Skip to main content

If Romney planned a buyout of America...

By John MacIntosh, Special to CNN
updated 9:13 AM EDT, Wed October 24, 2012
Columnist John MacIntosh talks to Mitt Romney about the
Columnist John MacIntosh talks to Mitt Romney about the "buyout" Romney and running mate Paul Ryan are planning.
STORY HIGHLIGHTS
  • Imagine former private equity exec Mitt Romney approached election as corporate buyout
  • MacIntosh says the buyout team would "run the numbers" on America
  • MacIntosh: Since taxpayers are captive, there's a lot of potential to raise "prices"
  • MacIntosh: But unlike most businesses, the customers with the most pay the lowest rates

Editor's note: John MacIntosh was a partner at Warburg Pincus, a leading global private equity firm, where he worked from 1994 to 2006 in New York, Tokyo and London. He says he supports the Democrats as "the lesser of two evils."

(CNN) -- Buyout guys usually "run the numbers" on a takeover target before spending too much time on it. As takeovers go, the United States looks pretty good. Here's a tongue-in-cheek look at how a private equity executive might sum them up for a former private equity guy.

To: Mitt Romney
Re: Project November
From: The Buyout Nation Team

The team has finished running the numbers on Project November and they look really strong.

First, if we're successful in the upcoming auction (they call it an election), we will have bought in cheap and should make a killing since the economy is improving and is likely to do so for the next four years even if we don't do much after the takeover.

John MacIntosh
John MacIntosh

Second, it looks like we have a lot, and I mean a lot, of room to increase sales. I've never seen a business with so much ability to raise prices.

The customers (they call them taxpayers) have little opportunity to leave, by law they have to pay, and not many have the resources to take advantage of the tax-minimizing options in Switzerland and the Caymans. But the pricing structure is a total mess. While every other business charges premium customers more, since they have the cash and benefit most from the services, here it's backwards.

A lot of the premium customers, the ones who've done really well for the last decade or two, actually pay the lowest rates! So raising prices on these guys should be a cinch. And we can also get some early revenue from one-time gimmicks like drilling a million gas wells, selling non-core assets (Guam?), sale-and-lease-backs on real estate (the Capitol?) and more aggressive corporate partnerships (Exxon-Yellowstone National Park?)

Become a fan of CNNOpinion
Stay up to date on the latest opinion, analysis and conversations through social media. Join us at Facebook/CNNOpinion and follow us @CNNOpinion on Twitter. We welcome your ideas and comments.



Third, on the expense side things look equally promising. As Larry Summers first discovered, a lot of the value created in takeovers can come from promise breaking and we've got great opportunities to do that with Medicare and Social Security.

Even better, our modeling shows that if we only break promises for younger people (say, under 54) they won't feel any real pain until after 2016 or 2020 when we'll already have exited the deal and been long gone.

Another easy option is to cut expenses for the poor and for kids since it turns out that they can't vote (too young), don't vote (those new ID rules), or won't vote for you anyway. (By the way, where did you get that 47% from? Your overall figure feels about right but the team wants to double-check the calculation.) We also found big potential cost savings from outsourcing not just jobs but entire government departments to India. This may be an option for lower value-added departments like Housing and Urban Development, and Education.

Analyst: Candidates played up strengths
Different tone in foreign policy debate
Watch final debate between Obama, Romney
Micklethwait: Bashing China 'dangerous'

Another potential expense-cutting option is the military, but this seems a bit tricky given the whole military-industrial complex thing.

But a takeover of the nation also presents some unique challenges compared with the smaller companies we usually target.

First, if things get tight, we can't save cash by slashing long-term investments because it turns out that there aren't any. I know it's unbelievable, but there just isn't much money going into the stuff that will pay off big time for competitors in the long-run: education, public transport, bridges and infrastructure, and clean/green technology.

Second, we're unlikely to make money by restructuring or refinancing the debt. It's already dirt-cheap (we could borrow for 30 years at 3%) and the experts I've spoken with are convinced that the nation really is too big to fail. I know you've been through a lot of tough restructurings, think the market should be allowed to work things out, and were willing to let the auto industry go to the wall. But I've pushed these guys hard and they remain adamant that if we get too close to that fiscal cliff, really bad stuff will start to happen: markets gyrating, interest rates rising, the dollar plunging, rating downgrades, you name it.

While this type of chaos might actually be a boon to some of our hedge fund supporters, I really think we should try to avoid it. (And there's no guarantee that the guys running your blind trust will have had time to bet against America before things start to unravel.)

Finally, I reviewed the nation's shareholders agreement and bylaws (they call it the Constitution) and it's a catastrophe.

In fact, the bottom line is that even after we take control, there will be real limits on what we can do without the support of some really crazy people. People who don't appear to believe in arithmetic or science, let alone rationality and analysis. These guys are definitely not the McKinsey and Goldman types we're used to dealing with so it's going to be a total nightmare.

It makes me wonder whether this whole thing is really worth the hassle. Where's the upside? Do we really have a special insight that makes us the natural owner or are we just willing to spend more than the competition to win? I'm a little bit worried that we may have a touch of deal fever for another trophy on the wall.

Anyway, the model is ready so just send me your plan so I can finalize the assumptions about price hikes, expense reductions, investments and the like. I couldn't find a copy on the server and everything in the public domain is vague and contradictory. My daughter's got soccer tonight so I hope to leave the office by 7 but call my cell if you need anything else.

