Republicans Are Candid About the True Price of the Tax Bill
Never mind economic projections, both lawmakers and donors have openly acknowledged that GOP financial support hinges on tax reform.
As the hung jury in Senator Menendez’s political corruption trial shows, proving a quid pro quo is notoriously difficult--especially as the Supreme Court continually makes proving corruption harder and harder as they did most recently in McDonnell.
Now Congress and the President are attempting to overhaul the tax code by slashing taxes for corporations and for those at the highest end of the income distribution. Despite rhetoric from the business community, the data shows corporations are doing just fine. Total after tax corporate profits in 2016 were up 2.2 percent over 2015, and only 3.3 percent down from the record-high year of 2014, according to the Commerce Dept. Of course, tax “reform” comes on the heels of the failure to repeal the Affordable Care Act, which also included a tax cut package for the rich.
Republican contributors were not amused by the Senate’s lack of accomplishment and withheld money for the 2018 campaign. Donations to Senate Republicans went from $7 million in March to only $2 million in July and August, “a poor showing for a majority party with a decided advantage on the midterm map,” wrote The New York Times.
Now it’s no surprise the wealthy put money into politics seeking tax benefits for their businesses, themselves and their heirs. But what is different this year is the surprising candor of both donors and recipients – officeholders allegedly representing all of their constituents, rich and poor alike – about the transactional nature of the game. The equation could not be simpler: donations in exchange for tax cuts.
Take the case of Doug Deason. Seven years ago his father, Darwin, sold his company to Xerox for $6.4 billion. Doug is Darwin’s only child, and a major GOP donor. In June, Doug Deason announced the “Dallas piggy bank” is closed until there is progress on health care and taxes. Deason said he had already refused to host fundraisers for two House Republicans. “Get Obamacare repealed and replaced, get tax reform passed,” Deason demanded of the GOP. “You control the Senate. You control the House. You have the presidency. There’s no reason you can’t get this done. Get it done and we’ll open it [fundraising] back up.”
Earlier, the Koch Brothers’ network was crystal clear about the fallout if Congress failed to pass tax reform: “If they don't make good on these promises [for tax reform] ... there are going to be consequences, and quite frankly there should be,” said Sean Lansing, chief operating officer of the Koch network's political arm, Americans For Prosperity.
Steven Law, president of the Senate Leadership Fund, a GOP Super Pac affiliated with Senate Majority Leader Mitch McConnell, was equally blunt. “Tax reform is a must-do for Republicans,” he told the New York Post. “[Donors] would be mortified if we didn’t live up to what we’ve committed to on tax reform.”
Members of Congress have been frank among themselves and the public. In a private meeting of GOP Senators in mid-September, Sen. Cory Gardner (Colo.), chair of the National Republican Senatorial Committee, reportedly said, “Donors are furious ...We haven’t kept our promise [on the Affordable Care Act and taxes].” Tax reform’s financial importance to the GOP was made obvious earlier this month when Sen. Lindsey Graham (R-S.C.) told an NBC News reporter “financial contributions will stop” if tax reform does not pass.
In the House, Rep. Chris Collins (R-N.Y.) related what he was hearing from his financial backers about tax reform: “My donors are basically saying, ‘Get it done or don’t ever call me again.”’ His colleague, Rep. Dave Brat (R-Va.), forecast a bleak result for the GOP in the midterm elections if tax reform does not pass, “We don't get taxes through, we're all going home. Pack the bags.”
Meanwhile, the White House isn’t even pretending that tax “reform” is supported by the voters, which probably makes sense according to the polls. White House National Economic Council Director Gary Cohn told CNBC, “The most excited group out there are big CEOs about our tax plan.” He added, “So, our biggest supporters are really the Business Roundtable,” referring to an organization of CEOs of the nation’s largest companies that has spent millions in ads backing the bill.
Voters, however, look at the GOP tax plan a little differently. According to a Quinnipiac University poll released last week, voters oppose tax “reform” by more than 2:1, with 52 percent disapproving and only 25 percent approving. Only a relatively slim majority of 60 percent of Republicans even support the package. Most striking is that even the rich are not convinced that cutting corporate taxes is a good idea. A majority of those with household incomes in the $100,000 to $250,000 range oppose cutting corporate taxes (54 percent), and only 50 percent of households with incomes above $250,000 support it. Overall, 71 percent of voters say the plan will either raise their taxes or not have much impact.
It’s clear that incumbents have calculated that it’s more important to first keep donors happy, and then try to win over voters – even if their taxes increased – with a wave of campaign spending later.
What’s astonishing about the past few months is that both donors and lawmakers are openly acknowledging a deal in which the tax bill passes in exchange for financial support. Quid pro quos are usually not so blatant. Perhaps our ability to be shocked by political corruption is slowly being eroded.
The views expressed are the author's own and not necessarily those of the Brennan Center for Justice.