Before I begin, I’d like to thank the editors and writers at Party Hard Politics for a phenomenal year. I joined the team in February 2011, and have thoroughly enjoyed the intelligent discourse as PHP has grown and prospered. I look forward to continuing the dialogue between writers and readers in years to come.
Today, I write as a frustrated member of the Republican Party. The primary race has become a circus of epic proportions, one that has long ceased to amuse. Never mind the $15 trillion debt; it’s as if the candidates have lost sight of anything beyond calling the Resolute desk their own. Now that New Hampshire is over, Governor Mitt Romney is the clear frontrunner. He will be the nominee, and is the party’s only hope to win in the general election. Yet, one doesn’t even need to look as far as the anti-Romney Mitt v. Mitt archive of Gov. Romney’s “flip-flops” to see how the top candidate is in trouble. The real problem comes from within the Republican Party.
Several Republican candidates are, with great enthusiasm, waging a massive assault on private equity and Bain & Co. No, I did not mean to say President Obama, I’m actually referring to Republican candidates. The Obama 2012 campaign doesn’t even need to say anything; they, like the president of the AFL-CIO, agree with the assaults on Gov. Romney, Bain, and private equity. To the Obama campaign’s glee, the GOP field is voluntarily doing the Democratic Party’s dirty work in a massive struggle for power.
Now, to illustrate my point, let’s play a quick game of who said it:
1) “There’s no doubt that private equity firms create value… research shows that from 1993 through 2008, money invested in private equity firms produced much higher returns than money invested in the stock market. That also benefited many typical Americans through the public and private pension funds that are big investors in the industry.”
2) “[Bain] apparently looted the companies, left people unemployed and walked off with millions of dollars…He owes us a report on his stewardship of his private record.”
3) “There’s a real difference between venture capitalism and vulture capitalism…venture capitalism, we like. Vulture capitalism, no.”
The answers? If you haven’t been following the political scene carefully in the past couple of weeks, you’ll be very shocked. 1) National Public Radio (NPR). 2) Speaker Newt Gingrich. 3) Gov. Rick Perry. You know there’s something amiss when NPR is more supportive of private equity than self-acclaimed developer of supply-side economics, Speaker Newt Gingrich. It would seem that “try anything to keep your campaign going” mode includes bashing private equity. Fun fact: Speaker Gingrich was on the advisory board of a private equity firm. These Republican candidates’ massive assault on private equity is disturbing to those who support the party for economic, not social, reasons. In other words, the GOP is giving the non-evangelical youth vote the boot, a dangerous move against a president who won while riding the youth wave.
It seems that, in these candidates, the Republican Party has abandoned its oft-lauded trait of analyzing empirical evidence. In 2008, the midst of the financial crisis, the Government Accountability Office (GAO) stated, “that academic research ‘generally suggests that recent private equity LBOs [leveraged buyouts] have had a positive impact on the financial performance of the acquired companies.’” The GAO received no complaints from the SEC’s Division of Investment Management regarding PE investors between 2004-2008. In other words, private equity was responsible for 0 out of 500 SEC complaints between 2004-2008. Private equity firms don’t trade bundled mortgages or currency, but invest directly in the creation of goods and services. The failure of these vocal Republican candidates, supposedly the proponents of free enterprise and capitalism, to recognize the value of private equity may very well be a dark foreshadowing of what is to come.
I know it’s difficult to predict election results this far in advance. Anything can happen. Maybe I’m wrong. Perhaps the party infighting will cease. But with members of the Republican field behaving in such a baseless and negative manner, it’s difficult to see a primary race ending with anything less than Republicans completing the Democrats’ work for them, and destroying Gov. Romney. Brad Woodhouse, the Communications Director for the Democratic National Committee expresses the joy Democrats feel at the Republican assault on Bain and private equity, “The fact that his own Republican rivals — from a party that talks about itself as being for the free market — are offended about his practices in the private sector makes our case a lot easier.” Nice job, candidates.