Park Avenue Response

Following the broadcast of Park Avenue: Money, Power & The American Dream, the New York City affiliate presented a community affairs program on the issue of income and economic disparity. The following statements were issued from the offices of Sen. Charles Schumer (D-NY) and David Koch, who were both covered in the film.

“This film gets Senator Schumer’s position on carried interest all wrong. While the Senator would prefer to eliminate the carried interest loophole across all industries–a view shared by President Obama–Schumer has said since 2007 that he would support any legislation that ended the loophole, even if it only applied to the finance industry. In the Senate, he has voted to close the loophole not once, but twice. Both the New York Times and Washington Post have corroborated this.”

– Brian Fallon, spokesman for Senator Charles E. Schumer

“This film is disappointing and divisive. Rather than advance ideas to address the root causes of poverty, it simplistically blames the wealthy while ignoring the billions of dollars in charitable support given by those with financial means. To continue to attack job creators and businesses that work to raise the standard of living for all Americans will only serve to impoverish our nation.

The success of Koch Industries with its 50,000 U.S. employees enables David Koch’s philanthropy. In spite of these attacks, he will continue to support causes that aim to eradicate cancer, advance a free society, and create a better quality of life for all.”

– Melissa Cohlmia, Director, Corporate Communication, Koch Companies Public Sector, LLC.

Filmmaker Alex Gibney issued the following response to these statements:

“The film takes no position in regard to charitable contributions by wealthy Americans.  Let it be said that they are tax-deductible.  Let it also be said that, to the degree they improve the cultural or economic landscape of the United States, they are to be applauded.  But the film does not “blame the wealthy” for being rich, just the opposite.  What the film does take issue with is the way wealthy interests in the United States have perverted the political process by using campaign contributions to obtain special favors from their representatives in Congress that are unavailable to citizens without enormous financial resources.  The vote, not the pocketbook, should determine the course of democracy.

Senator Schumer’s comments are disingenuous.  As the film points out, Sen. Schumer has tried to mask his efforts to preserve the hedge fund loophole by saying that he would eliminate that loophole, so long as all others disappear.  That’s a bit like saying he would like to end the war in Afghanistan just as soon as all other armed conflicts end and peoples of all races, creeds and colors agree to have eternal peace on earth.

It’s odd that Sen. Schumer cites 2007.  It was July 2007 in which Schumer killed a bill sponsored by Democrat Charles Rangel (D-NY) in the House, and supported by Charles Grassley (R-PA) in the Senate that would have ended the loophole.  But Schumer used his power as a member of the Senate Banking and Finance Committee to block Rangel’s plan by insisting that all other similar loopholes in real estate and energy be ended at the same time. This is detailed in many places, including Robert Kaiser’s book, So Damn Much Money, and in the following 2012 article in Crains:  http://mycrains.crainsnewyork.com/blogs/greg-david-on-ny/2012/01/how-schumer-cut-romneys-taxes/

In speaking to one hedge fund manager, I was told that Sen. Schumer still reassures the financial community that the carried interest loophole will stay in place so long as other similar loopholes remain.

But let’s not obscure the larger point: Senator Schumer is well-known for doing favors for Wall Street in exchange for enormous campaign contributions for himself and the Democratic Party.  If the film had more time, it would have pointed out what the New York Times observed on December 13, 2008, in an article about Schumer entitled “A Champion of Wall Street Reaps the Benefits.”  Schumer, the article says, “plays an unrivaled role in Washington as beneficiary, advocate and overseer of an industry that is his hometown’s most important industry…he has embraced the industry’s free-market, deregulatory agenda more than almost any other Democrat in Congress, even backing some measures now blamed for contributing to the financial crisis.”  As a member of the Senate Banking and Finance Committee, he was known as the Senator from Wall Street. He saved the financial industry billions in higher taxes and fees and relaxed oversight of the industry in ways that laid the groundwork for the financial crisis of 2008.

“Notably, Senator Schumer did not disclose which votes and which bills he is talking about.  Perhaps he should. That would tell us something meaningful.  Without that information, his comment means little.

More important, if Sen. Schumer felt so strongly about having himself heard on this issue, he could have agreed to our repeated requests for an interview.

Last, if Senator Schumer feels so strongly about the unfairness of the carried interest loophole, why does he not sponsor a bill in the Senate whose sole purpose would be to end that loophole?  Then, and only then, might the veteran firemen, nurses and policemen in the New York State be reassured that Sen. Schumer knows that it’s unfair that they often pay a tax rate that is often double that paid by hedge fund billionaires.”