Mitt Romney was born into wealth and privilege. His father, George Romney, was a corporate executive in the auto industry who in 1954 became president and CEO of American Motors (manufacturer of the Rambler and other brands), and in 1963 was elected governor of Michigan. Mitt attended the elite private Cranbrook School in Bloomfield Hills, MI, Stamford University and Brigham Young University, and went on to amass a personal fortune of around $250 million, first as a business consultant and then in the private equity business, mainly as co-founder and CEO of Bain Capital.
NOT 'LIKE FATHER, LIKE SON'
While Mitt Romney, like his father, is a corporate CEO turned politician, there are significant differences in their careers. George Romney ran a company that employed tens of thousands of unionized workers and manufactured things that people could buy and use. Mitt Romney's company Bain Capital doesn't make any useful products. Instead, Bain buys companies, using borrowed money, in deals structured so that the acquired company, not Bain, ends up loaded with debt. Then Bain imposes a plan to repay the debt by slashing jobs, wages and benefits, closing plants and selling off operating divisions, sometimes moving the work overseas, and often driving the acquired company into bankruptcy. This destructive business model has been called vulture capitalism, vampire capitalism and other names, and it is a far cry from the manufacturing economy in which George Romney made his wealth.
We don't want to make a hero of George Romney, but there are also striking differences between his political career and that of his son. In 1964 the elder Romney attended the Republican national convention where he battled the arch-conservative forces behind Barry Goldwater, trying unsuccessfully to get the party to support civil rights for African Americans. Can anyone imagine Mitt Romney doing anything similar? Then in 1968 George Romney ran for president in the Republican primaries and voluntarily released 12 years of his federal income tax returns. This set a precedent of publicly releasing multiple years of tax returns which has been followed by presidential candidates ever since - until his son Mitt refused to do so.
BLOOD MONEY AND UNION BUSTING
Bain Capital was started in 1984 when Bill Bain, the head of Boston-based consulting firm Bain & Company, decided to spin off an investment company and chose Mitt Romney to head the new operation. Romney and his associates spent the first year rounding up investors, and raised a major portion of its $37 million startup fund from members of wealthy families from El Salvador living in exile in Miami during that country's civil war. Many of Bain's Salvadoran investors were also major investors in murder. They and their families were the financial backers of the death squads - right-wing paramilitary forces that carried out murders of union organizers, peasant leaders, and even assassinated the Catholic Archbishop of San Salvador, Oscar Romero, who had forcefully spoken out against the violent oppression and exploitation of El Salvador's poor. (In July and August both the Los Angeles Times and Huffington Post published investigations of Bain's Salvadoran blood money.)
In the early years Bain engaged in what's called venture capitalism, raising money to invest in startup companies, most notably Staples, Inc., the office supply retailer launched in 1986. But Romney soon decided that what Bain should be doing instead was leveraged buyouts - borrowing huge sums of money to take over existing businesses. "There's a lot greater risk in a startup than there is in acquiring an existing company," Romney later said.
Trampling on workers' rights has been part of the Bain business model from an early date. Mitt Romney now boasts to Republican audiences, "I've taken on the union bosses before." One of his first deals as the head of Bain involved union busting. In 1984 Bain Capital bought Key Airlines entirely with money that Bain forced Key to borrow - in other words, Key paid for its own acquisition. An investigative report by Robin Harting in the Financial Times (August 16, 2012) describes how Bain turned Key Airlines "... from a profitable, taxpaying company with a $13m balance sheet and its own aircraft, into an operating company with a $2m balance sheet and a holding company from which it sold assets." In 1985 a majority of Key's pilots tried to form a union to protect their interests in the turbulent situation in which Bain had placed them. So Bain illegally crushed the union. A federal judge later concluded: "The anti-union activities in this case are not merely unfair labor practices as Key argues, but blatant, grievous, willful, deliberate and repeated violations of the Railway Labor Act" - the federal labor law covering the airline and railroad industries.
MOUNTAINS OF DEBT
One of the most insightful examinations of Bain is an article entitled, "Greed and Debt: The True Story of Mitt Romney and Bain Capital," by Matt Taibbi, published in the September 13 issue of Rolling Stone. Taibbi contends that the story of Mitt Romney and Bain Capital exposes the fundamental hypocrisy at the heart of the Romney campaign, over the issue of debt. Candidate Romney has cast the federal debt - not unemployment, falling wages, or crumbling infrastructure - as the greatest evil facing the country. Romney has called debt "a prairie fire" that every day "gets closer to the homes and children we love." But Romney's entire business career was built upon mountains of debt. Taibbi writes, "...what most voters don't know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back." Taibbi sums up the outrage of this:
"A man makes a $250 million fortune loading up companies with debt and then extracting million-dollar fees from those same companies, in exchange for the generous service of telling them who needs to be fired in order to finance the debt payments he saddled them with in the first place. That same man then runs for president riding an image of children roasting on flames of debt, choosing as his running mate perhaps the only politician in America more pompous and self-righteous on the subject of the evils of borrowed money than the candidate himself."
And while Romney as a candidate has railed against China and charged Obama with not being tough enough on China's agressive trade policies, Romney the businessman has made money -- and continues to make money -- from Bain's practice of shipping U.S. jobs to China. (A recent New York Times report highlighted this contradiction.)
BAIN "DEPENDENT ON GOVERNMENT"
Mitt Romney has attacked 47 percent of Americans who he said don't pay income taxes and are "dependent on government," and refuse to take responsibility for their own lives. But Taibbi exposes Romney's own dependence on government. "His personal fortune would not have been possible without the direct assistance of the U.S. government." In 1993, Romney "engineered a government deal worth at least $10 million for Bain's consulting firm when it was teetering on the edge of bankruptcy", Taibbi writes. But much more importantly, "The entire business of leveraged buyouts wouldn't be possible without a provision of the federal code that allows companies like Bain to deduct the interest on the debt they use to acquire and loot their targets." The same tax deduction meant to encourage home ownership by allowing homeowners to write off their mortgage interest payments has, perversely, become a federal giveaway to one of the most destructive forms of predatory capitalism.
We give the last word to a former employee of a Bain-acquired company. Randy Johnson worked at Ampad, formerly American Pad & Paper, in Marion, IL. Ampad was acquired by Bain in 1992, Bain closed Johnson's plant in 1994, and Ampad went bankrupt in 2001. Johnson says he doesn't fault Mitt Romney for being rich. "I fault him for making money without a moral compass. I fault him for putting profits before people like me. But that's just Romney economics... Mitt Romney will stick it to working people."
You can learn more about Bain Capital at bainofourexistence.com.