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Posted: September 20, 2012

Readers respond: Looking at the record, here’s my choice

Neither has done much for jobs

Cindy Wolf

(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 lryckman@cobizmag.com, 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.

 Cindy Wolf is a Colorado lawyer with more than 25 years experience representing large and small domestic and multinational companies. Her expertise is in corporate law and commercial contracting, with an emphasis on international issues, technology licensing and the Internet. She can be reached at cindy@cindywolf.com  or visit her blog at www.cindywolf.com

This publication is provided for informational purposes only. It does not constitute legal advice. There is no implicit guarantee that this information is correct, complete, or up to date. This publication is not intended to and does not create an attorney-client relationship between you and the author.

Enjoy this article? Sign up to get ColoradoBiz Exclusives. The opinions expressed in this article are solely that of the author and do not represent ColoradoBiz magazine. Comments on articles will be removed if they include personal attacks.

Readers Respond

Cindy, your analysis is utterly lame. You don't understand private equity markets. They take chances that banks won't. Bain's 75% success record is great. You can't leverage without a good chance of success. There's no tooth fairy. Obama's record has been consistently anti-business and anti-jobs. The Dodd-Frankenstein Bill ignores Fannie, the major housing crash offender, outside of Bill Clinton who put Carter's Community Reinvestment Act on steroids. Meanwhile Dodd-Frank chokes business lending. The EPA and NLRB have been badly anti-business. He refuses to meet his so-called jobs council. The Stimulus Bill buried us in debt just to payoff Dem contributors. The auto industry bailout mainly benefited other countries and the UAW, and its crowning glory is the disastrous Chevy Volt. And how 'bout that Solyndra! Four more years with a lame duck Obama would be catastrophic. By Greg Stetson on 2012 09 22
Please, some of you need to get a breath of fresh air. History proves tax cuts and spending cuts stimulate the economy. Where is this blind perception coming from that Obama has been good for the economy, or anything else? Sure if you want the same as everyone else vote for Obama. If you want the chance to be rewarded for what you do, vote for Romney. Success is not a bad thing, unless you want to ride on someone else's coat tails. By Garry Duncan on 2012 09 21
Yes, tax rates are low, especially for the 50% of Americans that pay no federal tax at all. Forcibly stealing from one to give to another is not basis for the founding of our nation. How about equality of opportunity, not equality of outcome? GE pays no corporate tax because our tax code is structured to reward outsourcing, and Obama rewards that behavior by putting the CEO on his advisory board, thank you for making that point crystal clear. As for health care, you can have efficiency, cost or quality. You can't have all three, so I'll pick quality. How is it possible that the addition of regulation will add to cut costs or improve quality? Any other federally run programs that smack of efficiency? By Dale Charles on 2012 09 21
This is an opinion piece, so please disagree with me. But, use some facts if you do. According to the Congressional Budget Office, taxes are at their lowest rates in 30 years. Obama's economic advisers include a former CEO of GE (which paid 0 taxes on $14 billion in profit in 2010), a former president of Harvard and former Goldman Sachs executives. Geithner was proposed by both Obama and McCain in 2008 to be Treasury Secretary. Wall Street is well represented in this administration. The Affordable Care Act will add regulation the US health care industry, arguably the least efficient in the world. Have at it. But, it's still hard to argue with record corporate profits and the success of the stock market. How has this been the worst presidency since Carter? By Cindy Wolf on 2012 09 20
Everyone is entitled to an opinion, even if they are wrong. BO's agenda of increasing taxes on SB owners, distributing wealth to non-producers, bigger government, weaker defense, and coddling the unproductive is the road to our destruction. The bigger picture is that we became the world leader in just about everything by encouraging entrepreneurship, self sufficiency, capitalism, ownership, and strong defense. BO's approach takes us in a different direction to a clearly different America where average is just fine and where the government controls your life. Romney/Ryan might not be perfect, but they respect supply side elasticity and aren't a national embarrassment. By David Hollenbach on 2012 09 20
Thank you Cindy. It is refreshing to read the comments of someone who actually understands economics and does not simply parrot the worn out and trivial nostrums offered to us by the right wing. The fact is that the Romney/Ryan ticket offers nothing to business. The experience in the US as well as the rest of the world demonstrates clearly that tax and spending cuts do not increase employment, no matter how much the Republican platform wishes that they would. Conservative economics have only proven to redistribute wealth to the narrow few, rather than to the broad many. Why indeed would any thinking person want to follow such an unsuccessful model? By Fred Wellers on 2012 09 20
Disappointing that a business magazine would publish such a liberal political promotion endorsing the worst business president since Carter. By Dale Charles on 2012 09 20
I can't believe your business magazine would publish articles supporting the anti business administration of Barack Obama. Business can't afford another 4 years of high taxes , big government, and small business regulations. I would think your publication would cater to small business. Obviously not.. By Bob Grant on 2012 09 20
Well said, Cindy. Romney has not displayed the type of business acumen that would help business in general--just individuals on a rather narrow basis. His plans for deregulation and tax cuts have been disproved again and again, and now we see that he scorns half the electorate. The right talks about Obama's European inclinations, but they are the ones that now want to take us down an unproven path of austerity instead of achieving stability then budget reductions. I operate a very small business with international revenue. Romney/Ryan would probably help me with tax avoidance, but they would turn my country into more of a third-world nation than it is already becoming. If I wanted to live in India where a minority of the population can afford to live in the 21st century, I would move there. By Dave Lucia on 2012 09 20
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