Democrats running for president in 2020 are agitating against the concentration of wealth in the hands of a few and decrying their influence on the political process. Now, they need to make room for one of those hyper-rich people in their own ranks.
Tom Steyer, the hedge fund billionaire and second-most prolific political donor of all time, made it official Tuesday: He is jumping into the race for the Democratic presidential nomination.
Steyer will have to overcome more than a late start. In his four-minute announcement video, he decried a broken government that represents corporate interests and those of the hyper-wealthy rather than everyday Americans. Watch it here:
But to push his message that he is the right leader to get big money out of politics, Steyer will be leaning on more of his own big money. He has pledged to spend up to $100 million of his personal fortune on the race.
A couple of his rivals for the nod seized on that fact Tuesday. In an appearance on MSNBC, Sen. Bernie Sanders (I-Vt.) said he likes Steyer personally but added he’s getting “a bit tired of billionaires trying to buy political power.” Sen. Elizabeth Warren (D-Mass.) drew a contrast between Steyer’s plan to self-fund and her own $19 million second-quarter fundraising haul drawn from a grass-roots network:
The Democratic primary should not be decided by billionaires, whether they’re funding Super PACs or funding themselves. The strongest Democratic nominee in the general will have a coalition that’s powered by a grassroots movement.— Elizabeth Warren (@ewarren) July 9, 2019
Steyer, 62, cut his teeth on Wall Street, working under future Treasury Secretary Robert Rubin on Goldman Sachs's risk arbitrage desk. But he amassed his estimated $1.6 billion fortune at the helm of a hedge fund called Farallon Capital Management, which he founded in 1986. By the time Steyer gave up his ownership in late 2012, it had grown to one of the largest in the world, with about $20 billion under management. The firm profited from investments in every sector of the economy, including fossil fuels, maintaining stakes in BP, oil-and-gas giant Nexen, and mining companies, among others.
By Steyer’s account, a percolating crisis of conscience over those holdings reached full boil during a mountain hike in the summer of 2012 with environmentalist Bill McKibben. Afterward, he decided to personally divest from “ecologically unsound” investments. That translated into dumping stakes in tar sands and coal, two of the dirtiest energy sources.
But he drew criticism for moving more slowly to divest from all fossil fuel interests. And the New York Times in 2014 found that “despite his highly public declaration, Mr. Steyer’s divestment will do little to impede the coal-related projects his firm bankrolled, which will generate tens of millions of tons of carbon pollution for years, if not decades, to come. Over the past 15 years, Mr. Steyer’s fund, Farallon Capital Management, has pumped hundreds of millions of dollars into companies that operate coal mines and coal-fired power plants from Indonesia to China.”
Steyer’s record since of putting his money where his mouth is may blunt charges of hypocrisy as he becomes an official candidate. His organization NextGen Climate Action has plowed about $234 million into boosting Democratic candidates over the past three election cycles — with about $209 million of that sum coming from Steyer’s own pocket, according to figures from the Center for Responsive Politics.
The bigger problem he faces is whether Democratic voters will embrace a billionaire at a time when populist animus is energizing the party’s base.
Michael Bloomberg — a fellow billionaire who has funded climate change activism and other progressive causes while spending big to elect Democrats — surveyed the same landscape earlier this year and decided it would be hostile to his own presidential bid. In a Bloomberg News editorial announcing his decision, Bloomberg said he concluded he could never win the Democratic primary — beacuse though he worries the primary will “drag the party to an extreme,” he would refuse to “change my views to match the polls.”
That may distinguish Steyer from Bloomberg — and, to a lesser extent, Howard Schultz, the former Starbucks CEO who looks to have given up on a potential independent bid that was based on the idea both parties had abandoned the center. Bloomberg has been an outspoken critic of some Democratic candidates’ proposals to hike taxes on the rich, comparing Warren’s plan for a wealth tax to socialism, for example. Steyer has called for raising taxes on upper-income earners, though he hasn’t gotten specific yet.
But the issue points to a box Steyer could soon find himself in: Promote a more moderate economic program, and his rivals on the left will have an easy time lambasting him for seeking to protect his self-interest and that of his class; adopt the stridently liberal line, and the question arises why Steyer is better suited to carry that banner than candidates like Warren or Sanders who have already detailed their plans and developed major grassroots followings.
As The Post's Dave Weigel noted Wednesday, last month's AP-NORC poll found just 26 percent of Democrats said they favored a candidate with experience running a business, while 73 percent said they preferred one with experience in public office. Yet Steyer is emphasizing his lack of experience in office. "I am an outsider from outside the system, and I’ve been doing this for 10 years,” he told Weigel, referring to his activism. "I think the question here for every single person who’s running is: Who can connect with Americans? Who can rewrite the electorate and get us organized? That is the question. You can’t buy that."
Steyer is right that he can't buy voter support. But he's launching his bid by trying, spending nearly $1 million on a TV ad campaign in states with early primary contests.
