Wednesday, January 11, 2012

Fox News Raises Solyndra Red Herring To Deflect Attention From Romney's Record

 by Jeremy Holden/Media Matters
Chris Wallace has offered a window into how Fox News can be expected to cover improving economic news during this year's presidential election: by raising red herrings.
Discussing criticism of Mitt Romney with Democratic National Committee chairwoman Debbie Wasserman-Schultz on Sunday, Wallace asked about scrutiny over layoffs at companies controlled by Bain Capital during Romney's tenure at the firm. Wallace then asked whether it was therefore fair to pin layoffs at the bankrupt solar panel firm Solyndra on President Obama, arguing that Energy Department loan guarantees to the firm made Obama a "venture capitalist."

Even if we were to accept that Obama was acting as a venture capitalist through DOE loan guarantees, Wallace's analogy is absurd: Mitt Romney was not simply acting as a venture capitalist at Bain. Pema Levy at Talking Points Memo explained why the analogy is fraudulent:
The comparison is misguided on many levels and only makes sense if you fundamentally misrepresent both what private equity at Bain meant in practice, and what happened at Solyndra. As a private equity firm, Bain Capital invested in companies and came up with a plan for making them profitable, or more profitable than they previously were. It wasn't merely a loan -- that's venture capitalism -- because it included a business strategy. Sometimes the plan was to lay off workers and cut wages and benefits. Sometimes the strategy failed and the company went under. But Romney, as CEO of Bain, was in charge of strategies that called for laying off workers while benefiting shareholders. None of that is true of Solyndra, where the company was loaned money to follow through on its own projects but ultimately failed anyway.
As detailed by the Boston Globe during the 2008 campaign, Bain Capital specialized not just in venture capital, but in leveraged buyouts, often using a strategy "designed at the outset to cut jobs":
The primary objective, of course, was to make money. That meant every job couldn't be saved. Some strategies, such as a roll-ups, are designed at the outset to cut jobs. In roll-ups, similar firms in the same industry are acquired and combined to boost revenues while eliminating duplicative jobs, particularly in administrative areas such as payroll, personnel, and information technology.
Wallace proffers no evidence that Obama or the Energy Department set out to cut jobs at Solyndra.
Meanwhile, Romney's record at Bain continues to come under scrutiny.
On Monday, The Wall Street Journal reported:
The Wall Street Journal, aiming for a comprehensive assessment, examined 77 businesses Bain invested in while Mr. Romney led the firm from its 1984 start until early 1999, to see how they fared during Bain's involvement and shortly afterward.
Among the findings: 22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses. An additional 8% ran into so much trouble that all of the money Bain invested was lost.
Wallace's strange diversion -- already being promoted by the right-wing echo chamber -- could serve to insulate Romney from any further examination of his time at Bain and the effect the strategic decisions he made there had on employment and the broader economy. As Greg Sargent has noted, jobs creation is emerging as one of the central issues of this election and Romney's campaign.
In recent days, Romney's oft-stated claim to have created 100,000 jobs while at Bain has come under scrutiny amid questions that his campaign is cherry picking companies that created jobs and whitewashing those that lost jobs.
After a Romney aide told Glenn Kessler of The Washington Post that the campaign was basing its figures on only three companies, Romney was pressed to explain the claim during an ABC News debate. He said that during his tenure at Bain, the firm "invested in over 100 different businesses" and that "net, taking out the ones where we lost jobs and those that we added, those businesses have now added over 100,000 jobs."
At this point, the only actual evidence cited by Romney's campaign is the jobs created at three firms. The Associated Press analyzed Romney's statement at the debate and concluded:
No one has been able to produce a full accounting of job gains and losses from the scores of companies Romney dealt with at Bain. But a Los Angeles Times review of Bain's 10 largest investments under Romney found that four of the big companies declared bankruptcy within a few years, costing thousands of jobs and often pension and severance benefits.
The question as to the net effect that Romney's decisions at Bain had on employment remains an open one. It's a question that requires nuance and a careful explanation of the net effect decisions made had on the overall economy, particularly given the fact that the the private sector under President Obama created 1.9 million jobs in 2011 -- the fastest rate of private sector job creation since 2005.
It's a question that can't be answered by misguided Fox News analogies. 
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