Are “job destroyers” sitting on President Obama’s jobs council?
Two Obama-appointed members of the White House Council on Jobs and Competitiveness, an advisory committee, are leading figures in the private equity industry.
Richard Parsons, chairman of Citigroup, is a senior advisor at Providence Equity Partners, “a leading private equity investment firm, specializing in media, communications and information companies,” according to his bio on the White House website.
He joined the firm in 2009 shortly after it completed what news reports describe as the “biggest leveraged buyout in history,” the $51 billion acquisition of Bell Canada.
Mark Gallogly, the co-founder of Centerbridge Partners and formerly with Blackstone Group, the nation’s largest private equity firm, also sits on the panel. He served on Obama’s Economic Recovery Advisory Board, his official bio states.
Gallogly is also a major Obama campaign contributor and fundraiser, collecting more than $500,000 for the 2012 race.
Obama’s inclusion of these men on his Jobs Council highlights a potential sticking point in his case against GOP rival Mitt Romney, a former private equity executive who says his 15-year experience in the industry qualifies him as a “job creator,” a claim that is a cornerstone of his campaign.
While neither Gallogly nor Parsons is running for office, Democrats and the Obama campaign have sought in some ways to demonize the industry itself, part of an aggressive effort to discredit Romney’s top selling point.
They have highlighted Bain investments that led to layoffs and outsourcing and devastated some communities. One Obama campaign TV ad attacking Romney’s record called him a “job destroyer.”
“If your main argument for how to grow the economy is ‘I knew how to make a lot of money for investors,’ then you’re missing what this job is about,” President Obama said of Romney on Monday.
“It doesn’t mean you weren’t good at private equity, but that’s not what my job is as president,” he said. “My job is to take into account everybody, not just some. My job is to make sure that the country is growing not just now, but 10 years from now and 20 years from now.”
Independent industry experts agree that private equity executives are focused on wealth creation, not job creation, but insist politics have clouded a more nuanced view of the industry that Obama himself seemed to accept in appointing Parsons and Gallogly to his jobs council.
“All of those guys on the jobs council want a stronger economy. They know a lot about what it means to transform businesses and also to create a new enterprise and create more jobs,” said Colin Blaydon, director of the Center for Private Equity and Entrepreneurship at Dartmouth College’s Tuck School of Business.
“That’s why a lot of these guys are on government commissions – because they understand what it takes to build companies, to transform companies and know what the outcomes mean,” he said.
Moreover, academic studies on the impact of private equity investing are ambivalent at best on measuring the overall direct impact on jobs – something both the Romney and Obama campaigns have sparred over.
“What all those studies do is measure for the particular company being affected, what happens to those jobs. They do not try to assess whether a company had not been improved and made more competitive, what would have happened to those jobs,” said Blaydon.
“And very possibly the story would have been a lot worse for the employment picture but there wouldn’t have been anyone to point the finger at other than the incumbent management,” he added.
Obama seemed to acknowledge as much Monday during his press conference in Chicago, saying, “there are folks who do good work in that area, and there are times where they identify the capacity for the economy to create new jobs or new industries.”
A senior White House official, who asked to speak on condition of anonymity, also noted the point of the jobs council was to have a group of only job creators but an independent, outside advisory board that represented all the different sectors of the economy.
Bottom line, say sources on both sides of the debate, it’s Romney’s record in private equity that will remain a primary focus of debate and is largely fair game.
“I think that the Bain record as a whole is fair game,” said Romney surrogate and former New Hampshire Gov. John Sununu on Tuesday – provided it be considered as a whole and not “cherry picked,” he said.
“No one aside from Mitt Romney is running for president highlighting their tenure as a corporate buyout specialist as one of job creation,” said Obama campaign spokesman Ben LaBolt said. ”The president has support from business leaders across industries who have seen him pull the economy back from the brink of another depression.”
But Romney “made profit at any cost for himself and his partners by outsourcing jobs and bankrupting companies,” he said.
There are signs, however, that when it comes to Bain Capital and private equity most voters don’t care.
The latest ABC News/Washington Post poll found just 21 percent of voters say Romney’s Bain experience is a reason to support him. An equal number called it reason to oppose him.
In the poll, 54 percent of voters said Bain wasn’t a major factor.