The carried interest issue returned to Capitol Hill today, as the Senate Finance Committee held its "Carried Interest, Part II" hearing. The views expressed by members of the committee were, for the most part, restatements of positions they took at the first hearing, on July 11. But there was one telling exchange. Sen. Charles Schumer (D-NY) trotted out his sectoral equity ('poison pill,' to some) position, glancing at committee chair Chuck Grassley (R-IA) and adding that we all need to weigh the impact on oil and gas, and real estate, and even ethanol R&D private equity funds. Interjected Mr. Grassley: "Try me." Massachusetts Senator John Kerry (D-Venture Capital) sounded oddly belligerent and confused by turns -- an examination of the hearing transcript, when it becomes available, will reveal his prosecutorial interrogative approach... and peremptory replies by the expert panelists. Meanwhile, the Center on Budget and Policy Priorities released today "An Analysis Of The "Carried Interest Controversy," as comprehensive and succinct a paper on the carried interest issue in current legislative context as I've seen anywhere. In its conclusion, the paper cites the Financial Times: For another day are bigger questions of whether it ever makes sense to tax capital gains at a lower rate than ordinary income (the policy that gave rise to this problem in the first place), and in the American case, whether the tax system as a whole should be made more progressive. The case for reform on both points is strong, in fact. But the carried interest anomaly can be dealt with promptly, and should be.