Lev Radin/Sipa USA via AP Images
David Rubenstein in September 2022
In December of 2019, as House Democrats were drawing up articles of impeachment against President Donald Trump, I was again introduced to the viewers of Fareed Zakaria GPS on CNN: “This is a historic moment. So how do historians look at it? I’ll talk to Doris Kearns Goodwin, Rick Perlstein, and David Rubenstein …”
One of these things is not like the other.
Prospect readers know David Rubenstein is not a historian, but the billionaire founder of the Carlyle Group, a private equity firm. Much like those English monarchs who by reason of the 1322 statute of Prerogativa Regis to this day enjoy personal ownership of all “Whales and great Sturgeons taken in the Sea or elsewhere within the Realm,” titles the rest of us have to earn by sweat and struggle, David Rubenstein possesses by right. Though that is hardly the most brazen of his thefts.
Born in 1949 to an immigrant mother put to work in a dress shop when she was six and a father who worked his way up to file clerk at the Postal Service—details we will be revisiting later—Rubenstein was an idealistic 27-year-old constitutional lawyer when he was tapped to become deputy domestic policy assistant in the Carter White House. “He strongly believed in the nobility of being a public servant” and was fantastically devoted to it, Dan Briody wrote in his excellent 2003 book The Iron Triangle: Inside the Secret World of the Carlyle Group. “Some thought that he was actually living in the White House.”
No wonder, then, that he hated the lobbying job he took after Carter lost. “I found it demeaning,” he recalled to a reporter in 1993.
Wait ’til you learn about the work he apparently did not find demeaning.
The next bit sounds like the setup for a joke from a time when comedians wore tuxedos. In 1986, a wizardly tax lawyer named Stephen Norris was looking for someone who knew some powerful Eskimos.
He called Rubenstein, who allegedly had the biggest Rolodex in Washington. Norris had learned that Native Alaskans had been awarded a certain tax loophole in 1983 to soften the impact of losses from failed tribal business ventures: They could sell $10 million in tax write-offs to willing buyers for $7 million in cash; the buyer thus got to reduce their taxable net income by $3 million.
The loophole was intended to have a small effect; Norris and Rubenstein figured out a way to run it at industrial scale. All told, according to Briody, the duo starved the federal Treasury of something like a billion dollars.
This was the gang that incorporated in 1987 as the Carlyle Group. Even the moniker bespeaks a staggering obsession with status: They named it after the grand old Manhattan hotel whose name had been synonymous with luxury ever since it opened in 1930. As Briody notes, it “sound[ed] like old money.” Which was ironic, because that was the same reason its Jewish developer named it after a long-dead British author in the first place.
It’s a Gatsbyesque story with Reagan-era accents. This was the dawn of an era when two age-old markers of status, “smartness” and wealth, were merging as one. “I thought I had a pretty good I.Q. myself, and people were making a lot more money than me who I thought maybe weren’t so smart,” Rubenstein told Michael Lewis for a 1993 New Republic profile, “The Access Capitalists,” that first brought him to wider attention. Access was Norris and Rubenstein’s instrument, like the alto saxophone was Charlie Parker’s.
FRED MALEK WAS ONCE A MASTER of the Republican Party’s back rooms. He was basking in the triumph of running George H.W. Bush’s nominating convention when a 1971 memo emerged detailing his work for Richard Nixon counting how many of the top officials of the Bureau of Labor Statistics, whose unemployment reports kept humiliating Nixon’s dreams of easy re-election, were Jewish. Readers of these columns have met Malek before: He was the guy who wrote Nixon’s Project 2025–like secret plan about how to fire civil servants. Malek understood the federal bureaucracy better than anyone alive.
Carlyle as yet had very little money and influence. But they already knew how to take advantage of distressed properties. Norris contacted Malek the day the bad news broke, and offered him a top executive spot.
