Hang On To Your Wallets

Here’s some news that should cause all taxpaying Americans to feel a cold, hard lump in the pit of their stomachs:  Congress has decided to focus on “tax reform.”

ap17306662049220Congress’ decision to pivot to tax reform has produced all kinds of news stories, most of which have headlines that can only stoke the angst.  What does the proposed tax reform bill means for the value of your home?  What kind of hidden tax brackets might be found deep in the dense language of the proposed bill?  How will small business owners be affected?  What company’s stock price took a dive because the bill proposes repealing a crucial tax break?  All of these stories, and more, can be found simply by running a google search on “republican tax bill.”

The stories are indirectly reflective of the key problem with the federal tax code, because the many different areas of potential concern they address shows just how wide and deep is the reach and impact of our federal tax structure.  Virtually every company, industry, form of property, job, trade, college, technology, and concept is affected by some form of federal tax or federal tax break.  At the founding of the republic, Alexander Hamilton may have devised a simple approach to raising revenue to fund the federal government, but those days are long gone.  Now, the tax code is a complicated morass far beyond the ken of the average citizen, with special rates and breaks and benefits and exclusions and surcharges that only experts and lobbyists understand.

So, given that reality, why should the average citizen be concerned that Congress has decided it’s time to mess around with the tax code?  Because our political class, Republicans and Democrats alike, have shown they are primarily interested in raising lots of money so they can be reelected . . . which means the risk that some special provision written specifically to help a large donor will be inserted in the dead of night simply can’t be ignored.  And with the Dealmaker-In-Chief in the White House, who’s going to really dive into the details of whatever gets passed, trying to make sure that the average citizen doesn’t get gored while the special interests get their perks and sweetheart deals?

Maybe it all will work out, and the tax code will be made more fair and equitable and easy to understand, and we’ll be able to file our tax returns on postcards like the photo op pictures are indicating.  Maybe — but I’ll believe it when I see it.  Until then, I’m hanging on to my wallet.

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“That’s What They Offered”

This morning I asked a very close friend — a lifelong, dyed in the wool Democratic voter — if Hillary Clinton had said anything interesting in last night’s New Hampshire town hall event on CNN.  She grimaced and said that when Anderson Cooper had asked whether Clinton regretted being paid $675,000 to give speeches to Goldman Sachs during the time period between her service as Secretary of State and her decision to run for President, Clinton said no — and when Cooper followed up by asking whether she had to be paid that much money, Clinton said:  “Well, I don’t know . . . that’s what they offered.”

Ooof.

160203221242-nh-town-hall-bernie-clinton-split-large-169Look, I recognize that this is one of those issues that we’re not going to agree on.  Hillary Clinton supporters will say that this is just another effort by Hillary Haters to tar Clinton on an issue when everyone who has served in an important public office makes a lot of money giving speeches, and anyway Clinton couldn’t possibly be corrupted by making $675,000 for giving three speeches.  If you’re a Hillary supporter, you believe Clinton when she says precisely that, and can’t understand others who don’t take her word for it.  (I should note. though, that Clinton’s later statement that the financial folks aren’t giving her a lot of money since she officially declared for President has been vigorously challenged by some journalists.)

But consider, please, what a terrible message Clinton’s rationalization sends.  Basically, it’s saying that everyone who engages in “public service” cashes in and, in her case, gets paid more for making three speeches than many people make over a 20-year career and far more than most Americans have saved for their retirements.  You can say that it doesn’t change your position on the issues, or give the people who paid that $675,000 special access, or make you any more likely to agree with what they have to say if you ultimately make it to the Oval Office, but such statements are very difficult for the ordinary voter to accept.  To most of us, $675,000 is a hell of a lot of money.

And how can you possibly complain about the corrupting nature of campaign finance laws, where issues organizations that technically aren’t affiliated with your campaign can contribute toward commercials that provide support for your candidacy or attack your opponents, when you’ve taken $675,000 that is paid to you, personally, for giving three speeches?  Ask most people what is worse — a direct payment of hundreds of thousands of dollars to the ultimate candidate, or indirect support through advertisements — and I’d bet that the majority say the direct approach is far more troubling.

But more damning still is the phrasing that Hillary Clinton used in her answer:  “that’s what they offered.”  It makes you wonder whether Goldman Sachs could have paid any amount that would have given Clinton pause.  $1 million?  $2 million?  $5 million?  It sounds like Hillary Clinton is allowing Goldman Sachs to define her ethical boundaries — which, unfortunately, seems to suggest that she doesn’t have much in the way of ethical boundaries in the first place.

As I said, I’m sure that Hillary Clinton’s supporters will pooh-pooh her answer and the amount she was paid for giving the speeches as another trumped-up tempest in a teapot.  They will accuse critics of being hypocrites.  But I think the Wall Street speech issue, and Clinton’s response to it, neatly capsulizes a much more significant, disturbing issue about the crushing presence of money in politics.  It’s a big reason why Bernie Sanders is vastly outperforming inside-the-Beltway expectations.

Raffoolishness

Our election campaigns are so awash in cash and our politicians are so trained to engage in incessant, mindless fundraising that seemingly nothing is off-limits, no matter how silly or classless.

Witness President Obama’s recent videotaped message offering his supporters a chance to participate in a raffle for a chance to have dinner with the President and Vice President Biden.  The message, which was filmed somewhere in the White House and emailed to millions of people, was accompanied by a form offering supporters the chance to check boxes making donations of between $5 and $700 for a chance to win the dinner.

