrats are piping in, "Wait a minute, you know, we kind of like private equity, private equity guys." They're all Democrat donors. The private equity guys, the hedge fund guys, the Bain Capitals, these are the people that invest in the states these governors like, in projects these governors need and want, and these governors particularly like these guys, and these guys donate to Democrats in large part, including to Obama. In fact, Obama is the number one recipient of campaign cash from private equity people. Oh, yeah, he is. Even the governor of Massachusetts, Deval Patrick, has come out and backed up Cory Booker. Everybody's backing up Cory Booker except Cory Booker, who was taken to the woodshed and had to do his little video.

RUSH: This Bain thing? We've come to find out that this Bain attack was a central -- it was one of the top three -- Obama reelection efforts. And it's backfiring on the regime!

Because it is Democrats who are coming out and defending the whole notion of private equity and Bain specifically. And you've noticed there's talk about maybe Hillary being on the ticket? Let me tell you something, you Democrats: The problem is not Biden. He is a problem, but he's not your reelection problem in 2012. Obama's your problem! If you're thinking about changing your ticket, look to the top of it. That's your problem.

RUSH: Now, did you know that last week when the Obama campaign was attacking Bain Capital, Obama collected $2 million in donations from a private equity firm, Blackstone? Obama's the number one recipient of private equity money. Bain Capital was run by a guy who was donating to Obama when Obama's ad on Bain was relevant. Romney wasn't at Bain during the time Obama's ad criticizes what Bain was doing. But, anyway, all these Democrat governors -- Deval Patrick, Fast Eddie Rendell, Cory Booker (the mayor of Newark) and others are coming forth.

"Wait, wait, wait, wait! I don't like this attack on Bain because Bain is crucial, Bain is important, and Bain gives money to Democrats!" Now, according to the Boston Globe, "Obama has accepted $92,270 in his last two campaigns from employees of Bain Capital." This is the Boston Globe. Employees at Bain have given Obama about $92,000. Democrat "candidates and committees have received more than $1.3 million from Bain Capital workers since the 2008 election cycle -- double the amount collected by Republicans."

So these "vampires," as Obama calls 'em -- and you know what Obama doesn't like about private equity? All they do is look for "profits." And when he says the word "profits," he spits it out practically. He doesn't like profits. He really doesn't. He thinks profit is the root of all evil. He doesn't like profits at all, and that's what he criticizes private equity for being focused on instead of creating jobs. Well, I'm sorry. Private equity is not there to create jobs. That's not what they do.

Oh, the other guy that came out is Steven Rattner, a big Democrat private equity guy. He's Pinch Sulzberger's best friend, or one of them, the New York Times publisher. Steven Rattner came out and defended private equity. He's in the business. He came out and defended Bain after Obama's attack on them, and he came out and defended the whole notion of profit-seeking. And it was Steve Rattner, Democrat fundraiser, who said that private equity's job is not to create jobs. Now, Romney's running around saying that when he was there, Bain Capital did create a hundred thousand jobs.

But that was in the process -- was as the result of -- companies that Bain invested in growing. But not all of them worked out. They invested in some losers. Welcome to real life! Not everybody wins in every investment. Not every investment pays off. People who understand capitalism, free markets, and risk-taking understand that. Obama, for some reason, doesn't understand it, or does and resents it. So he's out there ripping Bain Capital to shreds. Let's go back to audio sound bites. Here is from this program October 6th, 2011. Last year, obviously.

RUSH ARCHIVE: I think, folks, the regime wants to run against Mitt Romney. That's what I think. Here's what I'm thinking. When do you think these Astroturf protests were first talked about, this Occupy Wall Street thing? How long have they been in the works, do you think? I have been asking myself this, 'cause this is not spontaneous eruption here. This is a well thought out plan. ... Protests are needed 'cause the economy sucks, and these washouts would normally be protesting a Republican president who was responsible. Now they're targeting "Wall Street" as if Wall Street's responsible for the failure of Obama's policies. That's my point: They're trying to blame the rich for these economic problems when it's Obama and they're targeting Romney as a Wall Street guy. So I think part of the reason this was concocted was to take Romney out after seeing to it that he's the nominee.

RUSH: Let's move forward. Late Monday afternoon in Chicago (this is the closing of the NATO summit), Obama had a press conference. There was a Q&A and a Bloomberg correspondent said, "Will comments from [Cory] Booker and your former auto czar, Steve Rattner, who've criticized some of these advertisements of yours, Mr. President, are they gonna cause on you to pull back a little bit against Bain? Generally, could you give us your sense of just what private equity's role in stemming job losses is as they seek a return on investment for their investors?"

OBAMA: It's important to recognize that this issue is not a, quote, distraction. I think there are folks who do good work in that area and there are times where they identify the capacity for the economy to create new jobs or new industries. But understand that their priority is to maximize profits. And that's not always going to be good for communities or businesses or workers. And the reason this is relevant to the campaign is because my opponent, Governor Romney, his main calling card for why he thinks he should be president is his business experience. When you're president, as opposed to the head of a private equity firm, then your job is not simply to maximize profits. Your job is to figure out how everybody in the country has a fair shot. So to repeat, this is not a distraction. This is what this campaign's going to be about.

