Huntsman hits Romney on private equityOctober 12, 2011: 10:06 AM ET
Private equity last night became an issue in presidential politics.
Jon Huntsman: "Since some might see you because of your past employment with Bain Capital as more of a financial engineer, somebody who breaks down businesses, destroys jobs, as opposed to creating jobs and opportunity, leveraging up, spinning off, enriching shareholders... the whole discussion around this campaign is going to be job creation, how can you win that debate given your background"
Romney: "Well, my background is quite different than you described, Jon. So the way I'll win it is by telling people an accurate rendition of what I have done in my life... They understand that 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, and they know some of the names. We started Staples. We started the Sports Authority. We started Bright Horizons children's centers. Heck, we even started a steel mill in a farm field in Indiana, and that steel mill operates today and employs a lot of people. So, we began businesses. Sometimes we acquired businesses and tried to turn them around, typically effectively. And that created tens of thousands of new jobs."
(1) It's kind of fascinating that it's Jon Huntsman who played the PE card, given that his father recently co-founded a private equity firm with one of Romney's former partners at Bain (something Romney might have mentioned were Huntsman a viable candidate). I hadn't really expected any GOP candidate to discuss private equity -- Republicans are loath to insult capitalistic private sector experience -- but figured were anyone to do it, it would have been Rick Perry. Then again, you need to be awake to play cards...
(2) When the debate over carried interest taxation began several years ago, private equity execs tried to link themselves to venture capitalists (a group generally more popular in both Washington and America at-large). Looks like Romney will try a similar tact, when he reaches the general and this issue becomes more central. As I've written before, it's true that Bain Capital was basically a VC firm when it launched. But by the time Romney left, its primary focus was leveraged buyouts.
(3) Romney is going to keep trotting out that "tens of thousands" figure, even though there is no real evidence to back it up. Bain Capital doesn't keep historical records of employment levels at its portfolio companies -- either ones it helped create out of whole cloth or ones it acquired. This isn't to say Romney's number isn't defensible. For example, Staples alone has around 90,000 employees -- and the company arguably wouldn't have existed without Romney and Bain. On the other hand, Bain hasn't been actively involved with Staples for well over a decade (it's kind of like when the National Venture Capital Association takes jobs-creation credit for all of Apple's current employees or market cap). And Romney doesn't specify whether his number is net or gross. Not saying he's right or wrong. Just saying there are a variety of ways to slice the numbers.
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