Powerful Democrat Lives Large on Corporate Cash

Richard Neal, D-MA
Rep. Richard Neal (D-MA) leaves a meeting of the House Democratic Caucus in the Capitol on January 4, 2019. Photo credit: © Tom Williams/Congressional Quarterly/Newscom via ZUMA Press
Reading Time: 16 minutes

As the new chair of the House Ways and Means Committee, Rep. Richard Neal (D-MA) is being showered with campaign contributions — more than a half million dollars in the first quarter of 2019.

Journalist David Daley, who lives in Neal’s district, reviewed the fundraising and spending reports in a recent column in the Boston Globe (see link below). He found contributions from lobbyists and the corporate interests they work for, like Amazon, GE, Deloitte, Eastman Chemical — and most of those corporations paid no federal taxes last year.

One donor, H&R Block, saw progress on a longtime legislative goal: banning the IRS from providing its own online tax preparation system.

Federal Election Commission filings show that Neal spent over $467,000 in the first quarter, much of it for big-dollar fundraising events at five-star restaurants, at extravagant hotels (including a Ritz-Carlton), and on luxury suites at sporting events and concerts.

Neal is leading the Democrats’ effort to get the Internal Revenue Service to deliver President Donald Trump’s tax returns to him, as required by law. A recent news report also notes that Neal has declined to release his own tax returns.

David Daley is the former editor of Salon.com, the author of Ratfucked: Why Your Vote Doesn’t Count and the forthcoming Unrigged: How Americans Fought Back, Slayed the Gerrymander and Reinvented Democracy. Access his Boston Globe column here and a second report here.

Technical note: Skype produced some uneven levels that produced distortion in the last few minutes of this podcast, and we apologize to your ears.

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Full Text Transcript:

