It was at this point that two pivotal events occurred, one of which might be controversial for him this fall, the other of which is certain to be. The first involves his religious work. Carrel Hilton Sheldon, a local Mormon woman who already had five children, found herself pregnant again in 1983. A complication developed, and her doctor advised an abortion. This being a thorny matter religiously—the church generally disapproved, with rare exceptions—she sought the counsel of the man who was the local stake president at the time, Gordon Williams.
According to Sheldon—whom Scott interviewed exclusively for his book—Williams told her to do what the doctor advised. Romney, a local bishop at the time, got wind of this and inserted himself aggressively into her life. He badgered Sheldon and her family, accused her of lying about Williams approving an abortion, and struck Sheldon’s father as “an authoritative type of fellow who thinks he is in charge of the world.” Astonishingly, when The Boston Globe asked him about this in 1994, he gave the kind of slippery response for which he is increasingly becoming known: “I don’t have any memory of what [Sheldon] is referring to, although I certainly can’t say it could not have been me.”
The New York Times told this story, largely based on Scott’s reporting, back in October.2 It caused considerable comment at the time. Whether it returns will depend on circumstances—whether, say, Barack Obama’s campaign feels the need to push the women’s vote. The other event from that period, Romney’s decision to become the head of Bain & Company’s private equity arm, Bain Capital, is with us now and will not go away.
Bain & Company specialized in venture capital, essentially straightforward investing. Private equity—leveraged buyouts; after the LBO scandals of the 1980s, they simply changed the name—is another matter. PE firms scour the landscape for struggling companies, bid to restructure them, load them with debt in the form of borrowed bonds or notes from banks or hedge funds, and acquire them. PE firms invest very little of their own money, and they take advantage of a key tax loophole that permits them to deduct from their taxes the interest they pay on the money they’ve borrowed to finance the purchase.3 The company might swim or it might sink. It will almost certainly shed resources, which often means laying people off. The harsher the “restructuring,” in some cases, the better the PE firm stands to do. And since the profits come in the form of capital gains for the partners, they are taxed at much lower rates than income—just 15 percent as opposed to 35 percent.
Romney initially turned down Bill Bain’s offer to head the PE arm, until, Kranish and Helman report, Bain sweetened the offer with a promise that if the PE operation failed, he “would craft a cover story saying that Romney’s return to Bain & Company was needed because of his value as a consultant.” And so, in 1989, Romney started down the path that would eventually lead him to a net worth of at least (it could be more, the authors suggest) a quarter-billion dollars.
Kranish and Helman give a comprehensive reading of the Bain years—the greatest contribution of their book. They write that the “most thorough” analysis of Bain’s performance during Romney’s tenure (1989–2001) came from an analysis written by Deutsche Bank, which found that of sixty-eight major deals, nearly half—thirty-three—had lost money or merely broken even. On the others, though, profits soared, sometimes for everyone, and sometimes not. Certain success stories, like Domino’s Pizza, are widely known. On the other side of the ledger, there was a buyout of a department store chain called Sage Stores, for example. It made Bain $175 million in 1996–1997. But three years later, the company was in bankruptcy.
All these matters came starkly to the fore in mid-January with the release of the twenty-seven-minute film King of Bain, one of the most stunning and mysterious campaign artifacts of our time. It was made not by a liberal but by a conservative, Jason Killian Meath, who had produced ads for the Romney campaign in 2008. It was commissioned, according to Peter J. Boyer of The Daily Beast, by another conservative—Barry Bennett, who works at a firm whose principals include Dick Cheney’s daughter Mary.4 The rights were then purchased by a Super PAC affiliated with Newt Gingrich, apparently with money supplied by right-wing Las Vegas tycoon Sheldon Adelson. All this right-wing muscle has been invested in a project that makes Oliver Stone seem timid. A typical snippet of the voice-over goes:
This is a tale of greed, playing the system for a quick buck, a group of corporate raiders, led by Mitt Romney. More ruthless than Wall Street. For tens of thousands of Americans, the suffering began when Mitt Romney came to town.
The film was quickly and largely (though not wholly) discredited. Gingrich and Rick Perry, who led the attacks on Romney’s “vulture capitalism” (Perry’s phrase), were warned to cool it by Rush Limbaugh and others on the right. Romney has tried different defenses, first saying Bain created “more than 100,000” jobs, then revising that downward to “tens of thousands,” then to “thousands,” before it spiked back up in a January 16 debate to 120,000. The Obama people are presumably building their file of legitimate attacks on Bain. An argument about whether Bain created or eliminated more jobs will dissolve into the usual fog of unprovables, and it would be foolish of the Obama people to pursue that. (Still, is 120,000 jobs over twelve years really that impressive?) The point is that Bain Capital existed not to create jobs or destroy them, but to enrich the investor class—that now much-discussed “1 percent”—Romney himself very much included.
