Michael Smerconish: Decision 2012

by Michael Smerconish - 6/5/12 -

First it was Newark Mayor Corey Booker, then Massachusetts Governor Deval Patrick, and finally the big dog himself, former President Bill Clinton, all of whom seemed to step on the Obama campaign narrative about Bain Capital. Three A-list Democrats venturing off script at a time when the Obama campaign was seeking to define Mitt Romney at the outset of the general election.

So is Bain Capital fair game in the 2012 election? When we polled the question at my web site, smerconish.com, 70% said "yes."

By now you know the background. The Mayor of Newark went on Meet the Press recently and said the following:

"As far as that stuff, I have to just say from a very personal level I'm not about to sit here and indict private equity. To me, it's just we're getting to a ridiculous point in America. Especially that I know I live in a state where pension funds, unions and other people invest in companies like Bain Capital. If you look at the totality of Bain Capital's record, they've done a lot to support businesses, to grow businesses."

And a few moments later, he added:

"It's nauseating to the American public. Enough is enough. Stop attacking private equity. Stop attacking Jeremiah Wright."

His comments were viewed as heresy by the Obama campaign and no doubt feeling under pressure, he quickly he began backpedalling. What made the comments noteworthy was the political affiliation of he who offered them - and that Booker wasn't alone in breaking ranks. Former Democratic Congressman Harold Ford and Obama car czar Steve Ratner made similar comments.

Then President Obama got into the fray by saying: "My view of private equity is that it is set up to maximize profits, and that's a healthy part of the free market," Obama said. But, he added, "that's not always going to be good for businesses or communities or workers."

Governor Patrick was next. He said Bain was a "perfectly fine company." President Clinton struck a similar note when offering: "So I don't think that we ought to get into the position where we say this is bad work. This is good work."

Here are my thoughts.

First, how nice to have a dispute about substance instead of a bogus birth certificate or where the family dog rides on vacations.

Second, also a welcome change is a conversation that does not break down only along partisan lines. Maybe that's no surprise. Recall that it was Governor Perry who said that Mitt Romney and Bain Capital were involved with "what I call vulture capitalism." And Newt Gingrich said on the campaign trail: "Those of us who believe in free markets and those of us who believe that in fact the whole goal of investment is entrepreneurship and job creation, we find it pretty hard to justify rich people figuring out clever legal ways to loot a company, leaving behind 1,700 families without a job."

Third, on the question of whether Bain Capital is appropriate fodder for the campaign? Yes is the answer. Where Romney spends more time touting his experience in the private sector than he does talking about his stint as Massachusetts governor, of course it's fair game. It's as important to his narrative as Obama's experience as a community organizer, state senator or U.S. senator before becoming president.

Fourth, is it anti-capitalism for the president to raise Romney's private sector past? No. It doesn't follow that the president is anti-capitalism for commenting on how Mitt Romney made a lving where Mitt Romney himself promotes those credentials. It depends, of course, on what exactly the president is saying.

Fifth, is private equity, by definition, against free enterprise? No. To the contrary, private equity is about returning investment to investors, in this case, Bain Capital. How do they do that? By reducing expenses and increasing profits. Sometimes that process grows jobs, and sometimes it reduces them. Job growth is not the objective. Making money is, and that is the essence of free market capitalism.

Sixth, so what can be fairly said in the debate by both sides? Romney can say he was a successful businessman who did what he was supposed to - made money for investors. And Obama can say that Romney's objective while at Bain was not the same as that of a president. A president't job is the enhancing the general welfare of Americans, not investors. A president needs to be concerned with the unemployment rate of the nation. A person running a private equity firm need not. The latter need focus on whether investors are making money, and whether the national unemployment rate is 8% is inconsequential.

Finally, seventh, does any of this mean that Romney cannot be a good manager of the general welfare of the nation? No it does not. it simply means that the private sector experience he has does not directly transfer to the new responsiblity he seeks, no doubt, an observation people made about Obama's past when he ran in 2008.