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Blog Post | May 25, 2017

Rep. Delaney Consistently Sides with Corporations over Constituents

Ethics in GovernmentFinancial Regulation

On the 17th of this month, a group of House Democrats, including Representative John Delaney (D-MD.), delivered a letter to President Trump offering, essentially, a trade: A tax holiday for international corporations in exchange for the guarantee that the money from that repatriation would be used exclusively to fund the country’s long-overdue infrastructure maintenance projects. Earlier this year Rep. Delaney also authored a tax and infrastructure bill which would allow corporations with funds outside the U.S. to return that money to the country at a tax rate of 8.57 percent (instead of the top corporate tax rate of 35 percent). Delaney, in his statement, called the bill a “pro-growth reform” and his co-sponsor, Rep. Rodney Davis (R-IL), said that it would “spur job creation”.

Unfortunately, the Senate Subcommittee on Investigations has looked into this proposition and it disagrees. In 2011 the committee analyzed the Bush tax holiday (which also promised to increase job growth and boost the economy) and found that it did the exact opposite. Not only did the tax cuts lead to a net decrease in hiring by the companies that took advantage of them (which were almost exclusively in the pharmaceutical and tech industries), the money went predominantly to stocks and executive bonuses rather than new investments. The cuts also cost the Treasury an estimated $3.3 billion in revenue over the subsequent ten years. There’s no reason to think the results of a tax holiday would be any different now, and that lost tax revenue only exacerbates long-term federal funding shortages for infrastructure and other critical projects.

It’s surprising to see a member of the House Financial Services Committee championing a policy which starves the U.S. Treasury of revenue with no discernable economic benefit, but maybe not that surprising, because Rep. Delaney has a history of siding with corporations over his constituents financial needs:

  • HR 1135 (May 2013): Delaney voted to repeal Dodd-Frank’s requirement that companies report their CEO’s pay and median worker’s pay as a ratio.
  • HR 1309 (November 2015): He voted to exempt 28 of the largest regional banks from Federal Reserve Regulations stability measures like stress tests, capital and liquidity requirements, and risk management standards provided in the Dodd-Frank reforms.
  • HR 1210 (November 2015): He voted to remove CFPB rules that require lenders to verify a customer’s income and confirm that they have the ability to repay the loan.
  • HR 1737 (November 2015):He voted to undo CFPB rules limiting lending discrimination on the basis of race, ethnicity, gender, etc. in the auto finance market.
  • HR 5311 (June 2016): He voted to stifle unions, public pension funds, and other institutional investors’ access to research and analysis on investments.
  • HR 5424 (September 2016): He voted to repeal Dodd-Frank regulations on private equity firms that protected their investors from exploitation.

These are representative highlights from a consistent track record. Since Rep. Delaney was elected in 2013 he has voted five times to weaken regulatory guidelines set by the Consumer Financial Protection Bureau, three times to remove regulations established in Dodd-Frank after the global financial crisis, and twice to weaken the Securities and Exchange Commission’s oversight of capital markets.

In this time, Delaney has also raised considerable campaign funds from industry sectors “Securities & Investment,” ” Commercial Banks,” and “Misc Finance.” Indeed, his top donor sources reveal rewards from exactly the type of financial sector firms that continue to favor loose regulation even after the onset of the Great Recession.

So when Representative Delaney suggests that a tax cut driven approach to infrastructure will work out for workers, analysis of the implications of his approach ought to include the impact on the world’s richest corporations and their largest shareholders.

Ethics in GovernmentFinancial Regulation

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