Tax Loopholes And DC's Most Disgraceful Revolving Door

Yesterday, Justin Amash celebrated Ronald Reagan's birthday with a tweet quoting his hero: "I believe the very heart and soul of conservatism is libertarianism." Far be it from me to lionize the right right-wing icon, but on the occasion of his 104th birthday, I found a not completely unrelated celebratory quote (above) from 1985. It could have come from a Barack Obama speech as easily as from a Ronald Reagan speech-- or, even more likely-- from a Bernie Sanders speech.

Lawyers may be the most common job in DC in recent years, but that doesn't mean they're all hustling off to court. Most DC lawyers are negotiators, deal-makers and lobbyists. They range from genuine consiglieres to run-of-the-mill purveyors of corporate bribes to Members of Congress. It gets really messy when so many of these lobbyists-- many looking for more and "better" tax loopholes for their clients-- are former Members of Congress themselves.

This week, Vocativ.com, did a quick run-down of 6 men who started 2015 as Members of Congress and are, just a month later, already raking in gigantic cash payoffs as K Street lobbyists. There have been half-assed attempts to tip-toe around regulating this particularly unseemly and virulent form of political corruption but... half assed doesn't work in DC and cashing out as a lobbyist is a perfectly respectable career path among Beltway politicians.

While Washington’s contentious revolving door spins in perpetuum-- allowing a stream of money, influence and access to flow seamlessly between the private and public sectors-- the speed with which these public servants have offered themselves up to big business may raise a few eyebrows.

“It’s not like they were calling up their new employers on the morning of Jan. 5 and asking for a job,” says Russ Choma, a Center for Responsive Politics spokesman. “It would seem very likely that as these lawmakers were still voting on bills and debating policies, they were simultaneously negotiating with lobbying firms whose clients may have a direct interest in these issues.”

By law, ex-House members are required to wait one year before they can officially lobby lawmakers on the Hill, while former senators must wait twice as long. Many, however, are able to work around those requirements at firms by signing on as consultants, counsel and strategic advisors, as a recent analysis by CRP and the Sunlight Foundation shows. That study’s conclusion: “The many loopholes limiting who can lobby whom in Washington and whether that lobbying must be disclosed to the public make a hunk of Swiss cheese look like the Berlin Wall.”

These are the half dozen Members singled out for scrutiny, a bipartisan lot in terms of political parties but, notice, all sleazy careerist conservatives:

• Saxy Chambliss (R-GA)

Title: Partner
Firm: DLA Piper
2014 Lobbying Income: $8 million
Notable Clients: PGA Tour, Royal Bank of Scotland, Pfizer

• Lee Terry (R-NE)

Title: Senior Advisor
Firm: Kelley Drye Warren
2014 Lobbying Income: $3.5 million
Notable Clients: Exxon Mobil, Kroger, Alliance for American Manufacturing

• Jim Gerlach (R-PA)

Title: Senior Legislative Advisor
Firm: Venable LLP
2014 Lobbying Income: $8 million
Notable Clients: Lockheed Martin, Blackstone Group, Verizon

• Jim Matheson (Blue Dog-UT)

Title: Principal
Firm: Squire Patton Boggs
2014 Lobbying Income: $30 million
Notable Clients: Amazon, Goldman Sachs, General Electric

• Jim Moran (New Dem-VA)

Title: Senior Legislative Advisor
Firm: McDermott, Will & Emery
2014 Lobbying Income: $4.5 million
Notable Clients: Brewers Association, Trinity Health, Coalition for Fair and Rational Taxation

• Bill Owens (New Dem-NY)

Title: Senior Strategic Advisor
Firm: McKenna Long & Aldridge LLP
2014 Lobbying Income: $830,000
Notable Clients: University of Georgia, Canadian Association of Petroleum Producers

Not Bernie Sanders, not Barack Obama, not Ronald Reagan was able to do anything substantial about tax loopholes for the wealthy-- and no one ever will, not while the revolving door between Capitol Hill and K Street is spinning madly.

