Saturday, June 12, 2021
A Much Needed Look at Glenn Youngkin's "Business Experience"
Although a private equity fund may be advised by an adviser that is registered with the SEC, private equity funds themselves are not registered with the SEC. As a result, private equity funds are not subject to regular public disclosure requirements.
Does Virginia need a man as governor who made a career of further enriching the very wealthy and, in my opinion, possibly cheating the government out of taxes (I am not stating that Carlyle Group definitely did this and refer readers to the Times story highlights below)? I would argue "no", especially when combined with Youngkin's far right Christian from The Family Foundation. Here are highlights from the Times:
There were two weeks left in the Trump administration when the Treasury Department handed down a set of rules governing an obscure corner of the tax code.
Overseen by a senior Treasury official whose previous job involved helping the wealthy avoid taxes, the new regulations represented a major victory for private equity firms. They ensured that executives in the $4.5 trillion industry, whose leaders often measure their yearly pay in eight or nine figures, could avoid paying hundreds of millions in taxes.
The rules were approved on Jan. 5, the day before the riot at the U.S. Capitol. Hardly anyone noticed.
The industry has perfected sleight-of-hand tax-avoidance strategies so aggressive that at least three private equity officials have alerted the Internal Revenue Service to potentially illegal tactics, according to people with direct knowledge of the claims and documents reviewed by The New York Times. The previously unreported whistle-blower claims involved tax dodges at dozens of private equity firms.
But the I.R.S., its staff hollowed out after years of budget cuts, has thrown up its hands when it comes to policing the politically powerful industry.
One reason they rarely face audits is that private equity firms have deployed vast webs of partnerships to collect their profits. Partnerships do not owe income taxes. Instead, they pass those obligations on to their partners, who can number in the thousands at a large private equity firm. That makes the structures notoriously complicated for auditors to untangle.
People earning less than $25,000 are at least three times more likely to be audited than partnerships, whose income flows overwhelmingly to the richest 1 percent of Americans.
The consequences of that imbalance are enormous.
By one recent estimate, the United States loses $75 billion a year from investors in partnerships failing to report their income accurately — at least some of which would probably be recovered if the I.R.S. conducted more audits. That’s enough to roughly double annual federal spending on education.
It is also a dramatic understatement of the true cost. It doesn’t include the ever-changing array of maneuvers — often skating the edge of the law — that private equity firms have devised to help their managers avoid income taxes on the roughly $120 billion the industry pays its executives each year.
When it comes to bankrolling the federal government, the richest of America’s rich — many of them hailing from the private equity industry — play by an entirely different set of rules than everyone else.
The result is that men like Blackstone Group’s chief executive, Stephen A. Schwarzman, who earned more than $610 million last year, can pay federal taxes at rates similar to the average American.
The private equity industry, which has a fleet of almost 200 lobbyists and has doled out nearly $600 million in campaign contributions over the last decade, has repeatedly derailed past efforts to increase its tax burden.
“If you’re a wealthy cheat in a partnership, your odds of getting audited are slightly higher than your odds of getting hit by a meteorite,” Mr. Rettig said. “For the sake of fairness and for the sake of the budget, it makes a lot more sense to go after cheating by the big guys than focus on working people.” Yet that is not what the I.R.S. has done.
Private equity firms already enjoyed bargain-basement tax rates on their carried interest. Now, Mr. Polsky wrote, they had devised a way to get the same low rate applied to their 2 percent management fees.
In a nutshell, private equity firms and other partnerships could waive a portion of their 2 percent management fees and instead receive a greater share of future investment profits. It was a bit of paper shuffling that radically lowered their tax bills without reducing their income. The technique had a name: “fee waiver.”
“It’s like laundering your fees into capital gains,” said Mr. Polsky, whose paper argued that the I.R.S. could use longstanding provisions of the tax code to crack down on fee waivers. “They put magic words into a document to turn ordinary income into capital gains. They have zero economic substance, and they get away with it.”
