"Money Is The Mothers Milk of Politics"

I think that quote belongs to Tip O'Neil The famous Boston politician.

Roiling, boiling with envy, lust and righteous indignation the Democrats have pursued their White Whale of "the Rich" for several decades. In their pursuit of this legendary creature, they have tied the Middle Class in rules, regulations and wrapped them in snares of iron as they have taxed them most heavily... The FAMOUS ALTERNATIVE MINIMUM TAX (AMT) was set as a trap for 21 millionaires who used the standard loop holes of state taxes, home mortgage and child exemptions to pay zero federal taxes in a single year. THIS OUTRAGE could not continue. Congress passed the AMT and next year some 20+ million taxpayers will find themselves facing this extra assault upon their earnings.

In the same spirit, Congress read about the large reward coming to Stephen Schwatrzman, CEO of Blackston Group, and like Ahab felt that old familiar yearning...

... because the indiscriminate flood of capital that makes Mr. Schwarzman's riches possible shows no signs of abating. And stunning, because, at 15% for most of his earnings, Mr. Schwarzman's tax rate could be less than his chauffeur's.

Should Mr. Schwarzman's firm be allowed to sell shares to the public without paying corporate tax? Tax experts tell me that to do this, Blackstone -- and Fortress before it -- are taking advantage of a provision in the tax law that permits partnerships to be publicly traded, but only if they engage primarily in "passive" activities, a sop given two decades ago to oil, gas and timber partnerships. Blackstone claims it qualifies because its investments in the companies it buys are largely passive.

... as a matter of public policy, it's fair to ask: Why should the tax laws discourage private-equity firms from going public? To do so seems to favor fat cats and big pension funds at the expense of ordinary investors.

The dilemma for Congress is that private-equity firms aren't the only ones caught in this maze. All sorts of partnerships, including real-estate and oil and gas, rely on the same tax trick. Changing the rules makes sense. But its effects would reach far beyond private equity.

If all this seems hopelessly complex, there is a simpler solution -- abolish the lower tax rate on capital gains altogether. That would eliminate the carried-interest problem, ensure that even the fattest of cats pay their fair share, and also eliminate the lion's share of complexity in today's tax code. With the world awash in investment capital, legislators could argue, there's no need for a tax incentive to encourage more.

To compound the question is the combination of LARGE AMOUNTS OF MONEY and the 2008 POLITICAL SEASON... Democrats lust to take control of the presidency and both the House and the Senate...

Hedge funds spent $1.3 million lobbying Congress last year, a 46 percent increase from 2002, according to numbers compiled by the Center for Responsive Politics and Absolute Return magazine, an industry trade publication that tracks the largest hedge funds twice yearly. Hedge fund managers are also giving more to political campaigns; executives at the nation's 30 biggest funds increased their political donations by nearly 17 percent to $14.7 million between 2004 and 2006, the records show.

These amounts are pocket change for an industry managing more than $1.4 trillion in assets. But giving Washington any money at all reflects a major attitude adjustment in the hedge fund world. Traditionally, the industry's government relations strategy was to simply stay home.

Avoidance worked well for many years. Since the first hedge fund was founded in 1949, government regulators have largely left the funds alone. Hedge funds raise money privately and cater to the super-wealthy: Getting into a fund has long required $1 million. Hedge fund managers argued that sophisticated investors didn't need the additional protection of securities laws.

Regulators started paying closer attention to the funds in 2003, when the number and impact of hedge funds increased. The SEC expressed interest in making the funds more transparent by requiring them to register with the agency. Most people in the industry opposed this; in fact, they were reluctant to turn over any information at all. However, their opinions weren't backed with much financial clout; in 2003 and 2004, the Managed Funds Association, the industry's largest trade group, spent just $142,000 on lobbying.

In December 2004, the SEC passed a rule requiring large U.S. hedge funds to register with the agency. The rule not only forced the funds to turn over basic information but allowed the agency to conduct audits. The experience taught hedge fund managers a lesson about the power of politics. They could ignore Washington, but Washington had no intention of ignoring them.

Senators Schumer and Hillary Clinton plus Mayor Bloomberg now face a quandary. Do they ignore the issue and continue to take the donations from this group of very rich individuals or do they follow the bloodlust of their most confiscatory party members... Votes vs Dollars... Which has the greater appeal? How to get both without sending the Fat Cats over to the Republican Side of the universe?

Senators Schumer and Clinton are on the fence over a bill that would force private equity firms and hedge funds to pay higher tax rates if they go public.

The bipartisan proposal, offered last week by the leaders of the Senate Finance Committee, could be prickly for the New York senators, who have pushed for increased fairness in the tax code while also advocating for growth in the financial sector, which has long been crucial to the state's economy. Opposition to the bill could also put them at odds with the dean of the state's congressional delegation, Rep. Charles Rangel of Harlem, who has publicly praised the proposal.

