President Obama and Steve Schwarzman (inset)

Billionaire private equity mogul will get America back to work by complaining about government spending

Steve Schwarzman, a notorious symbol of finance industry excess, writes a very bad column about politics

Alex Pareene
September 12, 2011 8:13PM (UTC)

Billionaire private equity mogul Steve Schwarzman, a living symbol of post-industrial late capitalism's gaudy depravity, wrote an opinion column about politics and the government, and the Financial Times published this column. It's a bad, dumb column, but that is to be expected, because what the hell does billionaire private equity mogul Steve Schwarzman know about politics?

Again: Very wealthy people are not smarter than regular people, and wealth or financial acumen does not magically create expertise on other issues. Steve Schwarzman knows as much about politics and economics as any schmo who reads the Wall Street Journal editorial page, which is to say he believes a bunch of convenient lies. If Schwarzman wrote a column on what the Boston Red Sox need to do to reverse their slump would Sports Illustrated publish it, or would he have to put it on his blog like a regular self-appointed sports expert?


Instead, this is Steve Schwarzman's explanation for what caused America's slump, and how to reverse it.

The problem (Schwarzman's a successful, comfortable billionaire, so he doesn't have a problem, but he heard that other people have some sort of problem) is that after the finance industry caused a massive, international financial crisis, President Obama said unspecified mean things about billionaires:

My concern is compounded because our ability to make economic decisions has become paralysed by political and social divisions. This problem began when the administration sought to attribute blame for the financial and economic crisis and alienated large segments of the business and banking community. They cast them as villains regardless of their culpability. Predictably, business reacted with fear and limited economic expansion, hiring and new lending.

I might've pegged the start of "the problem" to "the crisis," but apparently they are only tangentially related. And here we see a classic example of the "people like me are sensitive babies with guns to your head" argument. It turns out that slightly critical language caused rich, adult business-owners to panic, and to retaliate against a completely rhetorical threat by driving the nation deeper into a recession. This makes the business and banking community sound insane and dangerous. Why flatter them? Why not institutionalize them?


Schwarzman adds that the other major problem is deficit spending, though he does not even bother to begin to make an argument that deficit spending is causing anemic growth and lack of investment. (This is because deficit hysteria is a religious belief, not a position arrived at after examining the details of our current situation.)

Now that we have identified the problem, it is time for Schwarzman to advertise his solution. His solution is "magic." I mean, that's it. It's just a vague call for everyone in the nation to all agree to do something or other about our problems. Half of Schwarzman's "plan to create jobs and ignite economic growth" is simply to get everyone to agree that government spending is bad. "Every American ... needs to appreciate the gravity of having the federal government borrow 40 cents of every dollar it spends," he writes, because that will really help. I may be underwater on my mortgage and unemployed but I understand the gravity of our nation's federal spending habits.

The other half of his plan is tax reform (plus vague spending cuts), which will be instituted through ... magic, as well. Does Schwarzman have a plan to get a bitterly divided Congress to pass a broad tax reform plan? Nope. All of our political leaders will just have to agree with one another. This is considered such an unremarkable argument that professional political columnists use it in newspapers every single day, but that doesn't make it less stupid. The parties have diametrically opposed political goals. That prevents them from finding common ground on policy. That has been true for 20 years now and painfully obvious since January of 2009.


See if you can find any sort of actual political proposal buried in this conclusion:

“Shared sacrifice” sounds like cheap political rhetoric. But if we are to reform taxes and cut spending sufficiently to make a difference, virtually everyone will be affected. Broad-based tax reform will put everything on the table, from the rates we pay at every bracket to serious thinking about a flat tax regime with few or no deductions. Entitlement reform of Medicare, Medicaid and Social Security will affect the benefits we receive and the amounts we all have to contribute. There will probably not be a single American untouched by the spending cuts needed in the rest of the federal budget.

I believe that most Americans will be willing to sacrifice for economic stability and a bright future for our children, if the deal falls equitably on all shoulders. I know I’d prefer the short-term pain while working together towards a shared solution to the long-term pain of another recession, social unrest, or worse.

"Shared sacrifice" sounds likes especially cheap political rhetoric when it involves lowering a billionaire's taxes, but it's very Adult and Serious of Schwarzman to support "short-term pain" for unnamed people who aren't Steve Schwarzman.


Meanwhile, Republicans are deciding what to do with President Obama's actual plan to address the unemployment crisis, and Pete Sessions says, "[to] assume that we’re naturally for these things because we’ve been for them does not mean we will be for them if they cause debt, if they [have] tax increases and if they take money from the free-enterprise sector, which creates jobs." Maybe the president will convince Sessions to support former GOP policies by talking even more about how bad the debt is?

Alex Pareene

Alex Pareene writes about politics for Salon and is the author of "The Rude Guide to Mitt." Email him at and follow him on Twitter @pareene

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