What is most interesting about the rest of Romney’s résumé—his governorship, his success at turning around the 2002 Salt Lake City Winter Olympics, and his failed political runs, against Ted Kennedy in 1994 and for president in 2008—is the way he consistently misrepresents both his triumphs and his setbacks. His one gubernatorial term was largely a success, but he now downplays for obvious reasons his most impressive achievement, the health care reform bill, and embellishes other accomplishments. On the subject of job creation, Kranish and Helman note that little of it occurred during his term: fewer than 40,000 new net jobs in his four years, or a 1 percent gain, the “fourth weakest rate of job growth of all states over the same period.” With regard to the Olympics, he did indeed straighten out some serious financial problems, put the games in the black, and oversee what is regarded as one of the most successful Olympiads of recent times. But Scott is near apoplexy over Romney’s urge to self-aggrandize and his need to exaggerate the failures of his predecessors, charging them with corruption (in his book on the subject, Turnaround) even after a judge had thrown out the charges against them.
What is striking in Scott’s account is not merely the fact of Romney’s numerous flip-flops on political issues familiar and less so (a less familiar one: the Massachusetts Romney refused to sign Grover Norquist’s anti-tax pledge in 2002, while the national Romney, in January 2007, became the first Republican presidential candidate to sign it). It’s his clumsy way of trying to assert that he has not in fact changed positions. On abortion rights, he took to saying in about 2007 that he had “always been personally pro-life” but had respected Roe v. Wade as law. But if he was always pro-life, why did he and Ann make donations for years to Planned Parenthood? And why, when asked about this, did he, in Scott’s words, “gracelessly roll his own wife under the bus” by saying, “Her contributions are for her and not for me”?
Romney appears to have a strong need to ingratiate, an urge to say much more than he really needs to say. When he wanted to prove he was a hunter and a regular guy, he made reference not to hunting animals or game but “varmints.” Twice. He boasted that his father marched with Martin Luther King Jr., but, admirable as his father was on civil rights, this was not true. His sons may have avoided military service, but they were “showing support for our nation” by…working on his campaign. The list goes on.
At other moments, a very different impulse reveals itself, and Romney’s deep and perhaps even unconscious sense of class superiority rises to the surface. He likes “being able to fire people,” he said to an audience recently, expecting a laugh that did not quite materialize. Complaints about his income are nothing more than “the bitter politics of envy.” Income inequality—this is the most incredible one to me—should be discussed only in “quiet rooms.” And his speaking fee income was “not very much” ($374,000 in the year ending in February 2011). Here again, he is his father’s opposite: George Romney was known for refusing bonuses, explaining that no executive needed to make more than his $225,000 a year ($1.4 million in today’s dollars).
Both urges, to pander awkwardly and to protect the prerogatives of his class, are at play in matters of policy. Romney’s proposed tax cut, writes The Washington Post‘s Ezra Klein, is roughly three times the size of George W. Bush’s 2000 proposal. It’s far more regressive—it would actually raise taxes on many working-class people, which Bush did not do—and would add to the deficit a hefty $600 billion.5 Likewise, Jonathan Cohn of The New Republic found that Romney’s proposed budget would cut at least 14 percent and perhaps 25 percent from every domestic program—on top of the cuts already slated to go into effect as a result of the congressional deal on the debt ceiling.6
Romney has benefited from running against a weak, not to say mostly preposterous, field of competitors. Most experts felt, even after South Carolina, that he would still grind out a win in the nomination battle with Gingrich, who is unacceptable to his party’s establishment figures for so many reasons (another lucky break). And if he is the nominee, he may benefit this fall from a weak economy, in which case President Obama will have a hard time persuading many independent voters to stick with him.
Romney would certainly, if elected, prove competent to do the job. Competence isn’t the question. Competence toward what end, however, is. He seems particularly intense when he talks of the need to build up the armed forces and would be competent at that. Asked in the first of two South Carolina debates whether the US should negotiate with the Taliban to end the fighting in Afghanistan, he answered:
Of course not…. Of course you take out our enemies, wherever they are. These people declared war on us…. We go anywhere they are, and we kill them.
“There is no leader who can provide sound leadership on the basis of unsound principles.” Words spoken long ago by the father, and long since betrayed by the son.
—January 26, 2012
2 See Sheryl Gay Stolberg, "For Romney, a Role of Faith and Authority," The New York Times, October 15, 2011. ↩
3 For a clear, detailed, and concise explanation of this loophole, see Merrill Goozner, "Private Equity's Edge: Buy Now, Deduct Taxes Later," The Fiscal Times, January 9, 2012. ↩
4 See Peter J. Boyer, "New Anti-Romney Video Attacks Bain Capital Work," The Daily Beast, January 6, 2012. ↩
5 See Ezra Klein, "On Policy, Romney Is Far to Bush's Right," The Washington Post, January 17, 2012. ↩
6 See Jonathan Cohn, "Moderate Mitt? Have You Looked at His Budget?," The New Republic, January 15, 2012. ↩
Why George Romney Didn't Run March 22, 2012
See Sheryl Gay Stolberg, "For Romney, a Role of Faith and Authority," The New York Times, October 15, 2011. ↩
For a clear, detailed, and concise explanation of this loophole, see Merrill Goozner, "Private Equity's Edge: Buy Now, Deduct Taxes Later," The Fiscal Times, January 9, 2012. ↩
See Peter J. Boyer, "New Anti-Romney Video Attacks Bain Capital Work," The Daily Beast, January 6, 2012. ↩
See Ezra Klein, "On Policy, Romney Is Far to Bush's Right," The Washington Post, January 17, 2012. ↩
See Jonathan Cohn, "Moderate Mitt? Have You Looked at His Budget?," The New Republic, January 15, 2012. ↩