Some of Wall Street’s wealthiest people want to keep the U.S. Senate in Republican hands and they’re sending their money to Georgia to make it happen. Or, as The New York Times put it, “In Georgia, private equity is investing in a divided government.” And they’re investing in Sen. David Perdue in particular.
Private equity firms raise money from pension funds, insurance companies, and wealthy individuals to buy companies, usually with a large amount of debt, which the company then has to repay. The private equity firms often pull money out of the company by selling off its assets and paying themselves dividends, and usually impose severe cost-cutting measures, resulting in layoffs and worse conditions for employees.
There are now about twice as many private equity-backed companies as there are public companies — those listed on stock exchanges. In short, private equity is the way Wall Street plays with the American economy and American workers.
A combination of private equity firms, including Bain Capital (founded by now Sen. Mitt Romney) and KKR, bought and then looted Toys “R” Us into bankruptcy. Private equity’s behavior is responsible for 1.3 million job losses in the retail sector alone. Included in those job losses were employees at 24 Toys “R” Us stores in Georgia.
One of the firms responsible, KKR, is the 10th largest contributor to Perdue.
If you’re wondering why Sen. Perdue might be close to KKR, consider how he made his money. Perdue was once CEO of Dollar General, the discount chain. But when KKR came knocking in 2007, Perdue sold them the company, triggering a $42 million payout to himself.
Perdue’s 6th largest contributor is Apollo Global Management, a private equity firm with a new interest in Georgia. Last year, it bought radio and TV stations from Cox Enterprises, including WSB-TV, the oldest TV station in that city. Put another way, one of Perdue’s financial backers owns a major news source in Georgia.
Apollo Global is about as big-time as it gets in Wall Street’s world of private equity. It is the creation of Leon Black and Marc Rowan, two men worth a combined $11.9 billion. And as the country has suffered during the pandemic, they’ve seen their wealth rise by about 25 percent, according to Americans for Tax Fairness.
Private equity money flows into Georgia in other ways, too. The Senate Leadership Fund, a super PAC associated with Senate Majority Leader Mitch McConnell, plays a big role in hotly contested Senate races. The donors to this entity include private equity giant Blackstone, which contributed $20 million. Its CEO, Stephen Schwarzman, was worth $13.2 billion before the pandemic; now, he’s worth $18.4 billion.
But those billions are apparently not enough.
Private equity barons are fighting to preserve a lucrative tax break known as the carried interest loophole among other privileges they enjoy. President Trump once denounced this benefit but then failed to eliminate it amid intense industry lobbying. Perdue voted for the legislation that then codified the loophole into law. A Republican-controlled Senate is likely to defend this loophole, said Eileen Appelbaum, the co-director of the nonprofit group Center for Economic and Policy Research.
But for that to happen, private equity needs David Perdue. The American people, however, don’t need private equity in our political system.
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