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Illustration: Brendan Lynch/Axios

In normal times, private equity would be nervous about Democratic Party control of both the White House and Congress. But in pandemic-consumed 2021, the industry seems sanguine.

Driving the news: Industry executives and lobbyists paid very close attention to Treasury Secretary nominee Janet Yellen's confirmation hearings this week, and came away convinced that tax reform isn't on the near-term agenda.

The history: President Biden campaigned on a tax policy plan that was significantly worse for private equity than was Trump's.

  • He pledged to raise income tax rates on top earners, eliminate the preferential tax treatment of capital gains and increase corporate taxes (including a new minimum tax on book income).

The reality: Yellen, as expected, endorsed Biden's tax plan in her testimony. But she also said the administration's top legislative priority would be economic stimulus, with infrastructure not too far behind.

  • Both of those would be major boons to private equity, as would be greater predictability on trade policy.

The bet: Private equity is keeping its fingers crossed that tax reform gets pushed off for at least a year, at which point election politics might interfere. And then, in the industry's best-case scenario, Republicans then regain control of at least one house of Congress.

The counterargument is that election season might embolden Democrats to raise taxes on the wealthiest Americans, particularly after its stimulus spending spree.

  • There also are some concerns about Gary Gensler as SEC chair. Like Jay Clayton, he knows where some private equity bodies are buried. Unlike Jay Clayton, he might be eager to dig them up.

The bottom line: Private equity is a long-term asset class. But for now it's banking on the short-term.

Go deeper

Biden picks up his pen to change the tone on racial equity

Vice President Harris looks on as President Biden signs executive orders related to his racial equity agenda. Photo: Doug Mills-Pool/Getty Images

President Biden is making a down payment on racial equity in a series of executive orders dealing with everything from private prisons to housing discrimination, treatment of Asian Americans and relations with indigenous tribes.

The big picture: Police reform and voting rights legislation will take time to pass in Congress. But with the stroke of his pen, one week into the job, Biden is taking steps within his power as he seeks to change the tone on racial justice from the Trump administration.

Updated 6 mins ago - World

U.S. sanctions Russian officials over Navalny poisoning and detention

Pro-Navalny protesters in front of the Brandenburg Gate in Berlin. Photo: Omer Messinger/Getty Images

The U.S. will sanction 7 senior Russian officials over the poisoning and jailing of opposition leader Alexey Navalny, senior administration officials told reporters on Tuesday.

Why it matters: The sanctions represent the first penalties the U.S. has imposed on Kremlin-linked officials since President Biden took office and pledged to confront Russian aggression.

Democrats to take up immigration reform next week

Biden in the Oval Office in January. Photo: Chip Somodevilla/Getty Images

The House will vote on two immigration bills next week, including one to protect undocumented immigrants who came to the U.S. as children, Majority Leader Steny Hoyer (D-Md.) said Tuesday on a call with the Democratic caucus.

Why it matters: This is likely the only realistic shot the Biden administration has at this point to pass immigration reform.

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