In the United States, billionaire investor and philanthropist David Rubenstein, a co-CEO at the Carlyle Group, expresses concerns over the divisive political climate. He sees significant tension between the two main sides, which isn't good, according to an interview with CNN. Rubenstein, a CG founder, considers the Covid-19 pandemic and the January 6th uprising as significant stress tests for American democracy, further dividing the nation.
Rubenstein shifts back to his past in Washington and the White House in the 70s, where politicians felt they could craft great legislation by demonstrating their ability to work with opponents. However, today, those collaborating with opposing sides are often ridiculed by their political base.
Presidential efforts to raise the debt ceiling, a "relic" mechanism that Rubenstein supports phasing out, face resistance. The U.S. Department of Treasury warns that without a raise, the U.S. could run out of cash by October, with extraordinary measures already exhausted.
Rubenstein calls the situation a "strange phenomenon," regarding the reluctance to get vaccinated. President Biden announced plans to enforce emergency rules requiring employers with 100 or more workers to ensure their employees are fully vaccinated or test weekly. Companies could face fines up to $14,000 per violation.
Critics of Biden's mandate include Republican governors, who have condemned the rules as "blatantly unconstitutional" and compared them to tyranny. Rubenstein supports Biden, remarking that although the president gained popularity from public appeal, he did not garner support among those who "ever harbor hopes of becoming politicians."
Rubenstein also addresses the ongoing inflation debate, although he downplays the concern, stating that "there are more important things to worry about than the monthly inflation rate." Despite a focus on consumer prices in Q2, climbing at their fastest pace since 2008 before cooling in August, some wage hikes helped offset the higher costs. However, inflation-adjusted wages are lower than December 2019, according to Harvard University's Jason Furman.
Rubenstein expresses optimism that inflation will return to lower levels, though it likely will remain above the Federal Reserve's 2% target. Japan's attempt to produce a certain level of inflation has been unsuccessful in the past, but an increasing inflation rate could enable the Fed to raise interest rates from current lows before the next recession.
Amid debate over Biden's "Build Back Better" $3.5 trillion plan, Rubenstein remains optimistic that Congress will eventually raise corporate, capital gains, and personal income taxes, despite uncertainty on the exact levels.
Despite suggesting that Powell should be reappointed, Rubenstein acknowledges progressive demands for a Fed chairman with harsher stances on Wall Street regulation and climate change. Weaker Federal Reserve support towards large banks remains a concern for some, including Sheila Bair, a former FDIC chair and long-time Republican, who has voiced concerns over the Fed's leniency towards big banks.
However, Rubenstein doubts that President Biden will find a confirmation-friendly replacement for Jerome Powell, as both Democrats and Republicans generally lack respect for "unique" individuals. [Source: CNN.com]
David Rubenstein, Co-CEO of the Carlyle Group, has kept a relatively neutral stance on the impact of political division on business climate in the provided sources. However, the broader context suggests that conflicts and uncertainty can influence the business climate, while Rubenstein's optimism about the incoming administration's policies hints at the possibility that such changes could mitigate negative impacts on business climate. Global conflicts offer additional challenges, though. [Enrichment Data]
