After three and a half years, President Obama’s achievements are
few, and his biggest, the passing of Obamacare, is consistently
viewed negatively by a majority of the American people. The economy
is still stuck in the mud as both businesses and consumers lack
confidence. So it is not surprising that team Obama is going
negative early. And it is also no surprise, given the creativity he
used in forming his own “personal narrative,” that his attempt to
redefine Mitt Romney as a black-hearted capitalist “outsourcer” has
little basis in reality. Indeed, Obama’s attacks on Romney are
manufactured in sweatshops in the Twilight Zone.
According to Obama and his reelection team, Mitt Romney, who
successfully ran the venture capital firm, Bain Capital, prior to
becoming governor of Massachusetts, is a rich corporate villain,
responsible for destroying companies and shipping American jobs
off-shore. Romney is the “outsourcer-in-chief.” To back up these
claims, the Obama team points to a few examples of Bain-funded
companies that either went bankrupt or created jobs in foreign
countries (it’s not clear that jobs were actually “outsourced” from
America) during a time that Mitt Romney no longer exercised
operational control at Bain. Despite detailed rebuttals from
Romney, several of the companies cited, and even by third party
arbiters (such as FactCheck.org) showing the allegations to be
false, Obama has chosen to keep to the narrative. The Obama team is
more interested in how it sells, not if it is true, and for now
they think this is the best thing they’ve got going.
Though these attacks do keep Romney “off message” and deflect
attention from the real issues in the race — the budget deficit,
the floundering economy, Obamacare, America’s retreat from world
leadership — it seems unlikely that they will have long-term
effectiveness. The record is just not there to give the attacks
credibility, and even if there was any substance to the charges,
the underlying argument — that Mitt Romney is cruel and unfeeling
for closing an unprofitable business — is rather hollow.
Private companies, unlike the federal government, cannot
continue to operate — and employ people — if they lose money year
after year. To argue that Bain should have kept an unprofitable
business operating in order to save jobs is simply not a serious
criticism. Should the Obama administration be criticized for not
throwing away another $500 million to keep Solyndra employees at
their money-losing jobs?
Private companies exist to make a profit for their owners. To do
so, they need to produce a good or service that people want at a
competitive price. When they succeed at that, they employ more
people and help the economy to prosper. When it is no longer
profitable to run a certain operation, that operation will be shut
down. That is simple economics. Sometimes foreign companies will
make better products, or low wage rates in underdeveloped countries
will be too much for American companies to overcome. But if to
survive a domestic company needs to send some jobs overseas, that
is not a sin. What is a sin is if that necessity comes from
government policies that make production in the United States
uncompetitive. Ironically, though the Obama administration has been
casting stones at American business, it is not without sin. If
Obama is so adamantly opposed to outsourcing, then why does he
endorse policies that make it harder for domestic businesses to
operate profitably?
The in-place and approaching mandates of Obamacare already weigh
heavy on businesses. And the Obama administration continues to call
for higher taxes on business owners and higher taxes on capital.
Its environmental policies will create further costs and regulatory
hurdles for American businesses. American companies do not close
down factories or shift production overseas for the fun of it. They
do so out of economic necessity, and a big part of that necessity
comes from the high cost of doing business in the United States
resulting from government (both federal and state) policies, from
heavy-handed regulations to high tax rates. To the extent that
American companies are sending jobs overseas, at least part of the
responsibility lies with government.
California is a prime example of the liberal Democratic mindset.
The state has been losing jobs to neighboring states (and to
foreign countries) in droves for two decades. California’s
legislature, dominated by liberal Democrats for the better part of
a generation, has made sure that California is one of the most
difficult places in the country to operate a business, with intense
regulatory burdens, high tax rates, and high labor rates (resulting
from the high cost of living, largely as a result of high tax rates
and excessive regulation). Facing a large budget deficit, governor
Jerry Brown and the state legislature have proposed a “painful”
budget — that actually increases total state spending — and a 30%
increase in the top income tax rate. There appears to be no
understanding that such a huge increase in taxes on top off one of
the most burdensome state income tax regimes in the country, will
force more businesses, and productive individuals, to leave the
state. If Governor Brown gets his way, many more jobs will be
outsourced from California, and that won’t be the fault of the
fleeing businesses.
Brown and the Democrat-controlled state legislature, however,
are moving forward with the first phase of a $68 billion
(optimistic projection) high-speed rail project to link Los Angeles
and San Francisco. The project will start with $6 billion to build
130 miles of track in California’s sparsely populated Central
Valley. If and when completed, it will undoubtedly run at a massive
deficit, will take few cars off the roads (it will compete —
probably not well — with airline travel more than driving), but it
will “create jobs” (though not nearly as many as advertised,
according to a UCLA study). And, of course, it is cool and cutting
edge.
The “Bullet Train to Nowhere” also comes with a $3.2 billion
stimulus grant from President Obama’s venture capital company known
as the U.S. Treasury. Obama’s other “investments” have been the
likes of now bankrupt Solyndra and LSP Energy. Obama’s “stimulus”
programs have been awash with waste, corruption, and favoritism.
They have cost the U.S. taxpayer dearly, with little to show for
it, with unemployment still above where it was when the “stimulus”
tap started to flow. By contrast, while at Bain Capital, Mitt
Romney helped to create tens of thousand of real, permanent
jobs.
The Democratic ad machine cranks out attacks on Mitt Romney,
smearing his business experience as something to be disdained. In
smearing Romney as having made his fortune “buying and selling
companies” rather than doing anything truly productive, Obama’s
surrogates show their profound ignorance of how business works. You
don’t make much money simply by “buying and selling companies”
unless you do something to increase the value of the companies you
buy. Bain Capital, under Romney’s leadership, did that with
visionary management, taking companies like Staples and Sports
Authority from obscurity to industry leaders, as well as investing
in and helping to manage many other successful companies —
creating tens of thousands of jobs in the process. There is no
argument that Bain has been tremendously successful in turning
under-performing businesses into stars. Even setting aside the
issue of when Romney relinquished operational control, focusing on
a handful of failures, or a few Bain-funded companies that hired
some foreign-based workers, to portray Bain and Mitt Romney as “job
destroyers” or “outsourcers” is breathtakingly dishonest, even for
the Obama administration.
Obama, however, is more than dishonest. He, and most of his
administration, it seems, does not have even a rudimentary
understanding of how an economy prospers. Though they wash their
hands of any responsibility for private sector job losses resulting
from their policies, they believe true “job creation” is a creature
of government. “Stimulus” spending is the answer. It doesn’t matter
if the spending is for productive activity, just as long as it
employs people (at least through the next election). As President
Obama put it so frankly, the problem is not anemic job growth in
the private sector, which is “doing just fine,” but rather that
government jobs are still in decline.
Unfortunately, President Obama’s experience as a community
organizer does not appear to have left him well equipped to deal
with the nation’s economic problems, and much of the current
Democratic leadership sounds as though their sole schooling in
economics came from a teach-in at an Occupy Wall Street protest.
They look down on private industry, do not understand that
prosperity comes from productivity (not just spending), and cast
employers as rapacious villains if they are too successful. That’s
a big reason why they really dislike Mitt Romney and see no problem
in taking creative license in distorting what they view as a
disreputable capitalist past. It is also explains why the American
economy is still in the dumps.
