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Billionaire Seth Klarman Warns Trump Is "A Threat To Democracy" As Donor Class Frets About Tax Reform

The revelation last week that the Washington Free Beacon, a conservative news website largely funded by Republican megadonor and hedge fund billionaire Paul Singer, hired Trump dossier firm Fusion GPS to conduct opposition research into Trump has inspired Steven Bannon to declare war on the mega doner.  But while Singer has reportedly warmed to the president in the months since he took office, many of his peers are growing increasingly cynical. To wit, New York Magazine reports that other pro-establishment donors are growing increasingly skeptical of the administration’s ability to pass comprehensive tax reform - the one issue that convinced many in the donor class to abandon their reservations and support Trumpism.

Now, in a story published in New York Magazine on Monday, Michelle Celarier reports that many of Singer’s fellow donors have soured on the commander-in-chief just nine months into his term.

But these men (and they were almost exclusively men) were hoping that a Republican agenda would give them a big tax cut, if nothing else. Now, after almost a year of congressional inaction and new fears that even the tax cut is slipping away, many are privately shunning the president. Like powerful Republicans in Washington, behind closed doors they are expressing disgust, disappointment, trepidation — and deploying no small amount of black humor.

Among the donors quoted by Celarier is Seth Klarman, CEO of hedge fund Baupost Group, who remarked at the Robin Hood investor conference in New York City earlier this month that the president has become a “threat to democracy” - echoing language used by fellow hedge fund billionaire Tom Steyer, who ran a prime-time ad exhorting Congress to impeach the president during last night’s World Series game.

Other conference participants sounded the alarm more loudly. Frequent GOP donor Seth Klarman, CEO of $30 billion Baupost Group hedge fund, had already warned his investors about Trump’s protectionist policies and the deficits his tax plan would produce. But at Robin Hood, Klarman — who is widely revered in investing circles — offered a much harsher assessment of Trump to his peers.

 

“The president is a threat to democracy. He has attacked journalists and he’s threatening to take away NBC’s license,” Klarman said, according to an audio recording of his remarks.

 

“He’s attacking judges. He’s violating all sorts of democratic norms, from the emoluments clause to questioning the election and threatening to lock up his opponent. People don’t focus on this but Nazi Germany had a constitution before Hitler came to power and at the end of the war they had the exact same constitution. It lasted all the way through, but democracy didn’t.”

Klarman continued:

“The country is getting divided, whether it’s immigrants, whether it’s transgender people, whether it’s blacks, whether it’s Mexicans. It’s awful.”

Even personal friends of the president complained about his behavior since taking office, saying he hadn’t followed through on what many expected would be a shift to the center.

Barry Sternlicht, a billionaire real-estate investor, hotel mogul, and self-described Trump friend and golf partner, seemed to have soured on the president. “I expected him to go to the middle, because I thought he wanted to be great,” he said of Trump, according to an audio of his off-the-record talk obtained by New York. “I played [golf] with Donald Trump and his golf game is like his presidency,” he said, eliciting guffaws.

 

“He’s amusing as my friend, but he’s not very amusing as president of the United States. And I’m a Republican.”

David Tepper, who once accused Trump of being “selfish”, was nervously soliciting opinions on the likelihood of tax reform’s success from his fellow conference attendees.

Hedge-fund manager David Tepper, the CEO of Appaloosa Management, seemed skeptical on the question of whether Trump and the GOP would be able to cut taxes. Tepper — who supported Jeb Bush in 2016 and has called Trump “selfish” — earlier this year was optimistic about deregulation and tax cuts with the GOP in control of the White House and Congress. But at the end of his Robin Hood talk, which focused mainly on a stock pitch, Tepper asked the crowd, “Is the tax bill going to get passed? Do you know?”

While the Trump administration’s nine-page outline of its tax reform would greatly benefit the nation’s wealthiest taxpayers (a group that includes many hedge fund investors) - by one measure 80% of the plan’s benefits will benefit the top 1% of America’s wealthiest - that issue is moot if it never gets passed. This suggests that, if Trump fails to pass tax reform before next year’s mid-term election, the donor class that reluctantly supported him during his first campaign might choose to set the next one out.