Blaming Bain

Jacob Laksin is a senior writer for Front Page Magazine. He is co-author, with David Horowitz, of The New Leviathan (Crown Forum, 2012), and One-Party Classroom (Crown Forum, 2009). Email him at jlaksin@gmail.com and follow him on Twitter at @jlaksin.


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Not all of Bain’s investments were such a clear success, of course. One Bain venture that has been the subject of media scrutiny in the New York Times and likely will be again if Romney is the nominee is Bain’s investment in a medical company called Dade International. The short version of the story, and one that Democrats will dwell on, is that Bain took over the company and embarked on a painful cost-cutting program. After laying off 1,700 people, Bain drove Dade into bankruptcy, all while squeezing the company for $242 million in fees. The full story, however, is more complex.

For starters, Dade already was going bankrupt when Bain took over the company in 1994. And while Bain did make job cuts – cuts that would have been inevitable given the company’s flagging financial fortunes – it also invested in it to the tune of nearly $27 million. It does appear that there were those at Bain who preferred to flip Dade for a quick profit rather than putting it on sound financial footing, but that course was vetoed by none other than Romney, who wanted to see the company genuinely turned around.

Which it was. Between 1995 and 1998, according to the Times, Dade’s annual sales surged from $614 million to $1.3 billion, while its assets grew from $551 million to $1.5 billion. To be sure, by taking out millions in profits, Bain also saddled the company with long-term debt that ultimately drove it into bankruptcy. Many of those fired during the bankruptcy process complained about Bain’s profiteering. But there is still more to the story. Bankruptcy turned out to be beneficial for Dade. It allowed the company to restructure its finances and emerge a more efficient enterprise. In 2007, the German conglomerate Siemens bought Dade for $7 billion. The name was changed but the company endured.

This is not to say that Bain’s business decisions benefited everyone. The goal of most businesses, including private equity, is to maximize its profits. That means cutting costs and, sometimes, jobs. Though Romney contends that Bain Capital created more jobs than it eliminated, that would have been little consolation to those who lost their jobs through no fault of their own. But as Democrats gear up to demagogue the reality of the private sector, where businesses rise and fall, it is worth remembering that many of the layoffs for which Romney is being blamed would have happened regardless, and that, without Bain’s intervention, many struggling companies never would have recovered.  At a time of lagging economic growth, the kind of market-driven wealth and job creation that Bain Capital oversaw should be commended, not condemned.

Whatever one’s view of Bain Capital’s individual acquisitions, the fact remains that private investors are far better suited than government bureaucrats to assess the risk of a business venture (see: failed solar panel manufacturer Solyndra). What’s more, their investments are typically made with private capital rather than taxpayer dollars. Taxpayers were not forced to shoulder the cost of Bain’s failed investments. The same cannot be said of failed government job creation schemes like the $787 billion stimulus package.

Democrats – and, apparently, Newt Gingrich – believe that they’ve found a winning issue in Romney’s involvement with Bain Capital. But as voters search for a candidate to lift the country from its economic malaise, they may well take a more charitable view of Romney’s role in a company that has managed what the current occupant of the White House has not: bolster businesses and create jobs.

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  • Chezwick_Mac

    As sins go, it wasn't terribly egregious….but it WAS relevant. I think it reflects less upon Newt's view of the market place than it does upon his undisciplined tongue. It was pique…nothing more, but it was an unfortunate and obviously counter-productive way to express it.

    It's going to be fascinating to see how Iowa plays out. It seems to be absolutely up for grabs.

    • George

      Don't make excuses for Newt. To attack Bain is to attack Conservatism and the free market. Newt knows perfectly well what he said, afterall, isn't he so brilliant!

      • scum

        There are a myriad of reasons to attack Bane.

      • scum

        Newt is brilliant. When he's not earning $1.6 million from government handouts, he's in the 'private sphere.' What did this entail? Unbelievably, he hosted a dinner for 'good doctors' and sent out letters to bait the suckers. They all came calling to his $5000 dinner to pick up their plaque, personally signed by Newt. He pocketed the proceeds and went on to his next scam. Hardly the Protestant Ethic, but he made big bucks. Gotta love him.

  • ObamaYoMoma

    Let's not forget that besides Newt's leftwing attack on Romney's Bain Capital career, Newt also praised Andy Stern of SEIU and ACORN fame as a forward looking visionary. He also claims that FDR, the father of socialism in America, is the greatest American president of all time.

