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Gingrich, Romney and the private equity debate

by Robert Teitelman | Published January 23, 2012 at 12:56 PM

We normally like to stay away from retail politics. But lately, particularly with the debate over Mitt Romney, Bain Capital and private equity, politics has come to visit and seems unwilling to leave the house. Vast numbers of words have been expended on debating private equity, most of it pretty predictable. Politically, however, the genius of Newt Gingrich's decision to go all-out after Romney and his business career -- driven most spectacularly by that half hour anti-Romney "documentary" -- did not lie in the sophistication of the argument or even in the compelling nature politically of the charges. Rather, it gave Gingrich the appearance of dynamism and energy. Once again, Gingrich could lay claim to that most-desirable moniker of Republican politics, no matter how shopworn it has been rendered by John McCain and Sarah Palin: maverick. That Newt has guts. That Newt will do just about anything. That Newt doesn't run a conventional campaign; he's a transformative figure (this latter description Gingrich regularly offers up about himself). This brash attempt at branding manages to obscure just how demagogic and ordinary is the message itself. Literally, content doesn't matter; performance does.

Gingrich's campaign in South Carolina was unconventional. Imagine if you had said the following just a few weeks ago: A Republican candidate would attack financial practices that are part of the texture of free enterprise; he would suggest that his rival made too much money and doesn't pay enough in taxes; and that an ex-wife would re-emerge and say terrible things about him. Not only was Gingrich, who carries contradictions around like a flag (he's the Washington insider as outsider, the moralistic adulterer), not punished for all of that in South Carolina; he was rewarded. At least among Republicans, Gingrich seems almost Whitmanesque in containing multitudes. Whether that translates to the general election is another matter.

Of course, Gingrich couldn't succeed alone. He needed Romney to help him out. And that's what the attack on private equity really did for him: It set off a chain of events and issues that not only surprised Romney, but seemed to panic him. That certainly was the case with both Bain and his taxes. In trying to explain, Romney looked increasingly uncertain and weak: guilty in a brow-furrowing way Gingrich viscerally rejects. Romney reacted to the attack on private equity in exactly the same way Wall Street confronted populist attacks on its practices: a passive, vacillating defense that suggests that it's almost useless to try to convince the lay public about such complex matters. Romney never made an aggressive defense of what Bain did or a justification of private equity -- certainly nowhere as aggressively as Gingrich has defended himself on everything from his tenure at Fannie Mae to his checkered marital life. (I'm not sure Romney has the rhetorical chops, certainly not like Obama on Jeremiah Wright, but he never really tried.) Moreover, Romney proved unable to halt the chain of unintended consequences: Bain led to wider debate over issues like the role of firing employees or M&A, to inequality, to demands that Romney release his taxes (while Gingrich deftly skirted substantive issues like carried interest that might truly make him a heretic in Republican circles), which led to the matter of the Cayman Islands and more. They're all connected, and once Gingrich lit the fuse with Bain, there was no stopping it.

As for private equity, this isn't the first time there's been a broad, national "debate" over the practice. (The post-'80s debate was never resolved and left us not with greater knowledge or insight into the business, but epithets -- vulture, asset stripper, financial engineer -- that were so easily mobilized for this episode.) There's no evidence that anything will change because of the Gingrich attack; there's no suggestion that Gingrich wants anything to change. He simply felt it necessary to depict Romney as a cold, technocratic financial engineer, too rich, too casually destructive in his relations with ordinary folks. And carried interest? Congress will discuss it. But at least for now, there's no way that Congress will alter it. Again, like Wall Street, private equity is far more effective dealing privately with Congress than in trying to convince a broad public.

And so on to Florida. Predicting what comes next is a fool's errand. What we do know is that the Republican electorate has proved extremely fickle and that for all his success in South Carolina, Gingrich is riding a wave but hardly controlling it. He is also a figure who historically speaking has a tendency to overstay his welcome. After all, we're electing a president, not a maverick. Transformative figures provide some entertainment, but living with them grows old quickly. - Robert Teitelman

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