NEA, Michael Steele and a Good Idea What do they have in common? It isn’t obvious, but bear with me as I try to weave this rather tenuous thread.

Yesterday, citybizlist.com published the letter from New Enterprise Associates (NEA) counsel Louis Citron informing Mayor Dixon that NEA was leaving the city for an office in the suburbs, and taking the $200,000 in revenue that it generates for local merchants (oh dear, like the Maryland Club!) with it.

The letter cited the increase in crime in the neighborhood. There is no doubt that this is a legitimate concern for all who live in the Mt. Vernon area which has seen crime spill over into this relatively peaceful neighborhood.

Was it just me, or did the tone of the letter make me wonder what NEA’s real motive is? Could it be that they wanted to consolidate operations in one office – after all, the St. Paul Street office is small and housed only 35 employees. That it would want to consolidate its operations in the area would be understandable for one of the largest private equity funds in the world with $8.5 billion in capital.

That they had to write a public letter to the Mayor struck me as disingenuous and grandstanding. If they were so concerned about the crime problem, they could have spoken to the Mayor about it in advance. According to the Mayor’s office, they didn’t. As a very wealthy fund, NEA could easily afford private security guards to escort its employees to their cars. The NEA partners obviously felt that it is government’s obligation to provide for the public safety. And it is. But as businessmen, they also know that the city is strapped financially and that police resources are stretched. If NEA had wanted to stay in the City, they could have kept their employees safe and their fancy cars too.

It could be that they just didn’t want to spend the money. After all, the private equity industry is facing the now certain prospect that the Congress will tax the “carried interest” portion of their compensation as ordinary income, and not as capital gains. The argument that capital gains treatment is justified because of the risk that equity funds take has lost currency with a Congress looking for revenue and wise to the fact that very little of equity partners’ capital is actually at risk. And as Warren Buffet has said, there is something wrong with a tax system where the income of the secretaries is taxed at a higher rate than the income of the equity firm’s partners.

Speaking of politics, the Republicans’ Senate and House campaign committees had a big fundraiser in DC last night and a friend of mine gave me a few little anecdotes from the evening. She noted that Michael Steele, the GOP Committee Chair was nowhere to be seen and didn’t even merit a mention from the parade of speakers on the podium. This seems pretty strange for a party that desperately needs to show some diversity. The evening was mostly a lackluster affair; the GOP is still apparently in shock at their diminished influence in Washington, and in awe at how Obama is hogging the limelight.

It was so bad that video introduction to Master of Ceremonies Jon Voight included a scene from the movie Pearl Harbor where Voight plays President (and democratic icon) FDR. In the scene, the paralyzed president struggles to his feet to angrily exclaim “don’t tell me it can’t be done”. The tepid applause from the republican crowd of 2,000 reflected, I think, their confusion at whether they should be applauding a democratic president’s defiant statement, or his portrayal by one of the party’s most conservative spokesmen. That confusion shows, well, how confused the GOP is.

The feckless GOP is left to hope that Obama (and the country) falls flat on its face. But in Maryland, the GOP has become so irrelevant that won’t be enough to save them.

So, here’s the idea. The June 6th Economist magazine has an article about Washington State’s system of holding non-partisan primaries which allows independents, Democrats and Republicans to vote on the same ballot. The top two vote getters in the primary, which could be of the same party, then have run-off in the general election. The effect of this is to enfranchise a large number of voters, particularly independents who are barred in Maryland from voting in primaries, and less polarization as the process leads to the election of moderate candidates. This might save the GOP in Maryland from self-destruction.

Such a system will never got adopted in Maryland because the Democrats know they would be giving up power.

But that is probably the best argument for it.  11:29 AM •  1 Comments • Links to this post