    Then besides conceding a debate on Global Warming to Senator John Kerry and then subsequently taping a PSA with Nancy Pelosi to call on Congress to act on global warming after being paid off, Newt also worked closely with Hillary Clinton in the mid 2000s promoting one size fits all healthcare solutions, which included the individual mandate, which he didn't stop conveniently supporting until just May of this year. Not to mention that Newt also backed Soros' hand picked liberal Republican Party candidate Dede Scozzafava in a special election, and also called Congressman Paul Ryan's budget proposal right-wing social engineering, and that is just unforgivable.

    Anyway, Fox News and the RINO establishment Republican Party are pushing hard for Newt's nomination because he is also pro amnesty, which indicates that Newt isn't really serious about stopping illegal immigration, since amnesty is the biggest magnet of all that draws them over here in the first place. In any event, the RINO establishment Republicans that despise conservatives and that have been advocating for years for tossing conservatives under the bus, want to use amnesty as a tool to pander for liberal Hispanic voters since Hispanics will inevitably become the largest demographic in the future. Nevertheless, that same exact strategy miserably failed in 2008, as liberal Hispanics overwhelmingly supported Obama, and that same strategy will inevitably fail again should that has-been Newt Gingrich win the Republican Party nomination in 2012. However, this time around because Newt carries so much excess baggage and is such a polarizing figure, it will prevent the Republicans from regaining the Senate and weaken Republican strength in the House as well

    Incidentally, curiously all of the Congressman who either have worked for Gingrich or with him during the 90s before he got thrown out of Congress are all universally refusing to endorse him or back him today. Amazing.

    Finally, if anyone believes that Newt was paid $1.6 million to be Freddie Mac's historian as he claims, then call me at BR-549, because I have a bridge to sell you. Not to mention that the videos showing him calling for all those receiving money from Freddie Mac back in 2008 to return it also indicates that Newt is also a hypocrite of gigantic proportions as well. Indeed, he needs to put his money where his mouth is and return the damn money, especially since it was the taxpayer's money.

    • Bill

      I"m in no way a supporter of Newt but to claim the RINO establishment is backing him is just out of touch with reality. The RINO northeast establishment has backed Romney all the way from Charles Krauthammer, to Ann Coulter to George Will. Ann would have preferred Christy but is strong behind Romney now.

      Newt certainly isn't the answer but the RINO North-easterners can't win. Anyone elected in a state such as Massachusetts is too liberal for Conservatives in the Republican Party.

      • George

        I can't understand why so many Republicans can't see the fact that Romney is far more conservative than when he was Governor of Massachusetts. You can criticize him for changing his positions on some issues but the fact is that fiscally he always was a conservative and regarding abortion, he had no choice but to pretend to support it. It was a strategic move to get ahead. Unprincipled but temporarily necessary, afterall, could he had made one iota of difference in the abortion laws of Massachuseutts?

        • ObamaYoMoma

          You can criticize him for changing his positions

          You know if I were a liberal I could see criticizing Mitt, since he has always changed his positions toward the right, like most conservatives also did as well as they gained experience through the school of hard knocks known as life. In fact if I were a liberal I would consider Mitt's changes in position always from the left to the right as betrayals and as being stabbed in the back. Thus, conservatives should be applauding and cheering Mitt's transformation, and unlike Newt, Mitt never ever flip flopped back to liberal positions or flip flopped back and forth between liberal, conservative, back to liberal, and then back to conservative positions again and again and again ad nauseum depending upon who was buttering his bread at the particular time.

      • ObamaYoMoma

        I"m in no way a supporter of Newt but to claim the RINO establishment is backing him is just out of touch with reality. The RINO northeast establishment has backed Romney all the way from Charles Krauthammer, to Ann Coulter to George Will. Ann would have preferred Christy but is strong behind Romney now.

        Newt certainly isn't the answer but the RINO North-easterners can't win. Anyone elected in a state such as Massachusetts is too liberal for Conservatives in the Republican Party.

        Nah…you got it ass backwards, as you are a victim of Fox News propaganda. For months now they have been deliberately mis-portraying Mitt as the most moderate candidate, the anti-Tea Party candidate, and the RINO establishment Republican Party candidate in the race. Which is so easy to do because Mitt is from the northeast, and the reason is because they fully understand that the sentiments in the conservative movement today is to elect the most conservative candidate possible, and never mind the fact that Mitt was the conservative candidate of choice in 2008 that most conservatives coalesced and rallied around because he was the most viable conservative candidate in the race.

