After failing to repeal Obamacare and a disastrous general election for their party on Tuesday, Republican members of Congress are feeling intense pressure from major donors to agree on and pass a tax cut bill for President Donald Trump to sign into law. Two GOP lawmakers made headlines in recent days for their unusually candid statements about the power that donors hold over them and their policy decisions.
Sen. Lindsey Graham of South Carolina reportedly said on Thursday that “the financial contributions will stop” if tax reform fails.
New York Rep. Chris Collins told reporters on Tuesday that his donors were “basically saying, ‘Get it done or don't ever call me again.’”
A review of these legislators’ campaign finance records shows which kinds of donors they appear to be scared of irritating. Both Graham and Collins are dependent on donors who can contribute large sums to their campaigns — those who also are likely to gain from the GOP tax cut plan, which heavily favors the wealthy and large corporations — and take in relatively few small contributions.
According to the Federal Elections Commission data analyzed by International Business Times, only 1.4 percent of the money this year from individual donors to Graham — a member of the Senate Budget Committee — came in the form of “small donations,” or contributions of $200 or less. The vast majority (70 percent) came from donations of $2,000 or more.
Among the top corporations that have donated to Graham’s campaigns from 2013 to the present are several that are sponsoring a “Tax Prom” event next week in hopes of the GOP passing a tax reform bill that will drastically cut their corporate tax rates from 35 percent down to 20 percent. PACs and individuals associated with companies such as Tax Prom sponsors Altria, Boeing, ExxonMobil, and Raytheon have lavished Graham with donations over the past five years. Of Graham’s donor industries, the securities and investment industry ($814,000 since 2013) is second only to lawyers and law firms, according to data compiled by the Center for Responsive Politics.
For Collins, 8.1 percent of the money from individual donations to Collins this year were small. Nearly 70 percent were donations of $2,000 or more. During the 2016 election cycle, small donations made up 9.2 percent of Collins’ total individual contributions.
The wealthy will also benefit from income tax cuts; the latest Tax Policy Center analysis of the regressive tax plan concluded that by 2027, those in the top 0.1 percent of Americans in terms of income will see an average tax cut of over $278,000, while those in the bottom 20 percent will get a tax cut of only $10.
The New York Times estimates that nearly half of middle-class families would end up paying more in taxes in 2026 as a result of the plan.
Outside Groups Lay On The Pressure
In a recent CBS interview, Trump’s top economic adviser and former Goldman Sachs CEO Gary Cohn made it clear that CEOs will benefit the most from the GOP tax cut plan.
“We see the whole trickle-down through the economy, and that's good for the economy,” Cohn said.
Campaign contributions aren’t the only way that wealthy donors pressure politicians. Independent groups, funded in large part by wealthy, conservative business executives and their companies, are telling politicians that they’re fed up and want tax cuts now. Americans for Prosperity — a “social welfare” nonprofit founded and largely funded by the billionaire industrialists and far-right political mega-donors Charles and David Koch — has spent millions on a tax cut campaign, including ads pressuring centrist Democrats to work with the GOP to pass the plan.
Other groups are turning up the heat as well. The Job Creators Network, which counts Americans for Prosperity and the Koch-backed Libre Initiative as partners, is spending millions of dollars on its campaign for tax cuts, which included a rally outside the Internal Revenue Service. A slew of other conservative political organizations such as FreedomWorks and Heritage Action are reportedly rallying behind the House GOP tax bill.
Current Campaign Finance System Reinforces Inequality
The Equal Protection Clause of the U.S. Constitution outlines a core principle of American democracy: that of “one person, one vote.” With weak campaign finance laws, lax enforcement and high — sometimes nonexistent — contribution limits, the current election system allows those with more money more of a say in elections, and thus, more influence once their preferred candidates take office.
Studies have shown that policy most reflects the preferences of the most wealthy members of society and that those preferences do not reflect the greater public opinion on issues including the economy. A Demos study found that less than half of donors making contributions of $1,000 or higher “supported the Dodd-Frank financial reform bill, which established a Consumer Financial Protection Bureau and helped restore stability to the financial system [after the 2008 financial crash], compared with 74 percent of non-donors.”
Other research finds that in the U.S. Senate, “there is a dearth of congruence [on policy] between constituents and senators — unless these constituents are those who write checks and attend fundraiser.”
“The wealthy disproportionately affect the policy agenda because money buy access and voice,” Sean McElwee, a researcher who studies campaign finance and inequality, told IBT.
“Politicians rarely engage in a direct quid-pro-quo, but their views on the ills in our society are deeply shaped by who has access to their ears, and more often than not, those individuals are affluent white men... For decades we had to learn about the influence of the donor class through careful research, but these days Republicans are openly touting that reality to reporters, which admittedly makes my job easier.”Business0