How hedge-fund-friendly is the White House?
Ryan Chittum makes a good point about the hedge funds kvetching about the Obama administration on page C1 of the WSJ: their “pique” (to use the word in the WSJ headline) might well be a function of the fact that their income taxes are about to rise dramatically:
Obama’s plan would force hedge funds and private equity and the like to pay income tax like the rest of us instead of much-lower capital-gains rates they pay now on their earnings. Sure, some hedge funds have honorably acknowledged they ought to pay the same rates as everyone else, but nobody likes to effectively have their tax rate doubled overnight—especially when their earnings are already down.
It’s also worth noting that the piece says that 70% of hedge-fund campaign donations went to Democrats in the last election cycle — and then goes on to quote at length Paul Singer, of Elliott Associates. What it doesn’t mention is that Singer was the single biggest supporter and fundraiser that George W Bush had in New York; that he gave even more money to Rudy Giuliani, partly by lending him his private jet; and that in general he is about as loyal and committed a Republican as they come.
Personally, I think it’s a positively good thing that hedge funds are feeling piqued by the White House. Maybe they were hoping that Larry Summers’s presence (not to mention that of Rahm Emanuel) would make the White House a bit more hedge-fund friendly. On the other hand, maybe this is being a bit more hedge-fund friendly. After all, if the worst that the White House does is make good on its promise to keep the Detroit car industry from imploding completely, you can make a pretty good case that hedge funds have gotten off pretty lightly.