        In addition, RINO establishment Republicans, which includes Fox News and other RINO establishment Republican media, who have been advocating for years for tossing conservatives under the bus in favor of going after liberal Hispanic voters because Hispanics will inevitably become the largest demographic in the future, would never ever in a million years support a conservative Republican Party candidate that is against amnesty the same way Mitt is, because they want to use amnesty as a tool to attempt to attract liberal Hispanic voters.

        Indeed, it was the sole reason that Fox News and the RINO establishment Republican media lifted John McCain's campaign up from the dead in 2008, and it is sole reason they are likewise lifting up Newt Gingrich's campaign from the dead in 2012, so that they can again attempt to duplicate their same strategy in 2012 that so miserably failed.

        Hence, if enough voters are duped by Fox News and the RINO establishment Republican media manipulation in 2012, like were duped via their manipulation in 2008, Obama will win in another major landslide and the Republicans will also not win back the Senate as well.

        Again, Mitt since the 2008 campaign has always been against amnesty in any and all forms, and that is a position that makes him persona non-grata and in fact the anti-establishment Republican Party candidate in the race. It is also just the inverse as what Fox News and the RINO establishment Republican media have been deliberately mis-reporting for months to deliberately manipulate voters.

        Indeed, being against all forms of amnesty is the position that the vast overwhelming majority of conservatives support. As a matter of fact, studies subsequent to the 2008 election indicated that approximately 5 million conservative voters like me stayed home on Super Tuesday and didn't vote for McCain because he promoted amnesty. At the same time those same studies also indicated that the vast overwhelming majority of Hispanics voters voted for Obama, despite the fact that the RINO establishment candidate John McCain was attempting to use amnesty as a tool to attract liberal Hispanic voters.

        In any event, if amnesty is eventually passed in this country, it will sound the death knell for conservatism forever in America, as once those illegals gain citizenship and once they import the rest of their family members to the USA as well, the Left will then have a permanent unbreakable majority vice grip on the politics of this country. Thus, the USA will inevitably quickly go into financial default and bankruptcy and the military might of the USA will inevitably be defunded, leaving behind a gigantic vacuum in the world that will inevitably be filled by the forces of totalitarianism. Thus, world war will be the inevitable outcome and freedom may be sacrificed forever.

  • ObamaYoMoma

    Anyway, for the hell of it and to rile up the Jew hating Ron Paul anarcho-kook brigade, like a loon Ron Paul believes that 9/11 was America’s chickens coming home to roost because he sees 9/11 as being a terrorist attack caused by American interventionism on behalf of the Jews in Israel. However, I hate to rain on his unhinged kook parade, as 9/11 was not a terrorist attack at all, but instead a violent jihad attack, as terrorism and jihad are mutually exclusive and two entirely different manifestations altogether.

    Indeed, terrorism, in stark contrast to jihad, can be for any number of political causes, whereas jihad, on the other hand, is holy fighting against non-Muslim unbelievers to make Islam supreme in the cause of Allah. Terrorism, as its name implies, is always only violent, while, in stark contrast, jihad can be both violent and non-violent. In addition, terrorism is a Western manifestation only. Meanwhile, jihad is an Islamic manifestation only. Further, terrorism is always perpetrated by political extremists, and jihad, on the other hand, is always waged by MAINSTREAM ORTHODOX MUSLIMS. Moreover, terrorism indiscriminately targets civilian non-combatants, while jihad, in stark contrast, specifically targets non-Muslim unbelievers, either civilian non-combatants as in the Fort Hood Massacre, or military combatants as in Iraq and Afghanistan.

    Therefore, because Ron Paul is so totally obsessed and consumed with hating Jews, he is totally oblivious with respect to jihad, exactly like all of his unhinged anti-Semitic Jew hating bigoted supporters.

    Anyway, I challenge any and all unhinged self-hating Ron Paul Jew bashing anarcho-kooks to prove me wrong. Good luck!

    • ObamaYoMoma

      In addition, Paul like a loon likes to say that we lived with the Soviet Union with nukes for years. Yet, this is coming from a moron who doesn't even realize that the 9/11 jihad attacks were not terrorist attacks, but jihad attacks. Hell, he doesn't even know what jihad is!

