A 'Fat Cat' Strikes Back

Article excerpt

Byline: Jonathan Alter

President Obama and the business community have been at odds for months. But in July the chairman and cofounder of the Blackstone Group, one of the world's largest private-equity firms, amped up the rhetoric. Stephen Schwarzman--the leading John McCain supporter in a firm that, in 2008, gave more money to Obama--was addressing board members of a nonprofit organization when he let loose. "It's a war," Schwarzman said of the struggle with the administration over increasing taxes on private-equity firms. "It's like when Hitler invaded Poland in 1939."

Attendees at the board meeting (who provided details on condition that they and the organization not be identified) were shocked. "War? Hitler? Poland? A little over the top for a proposal to make hedge-fund managers pay their fair share in taxes," one attendee says about the comments. Neither Blackstone nor the White House would discuss Schwarzman's statement, which came in the wake of strong, but less stinging, criticism this summer of the administration from the U.S. Chamber of Commerce and the Business Roundtable.

Schwarzman's original beef with Obama grew out of a 2008 campaign promise that "carried interest"--the compensation structure of private-equity-fund managers--would be taxed as ordinary income (35 percent) instead of capital gains (15 percent). …