To the Editor:
Mitt Romney is saying his experience in the private sector means he can do a better job of “fixing” the economy and “creating” jobs. He also tells us to ignore the rhetoric and “look at the record.”
Romney was CEO of a financial company. That is a very different kind of company than Ford Motors, Microsoft, Exxon or General Electric. These companies actually make a product as their main focus so they need raw materials and labor, as well as capital, to make their profits, so they do create jobs. Romney was CEO of Bain Capital, a name he rarely mentions, using the term “private sector” instead. As the very “poster guy” for what Wall Street does, his job as CEO was to make money for his investors, not to create jobs or make anything other than money. Henry Ford once said, “A business that makes nothing but money is a poor business.”
Most “financial capitalist” will tell you the last thing they want to do is “hire people.” Labor is usually the largest item on the “cost” side of any corporate ledger. When a company like Bain Capital invests in a struggling company, their goal is not necessarily to “save” the company by making production more efficient or innovating new products. Their goal is to increase short-term profits for their investors.
In most cases the fastest way to increase short-term profit is by cutting costs and the biggest saving is in cutting labor costs. Therefore, if you can fire people, reduce wages, reduce or eliminate benefits and pensions, short-term costs can be reduced dramatically. Better yet, you can close the whole U.S. plant and ship production to some foreign country with the cheapest labor and least safety protections. Then you use most of those short-term profits to pay yourself and your management team large salaries and pay the rest to your investors, and then sell the company at a profit before its debt you leveraged with company assets to increase profits comes due.
As CEO, Romney and his investors could also take advantage of special rules that allowed them to avoid paying taxes on much of their profits by putting their profits in offshore tax shelters and Swiss bank accounts.
If we look at his public sector record, job creation in Massachusetts dropped from 36th place to 47th place during Romney’s term. He also made massive cuts to education. His one positive accomplishment was creating a health system for all, which he prefers to disown now.
Romney’s own tax plan increases taxes on the poor by 60 percent and cuts them on the wealthy by 15 percent, according to the Congressional Budget Office analysis. Romney thinks the Ryan Budget is “marvelous” while Ryan’s church thinks it is immoral. Wall Street is sitting on an estimated $2 trillion in cash. If Wall Street is really the engine that drives job creation, where are the jobs? Do you think jobs in China or India count for the 99 percent? Wall Street has given $37.1 million to Romney’s campaign and only $4.8 million to Obama. Wall Street obviously thinks Romney’s “record” favors the 1 percent. How many of the 99 percent can afford to agree?