NEW YORK — One of Wall Street’s biggest titans gives President Donald Trump minimal credit for the past year’s surge in stock prices. And he’s not as worried as many investors about a reckoning if the GOP fails to deliver tax cuts.
“An awful lot of it is not related to Trump,” said Hamilton “Tony” James, president of private equity giant Blackstone Group, in an interview for the latest “POLITICO Money” podcast. “We’ve had nine years of run-up and he’s been president during one of them.”
While stock prices have built in some expectation for corporate tax cuts, James said he doesn’t think Wall Street will tank if the Republican effort to overhaul taxes falls apart — a warning offered even by Trump’s own Treasury secretary.
“If we don’t get it, I think it’s a modest negative for the market,” the Blackstone executive said. “But I don’t think it’s a huge driver for the market. I don’t think the market is going to tank by any means.”
James took sharp issue with some provisions in the GOP tax bills, especially those that might hit the private-equity industry including changes to the taxation of carried interest and the deductibility of interest on corporate debt.
He’s especially critical of the debt-financing provisions, arguing they would not only hurt private equity, but also lots of industries that for a variety of reasons depend on borrowed money to fund operations.
“I think this is very dangerous for a few reasons,” James said. “We will be the only economy in the world that has such a strict limit on interest deduction. U.S. companies will go borrow abroad, build a plant abroad and hire people abroad.”
James, a Democrat, was once rumored as a potential Treasury secretary in a Hillary Clinton administration. He said Wall Street is not the reason Clinton lost the presidential race last November, despite the attacks for her highly paid speeches to Goldman Sachs and other banks.
James said it was Clinton’s failure to connect with voters in the middle of the country that cost her the White House. “I don’t think Hillary lost because of Wall Street ties,” he said. “I just think she didn’t resonate at all with the center part of the country and I don’t think she particularly tried to. The country just desperately wanted change, radical change, and she represented the continuity candidate and that was that.”
James, who has a net worth somewhere north of $1 billion, said he loves Joe Biden, who is on tour for a new book this week, but doesn’t think the former vice president is the Democrats’ best bet in 2020.
“Joe is great and I think he’s such a warm, likable human being,” James said. “I’m worried that his time has passed. Much as I like him, he’ll be 78 years old at the time the next president is inaugurated. I just feel like the country is going to look for a fresh face and fresh ideas.”