It was “Barbarians at the Gate,” Washington-style.

As Republicans set out to overhaul the federal tax code in 2017, the private equity world leveraged its influence. The mission: protect the wildly lucrative tax break that’s helped mint more billionaires than almost any other industry.

The original Barbarian -- KKR & Co. -- had none other than a former head of the Republican National Committee rounding up lawmakers on Capitol Hill to fight for private equity’s cause.

Quietly meeting with Treasury Secretary Steven Mnuchin and top economic advisers was industry mogul Jonathan Gray, the No. 2 at Blackstone Group Inc. who’s famous for devising the $26 billion takeover of the Hilton hotel chain.

As lobbyists worked toward a compromise that would keep the tax benefit alive, Blackstone co-founder Steve Schwarzman was enjoying direct access to President Donald Trump. Worth $16.1 billion, Schwarzman happens to be the president’s Palm Beach neighbor, a regular guest at his Mar-a-Lago resort and one of his most generous donors.

And so went private equity’s latest feat in Washington: Despite dozens of attempts to close that crucial loophole -- a multibillion-dollar giveaway on so-called carried interest that Trump himself had pledged to junk -- the idea simply went away. Congress kept the existing system with a stipulation that money managers must hold their positions for three years. They usually do anyway.

The day the Senate passed the law preserving the tax break, Schwarzman hosted a fundraiser at his Manhattan apartment for the president. Guests paid $100,000 a plate.

An industry that’s reshaped the American economy now appears to be heading into an even bigger war to preserve the generous tax breaks and loose oversight that helped it amass more than $4 trillion in assets and launch a new Gilded Age. Senator Elizabeth Warren, climbing in polls as she seeks the Democratic presidential nomination, has laid out proposals that would dramatically rein in its profits if she’s elected next year.

She and some of her fellow candidates are picking a fight with a group of Wall Street firms more powerful than ever. They’ve evolved from mere buyout funds that use debt to acquire companies like RJR Nabisco, featured in the 1990s book “Barbarians at the Gate,” into major players in real estate, credit and other businesses. They hold sway in virtually every corner of the economy, as well as with millions of employees who will vote in 2020.

Major Donors
Over the past decade, private equity and investment firms -- not including hedge funds -- have dropped $400 million into federal campaign coffers, according the Center for Responsive Politics. That’s more than commercial banks or the insurance industry.

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