Rubenstein also knew a thing or two about the kind of human capital disgorged by outgoing White Houses. After Reagan’s, they hired Frank Carlucci, who’d been the defense secretary. Carlucci is the kind of guy who collected menacing nicknames like a mafioso: “Spooky Frank,” “Creepy Carlucci,” “Mr. Clean.” That started when he was a junior foreign service officer in the Congo. Eisenhower had ordered the CIA assassination of Congo’s left-wing prime minister Patrice Lumumba, but rivals got to him first—though, according to research by filmmaker Raoul Peck for his masterpiece Lumumba, Carlucci signed off on their work. When the film came out, however, Mr. Clean managed to arrange for his name to be bleeped out.
Carlucci had also allegedly aided coups in Brazil, Zanzibar, and Chile. And as Reagan’s last defense secretary, he reorganized the Pentagon’s entire long-term procurement system; an access capitalist’s wet dream. Carlyle made him vice chairman.
After George H.W. Bush’s single term, they landed James Baker, and then H.W. himself. Bush Sr. was surely grateful for a favor they had done for his no-account son George Jr.: Malek landed him a seat on the board of a company supplying in-flight meals to airlines that soon was performing so poorly that Bush left it off his biography when he ran for governor.
Scooping up these big fish attracted the attention of Michael Lewis at TNR, and also Time magazine, whose 1993 Carlyle profile was entitled “Peddling Power for Profit”—back in those innocent long-ago days when such a thing was even newsworthy. Lewis’s theme was Rubenstein’s palpable desperation that no one discover what Carlyle was actually up to; the last line of the piece was him pleading, “How do I keep it from being a cover story?”
What they were up to was scooping up defense properties whose value had plummeted with the end of the Cold War, cynically holding onto them in anticipation of the glorious day when American bombs would start falling—somewhere—again. One such distressed asset scooped up in 1997 was United Defense, which built things like the Bradley Fighting Vehicle. “When 9/11 happened and the defense budget took off, suddenly they had a winner on their hands,” the editor of Defense Mergers & Acquisitions has noted—though Carlyle did wait a tasteful two months or so before offloading the majority of their United Defense shares in a public offering. Rubenstein and his partners netted a cool billion.
Then they moved on. “Defense properties are too expensive these days,” a Carlyle spokesman explained at the onset of W.’s second term. So they began mastering the kind of vulture capitalism, familiar to any loyal reader of this magazine, for which the private equity business would become notorious, until they were on top of the heap.
In 2007, Carlyle bought a nursing home chain called ManorCare, largely with borrowed money. Carlyle didn’t have to pay it back—ManorCare did. Then, Carlyle sold the buildings, forcing the nursing homes to pay rent while the owner, Carlyle, raked in management fees. As TAP’s Maureen Tkacik recently wrote here, while ManorCare was once “considered the gold standard,” the financial stress imposed by Carlyle led to staffing and care cuts, and in 2018 the company’s bankruptcy. One wonders if Rubenstein cackled when that happened, as it often does: Companies owned by PE go bankrupt ten times more often than those that aren’t; and by then, Carlyle had long since taken the company public, walking away with another billion-dollar payout.
AS IT HAPPENED, 2007 WAS THE YEAR David Rubenstein, in a manner of speaking, also went public. He bought a copy of the Magna Carta for $21.3 million, lending it for display to the National Archives, with his name prominently attached. He did something similar with copies of the Declaration of Independence, the Constitution, and the Emancipation Proclamation. This brazen quest for reputational laundering eventually brought us together in CNN’s studios.
Roughly speaking, the political history of the Euro-American world we live in has a plot: the steady but uneven expansion of the rights of people who are not kings to shape their own lives, and the struggles of kings and their vassals to keep us from being able to do so. The Magna Carta was a tiny but significant step in that direction. The charter established that even kings were subject to limits on their powers and their subjects were entitled to rights, even if the good guys in this particular story were barons. The Declaration of Independence asserted the rights of American colonials to sever ties with their king, appending something between a statement and an ideal about all men being created equal—even if the good guys in this story were only property-owning white men, with the Emancipation Proclamation repairing part of the oversight.
Waxing rights, waning tyranny: David Rubenstein pays tens of millions of dollars to pose for selfies with that saga’s heroes. Even as, in the present-day chapter, he and his are actually the story’s bad guys—at the cutting edge of stopping any future advances in human liberty, dignity, and equal rights, clawing back those that already exist.
