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January 06, 2012 12:35 PM When Romney sought (and received) a bailout

By Steve Benen

It’s a familiar story: Mitt Romney’s Bain Capital takes over a company, the company is ruined, and Romney and his investors make millions. But few of these stories look worse than the circumstances surrounding GST in Kansas City.

Reuters reports today on the “steel skeleton in the Bain closet” — a Missouri steel company called GS Technologies, which had been operating since 1888. Romney and his team took over in late 1993, and the only folks who benefited were at Bain Capital. (via T.O.A.)

Less than a decade later, the mill was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health insurance they’d been promised, and their pension benefits were cut by as much as $400 a month.

What’s more, a federal government insurance agency had to pony up $44 million to bail out the company’s underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.

Romney ruined plenty of companies, and laid off thousands of American workers, but what makes the GST story especially interesting is that bailout.

[Romney’s] supporters say the pension gap at the Kansas City mill was an unforeseen consequence of a falling stock market and adverse market conditions. But records show that the mill’s Bain-backed management was confronted several times about the fund’s shortfall, which, in the end, required an infusion of funds from the federal Pension Benefits Guarantee Corp.

The Republican took a chance on a company and decimated it. The workers lost; the community lost; and when GST needed federal intervention, the taxpayers lost*. But Romney and his investors still took home millions.

This is, incidentally, the same business failure featured in the new MoveOn.org ad, which we discussed yesterday.

Steel worker and Army veteran Donny Box worked at that mill for 32 years. “We lost our jobs, they made millions,” Box says in the ad. “Mitt Romney wants to call himself a ‘job creator’? Mitt Romney doesn’t care about jobs. He cares about money.”

Update/Correction: upyernoz argues persuasively that the Pension Benefits Guarantee Corp. relies on a business’ funds for unfunded pension liabilities. It’s a good point.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

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  • c u n d gulag on January 06, 2012 12:43 PM:

    Maybe someone should paint a white stripe in his hair?

    WHAT A SKUNK!!!

    No, be fair, skunks only stink close-up, if they douse you or get run over.

    Mitt stinks to high heaven, no matter how you look at him - near or far.

    Unless you look through Conservative eyes, where all of this makes him an Anti-working Class hero!
    In that, he's "something to see..."

  • Ron Byers on January 06, 2012 12:54 PM:

    A lot of my clients worked for the GTS mill. Their lives were never the same after they encountered Mitt Romney.

    That closed mill is going to cost taxpayers even more in the future. The Super Fund will probably be involved when it is torn down.

    The term vulture capitalist is most appropriate when talking about people like Mitt Romney. They are more like pirates than people who build anything.

  • ex-curm on January 06, 2012 12:58 PM:

    Romney is now alleging that Obama laid off autoworkers. Romney is shameless in his storytelling but some folks might buy that.

  • Mitch on January 06, 2012 12:58 PM:

    "The Republican took a chance on a company and decimated it."

    Decimate isn't the proper word. Decimation, historically, meant to destroy ten percent of something. The Romans used to decimate rebellious towns, a practice which involved killing one tenth of all of the men in offending villages. What Romney and Bain did here is a massacre, coupled with pillaging.

    Scum like today's GOP are too uncivilized to decimate. They want to destroy everything, and take the spoils for themselves.

  • Ron Byers on January 06, 2012 1:01 PM:

    Mittons will say that GTS went down because of international market conditions. They just couldn't compete with their foreign competitors. He might be right, but instead of investing money in plant and equipment to turn the mill around, they simply took all they could, including the pension fund and shut the operation down. It was textbook Bain Capital. It was sad.

  • RepublicanPointOfView on January 06, 2012 1:15 PM:

    This is an unfair article...

    To balance this unfairness, Benen should do an article on one of Mitt's biggest successes! Naturally, my first choice would be his rescue of the Salt Lake Olympics. Mitt can rightfully boast about how he save the SLO from financial disaster.

    When Mitt went to the rescue, the first thing he did was to hire 3 big time lobbyists who promptly delivered.

    With Mitt to the rescue...

    He likes to brag about how he turned them around, but in reality he did so only by reaching into Uncle Sam's pocket. With taxpayer money and government employees the 2002 Games succeeded, with the help of Republicans in Washington to help out a fellow rich conservative.

    How much money? $380 million from a friendly Republican president.

    Just as important is the federal contribution of about $380 million, five times what taxpayers had to pay for the 1984 Games in Los Angeles and twice as much as what the federal government spent on the 1996 Games in Atlanta. [It was also twice that of the 2000 Sydney Olympics]

    With a fraction of the athletes and events of Atlanta, Mitt helped himself to double the taxpayer money. With Washington taking care of 20% of his budget, it became a lot easier to balance the books.

    Be fair Benen & write about Mitt's successes!

  • stormskies on January 06, 2012 1:20 PM:

    Be fair Benen & write about Mitt's successes!

    **********

    THESE ARE HIS SUCCESSES ......THAT'S HOW THIS SADISTIC, DUPLICITY, PIG OPERATES ...

  • SteveT on January 06, 2012 1:33 PM:

    What's more, a federal government insurance agency had to pony up $44 million to bail out the company's underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.


    We desperately need to reform our bankruptcy laws for corporations.

    The U.S. Pension Benefit Guaranty Corp. shouldn't have to bail out underfunded employee pensions until AFTER shareholder dividends and executive salaries and bonuses are forfeited.

  • Josef K on January 06, 2012 1:35 PM:

    I wonder how Willard manages to sleep at night? Did he have his conscience surgically removed or what?

  • SteveT on January 06, 2012 1:39 PM:

    Ron Byers said:
    The term vulture capitalist is most appropriate when talking about people like Mitt Romney. They are more like pirates than people who build anything.


    While some people describe what Mitt Romney and Bain Capital did as "vulture capitalism", I don't think that it's fair description -- it's not fair to vultures, who have the decency to wait for their prey to die before picking its carcass clean.

    A better description would be "Rodent capitalism", because rats will kill their prey if they have to. But more often, rats thrive by stealing provisions that have been stored by more evolved creatures for later use.

  • upyernoz on January 06, 2012 1:52 PM:

    the PBGC is not funded by taxpayer dollars. so it's not accurate to say that "taxpayers lost" or that there was a taxpayer funded bailout in this case.

    see my blog post.

  • just bill on January 06, 2012 1:57 PM:

    you're right on that, upyernoz. it is funded by pension plans themselves. but if they didn't have to keep bailing out these underfunded plans (usually intentionally), the cost of those premiums would be less, and the plans would have more assets to distribute. at the end of the day, "taxpayers" in the form of retired employees still paid, so bain and it's shareholders could proft.

  • RP on January 06, 2012 2:16 PM:

    JosefK, what is this "conscience" thing you ask about. I'm not familiar with that term. Anything word that begins with "con" is one you'd think I would know all about. Funny, huh?

    Regards,
    Willard

  • Anonymous on January 06, 2012 2:26 PM:

    But, but, but... I thought the free market regulated itself. And if an investment was bad, the owners should expect to lose money.

    Romney/Bain proves this isn't the case, so Mitt should just stfu.

  • mudwall jackson on January 06, 2012 2:42 PM:

    a skelton in romney's closet? there's probably more like an entire cemetery in his closet.

    Josef K on January 06, 2012 1:35 PM:

    I wonder how Willard manages to sleep at night? Did he have his conscience surgically removed or what?

    some people count sheep; willard counts money.

  • schtick on January 06, 2012 2:50 PM:

    If an individual goes bankrupt he screwed for years. If Bain buys out a company and they go bankrupt, Bain makes a fortune and all the employees get screwed. What's wrong with this picture?

  • Rattus on January 06, 2012 5:49 PM:

    Even if funded by premiums, such premiums are (while still solvent) funded by revenue generated by the corp. Corps establish their prices based on what market will bear, but this INCLUDES "cost of doing business" which, of necessity, payment of pension premiums is one. Thus, in essence, it IS, in large part, taxpayers, directly or indirectly, who pay these pension premiums.

    No matter how you spin it, ultimately, all of these bankruptcies and pension bailouts ARE essentially funded to some extent by taxpayers - just not necessarily directly so. Failure on occasion is understandable, but to suggest orgs such as Bain Capital should be paid BEFORE promised pensions as a result of very poor fiduciary (or other) mgt by such orgs is nothing short of insulting and, dare I say it? Feudalistic -- pay the king before everyone else.

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