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— Powell faces tough task in Hill testimony: “When Federal Reserve Chair Jerome H. Powell testifies before Congress on Wednesday and Thursday, he is expected to talk about slowing economic activity and increased risks, showing that the Fed is ready to cut interest rates as needed,” CNBC’s Patti Domm reports. “But Powell is also likely to keep the markets — and the White House — guessing about how soon and how deep the Fed intends to trim rates, when it meets at the end of July. The prevailing view, priced into the futures market, is for a 100% chance of a quarter-point rate cut July 31.”
“‘There is no part of what he has to do over the next two days that does not resemble walking a tightrope over Niagara Falls,’ said Julian Emanuel, chief equity and derivatives strategist at BTIG.”
Bespoke Investment Group notes expectations for a rate cut this month have collapsed.
The bubble in expectations for a July 50 bps cut is bursting faster than the dot-com stocks. pic.twitter.com/eGM6dzcvYU— Bespoke (@bespokeinvest) July 9, 2019
Meanwhile, via CNBC's Carl Quintanilla, top White House economic adviser Larry Kudlow suggested yesterday that the Fed should heed advice from the White House:
— Job openings outnumber workers by 1.4 million. WSJ's Eric Morath: "The number of unfilled jobs in the U.S. fell slightly in May, but remained near record levels, suggesting demand for workers was strong even during a month when hiring slowed sharply. There were a seasonally adjusted 7.323 million unfilled jobs at the end of May, down 49,000 from the prior month’s revised figure, the Labor Department said Tuesday... Openings have exceeded the number of unemployed for 15 straight months. Before last year, that had never occurred in nearly two decades of monthly records."
— The housing market is about to turn against buyers again: “Competition in the housing market finally began to cool this year, as listings multiplied and price gains moderated. Bidding wars became less frequent and spring sales perked up a bit. Well, forget that. The heat is on yet again,” CNBC’s Diana Olick reports.
“The housing shortage that fueled competition and resulted in sky-high price gains throughout 2017 and the first half of 2018 is on the horizon yet again. Supply is soon expected to drop and potentially hit a new low, according to realtor.com, after increasing in the second half of last year.”
— Kudlow says U.S. and China may never reach a deal: “The United States and China may never be able to reach a trade deal because of the difficulty in resolving the relatively few remaining issues on the table, a top U.S. official said Tuesday,” Politico’s Doug Palmer reports.
“During an interview at CNBC's Capital Exchange event in Washington, [Kudlow] said he was an optimist by nature and still believed a deal was possible. But he used a football analogy involving his favorite team to illustrate the potential for the Trump administration to fall short. 'It's like being on the seven-yard line at a football game,’ Kudlow said. ‘And as a long-suffering New York Giants fan, they could be on the seven and they never get the ball to the end zone.’”
Meanwhile, talks have resumed: “U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He and Minister Zhong Shan on Tuesday to continue negotiations to resolve outstanding trade issues, a U.S. official said,” Reuters’s Chris Prentice reports.
Trump administration allows sales to Huawei to resume. NYT's Jim Tankersley and Ana Swanson: "The Trump administration is following through with plans to allow American companies to continue doing business with Huawei, the Chinese telecom equipment giant, just weeks after placing the company on a Commerce Department blacklist.
"On Tuesday, Commerce Secretary Wilbur Ross said the administration will issue licenses for American companies that want to do business with Huawei 'where there is no threat to national security.' And another top official suggested the move would allow chip makers to continue selling certain technology to Huawei."
— Trump praises Acosta as he faces growing calls to resign: “[Trump] praised Labor Secretary Alexander Acosta on Tuesday and said he felt 'very badly' for him, as calls mounted for his Cabinet member to resign over his handling, as a U.S. attorney, of an earlier sex crimes case involving financier Jeffrey Epstein,” my colleague John Wagner reports.
“Speaking to reporters in the Oval Office, Trump also said the White House would look closely at the circumstances surrounding a 2007 plea deal overseen by Acosta that a growing number of Democrats argued Tuesday was far too lenient on Epstein … Shortly before, Acosta said in a tweet that he was pleased that federal prosecutors in New York are pursing a new sex trafficking case against Epstein involving minors."
The crimes committed by Epstein are horrific, and I am pleased that NY prosecutors are moving forward with a case based on new evidence.— Secretary Acosta (@SecretaryAcosta) July 9, 2019
Epstein recently tried to discuss damage control with a PR professional: “Private as he was, he was apparently concerned about what the public thought of him. A mutual friend arranged for him to meet R. Couri Hay, a public relations consultant. Mr. Hay said on Monday that their first meeting, at Mr. Epstein’s townhouse, took place three years ago,” the New York Times’s James Barron reports.
“Mr. Epstein was not ready to re-emerge in the public eye — not then, anyway. Three months ago, Mr. Epstein called and invited him over to discuss damage control, Mr. Hay said. ‘He hates every story starting with ‘billionaire pervert,’” Mr. Hay said. ‘Jeffrey had long stories about the difference between pedophilia with very young children and tweens and teens a little older.’ He added, ‘It was his way of trying to talk his way around it.’ ”
— Boeing set to lose biggest plane-maker title: "Boeing Co is set to lose the title of being the world’s biggest plane maker after reporting a 37% drop in deliveries for the first half of the year due to the prolonged grounding of its best-selling MAX jets," Reuters’s Ankit Ajmera reports.
