The Effect of the PE Sector on the US Election Campaign

By Francesco Piattore, Ebba Engen, Giacomo Ridolfo

Introduction

The 2024 presidential elections served to underscore the significant impact of the private equity sector on the American political landscape. In recent years, private equity has played a pivotal role in election campaigns, providing financial backing and advocating for specific positions on taxation, regulation, and economic growth. The substantial resources and extensive reach of private equity firms across a range of industries have enabled them to effectively promote policies that align with their interests, thereby exerting a profound influence on political discourse. In 2024, the private equity industry approached a political spending record, with expenditures exceeding $231m, just below the 2020 record of $236m.

For the first time following three election cycles, private equity shifted its allegiance, providing 52% of direct contributions to the Republican Party, a significant increase from the 40% it gave in 2020. Furthermore, private equity firms tend to be more conservative about soft money spending or donations to independent political committees. In 2024, they reached a spending record of $138m, with 82% of the total collected by the Republican Party, in comparison to 59% during the 2020 elections. This shift in spending patterns was prompted by the expectation that Trump would provide regulatory relief, which was seen as a potential offset to the frustration generated by Biden-era policies towards the industry.

The private equity industry exerts considerable influence beyond the remit of regulatory bodies, with its contributions to Congress reflecting a near even split between Republicans and Democrats. As of mid-October 2024, private equity employees have made donations to House and Senate candidates amounting to approximately $20m and $9.3m, respectively. According to data from OpenSecrets, 50.2% of these contributions were directed to Republican candidates. This balanced approach indicates a strategic bid by the industry to maintain influence on both sides of the political spectrum, thereby ensuring a continued voice in legislative matters that impact taxation, regulation, and economic policy.

The Financial Surge Behind Kamala Harris’ Campaign

Despite her late entry into the electoral race, Harris’ campaign was able to raise more than $1bn, a sum that surpassed the amount raised by Trump’s campaign. In the initial 24-hour period following her announcement as the Democratic Party’s presidential candidate, an extraordinary $81 million in donations was amassed, surpassing the previous record for the most funds raised by a US election campaign in a single day.

Ten days after Biden withdrew from the race, Harris’ campaign had already amassed $59 million in individual contributions. A total of 20% of this amount was sourced from donors in California. The campaign received considerable assistance from employees of companies in the technology sector, including Alphabet Inc., Microsoft Corp., Apple Inc., and Amazon. Notable individual donors included former New York City mayor Michael Bloomberg, Netflix co-founder Reed Hastings, and Facebook co-founder Dustin Moskowitz. In July 2024, a substantial cohort of venture capital investors, founders, and technology leaders coalesced under the designation “VCs for Kamala” with the objective of raising funds and advancing Harris’s candidacy. The group comprised notable figures such as LinkedIn founder Reid Hoffman, Khosla Ventures founder Vinod Khosla, billionaire entrepreneur Mark Cuban, and angel investor Ron Conway, among others. Furthermore, the website asserts the conviction that democracy constitutes the foundation of the nation. “We hold the view that robust, reliable institutions are an integral component of a functioning society, and that the absence of such institutions would have a detrimental impact on the stability of our industry and, indeed, of all other industries.”

Additionally, several prominent private equity firms have provided financial support for Harris, including Blackstone and Apollo Global Management. Furthermore, Jonathan Gray, the president of Blackstone, made a financial contribution of $413,000 to one of Harris’s political action committees (PACs). Following the late change of presidential candidate, the Democratic Party was reliant on substantial financial backing to have a chance of success against Trump and the Republican Party.

Private Equity’s Strategic Endorsement of Trump

The support of the private equity sector and its top executives has been pivotal to the success of Donald Trump’s 2024 presidential campaign. This support has been demonstrated through both substantial financial contributions and strategic momentum. This endorsement occurs at a time when influential financial figures are eager to influence an economic and regulatory environment that aligns with their business objectives.

