Dems play Wall. St. bash-and-take
POLITICO
By: MARTIN KADY II on April 13, 2010 @ 7:21 AM
Democrats are playing the classic bite-the-hand-that feeds-you game as they gear up for a major Wall Street reform debate.
The populist rhetoric is this: Big banks are greedy, Wall Street caused the melt down and we should crack down on the millionaires and billionaires who brought the country to the financial precipice.
But while they bash the financial industry, Democrats are still filling their coffers with donations from that sector – especially hedge funds, who may get off easy on regulations in the Senate financial reform bill, POLITICO is reporting this morning.
Good Tuesday morning and welcome to The Huddle.
HEDGE FUNDS HILL DOUGH: The richest guys on Wall Street are hedging their bets with donations, as Manu Raju reports in POLITICO: “John Paulson, one of the world’s richest hedge fund managers, has not been shy about spreading his wealth to Senate campaign coffers — or to the chairman of the committee that could directly affect his bottom line. Paulson held a ritzy $1,000-per-head fundraiser for Senate Banking Committee Chairman Chris Dodd last year — and then maxed out his donation with $4,800 more for the Connecticut Democrat’s now-aborted reelection run.
“Paulson is hardly alone. According to a review of Federal Election Commission records, the nation’s 10 richest hedge fund managers have dumped nearly $1 million into campaign accounts over the past several years — with much of it going to senators who’ve given them a friendly reception on Capitol Hill. And despite all the tough talk about a crackdown on Wall Street, consumer advocates and critics from other financial sectors say hedge funds would get off pretty easily under the regulatory reform bill Dodd’s committee approved last month.”
CRACKING CORPORATE DONATIONS: But even as they take big hedge fund money, Democrats are still working to crack down on corporate campaign dough, as Eric Lichtblau reports in the NYT: “The White House and leading Democrats in Congress are close to proposing legislation that would force private companies and groups to disclose their behind-the-scenes financial involvement in political campaigns and advertising, officials involved in the discussions said Monday. One provision would require the chief executive of any company or group that is the main backer of a campaign advertisement to personally appear in television and radio spots to acknowledge the sponsorship, the officials said.
“The legislation is being developed in response to a major Supreme Court decision in January that found that the government could not ban corporations from spending in political campaigns. The decision, a break from precedent, drew strong personal protest from President Obama. White House and Congressional leaders have been working for the last three months to find a way to stem what they predict will be a flood of corporate money flowing into November’s midterm elections.”
TAX VENTURE CAPITALISTS: Democrats are eyeing once again the super low tax rates paid by private equity investors, as Peter Cohn reports in CongressDaily: “Senate Democrats are taking another look at raising taxes on investment fund managers' profits to pay for a variety of must-do tax break extensions for businesses and individuals.
“Discussions are preliminary and there is still reluctance to raise taxes on investment gains, citing the fragile economic recovery. Senate Finance Chairman Max Baucus, for one, had wanted to set aside the fight over carried interest until Congress takes a broader look at the tax code next year. But there is also a realization that the era of easy money is probably over when it comes to offsetting tax cuts or spending increases, taming the deficit is paramount and previously unpalatable steps might need to be taken.”
A BREAK ON THE DEFICIT? It’s still mind bogglingly high, but the White House is hinting that the worst of deficit spending may be in the past, as David Cho reports in The Washington Post: “The federal deficit is running significantly lower than it did last year, with the budget gap for the first half of fiscal 2010 down 8 percent over the same period a year ago, senior Obama administration officials said Monday. The officials attributed the results to higher tax revenue and to lower spending than projected on bailing out the financial system. If the trend continues for the rest of the year, it would mean the annual deficit would be $1.3 trillion -- about $300 billion less than the administration's projection two months ago for 2010.
“But by suggesting the deficit may have peaked, administration officials are taking a political gamble. If the favorable number does not hold up in coming months and the budget shortfall surpasses the $1.4 trillion recorded last year, voters in the November midterm elections could punish the Democrats for offering false hope.”
LAWMAKERS HIT BY HEALTH LAW: Even members of Congress may get bumped from their current health care plan to the new exchanges, as Robert Pear reports in the NYT: “It is often said that the new health care law will affect almost every American in some way. And, perhaps fittingly if unintentionally, no one may be more affected than members of Congress themselves. In a new report, the Congressional Research Service says the law may have significant unintended consequences for the “personal health insurance coverage” of senators, representatives and their staff members.
“For example, it says, the law may “remove members of Congress and Congressional staff” from their current coverage, in the Federal Employees Health Benefits Program, before any alternatives are available. The confusion raises the inevitable question: If they did not know exactly what they were doing to themselves, did lawmakers who wrote and passed the bill fully grasp the details of how it would influence the lives of other Americans?”