Obama Assails Tax Lobbyists - and Hires One By RUSSELL BERMAN Staff Reporter of the Sun
WASHINGTON — Senator Obama of Illinois is blaming Washington lobbyists for stalling a proposed tax hike on private equity firms, but he can look no further than his own campaign team for one of the culprits.
The Democratic presidential candidate recently hired a top executive at the lobbying firm retained by the Blackstone Group to urge lawmakers against raising its taxes. The executive, Moses Mercado, is not yet on the campaign payroll as an adviser, but he took a leave from his job as a senior vice president at Ogilvy Government Relations late last month.
Federal records show that Mr. Mercado is registered to lobby on behalf of Blackstone regarding private equity legislation, although a spokesman for Ogilvy would not discuss his work on the issue.
His ties to the Obama campaign are drawing added scrutiny after the Illinois senator released a statement yesterday specifically assailing lobbyists for their role in the private equity tax debate on Capitol Hill. His missive followed the publication Tuesday of a front-page article in the Washington Post reporting that the Senate majority leader, Harry Reid, had assured industry executives that a proposed tax hike would not pass before the end of the year.
"If there was ever a doubt that Washington lobbyists don't actually represent real Americans, it's the fact that they stopped leaders of both parties from requiring elite investment firms to pay their fair share of taxes, even as middle-class families struggle to pay theirs," Mr. Obama said.
Along with the other leading Democratic candidates, Senator Clinton and John Edwards, Mr. Obama has supported a tax increase that would more than double the rate applied to "carried interest" profits earned by managers of hedge funds and private equity firms.
The industry has spent millions of dollars in lobbying fees over the past year to try to stop the legislation, including a $3.74 million payout by Blackstone to Ogilvy. Mr. Mercado, who advised the 2004 presidential campaign of Rep. Richard Gephardt, declined to comment yesterday through a company spokesman. The Washington Post reported his hiring by Mr. Obama on September 28.
The Obama campaign responded to questions about a possible conflict yesterday with a statement reiterating that the senator has "a consistent record of standing up to special interests by helping pass sweeping ethics and lobbying reforms as a state senator in Illinois and as a U.S. Senator in Washington. He will continue to lead when he is in the White House."
An aide to Mr. Obama, speaking on the condition of anonymity, told The New York Sun that Mr. Mercado's role in the campaign had yet to be determined and that he would not start his position until he had ceased his lobbying work. The campaign forbids work by registered lobbyists. "Mercado will not be exempted from that requirement," the aide said.
The campaign may also be hoping that the flap is seen as an example of Mr. Obama's independence, as any lobbying that Mr. Mercado has done on behalf of Blackstone has evidently not changed the senator's mind on the carried interest tax question. While Mr. Obama and Mr. Edwards jumped at the chance yesterday to criticize Washington inaction, Mr. Reid has been voicing doubts since the summer that a private equity bill would reach the Senate floor any time soon. The chamber has been bogged down by a host of other issues, and the House Ways and Means Committee has been urging senators to cool their heels on tax proposals until its chairman, Rep. Charles Rangel of Harlem, introduces a sweeping reform bill in the coming weeks.