Newt Gingrich has adopted an anti-free market argument—a favorite of the political left—to criticize Mitt Romney. Gingrich accused his rival of making money by “bankrupting companies and laying off employees” in his years at Bain Capital.
Under Romney’s leadership, Bain Capital emerged as a prominent private equity firm, investing initially in startups—Staples was one—then specializing in turnarounds. The company was highly profitable, but was criticized for reducing payrolls and shutting down firms it couldn’t revive. Romney left Bain Capital in 1999.
Whether its investments were successful or not, Bain Capital was engaged in the rough and tumble of free market capitalism. Thus Gingrich’s criticism, coming from a conservative, was surprising.
His attack echoes the criticism of Romney by the late senator Ted Kennedy in 1994. Romney ran against Kennedy when the senator sought reelection in 1994. Kennedy won, aided by brutal, unfair TV ads criticizing Romney for killing jobs.
Gingrich was responding to a statement by Romney earlier Monday on Fox News. Romney was asked if Gingrich should return the $1.6 million he earned for advising Freddie Mac. “Boy, I sure do,” Romney said. “He [Gingrich] was on a debate saying that politicians who took money from Freddie and Fannie should go to jail, which is outrageous in itself.”
In response, Gingrich said: “I would say if Governor Romney would like to give back all the money he’s earned from bankrupting companies and laying off employees over the years at Bain, I would be glad to listen to him.”
With Romney at the helm, Bain Capital bought companies, restructured them on firmer financial footing, and later sold them at a profit. But not every buyout succeeded. The Kennedy campaign broadcast ads that focused on cases in which workers lost their jobs. Romney has insisted Bain Capital created far more jobs than it killed.
President Obama’s reelection campaign is reportedly prepared to use the left-wing line of attack against Romney, should he win the Republican presidential nomination next year. Now Gingrich has jumped in first with his sharp criticism of Romney’s career at Bain Capital.
In a debate in October, Gingrich said: “If you want to put people in jail…you might start with Barney Frank and Chris Dodd.” They were the chief Democratic defenders of Fannie Mae and Freddie Mac, the “government sponsored enterprises” that have lost around $150 billion at the taxpayers’ expense.