Against my better judgment I’m going to weigh in on this Cory Booker story. As you probably know, Booker appeared on Meet the Press yesterday and pronounced himself “nauseated” by the Obama campaign’s attacks on Mitt Romney’s record with the private equity firm Bain Capital. In a follow-up YouTube that looked like the kind of video hostage-takers make their victims record, Booker walked back the comments, saying that Mitt Romney’s record at Bain Capital is fair game for scrutiny, and that Romney “is not being completely honest with his role and his record even while a businessperson, and is shaping it to serve his political interest.”
None of this really interests me, but it is worth understanding Booker’s knee-jerk response against attacks on private equity. Steve Benen writes here that “plenty of Booker’s constituents work in private equity, so it stands to reason he’s going to defend the industry.” The median household income in Newark, New Jersey, where Booker serves as mayor, is around $36,000 a year, almost half of the rest of the state. 25% of the population sits below the poverty line. There are a couple more suburban parts inside the city limits, but the idea that Newark is teeming with rich private equity kingpins is just misguided. To the extent that “constituents” of Booker’s work in private equity, you’d have to be talking about his donors.
But more than that, Jason Kelly explains how Booker, and most other big-city mayors, have an ongoing love affair with private equity in a time of depressed investment from state and local governments.
The answer: New Jersey has a lot riding on private equity.
The state’s pension system in December agreed to a sweeping $1.8 billion deal with private equity giant Blackstone Group that will comprise investments in real estate, energy and debt funds. That brought New Jersey’s total commitments over 12 months to $2.5 billion to Blackstone alone, the most Schwarzman’s New York firm has attracted from a single investor in a single year since its creation.
There’s another reason Booker may have spoken up. While he doesn’t control New Jersey’s state pension, as the mayor of a big city Booker has a deep interest in economic development. The Private Equity Growth Capital Council was quick to seize on that angle. In an email this morning, the industry’s main lobbyist, amid a campaign to defend its practices, noted that New Jersey drew $3 billion in private equity investment last year into the state economy.
In fact, Booker alluded to this right after saying he wouldn’t indict private equity, noting that “Especially that I know I live in a state where pension funds, unions and other people invest in companies like Bain Capital.”
This is not limited to New Jersey; practically every state in the union uses private equity, particularly through their large pension funds. This creates a symbiotic relationship between state and local governments and vulture capitalists. The pension funds then invest in local economies, fattened by the higher returns they get from their entrusting of funds to private equity. This allows these firms, which specialize in stripping down companies and turning over profits, without regard for the workers they leave behind, to get inoculated by the political class, who want to keep this game going.
The other way to go about this is to have a sustainable level of investment at the state and local level, so that we don’t rely on outsized returns from predatory asset-stripping for whatever investment we can manage. But that would require a sufficient level of taxation, and the people who fund campaigns have put the kibosh on that. This is a bipartisan problem, and it’s how you get Cory Booker tripping up on his campaign surrogate duties. It’s hard to make a villain out of your contributors.




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And this is why the Citizens United decision was such a disaster. All restraints on the rich are now gone.
Surprise, surprise! Another puppet masquerading as a populist.
Just another 1%er suck-up asshole.
He never really masqueraded as a Bernie Sanders. People just didn’t want to look at his actual record.
How’s that foot tasting, Cory? Hoping this whole thing will blow over in a few days, are you?
Do the oligarchs you’re trying so vigorously to please pick up the check for knee pads, or are those accessories on your own dime?
Next Q: How long before ‘private equity’ blows itself up?
Think that Rachel Maddow, Booker’s buddy from their Rhodes Scholar days together, will dare say anything critical about him?
Orange County here we come. We’ve seen this show before.
From private equity wiki
My bold. All the biggest crashes have stemmed from leverage, which happens to work in both direction.
I’m having this little discussion with the fin com of an endowment I serve. It is difficult to convince people that you can’t outperform the averages on a consistent basis over time, and since endowments are perpetual investments, ‘consistent over time’ is the operative phrase.
But it is an ongoing uphill battle to douse the quest to get something for nothing.
He did a commercial with Chris Christie – enough said.
Really, what Booker’s comments reveal is that a huge percentage of the people in this country depend on equity and private equity. There is nowhere near the us vs. them situation it was 50 years ago.
Heh. Another CIA plant, just like O.
It’s OK Cory, Obama is nauseated too, he just can’t say it.
After all, Jamie and Obama are BFF.
Double standard, anyone?
http://abcnews.go.com/blogs/politics/2012/05/obama-courts-private-equity-cash-at-new-york-fundraiser/
You just catching on to the fact Obama and Romney have more in common than differences? Where the hell have you been?
So you’re all for the privateers?
tweety has spewed 2 hours of apoplexy over this. booker is one thing, then he was doubled down by fellow nubian quisling harold ford.
both of these guys are reagan ‘democrats’ and should be drummed from the party.
$565,000.
Oh no, I’ve know for a long time that 0bama is even to the right of Cheney. I just like to point it out whenever I have a chance – for the benefit of those who still think he’s as great as HE thinks he is.
Republicans are crazy. Democrats are stupid. Just keep shooting yourselves in the foot while Republicans are aiming for your head.
Really, what Booker’s comments reveal is the complete bankruptcy of the progressive/liberal class, and the degree to which they are beholden to elite rule and unaccountable private concentrations of wealth and power.
The working class and the employing class have nothing in common, that ain’t changed just because you said so.