Readers respond: Looking at the record, here's my choice
(Editor's note: This is one of an occasional series of columns from readers about their perspective on which candidate, President Barack Obama or Gov. Mitt Romney, would be better for business. We welcome your views! Please submit your 500-word opinion piece to firstname.lastname@example.org, and we will post the best from both sides.)
The first question is: what is “business”? According to Dictionary.com, the definition includes: an occupation, profession or trade; the sale of goods for profit; a company or person engaged in commerce or service; the volume of trade; and a building where commercial work is carried on. So “business” encompasses employment, commerce, trade volume and commercial real estate. It’s a bit more specific than the “economy,” which encompasses management of resources for productivity and overall prosperity and earnings.
Romney asks us to look at his business experience to show that he will be the better candidate for business. Bain Capital was a very successful investment company under Romney – for Romney and Bain. Did it create jobs? Improve commerce? Increase trade volume? Contribute to a robust commercial real estate market?
Bain Capital excelled at leveraged buyouts, where a private equity company raises debt on the equity of the target company in order to buy it. The new owner then takes the cash, pays itself a handsome bonus and uses the rest to improve the company balance sheet to sell it off again, once again taking a handsome bonus in addition to the gains on the sale.
Employees often bear the brunt of this balance sheet improvement by being terminated or taking pay cuts. Real estate and other assets get sold off. But, sometimes the extra cash is used to improve market position and it results in increased sales and hiring. In the end though, the target company still has all that debt and is not left in a strong position after Bain sells it off. Bain is not actually producing anything but is churning the finance markets for fees. Is that good for “business” or just good for Bain?
There is also an aspect of the Republican platform that is indicative of how business would be affected by a Romney presidency: deficit reduction is paramount and will be achieved by undefined spending cuts, not tax increases. Is this good for business? Look at Europe. The countries which have slashed public sector spending to pay off their debt are suffering from increased unemployment rates which are double or triple ours, contracting economies and widespread unrest. The difference between those countries and the U.S. is that they are unable to pay their current debt or raise any more debt. Why should we follow in those footsteps?
Obama’s record speaks for itself. The recession officially ended six months after he took office. The auto industry not only survived but is profitable, paying back its debts and hiring. The US banking system is much healthier. At the beginning of his term, unemployment was at 7.3 percent. It increased to a high of 10 percent seven months later and has been sliding back down to 8.1 percent. Following the housing market crash, commercial real estate was suffering when Obama took office, but has finally stabilized. From 2009-2012, the Dow Jones has increased 85 percent and the S&P 500 has increased 98 percent. During that time, corporate profits after taxes have increased 68 percent.
So who is better for business? Neither has a glowing record on employment, but the scales tip heavily to Obama with regard to trade, commerce and real estate.