Where Bain gets its money

Posted: January 17, 2012

"No person except a natural born citizen, or a citizen of the United States, at the time of the adoption of this Constitution, shall be eligible to the office of President; neither shall any person be eligible to that office who shall not have attained to the age of thirty-five years" - U.S. Constitution, Article II, Section 1

By John E. Sununu

The Constitution may be the foundation of American democracy, but the qualifications to run for president are - let's face it - so 1789. As luck would have it, we have a historian running for president who's bringing things up to date.

If you've worked at a private-equity firm, it seems, you're not fit to lead the country: The business Mitt Romney was in is "suspicious" and "indefensible," Newt Gingrich has said; it has "undermined capitalism." Ouch.

Of course, other lines of work generate their own controversies, so while we're at it, we might as well list all the occupations that disqualify one from the presidency. That way, we can save money on super-PAC ads and "documentaries" condemning the disgraceful professions of future presidential wannabes.

Take working for a university, state agency, or labor union, for example. Where do you think private-equity firms get their cash in the first place?

Sure, there are "1 percenters" who invest. But in 2010, 55 percent of private-equity assets came from pension funds, academic institutions, and foundations. Working in private equity is bad enough, but working for an enabler like Harvard, the California Pension and Retirement System, or the International Brotherhood of Boilermakers? Totally unacceptable.

And no candidate for president should ever have worked for a company that was funded by private equity, which is like being on John Dillinger's payroll and then claiming you thought he went to all those banks just for the free lollipops and calendars. That's tough luck for anyone who ever worked at Domino's, Staples, or Sports Authority - all funded by Bain Capital, Romney's former firm - but standards are standards. This also applies to anyone at Hulu, Dollar General, or the Weather Channel.

Your mother told you that someday you could be president? Call her and break the bad news: You never should have taken that summer job delivering pizza.

Sounds suspicious

Obviously, the restriction should apply to venture capitalists as well. Have you ever seen the batting average of a typical venture-capital firm? Sometimes as many as half of their investments go belly up. Enticing entrepreneurs with millions and then just watching as they go out of business - is that even legal? Being ruled out of the presidential sweepstakes should be the least of venture capitalists' worries.

Forget banking. Big or small, doesn't matter - the monster banks of today all started somewhere. We need to send people a message: Don't even start down that path. At 1600 Pennsylvania Ave., you need not apply.

That goes for credit unions, too. They may not pay taxes, but they're up to the same tricks - taking deposits, investing the money, and taking a cut off the whole enterprise. It all sounds very suspicious.

And what about management consultants? Apparently, sometimes management consultants start private-equity firms. We'd be fools not to nip that in the bud.

Besides, management consultants at places like Bain, McKinsey, and Booz Allen make tons of money for what? Improving the way companies manage their inventories, reducing distribution costs, helping to align sales force incentives - yikes! Next thing you know, those companies will be growing like gangbusters and attracting private equity. Just say no.

Job creators

This may be a lot to digest on short notice, but fortunately, billionaire Sheldon Adelson is generously spending millions to explain things to the American people. Adelson, who recently gave $5 million to a super-PAC supporting Gingrich, made his money the old-fashioned way - casinos. And not the private-equity kind, in which you place a bet on a wide-eyed entrepreneur tying to build a successful company, but the kind where you stage games with odds that guarantee your customers will eventually lose money. Who says there are no job creators left?

None of this is to say that voters shouldn't scrutinize the candidates' professional records. They show experience, character, and leadership skills. But don't kid yourself: The hyperbole filling the airwaves lately hasn't been about scrutiny; it's been about demonization.

There is, after all, a remote possibility that we actually need firms to help put universities' and pension funds' money to work. Maybe it's good for entrepreneurs to get funding from specialists in start-up financing. There might be real value to having investors with a time horizon measured in years, rather than the quarter-to-quarter pressure on public-company earnings.

And as it stands, you can still run for president if you worked at a private-equity firm - but only if it never invested in a company that laid anyone off. Failing that, you can definitely run for president if you were a community organizer.

John E. Sununu is a former U.S. senator from New Hampshire. He wrote this for the Boston Globe.

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