Mitt Romney has been the front runner from the onset of the campaign and although he has had some setbacks and there were some questions about his sustainability, his huge advantage in organization and fund raising more than his Republican rivals left little doubt that eventually he would garner the nomination although it took longer then expected and he definitely has a major issue in not being able to connect with the average voter.
Now that Santorum's exit, has left Romney free to concentrate his negative ads against President Obama, he has begun in his expected etch a sketch mode to move to the center. He has given us a preview of his expected attack strategy by endorsing the childish game of "I'm rubber, you're glue" in that he is attempting to be the first to bring up the issues, which he knows will be used against him, such as his war against women and his health care reform, Romneycare. Mitt will use his organization's skills in prompting up a straw candidate that they can attack so that his weak flip flopping past image can be lost in the process. The war on women issue has to do with Romney's
anti-Planned Parenthood stance. Initially he endorsed Planned Parenthood and a women's right to choose but now that he is seeking the vote of the more conservative white Evangelicals he has to become anti- abortion and anti- contraception. This puts him in an awkward position where he has to appear that he is not conducting a war against women, while at the same time he is. If anyone can pull this off Mitt can.
He is very experienced in this sort of thing, after all he is the undisputed king of the flip floppers. Another prime example of Mitt's flip flopping is his positions on gun control.
As governor of Massachusetts he supported stiff gun restrictions, an assault weapons ban and the federal Brady Gun Control law. He has endorsed Florida's Stand Alone law and is now under pressure to calm uneasiness in the gun community otherwise known as the NRA, he will assure them that he will not entertain additional gun restrictions. His latest challenge against President Obama is to paint him as un-American using what has been termed as the American Exceptionalism concept. As usual Mitt is behind the times and out of touch, since President Obama stated in a speech in 2004 that his entire career has been a testimony to American Exceptionalism.
In his campaign during the primaries beginning in Iowa, Mitt's organization gathered reams of voter data that allowed them to precisely target supporters. His organization has a sophisticated and relentless voter contact program that early locked in supporters, turning them out to rallies, to caucuses, to vote early with absentee ballots and finally to get them to the voting booths. With a surplus in donations, the Romney team poured resources into data, mining reams of consumer information from the number of purchases made at a home goods store, William Sonoma to their range of financial investments, to build a model that would allow them to find and identify potential supporters. This micro-targeting program has been used in most of the primaries.
His organization pared this voter data with several hundred thousand paid and volunteer calls. They know that his sweet spot is among older, higher income, voters, those with incomes of between $75,000 and $150,000 and with upscale interests, such as gourmet cooking. He was particularly appealing to older women and did best with self identified Republicans. They also knew that Romney, the father of five sons, held particular appeal for voters whose consumer preferences showed a focus on children and family-centered activities. This knowledge guided the millions of dollars that Romney has spent on the primaries, outspending his opponents five to one, including of course the negative ads, aimed at what he termed desperate rivals, which he used to paint them into corners where they were unable to respond because of their limited funding.
Romney's Super PAC "Restore Our Future" has out spent the official Romney campaign. The new guide lines as per the Citizens United Decision, permit donations only to political committees that do not coordinate their activities with a candidates official political campaign, but in the presidential race the candidates and the Super PAC's are intertwined by personnel if not legally. Carl Forti was the political director of Romney's first presidential bid in 2008 and now run the pro-Romney group, Restore Our Future, along with other former Romney Aides
Charles Spies is the treasurer and former general counsel for Romney's 2008 campaign. The group reported raising over 12 million in the first half of 2011 in the form of large donations from approximately 90 wealthy individuals and corporations. Spies declined to discuss specific contributors to the PAC.
As of August 2011, the largest individual contributor to restore Our Future was John Paulson, a billionaire and hedge fund manager who is according to Politico, "famous for having enriched himself by betting on the collapse of the housing industry". An additional million dollars came from W. Spann LLC, a corporation with no record of actual business activities, which was incorporated, donated to the PAC, and then dissolved in a matter of months.
Several watchdog groups requested that the justice department and Federal Election Commission investigate donations from W. Spann LLC as possible violations of campaign finance law. Restore our Future refused to provide additional details about the donation and asserted that it had complied with existing laws. In response to rumors a spokesman for Romney's prior company, Bain Capital, stated that W. Spann LLC was not affiliated with with Bain Capital or any of their employees.
