On a conference call today to discuss the unemployment insurance and COBRA extensions expected to clear an initial cloture vote in the Senate today, Sen. Charles Schumer (D-NY) conceded that the Congress may pass a change to how hedge fund manager income is taxed to pay for a larger extension of UI, COBRA and other measures later this month.

At issue is the larger “tax extender” bill which includes a year-long extension of COBRA and unemployment benefits, along with Medicaid assistance for the states and the renewal of several expiring tax breaks. Both the House and Seante have passed their own versions of them, and Schumer vowed that Congress would pass a reconciled bill with those elements quite soon. “It’ll be done this work period along with another bill on small business lending,” Schumer said.

Sen. Debbie Stabenow (D-MI), who was also on the call, highlighted the issue with coming to an agreement on the extenders bill. “The House used different pay-fors than us,” she said. In fact, the two major revenue enhancers that the Senate stuck in their entenders bill, fixing the loophole on the “black liquor” alternative fuel tax credit and changing the “economic substance doctrine” to extract more from offshore tax shelters, ended up in the reconciliation sidecar to the Affordable Care Act. And House Blue Dogs want the extender bill, which in the Senate cost $154 billion dollars, paid for at least in part.

Which leads us to one of the most egregious loopholes currently in the tax code, commonly known as the “carried interest” loophole. Right now, hedge fund managers can legally list the income they make through managing trades as interest and capital gains instead of income, meaning that it gets taxed at a 15% rate rather than the 35% top marginal tax rate. This leaves tens of billions of dollars untaxed on some of the richest people in America. And given the common location of hedge fund managers in and around Wall Street, one of the biggest defenders of this loophole has been New York’s Senator, Chuck Schumer.

Asked about whether the carried interest issue could see its way into the extenders bill, Schumer expressed a willingness to see that through. “I voted for it before, and it’s one of the things on the table,” he said. That obviously doesn’t mean that the loophole will absolutely get closed, but certainly it’s notable that Schumer didn’t claim it not possible or say that it wasn’t part of the discussion.

Ideally, I wouldn’t offset unemployment and COBRA extensions at all; they have a stimulative effect and count as emergency spending. But if you’re going to raise revenue, the indefensible hedge fund loophole is a great place to start. And if it’s made permanent, it could fund additional programs aimed at reducing inequality, as well as reduce the propensity for risk by discouraging runaway incomes using the loophole. The National Women’s Law Center estimates that $23 billion dollars could be saved over the next decade by closing this loophole.

We shall see if Congress will move forward and eliminate this huge disparity for super-rich hedge fund managers.