Key Takeaways
- • David Rubenstein, co-founder of private-equity firm Carlyle Group and estimated $2.6 billion net worth, funded the repair of the Washington Monument after an August 2011 earthquake, a project Congress had required be privately financed for half its cost.
- • Rubenstein practices "patriotic philanthropy," including a $21.3 million purchase of a Magna Carta copy in 2007 and a $13.5 million gallery built to house it, with more than half of his several hundred million dollars in giving tied to national heritage.
- • The article ties Rubenstein's civic profile to his financial interests, noting that the carried-interest tax treatment has helped private equity generate record profits and that at least eighteen private-equity executives are each estimated to be worth $2 billion or more.
- • The carried-interest loophole has been attacked by Obama, Sanders, Clinton, Trump, and Jeb Bush, yet has survived every reform effort, according to the article.
- • Rubenstein's career began in Democratic and Carter-administration policy roles, and his early Washington-focused private-equity model of pairing capital with politically connected partners became the foundation of Carlyle.
Summary
The New Yorker profile examines the dual role of David Rubenstein, co-founder of the Carlyle Group, as a prominent Washington philanthropist and a beneficiary of the carried-interest tax treatment. After a magnitude-5.8 earthquake on August 23, 2011, damaged two dozen stone protrusions at the top of the Washington Monument, Congress appropriated half of the $15 million repair cost and required the remainder come from private citizens. Rubenstein subsequently committed the funds, and on June 2, 2013, he inspected the progress with the Secretary of the Interior and the head of the National Park Service.
Rubenstein, with an estimated net worth of $2.6 billion, describes his giving as "patriotic philanthropy." The article cites his 2007 purchase of a 710-year-old copy of the Magna Carta for $21.3 million, which he loaned to the National Archives and later financed a $13.5 million gallery to house. He has also bought two copies of the Emancipation Proclamation, one of which he loaned to President Obama, and made substantial gifts to Monticello, Montpelier, Robert E. Lee's mansion, the Iwo Jima Memorial, and the Lincoln Memorial. The article notes that he has also given generously to hospitals and universities, and that more than half of his several hundred million dollars in giving fits the patriotic theme. He chairs the Economic Club of Washington and sits on the boards of the Kennedy Center, the Brookings Institution, and the Smithsonian.
The piece highlights Rubenstein's financial stake in the carried-interest loophole, which it says has helped private equity become one of the most lucrative sectors in finance. Private-equity firms have reported record profits since the recession, and at least eighteen executives are estimated to be worth $2 billion or more. The article explains that carried interest, under the "2 and 20" compensation model, is taxed at long-term capital gains rates, which for most of the past fifteen years have been 15 percent versus 35 percent for ordinary income in the top bracket. It notes that hedge funds benefit less because their trades tend to be too short-term. In a 2013 Credit Suisse forum remark, Rubenstein said carried interest "is really what the business has historically been about." The loophole has been targeted by Obama, Sanders, Clinton, Trump, and Jeb Bush, but private-equity partners argue the treatment is justified, and the article reports it has withstood every reform effort.
The profile also traces Rubenstein's background, from his Baltimore upbringing and City College education through his work on Senator Birch Bayh's subcommittee and in the Carter administration. He left Shaw, Pittman for a brokerage of Alaska Native corporations' tax losses with Stephen Norris, a venture later called the Great Eskimo Tax Scam, before co-founding Carlyle in September 1987 with Norris, Dan D'Aniello, and William Conway. The article credits his early private-equity model with combining capital and politically connected partners, a strategy that Gary Shapiro recalled others initially mocked.
Rubenstein, with an estimated net worth of $2.6 billion, describes his giving as "patriotic philanthropy." The article cites his 2007 purchase of a 710-year-old copy of the Magna Carta for $21.3 million, which he loaned to the National Archives and later financed a $13.5 million gallery to house. He has also bought two copies of the Emancipation Proclamation, one of which he loaned to President Obama, and made substantial gifts to Monticello, Montpelier, Robert E. Lee's mansion, the Iwo Jima Memorial, and the Lincoln Memorial. The article notes that he has also given generously to hospitals and universities, and that more than half of his several hundred million dollars in giving fits the patriotic theme. He chairs the Economic Club of Washington and sits on the boards of the Kennedy Center, the Brookings Institution, and the Smithsonian.
The piece highlights Rubenstein's financial stake in the carried-interest loophole, which it says has helped private equity become one of the most lucrative sectors in finance. Private-equity firms have reported record profits since the recession, and at least eighteen executives are estimated to be worth $2 billion or more. The article explains that carried interest, under the "2 and 20" compensation model, is taxed at long-term capital gains rates, which for most of the past fifteen years have been 15 percent versus 35 percent for ordinary income in the top bracket. It notes that hedge funds benefit less because their trades tend to be too short-term. In a 2013 Credit Suisse forum remark, Rubenstein said carried interest "is really what the business has historically been about." The loophole has been targeted by Obama, Sanders, Clinton, Trump, and Jeb Bush, but private-equity partners argue the treatment is justified, and the article reports it has withstood every reform effort.
The profile also traces Rubenstein's background, from his Baltimore upbringing and City College education through his work on Senator Birch Bayh's subcommittee and in the Carter administration. He left Shaw, Pittman for a brokerage of Alaska Native corporations' tax losses with Stephen Norris, a venture later called the Great Eskimo Tax Scam, before co-founding Carlyle in September 1987 with Norris, Dan D'Aniello, and William Conway. The article credits his early private-equity model with combining capital and politically connected partners, a strategy that Gary Shapiro recalled others initially mocked.
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