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Peter B. Collins: Welcome to this Radio WhoWhatWhy podcast. In San Francisco, I’m Peter B. Collins. These days, in Washington DC, there are a lot of efforts to investigate alleged corruption on the part of Donald Trump and his administration, and I think that those investigations are very well-founded and justified. One of the point people, who is leading the effort to secure the president’s tax returns, under a law that allows the chair of the House Ways and Means Committee to request the returns of any American citizen, Richard Neal is the democrat from Massachusetts who rose to the chairmanship when the democrats took control of the House, in January. Reporter David Daley joins me today. He was an editor of Salon Magazine, he’s published a book about gerrymandering, called Ratf**ked: Why Your Vote Doesn’t Count, and he’s working on a new book about Citizens Redistricting Commissions, like the one we have in California. The working title is Unrigged: How Americans Fought Back, Slayed the Gerrymander, and Reinvented Democracy. David, thanks for being with us today.
David Daley: Thanks for having me, Peter.
Peter B. Collins: What drew your attention to the fundraising and profligate spending of campaign cash, by Richard Neal?
David Daley: Well, he’s my congressman. So, I was especially interested about two things. First, he’s chairman of Ways and Means, as you pointed out in your opening, and he spent January, February, March, into April of this year, being asked by a lot of us in the district, to go ahead and try and get Donald Trump’s tax return, as he had the right to do, as the chairman. And, he was dragging his feet, and he just wasn’t doing it, and it didn’t make any sense to me, and I came across a story in the American Prospect that said, “Well, the reason Richard Neal is not asking for Donald Trump’s tax returns, is because if you investigate his taxes, what you’re going to have to do is look at the ways in which wealthy people in this country are able to do all kinds of chicanery with their returns and hide money and create various LLCs, and to do all these things that wealthy people are able to do. And, Neal has spent his entire career being funded by these people, and he doesn’t want to go after Trump’s taxes because he doesn’t want to have the broader conversation about what wealthy people get away with, in their taxes.”
David Daley: And I thought, “That’s interesting.” And then, you also have the… You have every other member of the Massachusetts congressional delegation, who has endorsed the Green New Deal. And, I went to see the congressman speak, not far from the district, and he was being picketed by college kids who wanted to know why he wouldn’t sign on, and he was so dismissive and condescending of them, that I just thought that there had to be something else to it. So, I went and took a look at his FEC reports, and my mind was blown. I mean, I’ve been covering politics and money in politics for a long time, and never had I seen FEC reports filled, not only with the kind of wild, extravagant spending that Neal had done on his races, but it takes money to raise money, right? And, he was spending tens of thousands of dollars in the swankiest restaurants and hotels in the country, holding events to raise this money. So, he’s at the Ritz-Carlton in Florida, and he’s at these hotels in wine country, and boutique hotels in New York, and these amazing steakhouses, and fancy places up and down the east and west coast.
David Daley: And, this is not a wealthy district. The congressman is a former mayor of Springfield, Massachusetts, one of the poorer cities in Massachusetts, but he was living like a king, as you could see through these FEC reports, and he was doing so, essentially, by trading on his position that we, the voters of this district, had given him. And, all of that money seemed to be acting as armor that defended him and insulated him from all of us voters who wanted him to do things. So, we would lose twice. We lost the idea of honest representation that actually gave us a voice in our politics, and we also lost the ability to vote against this person, if we weren’t getting that, because the money made him bulletproof against a challenger.
Peter B. Collins: Now, now, now David, let’s get something out of the way here. Are you just jealous that, as a constituent, that he has never taken you to the Copley Hotel for drinks, in Boston, or invited you to a steak dinner at a Ritz-Carlton? Is this envy?
David Daley: Yes, that is the Green New Deal. By the Green New Deal, I just mean Envy New Deal. No, you know, I’m a vegetarian, so I’m not particularly interested in going to a steakhouse with Richard Neal. I am, however, interested in who he is taking to all of these steakhouses, and what influence that has on the policies that he backs and supports, and he is playing a really aggressive game of pay-for-play politics. If you look at some of the things that have come out of Ways and Means, just this year alone, they don’t make any sense, unless if Neal is giving favors to his donors.
Peter B. Collins: Give us an example, please.