The opinions expressed in this commentary are solely those of John MacIntosh.

ADVERTISEMENT
Part of complete coverage on
updated 3:47 PM EDT, Wed October 1, 2014
Julian Zelizer says Jimmy Carter's message about the need to restore trust in public officials is a vital one, decades after the now 90-year-old he first voiced it
updated 5:56 PM EDT, Wed October 1, 2014
Ford Vox says mistakes and missed opportunities along the line to a diagnosis of Ebola in a Liberian man have put Dallas residents at risk of fatal infection
updated 6:21 PM EDT, Wed October 1, 2014
Pepper Schwartz says California is trying, but its law requiring step-by-step consent is just not the way hot and heavy sex proceeds on college campuses
updated 10:17 PM EDT, Wed October 1, 2014
Mike Downey says long-suffering fans, waiting for good playoff news since 1985, finally get something to cheer about
updated 5:39 PM EDT, Wed October 1, 2014
Steve Israel saysJohn Boehner's Congress and the tea party will be remembered for shutting down government one year ago
updated 2:56 PM EDT, Wed October 1, 2014
Yep. You read the headline right, says Peter Bergen, writing on the new government that stresses national unity
updated 7:12 PM EDT, Wed October 1, 2014
Hong Kong's pro-democracy demonstrators are but the latest freedom group to be abandoned by the Obama administration, says Mike Gonzalez
updated 12:53 PM EDT, Tue September 30, 2014
Jeff Yang calls Ello a wakeup call to Facebook and Twitter, and a sign of hope for fast-rising upstarts Pinterest and Snapchat.
updated 10:23 AM EDT, Wed October 1, 2014
Paul Waldman says the Secret Service should examine its procedures to make sure there are no threats to the White House--but without losing the openness so valuable to democracy
updated 10:55 AM EDT, Wed October 1, 2014
Jesse Williams says the videotape and 911 call that resulted in police gunning down John Crawford at a Walmart reveals the fatal injustice of racial assumptions
updated 7:03 PM EDT, Tue September 30, 2014
Mel Robbins says officials should drop the P.C. pose: The beheading in Oklahoma was not workplace violence. Plenty of evidence shows Alton Nolen was an admirer of ISIS.
updated 3:11 PM EDT, Tue September 30, 2014
The Occupy Central movement has already achieved much by bringing greater attention to Hong Kong's struggle for democracy, William Piekos says..
updated 3:11 PM EDT, Tue September 30, 2014
The Occupy Central movement has already achieved much by bringing greater attention to Hong Kong's struggle for democracy, writes William Piekos.
updated 10:13 AM EDT, Tue September 30, 2014
As Prime Minister Narendra Modi visits America, Madeleine Albright says a world roiled by conflict needs these two great democracies to commit to moving their partnership forward
updated 10:04 AM EDT, Tue September 30, 2014
John Sutter: Lake Providence, Louisiana, is the parish seat of the "most unequal place in America." And until somewhat recently, the poor side of town was invisible on Google Street View.
updated 9:11 AM EDT, Mon September 29, 2014
Julian Zelizer says in the run up to the 2016 election the party faces divisions on its approach to the U.S.'s place in the world
updated 10:19 AM EDT, Mon September 29, 2014
Ruben Navarrette says Common Core supporters can't devise a new set of standards and then fail to effectively sell it.
updated 9:29 AM EDT, Tue September 30, 2014
Earlier this month, Kenyans commemorated the heinous attack on the Westgate Mall in Nairobi.
updated 2:59 PM EDT, Tue September 30, 2014
David Wheeler says Colorado students are right to protest curriculum changes that downplays civil disobedience.
updated 9:58 PM EDT, Fri September 26, 2014
Sally Kohn says when people click on hacked celebrity photos or ISIS videos, they are encouraging the bad guys.
updated 7:55 AM EDT, Fri September 26, 2014
Loren Bunche says she walked by a homeless man every day and felt bad about it -- until one day she paused to get to know him
updated 9:32 AM EDT, Tue September 30, 2014
ISIS grabs headlines on social media, but hateful speech is no match for moderate voices, says Nadia Oweidat.
updated 8:33 AM EDT, Mon September 29, 2014
A new report counts jihadists fighting globally. The verdict? The threat isn't that big, says Peter Bergen.
updated 5:37 PM EDT, Tue September 23, 2014
Ebola could become the biggest humanitarian disaster in a generation, writes former British Prime Minister Tony Blair
updated 12:58 PM EDT, Fri September 26, 2014
ISIS has shocked the world. But will releasing videos of executions backfire? Four experts give their take.
updated 10:39 AM EDT, Fri September 26, 2014
Eric Holder kicked off his stormy tenure as attorney general with a challenge to the public that set tone for six turbulent years as top law-enforcement officer.
updated 9:09 AM EDT, Fri September 26, 2014
LZ Granderson says Obama was elected as a war-ending change agent, not a leader who would leave behind for his successor new engagement in Iraq and Syria. Is he as disappointed as the rest of us?
updated 5:10 AM EDT, Wed September 24, 2014
Gayle Lemmon says the question now is how to translate all the high-profile feminizing into real gains for women
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT