Money Talks

The move to raise taxes on the managers of private equity firms, who are are raking in millions and paying at the lowest tax rate, has failed in the Senate, where all good legislation goes to die. Here is why this tax hike failed:

It has generated business for more than 20 lobbying firms, including the capital's two largest, Patton Boggs and Akin Gump Strauss Hauer & Feld. Former senator John Breaux (D-La.) is on the case for Patton Boggs. Akin Gump's team includes Kenneth B. Mehlman, a former chairman of the Republican National Committee. Also on retainer to private-equity firms are former senator Don Nickles (R-Okla.) and many former congressional aides.

A single private-equity firm, Blackstone Group, paid Ogilvy Government Relations $3.74 million this year, which is one of the largest recorded fees to any lobbying firm during a six-month period. Ogilvy said half the payment covered unpaid bills from last year.

Private-equity firms have already distributed at least $5.5 million in lobbying fees, quadruple what they spent in all of 2006, according to Bloomberg News. Private-equity and hedge fund executives have been increasing their campaign donations to members of Congress, according to lobbyists for the industry.