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Romney’s rantings ruin already-damaged reputation

By Paul Mackintosh - 24/09/12

Amid the blizzard of comment on Mitt Romney’s inopportune – to put it very charitably – remarks on video about the 47% of Americans who allegedly pay no federal income tax, I’ve yet to see mention of one pertinent rebuttal: a fair slice of that 47% may pay no federal income tax, but they did at least at some point in their lives pay for Mr. Romney’s income. Because according to the same 2011 Tax Policy Centre study that gave Mr. Romney his headline figure, the largest proportion by far (44%) of those made untaxable by entitlements are pensioners on elderly tax benefits. In other words, people supported by exactly the same private and public pension funds that fuelled Bain Capital’s own funds, and who presumably paid their own contributions into those funds for decades before retirement.

The host at the fundraiser where those now notorious comments were made is also a beneficiary of the 47%’s pensions. That was Marc J Leder, co-CEO of Florida’s Sun Capital Partners, which, according to Bloomberg, has been subpoenaed by New York State attorney general Eric Schneiderman, alongside Bain itself, TPG Capital, and other industry majors, in an investigation into alleged withholding of state taxes through management fee waivers. OpenSecrets.org has also stated that Leder has supported Restore Our Future, a pro-Romney special-purpose acquisition company (SPAC), with at least US$225,000. Huffington Post, already provided full of coverage of the bankruptcy of Contec Holdings Ltd, a Bain-owned company, that specifically links the story to Mr. Romney’s candidacy, is now reporting that Mr. Leder has apologised to Mr. Romney for the leaking of the video. And the fact that these remarks were made behind closed doors at a private high-rolling fundraiser, and then leaked, has only magnified the damage.

It is not hard to see where this whole fiasco is going. US private equity is being branded the rich man’s cabal, supported by and supporting the party of the rich. What state government, or even pension fund, is going to buy into private equity rhetoric about industrial regeneration and new jobs when this is bracketed with unrepentant discrimination from someone like Mr. Romney? In the public eye, private equity is now being pitted against the 47%: not a happy situation for an industry, never mind a politician.

All kind of ironic from an administration that looks ready to jump-start private equity fund marketing by passing the JOBS Act, but the Obama campaign’s anti-private equity negative videos against Mr. Romney’s policies at Bain suddenly look all too credible. If Mr. Romney is a measure of the sensitivity and public awareness, to say nothing of tact and PR skills, of a typical leading private equity alum, then no wonder the industry has had an image problem all these years.