Tax Reform for Donors - The American Interest

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Money in Politics

Tax Reform for Donors Bruce E. Cain

The tax bill shows that donor influence on Congress remains a problem, but reform efforts to reduce this corruption are further polarizing the country.

Published on: December 20, 2017

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QET

Political polarization may be bad, but trying to prevent people from behaving in a polarized manner is far worse. There is no agency that itself can stand outside of politics and control it apolitically.
Unelected Leader

If it were revenue neutral, ie paid for with federal expenditure reduction and closing of loopholes in tax law, etc., then it would be fantastic. However, we have plenty of experience with federal deficit-financed tax cuts. Not good for the poor or middle class, but fantastic for rich US citizens and foreign companies.

Trump talks a lot about the money that it will attract, and he’s not completely wrong about that of course. The problem, then, is that it will increase demand for US dollars and dollar denominated assets, and that pushes the value of the dollar even higher.

Without proper regulation and protectionist measures in place, an expensive currency means your exports are more expensive (less competitive), while imports become cheaper. In other words, manufacturing gets clobbered.
FriendlyGoat

Donors with more money to give, more ways to buy influence of either elections or public opinion, more ways to hide their identities, and fewer laws or courts to curb them, will not somehow have lesser impact in the future. Yes, that dim reality is polarizing.
Psalms13626

Sigh…. TAI is slowly but surely becoming yet another Leftwing website which no longer sees beyond its liberal bias. More and more I come for the comments. Should I continue to subscribe? After all, reading the headline pretty much told you everything you needed to know about this particular piece. Bruce E. Cain is another sub-species of White Writing Class that is dogmatically Leftwing and reflexively part of the #Resistance.
TAI used to have interesting point of view. WRM would write about failures of blue model and what comes next. Now it’s just another Leftwing clerisy member after another with all the usual Leftwing hangups. I will give this another month or two. Will probably pull the plug afterwards.
hecate9

Since this article is about partisanship:
23 Republicans hold seats in districts won by HRC. Many more hold seats in districts that were purple but are now deeply blue by generic ballot polling, due to the unpopularity of this president and his party. Not all of them are vulnerable in 2018 of course, but the tide may be turning.
Trump and the GOP have thrown down the gauntlet to the professional and middle classes in blue and purple states. If there was any doubt before as to what they really stood for, they have entirely doubled down on being the rural, rust belt and southern party on cultural issues, while their economic policy seems limited to using the middle class in blue and purple states as piggy banks there for the looting, shoveling the proceeds to Koch, Adelson, Mercer et al. OK- good to know. Old style “Liberal/Conservative” labels do not really describe this behavior. Is a tax cut mainly for plutocrats, funded by running up the deficit, really the best “Conservative” idea they had? Be careful what you wish for, McConnell, Ryan, and Trump. Middle class Americans increasingly know what you’re about. There are now many fewer reasons to vote for a Republican in Ranch Santa Fe, Downers Grove, Lindenhurst or Loudon County. Even the “solid South” is wavering. Can the white nationalist/anti-abortion/gun rights/anti-immigrant/anti-science culture war cover for this economic confidence trick? They will certainly hope that it can, but 2018 will be interesting.
- Angel Martin
  
  Repubs are no longer the “Stupid Party”. They now have a leader as tough, smart and devious as F Roosevelt or Johnson ever was. Reward your friends, punish your enemies.
  
  This tax bill was carefully targeted to benefit Repub core groups and Trump leaners. The proof, every Repub Senator voted for it, even the moderates.
  
  The tax bill is “paid” for out of the hides of the deep blue coastal affluent and high income urban gentry Liberals. Finally ! Conservatives are no longer paralyzed by BS like “picking winners” or “revenue neutrality”. Reward your own ! Penalize your opponents.
  
  Liberals have been doing this stuff for decades. But the “Washington Generals”, finally clued in, got a new coach and have a one game winning streak…
  
  MAGA !
- Boritz
  
  If you like your tax plan you can keep your tax plan. If you like your deductions you can keep your deductions.
ronetc

“[S]ince universities seemingly undermine traditional values . . . .” Seemingly? That gives away the game right there.
Jonathan Dembo

What sheer ignorance! Every American is part of at least one special interest; the vast majority of Americans are members of multiple special interests. Most Americans are affiliated with special interests that have contradictory goals. It is the clash between special interests that make our politics free. Every special interest I know or have ever heard of faces at least one countervailing special interest and often faces many countervailing interests. Indeed, it is probably true that you cannot have a system of free, Democratic self government without allowing people to peacefully assemble as a special interest to try to convince their political leaders to promote policies they desire, including by making campaign contributions. Indeed, there is probably no theory of free, democratic self government that says that constituents should not be able to make campaign contributions or that, once elected, politicians should reject advice from their constituents regardless of whether they contributed financially. This is an essential feature of the American political system, not an aberration, and it dates from the beginning. The founding fathers knew and expected that special interests would try to sway elected officials; they knew that elected officials would threaten to punish special interests by passing laws to hurt those interests; but they trusted that the plethora of special interests would end up neutralizing one another and preventing any specific special interest from gaining control of the government. As I see it, the fact that special interests oppose and balance one another and prevent politicians from enacting their most favored laws is a good thing and not a bad thing.
- hecate9
  
