“I have spent most of my life outside of politics, solving real problems in the real economy,” Romney told the Republican National Hispanic Assembly in Tampa on Friday. “My work led me to become deeply involved in helping other businesses, from innovative start-ups to large companies going through tough times. Sometimes I was successful and helped create jobs; other times I wasn’t.”
What Romney rarely brings up, however, is that the corner of the “real economy” where he excelled is a specialized, little-understood world known as private equity. It represents one of the most unsentimental sides of modern capitalism — as Romney’s opponents are sure to point out.
With funds they have raised from big investors, private-equity firms go looking for companies to buy — usually by borrowing more money, which the firm itself is then on the hook to repay. The goal is to unload them a few years later at a big profit.
Private equity is a hard-nosed business, and voters may decide that’s precisely the kind of approach the economy needs to get it back on track. Or through the prism of the 2008 financial meltdown, they may see in private equity — with its focus on short-term gains and its reliance on cheap and easy credit — the same impulses that got the country into a fix in the first place.
“He’s been living off the financial economy and cutting jobs in the real economy. That’s not a recipe for victory, given where most people are now,” said Robert Reich, labor secretary in the Clinton administration. “There is such deep anger, and at best cynicism, at Wall Street and the financial community.”
Perry, who has taken the lead in the latest GOP primary polls, has already signaled that he plans to use the former Massachusetts governor’s years at the private-equity firm Bain Capital as an argument against him.
Free-market ‘big tent’
Citing his own background as a family farmer, Perry said during a tour of the Iowa State Fair: “I wasn’t on Wall Street. I wasn’t working at Bain Capital. But the principles of the free market, they work whether you’re in a farm field in Iowa or whether you’re on Wall Street.”
In an interview, Perry’s chief strategist, David Carney, was more explicit. “I don’t think the country is looking for somebody to be a buyout specialist,” he said.
When Romney was running for president in 2008, he promised autoworkers in Michigan and textile workers in South Carolina that he would “fight to save every job.”
Now he makes no such broad guarantees. Instead, he promises to lead the country into a new era of innovation.