Leon Cooperman sent a critical letter to Sen. Elizabeth Warren, one of the top Democratic presidential candidates, marking the latest salvo in the war of words between the billionaire investor and the economic populist politician.
Cooperman laced into Warren right from the beginning of his letter for her Oct. 23 tweet criticizing him.
"You proceeded to admonish me (as if a parent chiding an ungrateful child) to 'pitch in a bit more so everyone else has a chance at the American dream,'" Cooperman writes.
He went on to say "your tweet demonstrated a fundamental misunderstanding of who I am, what I stand for, and why I believe so many of your economic policy initiatives are misguided."
Cooperman, chairman and CEO of Omega Advisors, began his critique of Warren by writing: "Now for your soak-the-rich positions on taxes and economic policy."
Warren responded to Cooperman's letter in a tweet, saying: "Leon is wrong. I'm fighting for big changes like universal child care, investing in public schools, and free public college.
We can do all of that with a #TwoCentWealthTax. Leon can and should pitch in more—so that every kid has the same opportunities he did to succeed."
Cooperman declined to provide a copy of the letter, or any specific details of it. He sent it Wednesday and intended to reveal it Friday.
After this story was initially published, however, CNBC obtained a copy of the letter from people familiar with the matter.
The letter explains Cooperman's disagreements with her recent criticisms of the influence of wealthy business leaders and her economic policy proposals, the investor said.
Cooperman said he expects the letter to arrive at one of Warren's offices by Friday and noted, "It's a very responsible letter on why I disagree with her."
Asked why he decided to do this, he said, "I'm responding to a tweet," and insisted he had other phone calls to attend to before he hung up.
In the letter, Cooperman says: "Our political differences aside, your tweet demonstrated a fundamental misunderstanding of who I am, what I stand for, and why I believe so many of your economic policies are misguided."
Later in the letter, he writes: "However much it resonates with your base, your villification of the rich is misguided, ignoring, among other things, the sources of their wealth and the substantial contributions to society which they already, unprompted by you, make."
After Cooperman recently told Politico that, while he believes in a "progressive income tax and the rich paying more," he disagreed with much of Warren's approach. "But this is the f---ing American dream she is s----ing on," he told the publication. Warren later fired back in a tweet, suggesting Cooperman should "pitch in a bit more."
At the end of the five-page letter to Warren, Cooperman calls on Warren to "elevate the dialogue."
"The fact is, Senator Warren, that despite our philosophical differences, we should be working together to find common ground in this vital conversation – not firing off snarky tweets that stir your base at the expense of accuracy," he writes. "Let's elevate the dialogue and find ways to keep this a land of opportunity where hard work, talent and luck are rewarded and everyone gets a fair shot at realizing the American Dream."
People familiar with the contents of the open letter say that Cooperman is writing it for another reason: to convince voters her proposals will hinder the economy and be a burden on taxpayers. Allies of the investor, who declined to be named in order to speak frankly about the letter, have privately warned him that an effort like this would only embolden Warren's argument that she is best equipped to take on the rich. Cooperman has privately shrugged off these concerns, these people added.
Warren has cut into Democratic front-runner Vice President Joe Biden's polling lead in recent weeks. After being behind Biden by at least 30 percentage points in the Real Clear Politics poling average, she has surged back to a distance of just over 5 points. Sen. Bernie Sanders is in third.
Warren has also performed better on the fundraising front. She outraised Biden in the third quarter by raking in $24.6 million while he brought in more than $15 million.
Cooperman previously wrote a critical letter to President Barack Obama in November 2011, a year before Obama was reelected.
Within that correspondence, Cooperman accused Obama and his allies of encouraging "class warfare."
"What does matter is that the divisive, polarizing tone of your rhetoric is cleaving a widening gulf, at this point as much visceral as philosophical, between the downtrodden and those best positioned to help them," Cooperman wrote at the time. "With due respect, Mr. President, it's time for you to throttle-down the partisan rhetoric and appeal to people's better instincts, not their worst," he added.
Obama was known to label Wall Street leaders as "fat cat bankers."
"They're still puzzled why it is that people are mad at the banks. Well, let's see. You guys are drawing down $10 [million], $20 million bonuses after America went through the worst economic year in decades and you guys caused the problem," Obama said in an interview with the CBS program "60 Minutes" in 2009.
The Cooperman-Warren feud started to boil after he ripped her during the Delivering Alpha conference presented by CNBC and Institutional Investor in New York last month.