Every time I read something that clearly explains how our lords of private equity play the game of “loading up a company with debt” as prelude to stripping what someone else has built for parts, I’m astonished anew. I can’t get over how a PE firm borrows money to buy a company, and that company, not Carlyle, has to pay it back—and that Carlyle gets paid to make them pay it back, in dividends and “management fees.” It’s hardly less surreal than the notion of the king personally possessing every whale and sturgeon in the kingdom for his own pleasure.
Matt Stoller describes private equity as a “political movement,” and I find that designation brilliant. Especially now, with Carlyle leading the industry into looting a basic human need, profiting from buying up vast tracts of apartment buildings that once had responsive landlords, and putting them under the control of faraway management firms that are not.
Private equity, in short, is one of our most world-changing institutions. But here’s Rubenstein’s neatest trick: In the spaces where super-elites gather to discuss public questions, he has figured out a way to prevent discussion of PE’s very existence. This he manages by leading those discussions. And the elites let him do it. In fact, they can’t get enough of the guy.
THE DAVID RUBENSTEIN SHOW LAUNCHED on Bloomberg TV in 2016. As an interviewer, he’s distinguished by relentless incuriosity. You can’t get anything from watching it that you can’t from a mid-length magazine profile. When I watched him sit down with the head of Abu Dhabi’s tourism bureau, it reminded me of the sort of thing that might play in a loop when you turn on the hotel TV. “Your parents must be very proud of you” is a favorite conversational prompt.
The subtitle for this train of mediocrity is “Peer-to-Peer Conversations.” The guests are people like Bill Gates, the librarian of Congress, Jane Goodall, Lorne Michaels—folks who actually created value out in the world. Rubenstein, conversely, writes checks to himself, drawn on money banked by people who create value out in the world. His calling such people “peers” is like calling King Viserys on House of the Dragon in the scene where his vassals capture a stag, secure its four legs to a tree, and give the sovereign a club to finish it off, while the courtiers cheer him for a job well done, a “hunter.”
And when it comes to conversations with Nancy Pelosi, or Bill Clinton and George W. Bush—interviewed onstage together at the Bush Library—the story of how finance affects democracy can never be part of the discussion. Kind of like how the characters on a streaming series co-starring Harrison Ford have to live in a universe where Star Wars doesn’t exist: The more Rubenstein gets out there as a curator of America’s civic discussions, the more Carlyle and its malevolent works become invisible.
Careful branding is at work here: Rubenstein is portrayed as nerdy and without charisma, nebbishy and harmless. In the original title sequence, a director invites him to fix his tie. He responds, “If I fix my tie no one will recognize me.” A favorite joke of his—so favorite it shows up in the most recent season’s title sequence—is that “private equity is the highest calling of mankind.” The funny-funny is supposed to signify something like: Here I am interviewing presidents, but ha ha, my job is useless paper shoveling.
Move along; nothing to see.
It’s a nifty trick, raising up someone like this as our most prominent modern interpreter of the meaning of America—almost (I want to cry) like the role Bill Moyers used to serve on PBS. Rubenstein has a hand in PBS, too, hosting Iconic America: Our Symbols and Stories with David Rubenstein on Washington’s WETA, and getting the studio where PBS News Hour is taped named after himself.
So I guess we won’t hear much about the Darth Vader of the PE cinematic universe on the News Hour, either.
WHICH BRINGS ME TO THE TIME I shared a panel with him in 2019. So nifty is Rubenstein’s hustle that he’s parlayed it into command performances before the United States Congress. Here’s Fareed Zakaria, introducing him to the audience:
“You may know David Rubenstein as a billionaire businessman. He is the co-founder of the Carlyle Group. But one of his great passions is American history. And he has just published a book called The American Story: Conversations With Master Historians. Before we begin, David, I want you to explain what your book is, and how it’s really come out of an act of educating American congressmen about the country’s history.”
