The Shady But Legal Behavior of the Guy Going After Trump's Taxes

Richard Neal is an example of just how outrageous political fundraising can be, even when it's entirely above-board.

by Matt Taylor
May 17 2019, 10:00am

Richard Neal. US House Office of Photography/Wikimedia Commons

Last week, Congress issued a subpoena for Donald Trump's tax returns, escalating a years-long battle between Democrats and good-government types on one hand and the likely tax cheat sitting in the Oval Office on the other. The official reason for the demand, from House Ways and Means Committee Chairman Richard Neal, was to explore how America's notoriously byzantine and oft-evaded tax laws get enforced against presidents. But of course Democrats also want to learn more about Trump's potential ties to dubious interests, Russian or otherwise, and to gain fresh insight into how rich people like him game the broken tax system, especially as the 2020 election approaches.

If the ultimate political goal for Democrats is to paint Trump as a creature of corruption, however, Neal is not exactly the ideal figure to make this case. The Massachusetts congressman is a classic D.C. insider who has had great success raising money from wealthy corporate interests with business before his committee. Unlike some higher-profile left-wing Democrats, he doesn't reject PAC cash or rely on small donors for fundraising, instead hobnobbing with lobbyists who represent industries looking for favors from government—the exact sort of behavior that has been heavily criticized by insurgent progressives like Congresswoman Alexandria Ocasio-Cortez.

It’s a spectacle: Trump stubbornly refusing to release his tax returns while the guy who’s demanding he cough them up is potentially compromised, too. And it adds up to a scathing indictment of the D.C. system as currently constructed, experts and advocates focused on money in politics say.

"At a time when Democrats need to persuade the country that they understand the system is broken, it's a real problem when one of their senior leaders is a slow-moving advertisement for how the system is broken," said Jeff Hauser, executive director of the Revolving Door Project at the left-leaning Center for Economic and Policy Research, who has criticized Neal for moving too slowly in his effort to obtain the president’s returns.

As David Daley wrote for the Boston Globe, recent FEC filings paint Neal as a deeply transactional sort of politician. Among other things, he raised more than $500,000 in the first few months of the year—much of it from big businesses that have an interest in his committee's dealings, like General Electric and Prudential—while spending nearly the same amount, often to entertain high-dollar donors. As Daley (who, it should be noted, is openly flirting with a campaign to challenge Neal) wrote:

Between January and March 2019, Neal spent hundreds of thousands of dollars wining and dining lobbyists at his fund-raisers. In return, he pocketed hundreds of thousands of dollars of contributions — many from elite donors with valuable interests before his committee. (One of his first-quarter donors was HR Block. Neal subsequently provided the tax-prep giant with its longtime legislative dream: a prohibition on an IRS free-file system that would undercut their profits.)

That may sound like an explosive accusation, but there is nothing illegal or even unusual about Neal’s activities. It is an old, old D.C. parlor game to spend heavily on swanky events for high-dollar donors who have a vested interest in what you do. Sometimes, the cash raised is for your own electoral survival, but it’s also useful to have money to give to fellow members and the larger party infrastructure in hopes of advancing your collective interest—and securing your own hold on power.

“Even if they don’t need it for themselves, as is probably true of Richie—I assume he’s got a strongly Democratic district—he’s probably under a strong expectation that he raise money, given his position, and that he contribute that money to other Democrats,” said Brad Miller, a former Democratic congressman from North Carolina. “And other Democrats would be pretty annoyed with Richie if he wasn’t raising money as chairman of the Ways and Means Committee.

Indeed, when asked about Daley’s criticism and his fundraising generally earlier this week, Neal pointed to how much good he did his party in 2018.

"In fact, I take great satisfaction from having shifted the House of Representatives from Republican control to Democratic control," he told reporters. "More than 200 candidates were helped by my endeavors, including every member of the Black Caucus, and every member of Hispanic Caucus."

The defense of this behavior is that campaigns require money, of course. And, for better or worse, the wealthier people willing to make large donations to politicians are often looking to influence those politicians.

"Generally, most members, given the current system, are going to raise money from the industries regulated by the committees that they serve on or for which they have influence," said Miller. The former congressman, who focused on financial reform and expressed fondness for Neal having helped him on foreclosure mitigation in the aftermath of the 2008 economic crisis, didn’t think it was quite fair to single Neal out for participating in this system. "I haven't been to all of those places," Miller noted of some of the D.C. bars and restaurants Neal has frequented at fundraisers. "I didn't really raise money that way. But I wasn't chairman of the Ways and Means Committee!”

Miller added that while some nationally famous members of Congress who have dedicated bases can avoid having to fundraise this way—famously, Ocasio-Cortez has said she doesn’t do “call time” with donors—that’s not possible for everyone. “There are a handful of members who have such a national profile that they can raise money through the internet in small amounts in large quantities,” he said. “But the average member can't. I couldn't."

That’s why reformers generally argue for funding campaigns largely or even exclusively with public money rather than private donations, which can have a corrupting effect. "If we are going to have a system of private funding of political campaigns, this sort of thing is going to be inevitable," said Rick Hasen, an expert on money and politics at UC-Irvine. "It does not demonstrate bribery or anything illegal; instead it shows a legalized system of obtaining access to elected officials, which existed well before Rep. Neal took over chairmanship of Ways and Means."

Presidential candidates have long relied on big-money donors as well. After appearing to shun large donors last time around (even though he still got plenty of “dark money” from outside groups and big donors), Donald Trump’s re-election campaign is openly embracing high-dollar fundraising and “bundlers” who amass maximum donations from rich people, as well as Super PACs. Likewise, Joe Biden's strategy for raising 2020 campaign cash has centered on the old-school model of fancy high-dollar-donor events. It was even suggested he might be crossing a picket line last week before he raised money at the house of a prominent player in the healthcare industry.

But in the presidential context, there’s at least more of a debate going on between small-dollar-powered insurgents like Bernie Sanders and Elizabeth Warren and more traditional cash cows like Biden. In Congress, with the exception of Ocasio-Cortez and a handful of other progressives, it seems like virtually every powerful member—from Speaker Nancy Pelosi on down to her committee chairs—has embraced the status quo. That makes it harder to sell the public on the idea that one party might actually have an interest in corruption reform, which was a key plank for Democrats in the 2018 midterms and would seem like fertile territory for the campaign ahead.

"Articulating populist policies will only work with voters if the party articulating them is credibly committed to 'breaking the wheel,'" Hauser said. "Neal is the type of leader Democrats need to move past if they want to reclaim the mantle of populism."

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Richard Neal