Obama's Bain: The Story You Haven't Heard
President Barack Obama enjoys attacking Mitt Romney for his work at Bain Capital, while portraying it as a vampire-like operation, destroying the livelihoods of entire committees for short-term gain. Obama's donors funding his Super PAC, Priorities USA, even went so far as to blame Romney for the death of a laid-off worker's cancer-stricken wife.
As a former statewide elected office holder in Ohio, I know politics is an ugly business. But I never thought I would witness allies of a sitting President of the United States accuse his opponent of murder.
In reality, what Bain does is good. With 80 percent of the more than 350 companies they invest in turning a profit, Bain expands the operations of companies that work and reorganizes companies that do not. In America's dynamic economy, this sort of change and innovation is essential to job and wealth creation.
In what can only be described as shameless hypocrisy, Obama does support venture capitalism when it supports his political purposes.
The story you probably have not heard is that in the battleground state of Pennsylvania, Philadelphia-based Sunoco's refinery was in trouble. According to the company's 10-K report, it had to pay $1.3 billion for "significant expenditures for environmental projects and compliance activities" to satisfy the carbon-limiting requirements of Obama's EPA mandates.
Sunoco rightfully feared regulatory costs would grow rapidly under the Obama administration, and made the decision to get out of the refining business entirely. Sunoco confirmed the cost of EPA requirements played a major factor in this decision.
When Obama found out a refinery was going to close and thousands of union jobs would be lost in the key battleground state while gas and heating-oil were going to skyrocket before the election, he has one of his cronies call in a favor with one of his friends on Wall Street.
Gene Sperling, director of Obama's National Economic Council, started discussions to sell the refinery to the Carlyle Group, a politically-connected private equity firm. Carlyle plans on taking a two-thirds stake in the refinery at no cost, while promising to invest millions in upgrading the refinery. In the process, it is keeping American fuel-prices under control and saved 850 unionized jobs. To ensure the rescue happened, Pennsylvania politicians were happy to work with the Obama administration and offer $25 million in subsidies, at the expense of taxpayers.
A major concern for Carlyle was an agreement Sunoco had in 2006 to limit emissions at its refineries. Obama's White House referred the issue to the EPA, which quickly modified the agreement, as it was important to the re-election campaign.
Given all the money the bailout showered on the financial services sector, it's no skin off Carlyle's back to buy a refinery if it helps keep the President in office, even if the Administration's policies force them to sell or close the facility after the election.
But all of this could have been avoided if EPA rules were not so onerous that one assumes they were created with the specific intent to limit (murder!) America's oil refining capacity.
In an ultimate example of political hypocrisy, Obama has no problem using venture capital to delay the prosperity-destroying results of his regressive, anti-growth policies until after the election.