Here’s the State of the Day, a morning newsletter from the Daily Caller Editorial Desk.
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Hello everyone,
Welcome to State of the Day.
Wall Street’s favorite big players are backed by some serious influence in Washington.
Washington Talks Tough. Wall Street’s Heard It All Before.
Private equity, an industry focused on buying, restructuring, and then reselling businesses, has lawmakers on edge again. But before you get too excited, hold on a second.
These firms—often seen as the true villains of Wall Street—have a significant effect on the companies they acquire. For a long time, there have been voices arguing that these firms prioritize profit above all, neglecting long-term sustainability, customer happiness, and cultural relevance.
Now, a handful of optimistic lawmakers seem eager to slow down the profit train.
Congress did pass a bipartisan housing law recently aimed at limiting these firms from purchasing single-family homes. However, buried in the details is a bit of good news for institutional investors: they get to keep the homes they’ve already snagged.
Sen. Elizabeth Warren has also brought back her Stop Wall Street Looting Act, seeking to hold private equity accountable for certain debts and liabilities tied to the businesses they take over. She has even partnered with Republican Sen. Josh Hawley on a different bill aimed at consolidating health care.
But let’s not get ahead of ourselves. It’s important to consider how past efforts have fared.
These Wall Street giants have significant sway in Washington, and their allies have worked hard to protect the lucrative loopholes they cherish.
Whenever lawmakers even hint at reforms targeting private equity’s finances, a swarm of lobbyists, funded by these firms, mobilizes, and proposals tend to fade away.
Take, for instance, the carried interest loophole, which allows private equity fund managers to pay lower capital gains tax rates on certain investment earnings instead of the much higher regular income tax. This loophole is just one of those delightful breaks that lets the wealthy keep more of their wealth.
For years, Capitol Hill has been in a continuous cycle debating how to eliminate this loophole.
What have they achieved? Nothing.
Back in 2007, the industry’s major players and their trade group enlisted 20 lobbying firms to counter proposed reforms on carried interest. Blackstone alone reportedly spent $4.9 million on lobbying efforts that year, according to a ProPublica investigation.
In the end, the reform efforts failed in the Senate; attempts to revive them in 2010 were also unsuccessful.
No party can claim to be innocent here. Just a couple of years ago, in 2022, then-Senator Kyrsten Sinema conditioned her support for President Biden’s Inflation Reduction Act on the removal of a provision meant to limit carried interest tax breaks. Her party complied, and the provision was dropped, to the delight of Wall Street.
Interestingly, President Trump campaigned on eliminating this loophole during his first presidential bid. He referred to it as “very favorable for Wall Street investors, and for people like me, but unfair to American workers.” Yet, his 2017 tax cuts left this mechanism mostly unchanged. Once again, the Wall Street barons had reason to celebrate.
It’s just another instance of Washington rhetoric that doesn’t translate into action. And yet again, it’s the average person, who can’t afford high-priced lobbyists, who feels the consequences.
So, it’s only reasonable to view any new efforts to regulate these wealth-concentrating firms with skepticism. Politicians may threaten change, but can they really deliver?
Some have even suggested that the upcoming midterms might serve as a wake-up call for private equity, with most insiders other than Speaker Johnson expecting a Democratic surge. The notion that the midterms could function as a referendum on private equity is gaining traction.
However, history paints a different picture, and the realities of the political landscape suggest otherwise.
If you ask me, this latest wave of tough talk might just produce a few half-hearted bills. As for closing the most cherished loopholes in private equity? I’m not counting on it.
Washington thrives on money, and private equity has been playing the long game, ensuring their influence remains strong.
So, a few lawmakers are claiming they will take on the Wall Street giants and challenge them?
Well, let’s see if they actually follow through.
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From The Editors’ Desk
Trump’s Triumphs — Steve Sailer, SteveSailer.Net
Steve Sailer observed something intriguing about a recent lengthy critique of President Trump by the New York Times editorial board: the issues they chose not to address. The same publication that spent 2020 focusing on systemic racism, police brutality, affirmative action, and transgender rights inexplicably skipped these topics in their latest anti-Trump commentary. Sailer suggests the omissions reveal as much about Trump’s policy successes—and the left’s shifting priorities—as the criticisms themselves.
Dem Mayor Revives Pre-2008 Mortgage Playbook That Helped Fuel Housing Crisis — Jack McGeever, Daily Caller News Foundation
A new publicly-backed mortgage initiative introduced by Philadelphia Mayor Cherelle Parker may echo the risky lending practices that contributed to the 2008 financial crisis, as it allows low down payments for borrowers with questionable credit. Jack McGeever from the Daily Caller News Foundation examines this alarming proposal emerging from the city known as the ‘City of Brotherly Love.’
Inside Democrats’ Secret Effort to Stack Alaska’s Ballot — Kellen Browning, New York Times
The New York Times reported on text messages and insider insights that link Democrat Mary Peltola’s campaign with national Democratic operatives in an alleged scheme to recruit a second candidate named Dan Sullivan to run against the Republican senator of the same name. The supposed aim was to confuse voters and draw votes away from the incumbent. Peltola’s campaign has previously denied any involvement. The timing of these revelations aligns closely with Election Day.
What Most Women Get Wrong About Satisfying Sex — Mary Rooke, Daily Caller
While some women opt for divorce when their marriages hit rough patches, Mary Rooke from the Daily Caller argues for the benefits of perseverance. With her characteristic wit and relatability, Rooke discusses a cultural shift affecting modern women’s perspectives. As she puts it, “Leaving is the easiest route. But the better choice is to allow intimacy to flourish.”
Everyone sits in the same traffic now — Yancey Strickler, The Ideaspace
Yancey Strickler explores what he refers to as the “Robert Mosesification” of the internet: the transition from collaboration to extraction. A select few tech giants have transformed the internet, once a diverse space, into a few sprawling highways designed for scrolling, shopping, and maximizing profit. Now, the rise of AI threatens to further entrench this trend, turning the open web into a resource for bots rather than a space for exploration. The internet was once a global community; now, it’s just a shared traffic jam.
