Stephen Schwarzman, chairman of the world’s largest private-equity firm, endorsed Mitt Romney for president today, citing his firm’s first investment in 1985 when Romney helped Blackstone Group LP earn “16 times profit.”
“In finance that’s a way to make friends,” Schwarzman, the firm’s co-founder and a longtime Republican donor, said in a Bloomberg Television interview. “In terms of being good for the country, he’s very smart, he’s great in a crisis, he’s direct and he can deal with problems as they actually occur.”
“He’s a natural leader and he’s accessible, and he listens to what you say,” he said.
Schwarzman will host a fundraiser for Romney at his Park Avenue apartment on Dec. 14, the same day that four JPMorgan Chase & Co. executives will also raise money for the former head of the private equity firm Bain Capital LLC and one-term Massachusetts governor.
“This is a personal choice, and from a corporate perspective, we have a lot of Democrats at the firm,” Schwarzman said.
“When we started Blackstone in 1985, the first investment we did in private equity was a joint deal with Mitt Romney at Bain,” he said. “This turned out to be a marvelously successful deal” with a company making aluminum wheels. The business “expanded very rapidly. We made about 16 times profit.”
“The second deal we did,” he said, “we ended up making 24 times our money.”
Romney and Schwarzman both made their fortunes in private equity, and they came of age during the leveraged buyout movement in the 1980s. Romney was the lead dealmaker at Bain, buying and selling companies to make money for investors.
He is among the leading Republican candidates for president, according to national polls. He also is leading in fundraising, having collected $32 million through Sept. 30, according to the most recent financial disclosure reports. The next closest candidate, Texas Governor Rick Perry, raised $17 million.
Romney has brought in $3.6 million from securities and investment industry employees and their families, according to the Center for Responsive Politics, a Washington-based research group that tracks political giving.
By comparison, President Barack Obama has struggled this year to raise cash from the financial industry, taking in $1.6 million through Sept. 30. Four years ago, Obama raised $16 million from Wall Street.
Schwarzman also waded into the debate about current taxation, suggesting that he would be willing to pay an additional amount if more Americans paid something in federal income taxes.
“We have a system today in the United States were 45 percent of Americans don’t pay any income tax,” he said. “I think there’s almost everyone who’d be willing to do something if everyone’s doing something.”
While 46 percent of U.S. households won’t pay federal income taxes in 2011, about half of those don’t make enough money to owe the levy after subtracting personal exemptions and the standard deduction. Only 18 percent will avoid a federal tax burden altogether, as employees must pay their portion of the payroll tax, which is currently 4.2 percent of income of their first 106,800 or earnings, according to projections by the Tax Policy Center, a nonpartisan group based in Washington.
Payroll Tax Extension
Obama is urging Congress to extend or expand a temporary payroll tax reduction, so that it doesn’t revert back to 6.2 percent next year.
Schwarzman gave $4,600 to John McCain, once the Arizona senator had secured the Republican presidential nomination four years ago, and collected more than $100,000 for Republican President George W. Bush’s 2004 re-election campaign.
He has been critical of Obama’s stance toward Wall Street. In August 2010, he compared the administration’s efforts to double taxes on the income of private-equity firms such as his to “when Hitler invaded Poland in 1939,” according to a New York Post account of a private meeting. He later apologized for the comparison while maintaining his criticism of the tax proposal.
Obama, who has the backing of organized labor, has criticized the financial industry for its opposition to tougher regulations and has called for the wealthy to pay higher taxes. He also has expressed sympathy with the Occupy Wall Street protests, saying in an Oct. 6 news conference the demonstrators were “giving voice to a more broad-based frustration about how our financial system works.”