Questions about Sen. Maria Cantwell

Joe Sudbay wrote an excellent piece this morning explaining why hedge fund managers are taxed at no more than 15%, unlike the rest of us. 15% — stunning.

Joe also wrote this, in a nice piece of original reporting:

What really doesn’t make sense is that several Democrats (albeit very wealthy Democrats) are willing to protect that loophole at the expense of unemployed Americans. I’m told by a source who is very close to the action that the Democrats protecting the tax break for Wall Street types are: Maria Cantwell, John Kerry and Mark Warner. [emphasis mine]

Great catch by Joe. The rest of his article is pretty damning. Kerry and Warner I understand, but Cantwell? She’s turned up a lot, and she’s a bit of a mystery. Here she is on Keith Olbermann’s show Thursday going to bat for stronger regulation of derivatives:

http://www.msnbc.msn.com/id/32545640

So Sen. Cantwell (D-WA) was willing to filibuster the FinReg bill (along with Russ Feingold) to make sure all derivatives were traded through a clearinghouse, but at the same time she wants to protect the stunning tax give-away to some of the highest income earners in the country.

I mean that literally. The top guy made $4 billion last year. Not the fund; the guy.

Via Barry Ritholtz, here’s the estimated 2009 earnings of the top ten hedge fund managers in the country (source: NYT and Absolute Return + Alpha.com):

    1. David Tepper, Appaloosa Management — $4 billion
    2. George Soros, Soros Fund Management — $3.3 billion
    3. James Simons, Renaissance Technologies — 2.5 billion
    4. John Paulson, Paulson & Company — $2.3 billion
    5. Steve Cohen, SAC Capital Advisors — $1.4 billion
    6. (tie): Carl Icahn, Icahn Capital — $1.3 billion
    6. (tie): Edward Lampert, ESL Investments — $1.3 billion
    8. (tie): Kenneth Griffin, Citadel Investment Group — $900 million
    8. (tie): John Arnold, Centaurus Advisors — $900 million
    10. Philip Falcone, Harbinger Capital Partners — $825 million

The average top hedge fund manager makes well over $100 million in a good year. That’s a lot of Cocoa Puffs for you and your kids.

By the way, John Paulson‘s the guy that got Goldman Sachs to create Abacus, the toxic investment designed to fail so Paulson could bet against it. The SEC sued Goldman for promoting Abacus as a good deal, when in fact they were handing a billion dollar gift to Mr. Paulson at their other customers’ expense. The word for what Goldman did is “fraud.” The word for what Paulson did is “best shark in the pool.”

Carl Icahn buys companies, picks them clean, and discards their bones.

So what about Maria Cantwell? She’s a tech-savvy former VP of RealNetworks (a scandal-ridden software firm) from Washington state. Prior to Real, she had one term in the House (1992) before being defeated in the 1994 “values” revolution. There she opposed the spy chip that Clinton (yes, Clinton) wanted to put into all telecom devices, but she supported NAFTA. Ouch.

After Real, she went into the Senate, where she supported McCain–Feingold and co-sponsored the Clean Money, Clean Elections Act. She’s green-friendly (she opposed off-shore drilling before that became a no-brainer), but she’s seriously wishy-washy on lots of other issues. For example, she:

  • Voted for Iraq in 2002 and CAFTA in 2005. (In her Iraq speech, she listed her many concerns, then voted Yes.)
  • Announced her opposition to Sam Alito, then voted for cloture.
  • Voted Yes on the 2006 war supplemental and No on the Kerry-Feingold withdrawal timetable.
  • Supported the Immigrant Reform Act of 2006.
  • Supported Darcy Burner in 2006 and raised $100k for her, but also strongly supported Mary Landrieu.

Thanks to her positions on “free trade” and Iraq, she drew primary challengers from the left in 2006. In another bit of scandal, she was accused of buying off one of her strongest potential opponents by putting him on her payroll. She won the primary by 90%, but she might be getting nervous about 2012.

She’s on the Senate Finance Committee and the Taxation Subcommittee.

A decidedly mixed bag. I think Sen. Cantwell bears watching very closely. She may be a friend on some issues — abortion, the public option, finance reform (maybe), off-shore drilling (definitely). But her support for “free trade” goes back to 1992, and she tried hard to have it both ways on both the war and Alito. I don’t trust her.

And now comes two financial reform issues at the same time. (Did I say she’s on the Finance Committee?) She claims to want strong derivatives regulation and transparency (essential to real reform in my view), and showed up on Countdown to prove it. But according to Joe’s reporting, she wants to hand billions in lost revenue back to the inhabitants of Mr. Robert’s Neighborhood, a position she’s not advertising at all.

So what is she trading for what? And whom will she betray? We’re about to discover which side of her green cred Ms. Cantwell is really on.

My bet? Derivatives reform will go down to regrettable defeat, and she’ll look noble on Countdown regretting it. Meanwhile, the New York hedge fund kings will keep their 15% tax rate and thank her all the way to the bank. Hers. After all, a girl’s gotta get re-elected, and 2012 is just around the corner.

Time to re-primary Maria Cantwell?

Yours in good banking,

GP


Gaius Publius is a professional writer living on the West Coast of the United States.

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