Only 7 Republican Extremists Filibustered The Latest American Jobs Bill-- And They Failed

Will the real Ron Johnson please stand up, please stand up

When the worst of the Republican crackpot extremists in the Senate tried to filibuster John Walsh's Bring Jobs Home Act (S.2569) even Ted Cruz looked at them like they were crazy. The bill "amends the Internal Revenue Code to: (1) grant business taxpayers a tax credit for up to 20% of insourcing expenses incurred for eliminating a business located outside the United States and relocating it within the United States, and (2) deny a tax deduction for outsourcing expenses incurred in relocating a U.S. business outside the United States. Requires an increase in the taxpayer's employment of full-time employees in the United States in order to claim the tax credit for insourcing expenses." In other words this bill-- which was cosponsored by two dozen Democrats, from progressives like Elizabeth Warren, Jeff Merkely, Brian Schatz and Tammy Baldwin to conservatives like Joe Manchin, Chris Coons, Claire McCaskill and Mark Pryor-- does just what the titles implies, incentivizes businesses to bring jobs back to America. Who wouldn't want that?

Glad you asked. Every single senator was there and cloture passed 93-7. The 7 filibustering extremists and obstructionists:

• Ron Johnson (R-WI)
• Rand Paul (R-KY)
• Mike Lee (R-UT)
• Tom Coburn (R-OK)
• Jim Inhofe (R-OK)
• Lindsay Graham (R-SC)
• Pat Roberts (R-KS)

These 7 don't like closing tax loopholes for their big donors and none of them care what the voters think of that. The senator most likely to suffer the consequences is Ron Johnson, who is up for reelection in 2016 and who Wisconsin voters have come to regret sending to Washington in the first place. If Russ Feingold challenges him, it won't even be close. This particular loophole Johnson was filibustering for allows for deductions of expenses incurred when companies wind down domestic operations and send jobs to foreign countries. The bill-- if it gets through the Republican House-- uses the savings to establish a tax credit worth 20% of the overall cost to a company of bringing jobs back to the United States. Elizabeth Warren was one of the senators celebrating the bipartisan victory. "Big corporations and their armies of lobbyists have rigged the tax code to reward businesses when they ship jobs overseas," she said. "This isn't right. I'm glad that after years of blocking this proposal, Republicans have finally agreed to allow us to debate this legislation. We should pass this bill and send it to the House as soon as possible-- to reward companies that return jobs to the United States and to give our workers and businesses a fair shot to succeed."

Not unrelated, last week Treasury Secretary Jack Lew called for a "new sense of economic patriotism. from companies looking to avoid paying taxes by moving their addresses offshore. Yesterday President Obama lashed out at "corporate deserters" who are taking advantage of another loophole the Republicans refuse to close. Right now corporate criminals like Walgreen and dug makers Mylan and AbbVie are in the middle of these kinds of shenanigans and American consumers have started a low key, grassroots boycott of Walgreen, the pharmacy chain. 50 companies have already taken advantage of the loophole.

Yesterday David Gelles, writing in the NY Times reported how Obama is trying to work out a deal with reluctant Republicans to stop these inversions. The goal of course is to "retroactively strip the tax advantages away from many of the year’s biggest mergers and acquisitions."

There is growing consensus on Capitol Hill that the rush of inversions should be stopped. Lawmakers from both parties worry that the more companies move their headquarters to countries like Ireland and the Netherlands, the more the American tax base is being compromised.

And given the unlikelihood of comprehensive tax reform getting passed anytime soon, both Democrats and Republicans seem to agree that a short-term fix is needed.

But already, there is partisan disagreement about what anti-inversion legislation should look like.

The Obama administration has proposed effectively banning inversions, and making any legislation retroactive until May of this year. Such a move would affect several big deals, including AbbVie‘s $54 billion acquisition of Shire, and Medtronic‘s $43 billion takeover of Covidien.

…But at a Senate Finance Committee hearing this week, Senator Orrin Hatch, Republican of Utah, signaled he would not support backdating a new law.