2012 Tuesday: Obama wants the election to be about a topic he doesn’t understand
In Chicago yesterday, President Obama described the essence of his campaign against Mitt Romney. Asked during a press conference about his campaign ads criticizing Romney’s record at Bain Capital in the 1980s and ’90s, Obama disagreed with fellow Democrats’ advice to focus on other issues:
[T]his is not a distraction. This is what this campaign is going to be about — is what is a strategy for us to move this country forward in a way where everybody can succeed?
Well, now. That’s just completely different from every other presidential campaign in history…
Some commentary has focused on what Obama said just before that: his description of the job of president vs. the job of a private equity CEO. And with good reason. There is plenty to address: from his assertion that the president should be involved in helping individual communities plan their economic development, to the obvious conclusion that the job, as he’s described it, is not one he’s done particularly well given the persistent sluggishness of the job market and the economy more broadly.
But what interested me was his summary of private equity:
Now, I think my view of private equity is that it is set up to maximize profits. And that’s a healthy part of the free market. That’s part of the role of a lot of business people. That’s not unique to private equity. And as I think my representatives have said repeatedly, and I will say today, I think there are folks who do good work in that area. And there are times where they identify the capacity for the economy to create new jobs or new industries, but understand that their priority is to maximize profits. And that’s not always going to be good for communities or businesses or workers.
Contra Cory Booker, Harold Ford Jr. and Steve Rattner — who are among the Obama supporters who cautioned him against demonizing private equity — the best reason for Obama to avoid the topic is that he sounds wholly uncomfortable on such foreign terrain.
His dissection of the place of profits in an economy supposedly based on free enterprise comes off like the remarks of an anthropologist recently returned from spending a year among some exotic, savage tribe. But profitability is a concept that comes naturally to most Americans because, unlike Obama, most of us have worked for for-profit enterprises.
Instead, Obama says “maximize profits” as if it’s one element among many when it comes to business (it’s just “part of the role of a lot of business people,” with the others ostensibly at liberty to ignore revenues and expenses), as if he grudgingly acknowledges some possibility that profits can co-exist with a healthy economy.
Wrong. Profits are indispensable to a healthy economy.
If a company is not trying to “maximize profits,” it is not a) trying to satisfy the most customers and thereby earn their business; b) recruiting and retaining the work force needed to deliver appealing products or services; or c) creating or freeing up the capital needed to expand its business.
Oh, and because we know Obama puts a premium on higher tax revenues: “Maximized profits” also mean more earnings for government to tax.
This is the story of America’s economic power. We are not the world’s most important economy, and the most prosperous people, because there are business people for whom “maximizing profits” is not “part of their role.” On the contrary. It’s because the profit motive — and, importantly, the greater freedom from government that our enterprises historically have had to pursue it — has ensured we have gotten the most out of our scarce resources.
Profits are not something to be merely tolerated as long as everything turns out OK for everyone else. They are the best motivation known to man to put as many people and resources as possible to productive work.
And creating new industries, with new jobs, is not incidental to free enterprise. Delivering novel products or services is not the only way to make money, but it is a time-tested way to do so.
This also happens to be the story of Bain Capital. Yes, it invested in businesses that couldn’t be turned around — that is, made profitable — and which had to be closed. But it also found great success in other ventures, some of which still employ tens of thousands of Americans.
Obama wants you to think the exceptions are the rule, at least where Romney and Bain are concerned. In doing so, he betrays his lack of familiarity with the very economy he claims to be trying to shepherd.
– By Kyle Wingfield
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Visitor Agreement | Privacy Statement
© 2013 The Atlanta Journal-Constitution
440 comments Add your comment
Halftrack
May 22nd, 2012
3:06 pm
Profits & Loss are not the Presidents main function. Certainly equality under the law for opportunity should be for all. Failure or success is up to the individual. A rising economy, like a rising tide, lifts all boats or individuals. This is the main function of the President as well as our security as a Nation.
Tiberius - Banned from Bookman's and proud of it!
May 22nd, 2012
3:11 pm
And what does it say about the desperation of the Obama campaign that they release two Bain Capital attacks against Romney, and Romney had nothing to do with either company closing it’s doors?
This isn’t “exaggeration”, or even “misrepresentation”. This is LYING, plain and simple.
What does it say about the Obama campaign and the candidate himself when he has to lie to try to keep his office?