David Daley: I think my favorite example, right now, is what is being called the TurboTax giveaway. So, TurboTax and H&R Block, we know them, we love them as the companies that help us file our taxes every year. So, about a dozen years ago, the IRS started thinking, “Well, like a lot of other countries around the world, we should offer Americans a free file system. The technology is there, we could simply take all the information that comes in via 1099s and W4s, and send it to Americans pre-filled in, and that would make it easier for everybody.” H&R Block and TurboTax did not like this idea. It got in between them and their profits, so they went to the government, and they said, “Well, how about if we administer the free file system ourselves? You won’t have to do any of the work, we’ll take care of it, and we’ll offer it to every American who makes less than $66,000 a year.”
David Daley: Sounds pretty good, right? Except, they didn’t really tell anybody that this existed. Only three percent of eligible Americans knew that it was available to them. If you were to go on Google and search for TurboTax free file, they had secret script on their website, to block the search from actually turning up the pages. And, if you were lucky enough to find it and get there and to start using it, they would begin upselling you to all kinds of additional, paid-for services that you didn’t actually need. There was a story today, that came out, about how they even grifted veterans in the process of this, which is a lovely way to spend the days before Memorial Day.
David Daley: So, fast forward to this year, and the number one priority of H&R Block and TurboTax, in Washington, is a law that would permanently prohibit the IRS from coming up with a free file system of its own. Richard Neal sneaks this line into a bill that is actually called, in some Orwellian way, the Taxpayer First Act, and it would permanently prohibit the IRS from ever offering a free file system. Neal calls himself a longtime champion of the old system. The old system is an absolute disaster. Elizabeth Warren has gone after it, the IRS’ own public advocate has gone after it, consumer groups have said that this is bilking people, it’s not protecting their information, it’s upselling them to products they don’t actually need. And, Neal calls himself a longtime champion of it, and he gives them a carve-out in the tax code that says, “We won’t ever change it.” Why would he possibly do this to this failed program that is exploiting his most vulnerable constituents, unless if it has something to do with the tens of thousands of dollars that TurboTax’s parent company and H&R Block have funneled him for years?
Peter B. Collins: Now, David, did this bill get signed into law?
David Daley: It made its way through Ways and Means, and it’s off to the Senate. And all of the media attention, ProPublica has been amazing on it, they’ve done, I think, a 20-series story on this topic. And all of that attention has begun to give some senators, especially democratic senators, cold feet about going forward with this. But, this is a great example of the kinds of small print in Washington, that donors are able to come away with gifts representing millions and billions of dollars, potentially, in profits, over the years, and we don’t really know about it. And, until the spotlight got shined on this small, little provision in the middle of a big bill, they probably would’ve gotten away with it. And this is how Washington functions.
Peter B. Collins: And David, this is one of my annual pet peeves, every April 15th, I tell my podcast listeners, “You know, filing a tax return is really just an honesty exam.” Because the government already has, reported from my brokerage account, from my employer, from my 1099s, they already have a very good picture of about 90% of my likely income, and they could send that to me, as you touched on, a few minutes ago, in a pre-printed form, saying, “Hey, Peter, check this, and if anything is wrong or if we’ve missed something, just add it in and mail it back to us.” It is that simple, but the tax-
David Daley: 35 countries do it that way.
Peter B. Collins: The tax code has been kept complicated, first, to preserve the careers of certified public accountants and whole tax avoidance practice, and now, to protect the interests of the consumer tax preparer and the software that is extremely popular. And, on top of this, the Trump corporate tax cut law of 2017 eliminated the deduction for tax preparation fees. And that, of course, hammers those of us who occasionally need to use a professional because of a particularly complex issue or things that occur from time to time. And so, the taxpayers, the average people, get hammered, while the wealthy use trusts and offshore accounts and all other kinds of dodges that are available to them. And, talk a little bit about your Boston Globe article, where you exposed that the very corporations that paid zero tax in the past year, made heavy contributions to the Ways and Means Committee Chairman, Richard Neal.
David Daley: Yeah, this is amazing. So, there’s a New York Times story, about a month or so ago, that listed the 30 most profitable companies in America that paid no federal income tax in 2018, and in many cases, actually even got a rebate from the federal government. So, I just entered those 30 companies into OpenSecrets and into the FEC database, and it turns out that 17 of those 30 companies had donated money to Richard Neal over the course of the previous year, and probably some of the other ones did as well, through the big industry groups and the other secret, dark money routes. But, 17 of the 30 had done so publicly and openly, which means that those 17 companies paid more to one congressman, than they did for the national defense or for clean air or for the highway infrastructure, or any of the things that our tax dollars go for. Their tax dollars don’t go toward any of this because they are able to make these donations, and it’s pennies on the dollar. I mean, Amazon gave Neal just under $10,000, and that protects them from a tax bill on billions of dollars in profits.
