We don’t think the press corps will go there: What did Mitt Romney do at Bain? And when did Mitt Romney do it?
Within the mainstream press, very few major players seem inclined to examine this topic. On MSNBC, Ed Schultz made three attempts last week to explain Reuters’ detailed report about Bain’s behavior in the case of two steel mills, including one in Kansas City. Once again, here’s part of the exchange between Schultz and David Cay Johnston on last Thursday’s program:
SCHULTZ (1/12/12): In 1993, Bain Capital became the majority shareholder of a Kansas City steel mill. Now according to Reuters, less than a decade later, the mill was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health care insurance that they had been promised. And their pension benefits were cut by as much as $400 a month.The Reuters report described horrible conduct. But aside from Schultz and Amy Goodman, we haven’t seen anyone try to discuss it. It’s easier to piddle around with less threatening topics concerning the number of jobs Bain and Romney may have “created.” For craftier players, those topics can create the impression that Romney’s record is being examined—while the “journalist” gets to stick to topics which won’t make her seem shrill.
How’s that for treating the workers good?
The remaining benefits, by the way, were paid by the Pension Benefit Guarantee Corporation, a pension protection agency in the United States government.
JOHNSTON: The record on Romney is somewhat mixed. There are companies that they essentially bought, sucked all the cash out of them, and then left behind. And I think the pension guarantee issue is one that will cause him a lot of problems, and a lot of explaining is necessary about why the government had to step in in this area.
SCHULTZ: Did Bain profit from reducing pensions?
JOHNSTON: Oh, there’s no question that they were able, in the particular case that was mentioned involving the steel mill, to take money out of this company, it didn’t have a properly funded pension, and fob it off on the Pension Benefit Guarantee program, is clearly an important part of this story. There are other parts of it that have not come out yet with other companies, where they made changes to the benefit programs for workers.
Schultz was discussing a Reuters report. That report had nothing to do with the 29-minute film the Gingrich super-PAC has been promoting; the conduct described by Reuters isn’t discussed in the film. But last Friday, the Washington Post fact-checked the film—and gave it its lowest rating.
Yesterday, the fact-check appeared in the hard-copy Post. To review that report, just click here.
Gingrich started backing away from the film when this fact-check appeared. Trust us: On this basis, journalists will be less inclined to examine this general topic. With that in mind, we were struck by this part of Glenn Kessler’s fact-check:
KESSLER (1/15/12): The 29-minute video “King of Bain” is such an over-the-top assault on former Massachusetts governor Mitt Romney that it is hard to know where to begin. It uses evocative footage from distraught middle-class Americans who allege that Romney’s deal-making is responsible for their woes. It mixes images of closed factories and shuttered shops with video clips of Romney making him look foolish, vain or greedy. And it has a sneering voice-over that seeks to push every anti-Wall Street button possible.Kessler describes the video as “an over-the-top assault.” He goes on to detail the ways the video gets various facts wrong. Kessler is right to detail those errors, but in some ways, this begs the basic question:
Here’s just a sampling of what Romney and Bain Capital, which he once headed, is accused of: “Stripping American businesses of assets, selling everything to the highest bidder and often killing jobs for big financial rewards . . . high disdain for American businesses and workers . . . upended the company and dismantled the work force; now they were able to make a handsome profit . . . cash rampage . . . contributing to the greatest American job loss since World War II . . . turn the misfortune of others into their own enormous financial gain.”
The video ends with a crescendo of images of despair, with voices of the victims adding emotional punch: “A lot of lives were ruined . . . he took away our livelihoods . . . he took away our future . . . he destroyed a lot of homes . . . it all gets back to greed.” (Irritatingly, few of these ordinary citizens are identified.)
Is it true? Did Romney and Bain “strip American businesses of assets, selling everything to the highest bidder and often killing jobs for big financial rewards?” Did they show “high disdain for American businesses and workers?”
Journalists didn’t seem inclined to examine those questions even before Kessler's fact-check. We’ll guess that they will be less inclined to do so now. Luckily, we have Rachel Maddow to help us see what was wrong with the way Mitt Romney once treated his dog! This helps liberals learn to adore Rachel more—while she avoids seeming shrill in the eyes of the industry which fills her own deep pockets.
What did Romney do at Bain? We’ll be watching The One True Liberal Channel to see if anyone goes there other than Schultz. Meanwhile, several people let us know that we ourselves misstated one part of this matter. The Pension Benefit Guarantee Corporation (see Schultz, above) is part of the federal government, but it isn’t funded by “the taxpayers,” as we said last week. (Schultz also repeatedly made that statement.) We don’t entirely understand how such entities work, but the PBCG “is financed with insurance premiums levied on defined benefit pension plans, not appropriations of tax dollars,” as one reader who knows whereof he speaks told us by e-mail.
In our view, Bain’s behavior in this case does fit the description Kessler called “over-the-top.” In this case, Bain did strip a business of its assets, killing jobs for big financial rewards. It robbed the workers of part of their pension and of their health coverage. Having under-funded this company’s pension, it forced the federal government to step in to replenish part of the funds.