The proposals have drawn opposition from the top three declared Republican candidates for president. "I don't like raising taxes at all," Mayor Giuliani said yesterday in an appearance on CNBC, after being asked about Mr. Rubin's statement. He said booming Wall Street bonuses had contributed to surpluses for the city, and he pushed for lower taxes on capital gains as a way to encourage investment.
Aides to Senator McCain of Arizona and a former Massachusetts governor, Mitt Romney, have also indicated their opposition.

Asked about the issue yesterday during an appearance in California, Mayor Bloomberg did not take a position, saying policymakers should look back to the writing of the tax code to determine whether the intended public purpose of certain provisions is currently being served.

The Senate proposal is seen by some as targeting Mr. Schwarzman, whose lifestyle has been fodder for the press. At a dinner held in his honor last night at the New York Public Library, several of his high-powered friends stood by him. Martha Stewart called him a "very powerful and popular figure," while a vice chairman at J.P. Morgan Chase, James Lee, told The New York Sun that Mr. Schwarzman was "building the Wall Street of the future."

Into this fevered swamp the real estate and venture capital industries see themselves being dragged and may well be hurt by accident...

Senate Finance Committee staffers are looking into reclassifying the so-called “carried interest” that alternative-investment fund managers earn from capital income to ordinary income, effectively boosting their tax rates from 15 percent to as high as 35 percent.

he real estate and venture capital industries make heavy use of the same limited partnership structure used by such funds.

“They’re concerned with highly compensated hedge fund and private equity managers. Our concern is that changes would affect not only those managers but the smallest of real estate deals,” said Steve Renna, counsel to the Real Estate Roundtable.

A spokeswoman for the National Venture Capital Association, Emily Mendell, said it would be “ironic” and “terribly, terribly unfortunate” if venture capital were swept in under the change because of the role it plays in the economy

“It is difficult to justify a 15 percent tax rate for the performance of services in one set of circumstances — private equity, venture capital, hedge funds, high-dollar real estate — while at the same time a John Deere or Mary Kay salesperson who gets a bonus for performing their job well will be taxed at a higher rate of often 33 percent to 35 percent,” the aide told The Hill yesterday.

In a limited partnership, the general manager typically takes a 20 percent cut of the profits from the investment, called the “carried interest” or the “carry,” in addition to a fixed fee that usually amounts to two percent of the funds invested.

In theory, the carry is taxed at the lower rate for capital income because, unlike a salary, it is not guaranteed and often isn’t paid in the year that the manager performs services to the partnership.

But critics argue that the treatment is a loophole that allows fund managers to escape taxation at the same ordinary income rates paid by other professionals.

...the lobbyists emphasize the importance of encouraging industries vital to the economy. In 2005, companies that received venture capital some time in the last 35 years accounted for 10 million U.S. jobs and $2.1 trillion in revenues, Mendell said.

Meanwhile, the quest for revenue due to the reinstatement of pay-go rule is also exacerbating the lobbyists’ concerns. “They’ve got to get the money somewhere under pay-go rules. Anything being discussed you have to take extremely seriously,” Renna said.

No...

Congress made the rule, it's not a law. Congress can break its own rules...and often does (Shall we discuss spending Ear Marks and 2006 election campaign promises contrasted with the recent rules changes ?)

The pay-go rule is a recipe for tax increases... It is supposed to limit the growth of government but the politicians cannot help themselves. Giving away other people's money is hard and important work. If they could not take from the middle and give to the rich and poor what would they do all year long?

Besides, Hunting Whales is fun. Playing Robin Hood is fun. Why else spend over a million dollars for a job that pays less than $200,000?

Politics -Democrats

Yep. its June....

It's hot outside and the TV season is over... America's longest running soap opera and faux news events continue to roil on. Propelled by their own steam the candidates are huffing and puffing to keep themselves and their campaigns inflated as they struggle towards the January and February 2008 primaries... After the primaries, there will be just NINE short months until anyone can actually vote.... Beginning February 6, 2008 there will be only 1-2-3-4-5-6-7-8-9 months with little new to learn that we did not learn in 2007... NINE months of watching those voted "most likely-like able-liked" by the EXTREMISTS of their party will try to convince the large bloc of unregistered, unaffiliated, turned-off, apathetic INDEPENDENT voters that they really didn't mean all those extreme things they said...



HILLARY UPDATE

The continuing weird news is that Hillary is lagging in Iowa and so she has pulled Bill out to campaign for her during the month of July... Disingenuously, the press release says that this will be his first appearance on her behalf... What was the visit and march in Selma? What was the visit in South Carolina? Rumors abound that he has his own airplane and own campaign staff. he is making calls on her behalf to raise money and garner support.... When will this end? When will SHE run on her own two left feet?.... Will she call him to help-save-her when she is President?... Everytime HE appears she diminishes in stature... "Sisters are doing it for themselves?"... Sure doesn't look that way..



