Dems Fail Litmus Test

The Washington Post reported today that Sen. Harry Reid has informed private-equity funds that the Senate will not be closing the obscenely inequitable tax loophole that allows mega-billionaires to be taxed at 15 percent – lower than most working Americans. Harry says there simply isn't time in the busy Senate schedule. Seriously. And the Post points out that if there isn't time in 2007, there almost certainly won't be in 2008 either – "Congress tends to be leery of tax increases in election years."

I'm sure this has nothing whatsoever to do with the private-equity firms and hedge funders putting "more than 20 lobbying firms" to work for them in the Halls of Congress. Nor is Reid's about face a sign of the Wall Street Execs "increasing their campaign donations to members of Congress." It's simply a jam-packed schedule – who has time to address the shafting of revenues for public infrastructure investment? Rebuilding the shredded social contract? funding health care, education, or new sustainable energy programs? Making up for lost revenues due to insane Bush tax cuts?

As I posted previously, this was a litmus test for Democrats – to see whether the party > is capable of truly taking a stand for working people. They have failed it. Rick Perlstein blogged today of Democratic capitulations on this issue and FISA.

Ari Berman noted that Barack Obama – and kudos to him – wasted no time in calling out this bad decision. Within hours, John Edwards had done the same, saying in a released statement, "Incredibly, for an investment of about $6 million dollars in lobbying fees – and another $6 million in political contributions – these elite Wall Street traders preserved a $6 billion tax break for themselves…. We have to end the rigged system in Washington that rewards big corporate interests at the expense of hard-working families."

Certainly Sen. Bernie Sanders gets it. The longtime fighter for a fairer and more decent America told me: "At a time when poverty is increasing, the middle class is shrinking and the distribution of wealth and income is more unequal than at any time since the 1920s, it is imperative that Congress initiate progressive tax reform which asks the rich and large corporations to start paying their fair share of taxes. This tax reform should certainly include raising the tax rate on private-equity firms and hedge funds from the current 15 percent... The American people want us to move this country in a new direction, and progressive tax reform is central to that effort." And Sen. Sherrod Brown is sticking to his principles on this issue too, telling me, "The income tax system should be the same for the trucker from Greenwich, Ohio, making 20 dollars an hour as for the hedge fund manager from Greenwich, Connecticut, making 20 million dollars a year. Carried interest is compensation for managing other people's money, pure and simple. I believe it should be taxed accordingly."

Here's hoping that more Democrats rediscover their spines and tell Harry Reid he's way off on this. Along with the promise to end the war, telling working Americans that they would stand up for them is the reason Dems are in the majority.

Comments (30)

1. And as noted on Ari Berman's article....Obama, largest receipient of hedge fund campaign money, has NOT returned the "dirty money"....just SAID some things. Same for Edwards.

   As for "I'm sure this has nothing whatsoever to do with the private-equity firms and hedge funders putting "more than 20 lobbying firms" to work for them in the Halls of Congress."....

   OR the fact that everytime (like 1993-1994) that Congress has raised taxes ...even on the "mega-billionaires"....it hurts them politically, because it's the perfect opening for the Republicans to find the exception to the exception (some small business guy who gets hit)...or to simply run "The Democrats just raised taxes $100 BILLION DOLLARS...Call Congressman (insert local district Dem name here) and tell him, you are already paying enough!" ads and then force Congressperson Fred or Ethel to try to explain how it's "JUST a tax on the mega-billionaires" and play on the Repubs' chosen and BEST field of battle!

   Posted by Mask at 10/09/2007 @ 4:37pm

2. KvH: As I posted previously, this was a litmus test for Democrats – to see whether the party > is capable of truly taking a stand for working people. They have failed it.

   Pretty incredible! I've been with you (We all know how rare that is :-) on this from your initial post.

   I've read up both sides of the arguments and as hardcore of a CAPTALIST as I am, I think this is a loop hole that needs to be closed!

   BTW, even my rag, the WSJ, is wrong on this issue....but then, I understand how important private equity and Wall St. are to the Journal!

   Posted by Happy at 10/09/2007 @ 5:36pm

3. Posted by MASK

   Why is it that people should vote? So that bottom feeders like you get to have your cake and eat it too?

   Posted by mtspence05 at 10/09/2007 @ 5:46pm

4. "And Sen. Sherrod Brown ☼ is sticking to his principles on this issue too, telling me, "The income tax system should be the same for the trucker from Greenwich, Ohio, making 20 dollars an hour as for the hedge fund manager from Greenwich, Connecticut, making 20 million dollars a year"

   There goes "progressive" tax rates...YES!!!

   We need a FAIR TAX now...and that would help EMPTYs "working class" more than any govt program the Progressives dream up....to help, of course.

