Just as we liberals have done: How does Romney escape on Bain?
Consider what happened at last night’s debate when Gingrich actually asked the right question. Responding to a prompt by John King, Gingrich asked about one of the steel mills Bain and Romney seem to have looted:
KING (1/19/12): I want you to be specific. What do you think he did wrong [as CEO of Bain Capital] that makes you question his ability as a president to create jobs?Earth to Gingrich: The average voter doesn’t know what “dramatically leveraged” means. But Georgetown Steel is one of the steel mills Reuters reported on two weeks ago. In this case of these two steel mills, Bain borrowed a big pile of money; gave itself a large pay-out; then proceeded to underfund the company’s pension fund. As a result, when the company went belly-up, the federal government had to step in to bail out the underfunded pension system. Even with the federal bailout, the workers lost a good chunk of their pensions along with all their promised health coverage.
GINGRICH: I think there are specific cases—Georgetown Steel would be a case here, and a company in Gaffney, South Carolina—specific cases where Bain Capital's model, which was to take over a company and dramatically leverage it, leave it with a great deal of debt, made it less likely to survive.
I think the governor ought to explain, because—it started because he cited his experience as a key part of his preparation for being president. And so I think the underlying model of that kind of investment, which is very different from venture capital, ought to be explained, and those cases ought to be looked at.
KING: Well, Governor Romney, let me give you a chance. Explain.
Did we mention that Bain had taken large payouts for itself? Even as it failed to maintain the pension system? That Romney got rich; that the employees got screwed; that the federal government had to make up a pile of the missing money?
That’s the particular situation about which Gingrich inquired! It’s interesting to see the way Romney escaped this mess.
First, Romney gave a long, rambling answer in which he battered Obama without addressing Gingrich’s question at all. To his credit, King actually noticed this small omission. But look how he restated the question when he followed up:
KING: So, so let's go—let's go back. I'm glad you had that opportunity. I do want to go back, see if we can clear this up.Sad. As we told you a few days ago, journalists will instinctively want to discuss that simpler, less threatening question—the question about the number of jobs Romney and Bain may have “created.”
Now the questions about Bain, many have been about the number. You have said 120,000 jobs that you can tie back to decisions you made at Bain Capital. I want you to take your time, sir, and do the math. Do the math, and how you get to 100,000 or 120,000 jobs?
Gingrich had asked about a matter which goes to the heart of Bain’s alleged bad conduct. Romney completely avoided that question—and then, when King tried to restate it, he switched to the easy-to-answer, less threatening question about “how many jobs.”
Romney had no trouble answering that easier question. That isn't the question Newt asked.
In a way, you can't blame King, who may not even undertand this topic. Even the fiery “liberals” at MSNBC have almost completely avoided this topic. Ed Schultz has tried to discuss the Reuters report, though he was quite unclear most nights. As best we can tell from the Nexis archives, Rachel, Lawrence, Chris and Al don’t seem to have gone there at all.
Romney made a classic escape last night, guided to a safer place by King. But can you blame the CNN host? It has now been two solid weeks since Reuters filed that detailed report. And even the fiery hosts on The One True Channel have thrown that report down the well.
King let Romney walk last night. Darling Rachel, our own willful child, has let Mitt walk as well.
The mind of Lawrence O’Donnell: What have our fiery progressive leaders been talking about instead? Here’s Lawrence, teasing some upcoming segments on Wednesday evening’s Last Word:
O’DONNELL (1/18/12): Coming up! The captain of the Italian cruise ship has a new reason today for why he did not stay on board the Costa Concordia as it sank.Exciting! Lawrence spent the second half of his program on three topics: A shipwreck, a true Hollywood murder mystery, and someone who dropped an F-bomb. Right on TV! In prime time!
And in the "Rewrite" tonight, someone on another network in primetime drops an "F" bomb tonight. Who did it? Who— What family is so modern that even the kids can drop "F" bombs? That's coming up.
[...]
O’DONNELL: Coming up! After five days of searching for survivors, the Italian Coast Guard has suspended the search, knowing that there are 21 still missing who are probably trapped on that ship.
And later, how two hikers and their dogs made a gruesome discovery yesterday on a popular trail near the Hollywood sign that is now the opening scene of a true Hollywood murder-mystery.
Here’s how he closed his progressive program just one night before:
O’DONNELL (1/17/12): Joining me now from the Moonlight Bunny Ranch in Nevada, owner and proprietor and HBO star Dennis Hof and two women who work for him, Hustler centerfold Cami Parker and Miss Caressa Kisses.Ha ha ha ha ha ha ha! Hof’s double entendres weren’t quite as sweet as the ones we got from Keith. But people! Evangelical leaders had endorsed Santorum! So only naturally, Lawrence wanted to know who the “girls” at the Bunny Ranch had endorsed!
Dennis, thank you very much. And women, thank you for joining me tonight. Dennis, while the Evangelicals were having their discussion down at that ranch in Texas, at your ranch you were discussing with your employees who you want to support for president. And who is that?
HOF: Well, here’s what happened. You know, the girls love a good caucus. And I polled all the girls, all 500 girls, and it came up with this.
Romney escaped last night thanks to King. That said, the gentleman has escaped for two solid weeks on this sad and ridiculous channel. But then, we live in a very sad world, full of sad millionaire men.
It took 20 minutes to google and read the relevant facts about Bain carrying off satchels of cash and leaving the employees without health coverage or a pension.
ReplyDeleteIt it that modern "reporters" don't know how to research, even when 99% of the effort is already done for them?