The arrangements all had the same basic structure. Say a private equity manager was set to receive a $1 million management fee, which would be taxed as ordinary income, now at a 37 percent rate. Under the fee waiver, the manager would instead agree to collect $1 million as a share of future profits, which he would claim was a capital gain subject to the 20 percent tax. He’d still receive the same amount of money, but he’d save $170,000 in taxes.
The Southern Baptist Convention's Sexist Theology Engenders Misogynies
Years ago, I lived in New York City and attended Grace Church, a historic Episcopal parish on Broadway at 10th Street. The beauty of the Gothic-style building was matched by the glorious choir. Yet the most memorable aspect of the experience was the frequent preaching of the Rev. Fleming Rutledge, who is regarded as one of the most intelligent pulpit presences in Christendom.
I mention that wonderful experience as a way of introducing the latest controversy inside the Southern Baptist Convention. Internal letters and secret recordings leaked in recent days suggest that the nation’s largest (though dwindling) Protestant denomination has not come to grips with the problem of sexually predatory pastors.
That failing cannot be separated, it seems to me, from the theological sexism at the top of the SBC. When the convention holds its annual meeting this week, a key bit of business will be the reaffirmation of a doctrine euphemistically called complementarianism. It holds that even so great a preacher as Fleming Rutledge is an abomination on account of the fact that Fleming Rutledge is a woman.
Mike Stone, former chairman of the SBC executive committee and a leading candidate for the denomination presidency, is a firm proponent of complementarianism, which says men and women have separate roles, and men are the ones in charge.
Among the nearly 800,000 words in the Bible, one sentence seems to contain Stone’s thinking on this matter. It’s from a letter the Apostle Paul wrote to his protege, Timothy: “I do not permit a woman to teach or to exercise authority over a man; rather, she is to remain quiet.”
(The Georgia minister operates an elaborate website boasting of his gifts as “preacher-shepherd-leader” — which suggests he may be less fixated on James 4:6: “God opposes the proud, but gives grace to the humble.”)
Hold this in mind as we look at the leaks: No woman has anything to teach a man; the lowliest person with a Y chromosome is superior to every double X. That 2,000-year-old claptrap was rattling around in Stone’s brain when the former head of the SBC’s Ethics and Religious Liberty Commission, Russell Moore [pictured above], gave Rachael Denhollander a forum in which to criticize the way the executive committee handled an employee’s sexual assault complaint.
Denhollander said at a conference arranged by Moore’s influential ethics commission that the SBC’s executive committee, under Stone’s leadership, had twisted facts and altered statements to make it appear that the complaining employee had consented to an affair. According to Moore, who has resigned from the commission and taken a pastorate at a non-SBC church, women complaining of sexual abuse were compared to “Potiphar’s wife,” a character in the Book of Genesis who lodges a false accusation against the biblical hero Joseph.
Stone countered with a rather fact-free dismissal of everything Moore charged. “This attack is a deflection from the fact that Russell’s leadership of the ERLC has been an ongoing source of division and distraction for Southern Baptists,” he averred.
That’s a veiled reference to Moore’s outspoken criticism of the evangelicals’ embrace of Donald Trump. But it is a distraction. Respect for women and their right to be free of sexual harassment and assault should not be filtered through politics. It is a matter of basic morals, that foundational principle expressed in Matthew 7:12 and known as the Golden Rule.
More than two years after the Houston Chronicle and San Antonio Express-News produced a devastating look at sexual abuse in the SBC, the denomination has not taken the steps necessary to address the problem. Can that really surprise anyone? Men who believe that no woman’s voice should be heard in the pulpit, and that no woman should be trusted with authority, can hardly be expected to listen when women speak the truth about men in positions of power. Thus, bad theology begets bad policy, and bad policy begets moral decay.
Friday, June 11, 2021
Why Won’t Republicans Rebuild America?
On June 26, 1956, Congress approved the Interstate Highway Act. Dwight Eisenhower signed the bill three days later. The legislation allocated $24.8 billion in federal funds for a down payment on the construction of an interstate highway system.
That’s not a lot of money by current standards, but prices are far higher now than they were then, and the economy is vastly bigger. Measured as a share of gross domestic product, the act was the equivalent of around $1.2 trillion today. And the interstate highway system wasn’t the only major federal investment program; the government was also spending substantial sums on things like dam-building and the creation of the St. Lawrence Seaway.
