Willard and his boy companion Paul may package their old lies in new feel-good lies, but their history as destroyers hasn't changed

"Fans of mob movies will recognize what's known as the 'bust-out,' in which a gangster takes over a restaurant or sporting goods store and then monetizes his investment by running up giant debts on the company's credit line. . . . When the note comes due, the mobster simply torches the restaurant and collects the insurance money. Reduced to their most basic level, the leveraged buyouts engineered by Romney followed exactly the same business model. 'It's the bust-out,' one Wall Street trader says with a laugh. 'That's all it is.' "

-- Matt Taibbi, in "Greed and Debt: The True
Story of Mitt Romney and Bain Capital"

by Ken

On Thursday Howie wrote about ""the real Romney story" as set out so elegantly in Rolling Stone by Matt Taibbi ("Greed and Debt: The True Story of Mitt Romney and Bain Capital"), and about the real Paul Ryan story he's been writing about for years now. He pointed out that this is "not something you'll be seeing in Tampa and it's not something the Village will be sharing with the public."

Commenters commented:

"Sorry, no one that I know that is voting for Romney will listen to anything said against him."

"You assume people thinking (I use the word loosely) about voting for Romney can read? Your naivety is astounding."

I've been screaming here since the 2008 election that there had to be consequences when one of our two major political parties and half our political spectrum went totally and unequivocally off the truth standard, with a candidate, Young Johnny McCranky, had a minimum of two positions on every issue, none of which there was any reason to think he believed, and all of which were supported, to the extent that they were supported, by obfuscations and outright lies.

Not surprisingly, having discovered that there was no price to pay for having every word out of the mouth of everyone of your speakers be a lie, for the ensuing four years they've made this a cornerstone of their conversation with the American public. And what reason is there to expect anything different in this campaign season?

Actually, it turns out that there is a modified tone to Republican rhetoric. No, not in the direction of truthfulness. It's more like a new overlay of lies on top of the old layers of lies. Indeed, Matt T himself has now written that "Mitt Romney, Paul Ryan Speeches Make Me Miss George Bush." He misses the clarity of the bygone Bush-Cheney-Rove era, when GOP orators knew what to do: "you bashed welfare queens and free-riders, told tearful stories of fetuses composing operas in the womb, and promised to bomb America's enemies back to the Stone Age."

So we've got Paul Ryan, whose "conservative cred derives almost entirely from his strike-hard-strike-first-no-mercy-sir reputation as a ruthless chainsawer of all government-funded 'waste,' including sacred-cow entitlements like Medicare," in Tampa "spend[ing] half his speech doing a Ted Kennedy impersonation, talking about the 'obligation we have to our parents and grandparents,' pitching his party as the defender of a beloved government entitlement program! 'The greatest threat to Medicare,' he said, 'is Obamacare, and we're going to stop it.' Then, like the Unknown Comic, who used to switch bag-faces mid-routine, he moved right back into his young-Barry Goldwater act, bashing entitlements and the 'supervision and sanctimony of the central planners.' "

"Are you confused yet?" Matt asks. Well, he thinks the delegates may have been just a little too, when "he railed against Obama's health care program, calling it 'two thousand pages of rules, mandates, taxes, fees, and fines that have no place in a free country,' and got the sought-after applause, but Matt swears it was "tempered just a bit" as his audience "slowly remembered that Ryan's running mate had not only proposed but implemented an extremely similar health care program in Massachusetts."

But both nominees, Matt says, "spent most of their time in their speeches slithering, Catherine-Zeta-Jones-in-Entrapment style, around their own records." Among the many things that didn't get mentioned was both nominees' awkward history on abortion. On this issue Ryan, as on budget cuts, "made himself famous by going further than other pols were willing to go," but not in Tampa. Willard's history as an outspoken pro-choice moderate (who "spoke glowingly of his mother's support of abortion rights in his 1994 Senate race against Ted Kennedy"), similarly went unmentioned.

So what did they talk about? The line that astonished me most from Mitt's speech was this one, where he talked about the changes Americans "deserved" and should have gotten during Obama's presidency:

You deserved it because you worked harder than ever before during these years. You deserved it because, when it cost more to fill up your car, you cut out moving lights, and put in longer hours. Or when you lost that job that paid $22.50 an hour, benefits, you took two jobs at $9 an hour…

Are you kidding? Mitt Romney was the guy that fired you from that $22.50 an hour job, and helped you replace it with two $9 an hour jobs! He was a pioneer in the area of eliminating the well-paying job with benefits and replacing it with the McJob that offered no benefits at all. One of the things that killed him in the Senate race against Ted Kennedy were Kennedy ads that reminded voters that Mitt's takeovers resulted in slashed wages and lost benefits. He was exactly the guy that eliminated that classic $22.50 manufacturing job, like in the case of GST Steel, where Bain took over with an initial investment of $8 million, paid itself a $36 million dividend, ended up walking away with $50 million, and left GST saddled with over $500 million in debt. 750 of those well-paying jobs were lost.

What kinds of jobs were left for those fired workers to look for? Well, in the best-case scenario, you might have found one at Ampad, another Bain takeover target, where workers had their pay slashed from $10.22 to $7.88 an hour, tripled co-pays, and eliminated the retirement plan.