"They won't open the stock market if Elizabeth Warren is the next president," he joked at the time. "You don't make the poor people rich by making rich people poor. The Democratic Party seems to be leaning towards the left on policies, which is very harmful for the economy. I don't like the shift to the left."
Warren has laid out plans that could curb the influence of finance executives if she becomes the next commander in chief, including a wealth tax. In July, she released a proposal that would make private equity firms responsible for debts and pension obligations of companies they buy.
These ideas have also led Democratic donors on Wall Street to stress that if she wins the primary, they will sit out or back President Donald Trump in the 2020 general election. CNBC's Jim Cramer reported in September that Wall Street is "terrified" of a Warren presidency.
Omega Family Office, Inc. 810 Seventh Avenue • 33rd Floor I New York, New York 10019
Tel: 212-495-5200 | Fax: 212-495-5236
Leon G. Cooperman, C.F.A.
Chairman & Chief Executive Officer
October 30, 2019
Senator Elizabeth A. Warren
309 Hart Senate Office Building
Washington, DC 20510
Dear Senator Warren:
While I am not a Twitter user, several friends passed along to me your October tweet in which, after correctly observing that my financial success can be attributed, in no small measure, to the many opportunities which this great country has afforded me, you proceeded to admonish me (as if a parent chiding an ungrateful child) to "pitch in a bit more so everyone else has a chance at the American dream, too." Our political differences aside, your tweet demonstrated a fundamental misunderstanding of who I am, what I stand for, and why I believe so many of your economic policy initiatives are misguided. Because your tweet was publicly disseminated, I feel compelled to respond in the form of an Open Letter for all who are interested to read.
As I have noted elsewhere, mine is a classic American success story. I have been richly rewarded by a life of hard work combined with a great deal of good luck, including that to have been born in a country that adheres to an ethos of upward mobility for determined strivers. My father was a plumber who practiced his trade in the South Bronx after he and my mother emigrated from Poland. I was the first member of my family to earn a college degree. I benefitted from both a good public education system (all the way through college) and my parents' constant prodding. When I joined Goldman Sachs following graduation from Columbia Business School, I had no money in the bank, a negative net worth, a National Defense Education Act student loan to repay, and a six-month-old baby (not to mention his mother, my wife of now 55 years) to support. I had a successful, near-25 year run at Goldman before leaving to start a private investment firm. As a result of my good fortune, I have been able to donate in philanthropy many times more than I have spent on myself over a lifetime, and I am not finished; I have subscribed to the Buffett/Gates Giving Pledge to ensure that my money, properly stewarded, continues to do some good after I'm gone. As I told Mr. Buffett when I joined the Pledge, asking for half of my money wasn't enough; I intend to donate substantially all of it, Apart from my children and grandchildren, I cannot imagine a finer legacy.
My story is far from unique. I know many people who are similarly situated, by both humble origin and hard-won accomplishment, whose greatest joy in life is to use their resources to improve their communities. Many of their names — including those of Ken Langone, Carl Icahn and Sandy Weill, all self-made billionaires whom I am proud to call friends — are associated with major hospitals (NYU Langone Health, Icahn School of Medicine at Mount Sinai, Weill Cornell Medical College, and, in my own case, Saint Barnabas Medical Center and Boca Raton Regional Hospital) which tend to the needs of, among others, many thousands of poor patients each year who could not otherwise afford the best-of-class medical services that those fine institutions, with our support and that of others like us, provide.
Having grown up without much money and valuing highly the public education I received, have donated substantial sums to Hunter College of the City University of New York and to Columbia University's Graduate School of Business —money for scholarships, libraries, and the construction of new buildings. In 2014, with a very large gift, I established Cooperman College Scholars, a program which identifies academically talented, highly motivated students of Strong character in Essex County (including Newark), New Jersey, who are traditionally underrepresented in higher education. children of color, impoverished children, children facing situational challenges that tug them away from educational priorities — and, through a contribution of high-school counseling, tuition grants, and ongoing cohort-based mentoring to help matriculated students navigate the challenges of transitioning successfully to college life — and by eliminating the negative impact of insufficient financial aid and social support systems on student persistence and graduation rates — enables them to attend college, thrive there and graduate. It is our goal to put 500 district and charter public-school students through college in the next few years. As I stated when my gift was announced, for splendid youngsters such as these to be denied access to a higher education, and to all the opportunities that that can afford, simply because of financial need is a national tragedy. My family feels very privileged to be in a position where we can help at least some of these children's dreams•come true, and in the process fundamentally change their lives.
