One of President Barack Obama’s 35 campaign “co-chairs” partnered with a private equity firm frequently decried by progressives — Kohlberg Kravis Roberts & Co. (KKR) — to lay off workers at Del Monte Food Company.
The revelation underscores the difficulty that Obama faces while trying to simultaneously slam Gov. Mitt Romney’s investment career and also spur donations from the many wealthy Democrats in the investment sector.
After complaints from several Democrats, including Newark Mayor Cory Booker, Obama has changed his campaign-trail rhetoric and is now arguing that private equity investors are selfish and can be useful contributors to the economy, but that their skills aren’t useful in the White House.
In private equity business, “investors walk off with big returns, and working folks get stuck holding the bag. … That’s fine,” Obama told cheering donors at a May 24 De Moines, Iowa fundraiser.
“But that’s not the job of a president. That’s not the president’s job. There may be value for that kind of experience, but it’s not in the White House,” he declared.
Obama’s public relations problem is exacerbated by Federico Pena, who is a co-chair of Obama’s campaign, a former mayor of Denver, a cabinet secretary for President Bill Clinton, and a “senior adviser” at Vestar Capital Partners, which allied with Kohlberg Kravis to buy Del Monte in March 2011.
Since then, the new management team has announced plans to lay off at least 135 full-time Del Monte workers in California and Pennsylvania, plus 1,000 seasonal workers in a California fruit-packing plant.
Progressives have long slammed KKR, which was the main target of a 1990 much-praised book, “Barbarians at the Gate; The Fall of RJR Nabisco.” Nine years, later, the New York Times printed an op-ed by one of the book’s authors, who described RJR Nabisco as “a piece of meat for the leading investment bankers to snarl over … [and] fee-hungry investment bankers who buzzed about … like horseflies.”
Pena’s company has also used its donations to signal political loyalty to Obama and his Democratic allies. Over the last six years, the firm’s partners have donated $338,044 in 207 donations, only 27 of which went to Republicans. On his own, Pena donated $45,000 to to Democrats.
Too much criticism by Obama of private equity firms could shut down those donations, or redirect them away from Obama towards Democrats seeking election to the House and Senate.
That process may already have happened at another equity firm, Centerview Partners, which allied with Vestar and Kohlberg to buy Del Monte.
Centerview’s leadership in New York includes Robert Rubin, who served as Clinton’s Treasury Secretary and as a board member at Citigroup during the mortgage meltdown in 2007.
Rubin donated more than $100,000 to Democrats in 2007 and 2008, but has only donated $16,500 going into the 2012 cycle.
Worse, criticism of venture-equity firms may spur donations to Romney.
The danger is highlighted by KKR’s leadership, which is mostly Republican, socially liberal and willing to donate.
They’ve donated almost $800,000 since 2008, mostly to Republicans, according to the Center for Responsive Politics.
Little of that money went to Republican social conservatives or to Romney, and almost $300,000 went to the business-friendly Republican leadership committees that often sideline the priorities of the GOP’s social conservatives and libertarians.
The Center’s website, OpenSecrets.org, shows that the firm’s employees have donated $8,500 to Romney and $7,850 to Obama, since 2008.
Obama is now trying to balance the risks and benefits of his campaign-trail rhetoric by arguing that Romney’s business experience isn’t useful for a president.
“Gov. Romney has made his experience as a financial CEO the entire rationale of his candidacy for president,” he claimed to his donors at the Des Moines fundraiser.
“When you’re the president, your job is to look out for the investor and the worker; for the big companies and the small companies; for the health of farmers and small business people and the nurse and the teacher. … That’s how I see the economy,” said Obama, who is a progressive who believes government should guide the nation’s economic and social development.
Obama’s “rambling and tortured” effort to explain his views on Romney and equity-capital took almost seven minutes to explain, said Romney spokesman Ryan Williams told The Daily Caller. “When you need to spend six minutes and 48 seconds to explain your message, you’re losing, he said.
In contrast, Romney’s message is clear and short, he added. Obama “has failed to live up to the promises that he made in 2008 and turn around the economy,” Williams said.
Obama is also wrong when he tried to suggestion that Romney’s experience too narrow, Williams said. “Romney has a wide variety of experience … [and] has more experience than Barack Obama ever had,” he said.
“Every day he fails to address the economy reminds people we elected an amateur and lightweight.”
“There is no question that he [Obama] is attacking capitalism,” Romney said on Fox during a May 24 interview. “In part, I think, because he doesn’t understand how the free economy works. He’s never had a job in the free economy.”
Romney’s allies in business are also boosting the private equity sector, saying it successfully directs limited investment funds away from outdated companies towards new companies, including a high-tech, Romney-funded steel factory that employs 6,500 workers. The pain suffered by workers and communities that lose declining companies is outweighed by the benefits generated by rising companies, they argue.
Romney is also pushing education reform, and on May 24, traveled to Philadelphia where he touted his education-reform policies at a charter school in an African-American neighborhood.
Polling indicates Romney’s strategy seems to be working better than Obama’s, and his joint fundraising with the Republican National Committee donations reached $40 million in April. That was only slightly less than the $43 million snagged by Obama and the Democratic National Committee.