Los Angeles mayoral candidate Austen Beutner gave a Town Hall Los Angeles speech yesterday at Center for the Preservation of Democracy in Downtown LA. The core topic? Getting "Los Angeles back to work."
In the speech, Beutner rolled out a kind of plan for a plan, highlighting areas he intends to focus on to rebuild the city's economy, which is currently facing a budget deficit of something like $200-$250 million and unemployment in LA County of 11.5 percent, three points higher than the national rate of 8.5 percent.
It's just an outline, although Beutner characterized it as an "ambitious agenda." The candidate — who came to city government as a "jobs czar" from a very successful career in banking and private equity, as well as in the Clinton Administration — zeroed in on six key job-creating areas: trade; technology and education; tourism; manufacturing; transportation; and small business.
In a roundtable meeting with the media after the speech, Beutner continued to tout his experience in business and evoked his own bootstrapping background. I asked him about the unemployment crisis, and he stressed that closing the gap between the national and local number shouldn't be the goal. "We ought to be doing better than the nation as a whole," he said.
California has actually been adding jobs at a faster clip than the country. But total employment in the city, according to the just released Pat Brown Institute State of the City report, won't get back to pre-recession levels until 2016. Even more worrisome is the youth unemployment rate — 36 percent for workers under the age of 25.
Beutner is hitting all the right notes, and his focus on making the LA business environment is probably the right overall path to future prosperity. It's earned him the endorsement of former Mayor Richard Riordan. But he sounds like he's running the white flag up a bit early when he rules out federal or state assistance. There are close to 600,000 people unemployed in California. Getting out of the way of business, supporting small business development, and killing the state's high speed rail project and diverting the money to Los Angeles transportation infrastructure needs may not be enough to grind that number down, even if the economy picks up significantly in 2012 and beyond.
In any case, at this juncture, Beutner didn't offer any specific projections for number of jobs he'd like to create, should he be elected.
He also didn't have much to say about the effect that the interrogation presidential candidate Mitt Romeny has been undergoing regarding the fortune he made in the private-equity business. A big part of Beutner's sales pitch is that he has serious business experience and can view constituents in the same way he did customers.
However, when he worked at the Blackstone Group (he made partner at age 29), the fields he labored in were those of private equity, which isn't exactly the same as running a hardware store — or even a company like Home Depot. A notable Blackstone deal would be something like Universal Orlando. Blackstone bought a chunk of that enterprise in 2000 for $275 million. NBC Universal bought Blackstone's stake in 2011 — for $1.025 billion. Blackstone held onto Universal Orlando for 11 years, a long stretch for private equity, but that was a handsome return. Whether it constituted running a theme park as a business, however, is another story.
This deal happened after Buetner had left the firm, but you get the idea.
The firm that Beutner co-founded after his stint in government was Evercore Partners, which staged an IPO while he was there, making Beutner $100 million richer when the firm went public. Evercore is closer to the political side of investment banking — it was established by Beutner and his partners (including former deputy Treasury Secretary Robert Altman) to provide old-school mergers-and-acqusitions advice to companies. It stayed away from the kind of trading that killed, for example, Lehman Brothers. Evercore also ran a private-equity business, but not at the same scale as Blackstone.
So in his career, Beutner has basically been on the "good" side of investment banking. The "vulture capitalist" tag that's been applied to Mitt Romney for his time at Bain doesn't apply to Beutner. In fact, if you want to look to antecedents for his kind of investment banker, you'd turn to guys like Felix Rohatyn and Steven Rattner — "wise men" bankers who've always had an eye on public service (both worked for Lazard Freres, a model for Evercore's "boutique" approach). Heck, Rohatyn is generally credited with saving New York City from its 1970s financial crisis, and Rattner oversaw the bailouts and bankruptcies of Chrysler and General Motors (Evercore advised GM during this time, but by then Beutner had retired from high finance).
Impressive and admirable, but still not the same as running a business. Then again, running LA isn't necessarily like running a business, either — although in 2011 Los Angeles Magazine credited Beutner with effectively taking over the mayorship. Up to this point, Beutner has benefited from his stupendous private-sector success and willingness to work for basically nothing (as deputy mayor, he was paid $1 a year). But that message could now fall under much greater scrutiny, thanks to Romney. And Beutner's back-to-work plan, while containing all the right parts, could certainly be more ambition.
One thing to remember, of course. A city budget deficit on $250 million sounds big. And to some of the other mayoral candidates, it is big. But because Beutner worked at the top of the Wall Street pile — not slogging away with the day-to-day management of business but rather doing deals and providing M&A advice — that big number might not seem even remotely daunting.