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Hedge Funds Win in Senate Dems' Jobs Bill Deal
June 7, 2010 - by Donny Shaw
Senate Democrats are facing pushback from both sides on the jobs bill they are trying to pass this week. On one side, liberals, the unemployed and state governors from around the country are pushing them to restore funds that were dropped by the House for helping unemployed people keep their health insurance under the COBRA program and for cash-strapped states to pay for Medicaid services. On the other side, a mix of business interest and right-wing activists are fighting against the revenue-raiser provisions in the bill that would close tax-code loopholes and increase taxes on a few industries.
Congress Daily is reporting late Monday night that the Dems are close to reaching an agreement on what to do with the bill in order to round up the final votes:
Senate Democratic negotiators are close to an agreement to ease the bite of a proposed tax increase on investment fund managers, according to congressional aides. The House-passed “extender” bill would have taxed fund manager profits at a blend of 75 percent ordinary income rates and 25 percent capital gains after an initial two-year transition period. An emerging Senate compromise being worked out by Finance Chairman Max Baucus, Sen. Robert Menendez, D-N.J., and other panel members would lower the portion subject to ordinary income rates to 65 percent, but with a twist: The rate on the sale of investments held longer than seven years would see a reduction to 55 percent ordinary income in the emerging compromise. Aides cautioned that the proposal was not yet final, but one aide remarked that a deal is “coming together.”
In other words, the plan is to soften a provision in the bill that would partially close a loophole in the tax code that lets hedge-fund and private-equity managers pay the lower capital gains rate (15%) on the cut they take from the appreciation of their clients’ portfolios rather than the regular income tax rate (up to 39%).
Janet Hook at the L.A. Times reported yesterday that the thing keeping some Democrats from backing the jobs bill is that its spending provisions are not fully offset with new revenue provisions, and that the ever-growing federal deficit is shaping up to be the big issue in the November mid-terms. Despite that, the Dems are not proposing to change the bill in a way that will soften its impact on the deficit. They are making it more costly. The Congressional Budget Office hasn’t given a budget scoring to this new compromise, but we know that restoring the COBRA health care benefits would cost $7 billion, and my best guess would put the cost of weakening the hedge-fund tax provisions according to the above plan at about the same cost.
So, why are the Democrats choosing this over restoring COBRA funds in the bill for helping hundreds of thousands of unemployed people get health insurance? Here’s a guess: the hedge fund industry has given Senate Democrats more than $14 million in campaign contributions during the last two cycles. The unemployed? Well, despite dwarfing hedge fund managers in sheer numbers, they don’t have jobs, meaning that they have no extra money to donate to senators’ campaigns.
UPDATE: Politico is reporting that the money for helping states pay for Medicaid may be added back into the bill as well. Full details of the compromise are expected to be made public later today, so we’ll know soon exactly what the Senate will be voting on this week.
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Comments
Great blog post!! Thanks for sharing these stories. I think i will add it in my favorite.
Yes i appreciate your thinking this blog is really very good & its gives lot’s of knowledge.
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Any Car Finance
The best jobs bill would have been a single-payer Medicare-for-all bill, but the Dems trashed the idea, perhaps because of the $125 million in campaign contributions from the insurance and health care industry. Thus the R’s are not the only political prostitutes. Political corruption runs deep.
—
Jack Lohman …
http://MoneyedPoliticians.net …
http://SinglePayer.info
• It’s the Republican party who is busy watching out for Wall Street/Corporations.
Shame on Congress for not coming up with a solution for ALL its’ displaced hard working Americans.
• 9.7% unemployed = 1.2 million Americans, and 55% of the workforce have taken reduced work hours, pay-cuts, unpaid leave, forced to switch to part-time. The BP Oil Corporation’s irresponsibleness is adding to lost jobs and lost lives.
Yesterday, President Obama’s discussed what was happening with corporations, the economy, and the need to help the displaced unemployed. Watch his entire interview on CSPAN. He gets it.
CNN and FOX only report on self-interested, with their main story and topics cycling 24 hours. Go to CSPAN
CSPAN: http://www.c-span.org/Watch/Media/2010/06/29/HP/A/34826/Pres+Obama+Remarks+on+the+Economy.aspx
wwww.change.org
Corporations have increased their cash reserves to $1.84 TRILLION, THE HIGHEST FIGURE IN HISTORY! Big business and the banks, after an unprecedented bailout by the public treasury, are hoarding the funds (Americans pay this back on their IRS tax bill). BIG CORPORATIONS EXECUTIVES ARE MAKING BIG BONUSES AND GETTING SALARY INCREASES FOR SHOWING HUGE PROFITS. The cash reserves of major corporations have jumped 26 percent in one year, the largest percentage increase in nearly 60 years. The cash reserves of working people, and particularly the unemployed, have not been so fortunate.
REPUBLICANS bloc, the SENATE vote and defeat sevaral proposed extension of unemployment benefits for unemployed workers. Many of these same Senators rushed through a $700 BILLION bailout of Wall Street in 2008 in a matter of days, cannot bring itself to support even the most meager subsistence for the unemployed workers who are the victims, not the perpetrators, of the economic crisis.
WWW.CHANGE.ORG
The best jobs bill would have been a single-payer Medicare-for-all bill, but the Dems trashed the idea, perhaps because of the $125 million in campaign contributions from the insurance and health care industry. Thus the R’s are not the only political prostitutes. Political corruption runs deep.
—
Jack Lohman …
MoneyedPoliticians.net
No doubt about it, Jack!
Landmark Study on Single-Payer as Economic Stimulus:
http://www.calnurses.org/media-center/press-releases/2009/february/update-on-landmark-study-on-single-payer-as-economic-stimulus.html
“Overall, expanding and upgrading Medicare to cover all Americans (single-payer) would create 2.6 million new jobs, infuse $317 billion in new business and public revenues, and inject another $100 billion in wages into the U.S. economy, according to the study by the Institute for Health and Socio-Economic Policy (IHSP), research arm of the California Nurses Association/National Nurses Organizing Committee.
…While 30 percent of the new jobs would be in health and social services, the ripple effect of job creation goes throughout the economy…"
And yes, great post! Where’s the update already?!?