Imagine how Mitt Romney would campaign if he actually ran as a private equity executive, dangerous though that may be in this era of the Tea Party andOccupy Wall Street.
Aggressively attacked by a super PAC supporting Newt Gingrich, Mr. Romney stands accused of being a rapacious capitalist intent on destroying jobs for personal gain. Mr. Romney has responded: Au contraire! He argues that his work at Bain Capital, one of the earliest and most successful private equity firms, created jobs by making companies more efficient and successful.
Many people on Wall Street are befuddled. After all, a private equity firm creating jobs is like Adam Sandler winning an Academy Award — it would be nice if it happened, but it sure wasn’t the goal.
The goal, of course, is high returns.
If Mr. Romney were really running as a private equity executive, how would he view what his campaign regards as one of the nation’s most pressing issues, the national debt?
Right at the top of his campaign’s home page, Mr. Romney proclaims, “We have a moral responsibility not to spend more than we take in.” The United States’ debt is such a problem, it’s like an addiction: “The first step toward recovery is admitting we have a problem and refusing to allow any more irresponsible borrowing,” his site says.
It’s almost as if Mr. Romney never worked in — what’s that other phrase for private equity? — oh yes, a leveraged buyout firm. Leverage as in debt, debt and more debt. Debt amplifies the returns of L.B.O. firms. Indeed, they often saddle companies with extra debt precisely so that their investors can cash out faster, a technique Bain deployed under Mr. Romney’s watch.
L.B.O. firms certainly never think of debt as immoral. When the borrowing is good, private equity is going to grab the money. When Mr. Romney rails against debt, he is running away from his entire career in business.
So what about the federal government? The 10-year Treasury bond rate is 1.87 percent. Since inflation is higher than that, real rates are actually below zero, meaning that a lender to the United States government will get back less money in 10 years than it started with.