  Of course Americans belong to special interest groups and of course special interests have always played a role in politics in America- and every other democracy and many non-democratic societies. The problem is obviously one of degree.
  Lets consider two hypothetical societies. In one, call it Eulandia, special interests fight for their opposing goals, pushing segments of the society apart, but the society also has common goals that everyone supports, a communitas, a set of shared values that bring people and interest groups together. In spite of opposing interests, these parties also come together around common issues such as public safety, infrastructure, security, health, fairness, (for example). The society, although rent by factional and special interest battles, is also united by what Durkheim called the collective consciousness. When needed, the special interests and parties come together and find a common ground to face existential threats to the core values.
  In the other society, Dyslandia, the special interests have become entrenched, and many citizens define themselves by their identification with that interests. These interests have been consolidated into political parties which used to be able to cooperate but which have now become tribes, or identities, and tribal and identity adherence has come to take the place of the society’s collective consciousness. Zealotry of every stripe is admired and emulated, and few want to cooperate or compromise.
  The US used to resemble Eulandia, but it has now become much more like Dyslandia. It is out of balance. The strife of opposing special interests and parties has brought the political system to a state of paralysis, and existential threats are denied or wished away in the name of tribe and party.
  This was all well described in Francis Fukuyama’s Political Order and Political Decay, Part IV. (2014) and by Samuel Huntington before him. Educate yourself before you start calling others ignorant.
  - Anthony
    
    Your hypothetical brings to mind something I acquired from Law and Liberty: if there is no we (Eulandia), there can be no cooperative engagement in the business of government – perhaps only a struggle to grab its contested benefits (Dyslandia).
  - Jonathan Dembo
    
    I understand your theory, and you state it clearly and elegantly, but I disagree with your analysis. It is not the special interests that have caused the paralysis in our societies. They have always existed in relative balance, no more or less that in the 1790s. It is the “communitas” that has failed. It has not come up with solutions that bring together a majority on anything worth doing. Social groups in our society and their individual members refuse to see their own liability in our shared community failure. Each wants to blame some other individual, party, or ethnic, racial, religious, business, regional, sexual, or ideological group for refusing to compromise. The others have refused to surrender to their own superior beliefs. The special interests keep balancing each other, but there is too little overlap between them. We are living in a world of ideological intensity unlike any since the Civil War, which erupted because of a similar failure of the community to develop solutions to the conflict of the day. Regarding your insulting aside about Mr. Fukuyama implying that unless I understand and approve of Mr. Fukuyama, I should keep silent, I would like to remind you that he was the man who said that the end of the Cold War has ushered in the “End of History”. He was wrong. History didn’t end then and it is obviously moving on as it always had. A person may be wrong on one point but right on others, but anyone who holds up Mr. Fukuyama as a paradigm should keep that thought in mind before they spout off.
    - hecate9
      
      That is certainly true- and sorry if I seemed to be spouting off. But I think this is partly a semantic problem. You say the special interests have always been there and the push-pull of interests, courts and parties has “…always existed in relative balance.” You go on to say that the “communitas” has failed- there is no moral “gravity” to counteract the centripetal forces off special interests.
      I think it would be very difficult for you to prove your thesis- that “relative balance” between special interests has “always existed”, particularly since it can be easily demonstrated NOT to have existed in many nations at certain periods over the course of history. The “static balance” model seems a priori an unlikely one for political and social systems long term. But I put forward Fukuyama for two reasons- first, he’s written part of a book on this subject and is one of the very few scholars in the general field of political decay. It’s likely he has thought far longer and more deeply about the subject than you or I. I realize that expertise is currently unfashionable and, of course, always fallible. Second, he’s an editor and founder of TAI. Since you’re reading TAI, why not give him a try? Can he be wrong? Of course.
      Even if we assume, for the sake of the argument, that the special interests are no more prevalent or powerful now than they have ever been, you seem to admit that, in the face of weak communitas, the relative balance between the special interests pushing us apart and the collective consciousness uniting us could and in fact has become dysfunctional. If the balance between communitas and special interests is weighted in favor of interests-or even if they’re equal- the end result (political decay) is the same as if party interests had greatly increased.
      A couple lived together for a long time. They had different interests and fought and argued a lot but also loved each other greatly, and usually compromised and made up. Then one day they realized the love might be gone- and the fighting was increasingly hurtful.
      In Dyslandia the love may be gone. “The best lack all conviction, while the worst are full of passionate intensity.”
      - Jonathan Dembo
        
