Friday, January 18, 2008

State of the Same


It seems both political parties like to be seen with their high dollar supporters. Bob Johnson, BET founder, made the headlines recently with his dig on Barack Obama and subsequent apology. Bob attempted to support Hillary Clinton, but got carried away.

The news failed to mention billionaire Bob's joint venture deal with The Carlyle Group. It neglected to call him a "small business owner and community banker", like President George W. Bush did in fall of 2006.

Given his strong defense of Hillary, what is Mrs. Clinton's position on taxing private equity carried interest?

As for The Carlyle Group, co-founder David Rubenstein had to deal with protests during today's speech at Wharton. He defended allegations of layoffs at ManorCare by saying "we've only owned the company two weeks." Let's see what other healthcare companies had Carlyle owned two weeks when something catastrophic happened? That would be LifeCare, the hospital with the largest number of patient deaths from Hurricane Katrina.

David must be good at using that "only two week" excuse. One might expect failures at other Carlyle healthcare affiliates to be pertinent in considering future buyouts, but not in ManorCare's case. Even a reporter from the Toledo Blade said the 24 LifeCare deaths were out of bounds. The feds went 0 for 9 in responding to my concerns.

David's other defense was no one ever talks about the good private equity does, especially in growing jobs. The Private Equity Council is working hard to justify PEU managers keeping their preferred tax status on carried interest. They published a study showing the positive economic impact of private equity underwriters. Be sure to read the comment at the bottom of the Reuter's article on that very topic. So Mrs. Clinton, where do you stand on taxing carried interest as income?

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