THE PLANK JUNE 21, 2007
A few months ago, my old boss Robert Kuttner wrote a harsh article in the American Prospect about former Clinton era Treasury Secretary Robert Rubin. Part of the article was a familiar criticism of the notion that Clinton's economic program contributed to the 1990s prosperity. But other parts of the article were more personally unflattering. For instance, Kuttner cited Rubin's "professed concern for America's downtrodden," [italics mine] which strikes me as highly uncharitable.
He also implied that Rubin's economic views are influenced by his position at Citigroup:
As a top Citigroup executive, Rubin uses his unequaled Democratic contacts to resist reregulation. In a recent interview, I asked Rubin whether he saw any need for tighter regulation of hedge funds, the massive, nominally private investment funds that enjoy a wholesale exemption from the system of financial disclosure that has kept financial markets tolerably transparent since the New Deal. "I don't know why you would single out hedge funds," Rubin replied, in a sincere tone that suggested genuine puzzlement at the question. Why, indeed? Citigroup has hedge-fund and private-equity subsidiaries, lends to hedge funds, places trades for hedge funds through its brokerage affiliates, and works with hedge funds through its investment-banking arms.
It's not unfair to point out potential conflicts of interest. But I think it's worth noting that Rubin, who is enormously rich, has staunchly favored higher tax rates on the rich for years.
A good case in point is the loophole allowing private equity managers to enjoy lower tax rates than people in other professions. Citigroup's clients benefit from this loophole, and is lobbying to fight to protect it in Congress. Rubin, nonetheless, defends (in his opaque, Rubinesque way) Congress in today's New York Times:
Several unlikely members of the business community have also questioned the present tax advantages for private equity firms, among them Robert Rubin, chairman of the executive committee of Citigroup, whose clients include many private equity firms.
Mr. Rubin, the former Treasury secretary, said he was speaking for himself rather than Citigroup. He suggested that the issue should be looked at "with great seriousness" by the appropriate tax committees in Congress.