OPINION:
Newt Gingrich’s sharp counterattack against Mitt Romney for “laying off employees” during his years as a venture capital investor was taken right out of former Sen. Edward M. Kennedy’s liberal campaign playbook.
Stung by the former governor’s criticism for earning a small fortune from the government’s bailed-out mortgage giant, Freddie Mac, Mr. Gingrich shot back that his rival had bankrupted businesses during his years with Bain Capital, the successful private investment firm Mr. Romney founded before going into politics.
The volley of charges and countercharges began this week when Mr. Romney said in a television interview that the former House speaker should give back the more than $1.6 million he earned from federally backed Freddie Mac.
Mr. Gingrich fired back that he’d consider returning the money “if Gov. Romney would like to give back all the money he’d earned bankrupting companies and laying off employees over his years” in the private sector.
That was the same line of attack Kennedy used against Mr. Romney with deadly effect to blunt his strong Republican challenge in the 1994 Senate race.
It was pure demagoguery then and its demagoguery now.
Kennedy’s strategists dug up some cases where Bain took over troubled but promising businesses that had to be slimmed down to make them more efficient and ready for expansion. That sometimes meant payroll cuts.
In many cases, these investments paid off handsomely and built startup companies into major corporations. One of Mr. Romney’s biggest successes was a small enterprise called Staples that grew into 2,000 stores in 26 countries and created jobs for thousands of Americans. In others, the investments failed to turn the company around.
The Kennedy campaign found workers who had been laid off under Bain’s fix-it strategy who told their stories in TV attack ads with devastating effect.
Venture capital investment is a tough, risky business, and not all enterprises take off and in the business community as a whole - many fail. But many also succeed, and in the free market, that’s what contributes to new job creation and a growing economy.
Mr. Gingrich, a free-market enthusiast, knows this. But when he found himself under fire for his high-paying, lobbylike arrangement at Freddie Mac, he reached for Kennedy’s demagogic tactic and fired.
“There’s a big difference between working in the private economy and working on [Washington’s] K Street and working as a lobbyist or working as a legislator or working to connect businesses with government,” Mr. Romney said.
When it was first revealed that Mr. Gingrich was paid huge sums by Freddie Mac, which was at the center of the subprime mortgage collapse, he falsely maintained his work there was as a historian.
“That would make him the highest-paid historian in history,” Mr. Romney said.
In fact, his work was much more than that, including strategic advice and counsel, bringing influential people together from the housing industry and at some point, connecting Freddie Mac with conservative leaders in Congress. That sounds a lot like lobbying.
In a statement his campaign issued when the Freddie Mac story surfaced last month, it said, “In addition, Freddie Mac was interested in advice on how to reach out to more conservatives.”
The Washington Post’s fact checker Glenn Kessler observed, “While Gingrich takes great pains to stress he was never registered as a lobbyist, he clearly appears to have provided advice on how to influence the thinking of conservative members of Congress.”
It is worth pointing out, as Bloomberg News has done, that Mr. Gingrich’s “primary contact inside the organization was Mitchell Delk, Freddie Mac’s chief lobbyist.”
Mr. Gingrich, as an influential leader in Congress and now a private citizen, had become well known as a skilled idea man who offered a wide range of solutions to the nation’s problems, and people were willing to pay him big money to give them his best advice. There’s nothing wrong with that.
At the same time, he was handsomely profiting from Freddie Mac, a multibillion dollar government-sponsored enterprise, or GSE, that played a pivotal role in the costly subprime mortgage debacle, which sowed the seeds of the housing industry’s collapse and the Great Recession.
Freddie Mac was taken over by the government in 2008 and has received more than $151 billion in government bailout funds. It still retains an unlimited line of credit from taxpayers. Mr. Gingrich was on its payroll between 1999 and 2008.
Most conservatives have long believed that Freddie Mac and Fannie Mae should be privatized and that the federal government shouldn’t be in the home mortgage business.
But in an interview April 24, 2007, for Freddie Mac’s website, Mr. Gingrich stoutly defended the GSEs and their work - just months before they declared bankruptcy.
“We have a much more liquid and stable housing finance system than we would have without the GSEs,” he said. “These are the results I think conservatives should embrace and want to extend as widely as possible.”
Thus, you have the ultimate irony of Mr. Gingrich attacking Mr. Romney, a businessman who was channeling investment capital into the private economy and creating jobs, while the former House speaker was advising and cheering a government-run enterprise that went bankrupt. And the taxpayers are footing the bill.
Donald Lambro is a syndicated columnist and former chief political correspondent for The Washington Times.
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