Or is it they were never given the old Who, What, Where, When and Why lecture? Or did they sleep through it?
By pure happenstance, I caught the Larry O'Donnell whorehouse bit.
WTF? I couldn't tear myself away; I gaped like a rube at the midway. I still don't know WTF it was about, but I think they liked Ron Paul.
As a result, when the company went belly-up, the federal government had to step in to bail out the underfunded pension system.
ReplyDeleteThat statement is false. The Pension Benefit Guaranty Corporation does not receive funding from the federal government.
The PBGC website states:
PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.
http://www.pbgc.gov/about/how-pbgc-operates.html
One commenter previously asserted that "the taxpayer is still on the hook when the fund can't cover the losses, in the same way the taxpayer is on the hook with the FDIC, when bank contributions don't cover bank losses."
However, unlike the FDIC, the PBGC does not have a guarantee from the federal government. If you wish to take the position that the federal government would step in if the PBGC were unable to meet its obligations, that's fine. We can all speculate about the future.
Since its creation in 1974, the PBGC has not received any funds from the federal government. Therefore, Mr Somerby is incorrect when he writes that "the federal government had to step in to bail out the underfunded pension system."
So the fact that Bain's business model caused workers to take losses, while Bain walked away with 100s of millions in profit and management fees, is A-okay if if the taxpayer isn't required to make up the difference?
DeleteAnd you really believe that impoverished workers who lose benefits and pension guarantees don't cost the taxpayer anything -- even IF the government isn't directly involved in making whole the pension commitment?
Whether the PBGC was involved or not (and it's currently running a huge deficit; *somebody* is going to have it bail it out), note this from the Reuter's report (http://www.reuters.com/article/2012/01/06/us-campaign-romney-bailout-idUSTRE8050LL20120106):
Delete"Less than a decade later, the mill [G.S. Technologies] was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health insurance they'd been promised, and their pension benefits were cut by as much as $400 a month.
"What's more, a federal government insurance agency had to pony up $44 million to bail out the company's underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees."
i am the commenter you refer to. go re-read my comments, re: PBGC. i never stated that the agency was guaranteed by the federal government, you inferred that on your own, clearly it is not. that said, there is nothing in the original ERISA legislation, or the more recent 2006 legislation, that legally prevents the federal government from stepping in, when the PBGC's liabilities are far in excess of its assets, rendering it unable to cover the benefits it's liable for.
Deletethis is more a political issue, and it's come close to happening a couple of times since the PBGC was created by the 1974 act: once in the 80's, during the heyday of the S & L/commercial banking implosion (silverado S & L anyone?) and the first major LBO catastrophe. the second time was in the early 00's, with the popping of the dotcom bubble, and early round of commercial real estate crashing (and more disasterous LBO's). in both instances, the corp. found itself bereft of sufficient funds to cover its current liabilities.
congress had two viable options: raise premium payments on existing pension plans, or help cover the deficits from general tax revenues, or a combination of the two. it chose to increase premiums, but just barely. the screaming of the companies (and their lobbyists) almost tanked that.
a few more bain-like LBO's, and congress will be under pressure to once again consider raising premiums on the few currently existing defined benefit pension plans, or just cover the shortfall itself. the alternative (more people in poverty) isn't going to make re-election any easier.
@cpinva who wrote: "i am the commenter you refer to. go re-read my comments, re: PBGC. i never stated that the agency was guaranteed by the federal government, you inferred that on your own, clearly it is not."
DeleteI was in fact referring to Anonymous Jan 19, 2012 08:37 AM who wrote, exactly as I quoted "the taxpayer is still on the hook when the fund can't cover the losses, in the same way the taxpayer is on the hook with the FDIC, when bank contributions don't cover bank losses."
If King were interviewing Romney, I'd agree with Bob Somerby. However, in this case, I think King got too much involved, rather than too little. This was a debate between candidates, not a joint press conference. King's job should have been simply to moderate the discussion, not to be a participant in the discussion.
ReplyDeletei don't agree. part of a moderator's job description is to keep the debate on target, which mr. king utterly failed to do. as a result, mr. romney was allowed to completely avoid addressing the actual question posed by mr. gingrich.
DeleteWhether the PBGC was involved or not (and it's currently running a huge deficit; *somebody* is going to have it bail it out), note this from the Reuter's report (http://www.reuters.com/article/2012/01/06/us-campaign-romney-bailout-idUSTRE8050LL20120106):
ReplyDelete"Less than a decade later, the mill [G.S. Technologies] was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health insurance they'd been promised, and their pension benefits were cut by as much as $400 a month.
"What's more, a federal government insurance agency had to pony up $44 million to bail out the company's underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees."
you are most likely correct:
ReplyDelete"In a way, you can't blame King, who may not even undertand this topic."
he probably doesn't. this would put him in the company of nearly every other journalist reporting on this issue. LBO's are pretty esoteric financial transactions, requiring a fairly sophisticated basic knowledge of accounting & finance, knowledge the average person (and reporter) don't have. however, if this is an issue that you intend to focus on, then as a professional, it is incumbent on you to gain at least a minimal understanding of the subject matter, so you can ask intelligent questions. this is mr. king's (and his colleague's) failure to their audience.
We can't blame King? Seriously? When I divide his probable salary by my salary, I get a very large number. His salary is much, much, much larger than mine. I'm not in the media! Yet, I would have been able to ask the proper follow-up about Bain Capital and the looted pension fund and the lost healthcare. I can blame King, easily.
ReplyDelete