RUSH: That's right. This campaign is going to be about Bain. This campaign is going to be about Romney. This campaign is gonna be about people who unfairly pursue profit. I was exactly right. I was exactly right about this last fall when I said Occupy Wall Street was put together to go after Romney. James Pethokoukis, who is over at the American Enterprise Institute, has a post at the Enterprise blog where he quotes the president here saying, "Their priority is to maximize profits, and that's not always a good thing for communities or businesses or workers." Pethokoukis says, "I think the president doesn’t fully grasp how dangerous his words are. If he had a true grasp of economic history, he would realize that it was only when business and profits and innovation began to be valued by society that we got the economic takeoff in the West that improved our average standard of living from $3 a day in 1800 to more than $100 a day today."

Now, Pethokoukis believes that when Obama, the president of the United States, starts running around denigrating, impugning, and criticizing profits and free enterprise, that it is dangerous. And he asks, maybe Obama's not fully aware of how dangerous his words are? He's being generous, because I think Obama's doing exactly what he's doing. I think Obama knows exactly who he is. I don't think there's any question Obama's got a chip on his shoulder about capitalism and free markets, the way this country was founded. He thinks profit seeking is evil, and he thinks that everything that comes with it is evil. And he thinks that profits equal poverty. He believes that profits is money that should be kept in the pockets of the poor. That somehow profits derive only from people being screwed, only from people getting the shaft. And so he's gonna double down on Bain no matter What Booker says, no matter what Steve Rattner says, no matter what Fast Eddie Rendell says, and no matter what Mark Warner says or Deval Patrick. He's gonna double down on it because that's what he loves. It's what he knows. It's what he's uncomfortable with. It's what he doesn't like. It's what he's passionate about.

RUSH: So Obama doesn't like maximizing profits. He doesn't like pursuing profits. And, by the way, if you make a profit in health care, you are going to be targeted. The left in general hates profits. They look at it as nothing more than people being screwed. But, doesn't Obama do everything he can to maximize his fundraising? In fact, didn't Obama evolve on gay marriage in order to maximize his fundraising? Let's substitute the word "profits" for fundraising. It costs money for Obama -- not his. But it might cost the DNC, it might cost somebody for Obama to go out. There are costs involved in fundraising. I mean $10,000 a plate. Somebody's gotta pay for the food unless it's underwritten, too, but the bottom line is there are costs. Fundraising is the profit, the net you end up with is the profit after all the expenses are included after the fundraising event.

This is why so many people don't like certain charities. You donate a million dollars to a charity, you find out half of it's used for administrative costs. But Obama does everything he can to maximize his fundraising, his own profits. So it's okay for him to do it. I wonder if all these widows and orphans and public employee union people who have money invested in these companies think the company shouldn't be trying to maximize profits, that they ought to be putting the community first, whatever the hell that means. The purpose of a corporation is not to create jobs. The purpose of private equity firms is not to create jobs. The purpose of a business is not to put the community first. This theory is so simple to understand.

A business is started by somebody who has a passion for a product or an idea and thinks it would truly benefit somebody, or it would make him rich if he could sell it, whatever. And in the process of growing the business, if it does grow, if he lucks out, then guess what he needs? He needs employees. Then what do the employees need? Well, they need health care benefits. But that's not why the guy went into business. But it is success that makes all these things that Obamacare's about possible. You've got to have profit. You have to have business success before you can have employees, before the employees can have benefits, and that's what Obama is targeting, success. That's what he wants to punish. What are these companies supposed to do, just invest in the community, work for nothing, everybody's supposed to be a nonprofit? So Pethokoukis is right. The guy's dangerous. I think he knows how dangerous is.

Actually, if we take time to listen, Obama's campaign carefully calibrated this attack to be not on capitalism or the private equity, Bain Capital or Romney's ability to make money, but specifically at Romney's idiotic and never substantiated claim that he "created 100,000 jobs" and the impression by some that making a lot of money in private sector somehow makes one a "businessman," "manager" or naturally suited to be a good Governor or President.

As everybody understands, and as Rush admitted and Obama's campaign underscored, the private equity / investment firms' job is not to create or destroy jobs, but to "maximize" the return on capital and the opportunity to "create" more money for themselves and their clients / investors, which more often than not, at least initially, results in layoffs and firings and, in mergers, elimination of redundancies (sometimes known as "consolidation") and often takes the form of loading target companies with debt (otherwise known as "leverage" for maximizing ROI).

The problem for Romney is that, for all his financial success, he doesn't really have a good political or private sector management experience résumé, so he had to come up with something to puff up his "management" cred as he thought that it would appeal to Republicans and sufficiently impress the independents who would not ask the relevant questions, i.e., how does personally making a lot of money translate into management experience or equate creating thousands of jobs.

