That Bain failed to make the company profitable is not an indictment of Romney or of the firm. Rather, it is an illustration of the obvious free-market principle that investment and restructuring do not invariably bring success. The flipside of this principle is that often they do just that, a point the Romney has campaign deftly made with a rebuttal ad spotlighting Bain’s successful investment in another steel company, Indiana-based Steel Dynamics. Struggling when it was taken over by Bain a decade ago, it has prospered since, growing from 1,400 jobs to 6,000. If the Obama administration wants to blame Romney and Bain for losing jobs at GST Steel, it should at least be consistent by crediting them with creating them at Steel Dynamics.
Besides its flawed message, the “Steel” ad is likely to have some unintended consequences for Obama. For instance, the ad inadvertently highlights Obama’s role in causing job losses through the government’s bailouts of the auto giants Chrysler and General Motors. Journalist Byron York notes that as part of the bailout package, the government saved union jobs but triggered job losses throughout the automotive industry as hundreds of dealerships and manufacturers affiliated with the companies were forced to shut down under pressure from the Obama administration’s auto task force. In July 2010, the New York Times reported that an “estimated … tens of thousands of jobs were lost as a result.” Obama might well argue that these layoffs were necessary to make the car industry more competitive, but of course that is the same defense that private equity firms can make. With one notable exception: Taxpayers generally don’t have to pick up the tab for the failed investment schemes of private companies, even as they are on the hook for failed government investment ventures like Solyndra.
More broadly, the president’s attacks on Bain highlight his hypocrisy on investment firms. On the same day that his campaign was unveiling the ad assailing Romney for his association with Bain, Obama was raising $2 million in campaign cash from wealthy Wall Street donors at the New York apartment of Tony James, the president of private equity giant the Blackstone Group. If Romney’s record running one private equity firm is to be considered a serious critique of his candidacy, the president should explain why he’s justified in hitting another one up for campaign funds.
For all its flaws, the Obama campaign ad gets one thing right in focusing on jobs. All indications are that job growth and the prospects of the economy will be the dominant issue of this year’s election. If so, the president is in trouble. The latest Gallup Poll shows Romney with a clear advantage on the issue, with most voters saying that they expect the economy to improve more under Romney than under Obama. The president’s latest attack ad, rehashing an anti-capitalist theme already tried and found wanting, can only confirm those impressions.
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