Romney Lacks Credibility to Attack Crony Capitalism

At Thursday night's GOP presidential debate in South Carolina, Mitt Romney rightly attacked Barack Obama on the issue of crony capitalism. As noted by NBC's Mark Murray:

And Romney adopts the Palin/Perry "crony capitalism" line against Obama, and dings president on Keystone

Good for him!

Unfortunately, Romney's history shows that he lacks the credibility to make this a real issue during the general election. While serving as the Governor of Massachusetts, Mitt Romney handed over $4.5 million in state government money to cronies of his very own, for companies that failed. Via the Boston Herald (emphasis):

GOP presidential hopeful Mitt Romney has hammered President Obama for his administration’s tax-funded investment blunders — but 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 benefited 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. Calls to Acusphere’s headquarters in Lexington were not returned...

Spherics Inc., meanwhile, was lured from Rhode Island to Mans–field with much fanfare from the Romney administration, partly through a $2 million loan in 2005. By 2008, the company laid off all employees and completely shut down. The state received about $300,000 when the company liquidated its assets, but the firm defaulted on more than $1.5 million of the state loan, Abbruzzese said.

Together, the two companies’ investors and executives donated more than $7,000 to Romney’s past campaigns.

The hypocrisy didn't go unnoticed by a pro-Obama Super PAC called "American Bridge." NBC's Domenico Montanaro reports:

Democratic-aligned Super PACs are going after Mitt Romney on what they depict as essentially his own Solyndra, a further sign that Democrats see the writing on the wall and that they believe Romney will be President Obama's opponent this fall.

A video produced by American Bridge, called “Romney’s energy loan hypocrisy,” hits Romney for loans made while he was governor of Massachusetts to two companies that eventually failed or moved away – and had ties to Romney campaign donors.

They certainly didn't do a very good job of exonerating Obama, but I digress.

Couple this information with what we already know about Romney's inclination to grow and link government with certain businesses. As Timothy Carney wrote in the Washington Examiner last May:

Examine Romney's dalliances with big government that have caused him such grief, and you'll see a trend: They all are described as "pro-business," they all amount to corporate welfare, and they all reflect the technocratic mind-set you'd expect of a business consultant. Romney's record and rhetoric show how managerialism veers away from the free market and into corporatism.

Begin with health care. Romney last week defended his Obamacare prototype in Massachusetts by pointing to the findings of a think tank that was "funded by business." In a similar vein, the Boston Globe attacked Romneycare's critics in an April editorial: "if they weren't hyperventilating about the national law, they might come to recognize that the role Romney played on the state level was skillful, creative, and business-friendly."

Yes, the legislation was business-friendly -- in a big-government way: It required individuals to buy health insurance, and it provided taxpayer subsidies for health insurance, helping insurers and employers at the expense of taxpayers and patients...

Romney didn't compete for business through lower taxes and regulation: He tried to entice them to the state with special subsidies. In 2005, Romney lured Spherics, a pharmaceutical company, away from Rhode Island by offering a $2.5 million direct loan from the state's "Emerging Technology Fund." That same year, he signed a bill creating the Massachusetts Film Office that was empowered to hand out special tax credits to studios filming movies in the Bay State.

Romney's corporatism isn't limited to the state level. In his 2010 book "No Apology," he lays out a national energy plan including more federal funding for energy research and supporting subsidies for "infant industries." He has supported that favorite of Iowa caucus-voters, ethanol subsidies.

On one hand, it's great that Romney is going after Obama for his crony dealings, failed energy policies, and kowtowing to special interests. On the other, how is he going to make the case against Obama during a general election when the president's supporters (as they already have done) can point right back at Romney and invoke rule #4 in Alinsky's book? Mitt Romney needs to ensure the country that he will not partake in crony capitalism on a national level, if he is elected as the GOP nominee. For now, his record indicates that he lacks the credibility to do so.