Mayor Mikey = President Mikey

It sure looks like he is heading in that direction... The dots to be connected... Tonight's news says he has left the Republican Party... Shock-! Who else can we get him to take along? He was a Republican In Name Only (RINO) and only swept in behind Giuliani because the Democrats were so feeble and untrustworthy....

Mr. Bloomberg sent out a statement at 6:05 p.m. declaring that he is leaving the Republican Party and has filed papers with the New York City Board of Elections to register as an "unaffiliated voter."

"Although my plans for the future haven't changed, I believe this brings my affiliation into alignment with how I have led and will continue to lead our City," the statement said.

Mr. Bloomberg, a life-long Democrat who became a Republican to run for mayor in 2001, is a billionaire who would not have to hold a single fund-raiser if he decides to throw his hat in the ring.

..."We have achiever real progress by overcoming the partisanship that too often puts narrow interests about the common good. As a political independent I will continue to work with those in all political parties to find common ground, to put partisanship aside and to achieve real solutions to the challenges we face."

"Any successful elected executive knows that real results are more important than the partisan battles and that good ideas should take precedence over rigid adherence to any particular political ideology."

BULL GARBAGE... we have a system that gridlocks by design. IT stops fanatics and visionaries from running roughshod over the opposition. Achieving things that are REALLY IMPORTANT gets done when the people (the ones who decide whats important) finally change the faces until they get the right combination for agreement. His speech from Los Angeles, California earlier in the day...

Bloomberg's office in New York issued his statement today while the mayor was in California appearing at a number of events, including a conference in Los Angeles called "Ceasefire! Bridging the Political Divide."

He said in his speech that partisanship was stopping the federal government from taking on big goals.

"When you go to Washington now, you can feel a sense of fear in the air -- the fear to do anything, or say anything, that might affect the polls, or give the other side an advantage, or offend a special interest. This is paralyzing our government -- and it's leading our elected officials to push all the big, long-term problems onto future generations: health care, Social Security, budget deficits, global warming, immigration, you name it. Their inaction and partisan gridlock are destroying our relationships and reputation around the world. "

I think that has the smell of mendacity.... A self-made billionaire does not make consensus. He commands and people obey. Being a politician is a very different world from being a businessman... Being a mayor, even of a large city is very different from being in control of one-third of the government of a nation. Every good marketing professional understands the importance of knowing your market, knowing the limitations and knowing the game.. Billionares are unique people, most especially, one whose name is on the company and every one of its products... Neither business or politics are a game for small egos, but Mayor Mikey may find that while others may lack his wealth few in Washington lack in comparison of appreciation of the self...

The Mayor aparently sees an opportunity to swoop in and take the Presidency away from Hillary...She was slow walking towards her coronation until Obama rose in the national psyche. Offering good look, charm and a way to assuage racial guilt, Obama has changed the dynamic of the race.

In a recent LA Times-BLOOMBERG poll:

When registered voters were asked which party they would like to win the White House, they preferred a Democrat over a Republican by 8%. But in a race pitting Mrs. Clinton against Mayor Giuliani, a Republican, the former New York mayor was favored by 10%.

Conversations with a dozen Times-Bloomberg poll respondents exposed a sour aftertaste from controversies of her White House years with President Clinton. Mark Penn, Mrs. Clinton's chief campaign strategist, said his reading of the electorate is that few voters hold such views.

If Hillary wins the Democrat Candidacy and Guilani wins the Republican Candidacy and Bloomberg runs as an independent...
The nation will see three faces from New York...
Who will Bloomberg take votes from?
Does America LOVE New Yorkers THAT much?...
New Yorkers seemingly think so...

President Mikey-?

Its no secret that New York City Mayor Michael Bloomberg would like to be President. Unfortunately, he has a city to run and can't be gone for two years chasing the dream. The WSJ watching the Democrats set their calendars for primaries in 2008 has an interesting observation.

What if the 2008 process serves to favor someone else -- namely, a billionaire who wants to run as an independent? It's possible that both major party nominees could emerge from their accelerated primaries so bruised, and with such high negatives, that the voters will already be feeling buyer's remorse. Then someone like New York Mayor Michael Bloomberg could decide to get into the race, spend $500 million of his own money, and truly remake the Presidential race.

It's a long, long time from February 5, 2008 until we get to the conventions in the Summer. It's even further from February to November. A man with a multi-billion dollar net worth could spend $500 million and run almost unopposed. Since we have turned politics into entertainment, the public will be bored with the candidates by February... The media will have said everything 15 times and we will be turned off... What else have we got to do? Watch and listen to Mayor Mikey tell us why he should be the one and the traveling circus tell us why he is the wrong one?

It'll be fun watching and handicapping the race... Best show in town-!