By ALEXANDER BURNS
A company that laid off hundreds of employees. A federal “bailout” to rescue a failing bank. Mitt Romney, at the center of it all.
It’s a story line from a tough Democratic ad that was teed up for use against Romney in his 1994 Senate campaign in Massachusetts. The spot, which was provided exclusively to POLITICO, never actually aired. But it’s all but certain that some version of its allegations will surface in the GOP primary or the general election, if Romney makes it that far.
That ad would have been damaging had it appeared when it was produced nearly two decades ago. But it could take on new relevance in a 2012 campaign in which Romney is touting his business career as proof he can lead a national economic turnaround.
In every one of Romney’s campaigns, his time in the private sector — specifically, at the consulting firm Bain & Co. and the investment company Bain Capital — has been a double-edged credential, branding him as a savvy businessman while tying him to countless controversial management decisions.
Romney has served as chief executive at both Bain Capital, which he helped found in the 1980s, and Bain & Co., which launched his career and which he later helped rescue from failure.
When Romney challenged Sen. Ted Kennedy in 1994, it was his connection to those two companies that played a significant role in sinking his campaign as Democrats tied him to plant closings and worker firings.
In 2012, those familiar attacks from his past are likely to take on a new potency: Bain Capital’s involvement in mass layoffs is likely to haunt Romney in a campaign focused on jobs. Other episodes, such as the claims that Romney benefited from a federal bank rescue, could ignite anew.
The never-aired “bailout” ad, shared with POLITICO by one of Kennedy’s advisers, remains an unexploded grenade from that race, underscoring Romney’s vulnerability in the first presidential election fought since the 2008 financial meltdown.
According to former Kennedy advisers, the ad never ran because it turned out to be unnecessary: Kennedy had already broken Romney with a series of ads tying him to layoffs in Indiana.
The commercial — produced for the Democratic Senatorial Campaign Committee by the firm Doak, Shrum, Harris, Carrier, Devine — highlights Romney’s role in turning around Bain & Co. during its financial distress.
“The way the company was rescued was with a federal bailout of $10 million,” the ad says. “The rest of us had to absorb the loss … Romney? He and others made $4 million in this deal. … Mitt Romney: Maybe he’s just against government when it helps working men and women.”
The facts of the Bain & Co. turnaround are a little more complicated, but a Boston Globe report from 1994 confirms that Bain saw several million dollars in loans forgiven by the FDIC, which had taken over Bain’s failed creditor, the Bank of New England.
Romney aides pushed back strongly on the Democratic charge that Bain & Co. received anything like a TARP-style “bailout.” While the FDIC is a government agency, it is funded by deposit insurance payments rather than taxes. The agency agreed to reduce Bain & Co.’s liability to the Bank of New England, but didn’t pump new funds into the flagging firm. Other Bain creditors also took a haircut in order to avert the company’s collapse.
In a broadly worded statement, Romney spokeswoman Andrea Saul defended the candidate’s record in the private sector and said that at Bain & Co., Romney “helped lead a successful turnaround. At Bain Capital, he helped launch and guide a private equity and financial services firm.”
“Bain Capital invested in many businesses; while not every business was successful, the firm had an excellent overall track record,” Saul said. “These experiences give Mr. Romney the unique skills and capabilities to do what President Obama has failed to do: focus on job creation and turn around our nation’s faltering economy.”
But Tad Devine, the former Kennedy adviser who helped produce the 1994 ad blitz, said spots like the ones Kennedy aired could take their toll again in 2012.
“This was a guy who stepped onto the stage, looked good, sounded good, but his big claim was, ‘I’m a job creator,’” Devine said of Romney’s first run. “We blew it up.”
Romney’s 2012 foes are starting to deploy the same attack lines Kennedy used 17 years ago. When Romney criticized President Barack Obama over last week’s bleak unemployment report, Obama adviser David Axelrod shot back on Twitter: “In business, Romney made a fortune firing American workers. As governor, 47th in job creation.”