Rafe Hollister
May 22nd, 2012
3:12 pm
Tiberius we agree. An economy depending on have nots, will nots, did nots, and care nots does not work. BUT, it rallies his base, the Have Nots and the Utopians.
Del
May 22nd, 2012
3:16 pm
Obama is on dangerous ground believing that a strong offense against Romey’s Bain career will translate into a defense of his less than stellar economic accomplishments. During the course of this campaign he will be forced to discuss and defend his record. This diversionary tactic focusing Romney and Bain hasn’t gained him very much in the polls.
redneckbluedog
May 22nd, 2012
3:19 pm
And after yesterday….I would be VERY careful questioning the President’s intelligence about ANYTHING…..he looked pretty up to date on a lot of stuff…..
Not dealing with George Bush here, or Nathan Deal….
redneckbluedog
May 22nd, 2012
3:20 pm
Tiberius we agree. An economy depending on have nots, will nots, did nots, and care nots does not work. BUT, it rallies his base, the Have Nots and the Utopians.
————————————————————
Sounds like North Korea to me…..
Dusty
May 22nd, 2012
3:21 pm
Cheesy Grits, 2:56
“We are in the south you know. This sort of thing is the norm around here.” (”racial overtones”)
Is that right? I suppose you live in Atlanta, crown city of the South, and haven’t noticed that this city has a majority of black citizens in charge and “black” universities and thriving black business and a mecca for black refugees such as those who came here after New Orleans was decimated.
I guess a majority of folks have not heard about the ” coded racial overtones”. Maybe you have found that for which you look.
The South is one of the finest places in America for all to live and thrive. If you don’t think so, why are you here?
Keep beating the drum. Blame everything on “race” when you live in the most free country in the world. If you can’t see beyond that, please don’t advertise your own shortcomings.
redneckbluedog
May 22nd, 2012
3:22 pm
Tiberius we agree. An economy depending on have nots, will nots, did nots, and care nots does not work. BUT, it rallies his base, the Have Nots and the Utopians.
———————————————————–
Are you suggesting that America be a Plutocracy…!?!? or a Fascist Oligarch….!??!!? BECAUSE THE HAVE NOTS ARE WHAT BUILT THIS COUNTRY…!!!!
iggy
May 22nd, 2012
3:23 pm
“…And after yesterday….I would be VERY careful questioning the President’s intelligence about ANYTHING…”
Kinda reminds me of the Bush/Goron interviews when Gore couldnt answer questions, kept abusing the time allotments and just generally behaved like a clown.
redneckbluedog
May 22nd, 2012
3:24 pm
America works best when EVERYBODY participates……Does that sound like a Democratic sound bite to you……or an AMERICAN sound bite….!?!?!?
Cutty
May 22nd, 2012
3:25 pm
Yeah Dusty, those ‘black universities’ were founded when those ‘blacks’ weren’t allowed to attend those white colleges. People went there, then their kids went there and so on. Sort of like those legacies at UGA.
And George Bush, the man republicans love to forget, was a businessman. How did that turn out?
redneckbluedog
May 22nd, 2012
3:26 pm
You folks should listen at yourselves…..You want Romney and Koch and Ryan to win so badly you’re becoming STRANGE….!!! Un-American….!!!! S-P-O-O-K-Y……!!!!
redneckbluedog
May 22nd, 2012
3:27 pm
Take that crap to Salt Lake City….because in America we believe in Americans…!!!!
AMERICAN PRIDE 2012…..Obama/Biden…!!!!
Tiberius - Banned from Bookman's and proud of it!
May 22nd, 2012
3:27 pm
“America works best when EVERYBODY participates”
They do. Conservatives participate in creating jobs and wealth, and liberals participate in sucking conservatives dry.
iggy
May 22nd, 2012
3:29 pm
“America works best when EVERYBODY participates”
Agreed. But many dont want to particpate. Many dont want to work. Other than working/scamming for as many govt benefits as possible, many will not participate.
Your logic, while well-meaning, is somewhat naive’.
Cutty
May 22nd, 2012
3:31 pm
TThats funny Tiberius, because when you look at the actual facts conservatives are the takers and those pesky liberals on the coasts are the wealthy. MS, AL, AR, AL, LA, KS, TN, KY. Yeah they’d be so wealthy if those liberals in NY, MA, and CT weren’t taking their money.
JDW
May 22nd, 2012
3:31 pm
@Tiberius…your examples in and of themselves are perfect illustrations of the differences and why Romney, Kyle and you are viewing this through a shortsighted lens.
