This FT article from Eoin Callan on private equity and hedge fund managers’ efforts to fight off taxes on deferred interests has a weird undertone to it. First of all, this:
House Democrats are determined to move ahead with new taxes, so the industry has concentrated its efforts on blocking threatened legislation in the Senate, courting influential figures such as Harry Reid, majority leader. Mr Reid was toasted by industry lobbyists recently at a party held at the luxurious Bellagio Hotel in Las Vegas. The event was billed as a moneyraiser for his special fund to get more Democrats elected – with generous donations suggested – and ended with a serenade by singer Barry Manilow. After the event, Mr Reid’s office indicated that the Senate leader continued to think it unlikely a bill to increase tax on carried interest would be passed before the end of this session. Lobbyists were anxious not to appear too gleeful.
So far, so run of the mill Democrats-showing-that-they-too-can-ramp-up-the-sleaze-to-11. But this is where it gets strange:
But while winning new friends, the industry is also gaining a reputation for making enemies that might haunt them as the political fight drags on. “These guys are not playing it well. They have hired too many people too quickly,” a senior Democratic tax staffer said. An industry lobbyist said: “A lot of good people are being hired, but some bozos too. They are trying to throw too much weight around but it is going to backfire.
“It is getting nasty: below the belt stuff; delving into people’s personal lives; crossing lines,” added the lobbyist, who was critical of colleagues but reluctant to repeat publicly allegations being made privately about lawmakers and congressional staff. People close to industry lobby groups such as the Private Equity Council and the Managed Funds Association are adamant they are not to blame for any sharp elbows thrown on Capitol Hill. Privately they tend to blame each other for black eyes to the industry’s reputation.
I may be wrong here, but it seems to me that Callan (who is an excellent and careful journalist, as best as I can tell from his previous articles) is suggesting that hedge fund lobbyists are blackmailing politicians and their aides over their personal lives, or doing the next best thing to it. Is there another plausible explanation that I’m missing here?