Rubenstein explained how it all came out of his “concern that people don’t know as much about our history as they should … So I started a series about six years ago at the Library of Congress to interview our great historians, like Doris Kearns Goodwin, in front of members of Congress. I’ve done about 50 of them and I’ve taken 18 of them, put them in a book … the greatest historians we have, talking about … John Adams, FDR, and so forth.”
I expect—I chose not to look into the book—that they did not hear from historians reflecting on whether firms like Carlyle represent a fourth branch of government, unrecognized in that Constitution whose original copy Rubenstein bought and displays. Nor Dwight D. Eisenhower’s January 1961 warning of the “potential for the disastrous rise of misplaced power” endangering “our liberties or democratic processes” that he termed the “military-industrial complex.” Or the sentiments of a founder like Noah Webster, who said “a general and tolerably equal distribution of landed property is the whole basis of national freedom.” Or the opinion of Justice John Marshall Harlan affirming the breakup of the Standard Oil Company, recalling how the nation “had been rid of human slavery” even as “the country was in real danger from another kind of slavery … that would result from aggregations of capital in the hands of a few individuals and corporations controlling, for their own profit and advantage exclusively, the entire business of the country, including the production and sale of the necessaries of life.”
No, I imagine that “American history” for him more resembles banalities like the ones he gave out that day on CNN:
“History is good to know, because if you look at history, it tells you what likely will happen in the future.”
“Congress is a pretty good barometer of the American people. If the American people were dead set against President Trump, then the Congress would reflect that.” (I tried to explain that when senators representing something like 15 percent of the population can filibuster something otherwise overwhelmingly desired by the rest, but whiffed the sound bite, alas.)
He went on. The presidential primary system is “not a perfect process, but it’s a process that I think is the envy of the world … as good a system as I think we can possibly get.”
It was thus kind of cool what Zakaria did next: He threw him a question for which feel-good platitudes could not answer:
“All right, let me ask you, as a billionaire, what do you think of Elizabeth Warren’s desire to tax the hell out of you.”
The billionaire stammered. He did not seem used to questions like that. “Well, I am … I don’t make the laws … whatever the laws are, I’m going to comply with … whatever taxes I’m supposed to pay and I pay a lot of taxes”—and finally stumbled into the comfortable terrain of cliché to restore his footing: He had been born in a log cabin, just like his peer Abe Lincoln.
“I’m happy to do so as an American who came from very modest circumstances. My parents didn’t graduate from high school or college and I got lucky in business so I’m happy to pay the taxes that the law requires me to pay!”
Things aren’t actually that simple, as this article about a $70.5 million tax dodge he managed in 2018, makes plain, ending with a pretty typical sentence in articles that penetrate into what Carlyle actually does: “Rubenstein, through a spokesman, declined to comment.”
Which is, pretty much, my point. Some things, the public gets to hear: happy-talk clichés about the genius of American opportunity. Other things, like how the world really works, they do not. Just like the Founding Fathers wanted, right?
Zakaria closed with bite: “All right, on that note of fealty to our nation’s laws, thank you all for a very, very interesting conversation.” Rubenstein, however, was not done. I’ll never forget it: As soon as he confirmed the camera wasn’t recording, he leaned over and started lobbying the host furiously about the economic disasters that would follow if Warren passed a 2 percent tax on wealth over $50,000,000.
We got in the elevator. I tried some small talk about his new role on the board of trustees of the University of Chicago, my alma matter. He shifted, mumbled; I didn’t rate eye contact. I chose to troll him, telling him about how I was on the board of a socialist magazine in Chicago that has been covering a tough new alderperson who hoped to make it harder for the university to do whatever it liked with the poor neighborhood at its western border, and I’d like to imagine he bristled.
The door opened. He scanned desperately for whoever it was who was supposed to be there to meet him, but was not; he would have to walk through a vast lobby alone. Without anyone around to affirm his status, he looked almost bereft.
THAT’S THE END OF MY RUN as election-year columnist here at the Prospect. It’s been remarkably rewarding, and the response from readers has been thoroughly enriching. Follow me here for my next adventure—and never stop checking out, and donating to, TAP.
