Obama Can End the “Carried Interest” Loophole Without Congress

Wow, you really do learn something new every day.

I really, really hate the “carried interest” loophole that lets the ordinary income of hedge fund and private equity guys get taxed at the lower rate for capital gains.  Right now the top rate for ordinary income is 39%, and only 20% for capital gains, so we’re talking real money.  The top 25 hedge fund managers made more than $24 billion in 2013.

I always thought that Congress gaveth that loophole and Congress would have to taketh it away.

But nooooo!  As David Lebedoff writes at Slate*, the IRS issued a ruling in 1993, before hedge funds existed, that was intended to apply to real estate investments.   Congress never voted on it.  When hedge funds arrived on the scene, the IRS applied this ruling to them.  But President Obama could — right now, today, before his bedtime in Europe! — tell the IRS to stop doing that.

Looking for a real IRS scandal?  This is it.

* “Why Doesn’t Obama End the Hedge Fund Tax Break?”

You Can Say That Again

“We are not experts on climate change.”

Charles and David Koch, declining Tom Steyer’s invitation for a debate on the issue.

Walker’s Flood of Money Water-Boarded Barrett

From “How Walker Won,” William Finnegan, The New Yorker:

“But the ocean of campaign money that drowned Wisconsin was definitely something new.  More than sixty-three million dollars poured in….  According to the Center for Public Integrity, Walker outspent Barrett by seven and a half to one.  Barrett raised four million dollars in campaign donations, roughly a million of that from out of state.  Walker, meanwhile, raised more than thirty million, with twenty million of that from out of state.  Four of Walker’s top seven donors were out-of-state billionaires.  Many of these overfed cats are becoming familiar figures in our democracy:  Sheldon Adelson, the anti-union casino magnate; the brothers Koch, who bow to no man in their anti-unionism.

“The state-level equivalent of SuperPACs slopped another thirty million into the mix, three-quarters of that to Walker, nearly all of it from out of state.  The Walker campaign had so much cash, it seemed drunk.  After saturating the airwaves and wallpapering America’s dairyland with ad buys, it started running commercials on Madison’s favorite left-wing radio station, apparently just to show that it could.”  Emphasis added.

Now the GOP is emboldened, thinking it can do for Mitt what it did for Walker.  Wake up, Chicago, they’re coming for you.

The Danger and Damage of Extreme Income Inequality

From “Plutocracy, Paralysis, Perplexity,” Paul Krugman, NYT:

“If something like the financial crisis of 2008 had occurred in, say, 1971 — the year Richard Nixon declared that ‘I am now a Keynsian in economic policy’ — Washington would probably have responded fairly effectively.  There would have been a broad bipartisan consensus in favor of strong action, and there would also have been wide agreement about what kind of action was needed.

“But that was then.  Today, Washington is marked by a combination of bitter partisanship and intellectual confusion — and both are, I would argue, largely the result of extreme income equality.

“For the past century, political polarization has closely tracked income inequality, and there’s every reason to believe that the relationship is causal.  Specifically, money buys power, and the increasing wealth of a tiny minority has effectively bought the allegiance of one of our two major political parties, in the process destroying any prospect for cooperation.

“Disputes in economics used to be bounded by a shared understanding of the evidence, creating a broad range of agreement about economic policy. … Now, however, the Republican Party is dominated by doctrines formerly on the political fringe.

“And why is the GOP so devoted to these doctrines regardless of facts and evidence?  It surely has a lot to do with the fact that billionaires have always loved the doctrines in question, which offer a rationale for policies that serve their interests. … And now the same people effectively own a whole political party.

“Many pundits assert that the U. S. economy has big structural problems that will prevent any quick recovery.  All the evidence, however, points to a simple lack of demand, which could and should be cured very quickly through a combination of fiscal and monetary stimulus.

“No, the real structural problem is in our political system, which has been warped and paralyzed by the power of a small, wealthy minority.  And the key to economic recovery lies in finding a way to get past that minority’s malign influence.”  Emphasis added.

I think it’s obvious that if Mitt wins, this problem won’t get better.