   Posted by john maasch at 10/09/2007 @ 6:14pm

5. I hear ya' cypherdude --i.e. "Zero".

   It's getting to the point where in order to salvage any fragments of hope The Nation --and a slew of other publications-- should be calling Hillary's cards NOW before we get a queen following the current king.......and we all end up getting jacked.

   How about it Nation staff?

   Posted by b_kool_66 at 10/09/2007 @ 7:22pm

6. Posted by MTSPENCE05 10/09/2007 @ 5:46pm

   Empty, I keep telling you. YOU shouldn't vote. Again, if Texas uses a butterfly ballot, you'd probably end up voting for the Republican.

   Safer if you just stay home, bitch about whatever side wins, and then act like you're going to do something about it "some day".

   Total inaction on your part is safest bet for the rest of us!

   heheh

   Posted by Mask at 10/09/2007 @ 7:27pm

7. Posted by JOHN MAASCH 10/09/2007 @ 6:14pm

   Well, JOHN remember that's Sherrod "I'll Vote For Torture If It Gets Me Elected & Then Come Out Against It AFTER I'm In Office" Brown!

   Posted by Mask at 10/09/2007 @ 7:29pm

8. If I hadn't done my own taxes, I might never have discerned that Billy Clinton and the Dems cut my taxes in 1993, by substantially increasing the standard deduction, personal exemption and earned income credit. The corporate media bombarded us with the Repubs' "Biggest Tax Increase In History" propaganda instead of breaking out with the truth; today, the same corporate media are anointing as 'front runners' the most compromised 'Democrats' in the race while ignoring real Dems like Dennis Kucinich.

   The Nation could certainly do more to report stories censored by the corporate media, like how the 'hidden inflation' of higher sales taxes is stifling our economy or how the Republican policy of redistributing wealth from the workers to the rentier class is causing another recession like that of the late 80's.

   Posted by samcrossett at 10/09/2007 @ 8:11pm

9. KAT,

   You're just now figuring out that the dems can be bought as easily as the republicans? At least the repubs make no pretensions about being anything other than in the pockets of the highest bidders........What's the Dem's excuse? They meant to be for the working people, but old evil dubya out-smarted 'em again????

   Posted by davebarlett at 10/09/2007 @ 8:32pm

10. WHAT'S THE USE ANYMORE,

    POWER, HATE, AND GREED

    RULE THIS COUNTRY AS NEVER BEFORE!

    Posted by bohdan yuri at 10/09/2007 @ 9:31pm

11. I'd say power, money and special interests, but that would be nothing new

    Posted by davebarlett at 10/09/2007 @ 9:58pm

12. KAT,

    You're just now figuring out that the dems can be bought as easily as the republicans?....

    Posted by DAVEBARLETT 10/09/2007 @ 8:32pm

    More than just "as easily", the Dems can be bought CHEAPLY! Let's see:

    John Edwards..."Incredibly, for an investment of about $6 million dollars in lobbying fees – and another $6 million in political contributions – these elite Wall Street traders preserved a $6 billion tax break for themselves.....

    One-time (say every 4 years) Investment of $12 million

    Annual return of $6 billion = $24 billion over 4 years

    Annual % Return = 50000% (that's 500-fold)

    Total Return over 4 years = 200000% (for 2,000-fold)

    Hot damn! These Hedge Fund gunslingers sure are sharp.......or is it the ones across the political tables from them are DUMBER THAN DONKEYS!!! Shit, the least I'd do is have every employee of every hedge fund to donate $2,300 EACH.....and let these whiz kids figure out how to do it......Hillary can refer Norman Hsu to them to do some BUNDLING consulting!

    Posted by Happy at 10/09/2007 @ 10:09pm

13. KvH: ...Making up for lost revenues due to insane Bush tax cuts?

    Today's WSJ Editorial: "The Shrinking Deficit", some excerpts:

    ....The CBO has released its preliminary estimates for Fiscal Year 2007 that ended September 30, and the federal budget deficit fell again, this time by 35% to $161 billion.

    ....:since 2004, deficit spending has tumbled by $251 billion...one of the most rapid three-year decline in U.S. history. The deficit as a share of the economy is down to 1.2%, or about half the average of the last 50 years.

    .....improvement is especially remarkable given the $150 to $200 billion a year of post-9/11 expenses for homeland security and the wars......

    .....federal receipts have climbed by $785 billion since the 2003 investment tax cuts, the largest four-year revenue increase in U.S. history.......with payments by the wealthy accounting for most of the windfall.