It was, in short, a time when politicians were willing to make bold investments in America’s future. And there was remarkable consensus on the need for those investments. The highway act — paid for with higher taxes on gasoline and user fees — passed the House on a voice vote and in the Senate received only one dissent.
But that was a different America — or, not to obscure the reality of what has changed, a different Republican Party.
I felt an urge to cheer when President Biden declared an end to discussions with Senate Republicans over infrastructure. . . . . it was obvious to anyone who remembered the 2009-2010 fight over health care that the G.O.P. wasn’t negotiating in good faith, that it was simply dragging the process out and would eventually reject anything Biden might agree to. The sooner this farce ended, the better.
But how and why did Republicans become the party of “build we won’t”? I see it as a mix of partisanship, ideology and profiteering. . . . . a party that was willing to sabotage the Obama economy is surely even more inclined to sabotage a president whom many of its members refuse to accept as legitimate. Increased public investment is popular, especially if paid for with higher taxes on corporations and the wealthy. It would also create jobs. But with a Democrat in the White House, those are reasons for Republicans to block infrastructure spending, not support it.
Ever since Reagan Republicans have been committed to the view that government is always the problem, never the solution — and, of course, that taxes must always be cut, never increased. They’re not going to make an exception for infrastructure. Indeed, the very fact that infrastructure spending would be popular counts against it; they fear that it might help legitimize a broader role for government in general.
Finally, the modern Republican Party seems deeply allergic to any kind of public program that doesn’t give profit-making private players a big role, even if it’s hard to see what purpose those private players serve. For example, unlike the rest of Medicare, drug coverage, introduced under George W. Bush, can be accessed only through private insurance companies.
When Trump’s advisers unveiled their infrastructure “plan” (it was little more than a vague sketch) . . . it proposed a complex and surely unworkable system of tax credits to private investors who would, it was hoped, build the infrastructure we needed.
If Trump’s people had ever gotten around to an infrastructure plan, it would probably have looked like the one investment program the administration did put into effect, the creation of “opportunity zones” that were supposed to help Americans living in low-income areas. What that program actually ended up doing was provide a bonanza to wealthy investors, who used the tax break to build things like luxury housing.
The modern G.O.P. just won’t do public programs unless they offer vast opportunities for profiteering. . . . The reality is that if we get the infrastructure plan we need, it will be passed through reconciliation with little or no Republican support. And the sooner we get to that point, the better.
Thursday, June 10, 2021
The Fight for the Heart of the Southern Baptist Convention
As numerous post over a period of years have noted, the Southern Baptist Convention ("SBC") has a huge sex abuse problem that the SBC leadership - much like the Vatican under Pope John Paul II - has sought to cover up and in the process has further abused and slandered victims of abuse by SBC pastors. But the SBC has another major problem which may well decide the long term future of the Convention: open racism. (A third problem is the Convention leadership's virulent homophobia which is the topic of a future post). In the 1970's arch reactionaries gained control of the SBC leadership and some churches - e.g., the Baptist church my late in-laws attended - opted to leave the SBC. Over the intervening years, churches that opted to be LGBT welcoming were thrown out of the Convention. But the racial issue always simmered under the surface until it exploded into the open by the SBC leadership's embrace of Donald Trump and his open white nationalism. With a new president of the SBC to be elected (reactionary candidate Albert Mohler is pictured above), many pastors of color - I suspect many younger Baptists - are preparing to leave if one of the reactionary candidates is elected. This exodus would be on top of historic loses in members in 2020. A piece in the New Yorker looks at the growing divide over race within the denomination that arose out of the goal of supporting slavery. Here are highlights:
In a recent Friday afternoon, Dwight McKissic sat at a folding table in his three-car garage, on a cul-de-sac in Arlington, Texas, discussing the role that race plays in a growing divide among American evangelicals. McKissic is sixty-four, with a trim white goatee and an imposing stature. For the past thirty-eight years, he has served as the lead pastor of Cornerstone Baptist Church, which he grew from a few dozen people to roughly four thousand congregants. In the process, he has become a prominent member of the Southern Baptist Convention, which, with more than fourteen million members, is the largest Protestant denomination in the United States. But McKissic is also one of a growing number of pastors of color who may leave the S.B.C. next week, amid allegations that the organization won’t collectively acknowledge the realities of systemic racism. “I’m hanging on by a thread,” he told me. “Dozens of other pastors have already called me to ask what I’m going to do.”