There are arguments about whether or not the raffle constitutes “fundraising,” and if so whether the appeal was improper because it was filmed in the White House.  I don’t know enough about campaign finance law to opine on such issues, but I do feel strongly that the appeal cheapens both the Office of the Presidency and the White House.  Our President’s time should not be raffled off like it is a weekend at a Hilton Head condo or a hot air balloon ride.  And although other Presidents apparently have used the White House, to varying degrees, for fundraising purposes, can’t we all agree that one of the most historic and venerated buildings in the land should not be used like a cheap backdrop in the eternal quest for cash?

The amount of money raised in political campaign is obscene.  Candidates from both parties don’t seem to have trouble raising money by giving speeches, attending political dinners, and appearing at standard-issue fundraisers.  President Obama’s 2012 campaign fundraising goal is somewhere above $750 million, and some are saying he will raise $1 billion.  Given his proven ability to raise huge amounts of money the old-fashioned way, why must we stoop to tawdry raffles and similar fundraising gimmicks that make our President look foolish?

John Edwards, Cover-Ups, And Campaign Finance Laws

I think John Edwards is a despicable character.  Vain and insubstantial, a weak political reed in the wind, he cheated on his wife who was battling cancer, had an affair and impregnated a woman, and then tried to cover it up while he pursued his presidential campaign.  When the cover-up failed, as cover-ups always do, it produced an ugly scandal that torpedoed Edwards’ political ambitions.

Yesterday Edwards was indicted for his actions.  The indictment charges him with conspiring to violate campaign finance laws and making false statements to the Federal Election Commission in accepting more than $900,000 in contributions from large donors that were used, at least in part, in connection with the cover-up.  The government argues that the contributions really were political because they were intended to protect the campaign’s ability to project the image of Edwards as family man.  The head of the Justice Department’s criminal division said:  “As this indictment shows, we will not permit candidates for high office to abuse their special ability to access the coffers of their political supporters to circumvent our election laws.”

The government’s theory pushes the envelope of how campaign finance laws are construed.  The issue is whether politicians can get around the laws by accepting donations for claimed non-political purposes that nevertheless could have political implications — and a related issue is where you draw the line if you accept that interpretation.  With campaigns extending for years and becoming all-consuming endeavors, couldn’t just about any claimed non-political contribution be argued to have a political dimension?  If a high-roller friend hosts a candidate at a vacation home, are they making a political contribution because the period of relaxation will allow the candidate to recharge their batteries and be more effective down the home stretch?  Edwards’ lawyers no doubt will focus on whether the government’s charges should be thrown out as beyond the scope of federal election laws.

If the charges survive the legal challenge and the case goes to trial, Edwards’ defense will not be attractive.  His statement yesterday indicates that he will argue that yes, he was a cheater, and yes, he accepted money in an unsavory cover-up — but the cover-up was designed to deceive only his stricken wife, and not to deceive federal election regulators.  How will a jury react to that theme?

Hey, Big Spender!

We all hear a lot about the enormous sums spent by outside groups on the 2010 elections.  Most of the complaints aired in the media have been about the U.S. Chamber of Commerce and the conservative issue advocacy groups that are supporting Republican candidates.  I therefore was surprised to learn that the biggest spender in this election, other than the two political parties themselves, is the American Federation of State, County, and Municipal Employees (“AFSCME”), a union that represents governmental employees.

It turns out that three of the five biggest spenders this election cycle are unions.  According to this article in the Wall Street Journal, AFSCME is the biggest spender by a considerable margin, having shelled out $87.5 million to support Democratic candidates.  That is $12.5 million more than the second place finisher, the U.S. Chamber of Commerce, which has spent $75 million.  American Crossroads and Crossroads GOP, two groups that have attracted a lot of media attention because of their affiliation with Karl Rove and Ed Gillespie, have collectively spent $65 million.  Rounding out the top five are the Service Employees International Union, which has spent $44 million, and the National Education Association, a teachers union that has spent $40 million.

When we hear people complaining about the glut of money in politics, we need to remember that the money flows in from both sides.  If Republicans are supposedly in the pockets of business interests because of the political activities of the U.S. Chamber of Commerce, where does that leave Democrats who have received enormous support from government employees and teachers who directly benefited from the federal “stimulus” legislation and the special “stimulus” spending specifically designed to help teachers keep their jobs?

If you are convinced, as I am, about the need to cut government spending as part of the effort to bring the budget into balance — which inevitably will mean cutting the federal spending that helps to support the jobs and benefits of government employees and teachers — you need to be concerned about how much money is being funneled into political campaigns by government employee and teachers unions.  Only the hopelessly naive would believe that Democratic politicians who get elected thanks to large-scale union spending are going to take a hard look at government spending cuts that will eliminate union jobs.

Rich And Running (Cont.)

I’ve written recently about wealthy individuals running for office.  The voters had their say on two of the fabulously rich candidates yesterday.  In New York City, Mayor Michael Bloomberg spent more than $100 million of his fortune and eked out an unexpectedly narrow win over his Democratic challenger.  In New Jersey, where Governor Jon Corzine spent a measly $30 million on his re-election bid, voters turned thumbs down and he lost to the Republican candidate.

So, personal riches don’t guarantee success; indeed, there is every indication that some New York City voters rejected Bloomberg precisely because he spent such ridiculous sums of money on his campaign.  And, in a time of economic hardship when we are looking for every bit of “stimulus spending” we can find, shelling out $130 million on two election campaigns ain’t chicken feed.  Bloomberg’s and Corzine’s millions were injected into the struggling economy and no doubt helped “save” the jobs of printers, robo-call recorders, TV commercial writers, caterers, and other workers who performed campaign-related services.  Maybe the way out of the current recession is to force big-money Americans — say, Bill Gates, Oprah Winfrey, and Warren Buffett, for starters — to run for office and spend their own fortunes as part of the process.