Wall Street lobbyists and associated special interest groups will be the biggest obstacle to passage of the Buffett Rule bill when the Senate takes it up in one week, said the legislation’s prime sponsor, Rhode Island Sen. Sheldon Whitehouse.
“I think Wall Street is going to be in on this with all of its energy,” Whitehouse told me last week. “I think the Wall Street special interests are going to be the strongest [opposition] group on this.”
That’s because his bill, known more formally as the Paying A Fair Share Act, would hit investment bankers and hedge fund managers disproportionately hard. The bill would tax all income earned over $1 million, including capital gains and stock dividends, which is currently taxed at a lower rate. Hence why Warren Buffett pays a lower tax rate than his secretary – because more of his income is on capital gains and stock dividends.
“The bulk of the really big money like this is made in the financial sector,” Whitehouse said.
While Whitehouse expects Senate Republicans to initially align themselves with Wall Street, he said he thinks Democrats can pick up at least a few GOP supporters if the American people get behind the bill.
“The magic of democracy is that even when people are beholden to special interests,” he said, “when they start to hear from their constituents that they expect them to vote a certain way on something and they don’t understand why they are not, they can dump their special interests in a hurry and suddenly be voting the right way.”
There’s even recent historical precedent for such. He recalled when the Senate was slated to vote on Wall Street reform.
“We tried to go to the Wall Street reform bill in the Senate and Republicans filibustered it,” Whitehouse told me. Majority Leader “Harry [Reid] found a way to call it up again and we lost again. Then Harry figured out a way to call it up again and we lost again.
“It was either fourth or fifth time it was scheduled for a vote, and we were going to stay up all night to bring attention to this, and at that point the minority leader came in to our leader, Harry Reid, and said, ‘I give up. My guys are getting killed, they are getting phone calls at home. We’re throwing in the towel, you can go to this bill.’ And that was a really clear sign that you can have special interest obstruction that can stop progress on a bill not once, not twice but four times and still in end prevail.”
Even if that happens, however, the bill isn’t expected to pass in the GOP-controlled House. But Whitehouse said debating the bill’s merits now has value in that it will put the issue squarely on the nation’s radar for when the Bush tax cuts expire at the end of the year when Congress is expected to do a major overhaul of the tax code.
Sen. Jack Reed is a cosponsor of the bill, and Congressman David Cicilline recently called on Speaker John Boehner to pass the bill in the House. The legislation is estimated to shave $50 billion from the national deficit over the next ten years.