Johnston, who knows what he’s talking about, said this about that: “I think the pension guarantee issue is one that will cause [Romney] a lot of problems, and a lot of explaining is necessary about why the government had to step in in this area.”
Maybe. Almost surely, this won’t cause Romney any problems unless it’s explained by major journalists in ways the public can understand. Just a guess: Unless the liberal world somehow makes them, our journalists won’t be inclined to go there. Rachel will talk about Romney’s dog—and that very bad conduct by Bain will go undiscussed, unexplained.
We’ll learn to love Rachel, and we’ll get dumber. Romney will slip away.
Yes, but this fact-check got there first and it seems the Gingrich film got it terribly wrong despite Kessler's wrongheaded conceptualizing:ReplyDelete
That Fortune story doesn't address the companies in the Reuters story albeit it does point out other errors in the Gingrich propaganda film. Not a surprise that a deliberate "hit"piece would not concern itself with factual representation.Delete
However, the Reuters story has some problems as well. The PBGC found the GS pension underfunded by $44 million in 2002 but in 1994 when Bain took over from Armco, the pension shortfall seemed to be $120 million.
As David in Cal would likely point out (actuary, pension etc) terminating a pension is a much different proposition than calculating the excess liability of the fund on an ongoing basis. It involves calculations of investment returns, mortality rates, final pay, eligibility and a raft of other calculations with a view towards arriving at a fixed $ amount. Similar elements as those used each year, but not quite the same.
Bob's point in linking Bain and Romney to the Carl Icahn crowd is a much better one to make since when GS folded is when LTV and Bethlehem both went under and dropped huge pension liabilities on the PBGC. Enough to put the fund in the red overall.
Please tell us what "GS" stands for, and which point of "Bob" is being referred to?Delete
I like your comment a lot by the way and want to understand all of it.Delete
Readers might care to remember how Bush's national guard derelictions were laundered by the Dan Rather affair: trivial details, quite possibly planted by the Bush campaign, and quickly shown to be false, took the *entire* story off the table.ReplyDelete
It didn't help, of course, that yet another hapless Democratic presidential candidate proved himself wholly incapable of going on the attack (had he been reading too many Howler commentaries?), but this right-wing produced and financed "documentary" does have a stench about it.... There was *plenty* they could have reported, highly injurious to Romney, which was true. But they didn't. They reported only that which was easily rebutted, as ten minutes on google would have demonstrated to any interested party, well in advance of making the film.
Karl Rove, anyone?
You know, you and Bob Somerby make excellent points about how this garbled "film"--which the New York Times, in typical fashion, wrote about today by way of pressing Hollywood liberal feature filmmakers and documentarians about its style and form, rather than substance--will probably have the effect of shutting down all discussion of what Bain and similar private equity firms do, how they operate, what effects they have on job creation and destruction, and, most importantly, how they create very negative outcomes for the workers who lose their jobs and benefits packages, including pensions, but also how such private equity firms benefit from government support and programs in various ways.Delete
You and Somerby both note that reporters are really not going to engage with the substance now. I even saw a headline, and then heard on NPR this weekend and again today, how this film may create "sympathy" for Romney. I thought, what on earth? But your comments are making me rethink my question. If this was a plant to get this stuff out there and defuse it, under the ruse of a PAC allegedly supporting Gingrich (who has no chance in hell of being the GOP nominee, let alone becoming President of the USA), it's actually quite brilliant. Now any challenge to Bain's depredations under Romney can be dismissed as a smear or worse, the media won't touch the issue, Obama and the even more timorous Democratic Party officials will probably be too afraid to do so, and a major aspect of Romney's "business" record is off the table.
Those Republicans, they really are too much!
I still find no reason to believe Bain "looted" any pension fund during the years Romney was active there. Please show me otherwise if possible, or explain what the term looting means.ReplyDelete
simply put, bain, as the management of the company in question, intentionally underfunded the employee pension plan (they didn't put in the cash to cover the expected liability), instead taking those monies out of the company as dividends/consulting fees. as a result, when the company went bankrupt, the PBGC was required to make up the fund's cash shortfall.Delete
This is reminding me of Bush's war record stuff. Weakly attacked at first, while the press obsessed over Al Gore's suitcoat and sighs, and then dismissed as "old news." The Dems are going to have to up their game, and weave this into a large narrative to make sure it has legs, which is something they've never done in my lifetime. In fact, they haven't been able to do it since FDR "welcome(ed) their hatred." Obama is scared and smart, and might end up using this angle out of desperation, even though the thought of going on the attack makes him shit his pants. But in this case, it isn't just correct policy, in which Obama has demonstrated no real interest, but correct politics, which he does seem to pay attention to, to build an aggressive narrative and drive it home.ReplyDelete
the "several people" who advised you of the source of PBGC's funding were only partly correct: ordinarily, it does come from premiums levied on companies with defined benefit pension plans, ordinarily. however, if those premiums aren't sufficient to meet the needs, as a consequence of too many underfunded plans of belly-up companies, we the taxpayers end up footing the shortfall, much as we would with the FDIC & FSLIC. this has occured several times since the 80's (when LBO's became very popular), whether this was the case with bain, i do not know.ReplyDelete
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