Monday, March 14, 2016

PRIVATE EQUITY ALLIES

“In May of 2010, when [David] Rubenstein returned to Capitol Hill, he was ‘the
perfect good guy’ a private-equity lobbyist told me. ‘Unlike these guys throwing themselves million-dollar birthday parties, David is donating the Magna Carta to charity.Evan Bayh, the Democratic senator from Indiana and the sonof Rubenstein's former boss, was among those receiving visits from private-equity lobbyists, and soon Bayh was heard arguing that taxing ‘enterprise was unfair. Bayh, who left the Senate six months later, now works for the Apollo [Group], onof the largest private-equity firms. Asked to comment, he said through
spokeswoman that he does not recall much about this given it was six years ago.'
      “
The debate unfolded on the floor of the Senate. (Democrats had strategically attached the reforms to a larger tax package, dodging the Finance Committee.)”
[New York Senator Chuck] Schumer insisted, as he had in 2007, that the legislation had to apply equally to all sectors; yet by threatening a greater variety of industries the bill was likely to become unworkable. Former Representative Barney Frank, of Massachusetts, told me, ‘The best way to avoid supporting what is doable is to insist on making it undoable. Schumer wanted to broaden the bill to death.’
“Soon Democratic senators with ties to venture capital and real estate were
protesting. Mark Warner, of Virginia, who, elected two years earlier, had made
a fortune
as the founder of the venture firm Columbia Capital, co-authored a
May 11th [2010] l
etter to [Senator Max] Baucus urging that the Senate retain ‘a capital gains incentive for those who contribute to the viability of our start-up community - venture capitalists.’ The real-estate lobby, meanwhile, relied on senators like Robert Menendez, of New Jersey, for whom real-estate interests were the second-largest source of contributions; and Kay Hagan, of North Carolina, a Schumer protégé who often lined him on financial issues.”


Alec MacGillis, “The Billionaires’ Loophole,” New Yorker, March 14, 2016, pp: 64-73 (71).