        You are simply incorrect. First of all I am not concerned with every nation, or every period of history. I am only speaking about the US and our system of government. Our Founding Fathers, in the Federalist Papers, explicitly stated that they designed our form of government to create and preserve a constant balance of interests. They balanced the Executive, Legislative, and Judicial branches, to the the President would represent a national electorate, the Senate would represent state electorates (originally state legislatures) and the House would represent local democracy. They balanced the federal government against the states. Then they created the Electoral College to limit the ability of the people to elect presidents who did not represent a broad range of states. They did this all to give maximum opportunity to interest groups at every level to maximize their influence. They did this all to limit and prevent any one group from becoming too strong. They then magnified all these mechanisms through the Bill of Rights which prevented the federal government from doing anything to limit the rights of individuals, especially from minorites and unpopular groups, to have free speech, free press, religion, trial by jury, the right bear arms, to freely assemble and petition the government, etc. All you have to do is look at how hard it is for any government to get anything done to realize how successful they were. Indeed, he US would have collapsed long ago if it wasn’t so hard for Anybody to accomplish anything. Secondly, I think that our system is now operating on autopilot and there are fewer and fewer people who share commonly held beliefs. We’re mostly busily undermining our shared beliefs as fast as possible, running to extremist political beliefs, identifying with hyphenated ethnic and racial and sexual affinities. We’re running like a railroad train that keeps rolling along with the engineer dead at the controls. Or maybe like a punch-drunk fighter who has not yet fallen unconscious. The various interests are all fighting each other as they have done since the 1790s, but they no longer accept they are all equally legitimate Americans. If we are like an elderly couple that has lived together for decades, it is because we are too tired and it would cause too much trouble and disturbance in our lives to separate. I do not have a problem with Fukuyama. I have read him and profited by it. I don’t claim any kind of superiority over him at all. I did, however, recognize that the end of the Cold War did not mean the end of history right from the beginning. I’ll pay attention to what he says but his word is not gospel to me.
      - hecate9
        
        I agree with everything you say after the word “Secondly…” halfway down.
        The first part of your reply, however, seems to confuse, or conflate, the constitutional STRUCTURAL system of checks and balances, which by definition is mostly static (since 1797), with the ebbing and flowing of party and special interests over time , which is NOT determined by statute or constitution, and has NOT been static. There are special interests now which, obviously, did not exist in 1787, and there were special interests then that no longer exist. How relatively strong, or weak, these interests are at any given time is NOT determined by anything the FF’s did (or could have done), although the INSTITUTIONS (Congress, Executive, Fed/State/Local bureaucracies and courts, Commissions, etc) through which these special interests contend were to a large part created by the Founding Fathers. The FF’s had no inkling that Wall Street, the Military-Industrial Complex, Unions, Megachurches, Lobbyists, Environmentalists, Hollywood, Evangelicals, etc. etc. would even exist; Silicon Valley was not even a twinkle in their eye. These are the “Special Interests” that now contend for power; the courts and parties and branches of government are merely the instruments through which special interests fight for dominance. In 1860 the anti-slavery and pro-slavery interests were so powerful that the government was rent asunder; at other times, special interests have been able to contend without threatening the body politic.
        Yes, we have a structural system of political checks and balances. But that says nothing about how strong, or weak, the influence of a given set of special interests will be at a given time.
      - Jonathan Dembo
        
        Incorrect, again. Special interests, such as supporters of trade (tariffs), agriculture (excise taxes), region (slavery, location of the national Capitol), finance (funding the Revolutionary War debt), business (banks, manufacturers, canals, railroads, highways), defense (forts, military spending, wars), foreign policy (neutrality, alignment with France or Britain), and class (labor organizations, industrial monopolies) were no less significant in the early national period than those which motivate us today. There has never been a moment when special interests were not the chief political movers and shakers in American politics. For the most part the special interests balance each other. As any interest gains strength, it arouses the fear and envy of other interests, which then coalesce against the rising interest, and seek additional adherents. The first part of my post attempted to describe the actual, present, and historical balance of forces in the US. This balance is repeated at each level of government, local, state, federal. It is repeated in each social organization, or business, in every locality throughout the country. Americans distribute themselves ideologically and politically, in the same way, on every issues, in every time period so far. It was the genius of the Founding Fathers to create a system that allowed the American political system to contain both freemen and slaveholders, easterners, westerners, farmers and merchants, workers and businessmen, producers, buyers, sellers, consumers; and then to incorporate immigrants, freed slaves, and women without revolutionary change. Individuals consistently move back and forth, in and out, of alliances; so do groups. Blacks, Jews, and immigrants voted consistently Republican from the Civil War until 1930; then they shifted en masse, to the Democrats between 1942 and 1936, along with Progressive Republican supporters of public power production. They have maintained these alignments to the present day; but the alignments are not permanent. Regional alignments follow the same pattern but on a different time scale. The South voted solidly Democrat from 1820 to the mid-1970s; since 1980 it has voted solidly Republican. I think of special interests as vital to American government. No government could rule America democratically without serving the interests of these special interests.
      - hecate9
        