Shortly thereafter, Edward Conard, a former top executive of Bain Capital and long time Romney supporter came forward to state that he had formed W. Spann LLC and funded and authorized the $1 million donation.
In December 2011, Glenn Kessler of the Washington Post found that a Restore Our Future ad attacking Newt Gingrich in Iowa had a number of "egregious fouls" and "underhanded" treatment of Freddie Mac and abortion issues. The PAC had $3 million budgeted for the Iowa television campaign. Brittany Gross, a Restore spokesperson, declined to answer questions from Kessler about the ad.
Romney was aided by 29 million dollars in ads paid for by Restore Our Future in the defeat of Rick Santorum and Newt Gingrich in the Illinois primary.
Although Romney has lost several southern primaries, including Georgia, South Carolina, Missouri, Mississippi and Alabama,his campaign raised more then 11 million in February.
Karl Rove is the founder of the Super PAC American Crossroads, a Romney supporter is likely to become the pre-eminent GOP group airing negative ads against President Obama this year.
Mitt Romney's rhetoric during this grueling campaign has been that he started at the bottom, has earned his money and has experience in the private sector and this qualifies him to deal with this nations economic issues. Recently Fox News has started the mantra, "Romney started with nothing".
Not so fast! It is well known that Mitt is the son of three time Governor of Michigan, George Romney, former president of American Motors and was raised in an exclusive sprawling residential area, Bloomfield Hills, far from the dregs of Detroit, where he attended and exclusive boys school, where his father who was governor of Michigan at the time gave a commencement speech at his high school graduation. It was recently revealed that it was at this exclusive boy's school that Mitt bullied a young man who he believed was gay. He and some friends held the boy down and cut his hair. While his friends remember the incident, Mitt does not recall it, but still apologized.
In the book, "The Real Romney", Michael Kranish and Scott Helman write that Romney's religion pulls a curtain over parts of his life story because some important moments for Mormons are restricted to Mormons. After Mitt and Ann were married in Michigan in 1969, they flew to the Mormon Temple in Salt Lake Utah for a ceremony where Mitt wore white robes and they were "sealed" for eternity. But Ann's parents were not Mormon so they were not allowed inside to see it.
As a Mormon Romney went to Paris as a missionary and received two deferments from the Vietnam war, (Wouldn't it have been grand to spend two years in France and Paris, instead of two years in the hot jungles of Vietnam)?
Mitt attended Stanford University not on a scholarship but on an allowance from his father.
When his allowance was cut back by his father to make him study. Mitt did not have the money necessary to pay his way back to Michigan to see Ann. He missed her so much that he auctioned off his camel's hair overcoat to pay for the trip home to see her. Does his father supporting him after his marriage, paying his way through University and Harvard law school while he was married, and graduating without having to worry about an $80,000 student loan, cause you to believe that he started with nothing?
Michael Kranish and Scott Helman in an adaption of their book, the Real Romney wrote in the
February edition of Vanity Fair, that in 1983 at the age of 36, Mitt Romney was approached by Bill Bain founder of Bain and Company a consulting firm which worked with one business at a time, providing analysis and attention to what made the companies work, scoped out the competition and then submitted a plan to the company. Bain would be able to watch it's clients prosper only from a distance, taking handsome fees but not directly sharing in the profits.
The new work model was that Bain would invest in companies and share in their growth, rather then just advise them. Bain Capital would raise tens of millions of dollars, invest in start-ups and troubled businesses, apply, Bain's brand of management advise, and then resell the revitalized companies or sell their shares to the public at a profit. Romney did not immediately accept the offer working with this new concept. He worried that if it was a failure that he would lose his reputation, earnings and position with Bain. The pot was sweetened and Romney was promised that if the business plan was not successful that he would be able to return to his prior position with Bain and a story would be floated that he was leaving Bain Capital to return to his prior position due to his value as a consultant. He was in essence covering his rear end before gambling on an untried business plan.
For the next 15 years Romney worked at Bain Capital and now boast about those years, how he helped create jobs, at new or under performing companies and knows how jobs and businesses come and go. He was involved in over a hundred deals, many of which have received little notice because the companies involved were privately held and not household names.
The most thorough analysis of Romney's performance during this period comes from a private solicitation for investment in Bain Capital's funds written by the wall street firm, Deutsche Bank. The company examined 68 major deals that had taken place on Romney's watch. Of those Bain lost or broke even on 33.