Peter B. Collins: And so, this is kind of an interesting feedback loop, where Richard Neal writes laws that benefit corporations and wealthy individuals. Those people take care of him by funding his campaigns, and then, he often uses that campaign cash to wine and dine the people who’ve donated to his campaign in four star, five star establishments. Is that accurate?
David Daley: Sounds like a nice life, doesn’t it? It sounds like a really swell way to spend time. It seems like a pretty easy job, and then, you get to spend your weekends in Florida, at the Ritz-Carlton, or… Neal, every year, has a Boston Weekend, in which he takes the lobbyists out to a fancy dinner on Friday night, then they all either go to the symphony or to a Celtics game, on Saturday. He sponsors a Cape Cod weekend, every year. That costs $5,000, and they stay at the Chatham Bars Inn, on the cape, which is a lovely place. That was funded by his leadership PAC, which is called the Madison PAC, and the bill for that, in 2018, was $113,000. And then, they spent an additional $10,000 at the Lobster Pot in Provincetown. It’s a lovely life, if you can lead it.
Peter B. Collins: So, David, let me ask you this because, people in California know, we have a member of Congress, Duncan Hunter, who is facing trial later this year, for converting campaign funds to personal use. He used it to pay to fly the family pet from California to Washington, he charged off fancy dinners and expensive hotel bills, where there wasn’t a campaign nexus. There wasn’t a lobbyist there to put on the list of who was entertained, and so, how do we define the line between a legitimate, but distasteful use of campaign money and criminal behavior?
David Daley: Duncan Hunter got greedy, right? I mean, if he was just doing what they all do, which is auction their office off to special interests, the law is just fine with that. That’s politics as usual. But, if your dog gets involved, then that’s just a little bit too far, that’s crossing the line. But, I mean, I think that what all of this tells us is that, oftentimes, it’s not what’s illegal in Washington, that’s the real outrage, it’s what’s perfectly legal. And it’s perfectly legal because it’s another piece of your merry-go-round. These guys are making the laws about it! These guys make the laws that make it legal for all of this to be the case, and they have no incentive to change it. Unless if we all get outraged about it and start getting tired and stop accepting the idea that this is politics as usual, or that this is okay. This is how democracy is corroded, this is how our members of Congress auction off our voice to special interests.
Peter B. Collins: Now, Richard Neal has responded, indirectly, to the piece that you wrote for the Boston Globe, and that was published on May 6th, and he told a television interviewer, “Well, everybody does it. If you were to look at the campaign statements of every member of the congressional delegation from Massachusetts, you’d see the same sort of report.” And you took that as a dare to dig deeper into the campaign finance reports of the entire delegation from the Commonwealth of Massachusetts. What did you find, David?
David Daley: I found that that’s bullshit, honestly. Neal spent more than any member of the House delegation in 2018, and he raised more than any member of the House delegation in 2018. And if you look at who he’s taking it from, on top of that, it’s just disgusting. There are three companies, right now, that are being sued by Massachusetts’ attorney general for bilking cancer patients and diabetes patients on the cost of their prescription drugs. Those three companies gave $40,000 to the members of Massachusetts’ congressional delegation last year, and three quarters of that money went to one man. I think you can guess who it is, it’s Richard Neal.
David Daley: But, on top of that, none of the other members of the delegation were spending the kind of money that Neal was on these fancy fundraisers. I went through every expenditure of Neal’s, that was over $1,000, and Neal had 24 of those, so that there were 24 different events, in the first three months of the year, that the tab, at the end of the night, at the hotel or the restaurant, was more than $1,000. In some cases, as high as $15,000. The other eight members had 21 of those, combined. So, Neal, simply isn’t telling the truth when he says that everybody does it. On top of that, even if everybody did do it, it still doesn’t make it okay.
Peter B. Collins: Is he still taking money from the Sackler family? They’re based in Massachusetts, right?
David Daley: I have not seen any money specifically from the Sackler family, but Neal takes his opioid money, essentially, through the big pharma overall PAC, the PHRMA PAC that is such a big giver. That, essentially, collects all of the money from the companies, and then, they dole it out under a fancy acronym, and it makes it possible for the members to take the cash without having it look like it’s coming from a particular blood money source.
Peter B. Collins: And is there anything else that surfaced, that really offended your olfactories? That is so stinky, that people need to know about it.
