Vulture capitalism is not free-market capitalism - East Valley Tribune: Ahwatukee Foothills

Vulture capitalism is not free-market capitalism

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Posted: Wednesday, January 18, 2012 12:00 pm | Updated: 3:34 pm, Sat Dec 22, 2012.

Despite their truthful condemnation of Mitt Romney's vulture capitalism, his opponents and the media have ignored the huge taxpayers' subsidies financing this sleazy business.

Romney's Bain Capital 1995 takeover of medical company Dade International illustrates how this process exploits taxpayers and workers.

In six years, Bain loaded Dade with an additional $1.5 billion, tax-deductible debt, which cost taxpayers probably $100 million (at 6 percent interest, 35 percent corporate tax).

Dade's 6,000 workforce remained stable, but 1,700 American jobs were lost to foreigners. Bain extracted $240 million in fees and ultimately drove Dade into bankruptcy, a common fate for Bain acquisitions.

This common feature of Romney's vulture capitalism, huge debt borrowed to pay acquiring firms' fees, cries out for reform.

Debt for initiating, or expanding, enterprise is justified as a tax-deductible expense. But highly leveraged debt used to finance acquirers' fees should not be tax deductible.

Vulture capitalism is not free-market capitalism; it is free-lunch capitalism.

C.W. Griffin

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