Avoiding the ‘Doom Loop’
Romney plans to steer us away from the Greek example.

Mitt Romney campaigns in St. Petersburg, Fla., May 16, 2012.


Jim Geraghty

Republican presidential candidate Mitt Romney talked to NRO’s Jim Geraghty Wednesday afternoon about tackling the debt, Greece, Bain Capital and bankrupt companies, and the strangely inserted facts about Obama in the presidential biographies on the White House website.

Mitt Romney on getting Americans to focus on the difficult, sometimes abstract issues of the deficit and accumulating national debt:

“I think it helps to translate the federal-debt and unfunded-liability numbers into personal numbers. The total amount of accumulated debt and unfunded liabilities is approximately $520,000 per American household. What that means is that each household will be paying the interest on the debt and paying the principal on the unfunded liabilities over the coming decade or two. It means that our kids will get saddled with that $520,000 — which of course will become a good deal larger over the next four or five years if the president is reelected.

“That number says that as interest rates go up, as they undoubtedly will down the road, people will get burdened with a tax figure that makes it harder for them to start their lives out, get homes, and build a future for themselves. It really kills the American Dream to be burdened with that kind of a figure from the beginning of your life. And so I think that’s the most effective way I can talk about the personal impact, long term, of this debt and unfunded-liability burden.

“There is also a recognition in this country that what Greece and Italy and Spain are facing could conceivably be brought home to us. The recognition that you reach a point where the world decides that your obligations are perhaps not going to be met, or that they will be inflated away — in which case people will ask for higher interest rates, and you’ll find yourself in a doom loop.”

On restoring America’s AAA credit rating, and how long that would take:

“I believe that if we show we have tackled our long-term unfunded liabilities, which are primarily Social Security and Medicare, and if we have killed certain federal programs, and if we’re on track to have a balanced budget in about eight years or so, at that point rating agencies will recognize that our credit rating is solid.

“ . . . Right now, the challenge from having been downgraded is not as apparent [as it might be] to the American people because the world is frightened of the euro, and so people are bringing their cash to the United States. That is holding down interest rates here. In addition, the Federal Reserve is purchasing our treasuries and holding down interest rates here. But at some point these features will come to an end, and if we are not on track to having a superior credit rating, we will start paying the costs of higher interest.”

During the campaign of 2008, Obama said that running up $4 trillion in debt was “unpatriotic.” On whether he would use the same term to describe Obama
s running up $5 trillion:


“I’ll call it inexcusable and disappointing that a president who was so critical of his predecessor for roughly $400 billion to $500 billion annual deficits is now running trillion-dollar deficits and has not apologized for them. When a president says that he pledges to cut this deficit in half by the end of his first term, and he’s doubled it instead — that shows he is on the wrong track. I try to avoid highly incendiary language, but this is something that puts our country very much at risk.”

On the fact that one of his successors at Bain Capital, Jonathan Lavine, is a top Obama bundler:

“I have no problem with people who have differing political sentiments participating in the political process. I can say I know that the Obama campaign misfired with this attack. The GS Steel Enterprises events that are in question occurred after I left the firm, so that obviously is not a very effective attack. Although the whole idea that we’re going to attack people in private equity — who make over 100 investments to get results in any one investment — is a very strange course for the president to take. I realize, however, that the president wants to do anything he can to deflect attention from his record, and he will persist in personal attacks.”

On how a firm like Bain can make money while the companies it manages, such as GST or Dade Bering, can fail:

“With very few exceptions, the times you are successful in an investment are when the enterprise itself becomes larger and more successful. That is how our firm and other firms were able to achieve such success. There are a few exceptions where an enterprise is doing well, and realizing dividends from its success, but then it encounters a reversal in circumstances, and it no longer does well. . . . That tends to be rare. The people in my firm, in every investment we made, we wanted to make the business more successful. The cartoon caricature of investors coming in, taking all the money out of a business and leaving it bankrupt is, of course, absurd. The only way you make money in the industry that I’m familiar with is by making the business more successful, more profitable, not by making it less so.”