MSN reported:
Something has changed this election season. The perennial hot button issue of carried interest, which offers sweetheart tax rates to wealthy private equity and hedge fund executives—and costs the U.S. Treasury billions of dollars—is getting a pass.
The Great Acquiescence has arrived.
...an Oxford study in June revealed that the largest private equity firms have avoided paying income taxes on more than $1 trillion of incentive fees since 2000—a line that seems tailor made for a campaign commercial—barely got any notice.
Now, any momentum to change the carried interest rate seems to have fizzled altogether. Just last week, former president Trump verbally sparred with Kamala Harris, the Democratic nominee for president and current VP, in a much watched 90-minute debate. Neither side mentioned carried interest or even taxes.
Politicians Red and Blue love private equity underwriters (PEU) and increasingly, more are one. How did this come to pass?
PEU legend Carlyle Group co-founder David Rubenstein covered the history in a recent Bloomberg Audio interview and had a number of startling admissions. First, this non-lobbyist regularly meets with elected officials.
...let’s get members of Congress to come and sit with each other from different parties in different houses, which they rarely get a chance to do. No press. Nobody can see ’em talking to somebody who’s a different member of a different party. And that’s been going over 10 years.
Rubenstein chronicled Carlyle's early history after locating in Washington, DC.
Later I went out and recruited big names who had been in government, people like former Secretary of State, Jim Bakker, former Secretary of Defense, Frank Carlucci. And that gave us a certain allure because people were wondering what are they doing in an investment firm?
What were they doing? Steering huge chunks of the federal budget to Carlyle Group affiliates through their non-lobbying political connections, reading the government tea leaves to direct Carlyle leveraged buyouts, and recruiting more government insiders to the secretive private equity underwriter. That almost sounds villainous.
Blue Team Senator Kyrsten Sinema's massive payday awaits. She heroically saved PEU preferred "carried interest" taxation. Legislators will watch closely her next career move. It could be theirs.
