At a rally in Richmond, Virginia, Obama responded by saying, McCain “isn't fighting for Joe the Plumber; he's fighting for Joe the Hedge-Fund Manager.“
Obama, McCain Pit Plumbers vs Hedge-Fund Managers in Tax Debate By Kim Chipman and Hans Nichols Bloomberg.com October 23 2008
Perhaps Barack Obama’s script writers are just ignorant, or perhaps the candidate, who has certainly done enough fund-raising now to know better, felt confident enough to venture into effrontery (that is English for chutzpah). Hedge Fund managers overwhelmingly support the Democrats.
Based on calculations from data supplied by OpenSecrets.org, from Federal Election Commission data released on October 19th, Obama himself has collected 25.1% of the money given by Hedge Funds in the Presidential race, and the combined take by the three top Democratic Presidential aspirants is 58.4% of the total pool. John McCain comes fourth on the list with only 14.1% of the loot: and all the Republicans as a whole gathered only a 34.5% share.
The picture is the same when donations to all federal races are considered. Furthermore it has almost always been true, although total contributions have swollen tremendously recently.
This might be thought odd, because the Hedge Fund model, which involves splitting up ordinary income flows at the end of each year, cannot work in a regime of high marginal tax rates. The scope to defer income or bury profits as capital gains is limited. A return to the confiscatory top rates of a generation ago would destroy the industry.
Very likely this tells us that increases in income tax rates by an Obama regime will hurt mainly the middle class, with the top rate set at a fairly low level of income.
Why do these quintessential beneficiaries of capitalism support Obama? Partly, it is unquestionably a question of class disdain (very vividly shown in the disparagement of Sarah Palin). James Pinkerton has pointed out
the Democrats are emerging as the new party of the rich, the party of Wall Street, the party that champions financiers at the expense of producers. For years now, the most affluent precincts in the country—mostly on the two coasts—have been solidly Democratic.
As a personal level, as I drive around I notice the wealthier the area, the more Obama signs. McCain/Palin signs are frequent only in genuine middle-class districts.
But there is a more practical and effective explanation. The Hedge fund business is very heavily Jewish, particularly at the top. Not a few literally had grandparents who were dedicated Marxists or Socialists in the Bund tradition. Sudden accessions of great wealth do little to erase strong family traditions. All that happens is the already limited comprehension of how difficult it is for the average American to support a family decently is eroded further.
The political enthusiasms of this group have not always turned out well. We have to hope that this time is different.