One of the most prominent supporters is Stephen Schwarzman, the CEO and co-founder of Blackstone. Following his initial distancing from Trump in the aftermath of the January 6, 2021 events, Schwarzman renewed his support for the Republican candidate in the 2024 presidential campaign. This shift reflects his concerns regarding the current U.S. political and economic environment, which he perceives as unfavourable for businesses and long-term investment. His endorsement, both financial and symbolic, has reinforced Trump’s appeal within the financial sector, emphasising the necessity for a leader with a conservative, pro-market approach.

Another prominent supporter is hedge fund manager John Paulson, who has also made a significant contribution. Paulson hosted a high-profile fundraising event at his residence in Palm Beach, Florida, which attracted several of the country’s most affluent donors. The exclusive gathering resulted in the raising of over $50.5m, a substantial sum that served to strengthen Trump’s campaign finances. Paulson has indicated that his support is predicated on the conviction that Trump’s stewardship can facilitate the restoration of economic policies that foster growth and investment in the private sector, which are indispensable for the financial sector’s prosperity.

Additionally, Elon Musk has emerged as a significant financial contributor, notably through America PAC, a super PAC established to support Trump’s campaign. During the initial three-month period, Musk was the sole contributor, providing approximately $75m in funding. By October 2024, this amount had grown to over $118m. America PAC has become a principal source of funding for Trump’s campaign, providing support for advertising initiatives and efforts in key states. A long-standing proponent of a more conservative regulatory approach, Musk has exerted considerable influence over Trump’s financial support, underscoring his confidence in Trump’s capacity to cultivate an environment conducive to innovation and limited government intervention.

Private Equity’s growing political influence

The private equity sector, which has been experiencing a period of growth in terms of its economic influence, is positioned to play a substantial role in the evolution of the political landscape in the coming years, particularly in the event of Donald Trump’s return to the presidency in 2025. Private equity firms, which control vast amounts of capital and have stakes in diverse industries, could exert substantial influence on policy priorities, regulatory frameworks, and public discourse. This dynamic may manifest in several ways.

Given the PE industry’s focus on deregulation, it is likely that it will prove a key ally in driving legislative and administrative changes, given that this is in accordance with Trump’s historically pro-business agenda. For instance, private equity leaders may promote the adoption of more flexible labour policies, the repeal of Environmental, Social, and Governance (ESG) regulations, and the relaxation of antitrust enforcement, portraying these measures as indispensable for stimulating economic growth and competitiveness. By leveraging their economic influence, PE firms could shape policies that reduce compliance burdens and encourage mergers, acquisitions, and leveraged buyouts, thereby creating a feedback loop of mutual support between the sector and the administration.

On tax policy, the private equity industry’s lobbying efforts could significantly influence reforms under Trump or any administration. Firms may push for preserving favourable tax treatments, such as the carried interest loophole, while supporting corporate tax cuts and reduced capital gains taxes that directly benefit their operations. These measures could find support among pro-business policymakers, further embedding PE’s priorities into the political agenda.

Regarding tax policy, it seems probable that the lobbying efforts of the private equity industry will exert a significant influence on reforms under Trump or any subsequent administration. It is possible that firms will seek to preserve favourable tax treatments, such as the carried interest loophole, while supporting corporate tax cuts and reduced capital gains taxes that directly benefit their operations. These measures could find support among pro-business policymakers, thereby further embedding PE’s priorities into the political agenda.

Nevertheless, the industry’s increasing prominence may also give rise to political scrutiny, with the potential to intensify debates surrounding issues such as wealth inequality, job losses and corporate accountability. Those on the political right and left may exploit populist sentiment to demand more rigorous regulation of private equity practices, including leveraged buyouts that result in job losses or increased debt burdens for acquired companies. This tension may prompt the sector to engage more actively in political advocacy, with a view to emphasising its contributions to economic stability, job creation and innovation.

In the forthcoming years, the private equity sector is poised to emerge as both a beneficiary and a catalyst for political transformation. As firms influence the regulatory and economic landscape, they must also navigate the growing public and political scrutiny that accompanies this influence. By balancing their lobbying efforts with a focus on demonstrating tangible benefits to the broader economy, the industry has the potential to consolidate its influence while addressing mounting societal concerns.