Tuesday, April 24, 2018
Opinion

Romney is no job creator

When Republican presidential nominee Mitt Romney says he'll create 12 million jobs as president, he invites scrutiny of his performance as Massachusetts governor and CEO of Bain Capital.

Running for governor in 2002, Romney said he would initiate a jobs program "second to none in the history of the state." Once elected, however, he showed more concern with balancing the budget. Romney slashed aid to cities and towns by 15 percent and reduced funding for schools by 4 percent. He didn't raise the state sales or income tax for individuals, but in the wake of aid cuts, property taxes increased on the average by 24 percent. Not a great job-producing strategy.

Romney did attract some businesses to Massachusetts, but sometimes with a price. He turned over $100 million in tax incentives to convince Bristol-Myers Squibb to build a $750 million plant. That averages out to $250,000 for each of the 400 employees there.

At one point, Romney ignored business leaders who wanted him to use federal funds for a new highway interchange, which would have created jobs galore. According to David A. Tibbetts, the state's director of economic development under two previous Republican governors, Romney was more focused on his presidential ambitions than economic development. "People had very high hopes for him as governor," Tibbetts told the Boston Globe. "He's extremely bright, talented, and involved in business. In the end he showed no loyalty to the state he was elected to run."

When Romney's four-year term expired, the job growth rate of 1 percent lagged four points behind the national rate. Unemployment fell from 6 percent to 4.7 — the U.S. rate was 4.4 — but 233,000 people left the state.

Romney founded Bain in 1984 and left active management in 1999. Romney is currently a "passive private shareholder" at Bain, although he has served on boards of Bain-operated companies and undoubtedly consulted with his former associates.

You can search the Bain website in vain for news of jobs. From the beginning, Romney's work there was as much about destroying jobs as creating them.

Robert Solow, a Nobel Prize-winning economist, explains how Bain acquires companies. "In a leveraged buyout, the private equity shop buys a distressed company," he told me. "In some cases it decides the company is worth more dead than alive, and just sells off the assets. Jobs disappear. In other cases it may reorganize the company, take a seat on the board and create jobs, but also typically lower wages and benefits. It issues debt in the name of the company and uses proceeds to buy out existing stockholders and finance reorganization. Bain makes most of its profits from selling off the reorganized company, and from stripping the assets of the no-good ones. Nobody can know what the long-run net effect on employment is. But for sure the small investor has no access."

"Take a typical Bain transaction involving an Indiana-based company called American Pad and Paper," Matt Taibbi wrote in Rolling Stone. "Bain bought Ampad in 1992 for just $5 million, financing the rest of the deal with borrowed cash. Within three years, Ampad was paying $60 million in annual debt payments, plus an additional $7 million in management fees. A year later, Bain let Ampad to go public, cashed out about $50 million in stock for itself and its investors, charged the firm $2 million for arranging the IPO and pocketed another $5 million in 'management' fees. Ampad wound up going bankrupt, and hundreds of workers lost their jobs, but Bain and Romney weren't crying: They'd made more than $100 million on a $5 million investment."

As governor, Romney was obsessed with budget balancing. As CEO of Bain, he sought to maximize profits for investors, while viewing workers as potholes on the road to riches. Neither experience suggests job creation in a Romney administration.

And yet Romney says he'll create 12 million jobs. He's right about the number, wrong about the provider. According to respected indices like Macroeconomic Advisers and Moody's Analytics, the economy regardless of the president will add 11.8 million jobs over the next four years.

In short, don't depend on Mitt Romney for your future paychecks. The former governor is no job creator.

Jim Kaplan is a Massachusetts-based journalist who wrote the book "The Greatest Game Ever Pitched." He is a contract adviser/grievance officer for the National Writers Union, Local 1981 of the United Auto Workers. He can be reached at [email protected] He wrote this exclusively for the Tampa Bay Times.

Comments
Editorial: As USFSP consolidation task force meets, openness and collaboration are key

Editorial: As USFSP consolidation task force meets, openness and collaboration are key

Writing a new law that phases out separate accreditation for the University of South Florida St. Petersburg and folds it back into the major research university was the easy part. The hard work starts today when a new consolidation task force holds i...
Updated: 2 hours ago

Correction

CorrectionCircuit Judge John Stargel of Lakeland is a member of the Florida Constitution Revision Commission who voted against a proposed amendment that would have stopped write-in candidates from closing primary elections. An editorial Saturday inco...
Published: 04/23/18
Editorial: Pruitt sets new low for ethics at EPA

Editorial: Pruitt sets new low for ethics at EPA

Not too many people took then-candidate Donald Trump seriously when he famously campaigned to "drain the swamp" as president. But that shouldn’t give this administration a free pass to excuse the behavior of Scott Pruitt, the administrator of the Env...
Published: 04/22/18
Updated: 04/23/18
Editorial: Allegiant Air still has safety issues

Editorial: Allegiant Air still has safety issues

Allegiant Air’s safety record remains troubling, and the Federal Aviation Administration’s reluctance to talk about it is no more encouraging. Those are the key takeaways from a 60 Minutes report on the low-cost carrier’s high rate of mid-flight brea...
Published: 04/21/18

Editorial: Women’s work undervalued in bay area

Even a strong economy and low unemployment cannot overcome the persistent pay gap affecting full-time working women in Florida. A new report shows women in Florida earned 12.5 percent less on average than their male counterparts, and the disparities ...
Published: 04/21/18
Editorial: Florida’s death penalty fading away on its own

Editorial: Florida’s death penalty fading away on its own

Florida lawmakers may never take the death penalty off the books, but stronger forces are steadily eroding this inhumane, outdated tool of injustice. Court rulings, subsequent changes to law and waning public support have significantly suppressed the...
Published: 04/20/18
Updated: 04/24/18

Editorial: A missed chance for open primary elections

The Florida Constitution Revision Commission did a lot of things wrong this week by combining unrelated or unpalatable provisions into single amendments that will appear on the November ballot. It also wasted an opportunity to do one thing right. The...
Published: 04/20/18
Updated: 04/23/18
Editorial: New Cuba president is chance for new start

Editorial: New Cuba president is chance for new start

For all the symbolism, Raul Castro’s handoff of the Cuban presidency this week amounts to less than meets the eye even if his handpicked successor, the Communist Party functionary Miguel Diaz-Canel Bermudez, is the first person not named Castro to le...
Published: 04/20/18
Editorial: When they visit Nature’s Classroom, kids are right where they belong

Editorial: When they visit Nature’s Classroom, kids are right where they belong

The Hillsborough school district planted a fruitful seed with the opening of Nature’s Classroom five decades ago on the cypress-lined banks of the Hillsborough River northeast of Tampa. • The lessons taught there to some 17,000 sixth graders each yea...
Published: 04/20/18

Editorial: Equality pays off on Southwest Flight 1380

The passengers of Southwest Flight 1380 can be thankful that, 33 years ago, the U.S. Navy took the lead on equal opportunity.Capt. Tammie Jo Shults was piloting the flight from New York to Dallas on Tuesday when an engine exploded, blowing out a wind...
Published: 04/19/18
Updated: 04/20/18