GOP Donors To GOP Lawmakers: Yeah. We Will Cut You Off Absent Tax Reform

Members of Congress have warned that the money will dry up if they can’t move their top legislative agenda item. They’re right!

Photo Illustration by Elizabeth Brockway/The Daily Beast

Congressional Republicans have warned in recent days that if the party fails to pass a massive package of tax cuts in the next year, their donors will desert them.

Such bluntness is rare in Washington D.C. — an instance of lawmakers saying the quiet part out loud. In this case, it has the added benefit of being true.

Several GOP donors contacted by The Daily Beast said that they would either stop writing checks to the party of divert their money elsewhere should tax cuts end up being stalled.

“If they don’t get tax relief done, as they promised they would, then we will support challengers who will do their jobs for them,” said Doug Deason, a Dallas investor and high-dollar Republican donor. “Donations will still flow, just to different politicians.”

The threat from GOP donors adds to the already massive amount of pressure that congressional Republicans are facing as the calendar year closes. After having failed to repeal and replace Obamacare, the party has few remaining opportunities to score a major legislative win.

Members have openly fretted the possibility that they won’t be able to move a $1.5 trillion tax cut package before Congress convenes for the holidays because of sharp disagreements over the impact it will have on the deficit, the pay-for provisions included within it, and the possibility that it is too beneficial to the rich. Should they end up in  legislative paralysis, they warn, it could facilitate an electoral bloodbath.

“My donors are basically saying, ‘Get it done or don’t ever call me again,’” Rep. Chris Collins (R-N.Y.), said on Tuesday.

Sen. Lindsey Graham (R-S.C.) told reporters on Thursday that the party would fracture and primary challenges would mount in the wake of a tax cut failure. He added, “The financial contributions will stop.”

One top GOP fundraiser, who has raised millions for the party and various presidential campaign, concurred with Graham’s assessment. “If it fails, there will be donor flight,” the fundraiser explained on condition of anonymity. “It will dry up.”

But others expected a less direct, but equally severe, type of fallout. Bruce Ash, an RNC national committeeman and a high-money GOP political donor, noted that he personally would continue giving to the party. “But,” he added, “small donors would be more likely to pull back political giving.”

“Congress needs to move President Trump’s legislative programs on tax reform, the wall/immigration ( DACA ) and significant changes O-Care and GOP and Indy support will flow back into success in mid terms significantly,” Ash added in an email.

For donors, there is a two-fold desire to see tax reform enacted. There is a financial windfall that comes with the legislation, which would lower corporate rates, end or lessen the estate tax, and raise the thresholds for income taxed at the top individual rates. But there is also the expectation that the Republican Party should be able to move top agenda items when they have control of both chambers of Congress and the White House.

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A rough measurement of the financial stakes of the debate are the sums spent lobbying congress and the administration on tax-related issues. In the third quarter of 2017 alone, companies and organizations that reported lobbying on those issues collectively spent nearly $900 million on their federal influence campaigns, according to federal lobbying disclosure records.

“Most wealthy donors are not overly concerned about our taxes. We will always find ways to limit the percentage paid,” said Deason. “We are concerned about corporate tax relief to spur growth to create jobs and increases in payroll for the middle class and the poor.”

Deason and his father, billionaire investor Darwin Deason, are among a handful of high-dollar Republican donors financing a $100 million 2018 political effort by America First Action, an independent political group supportive of President Donald Trump. Due to that involvement and their own personal heft as political donors, the Deasons’ threats carry significant weight in GOP politics.

Already, Republican Party fundraising in 2017 has been a mixed bag. The Republican National Committee has raised more than $75 million to the Democratic National Committee’s $44 million from January through September. But the GOP’s national campaign arms—the National Senatorial Campaign Committee and the National Republican Campaign Committee—are lagging far behind their Democratic counterparts, raising a collective $61 million to the Democrats’ $110 million through September.

It is, in part, because of these numbers, that GOP operatives have been increasingly worried about the 2018 midterms — fears that were amplified by the Democratic Party’s blowout wins across the country in elections last Tuesday. A failure to deliver on tax reform would create, what one Republican lobbyists deemed, “a death spiral,” in which incumbents are left with fewer donors and less party backing all while grassroots support swells behind primary challengers.

“I think the traditional, politically sophisticated corporate activist givers will continue because it is their business and this is a cycle,” said GOP consultant and former Arizona state Senator Stan Barnes. “But there is a great deal of money that comes out of grassroots true believers, those who feel they are a part of something and want to participate. And the way for them to participate is to write a check. That will dry up because they will lose faith that Republicans can do what they say they will do.”