WASHINGTON — At Adewale Adeyemo’s confirmation hearing last
month, Senator Elizabeth Warren pressed the deputy Treasury secretary nominee
to commit to using the department’s regulatory powers to scrutinize the private
equity industry, which she said posed a risk to low-income communities when
buyout firms strip companies of assets, load them with debt and fire workers.
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Warren, a progressive Democrat from Massachusetts, has been
a mentor to Adeyemo, who served as her chief of staff when she was establishing
the Consumer Financial Protection Bureau (CFPB) a decade ago. But when he gave
a noncommittal answer, she did not let him off the hook.
“I don’t think you should waver about this,” Warren said
emphatically. “Treasury should not be a bystander in this.”
The exchange underscored Warren’s role in the new
Washington, where the Biden administration and congressional Democrats control
the levers of power. A year after ending her own presidential bid, and with her
aspirations of becoming Treasury secretary unfulfilled, Warren now wields
influence in her own way. She has shepherded a pipeline of progressive former
staff members into powerful jobs across the government, and she releases a
steady stream of legislative proposals that have kept her progressive ideas at
the forefront of the policy conversation.
Two months into the Biden presidency, it is not yet clear
how much Warren’s sway will yield in terms of policy results. But many of her
ideas for raising trillions of dollars of revenue by taxing the wealthy and big
corporations will soon take center stage as the Biden administration and
Congress consider ways to pay for the multitrillion-dollar infrastructure plan
that they hope to pass this year.
Marcus Stanley, the policy director of Americans for
Financial Reform, an advocacy group, said the upcoming infrastructure and jobs
legislation would be a real test of Warren’s influence.
“We probably have a big bill coming up in the next couple of
months, so when you talk about winning the policy fights, we’re going to see
there,” Stanley said.
If personnel is policy, as Warren likes to say, then she is
winning so far. Many of the top officials and senior staff members at the
nation’s most powerful economic policymaking and regulatory agencies are
ideological allies who have been groomed by Warren.
In addition to Adeyemo at the Treasury Department, Warren
has worked closely in the past with Bharat Ramamurti, the deputy director of
the National Economic Council, and Rohit Chopra, President Joe Biden’s nominee
to lead the CFPB.
The effect of the hires can be seen in the progressive tilt
of the $1.9 trillion economic relief law, which dismissed concerns about
deficits and focused heavily on poverty reduction. Warren and her allies hope
that having strong advocates for progressive views within the administration
will help those ideas find purchase in a White House that thus far has been
more open to tacking to the left than previous Democratic administrations.
But it remains to be seen how far the Biden White House is willing
to go, particularly with regard to tax increases, which is an area where the
two former candidates disagreed.
Although she has been off the campaign trail for more than a
year, Warren has been reviving proposals that she promoted in Iowa and New Hampshire.
This month, Warren and two House Democrats introduced
legislation for an “ultra-millionaire tax” that is modeled after what she
proposed as a candidate. The 2 percent annual wealth tax on the net worth of
households and trusts between $50 million and $1 billion was unveiled with
polling data to back up its popularity and letters supporting its
constitutionality.
This week, Warren plans to pitch new legislation to increase
taxes on big companies. Her “real corporate income tax,” which was also part of
her campaign platform, would require the most profitable companies to pay a 7
percent tax on their annual book value — the earnings that they report to their
investors but not the Internal Revenue Service — above $100 million. The idea,
which is similar to a proposal that Biden put forward during his campaign, is
intended to stop companies from using accounting loopholes to lower their tax
bills.
When it appeared that Democrats were likely to lose the
Senate after the 2020 election, some industry groups were relieved that Warren
would not become the Treasury secretary. These days, however, they acknowledge
that they are watching her moves closely.
“Senator Warren is certainly well positioned to have an
outsized influence in the Senate and the administration,” said James Maloney, a
managing partner of Tiger Hill Partners, a public affairs firm focused on
financial services. “Every item that she’s focused on should be a focus area
for the industries whose policies can potentially be impacted.”
Maloney, whose firm represents some private equity
companies, noted that allies of Warren were spread across the Biden
administration. He said businesses were closely watching the letters that
Warren sends to regulatory agencies and the responses she receives.
Biden has so far not been persuaded by her argument for
using executive authority to waive student debt. And the White House has given
mixed signals on Warren’s wealth tax.
Treasury Secretary Janet L. Yellen, whose nomination Warren
supported, has expressed skepticism about the feasibility of putting a wealth
tax in place. Yellen’s recent hiring of Natasha Sarin, a protégé of Lawrence H.
Summers who has been skeptical about how much revenue a wealth tax would
generate, to join her economic policy team raised eyebrows among some in
Warren’s orbit.
In an interview, Warren said she was heartened by the early
returns of the Biden era after four years of President Donald Trump’s
deregulation and tax cuts.
“People like progressive ideas and want to see them enacted,”
Warren said. “That’s going to happen. Washington is beginning to catch up.”
She said she planned to have a private conversation with
Yellen about how to establish the tax.
“If that’s her biggest problem, then we’re good,” Warren
said. “It’s easy to implement. We just need to sit down and talk about it.”
In the meantime, Warren feels a sense of relief after four
years of being on defense. On the day she voted to advance Chopra’s nomination
to the lead the consumer bureau, she reflected on how different his tenure
would be from that of Mick Mulvaney, whom Trump appointed to neuter the agency
in 2017.
Chopra helped Warren establish the bureau and worked for
five years as its assistant director and student loan ombudsman. Mulvaney tried
to cut its funding and scrambled its acronym out of spite.
“Mick Mulvaney was doing everything he could to try to
undercut the consumer agency, and he made no secret about that,” Warren said.
“Now there’s someone who will be in charge of the CFPB who sees the need for a
level playing field and a fair set of rules and who has the backbone to get in
there and make it happen.”
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