Lets take this one first
“You mean like how Obama can “invest” in green companies that go under completely without any return to the investors, JDW?”
SO? Is it your view that companies should not take a risk on new technologies? That’s what it is, a risk. You wish to castigate the President for a company gone bad that got some investment from the government while at the same time giving Bain a pass for a 30% failure rate. In true VC environment that failure rate should exceed 50%. If it doesn’t you aren’t taking enough risk.
And of course you do realize that the technology from those failed companies lives on. To be reused or discarded as the case may be, both valuable results. You don’t think so. Check out Voice over IP adoption rates…nice business right? How many VOIP companies went bust along that road?
Now for this gem…
“Or investing in companies like GM who pay back their loans with other government funds? Or screw the ACTUAL investors out of THEIR investments, JDW?”
GM is one of the biggest success stories of all time. Last year they made a $7.6 billion dollar profit, most people still have their jobs and NO ONE GOT SCREWED. In fact, when compared with liquidation, bondholders got more than they would have and common stockholders got exactly what they would have.
Your attitude is a perfect example of the skills that are lacking in Romney. You and he, ostensibly, would have simply let GM fail. Roasted everyone investors, bond holders, customers, employees and suppliers. All in the name of what?
Dusty
May 22nd, 2012
3:35 pm
redneckbluedog 3:19
There you go with the usual riffraff.
As far as I can see, Obama makes us wish for Bush and Nathan Deal is running a “tight ship” for Georgia.
You want to mention the many trillion national debt increased under President Obama or shall I do it for you? Or…are you one of those that the ” President works for inspiration, not the perspiration of work”?
Kyle Wingfield
May 22nd, 2012
3:35 pm
Yes, JDW. I’m sure the president was only being critical of those companies that try to maximize profits during the wrong part of their lifecycle…
And while I didn’t quote the part of his remarks where he outlined the president’s job vis-a-vis the economy, I did refer to it and comment on it. If you want to argue that he showed a better grasp of how the economy works with his assertion that the president’s job includes helping individual communities develop new economic clusters, be my guest.
iggy
May 22nd, 2012
3:36 pm
Cutty
May 22nd, 2012
3:31 pm
You seem to have forgotten California….
Thomas Heyward Jr
May 22nd, 2012
3:37 pm
Only a Romney/Obama supporting maron would pay attention to a campaign or rhetoric spewed forth from serial politicians.
.
Both men have a record of stealing wealth.
Romney……….using a corrupt and complacent SEC and various government porn-surfing “regulators.
And Obama………using the government in a more direct way.
.
Neither parasites ever “created” some much as a dollar of real wealth.
They only stole it.
iggy
May 22nd, 2012
3:40 pm
GM is a very poor example of a profitable company, yet a prime example of how not to conduct business. The numbers they post are a sham. You’ve been a victim of the “ole shell game.”
If thats the best you have then restocking your quiver would be wise.
Well maybe I speak too quickly. With the roll-out of the Chevy Volt and, as the commercials state, visiting the petrol station monthly could be our saving grace.
iggy
May 22nd, 2012
3:44 pm
And on another note…fb continues its descent into the toilet. New alltime low just achieved at $30.94.
Dusty
May 22nd, 2012
3:49 pm
I don’t think the government should be involved in the running of “business”. I mean I don’t want to buy a car from the government, buy roofing, windows, windmills & energy from the government or gasoline from government oilwells, or fly in government airplanes.
Our constituion is not a business plan.. It is for citizen’s rights, justice and defense and nothing more. Maybe Congress could do more if it could attend to basic government duties. .
Lil' Barry Bailout (Unexpectedly Revised Downward)
May 22nd, 2012
3:52 pm
jefflz: The Romney/Bain Vulture Capitalist model is based on a smash-and-grab strategy that sucks out all the assets of a faltering company, pays huge bonuses to the investors, defunds pension plans at the expense of the tax payer and basically takes no risk with their own money.
——————
You could have just said “I know nothing”.
It would have saved you and us so much time.
Lil' Barry Bailout (Unexpectedly Revised Downward)
May 22nd, 2012
4:01 pm
GM is one of the biggest success stories of all time. Last year they made a $7.6 billion dollar profit, most people still have their jobs and NO ONE GOT SCREWED.
——————–
The thousands of folks who used to work in GM’s now-closed dealerships and their former bondholders might take issue with the above.
Why didn’t GM pay their “fair share” in taxes on that “profit”?
Enough to make grown liberal democrats cry!
