IN COMPETITIVE House races across the country and here in Congress, Democrats are trying to take political advantage of the public’s growing distrust of U.S. corporations by bashing drug companies for the skyrocketing cost of medicine and Tyco International, among others, for dodging taxes by relocating to offshore havens.
RISKY BET
Democrats are making what some observers see as a risky bet that voters will punish pro-business Republicans this fall for the rolling wave of corporate transgressions and for any stock market losses left in its wake. They are also trying to make the case that this campaign, like the war on terrorism, is about patriotism — “economic patriotism” in the words of Democratic spokeswoman Jenny Backus.
• Study tracks 'soft money' to state parties
• Special report: Elections 2002
House Minority Leader Richard A. Gephardt (D-Mo.), the architect of this strategy, said Republicans, starting with the Republican Revolution of 1995, have “created an environment” conducive for corporations to break rules and escape penalty by repealing regulations and ridiculing the tax code.
Democrats, needing to pick up six seats to win control of the House for the first time since 1994, see the “corporate responsibility” theme as their best chance of knocking off GOP incumbents in what is shaping up as a fight over a very small number of competitive districts.
Gephardt has privately instructed top Democrats, particularly those on the House Appropriations Committee, to use the legislative process to force votes that will emphasize this new political theme, according to a senior Democratic aide. The Democratic Congressional Campaign Committee (DCCC) is inundating campaigns with memos outlining ways candidates can capitalize on the public’s anti-business attitudes, which is showing up in polls conducted by both Democrats and Republicans.
Advertisement
Rep. Thomas M. Davis III (Va.), who chairs the National Republican Congressional Committee, said this new line of attack could work “if left unanswered.” But, he added, “we’re not going to leave it unanswered.”
Republicans are pushing their own legislation to provide cheaper prescription drugs, crack down on the accounting industry, strengthen retirement funds and punish corporate wrongdoers. “It’s not like we’re protecting” corporate criminals, said Davis. ”[Democrats] have no moral high ground on this at all.”
Indeed, a review of political contributions from 17 companies under scrutiny for questionable business practices found that more than 43 percent of their money in the past 18 months went to Democrats, according to figures compiled by the nonpartisan Center for Responsive Politics at the request of The Washington Post.
NEW POLITICAL ENVIRONMENT
Strategists said the GOP’s best defense is perhaps the war on terrorism, which has diverted attention away from many of the hot-button domestic issues and created a new environment in which political attacks are seen as offending a public looking for bipartisanship.
While the war continues to dominate the news, as well as the focus of many policymakers in town, economic concerns are mounting. Chief executive officers involved in scandals are stepping down. The stock market is nose diving, dragging the value of many 401(k) savings plans along with it. And, based on polls surveying the public’s attitude, voters appear fed up with the financial messes strewn before them.
Independent pollster John Zogby, who is widely respected inside GOP circles, recently found that voters no longer trust Republicans more than Democrats on economic issues. “The economy could be the sleeper issue,” he said. “A lot of people, especially 401(k) holders, are scared.” A Wall Street Journal/NBC poll earlier this month showed widespread distrust of everyone from oil companies and brokerage firms to corporate leaders in general.
Democrats concede their challenge is to convince the public that Republicans are to blame for the loose government regulations that permitted corporate scandals to go undetected, as well as for the plummeting stock prices that followed. The campaign, which is growing larger by the day, started with attacks on GOP support for partially privatizing Social Security and escalated with last week’s prescription drug fight.
Now, Democrats are focused on tax-evading companies.
Last Friday, moments after lawmakers defeated a Democratic proposal to prevent corporations from lowering their tax bill by reincorporating overseas, the DCCC took aim at Rep. George W. Gekas (R-Pa.).
The committee fired off a statement to the local press detailing how the measure could have affected firms such as Tyco International Ltd., which has several plants in Gekas’s district but shifted its corporate headquarters to Bermuda in 1997. “Representative Gekas took sides in the fight between ordinary Americans and corrupt corporate practices,” declared DCCC spokeswoman Kim Rubey. “At a time when our country is fighting a war, these companies are planting their flags overseas for a quick buck.”
Gekas, who is in a tough race with Rep. Tim Holden (D), shrugged off the attack. Voters “are anxious about the stock market, but they’re not willing to place the blame on any one factor,” he said.
Rep. David Phelps (D-Ill.) is touting his backing of the Patriot Purchasing Act of 2002, which would bar firms that have reincorporated overseas, including Tyco, from receiving government contracts.
And Rep. Ronnie Shows (D-Miss.) is highlighting his support of the Corporate Patriot Enforcement Act of 2002, which is sponsored by Reps. Richard Neal (D-Mass.) and Jim Maloney (D-Conn.). The measure would deny companies the tax benefits they now enjoy by operating out of Bermuda and elsewhere. “I will not stand by and allow companies to skip town and stick individual Americans with the tax bill,” Shows said. “Patriotism must not take a back seat to profits.”
BERMUDA MOVE
Republicans are fighting back. Rep. Nancy L. Johnson (R-Conn.), for example, is just as determined to prove that she is cracking down on companies evading taxes as her rival Maloney. The issue has become particularly important ever since shareholders in the state’s longtime hardware company, Stanley Works, voted in May to reincorporate in Bermuda.
Yesterday, the two lawmakers testified before a House Ways and Means subcommittee on their competing plans to stop the flood of companies shifting their corporate identity overseas. Maloney’s bill would make companies pay U.S. taxes even if they reincorporated abroad, and it would make the ban retroactive to Sept. 11. Johnson, by contrast, would impose an 18-month moratorium on such moves while Congress devises a permanent solution to the problem.
Johnson said she was aiming to strike a balance between curbing corporate flight while giving firms an incentive to stay in the United States. “It just seems un-American to change your identity to evade taxes,” said Johnson. “It’s also outrageous that we put our companies at a disadvantage.”
Maloney, who skipped several House votes last month to protest outside the Stanley Works shareholders meeting, scoffed at Johnson’s proposal. “Her approach to the issue is to do as little as she possibly can as late as she possibly can to protect herself politically,” he said.
© 2002 The Washington Post Company |