David Daley: Yeah. You know, I think what they’re doing with H&R Block and TurboTax is absolutely disgusting because it is going after the most vulnerable constituents. There was a bill that was passed out of Ways and Means, just this week, it’s called the Secure Act, and I don’t think it’s going to secure anything except a lot more campaign cash for incumbent members of the House because essentially, while they say that it will help protect and preserve our pensions, really, what it does is, it opens the door to all kinds of fiscal shenanigans by the makers of annuities, to take all kinds of risks with our pension money. And then, what they do in this act is, limit the legal liability of these companies, if they lose all of our cash. So, it essentially opens the door… it’s open season for all of these financial companies to take as many risks as they want with pension money, without having to fear that there will be any cost on the other side, if they screw up.
David Daley: And you just can’t believe that our representatives are doing this! That they’re okaying it! And they’re doing it because they are taking tens of thousands of dollars from these very companies, and then, they’re giving them carte blanche to destroy peoples’ retirement. They’re giving them cart blanche to charge whatever they want for drug prices for the sick. It’s a corrupt, corrupt system, and money is at the very heart of it.
Peter B. Collins: And, it’s fair to say that this is a plague on both parties, but are the democrats more hypocritical, in your view? After all, I’m still getting emails almost every day, coming from allegedly progressive organizations, asking me to chip in just $3.00 to overturn Citizens United. Now, I want to overturn Citizens United, but there is no effort that is, in any way, shape, or form, poised to achieve that goal. And so, it is a cynical dangle to email me and say if I just chip in $3.00, that Citizens United will be gone faster than who shot Bob!
David Daley: No, I think you’re right. I think that money flows toward power. And so, it flows towards the leadership of both sides of the aisle, and whenever they are in power, they are responding to that money. It would be terrific, if we ended Citizens United, but… and, well, the democrats did advance H.R. 1 during this session, that would do some good things on campaign finance and democracy reform. But, they were able to advance that, knowing it wasn’t going anywhere in a republican Senate, and with a republican president. So, they were able to pass a series of symbolic legislation, without having to fear that it would actually change the reality of doing business in Washington.
Peter B. Collins: And it’s-
David Daley: I’m not certain that either side wants to change that.
Peter B. Collins: And, can we compare that to the 38 times that republicans voted to repeal Obamacare, when they controlled the House? They had no intention of really achieving that, but it was a way to stoke the fundraising system, by pandering to a base that wanted that outcome.
David Daley: Yes, I think that’s exactly right, and I mean, I talk in my book about redistricting, really, but I mean, in a lot of ways, what happened in the House, in 2013, is this perfect storm of redistricting and fundraising, but it creates this toxic extremism in our politics. Republicans drew themselves districts, in Congress, this last decade, that really put the base in charge of the party. And, they had little choice, but to go wherever the base led them, and they created a Frankenstein’s monster and set it loose on our politics, and I don’t think they had any idea what they were doing. They just thought that they were going to make it easier for themselves to win reelection.
David Daley: Instead, they made it easier for the craziest republican to win election in every district, and those people came to Washington, and they built the House Freedom Caucus, and they called for the head of John Boehner, and they shut down the government in 2013, and they had dozens of votes on repealing Obamacare, and still, this wasn’t enough for the base, and in 2016, republicans around the country had their choice of 17 different presidential candidates. Some of them from the most famous names in republican politics, others major governors, or famous senators. And, the party went with Donald Trump because they were so riled up and so angry. They’d been promised so many things, the base had been stoked and stoked and stoked, and the republicans wouldn’t deliver, and they went with someone who would blow the whole thing up.
Peter B. Collins: Well, David, I want to thank you for joining us today and airing out these issues related to congressman Neal. And, the one nice thing that I will say about him, based on the details that you’ve provided, is that he’s a Bonnie Raitt fan, and I think that that’s always praiseworthy.
David Daley: He did spend a lot of money on a private box for James Taylor and Bonnie Raitt, and I believe that was at the Washington Nationals’ baseball stadium, so he certainly has fine taste in music, fine taste in restaurants, great taste in hotels and beaches. I just wish that there wasn’t a public policy cost for all the rest of us, in the middle of that.
Peter B. Collins: David Daley has been our guest today, and I will link to his two articles related to Richard Neal’s fundraising and spending, that he has recently published. They’ll be in the show file for this podcast, at WhoWhatWhy.org. David, thanks for talking with us today.
David Daley: My pleasure.
Peter B. Collins: Thanks for listening to this Radio WhoWhatWhy podcast with David Daley, my guest. Send your comments to Peter@PeterBCollins.com, and I hope you’ll be as generous as you can, to support the investigative journalism thriving here at WhoWhatWhy.

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