“Boeing deliveries lagged those of Airbus SE, which on Tuesday said it handed over 389 planes in the same period, up 28% from a year earlier. Reuters had reported Airbus delivery numbers on Friday, citing sources. The numbers indicate that Boeing’s full-year deliveries are likely to fall behind its European rival for the first time in eight years.”
— PepsiCo’s earnings are on the rise: “PepsiCo Inc. posted higher quarterly profit and sales as the food-and-beverage giant rolled out new products such as Pepsi Mango and ramped up marketing for some of its more established brands,” the Wall Street Journal’s Jennifer Maloney and Kimberly Chin report.
“Under Chief Executive Ramon Laguarta, who took over from longtime chief Indra Nooyi in October, the company has been increasing spending on advertising and distribution networks, broadening its product lines and changing its packaging. Revenue in the company’s North America beverages division increased 2.5% in the second quarter, as volume rose in ready-to-drink coffee and water brands such as Lifewtr and Bubly. The Pepsi and Mountain Dew brands, which slumped last year, continued to turn around, executives said.”
— Virgin Galactic announces it will take its space tourism venture public: “Before Virgin Galactic starts bringing human beings closer to the cosmos, Richard Branson’s space tourism company has set its sights on another new frontier: the New York Stock Exchange,” my colleagues Taylor Telford and Christian Davenport report.
“The British billionaire announced Tuesday that Virgin Galactic planned to become the first human spaceflight company to go public via a merger with a New York investment firm. Social Capital Hedosophia will take a 49 percent stake in the company, which will be valued at roughly $1.5 billion. The firm’s chief executive, Chamath Palihapitiya, will invest an additional $100 million in the combined enterprise at $10 per share and become its chairman. The listing is expected before the end of the year.”
— Saudi lobbying whirs on. The Post's Beth Reinhard, Jonathan O'Connell and Tom Hamburger: "After the killing in October of journalist Jamal Khashoggi in the Saudi Consulate in Istanbul, a handful of lobbying firms and think tanks made a move rare in Washington: They publicly severed ties with Saudi Arabia, swearing off the kingdom’s money. But nine months later, Saudi Arabia’s efforts to influence U.S. policy continue unabated — bolstered by President Trump’s embrace of Crown Prince Mohammed bin Salman, despite a recent United Nations report that the prince was complicit in the grisly killing and dismemberment of the Washington Post contributing columnist and political dissident.
"Since fall 2018, high-powered lobbyists and lawyers have reaped millions of dollars for assisting the kingdom as it works to develop nuclear power, buy American-made weapons and prolong U.S. assistance to the Saudi-led coalition waging war in Yemen, foreign lobbying records show."
— Apple, Amazon, Facebook and Google to testify to Congress on antitrust: “Apple, Amazon, Facebook and Google have been summoned to Capitol Hill to testify next week as part of House lawmakers’ wide-ranging investigation into big tech companies and the threats they may pose to competition,” my colleague Tony Romm reports.
“The hearing, scheduled for July 16 in front of the House Judiciary Committee’s subcommittee that deals with antitrust, will bring simmering Democratic and Republican frustrations with Silicon Valley into public view, potentially setting the stage for further scrutiny — or regulation — of an industry that has long insisted that its size doesn’t harm rivals or consumers.”
— Joe Biden raked it in after leaving office: “Joe Biden on Tuesday afternoon reported earning $15.6 million in income over the past two years, making him the wealthiest among his chief competitors for the Democratic presidential nomination,” my colleagues Matt Viser and Anu Narayanswamy report.
“The vast majority of the former vice president’s income — which totaled $11 million in 2017 and $4.6 million in 2018 — came from book payments and speaking fees. Biden was also a professor at the University of Pennsylvania, where he was paid $371,159 in 2017 and $405,368 in 2018. The tax returns and financial disclosure statements Biden released Tuesday provided the first picture of the wealth he has accumulated since leaving a 44-year career in government.”
— Powell: Stress tests must evolve. WSJ's Lalita Clozel: " Powell said stress tests of the nation’s largest banks must adapt and keep firms on their toes, or the annual exam could fail to prepare the financial system for the next downturn. 'If the stress tests do not evolve, they risk becoming a compliance exercise, breeding complacency from both supervisors and banks,' Mr. Powell said Tuesday in prepared remarks for a stress-testing conference at the Federal Reserve Bank of Boston."
- Federal Reserve Chair Jerome Powell testifies in front of the House Financial Services Committee.
- The Peterson Institute for International Economics holds an event on China and world.
- The House Committee on Small Businesses holds a hearing on the role military veteran entrepreneurs serve in the economy.
- Powell testifies in front of the Senate Banking Committee on Thursday.
- Fed Vice Chair Randal Quarles speaks at the Bipartisan Policy Center on Thursday.