What Croesus wants from Trump

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What Croesus wants from Trump

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With a fortune that has more than doubled to $50 billion since 2021, Steve Schwarzman and his descendants could spend a million dollars a week for the next thousand years and still have change. Yet the Blackstone co-founder is so worried about Democrats harming the economy that he sides entirely with Donald Trump. This despite the January 6 assault being described “as an affront to the democratic values ​​that we hold dear.” Not so expensive, it seems.

It would be arbitrary to single out Schwarzman. As Susan Glasser explains in the New Yorker, many of the billionaires who bankroll Trump need to eat their words. Elon Musk, who proposes a million dollars a day by Nov. 5, during Pennsylvania’s lottery for newly registered voters, once urged Trump to “hang up his hat and sail off into the sunset.”

Nelson Peltz, a Florida-based hedge fund owner, called Trump a “terrible” human being. “I voted for (Trump) in the last election,” Peltz said on January 7, 2021. “Today I am sorry that I did that.” Peltz’s recent fundraisers for Trump are his lack of apology. Others include Harold Hamm, the Oklahoma oil billionaire, who told the FT last year that he wanted Trump to end the “division and chaos” and retire. Apparently, this chaos is worth the risk.

One or two Maga financiers, notably Timothy Mellon, scion of the Pittsburgh-based dynasty, have never shied away from Trump. The rest made it clear that they valued the rate of growth of their assets more than the future of American democracy. However, the Joe Biden years have been favorable to the American super-rich. The S&P 500 is up more than 50 percent since he took office. Others have seen their net worth increase at similar rates to Schwarzman. Kamala Harris, who describes herself as a “capitalist,” is more pro-business than Biden. For example, she proposes a capital gains tax of 28 percent, compared to 39.6 percent for Biden.

What is it about Harris that brings billionaires back to a man so many of them have condemned? Everyone is a billionaire in their own way. Some, like Musk, want Trump to have specific benefits on deregulation. A softer approach to self-driving cars from Tesla and more federal contracts for its Starlink satellites are clear advantages. Alone among major Trump supporters, Musk’s fortunes fell during the Biden years. He seems to attribute this to Democrats’ overregulation, not his own business decisions.

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Others, like Miriam Adelson, widow of the late video game mogul Sheldon Adelson, think Trump would be better for Israel. Hamm is motivated by Trump’s promise to lift Biden’s freeze on Alaska’s Arctic drilling and his ban on LNG exports. Last May, Trump asked 20 oil and gas executives for $1 billion in exchange for bidding on drilling. The $14.1 million he’s raised since then falls short. But that’s 10 times what Biden and since then Harris have received from energy donors. Likewise, crypto enthusiasts, such as Howard Lutnick of Cantor Fitzgerald, want regulators to get rid of bitcoin. They also want Trump to stop the US Federal Reserve from launching a central bank digital currency. Trump has pledged to add bitcoin to the Fed’s balance sheet.

All billionaires are worried about the expiration next year of much of Trump’s 2017 tax law. Still, its 21 percent corporate tax rate is permanent and the 20 percent capital gains tax would be unaffected. The biggest blow for the very wealthy would be a halving of the estate tax exemption, to $13.6 million. But there are myriad ways to handle estate obligations. If Harris won, she would almost certainly face a Republican Senate, which would block her plan to tax unrealized capital gains. In practice, the tax difference between Trump and Harris would be on the order of pennies on the dollar.

So what’s keeping the rich coming back to Trump? The missing piece is psychology. When you are as rich as Croesus, the paranoia of losing everything sets in. Your sense of reality changes. In 2010, Schwarzman compared Barack Obama’s plans to close the so-called carried interest loophole — which allows private equity owners to pay a lower tax rate than their secretaries, according to words of Warren Buffett – to the Nazi invasion of Poland. Neither accounting nor historical knowledge could explain this strange analogy.

Other billionaires and many leaders have donated to Harris. Her nearly a billion dollars in fundraising in the last quarter alone, that exceeds Trump’s total since January 2023. Perhaps his donors value democracy more. But they could also be motivated by asset protection. The inflationary effect of Trump’s planned global tariff war and his threat to the independence of the Fed would affect everyone’s bottom line.

edward.luce@ft.com

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