Thanks for that! That’s a missing piece from my analysis on how the tax code gives special government favor to these private equity firms. I really hope Newt and others DO NOT back off these attacks because what Bain did looks dirtier and dirtier the more you look into it. Here is a Wall Street Journal review of the book they’re discussing:
Private Equity, Debt Worries
A warning about the precarious state of companies owned by buyout firms.
http://online.wsj.com/article/SB10001424052748704013004574515450045378722.html
Mr. Kosman brings to the subject a relentlessly critical approach that is refreshing, simply because so many stories about the buyout firms are the sort of puff pieces that result from delicate negotiations for access. He documents dozens of companies acquired in buyouts—such as hospitals, mattress manufacturers and a car-parts maker—whose service or products went downhill, whose employees suffered pay cuts or layoffs, and whose fortunes plummeted, sometimes ending in bankruptcy.
Time and again, Mr. Kosman details how the rest of us suffer at the hands of the buyout barons, 17 of whom are members of the Forbes 400. The private-equity firms pay lowball prices, he says, shortchanging public investors, by teaming up with management to pre-empt competing bids. They cream fees from their acquisitions, generating profits no matter how the companies fare. The companies cut more jobs than publicly owned competitors and sidestep proposed reforms by currying favor with politicians. Mr. Kosman finds a University of Chicago study showing that, for the years 1980 to 2001, the private-equity firms’ investors got returns that fall short of the broad market average, after fees.
At Bain Capital, built by former presidential candidate Mitt Romney, dividends paid to investors siphon off much-needed capital, weakening company after company.
http://www.washingtonmonthly.com/political-animal/2011_12/romneys_carried_interest_probl034344.php
Romney is likely paying taxes at 15% rate due to the carried interest scam/loophole that hedge fund guys also pay. If true and this comes out while he is running against Obama....
Romney is kinda spacey. He is not grounded. David Axelrod loves him...an easy target
Josh Kosman wrote the book http://www.amazon.com/Buyout-America-Private-Equity-Credit/dp/1591842859/ref=sr_1_1?ie=UTF8&s=books&qid=1256067473&sr=8-1 on these so called private equity firms. The story goes that David Axelrod has read it and will use it against Romney