The Senate has just passed one of the most unpopular bills in recent history, one that raises taxes on American families in order to pay for a permanent tax cut for corporations. In fact, according to political scientist Chris Warshaw, support for the current tax bill “is lower than any major legislation passed in (the) last three decades.”
The question is: Why would Congress pass a bill that is so unpopular?
Two possibilities come to mind. One is that some members seem genuinely to believe, in spite of the evidence, that tax breaks for corporate America will “trickle down” to ordinary Americans. Corporate CEOs have contradicted this claim, stating that any tax savings will go directly to their shareholders, not to raising salaries or adding jobs.
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The other possibility is that members of Congress know that they will be rewarded for catering to corporate interests — in the form of campaign contributions, lucrative lobbying jobs and support from outside political groups. And they may lose those perks if they don’t give corporate interests what they want.
According to data in my recent report published at the Center for American Progress, members of Congress on the two committees that write tax bills have received more than $1.5 billion in contributions from corporate PACs and corporate employees over the course of their careers. Now they are hearing from these donors that the money will stop flowing if they don’t get tax breaks.
Rep. Chris Collins, R-New York, told a reporter, “My donors are basically saying, ‘Get it done or don’t ever call me again.’” Sen. Lindsey Graham, R-South Carolina, when asked what would happen if the tax bill didn’t pass, said that “the financial contributions will stop.”
Members of Congress depend on this money to run their campaigns and to move up the party ranks. And direct contributions are not the only lever that corporate interests can pull. Thousands of corporate lobbyists try to influence members of Congress and help them raise funds. Members have very limited staff, and depend on corporate lobbyists to provide them with the legislative materials they need to get things done.
And about half of the members and staff that leave Congress ultimately work as lobbyists and influence brokers for these same interests. For example, Rep. Pat Tiberi, R-Ohio, helped draft the tax legislation while negotiating to leave Congress for a job with a business group that lobbies for lower tax rates.
Fortunately, there are common-sense ways to improve political incentives so that members aren’t so indebted to corporate interests. For example, as CAP recently proposed, members of Congress should not be allowed to accept contributions from the corporations and special interests that their committees oversee.
Furthermore, lobbyists should not be allowed to fundraise for members of Congress or hire them only a year after they leave office. Last, Congress should allocate more resources to legislating on behalf of the American people — including by increasing congressional staff, and matching small donor political contributions.
Until Congress starts to tackle this problem, we can expect to keep seeing more of the same. The president and congressional leaders haven’t been responding to public dissatisfaction about the bill. Instead, in defiance of the facts, they have claimed that the bill benefits the middle class and takes on special interests.
President Trump said that the tax plan would “protect low-income and middle-income households … not the wealthy and well-connected.” He also promised that the plan would “get rid of the loopholes and complexity that primarily benefits the wealthiest Americans and special interests.” House Republicans said the plan would fight “special interest subsidies and crony capitalism.”
But the bill does just the opposite, lining the already-full pockets of the rich, and raising taxes on 87 million families. The bill was so popular among corporations and special interests that a website set up to identify opponents of the bill — under “Who’s Jeopardizing Tax Reform?” — currently lists only six organizations. In an interview with CNBC, the president’s top economic adviser, Gary Cohn, said that “the most excited group out there are big CEOs.”
Meanwhile, the American people aren’t buying what Congress and the president are selling. Two-thirds of the public believe that corporations pay too little in taxes, while only 9 percent say they pay too much. Only a little over a third of the public believes that the tax plan will increase jobs and economic growth. Even small business owners oppose the tax bill, by a margin of 51 percent, with only 34 percent in favor.
People hate this tax bill. Small businesses hate this tax bill. But corporate donors love it. And it is a good bet that that is why it’s headed to the president’s desk.