Mitt Romney Knows About Crony Capitalism

| Fri Jun. 1, 2012 5:20 AM EDT

Mitt Romney has been playing the crony capitalism card lately, talking up the Solyndra stimulus-money debacle and falsley accusing the Obama administration of lining the pockets of "friends and family." But it turns out that Romney may need to take a long, hard look in a mirror:

When Romney was governor, the state handed out $4.5 million in loans to two firms run by his campaign donors that have since defaulted, leaving taxpayers holding the bag.

The two companies—Acusphere and Spherics Inc.—stiffed the state on nearly $2.1 million in loans provided through the state's Emerging Technology Fund, a $25 million investment program created while Romney was governor in 2003 that benefitted 13 local firms.

Acusphere, a biotechnology firm headed by a Romney campaign donor, got $2 million in 2004 that it was supposed to put toward a $20 million manufacturing facility in Tewksbury, which never became fully operational...

The loans were approved by a seven-person advisory board that included two Romney appointees and three Romney campaign contributors, a Herald review found.

Meanwhile, stimulus funds have actually been remarkably well managed. Michael Grunwald at Time's Swampland blog writes:

The Department of Energy has handled $37 billion in stimulus money, more than its annual budget. Overall, the federal government has distributed over $800 billion in stimulus money. Where are the sweetheart deals? Where are the actual outrages that are provoking outrage? During the debate over the stimulus, experts warned that as much as 5% to 7% of the stimulus could be lost to fraud. But by the end of 2011, independent investigators had documented only $7.2 million in fraud, about 0.001%. As I've written, reasonable people can disagree whether the stimulus was a good thing, but it's definitely been a well-managed thing.

If you want to talk about actual crony capitalism at the federal level, the problem isn't so much a vast conspiracy as it is a magnificently complex web of elected officials who want to keep their own jobs by keeping jobs in their home districts and states. That bland reality makes the real problems with more equitable spending at the federal level even more intractable.

Meanwhile, Romney's broader argument against the stimulus is incoherent. He blasts Obama for job losses during his administration, but under a Romney administration during that same period of economic crisis, with no stimulus money, job losses almost certainly would have been much more severe. There's a time for austerity, and it isn't during a recession.

Front page art: Mandi Wright/Detroit Free Press/Zuma