Sen. Blanche Lincoln (D-AR) has been garnering a lot of attention recently due to her position as chairwoman of the Senate Agriculture Committee, which gave her significant influence over the portion of Sen. Chris Dodd’s (D-CT) financial reform legislation dealing with derivatives. To the surprise of many (myself included), Lincoln’s legislation went further than Dodd’s and even includes a provision that would force commercial banks to spin off their derivatives trading desks.

But derivatives are not the only thing on Lincoln’s plate, and she wants everyone to know that one of her other priorities — slashing taxes for the heirs of multimillionaires — is still on her mind:

Senate Agriculture Chairwoman Blanche Lincoln is apparently not letting her primary opponent or her focus on derivatives regulations hamper efforts to permanently cut the estate tax. An aide said Monday Lincoln continues to have discussions with members and staff and that she “is very hopeful a deal will come together in the near future”…[Lincoln's spokeswoman] said she was as committed as ever to an estate tax fix. “[Lincoln] believes that an agreement can and should be reached by Memorial Day and that achieving a deal should be a priority,” she said.

Lincoln and her Republican counterpart, Sen. Jon Kyl (R-AZ), said that they are “virtually ready” to unveil legislation formalizing their intention to cut taxes for those at the very top of the income ladder.

Due to a Bush-era accounting gimmick, there is no estate tax this year, and the tax is set to come back at the Clinton-era level of 55 percent with a $1 million exemption next year. The Obama administration and many Democrats in Congress favor permanently setting the estate tax at the 2009 level, which is 45 percent with a $3.5 million exemption. But Lincoln and Kyl want to cut the rate to 35 percent and raise the exemption to $5 million, providing a $250 billion tax cut to the richest 0.2 percent of Americans.

The 2009 level exempts 99.8 percent of estates, and since the exemption is so high, the average effective rate those hit by the tax will pay is just 14 percent. With the government trying to grapple with long-term deficits that are unsustainable, it’s the height of irresponsibility to slash taxes for the very richest segment of the population.

The U.S. Chamber of Commerce has released an ad supporting Lincoln in her primary campaign against Arkansas Lieutenant Governor Bill Halter, citing her support for tax cuts for “small businesses and family farms,” which is the misleading right-wing claim used to justify cutting the estate tax. But make no mistake — cutting the estate tax as Lincoln and Kyl suggest is nothing more than a giveaway to the richest families that the country can’t afford.

Last night, the entire Republican Senate caucus — joined by Sen. Ben Nelson (D-NE) — succeeded in blocking Sen. Chris Dodd’s (D-CT) financial regulatory reform bill from coming to the Senate floor, setting up another vote this afternoon and potentially a third on Wednesday.

For months now, the GOP has been falsely saying that Dodd’s bill would institutionalize “too big to fail,” when in fact the bill lays out a resolution authority that would allow the government to unwind large, failing financial firm with money fronted by the financial industry itself. Sen. Bob Corker (R-TN) tried to dispel this false GOP notion last week, but evidently to no avail, as Sen. Kay Bailey Hutchison (R-TX) was on CNBC last night reviving the same meme.

CNBC’s Larry Kudlow asked her “if Citigroup is on the road to failure, is it your view, is it the GOP view that it should fail and be liquidated?” Of course, Hutchison said yes, making it seem as if Dodd’s bill wouldn’t do the job:

Yes, I think you have to set a bar, because if you leave wiggle room, then you are saying, ‘hey, if you’re really too big and it really would make a difference, then you can have this cushion.’ And if we do that, then too big to fail will always be with us. So, yes, we are. Now there is a way that we can certainly give flexibility to the governing agencies for making sure that there’s liquidity, that you can service your customers. But there should be the ability for any bank or financial institution to fail, any one of them, or we will never get rid of it.

Watch it:

What Hutchison laid out sounds pretty good. But if she actually believes in what she said, she should have voted for the bill last night, as it would allow for the orderly dissolution of failed financial firms, with money provided by the banks themselves. It’s not clear from Hutchison’s statement that she has any substantive difference with the Dodd bill that she felt the need to vote against.

Of course, there’s a very good political reason for the GOP to take its current line towards the Dodd bill, voting against it for reasons that don’t make sense. As the Wall Street Journal reported today, the GOP’s stand against financial reform is reaping benefits in terms of campaign contributions from Wall Street. In fact, “for the first time since 2004, the biggest Wall Street firms are now giving most of their campaign donations to Republicans.” Many financial institutions, including Goldman Sachs, wrote $15,000 checks to the Republican party last month.

According to one GOP staff member quoted in the Washington Post, Republicans are working on a financial reform bill that they may or may not release. “It may come to the point where Republicans decide, ‘Let’s just put out specifically what we’re for.’ That decision hasn’t been made yet,” the staffer said.

Last year, when financial reform regulation first started coming together, big Wall Street banks enlisted the big business community in its fight against regulation of derivatives, the financial instruments that played a large part in the failures of Lehman Brothers and American International Group. At the time, the Wall Street banks were thrilled that their “lonely and uphill lobbying battle” would have some names that might garner more sympathy.

Today, the New York Times reported that Mars, the maker of Snickers, is concerned about derivatives legislation hurting its ability to hedge against fluctuations in the price of sugar and chocolate. Republicans — who last night, along with Sen. Ben Nelson (D-NE), blocked Sen. Chris Dodd’s (D-CT) financial reform bill from coming to the Senate floor — are using these firms concerns to criticize the entire financial reform effort. For instance, Sen. Mitch McConnell (R-KY) falsely said today that Mars is concerned about the literal cost of sugar changing under the Democrats’ bill, and that Democrats are blaming Snickers and Harley Davidson for the financial crisis:

I mean, does anyone really believe that the people who make Harley Davidsons and Snickers bars are responsible for the financial crisis? Does anyone think that? Then why would we want to punish them in our effort to hold Wall Street accountable.

Watch it:

Of course, it’s natural that companies that might be affected by financial reform to express concerns about the legislation. But the GOP is using these concerns to trash a bill that will likely help the very companies cited.

Mars uses derivatives to hedge against changes in the prices of its ingredients, so if the price goes up unexpectedly, the company won’t take a huge hit. So it’s actually in Mars’ interest for the derivatives market to be more transparent and with clear rules of the road, as that will drive down prices and prevent Wall Street banks from keeping these markets in the dark, with prices that aren’t discernible.

The reform legislation would mandate that derivatives be traded on exchanges, like stocks, and go through clearinghouses, which would ensure that the parties in a trade actually have collateral to back it up. As Commodity Futures Trading Commission Chairman Gary Gensler put it, “the more transparent a marketplace, the more liquid it is, the more competitive it is and the lower the costs for companies that use derivatives to hedge risk.” “The best way to bring transparency is through regulated trading facilities and exchanges…A greater number of market makers brings better pricing for businesses and lower costs for consumers,” he added. Plus, hedging of the sort Mars would engage in is specifically exempted from using the exchange under the proposed legislation.

Last year, there were $78 in outstanding derivatives exposure for every $1 that was legitimately used by companies like Mars to hedge risk. Five large banks — JP Morgan Chase, Goldman Sachs, Bank of America, Citigroup, and Wells Fargo — account for 97 percent of the activity in the derivatives market. Making this activity transparent will let investors like Mars know what is going on in the market and make informed decisions, driving down costs. For McConnell to pretend that the bill will unduly regulate the candy-making function of the company is disingenuous.