May 22nd, 2012
4:03 pm
Among the list of nominees for Georgia Supreme Court Justice… envelope if you please…. drum roll…Justice Neal Boortz!
Lil' Barry Bailout (Unexpectedly Revised Downward)
May 22nd, 2012
4:37 pm
GM not only didn’t pay their “fair share” in income taxes on their 2011 “profit”, the IRS stroked them a check for $110 million.
http://media.gm.com/content/dam/Media/gmcom/investor/2012/Q4_2011_Financial_Highlights.pdf
Tiberius - Banned from Bookman's and proud of it!
May 22nd, 2012
4:38 pm
“SO? Is it your view that companies should not take a risk on new technologies? That’s what it is, a risk.”
Not at all, and you don’t get to speak for me, either, JDW. The difference between a conservative and a liberal is that conservatives believe that companies should take thoughtful risks with PRIVATE capital, not wealth taken by force through government taxation or unfunded debt.
“You wish to castigate the President for a company gone bad that got some investment from the government while at the same time giving Bain a pass for a 30% failure rate. In true VC environment that failure rate should exceed 50%. If it doesn’t you aren’t taking enough risk.”
So now you’re agreeing with me that Bain Capital under Romney’s leadership did much better than typical venture capital firms? Good for you for finally seeing the light, JDW.
“And of course you do realize that the technology from those failed companies lives on.”
Really? With who? Solyndra produced nothing of value nor any leading technology
“GM is one of the biggest success stories of all time. Last year they made a $7.6 billion dollar profit, most people still have their jobs and NO ONE GOT SCREWED.”
Guess you missed the part where the original bondholders were eliminated from the mix when the government took over and the unions took their place. maybe if you were one of the original bondholders you might feel different about the whole “no one got screwed” meme, JDW.
“In fact, when compared with liquidation, bondholders got more than they would have and common stockholders got exactly what they would have.”
Bondholders got NOTHING, JDW.
“You and he, ostensibly, would have simply let GM fail.”
You obviously don’t know what a managed bankruptcy means, do you, JDW? Many companies undergoing reorganization through bankruptcy do not fail. In fact, many come back stronger than ever.
And they do so without taxpayers dollars being spent and never repaid.
Lil' Barry Bailout (Unexpectedly Revised Downward)
May 22nd, 2012
4:42 pm
How many “success stories” is this now for Chrysler?
JKL2
May 22nd, 2012
4:45 pm
redneckbluedog- AMERICAN PRIDE 2012…..Obama/Biden…!!!!
ROFLMFAO!!! How can you put “American pride” and obama in the same sentence? Never heard of a man embarrassed to be American having pride in it too.
Lil' Barry Bailout (Unexpectedly Revised Downward)
May 22nd, 2012
4:54 pm
2012 Tuesday: Ob[ozo] wants the election to be about a topic he doesn’t understand
—————————
Some things Obozo doesn’t understand:
- Patriotism
- Free market capitalism
- Men’s jeans
- Personal responsibility
- The number of states in the Union
- The proper way of throwing a baseball
- Work
- Honesty
md
May 22nd, 2012
4:55 pm
It’s past the point of comical…….Obama is opening a can of worms he should have left alone. He wants to bash Romney for having to slash some jobs in trying to save businesses, yet conveniently fails to remember that GM shuttered hundreds of dealerships and laid off thousands of employees, not to mention the Solyndra top brass running off with our tax money.
He also seems not to remember that one of his top bundlers, Jonathan Lavine, is/was a managing director at Bain Capital. Lavine, who has raised over $100,000 for the president, was at the firm when GST Steel declared bankruptcy.
My other beef with posters here is in regards to the “vulture” investors that take part in these ventures. You folks would be wise to do a little research as you yourself may be in on it. Unions, Universities, Pension funds, etc etc…….ALL investors.
And guess what folks…..WE WANT THEM TO DO WELL and make LOTS of profits.
Lil' Barry Bailout (Unexpectedly Revised Downward)
May 22nd, 2012
4:59 pm
I wonder what happens to failing companies that private equity firms DON’T buy.
JDW
May 22nd, 2012
5:02 pm
@Kyle…”I’m sure the president was only being critical of those companies that try to maximize profits during the wrong part of their lifecycle”
I don’t think he was critical of companies. Making a statement on Mittens yes…critcal of profits no.
And yes, I do think he has and showed a better grasp of the issue than you or Mittens.
