I’ve had CNBC on all day, what with its extensive coverage of the “War on Wealth” and all. I turned up the sound when John Snow–former Secretary of Treasury, now the figurehead (but hard-working) chairman of Cerberus Capital Management–showed up on screen a little while ago. Anchor Erin Burnett asked him a few questions about Cerberus’s purchase of Chrysler, and he acquitted himself reasonably well.
Then she brought up the Congressional proposals to increase the taxation of carried interest. Clearly not realizing that he was talking to a former Goldman Sachs analyst who actually understands this stuff, Snow started by pedantically describing the difference between ordinary income and risk-based income, and why it was appropriate to tax them differently. Burnett cut him off, pointing out that that it was the capital of pension funds and other outside investors that was at risk, not that of the private equity partners like Snow.
At that, Snow simply changed the subject, moving on to the old standby, “Remember, you always get less of anything you tax.” Which is true, sort of, but if taken to its logical conclusion means that we shouldn’t tax anything except maybe littering and saying boneheaded things on CNBC. Burnett kept hassling him after that, and by my lights he really did come off the fool. (If they post video later, I’ll link to it.)
The thing is, I have it on pretty good authority–his econ grad school classmate, should-be Nobelist Charlie Plott–that John Snow is no fool at all. That he mostly talked like one at Treasury was understandable, given President Bush’s penchant for ousting appointees who say intelligent things in public (has anyone else noticed how quiet Hank Paulson, who has trouble saying things that aren’t intelligent, has been at Treasury?). Now, though, at least on the subject of private equity taxation, Snow is still spouting disingenuous nonsense. I realize he’s being paid an awful lot to do so. But come on, Johnnie, you can do better than that. And way to go Erin Burnett!
Update: Here’s the video, complete with a bizaare ad for the CBOE.