Senate Republican leaders hoped to wrap up work on their tax plan on Thursday night, but it quickly became apparent that they hadn’t yet locked up the votes. As members left Capitol Hill that night, they faced a challenge: the GOP bill was too expensive, and making it cheaper wouldn’t be easy.
And so, they didn’t try. Instead of making the legislation more affordable, Republicans decided to make it more expensive, throwing in all kinds of 11th-hour treats benefiting the wealthy. Slate highlighted one especially notable last-minute addition to the GOP plan.
Senate Republicans are getting ready to pass their tax bill any minute now – but not before tacking on one last gift for their donors.
University of San Diego law professor Victor Fleischer spotted the early Christmas present in a leaked list of the amendments Republicans are planning to include in the bill. It comes courtesy of Texas Senator John Cornyn. In essence, it lets the partners of giant private equity firms like Blackstone and Apollo Global Management, as well as a number of energy companies, take advantage of the bill’s big tax cut for pass-through businesses, which aren’t subject to the corporate rate.
A New York Times report quoted USC professor Edward Kleinbard, a former chief of staff for the congressional Joint Committee on Taxation, saying, “The Senate went out of its way to confirm that passive investors in these publicly traded investment vehicles get the benefit of the pass-through discount tax rate. This is a working definition of a tax boondoggle.”
But that’s not the punchline. This is the punchline.
Despite the continued media focus on Flynn, Trump was in a buoyant mood as he crossed Manhattan on Saturday, bragging about his election win in Rust Belt states and the improving economy. He did not mention Russia or Flynn, attendees of the various fundraisers said.
At several stops, he touted the Senate’s passage early Saturday morning of the GOP tax bill and predicted that Democrats who voted against it would lose their next elections.
Trump’s stops included the palatial Upper East Side apartment of Steve Schwarzman, the chairman of a global private-equity firm.
Of course, Steve Schwarzman isn’t just the chairman of any ol’ global private-equity firm; he’s the chairman of the Blackstone Group – which stands to benefit greatly from the generous treat added on Friday night to the Republican tax plan.
For weeks, there’s been quite a bit of speculation about why in the world congressional Republicans would scramble to pass a woefully unpopular tax plan. There’s probably no one answer that explains every GOP policymaker’s motivation, but it’s hard to deny the evidence that suggests demands from wealthy Republican donors made an enormous difference.
Indeed, many have been quite candid on this point.
We got one hint toward an answer last month from Rep. Chris Collins (R-N.Y.). Asked how donors felt about the tax-reform proposal, Collins replied, “My donors are basically saying, ‘Get it done or don’t ever call me again.’”
Collins wasn’t the first to hint at a powerful force driving the legislative process. In June, the Associated Press reported that, in the absence of Obamacare repeal and tax reform, big donors had shut down fundraisers. That failed repeal effort, Sen. Cory Gardner (R-Colo.) reportedly told his peers, had made donors “furious.” The same attitude applies to the tax bill, as Mother Jones wrote this week.
“I don’t know why donors should give to the [National Republican Senatorial Committee] until tax reform is passed,” a major Republican donor told the magazine.
The result is an almost cartoonish dynamic that unfolded on Saturday: a Republican who’s benefited from private-equity contributions quietly included a provision in the Republican tax plan to benefit private-equity powerhouses. The Republican president bragged about the bill soon after at a fundraiser hosted by the CEO of one of the nation’s biggest private-equity firms.
Anyone watching current events who still thinks Trump is a “populist,” ready to fight for working families, is profoundly confused.