The Romney Scandal

The Romney Scandal

When Mitt Romney took the top job of the 2002 Winter Games in 1999, he made a startling claim: the local Olympic committee that he now led had a “$379 million deficit.” He said at the time that he “wondered if we would really even be able to hold the Olympic Games.” After the Olympics, he was categorical: without his intervention, “we wouldn’t have had an Olympics in Salt Lake City in 2002.”

The story of victory over certain disaster is the foundation of this public record. Only a few months later in 2002, he used it to be elected governor of Massachusetts. During his difficult run in the 2012 primaries, elected officials wary of Romney’s flip-flops would nonetheless make reluctant endorsements, stating he was a “problem solver” and a “great manager.”

Yet Romney’s “$379 million deficit” never made sense. Utah has its shortcomings, but missing a massive 30% hole in the most scrutinized budget in the state sure isn’t one of them. The idea that the governor, the governor’s personal representative on the Olympic board, and the state Olympic officer – savvy insiders all – could miss this gigantic overrun beggars belief. This wasn’t an academic issue for them. If the budget came up short, under the contracts the State would have had to bail out the Games. (Legal and financial responsibility the Games had been transferred from the City to the State in 1991.)

More to the point, Romney wasn’t just alleging a major financial scandal, but also a much more frightening governance scandal on top of it. He alleged that the top state officials were completely ignorant of a paralyzing 30% deficit as it grew and festered over the years. Remarkably, he doesn’t have any ill-will toward the Utah governor who presided over this alleged financial disaster: Romney has named him his transition director, in charge of setting up his administration should he win in November.

A deficit in the organizing committee budget – the entity Romney was in charge of – is rare. Even the Montreal committee, running perhaps the most troubled organizing effort ever, didn’t run a deficit. Organizing problems come in other areas, like governments overspending on white elephant venues, or public road or rail projects that go way over budget in order to get them done in time. The “deficit” in Montreal was simply the bond to pay off the Olympic stadium. If the Expos had been a more popular baseball team, regular payments on stadium bonds would have been as controversial as the bond payments on Atlanta’s baseball stadium.

The deficit claim didn’t up in other ways. Romney never said how this deficit came to be. Did revenues crater? Venue costs explode? And not off by just a little, but by huge margins. Nor were we told how the gap was closed. Massive lay offs? Big hikes in ticket prices? Venue plans slashed? A $379 million deficit would be hard to miss, and the measures needed to close it would be painful.

Of course there were media reports about the need to raise another several hundred million dollars to run the Games. But that was in the job description. It isn’t realistic to expect that all of the money had been raised at the mid-point of the organizing effort. As it happens, the organizers were doing much better than par, having already secured 79% of the funds that were needed. There were also clips about fiscal issues in the millions of dollars. Again, job description. Romney’s “deficit” was an order of magnitude or two larger. Finally, the overall cost of the Games ended up being somewhat lower than the estimates, but that was in large part because of national assistance, particularly in the security area, which was effectively taken over by the federal government after 9/11. Who deserves the credit for those cost savings?

There’s also a personal angle that also doesn’t add up. Romney has said he likes to fire people. So what did he do when he took over the Olympic committee and could fire the person most responsible for this fiscal mess? What did he do when he could get his hands on the top finance officer for the Olympic committee from 1995 to 1998? The official arguably most at fault for creating an Olympics-threatening “$379 million deficit”? Promoted him. Romney has never explained these inconsistencies.

The truth is simpler. There was no “$379 million deficit.”

The only evidence of a massive deficit was rhetorical. It came into existence when Romney starting talking about it. It went away when he stopped.

So where did the “$379 million deficit” come from? It appears to simply be the difference between revenues in-hand as of 1999 and projected expenditures for the entire effort through 2002. Of course this apples-and-oranges approach isn’t the definition of a deficit. It would have made as much sense to look at it the other way, and compare expenditures to-date in 1999 to projected full revenues, then declare a massive surplus. Either way, nonsense on stilts. When the Boston Globe looked at the books, they concluded that “79% of the money ultimately used to produce the Games was already on the books when Romney stepped off the plane from Boston in February 1999.” Almost every organization in the world has, at the midpoint of its budget cycle, only half of its revenues. Turns out Romney had 79%, but nonetheless said catastrophe was imminent.

Romney could have said the budget was right about where it was supposed to be – but there was still money to be raised and the bid scandal had made that task more difficult. But how heroic is to stay the course? Instead he created the impression that things were wildly off track and would result in no Olympics at all unless he alone took dramatic steps to save the day.

Romney clearly wanted a dramatic narrative to propel him into his next campaign, one that he could win. If the budget was where it was supposed to be, what were the other options? He could have talked about overcoming the bid scandal, but that drama came earlier, after the bid scandal broke in the fall of 1998. At that time, there was talk of cancelling or moving the Games. However, by the spring of 1999, the IOC, the USOC, the federations, the national, state and local governments, the broadcasters and sponsors had all recommitted to the Salt Lake Olympics. Indeed, Romney’s very hiring five months later was an indicator that the Games would go forward. He couldn’t claim a heroic role in overcoming the bid scandal, as the worst of it was in the rear-view mirror.

Nor could Romney talk about the last-minute scramble to get ready to host the world, which is the usual routine for an Olympics. Typically there are problems with venues and ambitious public projects. But there weren’t these kinds of problems with 2002. Most venues had been built seven years earlier, well ahead of the IOC vote itself. There were venue upgrades after the vote, yet by 1999 those were well on the way to completion. No large problems there. And there were the usual ambitious rail and road projects pushed by the city and state governments. But again, by 1999 they were well on their way.

In hindsight, the oddest thing about the whole episode is how completely unnecessary it all was. These are the Olympics for heaven’s sake. He could have basked in his role as one of the people who made it all possible. He could have talked of being on the Olympic team, and he how he was proud and humbled to be the one to run the anchor leg. The Olympic aura would have been his. Tellingly, he felt that wasn’t enough, and instead invented a scandal where he could single-handedly save the day.

In sum, it turns out that in 1999 the biggest threat to the 2002 Olympics wasn’t a “$379 million deficit;” it was Mitt Romney’s reckless alarmism. He didn’t save the Olympics; he endangered them. He didn’t solve problems; he created them. His imagined crisis could have become self-fulfilling by scaring off the donors and other partners still needed to make the Games a success, something he admits the USOC was worried about in his own book. The bid scandal was largely history and the bid players long gone. But the Romney scandal was in the present, and the responsible parties were still in office – indeed, had been freshly promoted by Romney himself – a frightening prospect for anyone actually believing his story.

But while this reckless alarmism was real, it shouldn’t be overstated, Romney-style. This was the Olympics, after all. There is enormous goodwill among everyone to make it work. At the mid-point in 1999, the venues were almost finished. The public projects were largely done. Most of the money was raised. The city was the largest to that point to ever host a winter games, with an international airport minutes from the venues and thousands of hotel rooms ready to accommodate record attendance. Even Romney’s scandal couldn’t change the fact that most of the heavy lifting had been done by 1999.

Still, voters this fall need to understand the lesson of this telling moment. If a president-elect Romney gives us more of his Olympic management style, expect him to make the ridiculous announcement right after the election that, one month into the fiscal year, he has just “inherited a multi-trillion dollar federal deficit.” Then at the end of the fiscal year eleven months later, expect him to make the even more preposterous announcement that he has “personally closed most of the federal deficit and saved America.”

That’s how he rolls.

Brian Hatch was Salt Lake City Deputy Mayor from 1992 to 2000.