When You Can't Tell The Truth

David Frum on the challenge for Mitt Romney in explaining his involvement with Bain Capital:

Romney's core problem is this: He heads a party that must win two-thirds of the white working-class vote in presidential elections to compensate for its weakness in almost every demographic category. The white working class is the most pessimistic and alienated group in the electorate, and it especially fears and dislikes the kind of financial methods that gained Romney his fortune.

Romney has a strong potential defense: Bain was in the business of making companies more efficient and profitable. Downsizing and outsourcing were necessary -- and often indispensable -- means to that end. In a growing economy, the workers who lost their jobs should find new jobs elsewhere, and it's precisely the relentless search for profitability that causes economies to grow in the first place.

That's an argument that, to borrow an old joke of Henry Kissinger's, is not only convincing but has the additional merit of being true. However, it's not an argument that appeals much to the voters Romney most intensely needs to win. Hence his unleashing of the war room -- but in the end, there's only so much a war room can do. And this time, by trying to do too much, the Romney war room may have blasted its own side with lethal friendly fire.

I'm not sure how strong that potential defense is.  Looting the economy might not be everyone's idea of necessary and indispensible:

Thanks to leverage, 10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, later wound up in bankruptcy. It’s worth examining some of them to understand Romney’s investment style at Bain Capital.
In 1986, in one of its earliest deals, Bain Capital acquired Accuride Corp., a manufacturer of aluminum truck wheels. The purchase was 97.5 percent financed by debt, a high level of leverage under any circumstances. It was especially burdensome for a company that was exposed to aluminum-price volatility and cyclical automotive production.
Forty-to-one leverage is casino capitalism that hugely magnifies gains and losses. Bain Capital wisely chose to flip the company fast: After 18 months, it sold Accuride, converting its $2.6 million sliver of equity into a $61 million capital gain. That deal, which yielded a 1,123 percent annualized return, was critical to Bain Capital’s early success and led the firm to keep maximizing the use of leverage.
In 1992, Bain Capital bought American Pad & Paper by financing 87 percent of the purchase price. In the next three years, Ampad borrowed to make acquisitions, repay existing debt and pay Bain Capital and its investors $60 million in dividends.
As a result, the company’s debt swelled from $11 million in 1993 to $444 million by 1995. The $14 million in annual interest expense on this debt dwarfed the company’s $4.7 million operating cash flow. The proceeds of an initial public offering in July 1996 were used to pay Bain Capital $48 million for part of its stake and to reduce the company’s debt to $270 million.
From 1993 to 1999, Bain Capital charged Ampad about $18 million in various fees. By 1999, the company’s debt was back up to $400 million. Unable to pay the interest costs and drained of cash paid to Bain Capital in fees and dividends, Ampad filed for bankruptcy the following year. Senior secured lenders got less than 50 cents on the dollar, unsecured lenders received two- tenths of a cent on the dollar, and several hundred jobs were lost. Bain Capital had reaped capital gains of $107 million on its $5.1 million investment.

I'm not sure how necessary and indispensible charging $18 million in fees for running up tremendous debt to cash out all of your investment is in strengthening our economy.  That seems to me like calling leeches necessary and indispensible in medicine.