The Party of Finance

LAT notes that Clinton and Obama are raising tons of money from finance types, "easily surpassing Republican John McCain in campaign contributions from the troubled financial services sector" and that "some Democrats worry that the influx of money will make their candidates less willing to call for increased regulation of financial markets, which have been in turmoil after a wave of foreclosures on sub-prime mortgages." Kevin Drum says "considering that 18 Democratic senators voted in favor of the 2005 bankruptcy bill and that virtually no one in the party was willing to push hard to end the capital gains loophole for hedge fund managers last year, I'd say that will make is in the wrong tense."

Right. The solution here would be for the GOP to pull its head out of its ass and have some members go where the Democratic Party fears to tread. "I believe in low taxes, but also in fair taxes -- hedge fund managers should pay the same rate as everyone else; these kind of inequities only push up tax rates on hard-working middle-class Americans." Is that so hard to say? To go further and say that if non-bank financial firms are going to be bailed-out when they get into trouble just like banks, then they should also be regulated just like banks would seem to me to be an ideal thing for a reformer like John McCain to step up and say, only that would probably have to happen in an alternate universe where McCain has some grasp of public policy. So instead we'll be missing John Edwards.

Photo by Flickr user Bert van Dijk used under a Creative Commons license

Comments

It's about ratios though. McCain raised what, 12 million last month? Hillary and Obama raised 3 to 5 times that amount. So, the fact that they also raised more than him from finance types shouldn't be overplayed.

Obviously I wish that Obama (might be tougher for D-NY Hillary) to take on the hedge funds, but this really is just a story about how Repubs can't raise money.

Posted by Jerome | March 21, 2008 3:01 PM

So instead we'll be missing John Edwards.

As ever we do.

Posted by Neil the Ethical Werewolf | March 21, 2008 3:17 PM

Isn't Obama planning to raise the capital gains tax? That will raise the tax for hedge fund managers.

Posted by The Animal | March 21, 2008 3:21 PM

As a tax professional working in the hedge-fund industry and seeing what I see, I think a better idea still would be to simply institute a graduated rate for long term capital gains taxes. Any gains over, say, $1 million should be taxed at a less-beneficial rate, maybe 25% to 30%. I think that given the push for egalitarian measures that should be forthcoming with a hopefully all-Democratic Congress and Executive branch (in order to correct all the excesses of '03-'07).

I do NOT think, speaking from a tax law perspective, that it is reasonable to expect that we should change long-standing principles of partnership tax law in order to single out one or two specific industries (i.e. Hedge Funds and Private Equity).

Can't we all just agree that a 15% long-term capital gains rate is just plain too low and its also unfair to have a graduated income tax rate but a flat cap gains rate?

And while we're at it let's lift the cap on social security and Medicare taxes.

Posted by Fletcher | March 21, 2008 3:23 PM

The guys who work on the Street are not stupid -- well maybe the ones who lent money to banks and hedge funds that were already way over leveraged are -- but for the most part they are smart guys. The know which way the wind is blowing and they know that either Hillary or Barack will be the next president. Why waste your money donating to John McCain? He's just the senator from Arizona.

The point of making lots of donations to to buy influence. The senator from Arizona won't have that much of it. One of Barack or Hillary will have a shitload of it.

Posted by dumb finance jock | March 21, 2008 3:24 PM

I thought Kevin singling out Chuck Schumer for a slam in that piece was pretty damn weird.

Schumer is obviously a Senator from New York in many, many ways. But Schumer was single-handedly responsible for obstructing the bankruptcy bill for over a decade when it always had majority support in the Senate.

The guy is no saint on Wall Street issues, but he's gonna get into heaven anyway just because of the bankruptcy bill.

Posted by Petey | March 21, 2008 3:24 PM

This kinda puts the lie to all the Wingnuts who claim that Obama and/or Hillary are Socialists. (Something about health care.)

Only the terminally deluded would think that Wall Street would prefer a Socialist candidate.

Posted by Clive A. | March 21, 2008 3:24 PM

The solution here would be for the GOP to pull its head out of its ass and have some members go where the Democratic Party fears to tread. "I believe in low taxes, but also in fair taxes -- hedge fund managers should pay the same rate as everyone else; these kind of inequities only push up tax rates on hard-working middle-class Americans." Is that so hard to say?

Let's not encourage them. Seriously. The utter lack of serious domestic policy thinking on the part of the GOP is one of the clearer signs of just how intellectually bankrupt the party has become. Voters want solutions to their problems, and Republicans aren't offering any. And this in turn is helping drive their steady retreat from power. I could seriously go for a couple of decades of Democratic party dictatorship right about now.