McKissic thought that it would be hard for an outsider to understand why he’d joined the S.B.C., which has a long and painful history around race. But he’d also seen the organization do a lot of good. He was raised in a Black Baptist church, and, when he started Cornerstone, in 1983, the S.B.C. had helped out with funding.
Until recently, much of the racism that he’d encountered in the S.B.C. was “passive,” McKissic said. But after the election of Donald Trump, in 2016, he felt that the racist rhetoric became more overt. McKissic was also unsettled by what he saw as a growing antipathy toward allowing women to serve in leadership roles in the church. The tensions came to a head over the teachings of critical race theory, a loose set of academic tools used to identify systemic racism. C.R.T. emerged in legal scholarship in the seventies, as a method of examining how the law perpetuates racial injustice. Recently, though, it has become a kind of bogeyman for the right: last year, Trump tweeted that critical race theory was “a sickness that cannot be allowed to continue. Please report any sightings so we can quickly extinguish!” His Administration also issued a memo ordering federal anti-racism training programs to stop using the theory.
For the past few years, prominent members of the S.B.C., including Albert Mohler, the president of the Southern Baptist Theological Seminary, the denomination’s oldest academic institution, have demonized C.R.T., calling it, among other things, Marxist and anti-Biblical. Critics have frightened S.B.C. members with the prospect that the theory could soon be used in public schools to indoctrinate children against conservative values.
Throughout 2020, state chapters passed resolutions rejecting critical race theory. Then, last November, on the heels of the nationwide Black Lives Matter protests sparked by the murder of George Floyd, the presidents of S.B.C.’s six seminaries issued an incendiary statement calling C.R.T. “incompatible with the Baptist Faith & Message.” This outraged many pastors of color; none had suggested applying the teachings of C.R.T to the church, but they felt that its blanket rejection was being used by white leaders to dismiss the realities of racism.
In Texas, McKissic read the statement with dismay. “It’s putting lipstick on racism,” he told me. As he saw it, the fight over C.R.T. was also the fight for the future of the S.B.C. A cabal of reactionary, aging white men was trying to maintain control of the organization, and, in order to hold on to power, those men were stoking people’s fears of creeping liberalism. (A spokesperson for the S.B.C. said that it was a sprawling organization whose members held a wide range of viewpoints.) In January, 2021, McKissic wrote an article titled “We Are Getting Off The Bus,” denouncing the rejection of C.R.T. in the November statement and explaining that he was leaving a Texas chapter of the S.B.C. “I am not willing to allow them to dictate what the belief systems, definitions and authoritative binding, academic and ecclesiastical decisions [are] regarding how race is to be communicated in the local church,” he wrote.
On Twitter, the backlash to McKissic’s announcement was severe. Several days after he spoke out, he received a letter in the mail from a former S.B.C. member named John Rutledge, saying that Black people had “invaded the church” and that the issues were “beyond the Negroes’ intellectual capacities.” The letter said, of Black people, “Like two-year-olds, they know only how to whine and throw tantrums. The SBC should bid them goodbye and good riddance!”
Next week, at the group’s 2021 conference, in Nashville, its members will vote on the Convention’s next president. The choice likely lies between the three most viable candidates. One candidate is Mohler, the seminary president who was the face of the charge against C.R.T. He told me recently that C.R.T. goes against “both Christianity and modern political, classical liberty.” Another contender is Mike Stone, a pastor from South Georgia who is even more conservative than Mohler; when we spoke, he called C.R.T. a “weapon of division.” The third is Ed Litton, a soft-spoken pastor who has been involved in racial-reconciliation efforts in Mobile, Alabama, and who believes that the fight over C.R.T. has become a way to avoid talking about the need for structural change in the Southern Baptist Convention.