Jefferson
May 22nd, 2012
5:08 pm
Bain will be a liability. Mean spirited, cares about money more than people. Greedy, seeking personal gain on the backs of others. Did I mention greedy ?
JDW
May 22nd, 2012
5:08 pm
@Tiberious…”So now you’re agreeing with me that Bain Capital under Romney’s leadership did much better than typical venture capital firms? ”
I never said they did poorly, however I would not call them a venture capital firm. They are a private equity firm. Big difference.
Check your facts on this one…”Bondholders got NOTHING, JDW.”
“Investors holding bonds in the old General Motors Corp. will receive stock and warrants for shares in the new General Motors Co. (GM) on April 21, an action that analysts said may depress the stock price.
Old GM, now known as Motors Liquidation Co. (MTLQQ), will give bondholders 150 million shares in GM and warrants to buy 272.8 million more shares. A trust holding the shares will distribute them directly to bondholders’ brokerage accounts on or after April 21, according to a memo distributed Wilmington Trust Inc., a money-management firm hired by the creditors’ committee.”
http://www.bloomberg.com/news/2011-04-06/old-gm-bondholders-getting-shares-in-new-general-motors-may-depress-price.html
No one got screwed, in fact virtually everyone came out better than they would have under a traditional bankrupcy…it would have been a forced liquidation fire sale.
biggie whoops
May 22nd, 2012
5:18 pm
Personally, I’d prefer bain to go away. It wasn’t about creating or destroying jobs. It was all about the benjamins. Romney’s a money pimp.Big whoop!
md
May 22nd, 2012
5:19 pm
“I wonder what happens to failing companies that private equity firms DON’T buy.”
That’s the part some on the left seem not to understand…….it’s much better to lay off 10% of employees vs 100% of employees……but they can’t see the big picture as they are squinting too hard looking at the little picture.
JDW
May 22nd, 2012
5:20 pm
@LBB…”Not taxpayers. We’re still owed tens of billions by GM alone.”
GM still owes the government some $20 odd billion which will be repaid. That makes the debt an asset not a cost. On the interest side of the ledger we have had the opportunity to collect taxes from GM employees, suppliers, and sales. My guess is that if you calculated the ROI it would be usury.
That makes it an incredibly profitable investment for the taxpayer. Unlike missile defense, invading Iraq and tax cuts for the wealthy. Just to name a few Republican boondoggles.
Tiberius - Banned from Bookman's and proud of it!
May 22nd, 2012
5:20 pm
““Investors holding bonds in the old General Motors Corp. will receive stock and warrants for shares in the new General Motors Co. (GM) on April 21, an action that analysts said may depress the stock price. ”
Oh, so bondholders get something that will likely be reduced in price.
Great way to protect their original investment, JDW!
And again, you don’t understand bankruptcy laws one little bit.
biggie whoops
May 22nd, 2012
5:21 pm
Kyle,
What’s a scumbag obozo?
md
May 22nd, 2012
5:21 pm
“Mean spirited, cares about money more than people. Greedy, seeking personal gain on the backs of others. Did I mention greedy ?”
You really shouldn’t talk about teachers unions like that……they just want their piece of the pie too…..
Lil' Barry Bailout (Unexpectedly Revised Downward)
May 22nd, 2012
5:24 pm
GM still owes the government some $20 odd billion which will be repaid.
—————
When is that payment scheduled?
Didn’t think so.
Lil' Barry Bailout (Unexpectedly Revised Downward)
May 22nd, 2012
5:25 pm
On the interest side of the ledger we have had the opportunity to collect taxes from GM employees, suppliers, and sales.
———————————-
You’re assuming those folks would have just gone home and sat around waiting for someone to provide for them.
Be real. They’re not ALL Democrats.
Jefferson
May 22nd, 2012
5:26 pm
They aren’t going to be drilled on your so called greed as they are not running for president.
JDW
May 22nd, 2012
5:27 pm
@Tiberius…”And again, you don’t understand bankruptcy laws one little bit.”
Want to elaborate or are you just comfortable tossing out unfounding sweeping statements as usual?
Jefferson
May 22nd, 2012
5:27 pm
Romney, the cat with an image problem.
Kyle Wingfield
May 22nd, 2012
5:28 pm
Lil’ Barry: As indicated in the rules, I put up with a lot of name-calling toward public officials, but “Scumbag Obozo” and “Idiot Klown Obozo” are well and truly beyond the pale.
JDW
May 22nd, 2012
5:29 pm
@Kyle..thank god!