Overall though, the numbers were stunning. Bain was nearly doubling it's investors money annually, giving it one of the best track records in the business. Bain names Staples as one of his success stories.
A former super market executive was trying to sell venture capitalist on the idea of a cheaper way to sell office supplies. Romney did not stumble on the idea on his own. He was invited by a venture capitalist from another company to sit in on a meeting with the super market executive and after that Romney took the lead. Bain Capital invested $650,000 to help staples open it's first store in May 1986. In all it invested 2.5 million in the company. Three years later Staples sold shares to the public when it was barely turning a profit and Bain Capital reaped more then $13 million. Since then Romney has boasted that he helped create tens of thousands of jobs. But neither Romney nor Bain directly ran the business.
When the IPO was issued, Staples was a firm of 24 stores and 1,100 full and part-time employees. Romney resigned his seat on the Staples Board in 2001 in preparation for his run for governor.
A decade later, the company had more then 12,200 stores and 89,000 employees. The Staples gain in employment were offset by losses elsewhere, smaller mom and pop stationary stores and suppliers were being squeezed and some went out of business entirely. Staples steamrolled the competition, under-cutting prices and selling in large quantities.
Leverage buyouts or LBO's were the main investments for Bain Capital. . Whereas a venture capital deal bet on a new business, pursuing an LOB meant borrowing huge sums of money to buy an established company, typically saddling the target with big debts, with the goal being to mine the value that others had missed, to quickly improve profitability by cutting costs and then selling.
Not every deal turned out well for Romney and his investors. Bain invested 4 Million in a company called Handbag Holdings, which sold pocketbooks and other accessories. When a major customer stopped buying, the company failed and 200 jobs were lost.
Bain invested 2.1 million in a bathroom fixture company called PPM and lost nearly all of it. An investment in a company called Mothercare Stores also didn't pan out; by that time Bain dumped it, fellow Bain Partner Robert White said Bain lost its $1 million and blamed a difficult retail environment.
In some cases, Bain Capital's alternative strategy of buying into companies also ended in trouble. In 1993, Bain bought GST Steel, a maker of rod iron rods, and later more than doubled it's $24 million investment. The company borrowed heavily to modernize plants in Kansas City and North Carolina and to pay out dividends to Bain. But foreign competition increased and steel prices fell. GST Steel filed for bankruptcy and shut down it's money losing the Kansas City plant, throwing some 750 employees out of work. Union workers there blamed Bain, then and now, for ruining the company, upending their lives and devastating the community. (This is the subject of the Ads now running about Romney and his success in the private sector).
In 1994 Bain invested 27 million as part of a deal to acquire Dade International, a medical diagnostics equipment firm from its parent company, Baxter International. Bain Ultimately made nearly 10 times its money, getting back 230 million, but Dade ended up laying off more than 1,600 employees and filed for bankruptcy protection in 2002, amid crushing debt and raising interest rates. The company with Bain in charge had borrowed heavily to do acquisitions accumulating $1.6 billion in debt by 2000. The company cut benefits to some of its workers at its acquired firms and laid off others. When it merged with Behring Diagnostics, a German company, Dade shut down three U.S.
plants . At the same time Bain paid out $421 million to Bain Capital investors and investing partners.
In one of his Leverage Buyout Mitt sought the services of junk bond king, Michael Milken and his company Drexel Burnham Lambert to solicit scarce cash. During this time it was well known that Drexel and Milken were under investigation by the SEC, but Drexel was still the big player in the junk bond business and Romney needed the financing, ( for the $300 million purchase of two Texas Department Store chains, Bealls and Palais Royal to form Speciality Retailers Inc).
On September 7, 1988, two months after Bain hired Drexel to issue junk bonds to finance the deal, the SEC filed a complaint against Drexel and Milken for insider trading. Instead of backing out of the deal Romney went forward with the transaction. Mitt's deal with Drexel went well for him and Bain Capital which put $10 million into the retailer and financed most of the rest of the $300 million deal with junk bonds. The new company later known as Stage Stores, refocused on its small store, small town roots. Seven years later in October 1996 the company issued an IPO, selling shares at $16.
By the following year the stock rose to $53 a share and Bain Capitol and a number of it's officers and directors sold a large part of its holdings. Bain made a $175 million gain by 1997. It was one of the most profitable leverage buyout in that era.
