Posts Tagged ‘reuters.com’

“From the day he announced his candidacy, observers have noted that Mitt Romney ‘looks presidential,’ yet this appearance advantage did not particularly help Romney in the early primary states,” writes Ana Marie Cox in a Time.com article titled Romney’s Cash Advantage Sinks In

In Iowa and New Hampshire, states where voters expect — and usually receive — face time with every candidate, Romney came across on the stump as stilted and rehearsed. Voters flocked instead to the personality rich and cash poor campaigns of Mike Huckabee and John McCain [...]

[...] The good news for Romney is that in the larger, more diverse state of Florida, most voters won’t have a chance to make that up close judgment. If Romney is able to surge past John McCain here in the state’s primary on Jan. 29 — and most recent polls have McCain with a very slight lead — it will most likely be due to his ability to spend freely on expensive advertising throughout the state.

Throughout the primary season, Romney has been accused of trying — though often failing — to buy elections. But Florida is the first state money really can buy. “Romney is the only one [of the four major candidates] who has the money on hand to go on the air in our 10 major media markets,” says Daniel Smith, a professor of political science at the University of Florida. “For everyone else, it’s cost prohibitive to run a media campaign in Florida. It’s completely different from New Hampshire, Iowa or Michigan.”

As in every other state contest thus far, Romney is far outspending his Republican rivals on paid advertising. In Iowa he spent more than Huckabee by a ratio of 7 to 1, while in New Hampshire and South Carolina, he spent more than McCain by at least 5 to 1. And in the past month, one rival campaign estimates that Romney has spent twice the amount spent by any other candidate. He has also worked to gain an advantage in what consultants call “earned media” — the free, generally friendly local news coverage that a candidate generates by swinging through town. On that front, he’s made high-profile visits to the state since 2005 — when he had an off-the-record meeting with then-Governor Jeb Bush, several of whose former staffers work for Romney today. Thursday evening’s surprisingly civil GOP debate played to his strengths as well: on camera, Romney came across as prepared, not scripted.

Florida may be a diverse state, but Romney makes much the same appeal to all Floridians; an unshakeable belief in reuniting the “Reagan coalition” of social, fiscal and foreign policy conservatives. Romney staffers seem confident that the governor can attract the social conservatives and evangelicals who have been supporting Huckabee —who has greatly reduced his presence here since his loss in South Carolina — along with a good chunk of the fiscal conservatives for whom Romney’s private sector background has an almost mystical appeal [...]

[...] Still, Romney advisers do have some basis for their optimism about Tuesday’s race. The Florida GOP primary is the first “closed” primary in the country; only registered Republicans can vote. McCain, while pulling a fair share of registered Republicans in other states, has been put over the top by independents. As national spokesman Kevin Madden puts it, “There is no refuge in the independent vote in Florida.” But fortunately for Romney, there is some refuge from too much face-to-face, retail politics in the Sunshine State [...]

Yes. Passing in review, (a) Romney fails to mobilize voters when he is forced to actually meet them and talk to them—i.e. in retail politics or F2F Romney fails to impress, or, worse, he mobilizes support for his rivals. Hence (b) in large, diverse states where retail politics and F2F contact is less decisive, Romney enjoys a potentially decisive advantage because (c) his vast and personal reserve of cash allows him to reach more voters in a more controlled way, by means of controlled, scripted, and focus-group tested television advertising.

You would think the Romneys would want to suppress such unflattering, almost despairing analysis. But no, even their supporters—e.g. Mitchell of Evangelicals for Mitt—argue the same case, exactly the same way (see the point, counterpoint link below). Apparently Cox and Mitchell are rehearsing their lines from the same talking points memo. (Either that or this is an emerging fixed point in the discussion of Romney’s fitness but we sort of doubt it.) Here is where we discuss and criticize the Cox-Mitchell “Romney wins when Romney is a talking head on a television screen” trope:

point and counterpoint on Romney’s viability with commentary

yours &c.
dr. g.d.

NEW YORK (Reuters) – Recalling his days as a businessman, Republican U.S. presidential contender Mitt Romney often cites the 25 years he spent in the private sector creating jobs,” which apparently isn’t true, writes Michael Flaherty of reuters.com in an analytical discursus titled Private equity past may cloud Romney’s jobs pitch

But as the leader of private equity firm Bain Capital from 1984 to 1999, Romney’s record shows that while some of the firm’s investments helped companies grow, others ended in thousands of layoffs, and in some cases, bankruptcy.

Layoffs are a common result of private equity takeovers, with Bain Capital no exception. Although Romney is credited with helping make Bain the private equity powerhouse it is today, buyout firms are known more for cutting jobs — not creating them.

“I believe most Americans want their next president to remind them of the guy who they work with, not the guy who laid them off,” Republican rival Mike Huckabee said in a campaign ad and in many campaign speeches.

Companies such as office supplier Staples Inc. and pizza company Domino’s were successful Bain investments under Romney.

But medical test maker Dade Behring, circuit board maker DDi, American Pad & Paper and auto parts company Cambridge Industries are among the companies that went bankrupt after Bain invested in them with Romney at the helm.

“The bottom line of a private equity buyout is not to create jobs. The point is to make money,” said Marisa DiNatale, senior economist at Moody’s Economy.com. “In many cases, the point is to pare down the company and make it run as efficiently and as profitably as possible. Oftentimes that includes cutting jobs.”

Private equity firms buy companies by borrowing most of the money, and sell them later, keeping about 20 percent of the profit on the sale and giving the rest back to their institutional investors.

Romney worked as a consultant at Boston-based Bain & Co before he was tapped to run Bain Capital. The firm started out with more of a venture capital strategy and later moved more toward traditional leveraged buyouts.

The private equity model is built on loading companies up with debt — which can ultimately prove too heavy a load for the business, as was the case with DDi [...]

Precisely. This is not jobs creation or even wealth creation. Private equity is about gaming the system; it is about optimizing, eking out hairline efficiency gains, discovering opportunities for consolidation or liquidation etc. We harp on these strings often around here:

Romney in FL wants credit for being a major player in the financial services sector—at the very moment that that sector is crashing and taking the US economy down with it

This is what interested us the most in Flaherty’s analysis:

[...] Romney knows a lot about the economy, says a former Bain Capital employee who worked under him. But on the topic of jobs, he says Romney was never one to put expanding a company’s payroll ahead of keeping costs low.

“It’s fair for him to claim that he spent 20 years of his life in the private economy. And therefore he understands what makes businesses succeed and fail,” said the former Bain employee, who did not want to be identified. “But that’s different from saying he was in a position to oversee job creation as a whole. Bill Gates grew a business from scratch. That’s not what you do in private equity. You’re an investor” [...]

A former Bain employee willing to speak frankly?

yours &c.
dr. g.d.





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