Ask Dr. Popkin: On the Bain Imbroglio


Previously in the "Ask Dr. Popkin" series, see this entry with links to previous rounds. The big idea here is that political scientist Samuel Popkin, of UCSD and the recent book The Candidate, is applying his studies of how presidents run for re-election to this year's race.

"So, Dr. Popkin, tell us what 'the Bain question' shows about the approach each campaign is taking to this campaign. Has Barack Obama been shrewd, or foolish and (gasp) 'divisive,' in saying that Mitt Romney's record at Bain Capital is a minus rather than a plus in his suitability to the economic problems of 2012. Is the Romney campaign doing the right thing in basing its appeal on his record as a 'job-creator,' in this time of chronic unemployment?"

"Dear Jim:

"Mitt Romney has trumpeted his success as a can-do, growth- and job-creating executive.    He has relied on the argument that he can make the economy grow because he has a track record at making individual companies more profitable.

"Appealing as this argument may be, it is, at best, a leap of faith.  For Obama to win this election, he must get voters to look before they leap, and persuade them that the methods Bain used to enrich its investors will not grow industries, let alone an entire national economy.

"It's already begun.  As Romney continues his party-unification tour around the country, Obama has launched attack ads on Bain.  Obama's campaign can't afford to let Romney define himself without getting their side of his story out.  Behind all the furor over Obama's anti-Bain ads is the beginning of a long set of opposing arguments about government and the economy.  The discussions about Romney's personality are a sideshow to fill time for pollsters and pundits.

"The Obama campaign's ads are not attacking Romney's brains, wealth or success.  Unlike the allegations that John Kerry did not deserve his silver star or that George W Bush used family connections to avoid military service, none of the ads are denying Romney's accomplishments.

"Instead they are questioning the applicability and desirability of his methods for governing an entire country. The Obama campaign scores only if it persuades people that what was good for Bain won't work for America.

"Obama's actual statements about Romney's time at Bain have been carefully phrased to argue that private equity is 'a healthy part of the economy,' but that being good at 'buying and selling companies' or maximizing profits for investors leaves Romney 'with little understanding of the job that a president needs to do.'  Romney's working assumption, Obama says in his speeches, is: 'if CEOs and wealthy investors like [Romney] get rich, then the rest of us automatically will too.'  (Obama and his fellow Democrats have their own Wall Street donors to keep happy, but I don't think you can challenge the credentials of a private equity star without pointing out the dark side of corporate restructuring by private equity investors and ruffling a few feathers.)

"So far, what the Obama campaign has given us is just a minor rehash of some old story lines used against Mitt in his failed 1994 Senate run against Ted Kennedy, and then elaborated by Newt Gingrich and Rick Perry in the Republican primaries.

"If he ends up simply attacking Romney for union busting, job cutting or 'vulture capitalism,' Obama loses.  He only wins if he can persuade people that growing the whole economy requires a policy approach that Romney has already opposed, doesn't appreciate or will not enact.  Without that, what evidence is there that a venture capitalist cannot simply apply his skills to growing the entire economy as America's CEO?

"Mitt's campaign has had an easy time defending against the Bain ads by recycling comments from high-profile Democrats (Newark Mayor Cory Booker and former Obama 'car czar' Steve Rattner) who criticized the ads and defended private equity - as if the issue raised by Obama was whether private equity firms ought to be allowed to exist.  So far, Romney hasn't needed to go beyond the obvious point - that he knows more about business than a law professor and community organizer - to explain what specific policies he will propose.

"Republican strategists know the policy questions are inevitable, though, and are worried enough to publicly call on Romney to fill in the blanks.  If Obama is the problem, why is Romney the solution?  As Mark McKinnon put it: 'He has to show that he has a vision of a better way. He can't just say "The future is bleak, follow me." '

"Obama will certainly try to move the debate to a discussion about the proper role of government in improving the performance of the entire economy. A CEO isn't responsible for helping laid off workers find new work  or taking care of them until they get another job; a president is. A CEO isn't responsible for educating their employees' children for  new jobs in other industries; a president is.

"The president has some powerful cards to play.

"In November 2008, Romney came out 100% opposed to a federal bailout of the auto industry.  His NY Times op-ed began, 'If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye.'  Economists can argue about whether the auto bailout created new jobs or saved old jobs, but the companies are still here (and GM posted a $1 billion profit in the first fiscal quarter of 2012). Obama can claim that Romney was wrong when he applied his Bain experience to an entire industry.

"In 2009, Romney ballyhooed his healthcare success in Massachusetts as a conservative, cost-cutting model for the country.  Now he has to explain why an effective, visionary CEO would repeal the plan he created just three years ago.  Is reversing his stance evidence that he was the CEO of a Titanic-sized mistake?  A person without core convictions who bends with the prevailing winds?  Or someone who has seen the error of his ways and is the wiser for it?  
Of course, the Affordable Care Act scares millions of voters who fear government mandates, and Congressional Republicans have said they will keep the protection for people with preexisting conditions when they repeal the mandate.  I doubt it is possible to insure people with preexisting conditions without the mandate.  But it is very hard to explain these inter-connections within the healthcare package.  Once it passed through Congress, the Obama campaign stopped trying to explain Obamacare to a still-confused public.  Unless they do a better job of explaining the specifics, Romney might very well be able to finesse the healthcare reform debate.

"We will be revisiting this debate about the government and the economy all election.  Obama and Romney are both immensely talented - and both have major credibility problems.  Obama has presided over mounting debt and a sluggish economy; it is hard for him to blame an obstructionist GOP congress without looking impotent.  Romney has not overcome suspicions about his wealth and privilege and   convinced people that he has a positive - and credible --  vision for a better America."

That's the news for now; stay tuned for more.