In a series of exclusive interviews with members of both houses of Congress from both sides of the aisle, and members of their staffs, the Hedge Fund Law Report has determined that the appetite among Democratic legislators for taxing carried interest as ordinary income remains high, while opposition among Republicans to increasing taxation of carried interest remains equally vigorous.  In this climate of negative returns, the sizes of both management and performance fees are under pressure (primarily from hedge fund investors as opposed to regulators), and many managers will not earn a performance fee until they exceed their “high water mark” – the highest level their funds previously reached – which in many cases appears to be a far-away prospect.  Accordingly, for practical purposes, the level of taxation of hedge fund manager carried interest may be moot for the time being, since for the foreseeable future there will not be any carried interest to tax.  Nonetheless, in this dour economic environment, legislators may look to placate their Main Street constituents with actions targeting “executive compensation,” very broadly understood.  So, even though increasing taxation of carried interest may have only a minor near-term economic benefit, it may have a symbolic resonance.  That is, the setting may be ripe for finalizing a legislative item at precisely the time when it will yield the least revenue.  We bring you insight directly from Capitol Hill, including quotes from Rep. Charles Rangel (via a spokesman), Rep. Elijah Cummings, Senator Orrin Hatch and the office of Senator Mike Crapo.