If either of the two hard-liners wins, McKissic will leave the S.B.C. “The trajectory of the S.B.C. will have proved to be anti-woman, and hostile to race in a way that can’t be justified by the Bible,” he said. “I just can’t, in good conscience, remain a part of a fellowship like that.”
The Southern Baptist Convention was founded, in 1845, to safeguard the institution of slavery. Northern Baptists had recently ruled that men who owned slaves were no longer permitted to serve as missionaries, and slaveholding Baptists decided to form their own group in protest. Founders of the new organization claimed that, according to the Bible, slavery was “an institution of heaven.” . . . . In 1863, the Southern Baptists pledged to support the Confederacy in the Civil War. According to a 2018 report put out by the Southern Baptist Theological Seminary, on the role that slavery played within the organization, one early leader believed that “slavery was no mere necessary evil, but rather a God-ordained institution to be perpetuated.”
In the twentieth century, the S.B.C. went through a period of relative opening, allowing for wide-ranging readings of scripture and letting its academic institutions flourish. . . . But, in the late seventies, there was a backlash within the organization that came to be known as the conservative resurgence. Hard-liners took over the S.B.C., and, in the name of returning it to the teachings of the Bible, pushed back on several social issues. They fought efforts to diversify the leadership and pressed for stricter scriptural interpretations, arguing, for example, that women must submit to the will of men.
After Trump’s election, these divisions intensified. Some Convention members were shocked at what they saw as Trump’s openly xenophobic, racist, and sexist rhetoric, but those who criticized him faced swift backlash.
For many pastors of color, the Southern Baptist Convention’s future rests on what happens during the election in Nashville. Some have already begun to leave. Onwuchekwa, the pastor in Atlanta, was among the first to go. Soon after the death of George Floyd, he gathered about two hundred members of his congregation on Zoom to vote on abandoning the S.B.C. . . . leaving was a principled decision: How could they represent an entity that was increasingly hostile to the needs they were addressing on the street? “The S.B.C. is going backwards,” he said. Voting by Zoom poll, ninety-seven per cent of his congregation decided that the church should leave the Convention.
In December, several more prominent pastors of color followed suit, including Charlie Dates, of Chicago’s Progressive Baptist Church, and Ralph West, who leads the Church Without Walls, a church with nine thousand members in Houston, Texas. West, like others, grew troubled by the aggressive tone that the S.B.C. adopted while Trump was in office. “With their invective and rhetoric, they were providing theological cover for the extreme right,” he said.
I would be highly shocked if the moderate Litton gets elected. Unless this happens, expect the SBC to become even more supportive of white nationalism and more active in dissemination lies and hate. If this happens, with luck, the exodus of blacks and younger members will become a stampede.
McAuliffe’s Chance to Defy History Once Again
[I]t’ll be former Gov. Terry McAuliffe (D) versus Glenn Youngkin (R) for the Virginia governorship this fall. We continue to rate the race to replace outgoing Gov. Ralph Northam (D-VA) as Leans Democratic. McAuliffe is favored, but not overwhelmingly so.
Youngkin has a path, although he’ll have to simultaneously appeal to hard-core Donald Trump voters as well as lapsed Republicans who have voted Democratic in recent years. A significant factor for the fall is one over which neither candidate has control: perceptions of President Joe Biden. If Biden’s modest honeymoon continues, and his approval rating remains over 50%, Youngkin may struggle to make the case against McAuliffe and continuing Democratic control of Richmond. But if there’s some downtick for Biden, that could threaten McAuliffe. The former governor won his first term in 2013 even amidst trouble for national Democrats . . . but McAuliffe also only narrowly escaped against a hard-right challenger, then-state Attorney General Ken Cuccinelli (R).
In picking McAuliffe and Youngkin, Virginians of both parties selected nominees that are within the mainstream of their respective parties. That’s another way of saying neither are really moderates, but voters also passed on more ideological options in the respective party nominating contests.
