Jesse Eisinger, a senior reporter at ProPublica, and Bloomberg View columnist William Cohan, a former investment banker, join “Viewpoint” host Eliot Spitzer to discuss the culture of private equity firms and Eisinger’s recent article detailing several business deals in the early days of Bain Capital that involved Mitt Romney.
Eisinger explains that Bain sought to acquire mature companies that could sustain a high level of debt.
“It’s the tax deductibility of the interest on the debt that makes the whole thing fly, and that is a gift from the government,” Cohan explains. “If you eliminated the tax deductibility of interest on those kind of leverage payments, there would be no private equity industry … the fortunes that were made would not be nearly as large.”
Spitzer asks whether Romney and his Bain colleagues are the very “moochers” Romney has been deriding as the subsidized 47 percent.
“There’s no question that these guys are deeply subsidized,” Eisinger says. “And of course they’re subsidized in their personal income because there’s a second tax game going on which is that they don’t have to pay ordinary income tax on carried interest on their gains. So they’re getting tax breaks on the money coming in and going out, every which way.”