By Josh Kosman
President Trump in a matter of months turned from a private equity critic to champion and much of that has come because of a deal involving AI, sources told JOBs.
Back in February when Trump was threatening to end one of private equity’s big tax loopholes, the treatment of carried interest, leading private equity moguls and their lobbyists told the White House they would rather work out an investment plan to boost US energy dominance – an important goal for the President, insiders with direct knowledge of the situation told me at the time.
The idea was of a grand bargain and would culminate with a press conference that included Trump and the head of a private equity firm committing to AI infrastructure, sources told me then.
Blackstone Group COO Jonathan Gray on July 15 sat next to Trump announcing a commitment to invest over $25 billion to support the build out of Pennsylvania’s digital and energy infrastructure. The firm said it was forming a joint venture with utility PPL to invest in new natural gas power generation facilities to provide electricity for AI.
“We believe this new technology [AI] can lead to a manufacturing renaissance in the US,” Gray said. “Generating electrons will spur economic activity and employment growth right here in Pennsylvania.”
Recently Trump has showered the industry with one giant favor after another.
Trump on July 4 signed his Big Beautiful Budget Bill into law. The government kept carried interest the same helping to preserve private equity wealth. What’s more the bill increased the deduction on interest payments that can be used by all companies but disproportionately benefits private equity.
Trump on August 7 by executive order announced guidance for the Labor Department and SEC that would make it much easier for private equity firms to raise money from defined benefit plans (401-Ks) for the first time.
“Despite multiple suggestions from various sources in the months and weeks leading up to the passage [of the Bill] hinting at possible changes to the taxation of carried interest, the [Bill] does not contain any provisions changing the current law,” law firm Ballard Spahr said. “This is welcomed news to fund sponsors.”
“I think private equity firms are incredibly relieved,” a DC source close to the situation said.
During the budget negotiations, Blackstone was working on its AI investment while Congress was hammering out details simultaneously, the DC source said.
“I don’t think it was a deliberate quid pro-quo,” the DC source said but it made Trump amenable to changing his mind.