    -------------------------

    In case some of you didn't know, the DOW and S&P set ALL-TIME HIGHS today while the NASDAQ set another 6~7 year (post-2000 crash) high....The Russell 2000 is within 1% of its own all time high. All of you with stock or fund accounts, stop the bitching and log into your accounts.....`smell' the roses and enjoy a bit!

    Posted by Happy at 10/09/2007 @ 10:30pm

14. Posted by HAPPY 10/09/2007 @ 10:30pm

    HAPPY, since you seem to have "the numbers"....how much of the supplemental spending on Iraq is figured into those deficits?

    Posted by Mask at 10/09/2007 @ 10:33pm

15. Posted by MASK 10/09/2007 @ 10:33pm

    Try "wsj.ltrs@wsj.com" or fax your question to 212-416-2255

    Or you could go to the CBO web site and try to figure it out......Uninteresting to me!

    One way I could look at it is this: the half-trillion spent on the GWOT/Iraq, has led to 4 peaceful, good years of economic and national net worth growth worth $10~$20 Trillions.

    BTW, did you hear that Al Queda is now in a QUAGMIRE in Iraq and is putting out desperate calls all over the internet trying to get more `Jihadists' into Iraq.......Seems that they are, ahem, going to the Virgins too fast or ending up captured!

    Posted by Happy at 10/09/2007 @ 10:48pm

16. When I was in the corporate world, there were times I envied those who worked with heavy debt....the leveraging effects were tremendous--if one guesses right--and the pay reflected the expected `leverage' effect!

    I've always worked on the equity side...in real estate development/investments....with real equity PLUS a healthy dollop of debt that weren't anywhere as crazy as what the financial engineers have accomplished in the past decade!

    The financial world is very similar to government in one very critical respect. Most people are playing with other people's money.....if it blows up, hey, no big deal, "it's not my money"! Every bit of money I borrow, I am on the hook....all with recourse...sigh!!

    Posted by Happy at 10/09/2007 @ 11:49pm

17. ....what the stock market is reacting to. It's probably not good for us.

    Posted by ZERO 10/09/2007 @ 11:44pm

    I hear you on all the potential trouble spots.....

    I frankly don't believe, and neither do the Fed so it seems, a steadily lower dollar is a big problem. The fact is that our exports are rising much faster than imports....a good thing.....I wish I had bought Caterpillar (watched for a year, didn't pull the trigger while it went from $50 to $80) and a couple of other export powerhouses (Boeing is another `lost' opp.)!

    The solution for China is reinvest into dollar assets, which they WILL DO, guaranteed! They wanted to buy Unocal and we screamed! They bought IBM's PC business...there will be more...As they invest more in us directly and gradually climb the economic and democracy ladders, bilateral relations will improve naturally (my hope and my forecast).

    The ARM reset affects just a samll % of all mortgage loans.....there was an extensive series of WSJ articles on this subject....in detail....and heavily concentrated in markets that MUST fall hard to bring prices into some semblance of rational multiple of income. Your Seattle area will fall later than most while Boeing, MSFT are helping out! A friend of mine (ex-Houstonian) lives in Bellevue and he even bought a lot that he's subdividing into two and plans to become a builder....I've coached him a bit!

    The most sensitive and long-lasting indicator for the stock market and all of our moods, will be jobs and job growth....PERIOD! When times are good is when stuff like Iraq grabs so much attention.....when people can't find jobs, who gives a f*&^ about a war that has no visible effects here at home??? Jobs mean income and ability to take on debt for spending or investing! THIS is my biggest worry!

    Tax cuts work but you Libs just don't buy it! Your preferred policies will reduce inequality but will lead to higher unemployment and less economic growth, quite possibly a policy-driven recession!

    Posted by Happy at 10/10/2007 @ 12:07am

18. If the objection is lack of fairness, then why not REDUCE the tax rate of small percentage of Americans who actually pay income taxes to the same 15%? Less money for the government means more money for Americans who, after all, having earned their income deserve to make the choice about how it is to be spent.

    Posted by TVAnderson at 10/10/2007 @ 03:10am

19. HAPPY, since you seem to have "the numbers"....how much of the supplemental spending on Iraq is figured into those deficits?----Posted by MASK 10/09/2007 @ 10:33pm

    Posted by HAPPY 10/09/2007 @ 10:48pm

    So the answer is "no"....and all your talk of declining deficits is false.

    Posted by Mask at 10/10/2007 @ 09:13am

20. ....and all your talk of declining deficits is false.

    Posted by MASK 10/10/2007 @ 09:13am

    What's with you? Just dumb this morning? I quoted the WSJ which took its `math' from the CBO......

    IF you concluded that the recent "declining deficits is false", I'd appreciate your set of facts....

    I'd be very pissed if the WSJ uses the same tactics as The New Republic or the NYT...just manufacturing lies to suit their purposes....much like what you do by `twisting'!