So a guy who eliminated hundreds of $22 an hour jobs and slashed hundreds more jobs to below $9 an hour blasts Barack Obama for not giving you the better life you deserved, after you lost your $22/hour job and had to take two $9/hour jobs. Are we all high or something? Did that really just happen?

We keep hearing about these armies of fact-checkers who have now taken center-stage in the campaign, but whose only role, clearly, will be to discredit Democrats as the Republicans flash their "free pass on lies" cards.

I don't know how, but somehow the message has to get out, notwithstanding the abundant evidence that Americans don't want the truth, that they believe they have a God-given right not to have to handle the truth. But just as it's impossibly galling to listen to PRyan, a man who doesn't have a moral bone in his rotting carcass, pontificate about the moral foundation of America, Willard has to be made to pay a price for his shameless lies in presenting himself as the last great defender of the free-enterprise system. In the face of the clever spin the lying liars of the Right have come up with to defend career his history of gross financial predation -- you know, their wailing about how he's being blamed for his success -- somebody's got to be talking about what that "success" consisted of.

Which brings me to the point I really wanted to make today. In that earlier piece of Matt T's, "Greed and Debt: The True Story of Mitt Romney and Bain Capital," he provided as clear an account as I've encountered of Willard's version of "free enterprise":

The reality is that toward the middle of his career at Bain, Romney made a fateful strategic decision: He moved away from creating companies like Staples through venture capital schemes, and toward a business model that involved borrowing huge sums of money to take over existing firms, then extracting value from them by force. He decided, as he later put it, that "there's a lot greater risk in a startup than there is in acquiring an existing company." In the Eighties, when Romney made this move, this form of financial piracy became known as a leveraged buyout, and it achieved iconic status thanks to Gordon Gekko in Wall Street. Gekko's business strategy was essentially identical to the Romney-Bain model, only Gekko called himself a "liberator" of companies instead of a "helper."

Here's how Romney would go about "liberating" a company: A private equity firm like Bain typically seeks out floundering businesses with good cash flows. It then puts down a relatively small amount of its own money and runs to a big bank like Goldman Sachs or Citigroup for the rest of the financing. (Most leveraged buyouts are financed with 60 to 90 percent borrowed cash.) The takeover firm then uses that borrowed money to buy a controlling stake in the target company, either with or without its consent. When an LBO is done without the consent of the target, it's called a hostile takeover; such thrilling acts of corporate piracy were made legend in the Eighties, most notably the 1988 attack by notorious corporate raiders Kohlberg Kravis Roberts against RJR Nabisco, a deal memorialized in the book Barbarians at the Gate.

Romney and Bain avoided the hostile approach, preferring to secure the cooperation of their takeover targets by buying off a company's management with lucrative bonuses. Once management is on board, the rest is just math. So if the target company is worth $500 million, Bain might put down $20 million of its own cash, then borrow $350 million from an investment bank to take over a controlling stake.

But here's the catch. When Bain borrows all of that money from the bank, it's the target company that ends up on the hook for all of the debt.

Now your troubled firm -- let's say you make tricycles in Alabama -- has been taken over by a bunch of slick Wall Street dudes who kicked in as little as five percent as a down payment. So in addition to whatever problems you had before, Tricycle Inc. now owes Goldman or Citigroup $350 million. With all that new debt service to pay, the company's bottom line is suddenly untenable: You almost have to start firing people immediately just to get your costs down to a manageable level.

"That interest," says Lynn Turner, former chief accountant of the Securities and Exchange Commission, "just sucks the profit out of the company."

Fortunately, the geniuses at Bain who now run the place are there to help tell you whom to fire. And for the service it performs cutting your company's costs to help you pay off the massive debt that it, Bain, saddled your company with in the first place, Bain naturally charges a management fee, typically millions of dollars a year. So Tricycle Inc. now has two gigantic new burdens it never had before Bain Capital stepped into the picture: tens of millions in annual debt service, and millions more in "management fees." Since the initial acquisition of Tricycle Inc. was probably greased by promising the company's upper management lucrative bonuses, all that pain inevitably comes out of just one place: the benefits and payroll of the hourly workforce.

Once all that debt is added, one of two things can happen. The company can fire workers and slash benefits to pay off all its new obligations to Goldman Sachs and Bain, leaving it ripe to be resold by Bain at a huge profit. Or it can go bankrupt -- this happens after about seven percent of all private equity buyouts -- leaving behind one or more shuttered factory towns. Either way, Bain wins. By power-sucking cash value from even the most rapidly dying firms, private equity raiders like Bain almost always get their cash out before a target goes belly up.

This business model wasn't really "helping," of course -- and it wasn't new. Fans of mob movies will recognize what's known as the "bust-out," in which a gangster takes over a restaurant or sporting goods store and then monetizes his investment by running up giant debts on the company's credit line. (Think Paulie buying all those cases of Cutty Sark in Goodfellas.) When the note comes due, the mobster simply torches the restaurant and collects the insurance money. Reduced to their most basic level, the leveraged buyouts engineered by Romney followed exactly the same business model. "It's the bust-out," one Wall Street trader says with a laugh. "That's all it is."

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