The Democratic congressman leading the charge to undermine his party’s two-track strategy to pass President Joe Biden’s economic agenda was the US House’s biggest recipient of campaign cash from the private equity industry, whose executives could lose lucrative tax loopholes should that agenda become law. The lawmaker’s former legislative director is also lobbying lawmakers on tax policy behalf of the private equity industry, according to federal records reviewed by the Daily Poster.
Representative Josh Gottheimer (D-NJ) has spearheaded a media tour and legislative campaign to pass a business-backed infrastructure bill separate from Biden’s reconciliation package — a maneuver backed by corporate lobbyists seeking to kill the latter because it will likely be paid for by taxes on the wealthy.
Gottheimer’s campaign to short-circuit his own party’s strategy is a huge favor to the Blackstone Group, the private equity behemoth whose wealthy executives are collectively his top campaign contributors, and who stand to both benefit from the passage of the bipartisan Senate infrastructure bill and death of the reconciliation legislation. In all, Blackstone executives have funneled nearly $200,000 worth of campaign cash to Gottheimer since 2015 — and his wife, Marla Tusk, works for a lobbying and consulting firm that lists Blackstone as a client.
In the last election cycle alone, Gottheimer received more than $450,000 from donors in the private equity and investment industry, making him the US House’s top recipient of that money during the campaign, according to data compiled by OpenSecrets.
Under intensifying public pressure, Gottheimer has begun insisting that he does want to pass the reconciliation legislation, just after the passage of the Senate infrastructure bill. But it is an open secret in Washington that the attempt to de-link the two bills is part of an effort to doom the reconciliation package, because separating the bills would eliminate the incentive for conservative Democrats to vote for the far more progressive reconciliation bill.
Gottheimer’s moves are only the latest examples of his defense of the private equity industry. He championed a publicly funded bailout of the industry during the pandemic. And after his own state’s scandal-plagued pension system reported funneling $670 million worth of fees to Wall Street in a single year, Gottheimer used a 2019 congressional hearing to defend the industry from revelations that it has been systematically fleecing retirement systems with exorbitant fees in exchange for weak investment returns.
Gottheimer said that “we are hearing from institutional investors looking to invest in private equity as part of their asset allocation strategy,” encouraging witnesses to laud the private equity industry.
“I think our job in the committee is to, of course, make sure that we are punishing bad actors while not interfering with those that produce good returns,” he added.
Blackstone’s Stake in the Fight
Blackstone has for months been pressing for passage of the Senate infrastructure bill that Gottheimer is championing — including in an op-ed authored by the company’s billionaire CEO, Stephen Schwarzman, who was previously an adviser to former president Donald Trump. The firm is a major private investor in infrastructure, and the legislation includes language encouraging local governments to funnel public infrastructure spending into private equity firms.
The provisions were inserted after a Blackstone-affiliated trade association lobbied on “public-private partnerships in financing state and federal infrastructure,” according to federal disclosures first highlighted by the Washington Post.
Similarly, Blackstone has myriad financial reasons to support Gottheimer’s strategy to kill or significantly pare back Democrats’ $3.5 trillion reconciliation package, which is meant to put big portions of President Biden’s economic, health, and climate agenda into law.
While the private equity industry could benefit from some spending in the reconciliation bill, the legislation may include measures to close or limit the so-called carried interest tax loophole, which allows private equity moguls to classify their income as capital gains and pay only a 20 percent tax rate on those earnings, rather than the normal top income rate of 37 percent. This is the tax loophole that infamously allows billionaire Warren Buffett to pay a lower effective tax rate than his secretary.
Senator Ron Wyden (D-OR) who chairs the panel that will write the upper chamber’s version of the reconciliation bill’s tax provisions, recently backed legislation that would shut down $63 billion worth of those tax loopholes that benefit Blackstone and its executives.
The reconciliation legislation could also raise the corporate tax rate, which is of particular interest to Blackstone after the company completed a corporate conversion to take advantage of President Donald Trump’s 2017 corporate tax cuts. Raising the corporate tax rate could limit the financial gains the company reaped from those previous tax breaks.
Likewise, the reconciliation bill could subject Blackstone executives to significantly higher personal income taxes. The House version of the reconciliation bill would compel those making an average of $4 million a year to pay over $1 million more in taxes every year, according to a new analysis from the Tax Policy Center.
Meanwhile, the reconciliation bill’s climate programs designed to shift the country away from fossil fuels could ultimately imperil the profitability of Blackstone’s huge fossil fuel investments, ventures that are intensifying the climate crisis.
Personal Ties to Blackstone
Immediately after the 2020 election, a leading private equity trade publication reported that private equity executives “have turned to [Gottheimer] to help protect them from his party’s left wing,” with the publication noting that he had raked in large campaign donations from some of the wealthiest executives in the industry.
Gottheimer also has personal ties to the private equity industry. His wife, Marla Tusk, lobbies for Tusk Strategies, a consulting firm that lists Blackstone as a client on its website. (Tusk is listed as the general counsel at Tusk Holdings, the parent company of Tusk Strategies.)
A Blackstone spokesperson told Daily Poster, “Blackstone has not been a client of Tusk Strategies since 2016 — before Rep. Gottheimer became a congressman.”
Tusk Strategies, which is led by the one-time campaign manager for former New York mayor Mike Bloomberg, offers communications support, grassroots organizing, and policy advice for corporate clients. “We develop and execute complex policy and regulatory campaigns at every level of government,” its website says.
The firm has worked for Blackstone for years. Tusk Strategies named the private equity giant as one of its clients in 2016, when it launched a “specialized political diligence practice to counsel banks, asset managers, private equity funds, real estate finance groups, and other institutions on the political and regulatory impact of potential investments.”
Tusk Holdings also has a venture capital firm, called Tusk Ventures, which is led by a former Blackstone executive. Gottheimer’s most recent financial disclosure, from 2020, lists a substantial investment in a Tusk Ventures fund. The filing says the investment in Tusk Venture Partners I GP, LLC, was worth between $250,000 and $500,000, and generated between $100,000 and $1 million worth of income for his family last year.
Gottheimer’s former legislative director Mike Lukso is listed as a registered lobbyist for the American Investment Council — the private equity industry’s lobbying group in Washington. He has been lobbying on “proposals to alter the tax treatment of carried interest capital gains,” according to the most recent lobbying disclosures from the second quarter of 2021.