      Not only that, but Paul is so totally obsessed and consumed with Jew hating, that it has made him so completely oblivious that like a moonbat he morally equates Muslims with non-Muslim unbelievers. Obviously, he is so delusional that he believes anyone who hates Jews almost as bad as he does can't be all bad. Indeed, he doesn't see the Islamic world as our eternal enemies like they really are; he sees them instead as our friends and allies, because they hate Jews like him.

  • StephenD

    So far, I like Gingrich. He screwed up bad mouthing Romney. I think it is wrong for any of them to bad mouth each other. They should concentrate on challenging Obama. Show us what you will do compared to what he is (or isn't) doing. Leave each other alone. Seriously, has it ever helped any candidate to bad mouth another? How does making someone look bad make you look good? I could never figure that out. Again, I would hope they all step up. Let us know where they stand as compared to Obama and not each other. We can figure out from there who has the better plan and who we want to support.

    • George

      I marvel at how forgetful so many Republicans are. Newt Gingrich's commercial with Nancy Pelosi is incontrovertible proof that Newt is a man made global warming nut and mark my words would introduce some sort of cap and trade compromise. I'm not giving Newt a free pass in my irrational desire to shut down Romney. Romney is playing smart with global warming and positioning himself to win the White House so that he can shut down Kyoto as the Canadians just did. Romney is not stupid and will produce the 11.5million jobs he is promising. Now if more Republicans could see the forest for the trees, as the "establishment" does, than you would support Romney. I'm not Mormon by the way nor live in Utah.

      • Chezwick_Mac

        "Romney is playing smart with global warming and positioning himself to win the White House so that he can shut down Kyoto as the Canadians just did."

        The USA never signed the Kyoto protocols.

        • George

          But the pressure to introduce cap and trade and some sort of taxation system is real and the USA needs a leader who understands business to fight this scheme.

    • scum

      Republicans just can't stop the attack ads, that's what they're good at. Little else.

  • Chezwick_Mac

    STEPHEN: "Seriously, has it ever helped any candidate to bad mouth another?"

    Old buddy, the sad reality is, negative campaigning indeed works. The public SAYS they don't like it, but they respond to it. This is one reason Newt's poll numbers are falling…because he's been under sustained attack from Romney and the others for a couple of weeks now.

    Do you remember the 'Willy Horton' issue in the 1988 campaign? He was the violent criminal that Mass. Gov. Dukakis' let out on furlough…and while out, he raped and murdered a young woman. The Bush Sr campaign highlighted the case in a TV ad. Within a couple of weeks, Dukakis' double digit lead in the polls completely evaporated.

    There does seem to be a fine line…where negative attacks that go too far REPEL voters. Knowing where that line is and not crossing it is almost an art form.

  • http://apollospaeks.blogtownhall.com/ ApolloSpeaks

    MITT ROMNEY'S ANTI-CAPITALIST MOMENT

    In defending his job as a consultant with Freddie Mac Newt Gingrich sounded like an anti-corporate leftist in attacking Mitt Romeny's irreproachable career in private equity investing, and the idea of creative destruction so vital to progress in an evolving free market economy. But what practically went unnoticed by the media was that Romney had his own anti-capitalist moment when attacking Newt.

    Click my name and read my piece, Romney's Attack On Newt's Extraterrestrial Capitalism

    Turns out lunar mining colonies are an economically sound idea.

  • http://apollospaeks.blogtownhall.com/ ApolloSpeaks

    …….is an economically sound idea.

  • scum

    There's plenty to complain about when one talks about BANE & CO. Like the rest, they were basically a bunch of shysters, a bane to honesty in America. But it's funny you're now attacking Gingrich, too.

  • Chezwick_Mac

    Bill, could it be that Gore's ad didn't resonate because he was appealing to primary (i.e., liberal democratic) voters…those who weren't inclined to put much of a priority on issues like crime and revolving-door justice?…whereas Bush's ad appealed to the overall electorate, and moderates saw it and responded by moving away from Dukakis.

  • scum
  • TonyN

    Romney and Bachmann got some explaining to do

    why didn't Fox News cover this stuff ?? its all over the Place .What is this stuff on Romney about ? It even has Jack Abramoff' in it and the Daily KOS is ready to use this if Romney gets the nomination . http://tinyurl.com/dxwtmbt http://tinyurl.com/d5a8bwp
    Bachmann Loves Newt Gingrich http://tinyurl.com/7dgmgvv