Despite what turned out to be a predictable and uncompetitive primary, Democratic turnout on Tuesday was robust, at least by Virginia standards. Votes are still being counted, but it appears that around 485,000 votes were cast in the Democratic primary, not that too far shy of the 540,000 cast four years ago. The Democratic turnout four years ago was cited by many as a sign of the white-hot Democratic voter engagement in Virginia just months after Donald Trump had won the White House.
The key question is whether Virginia has become so Democratic that a Republican can’t win here anymore. We don’t think that’s the case, but Republicans haven’t won a statewide contest in a dozen years, and Biden just posted the biggest presidential win in Virginia by a Democrat in the post-World War II era.
In order to win, Youngkin needs to do a little more than 10 points better statewide than Donald Trump did in 2020. A half-century’s worth of modern Virginia gubernatorial races show such an improvement is very much achievable, but there are important caveats to the history.
Of the 13 modern gubernatorial races, the party that didn’t hold the White House won 10 of them. Holton is one of the exceptions, and he was followed four years later by former Gov. Mills Godwin (R), who performed the same feat that McAuliffe is attempting: winning two nonconsecutive terms as the Old Dominion’s chief executive. . . . McAuliffe was the third and most recent presidential party candidate to break the Virginia governorship’s familiar White House jinx, and if he wins this fall, he’ll be the fourth.
Virginia has changed dramatically in the course of this timeframe, going from a state that voted considerably to the right of the nation in presidential elections to one that votes to its left.
What would a Youngkin victory look like? For one thing, Youngkin would be the first modern Republican gubernatorial nominee, in all likelihood, to win without carrying any of the fast-growing suburban/exurban enclaves of Henrico County in Greater Richmond and Loudoun and Prince William counties in Northern Virginia. . . . Youngkin will need to cut Democratic margins in these counties, but winning them is unrealistic, at least in a close race. Youngkin also will need GOP-friendly turnout and giant margins in sparsely-populated but now extremely Republican western Virginia.
Localities Youngkin almost certainly will have to flip back to Republicans after Biden carried them include Chesterfield (in Greater Richmond), Stafford (between Northern Virginia’s bigger population centers and Richmond along I-95), and — perhaps most importantly — the big Republican-leaning swing cities in Hampton Roads, Chesapeake and Virginia Beach. Both voted for Trump in 2016, but flipped to Northam in 2017 and Biden in 2020. Many observers see Hampton Roads as a key not only to the statewide races but also to the battle over the state House of Delegates, where Democrats won a 55-45 majority two years ago. . . . If Youngkin puts up a strong showing in the governor’s race, he could provide enough lift to down-ballot Republican candidates to flip the Virginia House even if he himself does not win.
Beyond the gubernatorial race, Virginia Democrats also chose their nominees for lieutenant governor and attorney general, which are the state’s other two statewide elected positions. Incumbent Attorney General Mark Herring (D) fended off a challenge from state Del. Jay Jones (D) as he seeks a third term (while Virginia governors cannot run for reelection to consecutive terms, there are no term limits for the other two statewide elected positions). State Del. Hala Ayala (D) defeated several other Democratic contenders for the lieutenant gubernatorial nod. Ayala will face former state Del. Winsome Sears (R) for the lieutenant governor post, and Herring will face state Del. Jason Miyares (R). Both Herring and Ayala are from Northern Virginia, as is McAuliffe; Miyares represents and Sears represented state House districts in Hampton Roads, while Youngkin lived in the area for a time as a teenager.
Perhaps the composition of the Republican ticket could help in that electorally-vital Tidewater region. Meanwhile, the Democrats are all from Northern Virginia, the vote-rich engine that powers Democratic statewide victories. Ultimately, we doubt there’s much significance to the geographic makeup of the tickets, but we suspect the all-NOVA composition of the Democratic ticket will get some attention.
While the margins in the three statewide races won’t be identical, they likely will track relatively closely with one another. So the best bet is a sweep for one side or the other, unless all the races are decided by slim margins. The same party has swept all three races in the last three elections.
Virginia appears likely to have the most competitive gubernatorial race of 2021.
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