Blackstone CEO Stephen Schwarzman, a private equity pioneer, is fantastically wealthy, politically generous and very well-connected in Washington. He’s also the newest Capitol Hill villain.

It wasn’t supposed to work out like this. Just three years ago, Schwarzman joked he’d fancy a high-level appointment in the second Bush administration. Before that, he raised at least $100,000 as a Bush Pioneer, helping out an old buddy from Yale.

Story Continued Below

Today, he just wants Washington to leave him — and his bankbook — alone.

In June, Schwarzman completed Blackstone’s $4.75 billion initial public offering, the largest so far this year. A week before the much-anticipated IPO, Sen. Chuck Grassley (R-Iowa) introduced legislation hiking the tax rate for publicly traded private equity partnerships from 15 percent to 35 percent. The proposal was immediately nicknamed the “Blackstone bill,” a backhanded compliment to Schwarzman.

Over the next few months, Congress launched a private equity pile-on. Reps. Sander M. Levin (D-Mich.) and Charles B. Rangel (D-N.Y.) announced a bill increasing the tax rate paid by investment mangers on a portion of their income known as carried interest.

Last week, members of the Senate Finance Committee asked five private equity firms to detail their investment stakes in nursing homes and to provide copies of contracts about their operations. And Sen. John F. Kerry (D-Mass.) and Rep. Rahm Emanuel (D-Ill.) are soon expected to announce a bill that would prevent hedge fund managers from using offshore shelters to defer taxes.  

When they talk about private equity, Democrats in Congress describe greedy, risk-taking managers, benefiting from secret tax code loopholes. And when they need an example of unadulterated private equity greed, the self-made Schwarzman — with his estimated $7.3 billion net worth — is their go-to guy.

Blackstone declined to comment for this story.

His problems all started with one very infamous party. Schwarzman is known for his lavish lifestyle, complete with the clichés of wealth: the Sikorsky helicopter, the Monets and the $40 million, 35-room, three-floor Park Avenue apartment.

When he turned 60, Schwarzman outdid even himself. Last Valentine’s Day, Schwarzman reportedly spent $3 million on a lavish birthday bash. Schwarzman and his wife, Christine Hearst (yes, as in the Hearsts), recreated their expansive apartment in the cavernous Park Avenue Armory.

Rod Stewart and Patti LaBelle performed for guests, including real estate mogul Donald Trump, media executive Barry Diller, former Secretary of State Colin Powell and New York Mayor Michael Bloomberg.

The famous fete catapulted Schwarzman into Wall Street and K Street infamy.

Seven months later, Congress was still talking about the party. At a September Senate Finance Committee hearing, Sen. Gordon Smith (R-Ore.) suggested the whole tax issue was sparked by the “extravagant lifestyle of one man.”

Republican staffers and investment fund colleagues quietly agree, comparing Schwarzman’s party with a lavish party thrown by Tyco CEO Leo Dennis Kozlowski, now serving time for corporate fraud.

“Big egos have impacted our industry adversely,” Warren Hellman, chairman and co-founder of San Francisco-based private equity firm Hellman & Friedman, recently told Fortune. “Buying fancy homes in fancy places doesn’t help us get along with governments or other investors.”

The story isn’t quite true. While the party lives in infamy, congressional curiosity wasn’t caused entirely by it. Sources close to the company said Blackstone repeatedly met with Senate staffers before the IPO to assuage lawmakers’ fears about Chinese investment in the company. They say labor unions first suggested the tax hike to Congress.

Levin claims he never heard of Blackstone before he started working on his bill this past spring. The idea, he said, came from a Harvard Law School friend and retired tax lawyer, Stephen Wolfberg, a personal friend of the lawmaker.

Whether it was the party blow-out that led to testy relations in Washington, the media-loving Schwarzman has lowered his public profile since early summer. He didn’t come to ring the opening bell at NYSE the first day of Blackstone trading, and he sat out the company’s first earnings call as a publicly traded company.

He has, however, popped up on the Hill. Schwarzman, along with Henry Kravis of competitor Kohlberg Kravis Roberts, lobbied Washington to kill the bill a few months ago.

And he is still, most definitely, on the Republican radar screen. Since 1990, Schwarzman and his wife have given more than $283,000 to political candidates, according to the Center for Responsive Politics. More than 81 percent of his donations went to Republican parties and candidates.