What Was It That Leona Helmsley Said...?

Stand down, masters of the universe. Call off the attack lobbyists. Senate Majority Leader Harry Reid is passing it through the grapevine that a proposed tax hike on hedge funds and private equity firms won't get through the Senate this year.

Saved by the bell! Gee whiz, the Senate would love to help, but it just doesn't look like there's time to schedule it in for 2007. For that matter, Congress is unlikely to pick up tax hike legislation in an election year, either. So how does 2009 look for a rain check?

Those paid in carried interest can breathe a sigh of relief, for now, that it'll likely be two more years before they have to think about which vacation house to put on the block. It's amazing what millions and millions of dollars in lobbyists and campaign donations will do to jam up a Senate calendar.

The tax measure in question originated in the House this spring, with the Ways and Means committee discussing a bill that would raise the tax rate on fund managers' profits (carried interest) from the 15 percent capital gains rate to the standard tax rate of 35 percent.

The House's action spawned a frenzy of resistance, as hedge funds and private equity firms started throwing fistfuls of money at Washington lest the contagion spread to the Senate. Lobbying efforts redoubled; powerful stakeholders were mobilized in opposition; suddenly, Wall Street was making checks out to the D.N.C.

In short—the Senate got spooked.

So much for the Democrats' indestructible Congressional agenda. It's another high profile compromise for that eager party that took the majority with guns blazing in '06.

by Liz Gunnison

^{* Helmsley's quote can be found here.}