In an ad earlier this month, Mitt Romney accused President Obama of failing to create any job during his stints as a community organizer and law professor. Romney, the ad claims, “created thousands of jobs” in his career at the private equity firm Bain Capital.
The picture, of course, is murkier. As the New York Times and others have found, the corporate takeovers that Romney oversaw in his role at Bain Capital often created great amounts of wealth for investors while resulting in the large numbers of layoffs. In one takeover the Times examined, Romney’s handiwork led a company’s sales to double while it transferred thousands of jobs overseas. In another, investigated by the Los Angeles Times, Bain partners raked in about $50 million from a company that soon went bankrupt, costing 700 people their jobs.
One of Romney’s colleagues during this time told the LA Times, “I never thought of what I do for a living as job creation. The primary goal of private equity is to create wealth for your investors.”
It turns out that Romney (who once joked that he was “unemployed” on the campaign trail) is still reaping some pretty sweet benefits from Bain’s work restructuring companies. A new report from the New York Times finds that when Romney left Bain in 1999, he cut a deal to continue receiving “share of some of Bain’s profits”:
While Bain’s deals typically yielded enormous profits for its investors and partners, several have led to serious financial problems — and sizable layoffs — at companies it acquired.
The 2000 purchase of KB Toys, then one of the country’s largest toy retailers, became one of the most contentious.
As in most Bain deals, the partnership put up a small fraction of the money — in this case $18 million — and borrowed the rest of the $302 million purchase price. Just 16 months later, the toy company borrowed more to pay Bain and its investors an $85 million dividend.
That gave Mr. Romney and the other partners a quick 370 percent return on their money. But it also left the toy company with a heavy debt burden. Before long, the company began closing stores around the country and laid off 3,400 workers. It filed for bankruptcy protection in 2004.
Two more recent deals have also led to spiraling debt loads and layoffs. Since Bain and another private equity firm led a buyout in 2008 of Clear Channel Communications, the company has struggled under nearly $20 billion in debt and has cut 2,500 jobs.
Sensata Technologies, a European company that makes sensors and controls used by the auto and aerospace industries, prospered after a Bain-led buyout in 2006, but the firm also laid off several hundred American workers. Most of the jobs were moved overseas, and the federal Labor Department spent at least $780,000 to retrain some people who lost their jobs.
In itself, there’s no problem with Romney receiving investment income from his old company. But he is running ads claiming that he is a job creator, even as he brings in income from deals that may result in massive layoffs. And he’s claiming to be a champion of the middle class while pushing a tax policy that benefits people like him who bring in millions of dollars a year in investment income at the expense of those working paycheck to paycheck.
This summer, Romney defended massive corporate tax breaks, insisting, “Corporations are people.” He, apparently, is one of those people.
See the ad we ran in New Hampshire, highlighting his remark: