One of my favorite recent documents in American politics is Evan Bayhās schedules from his last year in office as a Democratic senator from Indiana. In the months following his 2010 announcement that he would retire rather than seek re-election, the Associated Press reported, the man who was almost Barack Obamaās running mate āheld more than four dozen meetings and phone calls with head hunters and future corporate employers.ā
That summer, Bayh cast a key vote to help save the carried interest loophole, the tax break that allows private equity managers to pay a considerably lower rate on much of their income by treating it like capital gains rather than compensation. That fall, Bayh embarked on a whirlwind tour of the private equity world. In the span of just a few days in September, the AP reported, he spent the night at a Nantucket estate belonging to the co-chair of the PE giant the Carlyle Group, then flew to New York, where he stayed at an apartment belonging to an executive at the PE giant Apollo Global Management; took meetings with executives at Credit Suisse and Deutsche Bank; had dinner with the CEO of Goldman Sachs; andāthis is my favorite partāsat for an interview with Katie Couric on the subject of āwhy are our politics so broken.ā
Bayh’s hustle eventually paid off. Shortly after his term in office had ended, he took a new job as a senior adviser at Apollo, the company whose now-disgraced former CEO, Leon Black, he’d met with twice.
As my colleague Hannah Levintova explained last year, private equity firms pool money from big investors like pension funds and college endowments and use that cash to take over actual companiesāchain retailers, dentist offices, you name it. It’s a $7.3 trillion industry that touches basically everything in your life, and it’s growth has had serious consequences for workers, patients, and consumers. It’s also become a premier destination for retired public servants. Connecticut Sen. Joe Lieberman, who joined Bayh in voting to save the carried interest loophole, ended up at a PE firm. Timothy Geithner and Steve Mnuchināwho served as treasury secretaries in the Obama and Trump administrationsāboth entered the PE space after their respective bosses failed to fulfill their campaign promises to close the loophole. And on Wednesday, the industry welcomed the newest politico to pass through its revolving door: Former Pennsylvania Republican Sen. Pat Toomey is joining the board of Apolloājust a few years after playing his own key part in preserving the loophole.
As I wrote in a story for the magazine last year, the loophole is one of Washingtonās favorite punching bags and also one of its most unsinkable provisions. It has survived repeated legislative battles over the last decade-and-a-half, through three presidential administrations. The private-equity industry has a lot of people to thank for the tax breakās continued existence. Sen. Chuck Schumer (D-N.Y.) did his part to tank the repeal effort in 2007. Bayh helped block it in 2010. Arizona Sen. Kyrsten Sinema (IāAriz.) helped scuttle the movement just last year.
Toomeyās turn came in the first two years of the Trump administration, when the new presidentāwho had said fund managers were āgetting away with murderā and promised to eliminate the carried interest breakābegan his push for a sweeping new tax reform law. As a member of both the budget and finance committees, Toomey was instrumental in shaping it. The Washington Post reported that he worked tirelessly to craft the legislation into what it ultimately becameāa corporate-friendly grab-bag that disproportionately favored Americaās richest citizens. And he stuck his neck out for carried interest loophole. Toomey was an āall starā in the fight, a lobbyist told Bloomberg. The final law made a mostly cosmetic change to carried interest that had little effect on private equity’s bottom line.
Toomey, to be clear, is as much of a true-believer as they come in conservative politicsānot in the cultish Trump-era way (he voted to convict the president in his second impeachment trial, after January 6th), but in his devotion to supply-side economics. This is less about any sort of quid pro quo than it is a kind of ideological gravity. He worked on Wall Street before his career in politics, and he ran the Club for Growth before running for Senate. In taking a job with Apollo, Toomey is returning to this world. But given his legacy on Capitol Hill, you might also say he never really left it.