Posted by Jasper | March 21, 2008 3:27 PM

an ideal thing for a reformer like John McCain to step up and say, only that would probably have to happen in an alternate universe where McCain has some grasp of public policy.

Yeah, the problem is that McCain is just too stupid and ignorant to realize this. And his advisers/consultants mostly get paid by these financial donor types, either in this race or at least in future ones.

That's the real problem with having both parties basically owned by pretty much the same group of people, not much choice for the electorate.

It's a little like in evolutionary-biology. Unless some "mutant" with the advantageous characteristics appears, there's just not enough variation for the force of selection to operate on...

Posted by RKU | March 21, 2008 3:30 PM

Schumer is obviously a Senator from New York in many, many ways. But Schumer was single-handedly responsible for obstructing the bankruptcy bill for over a decade when it always had majority support in the Senate.

Yes, that's true. Props for Schumer on bankruptcy!

Posted by Matthew Yglesias | March 21, 2008 3:30 PM

Right. The solution here would be for the GOP to pull its head out of its ass and have some members go where the Democratic Party fears to tread. "I believe in low taxes, but also in fair taxes -- hedge fund managers should pay the same rate as everyone else; these kind of inequities only push up tax rates on hard-working middle-class Americans."

FWIW, Huckabee said these things. His solution was a VAT (i.e. 'Fair Tax'), which is debatable, but his problem is that he's still a 'ignorant, hillbilly, yahoo preacher.'

Posted by Kolohe | March 21, 2008 3:45 PM

The solution here would be for the GOP to pull its head out of its ass and have some members go where the Democratic Party fears to tread. "I believe in low taxes, but also in fair taxes -- hedge fund managers should pay the same rate as everyone else; these kind of inequities only push up tax rates on hard-working middle-class Americans." Is that so hard to say?

From your fingertips to God's ears.

Republicans can be so stupid sometimes. If they are so afraid of something that has a whiff of raising taxes, they ought to offset the tax raise on hedge fund managers with a tax reduction on someone else - make the whole thing revenue neutral.

Posted by Al | March 21, 2008 3:52 PM

P.S. I've also noticed that not a single one of all those hordes of financial-type commenters have yet replied to my rebuttal yesterday of their "hedge funds aren't swindles" arguments Making Billions from Pseudo-Randomness.

Maybe they'd just never heard of what a "thought experiment" was, and just been thoroughly researching the term, or perhaps they're too busy converting their financial assets into buried gold...

Posted by RKU | March 21, 2008 3:54 PM

Re: The know which way the wind is blowing and they know that either Hillary or Barack will be the next president. Why waste your money donating to John McCain? He's just the senator from Arizona.

More to the point Wall Street has also figured that the GOP has ceased to be the party of financial responsibility and that another GOP presidency spells more bad news for the economy and their own bottom lines. They need only compare the Clinton economy to the Bush economy too see the contrast. Sure Clinton taxed the rich a bit more but the wealthy still did better overall in those years. A rising tide may or may not lift all boats, but an ebbing one sure does sink them all together.

Posted by JonF | March 21, 2008 3:56 PM

This kinda puts the lie to all the Wingnuts who claim that Obama and/or Hillary are Socialists. (Something about health care.)

Only the terminally deluded would think that Wall Street would prefer a Socialist candidate.

Or they assume that McCain can't hurt them if he loses and will only minimally hurt them if he wins, so it's a much better use of their money to buy off the Democrats.

Posted by AT | March 21, 2008 8:17 PM

Speaking from personal experience, most of the people I've met in finance tend to be either Democrats or libertarians.

Posted by Kyle | March 21, 2008 11:18 PM

Matt, I hope you're at least half-joking here. Are you really implying there's no structural reason the GOP isn't going to suddenly turn on the robber barons?

You do realize that the most important money machine in the history of presidential politics recently collapsed on ignominy and disrepute around the helmet-head of Tom Delay, yes? And that the GOP is now reliant on the financing of people whose vast wealth has been made in ways that no one quite seems to be able to explain? And that many of these people are currently watching their companies collapse and cutting crazy lowball deals with the Fed in the hopes of avoiding prosecution?

The GOP can't throw the hedge fund managers under the bus. The hedge fund managers OWN the bus and know how to drive it to where the bodies are buried.

APS

Posted by Ape Man | March 21, 2008 11:21 PM

Speaking from personal experience, most of the people who claim to be libertarians are in fact Republicans.

APS

Posted by Ape Man | March 21, 2008 11:27 PM

So instead we'll be missing John Edwards.

Officially, his campaign is just suspended. It would be a real boon if Edwards would de-suspend it, and jump back in to the action.

Posted by low-tech cyclist | March 22, 2008 11:31 AM