Mitt Romney won the GOP caucus in Nevada today, which again makes us ask if a Romney presidency would have any particular benefits for the private equity industry. Not just typical GOP priorities of lowering taxes, reducing regulations, etc. – but something more akin to favors for his former colleagues. Like fighting for carried interest to be treated as a tax deduction, or providing David Rubenstein with Secret Service protection when he speaks at industry conferences.
I posed the question during my Wharton panel yesterday, and only NVCA president Mark Heesen deigned to answer. His claimed that Romney might actually be the worst candidate for private equity, because he will go out of his way to show that he’s his own man, and not beholden to his resume. Former example, Heesen argued, former Goldman Sachs chief John Corzine was not Wall Street’s best bud once he got elected to the U.S. Senate.
I admire Mark’s counterintuition, but completely disagree. First, Romney is willing to be brazen. Not only has he changed his positions on key social issues for electoral purposes, but he essentially launched his campaign by savaging the very people who first helped him attain elective office (us gay marriage lovin’ folk in Massachusetts). And he did so while still governor!
More importantly, Romney honestly believes in the power of private equity and its associated principles. Sure he could flip-flop, but to what end? There has still not been a compelling case made that private equity causes more harm than good (in terms of economic growth, jobs, etc.), and the overall industry is not going to be the attention-grabber in 2008 that it was in 2007.
Finally, there is the undisputable fact that politicians often reward their contributors. Romney has raised far more money from buyout pros than has any other presidential candidate (through Q3), and ranks second among venture capitalists (behind Obama). Unless Romney is willing to turn his back on his own character, resume, fiscal intuition and supporters, I expect him to be private equity’s best friend at 1600 Pennsylvania Avenue. If he can get there, that is…