Even the Wall Street Journal, mostly sympathetic to Romney, couldn't defend or explain away his braggadocio about 100,000 jobs created, so they they "defended" it by sidestepping the issue and defending "generic" private equity industry and the general economic theory of "net plus of job creation vs job destruction" - here's the best they could do:

From The Truth About Bain and Jobs - WSJ (sub), by Holman W. Jenkins, 2012 January 13

< snip > ..... First, the money: He expected to be paid well. But nobody — not even those whose billions earned in private equity make Mr. Romney's millions look paltry — envisioned the astounding rise in business values in the gilded '80s and '90s. When Mr. Romney was asked by his boss to start Bain Capital in 1983, the Dow was at 1086.50. When he left on Feb. 11, 1999 to run the Olympics, it was 9363.46. His is not the only recent fortune owed partly to this accident of timing (Warren Buffett's and many others come to mind). Indeed, if we're being honest, Mitt here is representative of a generation of professionals whose serendipity it was to have spent the 1970s on our education and then to be spit into the job market just as one of history's great economic liftoffs was taking place.
Second, the work: He put his talent for calm, careful analysis to work helping American businesses adapt to the onrushing challenges of globalization and technological change. Looking back, it may even be true that his ratio of jobs created to jobs destroyed was better than the economy's as a whole.

So, in the end, he was the fortunate beneficiary of good education (Harvard MBA and Law degree), Reaganomics and the Gingrich Revolution that boosted the economy and the stock market. I guess the same can be said for Jon Corzine, another North East financial engineer who bought a governorship of a small New England state after making a boatload of money? He did it for the people and for job creation!

Warren Buffett actually defended Romney this way: "He makes his money the same way I make my money ... he makes it shoving around money." In and of itself, "shoving money around" is not an "executive" or "job-creating" experience as Romney tried to claim.

That's why he never could explain (can't quantify the unquantifiable) or credibly defend his "job creation" record in the primaries but, lucky for him, he didn't have to - unlike any other candidate, he could spend a lot of money and unleash "it's his turn" GOP establishment machine, to lie about and destroy the reputation of anyone who had the temerity to call him on his "I do not apologize for my success, management experience and creating jobs" mantra or had actual conservative ideas about running smaller or less corrupt government.

That's how important for Romney his phantom "creating jobs and management experience" résumé is - without it he has nothing to appeal to hoi polloi, disaffected with Obama because of the economy. Without this "manager / businessman" halo, how does he differentiate himself to all those who are affected by the Obamanomics from just another rich guy buying his way to high office because "what else would the guy, who already has everything he needs, want?" That was the appeal and the differentiation of Ross Perot after the shallow 1991 recession, except that Ross Perot had genuine entrepreneur and job creator credentials, founding Fortune 500 and Fortune 1000 public companies (EDS and Perot Systems) from scratch and creating hundreds of thousands of jobs using then state-of-the-art technology.

Romney is not going to win on "ideology" because he doesn't have any. The only thing Romney has going for him is "the economy" - the same thing that helped barely elect the "electable" Bush-43 twice, by the slightest of margins against his barely electable opponents.

So Romney badly needs this "job creator and economic Mister Fix-it business manager" aura to differentiate himself from Obama, whom he wants to paint as a "good man" but not a "competent manager" of the economy. Obama, obviously, is trying to puncture the carefully protected myth of Romney's job creation and management abilities and experience. With the myth gone, Romney has nothing but "he is worse than I am" and it may cost him votes in the few states where it will really count in this election. Ignore the national popular polls, it will really come down to just several states like OH, CO, NM, etc... Mostly, it will be a replay of 2000 and 2004 elections, which is one reason why Rove is so heavily involved, this time with his SPAC. Both campaigns' strategies will be dictated by what they think can give them advantage in those crucial states.

Trying to dismiss this again as an "attack on capitalism" or "attack on the PE industry" or "attack from the left" or "attack on profit-making" may have worked on the conservatives in the GOP primary but will not work on voters in the general elections - this is intended as the exposure of the core of Romney's main weakness, namely that Romney has no "core" or necessary competency in areas people think are needed for President today, and that Romney is wiling to pad and distort his credentials to pretend he is something he is not and "buy" himself credentials and qualities he doesn't really have. What Romney really has is the desire to "win" - at any price, by any means, without thinking about the cost or consequences of his actions - "winning" is all that counts, his entire life revolved around gaining power for its own sake and keeping score.

Unlike the GOP primary, Romney's money advantage will disappear and Obama will have plenty of money as well as "free media" to attack him on his main weaknesses. It will be like two featherweights boxers who, not knowing how to defend themselves, will have nothing else in their arsenal than wildly attacking and swinging at each other, without providing the reasons to vote for them.

It's called "winning ugly", but one of them will eventually lose. We, the people, have already lost...

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