Romney and Bain Capitol officers and directors sold at just the right time. Shares plunged in value the next year amid declining sales. The department store company filed for Chapter 11 Bankruptcy protection in 2000, struggling with $600 million in debt, and a reorganized company emerged the following year. So ended the story that Romney would definitely not be telling on the campaign trail, the highly leveraged purchase, financed with junk bonds from a firm that became infamous for it's financial practices, of a department store company that had subsequently gone into bankruptcy.
For Romney and Bain Capital, however, it was a huge win, a 175 million gain!
During those 15 years, that Romney had been in the business of "creative destruction" (as he coined the term in his autobiography, Turnaround), and wealth creation, he has made claims of job creation? Though the Bain Company surely helped expand some companies that had created jobs, the layoffs and closures at other firms would lead Romney's political opponents to say that he had amassed a fortune in part by putting people out of work and called him a vulture capitalists. To avoid the use of the name venture capitalists the term equity funding was utilized. The lucrative deals that made Romney wealthy could exact a cost.
Maximizing financial return to investors could mean slashing jobs , closing plants, and moving production overseas. It could also mean clashing with unions workers,serving on the board of a company that ran afoul of federal laws and loading up already struggling companies with debt.
In response to Romney's claim that he helped create tens of thousands of jobs, Howard Anderson, a professor at MIT Sloan School of Management and a former investor of Bain Capital said, "what you really cannot do is claim every job was because of your good judgement, You're not really running those organizations. Your financing them, your offering your judgement and your advise . I think you can only claim credit for the jobs of the companies you ran".
In his 2004 autobiography, Turnaround, Romney admitted,"I never actually ran any of our investments, that was left to management"
When it comes to buyout firms the objective is to make money for investors . It is not to maximize jobs . Romney had a fiduciary duty to investors to make as much money as possible . Marc Wolpow , a former Bain Partner who worked with Romney on many deals said the discussion at buyout companies typically does not focus on whether jobs will be created. "It's the opposite, What jobs can we cut".
Mitt explained it by saying if we didn't buy these companies and impose efficiencies on them, the market would have done it with disastrous consequences. This was his point of view when he wrote a 2008 op-ed piece in the New York Times opposing a federal bail out for automakers that the newspaper headlined, "Let Detroit Go Bankrupt". It was good that his his advice went unheeded and his prediction that "you can kiss the American automobile industry goodbye if it got a bailout has not come to pass. Mitt now claims sucess for the General Motors revival. Somehow in his convoluted thinking, he surmises that if GM had followed his advice and gone bankrupt they would have also been successful.
Mitt's present net worth is estimated at $ 250 million dollars and he has millions of these dollars in investment funds in the Cayman Islands. A spokesman for Romney said that Romney follows all tax laws and he would pay the same in taxes regardless of where the funds are based.
On or about January 18, 2012, Romney disclosed that he has been paying a far lower percentage in taxes then most Americans, around 15 percent of his annual earnings, because his earnings are from capital gains and not wages. It was only until his Republican rivals forced him to release his income tax returns that he shared his returns. "I can tell you, we follow the tax laws ", Romney said, "And if there is an opportunity to to save on taxes, we like anybody else in this country will follow that opportunity."
Tax experts at ABC News said there maybe other reasons why Romney may not want the public viewing his returns. As one of the wealthiest candidates to run for president in recent times,, Romney has used a variety of techniques to minimize the taxes on his estimated $250 million fortune. In addition to paying a reduced tax rate on his investment income, Romney has $8 million invested in at least 12 funds listed on a Cayman Island registry. Another investment which Romney reports as being worth between $5 million and $25 million, shows up on security records as having been domiciled in the Caymans. Official documents reviewed by ABC News show that equity partnership that Romney once ran, has set up 138 secretive offshore funds in the Caymans. Romney campaign officials and those at Bain Capital Tell ABC News that the purpose of setting up those accounts in the Cayman Islands a is to help attract money from foreign investors.and that the accounts provide no tax advantage to American investors. The decision to locate some funds in the Caymans is routine and a benefit only to foreign investors. who do not want to be subjected to U.S. Taxes. Tax experts agree that the offshore accounts have provided Romney and Bain with other potential financial benefits , such as higher management fees and greater foreign interest, all at the expense of the U.S. Treasury. Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, said the federal government loses an estimated $100 billion a year because of tax havens.
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