Tuesday, November 28, 2017

The quid pro quo moment has arrived.

New York Republican Congressman Chris Collins summed it all up the other day, when he cited the pressure he and his GOP colleagues are facing to pass tax cut. "My donors are basically saying, 'Get it done or don't ever call me again.'" 

GOP donors have long dreamed for such a moment; a unique alignment of venality and shamelessness that is putting all of their most deeply held dreams within their grasp. Elimination of the estate tax. Slashing the corporate tax rate. Creating a tax rate on pass-through income that will have the effect of extending the hitherto reviled carried interest loophole to a new universe of beneficiaries. And they understand that the moment may be fleeting, that it may not survive the new year, much less the Alabama special election just two weeks away. This is not a moment--to paraphrase Charles Colson--to let go for a better grip.

Three years and what feels like eons ago, in his majority opinion in McCutcheon v. FEC--in which the Supreme Court removed limits on aggregate individual contributions to federal campaigns--Chief Justice John Roberts was dismissive of the corrupting influence of political contributions. Should a recipient of donations act in his or her donors interests, Roberts suggested that was a reasonable expression of "the general gratitude a candidate may feel toward those who support him." Any regulation of political contributions, Roberts went on, "must instead target what we have called 'quid pro quo' corruption or its appearance." 

Almost a half-century earlier, in a moment of honesty that eluded the Chief Justice, Louisiana Senator Russell Long observed that “the distinction between a campaign contribution and a bribe is almost a hairline's difference." Now, after decades of watching the dance of contributions and favors in the nation's capital--and this is not a partisan observation, as it was Bill Clinton who delivered financial services deregulation as his expression of gratitude for the contributions and support of the titans of Wall Street--a moment of quid pro quo corruption or its appearance as the Chief Justice suggested would appear to be upon us. Hundreds of billions, if not trillions of dollars of tax benefits are about to be bestowed on mega-donors who have showered hundreds of millions of dollars of political contributions on the GOP in anticipation of just this moment.

To give the GOP the benefit of the doubt, much of what is in the tax bill represents long-standing Republican priorities, including lowering the corporate tax rate, migration to a territorial tax system, simplification of the tax code, and the elimination of the estate tax. And perhaps if the legislators and donors alike--Collins being case in point on the subject--kept their mouths shut, the case for gratitude vs. bribery might be more credible. But they haven't, and their reliance on abject lies about the merits of the legislation only makes their case worse. It is Donald Trump, after all--along with this tone-deaf factotum, Steve Mnuchin--who continues to sell the bill as one that will deliver HUGE benefits for the middle class and little or nothing for the rich, while House Speaker Paul Ryan continues to claim that the legislation will more than pay for its $1.5 to $2.2 trillion cost, despite the lack of any evidence beyond the prattle of a few, long-debunked charlatans and cranks of the economics world.

To the naked eye, the looming tax legislation has elevated the art of gratitudinous conduct--what even John Roberts should recognize as a quid pro quo relationship--to new heights. The desperation emanating from members of Congress reflects what those donors have seized upon: that this is a moment when all their dreams can come true. The quid has been delivered; this is the moment to collect on the pro quo.

And there sits Chris Collins, a man reelected by 30 and 40 point margins in his last two races, shuddering as he is being shaken down by his donors. “Don’t tax you, don’t tax me, let’s tax the guy behind the tree,” is the aphorism of tax policy famously attributed to Senator Long, and is appropriate for Congressman Collins to consider. After all, as a member from a suburban district in a high tax state, his constituents are the people behind the tree when it comes to this legislation. With the elimination of the state and local tax deduction, only the wealthiest of his constituents--those in the highest tax brackets and with large estates--loom to be material beneficiaries of the proposed legislation.

Proponents of the tax cut legislation--particularly those from low-tax red states--love to point to the elimination of the state and local tax deduction as an issue of simplification and fairness, yet its blatant political calculus should be evident to all. The tax bill is projected to cost the U.S. Treasury trillions of dollars in lost revenue. As they searched for how to pay for it, the first place they looked--suppressing their conservative principles--was borrowing, as they redefined "balanced budget" to include $1.5 trillion in new deficit funding over the next ten years. The second place they looked was to the pockets of taxpayers in high tax, blue states.

Far from increasing fairness in the tax system, the elimination of that deduction will simply exacerbate the current situation, wherein residents of high tax states contribute far more to the federal government than their low tax state counterparts. Residents of New York--like those in Chris Collins' district--pay on average $11,594 in federal taxes, an amount exceeded only by their well-taxed compatriots in New Jersey, Connecticut, Massachusetts, Minnesota and Delaware. Eliminating the state and local tax deduction is estimated to generate $1 trillion to offset tax cuts--an amount that will be taken directly from the pockets of taxpayers in those states. Yet it will cost the GOP little as they round up votes for the tax cuts, as none of those states have a Republican senator.

In aggregate, New York taxpayers paid $55 billion more in income taxes to the federal government in 2016 than they would have if they paid the national average contribution of $8,800 per capita. New Yorkers contribute more--as they have for the past century--because the state's workforce is more economically productive. The workforce is more productive because New Yorkers are, on average, better educated. And New Yorkers are better educated because New York State spends more on K-12 and higher education--requiring higher taxes--than the average state. It is all connected.

By his own words, Chris Collins is not motivated by his general gratitude toward those who have supported him, as John Roberts suggested in McCutcheon v. FEC; instead, Collins has described a world of quid pro quo. Taxpayers in New York's 27th Congressional District should take a hard look at the tax bill and realize that they are getting the short end of the stick. Then, they should ask why their member of Congress--to say nothing of their President--is out there fighting for those donors, rather than fighting for them.

Read it at the HuffPost.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out his political cartooning at www.jayduret.com. Follow him on Twitter @jayduret or Instagram at @joefaces.

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