One could summarize Eric Cantor’s career in public service in just two Labor Day news tidbits, two years apart. On Labor Day 2012, when other politicians, even his fellow Republicans, were offering token greetings to the working man, Cantor attracted attention when he tweeted this:
Today, we celebrate those who have taken a risk, worked hard, built a business and earned their own success. — Eric Cantor (@RepEricCantor) September 3, 2012
As Wonkette noted at the time, this was a bit like turning Martin Luther King Jr. Day into “Woolworth’s Lunch Counter Appreciation Day.”
Two years later, Cantor announced on Labor Day—not to his hometown paper, the Richmond Times-Dispatch, but to the Wall Street Journal—that he has found a good place for him to “work hard” after losing his House seat to a little-known economics professor: the boutique New York investment banking firm of Moelis & Co., where he will serve as vice chairman and board member, operating out of a new branch office in Washington. The Journal reports that Cantor will get a “base salary of $400,000 and an initial cash payment of $400,000…The firm is also granting Mr. Cantor $1 million in shares that vest over a five-year period. In 2015, Mr. Cantor is slated to receive a minimum $1.2 million cash-incentive payment and $400,000 in shares, according to the filing.”
So, maybe Cantor is not exactly “taking a risk” with this leap into the management realm of those who “built a business.” But surely he will be “earning his own success.” For no one—no nose-to-the-grindstone Wharton MBA—has made more of an effort over the years to endear himself to big financial employers than has Eric Cantor. It wasn’t easy, at one of the most populist moments in recent American history, to put oneself forward as Wall Street’s leading champion on the Hill. It was Cantor who, during the 2011 debt-ceiling showdown, stood firm against Joe Biden, and thereby helped torpedo any fiscal “grand bargain” and bring the nation to the verge of a credit default, in refusing to give up one bargaining chip that even many fellow Republicans would’ve gladly surrendered: the closing of the carried-interest loophole that allows private equity partners and some hedge fund managers to pay taxes at a vastly lower rate on their compensation than everyone else.
In fact, a case could be made that Cantor is selling himself short in his move to the private sector. Yes, he was recompensed all along for his efforts on behalf of Wall Street—he was by far the top recipient in the House of contributions from the finance industry, raking in nearly $2 million for the 2010 campaign, an especially banner year. (The founder of the firm that hired him has written big checks to Republicans, though many others at the firm give to Democrats.) But really, those contributions were a pittance compared with what Cantor provided in return. The carried-interest loophole alone—only one of many issues where Cantor went to bat for the financiers—is worth an estimated $20 billion over 10 years that investment managers get to keep instead of sending to the IRS.
Shouldn’t that disproportionate benefit have been reflected in Cantor’s pay at Moelis? I mean, any old former congressman or senator can bring in low seven-digit figures simply by joining a firm. Heck, even Bill Bradley, the former Democratic senator from New Jersey who was not nearly the friend to Wall Street that Cantor is, has been raking it in at a New York private equity firm. And look at Larry Summers—he made many millions in his stint at the hedge fund D.E. Shaw between quitting the Harvard presidency and returning to the White House. And Tim Geithner, who was a leading member of the administration that passed the financial reforms that much of Wall Street bitterly opposed, even he got a sweet job on the Street. Surely Cantor has earned the right to out-draw every one of them.
What we’re faced with here, clearly, is a collective action problem. Eric Cantor helped Wall Street make a ton of money, but he only made any given firm a fraction of that total sum, and so the full force of the industry’s gratitude cannot make itself felt. This is a dilemma that his successor, David Brat, can perhaps take up in his economics research. And it’s something to rally the rest of us to the barricades on future Labor Days: like the rest of us working stiffs, Eric Cantor is underpaid.