However much it resonates with your base, your vilification of the rich is misguided, ignoring, among other things, the sources of their wealth and the substantial contributions to society which they already; unprompted by you, make, Typically, unless born to money or married into it, people become rich by providing a product or service that others want and are willing to pay for.
The list goes on of self-made billionaires — Bill Gates (Microsoft Corporation 144,000 jobs), Michael Dell (Dell Technologies - 145,000 jobs), Mark Zuckerberg (Facebook 39,000 jobs) and Larry Ellison (Oracle Corporation — jobs), among others — who have built huge businesses from the ground up, providing jobs and economic opportunity to hundreds of thousands of taxpaying workers, and voluntarily gift every year, in the aggregate, billions of dollars back to the society that nurtured their success. Their stories, and many more like they are the very embodiment of the American Dream. For you to suggest that capitalism is a dirty word and that these people, as a group, are ingrates who didn't earn their riches through strenuous effort and (in many cases) paradigm-shifting insights, and now don't pull their weight societally indicates that you either are grossly uninformed or are knowingly warping the facts for narrow political gain.
Now for your soak-the-rich positions on taxes and economic policy.
The two University of California at Berkeley economists who are advising your campaign, Emmanuel Saez and Gabriel Zucman, have drawn a lot of media attention for their contention that the U.S. federal income tax system is flat, which is to say, regressive and therefore fundamentally unfair to low-income Americans. But their analysis is open to challenge, and the conclusions which they (and you) draw from it are debatable.
In sum, Saez and Zucman's economic model appears to be based on highly dubious assumptions and tailored to promote a specific "progressive" policy agenda, and their conclusions are far less definitive and unequivocal than they maintain.
Further undercutting your economists' fair-share arguments, the Internal Revenue Service recently released data that detail, for tax year 2016 (the latest year for which these data are available), individual federal income tax shares according to income percentile.
As analyzed by the Tax Foundation, a leading independent tax-policy nonprofit, the data demonstrate "that the US. individual income tax continues to be very progressive, borne primarily by the highest income earners."
Saez and Zucman surface again in the debate over an explicit, recurring wealth tax (as distinct from property and one-time estate taxes — alternative forms of levy on wealth) targeting the richest Americans, e major plank of your economic platform. As numerous economists (if not yours) have observed, the history and prognosis of explicit wealth taxes is not sanguine.
The opportunities to which Summers was referring — opportunities to raise funds for a more progessive legislative agenda that might stand a chance of passing Congress and weathering constitutional scrutiny, and whose revenue-raising potential is unquestionable — could include eliminating the exemption of capital gains from taxation upon death, the carried-interest exemption for private equity and hedge funds, and the capital-gains tax-deferral preference accorded like-kind exchanges under Section 1031 of the Internal Revenue Code.
It may be worth considering that wealth redistribution advocates might be wrong to focus solely on income inequality rather than on income opportunity more broadly. In economics, the most commonly used gauge of economic inequality across a target population is the Gini coefficient (or Gini index), named for the Italian statistician who developed it in 1912. A Gini coefficient of means the country has perfect equality of financial prosperity; a coefficient of one means maximum inequality. The World Bank, in its Gini coefficient-by-country analysis for 2019, ranks a number of countries — including Afghanistan, Albania, Algeria, Kyrgyzstan, Romania, Slovakia, Slovenia and Ukraine, all with Gini coefficients in the 20s — high on its financial equality list. Yet despite the relatively high degree of financial equality implied by their numbers, none of these countries can boast booming economies or generalized income and wealth-creation opportunities. It would therefore appear that may be more aligned than those of most other countries in the fair distribution of wealth, but that does not translate in any meaningful sense into widespread prosperity. So what good is income equality to them? Should that — the narrowing of income inequality as an end in itself, as opposed to income growth for all — really be our fiscal policy imperative?
And that takes me to my final points — what I do, in fact, believe should be our fiscal policy priorities:
I am a registered Independent who votes the issues and the person, not the party. The fact is, Senator Warren, that despite our philosophical differences, we should be working together to find common ground in this vital conversation — not firing off snarky tweets that stir your base at the expense of accuracy. Let's elevate the dialogue and find ways to keep this a land of opportunity where hard work, talent and luck are rewarded and everyone gets a fair shot at realizing the American Dream.
Leon G. Cooperman
cc: Senator Elizabeth A. Warren
2400 JFK Federal Building
15 New Sudbury Street
Boston, MA 02203
Senator Elizabeth A. Warren
1550 Main Street
Springfield, MA 01103