“We’ve had political divides before. Obviously the greatest one of them was the Civil War,” Rubenstein said during an interview on the sidelines of the SALT conference about finance, tech and geopolitics this week in Manhattan.
During Rubenstein’s time working on Capitol Hill and in the White House in the 1970s, politicians felt like they were great legislators if they proved they could work with people from the other side of the aisle, he said.
“Now, anybody who works with the opposite side is derided by their own party,” he added.
‘It’s a strange phenomenon’
“We’ve lost 650,000 Americans. Four million people have died globally because of Covid. At what point do we say, ‘Enough is enough’?” Rubenstein asked.
“I don’t see any alternative to what he did,” Rubenstein, said of Biden. “Clearly, people are playing to political audiences. Some people want credit for having come up with a vaccine relatively quickly, but they don’t want to have people take the vaccine. It’s a strange phenomenon.”
The inflation debate
And even as another current debate rages over inflation, Rubenstein dismissed those concerns.
“There are bigger things to worry about than the monthly inflation rate,” he said.
However, Rubenstein expressed confidence that inflation will ease from these high levels, though it may stay above the Fed’s target for average inflation of about 2%.
“I don’t think the world will fall apart if we have 3% or 4% inflation. We’ve just gotten used to low inflation,” he said.
Rubenstein, non-executive chairman at Washington, DC-based Carlyle, pointed out that countries like Japan have tried and failed to create some inflation. And higher inflation should allow the Federal Reserve to lift interest rates out of the basement, giving it room to drop them lower again during the next recession.
“It will get us out of this artificially low interest rate environment we have now,” he said.
As Congress debates Biden’s $3.5 trillion Build Back Better plan, Rubenstein expressed confidence lawmakers will eventually enact increases to corporate, capital gains and personal tax rates, though the final levels remain a bit of a mystery.
“There will be tax increases. There’s no doubt about it,” he said. “The reason is we need the revenue. And we don’t have the discipline to cut spending.”
‘He stood up to Trump’
“He’s done a very good job,” he said.
Rubenstein argued Powell proved his independence by refusing to cave to former President Donald Trump’s demands to lower interest rates.
“He was strong in not getting into a pissing battle with Trump. He stood up to Trump in many ways,” Rubenstein said.
But Rubenstein is skeptical Biden will find someone to replace Powell who can get confirmed by a narrowly divided Senate.
“You’ve got the rare person who Democrats and Republicans generally respect,” Rubenstein said.