It’s hot here in Las Vegas, so it’s a good thing former Treasury Secretary Larry Summers brought shade to the desert.
On Wednesday morning at the SkyBridge Alternatives hedge fund conference, Carlyle Group co-CEO David Rubenstein interviewed Summers alongside his Clinton administration colleague Robert Rubin. But at one point, Summers turned the tables on Rubenstein, with an assist from Rubin.
The interviewees noted Rubenstein could teach the audience some lessons on influencing government, given his surprisingly successful record of fighting to retain the “carried interest” tax loophole, which gives private equity and hedge fund managers a tax preference on their performance fees.
“Rarely has a policy existed so long with such weak arguments in its favour,” said Summers, in backhanded praise of Rubenstein’s lobbying skill. “It’s the First Amendment, the Second Amendment, and carried interest, right?”
“Not necessarily in that order,” Rubin added.
Rubenstein replied that, if Summers and Rubin thought the tax preference for carried interest was such bad policy, they could have used executive action to eliminate it when they served at the Treasury department.
“Not sure it works like that,” Rubin replied. He’s right: you would need legislation to close the loophole, and that legislation has been stalled by private equity-friendly members of Congress.
Rubenstein clearly preferred to discuss other topics, such as why neither Summers nor Rubin chose to put a woman on American currency. He returned to the tax preference issue only at the very end of the discussion.
“We’ve run out of time,” he said. “We’ll have to talk about carried interest some other time.”