Earlier this week, the Edmund Burke Foundation, a new conservative think tank, held its debut conference in Washington. I spent two days poking in and out of it, listening to everything from University of Pennsylvania law professor Amy Wax rant about immigrants to Sen. Josh Hawley (R-Mo.) call for an end to elites who prize their own economic gains ahead of that of the American middle class. One subject — or should I say name — that came up not infrequently was Sen. Elizabeth Warren (D-Mass).
And, no, not all of the mentions were negative.
Warren’s overarching theme is that American capitalism, in its current form, runs roughshod over Americans workers, families and communities. That resonates in certain conservative circles, where people like to view themselves as defenders of traditional values. During the conference, one attendee asked Tucker Carlson, who spoke at a Monday keynote, if Warren could be a potential ally. That’s likely because last month, Carlson declared Warren’s ” Plan for Economic Patriotism ,” which argues for a government investment in green energies and an economic policy to encourage American exports, to be something that ” sounds like Donald Trump at his best .” Carlson, if you are wondering, said no but added that he considered Warren’s book ” The Two-Income Trap ” one of the best books on economics he’s ever read.
It will be interesting to see if Carlson has anything to say about Warren’s latest plan. On Thursday morning, Warren, along with a bevy of co-sponsors , including Sens. Tammy Baldwin (D-Wis.) and Sherrod Brown (D-Ohio) and Reps. Mark Pocan (D-Wis.), and Pramila Jayapal (D-Wash.), released another one in her series of policy proposals, a piece of legislation designed to rein in the private equity sector’s many, many abuses.
Private equity, as I pointed out in a piece earlier this week , is a benign way to describe an often heinous practice. Privately owned investment companies use a combination of their own resources and borrowed money to buy other firms. They then, all too often, transfer the responsibility for paying that debt to the firm they just purchased. The defenders of private equity argue that their business expertise allows them to wring efficiencies out of the operations that others have missed, and with this savings, their newly purchased companies can pay off their bills. But all too often, they are investment vampires, sucking the life out of their companies. The profits accrue to the investors, as the company they are supposedly saving slowly sinks, shedding jobs and offering increasingly inferior service to consumers. We lost Toys R Us this way. Sears too. Others — like, say, Digital First Media‘s newspaper properties such as the Denver Post — continue on but are a shadow of their former selves.
Warren’s plan would crack down on a host of practices that make private equity strip mining as lucrative as it is, eliminating many of the economic incentives for it. She would demand private equity companies share in the risks of their purchase, by making them partially responsible for the debt they would otherwise load on the hapless companies they control. If one of the firms they own makes a decision that harms consumers, courts could find them liable, something that is not true now. Warren’s bill would also ban the purchased company from paying dividends to investors for two years past the leveraged buyout, cutting into immediate profits. Should the company land in bankruptcy court, she would double the amount due to employees in owed wages and severance that is placed before the interests of the bondholders, something that would make a filing less lucrative to private equity. And ever the personal finance guru, she’s even onto how company’s skip out on their obligations to consumers possessing their gift cards. She’s demanding they receive more protection in bankruptcy court than they currently do, too. And while she’s at it, she’s demanding an end to the carried interest loophole, the tax dodge beloved by hedge fund managers and private equity investors alike.
None of this is likely to go anywhere in the current environment. Republicans control the Senate, and it’s not even clear how many Democrats will support it. The lure of private equity is, alas, bipartisan.
But what Warren’s bill does do is highlight a certain hypocrisy. If you are a Democrat, it makes it harder for you to claim you are a progressive because you support raising the minimum wage and decriminalizing illegally entering the country if you cannot address the blight that is private equity. And it calls people such as Tucker Carlson and other attendees at the Burke Foundation event on their own stated values. If you want to help American families, you need to attack all the financial practices that are harming them, not just the ones that Trump thinks are damaging. At least one person at that conference got the exact nature of Warren’s threat to the right wing. Silicon Valley mogul Peter Thiel, another speaker at the event, joined Carlson on his nightly Fox News television show Monday night. “I’m most scared by Elizabeth Warren,” he told Carlson when asked about the Democratic presidential field. “I think she’s the one who’s actually talking about the economy.”
Paul Waldman: Warren’s latest proposal tells a morality tale about the economy
Andy Puzder: Good economic news is so awkward for the Democratic candidates
E.J. Dionne Jr.: We don’t usually put ‘moral’ and ‘economics’ in the same sentence. It’s time we started.
Erik Wemple: Please don’t be fooled by Tucker Carlson
Max Boot: Elizabeth Warren has lots of ideas. Bad ideas.
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Helaine Olen Helaine Olen is a contributor to Post Opinions and the author of “Pound Foolish: Exposing the Dark Side of the Personal Finance Industry.” Her work has appeared in Slate, the Nation, the New York Times, the Atlantic and many other publications. She serves on the advisory board of the Economic Hardship Reporting Project. Follow Subscriber sign in We noticed you’re blocking ads! Keep supporting great journalism by turning off your ad blocker. Or purchase a subscription for unlimited access to real news you can count on. Try 1 month for $1 Unblock ads Questions about why you are seeing this? Contact us
LINK ORIGINAL: Washington Post