Earlier this spring, Republican Donald Trump became the first presidential aspirant to attack Romney’s record in the open, dismissing him as “a funds guy” who would “buy companies, he’d close companies, he’d get rid of the jobs.”
Axelrod and Trump may have overstated the case: Romney made his millions through numerous successful deals, including one that gave rise to Staples, the office supply retail giant. He consistently has downplayed his direct involvement in Bain Capital properties that went under.
What’s more, Romney has been more careful than he was in 1994 about making sweeping claims about his job creation record. That year, Romney claimed credit for creating 10,000 jobs. Now, he’s far more cautious, speaking about his business record in general terms and acknowledging that it has its blemishes.
“My work led me to become deeply involved in helping other businesses,” Romney said in his June 2 announcement speech. “Sometimes I was successful and helped create jobs, other times, I was not.”
But even a handful of persuasive data points from his career at Bain and Bain Capital could be enough to tarnish Romney’s credibility on the economy. And the data is there: In 1992, Bain Capital purchased American Pad and Paper, which subsequently laid off 250 workers at an Indiana plant and rehired some after slashing their wages and retirement benefits.
The Ampad affair became the core of Kennedy’s 1994 ads against Romney. Kennedy’s team went out to Indiana and came back with footage of angry workers expressing frustration with Romney, with one saying on camera: “If he’s created jobs, I wish he could create some here, you know, instead of taking them away.”
“They were so powerful in their own words. The Romney campaign accused us of having scripted them, and we could truthfully say we hadn’t,” said Bob Shrum, Devine’s former business partner and another Kennedy adviser. “Romney running as the candidate who created jobs was over.”
Strategists in both parties say that a 1994-level assault is coming Romney’s way if he makes it to the general election, no matter what precautions he takes.
“There’s no question that should Mitt Romney become the nominee of the party, there’s going to be a line of attack opened up on him that’s not dissimilar to that Ted Kennedy used in their Senate battle,” said Steve Schmidt, who managed John McCain’s 2008 general election campaign. Still, he predicted that the public would view Romney as a “credible and effective spokesman for economic growth.”
Said Schmidt: “The effectiveness of the attacks is likely to be diminished because of the severity of the crisis we’re in.”
Greg Mueller, the conservative public relations man and former Pat Buchanan adviser, argued that the offensive against Romney was well under way: “They’re trying to hit him on Bain, companies that Bain had under their umbrella, where people lost their jobs.”
“Those things are already coming out. They’re already starting to pick away at his credentials, as an entrepreneur,” he continued. “If you don’t get out there and get on offense a little bit, you will be defined by the other side and things will slip away.”
Ampad is just one area of vulnerability. In 1993, Bain Capital bought the company GST Steel, which later filed for bankruptcy protection and closed a steel plant in Kansas City, and a string of smaller companies also ran into trouble after being acquired by Bain Capital.
There’s also a larger — and less well scrutinized — web of corporate relationships associated with Bain and Bain Capital. Romney would be open to attacks on Bain Capital’s deals with foreign companies and his own involvement in corporate boards.
In one instance, Romney sat on the board of a medical supply company, Damon Corp., which later paid $119 million in penalties for billing unnecessary blood tests to Medicare during the period of Romney’s involvement.
Romney’s opponents in both parties have already begun preparing files on his Bain years, raising the prospect that a drip-drip of opposition research could sap Romney over the course of a long campaign.
“The Romney people are going to have to say he helped the economy and Bain Capital invested in startups and created jobs. He’s going to want to talk about Staples,” said former Mike Huckabee campaign manager Chip Saltsman. “His opponents are going to want to talk about the ones where he came in and bought everything and sold everything.”
For now, Devine suggested that Romney was doing a decent job preparing himself to make the argument that “there were winners and losers in the economic sphere that he was in, but for the most part there were gains, and the gains outweigh the losses.”
“I think Romney and the people around him have learned the lesson of ’94, which is you don’t want to lead with your chin,” Devine said. “If you overstate your record on job creation, and you try to get everybody to believe that everything in business was great, you pay a price for that.”
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