Throwing Softballs at Henry Kravis

I must have missed this Reuters interview with KKR co-founder Henry Kravis last week, which isn’t too surprising because it didn’t make many waves.   Based on an interview with Reuters Editor-in-Chief Steven Adler, it is the very definition of a puff piece.

The article barely touched on whether Kravis believes the favorable tax treatment enjoyed by private equity should be allowed to continue:

Kravis didn’t say what he thought the tax rate on carried interest should be, though the company has said many times that an increase in the tax rate would be negative for the firm and its investors. Instead, Kravis linked the question to the wider tax debate.

“We have to look at the whole tax system, so that means you have to look at everything across all segments there. Carried interest could be part of that clearly, but there are lots of other things that need to be looked at,” Kravis said.

That’s it.  Kravis was able to get away with a non-answer to one of the most important tax-policy questions facing the country.  It’s been a hot topic on the campaign trail and the focus of numerous Congressional hearings, yet Adler didn’t pursue a probing follow-up question or press Kravis to be more specific.

A seasoned journalist like Adler should have done better.  Of course, he was interviewing Kravis at PartnerConnect2012, an event sponsored by Adler’s employer, Thomson Reuters.   Such events wouldn’t attract industry bigs like Kravis if they were subject to tough interviews.  So Reuters gets the bragging rights to an exclusive interview with a top executive, and readers get…nothing.  That is a recipe for weakening a news brand.

Kravis, for his part, missed a great chance to make a clear and impassioned case for retaining the carried-interest deduction for private equity.  A friendly forum, a tame inquisitor and the global reach of a major news organization – such an ideal setting doesn’t come along often.  And yet the best he could do was dodge.

David Rubenstein of Carlye hasn’t risen to the occasion either, blandly saying that private equity is just following the tax law.

It has to make you wonder if the industry is afraid to make its case in public, despite the campaign it has mounted through its trade group, or if it is patiently waiting for a new – and perhaps more sympathetic – Congress to take up the issue next year.



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