Bain’s Successes and Obama’s Failure

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Words may not make the man, but they sure tell us a lot about the individual who chooses them.

At a press conference following the NATO summit in Chicago yesterday, President Barack Obama referred to "my one Congress," compared to the euro zone's 17 different legislative bodies. My Congress? Sorry, Mr. President, it's ours (please don't remind us!).

More telling is Obama's defense of a campaign ad attacking presumptive Republican nominee Mitt Romney and Bain Capital, the private-equity firm he ran in the 1990s. The ad depicts Bain as a "vulture capitalist," swooping in to take over Kansas City's GST Steel in 1993, picking it clean and profiting handsomely before shutting it down in 2001. The facts are somewhat different, but that is not our concern here.

Prominent Democrats, such as former car czar Steve Rattner and Newark Mayor Cory Booker, criticized the attack on private equity. The Obama campaign must have taken Booker to the woodshed because the mayor put out a lame clarification on YouTube Sunday.

Here's what Obama had to say about the ad: "He (Romney) is saying he is a business guy, and this is his business. And when you're president as opposed to the head of a private equity firm, then your job is not simply to maximize profits, your job is to figure out how everybody in the country has a fair shot."

Shades of "Joe the Plumber" and Obama's advice about the need to "spread the wealth around"? Actually maximizing economywide profits -- a better word would be output -- is the president's job. Economic growth generates jobs and income. Gross domestic income represents the income from gross domestic product. (GDI equals GDP conceptually; in reality there are statistical discrepancies.) Profits are one part of GDI, along with wages and salaries, proprietors' income and rents.

Obama dug himself into a hole by approving the ad attacking private equity. He made it worse by defending it. At this point, with business-savvy Democrats challenging him, he would be well advised to observe the first law of holes and stop digging.

(Caroline Baum is a Bloomberg View columnist. Follow her on Twitter.)

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