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Political Strategy for a Permanent Democratic Majority

Reich: No Free Ride for Romney’s ‘Casino’/Vulture Capitalism

Excellent Mayor that he is, Cory Booker screwed up big time when he criticized the Obama campaign for holding Romney accountable for his record at the helm of Bain Capital. To paraphrase WaPo columnist Gene Robinson’s quip on MSNBC’s ‘Morning Joe’ show, “…Everybody understands why a democrat in the New York metropolitan area is going to be nice to private equity…but not that nice.”
It wasn’t just that Booker is supposed to be a supportive Democrat etc. And, he has walked his comments back somewhat. Putting politics aside for a half-second, Booker’s critique was wrong from both a strategic and factual perspective. What a presidential candidate did for years and then brags about as indicative of his mighty powers of job-creation, most certainly merits rigorous analysis and a tough critique from his opponent. When Romney so frequently references his private sector experience as proof of his ability to lead America to a nation-wide recovery, he not only deserves scrutiny; he invites it.
Robert Reich makes sure Romney gets some of that scrutiny — and more — in his HuffPo column, “Why Obama Should Be Attacking Casino Capitalism — Both Romney’s Bain and JPMorgan.” Here’s a piece of Reich’s take:

I wish President Obama would draw the obvious connection between Bain Capital and JPMorgan Chase. That way his so-called “attack” on private equity is neither a personal attack on Mitt Romney nor a generalized attack on American business.
It’s an attack on a particular kind of capitalism that Romney and JPMorgan both practice: Using other peoples’ money to make big bets which, if they go wrong, can wreak havoc on the economy…It’s the substitution of casino capitalism for real capitalism, the dominance of the betting parlor over the real business of America, financial innovation rather than product innovation…It’s been terrible for the American economy and for our democracy.

Reich goes on to urge Obama to mount a stronger attack vs. JPMorgan Chase’s recent “reckless bets,” and adds,

As a practical matter, the Volcker Rule is hopeless. It was intended to be Glass-Steagall lite — a more nuanced version of the original Depression-era law that separated commercial from investment banking. But JPMorgan has proven that any nuance — any exception — will be stretched beyond recognition by the big banks…So much money can be made when these bets turn out well that the big banks will stop at nothing to keep the spigot open…There’s no alternative but to resurrect Glass-Steagall as a whole.

Reich also blasts “the “carried interest” loophole that allows private-equity managers like Mitt Romney to treat their incomes as capital gains, taxed at only 15 percent, when they’ve risked no money of their own,” and concludes:

If private equity were good for America it wouldn’t need this or the other tax preference it depends on, elevating debt over equity. But the private equity industry has huge political clout, which is why these tax preferences remain…Get it? Bain Capital and JPMorgan are parts of the same problem. The president should be leading the charge against both.

Steven Rattner also puts it well in his New York Times op-ed:

Mr. Obama struck the right balance, emphasizing that he wasn’t attacking private equity but was questioning Mitt Romney’s Bain Capital credentials to be the job creator in chief.
That’s fair, particularly because Mr. Romney himself has been foolishly reweaving history to claim, as recently as last week, that he helped create 100,000 jobs during his time at Bain…Mr. Romney takes credit for every job ever created at every company Bain Capital invested in during his tenure — while ignoring jobs eliminated after his departure.

Worse, adds Rattner,

And in a further effort to deflect attention from the Bain Capital debate, Mr. Romney last week argued that President Obama was responsible for the loss of 100,000 jobs in the auto industry over the past three years.
That’s both ridiculously false (auto industry and dealership jobs have increased by about 50,000 since January 2009) and a remarkable comment from a man who said that the companies should have been allowed to go bankrupt and that the industry would have been better off without President Obama’s involvement.
Adding jobs was never Mitt Romney’s private sector agenda, and it’s appropriate to question his ability to do so.

Despite all of the above a new NBC/Wall St. Journal poll indicates that nearly 60 percent of respondents believe that Romney’s experience gives him cred for economic leadership. The Obama campaign would be suicidal to let that misperception go unchallenged.
It looks like the President gets it, as indicated by the speech excerpt in the ‘Noteworthy’ box above. Whether you call it ‘casino’ or ‘vulture’ capitalism, this is clearly not the kind of ‘free enterprise’ the majority of Americans want to protect, and the President would be remiss if he gave Romney’s whole-hearted embrace of it a free ride.

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