        Two brief replies, then I’ll shut up, because we seem to be missing each other. I have heard the “Genius of the Founding Fathers” just-so story before, but I’m not sure it explains much about the state of special interests in 2017 USA.
        Point 1. The issue of the “balance” of special interests: You list many special interests over history and then make the statement that “…For the most part the special interests balance each other.” How do you know this? Is this an observation based on personal research you have done as a professional historian, or can you back up this blanket statement with the work of a professional who has made special interests in the US their field of study? I am somewhat familiar with the work of Baumgartner et al who show that the lobbying agenda (determined mostly by money spent by special interests) differs greatly from the agenda that the public considers to be important. You say “As any interest gains strength, it arouses the fear and envy of other interests.” Yes- but that is no guarantee they will somehow magically “balance.” What happens when one special interest such as JD Rockefellers’ Standard Oil) has a monopoly power and can crush the independent oil producers that stood in his way? Some special interests have almost unlimited funds, and others have very little. Clearly there will be victors and a losers in these battles of the interests – to deny this is to promote a fairy tale. There seem to be real reasons to doubt that special interests must be, or can be, “balanced” in the US or elsewhere, particularly as money is increasingly the instrument by which interests, through lobbyists, Citizens United, etc., compete. If special interests were always “balanced”, why would anything ever change? Since special interests are manifestly NOT balanced in other countries (hence history happens), your argument that they are (magically?) balanced in the US seems to be one that implies yet another new(?) kind of American historical exceptionalism, and ignores the 900LB Gorilla in the room- the massive $$ disparity between rich interests and poor interests.
        
        Point 2: Even if special interests WERE balanced (and I maintain there is no empirical evidence that they are), isn’t their effect on society to pull people away from one another, and isn’t it communitas that counters the effects of the special interest contest? If communitas has declined (and I think we both agree that it may have), then isn’t the functioning of the political system in danger? If there is no communitas, and I don’t happen to have a special interest in common with you (we don’t both have guns or worship the same god or root for the same NFL team, etc.) what reason can there be for us to cooperate- our even to talk to one another? And if that’s the case, that is a problem for our society and our governance.
      - Jonathan Dembo
        
        You are missing the obvious. The facts are as plain as water. They are beyond dispute. We are not one big community. We never have been. I don’t know the future but it seems highly unlikely that we will ever be a single community. We are a myriad of communities in the process of breaking up into ever smaller fragments of communities with nobody in control. There is no overall cultural authority between the groups to bind them together. Each fragment is its own universe of internal disagreements getting ready to break apart from the larger mass, like the Protestant churches broke from Catholicism and have spent the last five centuries breaking into ever smaller fragments. That is the model for the American “communitas”. I am here to oppose you. You are here to oppose me. The Republicans are here to oppose Democrats. Labor opposes capital. East opposes West. Thesis opposes antithesis. Yin opposes yang. Predator opposes prey. Each group is rife with smaller factions fighting for dominance. In my understanding communitas is the least common denominator among all the opposing interests. It evolves from moment to moment as the balance may shift. New generations replace old; new immigrants overlay old immigrant groups; new industries arise to replace old; new conflicts – race, sex, nationality, religion, region, language, ideology – rise to replace old. It doesn’t matter who were are or what we are on, we will disagree about something, and that will become the heart of the matter. Like the “Big endians, vs. the Little endians” in Gulliver’s Travels, we will argue about the littlest thing, the more to make a place for ourselves in the stultifying herd of the homogenous crowd. If we were all born identical clones of one another, we would then all tattoo ourselves to makes ourselves unique.
      - hecate9
        
        Best wishes to you in the coming new year.
      - Jonathan Dembo
        
        Thanks. Best wishes to you in 2018.
Dale Fayda

Anytime, anywhere someone gets to keep more of THEIR money from the government’s rat claws is a good thing. “Little guy”, “big guy”, “in-between guy” – doesn’t matter. Even stuffed under someone’s mattress it will do more good than propping up the failing welfare state.

Obamacare mandate repeal is also a very good thing. Just in time for the tax season – fantastic!

Oh, and this is on the off chance that Friendly Goat will see this… High-end tax cuts – woooohoooo!!!
Joe Eagar

Exactly what are calls for ever more progressive tax rates other than a tool to punish political enemies?