    Posted by Happy at 10/10/2007 @ 10:28am

21. Posted by HAPPY 10/10/2007 @ 10:28am

    I'm sorry HAPPY, if you DON'T KNOW the answer (despite seeming expertise on deficits), just say so.

    The question was simple enough....Are the supplemental spendings on Iraq included in those "good deficit reduction numbers"?

    Seems a person who did so much research to posit that "good news" would be able to look a little deeper to see if it was truly factual....

    unless they didn't WANT to know?

    Posted by Mask at 10/10/2007 @ 10:59am

22. ...unless they didn't WANT to know?

    Posted by MASK 10/10/2007 @ 10:59am

    OK, I'm feeling flush...I'll toss you piece of crumb....I don't care and I don't want to know! Being the search expert you are, I'm willing to see what you dig up!

    Posted by Happy at 10/10/2007 @ 11:30am

23. Posted by ZERO 10/10/2007 @ 11:29am

    I was NOT FOR the Fed's doing a half-point rate cut! That said, I had felt Greenspan raised the rate too much when he finally stopped!

    Given the rise in oil prices over the past 3 years and the economic growth in China, India, everywhere, my personal opinion was that considering the commodity boom, inflation wasn't a big problem. I think, for the the most part, I was right...and I have invested accordingly (quite successfully)!

    The ARM is a problem for those who took the risks, both lenders and the borrowers. The housing bubble should never have gotten as big as it did.....Greenspan's fault for keeping rates too low for too long.

    The Feds did what it did, dropping rates, to calm the market and it seems to have worked for the time being. CDOs' will have a chance to be priced and vultures will buy....So far, everything has been predictable, just a matter of timing. I told a Corn blogger almost two years ago to cash out of her San Diego house, she didn't! Turns out, I called the peak almost on the nose!

    I know some people don't believe me, but for the most part, the financial/investment markets are reasonably easy game to play and one CAN BAT above-average consistently. IF one's main sources are the network news, NYT and WaPo, the sky is always falling....unfortunately for most people, they tend to believe it. My rag, the WSJ, always present multiple viewpoints....the bulls and bears (Iraq and the stock/financial markets), etc. Whether you are a Lib or not, IF you are interested in better managing your family's finances, there is no other better source for all-around news, analysis...you can skip the Op-Ed but oftentimes, there are hard numbers and excellent analysis.

    Posted by Happy at 10/10/2007 @ 11:42am

24. ...need to be a little less Happy and a little more Pensive.

    Posted by ZERO 10/10/2007 @ 11:37am

    I've stated it before.....our manufactured goods export are doing great. Combination of increased productivity due to capital investments, better-trained workers able to work/read the gizmo machines and the falling dollar. The US also leads in logistics...just-in-time, FedEx, UPS, etc.

    The S&P 500 today derives something like 40$% of its sales and profits from overseas! For some, like Intel, it's more like 70%!

    The low wages in the no-skills service sector is due mostly to illegal immigration and the lost generations of blacks! All around me in Houston, I see employed, successful and HAPPY Hispanics....many "No Hable English"! Question is, where are the blacks....guess $9 to $15/hour work isn't enough for them!

    Posted by Happy at 10/10/2007 @ 11:50am

25. "...Rediscover their spines...." Hope against hope, year after year, excuse after excuse, betrayal after betrayal..and yet another litmus test, while those who condemn it, do so at a distance.

    And the Nation will predictably line up behind the selected Democrat, because, after all, what other choice is there, they will claim. Rinse. Repeat.

    Posted by Lil at 10/10/2007 @ 11:58am

26. Posted by HAPPY 10/10/2007 @ 11:30am

    Thank you, Colonel Brady, you may step down!

    Posted by Mask at 10/10/2007 @ 12:13pm

27. I would personally be for a "flat tax" if the tax included ALL types of income, not just earned income.

    Let's say you assess a 20% tax on income. That tax would be assessed against earned income, dividend income, capital gains income, inheritance income, etc.

    Now THAT is a REAL fair tax.

    Posted by jorcheim at 10/10/2007 @ 12:14pm

28. Posted by JORCHEIM 10/10/2007 @ 12:14pm

    Or Mike Gravel's sales tax with "prebates" for those below the poverty line.

    Posted by Mask at 10/10/2007 @ 12:35pm

29. Gravel's idea isn't bad, but the "poverty line" really would need to be ratcheted up immediately, and then pegged to the cpi and other economic indicators.

    Posted by jorcheim at 10/10/2007 @ 12:38pm

30. I'm all for flat tax, no deductions! Won't happen under Dem-controlled anything!

    Posted by Happy at 10/10/2007 @ 4:00pm