Say Anything Blog

It has occurred to me that no one this side of Paul Krugman would offer the kind of idiot answers to those capital gains tax questions posed by Charlie Gibson that candidate Barack Obama did in the most recent Democrat debate.  It is an act of rhetorical kindness to call Obama’s answers about the income of private equity partners lame in the face of clear evidence that raising capital gains tax rates actually lessens federal revenues.  Fortunately, we have the Wall Street Journal to clear the air and explain candidate Obama’s apparent economic ignorance.  It’s not that Barack Obama is so stupid.  It’s that he is doing the bidding of one of his fiercest special interest supporters, the Service Employees International Union, and its boss, Andy Stern.

For more than a year, the head of the powerful Service Employees International Union has been running a political campaign against private equity firms to allow him to organize workers at the companies they own. This month in California, the SEIU suffered a major setback when a bill that would have restricted state pension fund allocations to sovereign wealth-backed private equity firms was shelved by lawmakers. The measure was Mr. Stern’s brainchild, and its ostensible purpose was to target sovereign wealth funds in countries with spotty human rights records.

The real impetus for the bill, however, was to help the SEIU organize employees of ManorCare, a nursing home chain owned by the Carlyle Group private equity firm. Kohlberg Kravis Roberts, another private equity outfit and owner of the Hospital Corporation of America, has also been a major target of Mr. Stern’s campaign.

The SEIU wanted to ratchet up the pressure on Carlyle and others by cutting off two gigantic sources of private equity capital: the California Public Employees’ Retirement System (Calpers) and the California State Teachers’ Retirement System (Calstrs), which manage $240 billion and $167 billion of assets, respectively…

Calstrs and Calpers estimated that their funds would lose a combined $7.5 billion in the first five years alone under Mr. Stern’s bill…

…Calpers and Calstrs have had the sense and wherewithal to push back against the SEIU’s bullying. As they see it, Andy Stern’s war on private equity would kill the goose that lays golden eggs for their retirees. His bill would have prevented them from maximizing their returns, which happens to be their fiduciary duty. It’s also what’s best for working families.

In other words, Obama’s attacks on the income of private equity partners are nothing more than a not-so-subtle form of political pressure from Andy Stern and the SEIU via candidate Obama… a quid pro quo in exchange for that union’s continued political support.

As economist Don Luskin has noted, a visit to the SEIU website shows just how committed the union is to the election of Senator Obama, and why Obama, for his part, feels obliged to attack the private equity industry at the behest of his union master.

Barack Obama has spent the past year preaching “change” and his “new style politics” but the simple fact is he is just another, inexperienced liberal politico doing the bidding of his union bosses.  There is nothing “new” about another round of special interest class warfare from the radical Left.