“Awwwwwkward”: Meet Ted Cruz’s Tax-Dodging Sugar Daddy
Hedge fund CEO Robert Mercer is all in for the conservative Texas Republican Ted Cruz, and the billionaire will have unusually substantial influence in how his contributions get spent.
But the billionaire also has some baggage—like, the avoiding billions in taxes kind of baggage.
His alleged failure to pay those taxes led to substantial congressional scrutiny in 2014—and it’s not clear the investigation is over.
This, and some of Mercer’s side projects, could present interesting challenges for Cruz’s campaign. Especially since Cruz has been a vocal opponent of those who “give favors to Wall Street” and engage in “crony capitalism.”
On the one hand, Mercer’s support is fantastic for Cruz for all the obvious reasons (having a billionaire in your corner is nice). On the other hand, Mercer’s hedge fund—Renaissance Technologies—recently faced an unflattering congressional investigation, the results of which indicated that it used complex and unorthodox financial structures to dramatically lower its tax burden.This drew scorching bipartisan criticism from investigators on the Senate Permanent Subcommittee on Investigations.
“Renaissance profited from this tax treatment by insisting on the fiction that it didn’t really own the stocks it traded—that the banks that Renaissance dealt with, did,” said Sen. John McCain during a hearing on the issue, per Mother Jones. “But, the fact is that Renaissance did all the trading, maintained full control over the account…and reaped all of the profits.”
In his opening statement for that hearing, then-subcommittee chair Sen. Carl Levin, a Michigan Democrat, said that Mercer’s business avoided paying more than $6 billion in taxes between 2000 and 2013.
Since then, Levin has retired from the Senate and Republican Sen. Rob Portman has taken his place as subcommittee chair. When I called the subcommittee’s Capitol Hill office to see if any investigation into Renaissance was still underway, the person who answered the phone said he couldn’t comment on active investigations. I then asked if that meant the investigation was in fact active.
“I can’t say whether it’s active, I can’t say whether it’s inactive, I can’t even say whether we’ve investigated them,” he said.
Later, Portman’s spokeswoman, Caitlin Conant, emailed to say that the committee doesn’t comment on its work beyond what’s in the public record. Renaissance Technologies didn’t respond to a request for comment on whether they’re currently being investigated.
Given this probe into his company’s books, it’s no surprise Mercer has invested heavily in keeping financial industry watchdogs from gaining political power. However, you’d think this might conflict with his candidate’s populist zeal.
“[M]y criticism with Washington is they engage in crony capitalism,” Cruz told Bloomberg Politics. “They give favors to Wall Street and big business and that’s why I’ve been an outspoken opponent of crony capitalism, taking on leaders in both parties.”
But the Cruz campaign doesn’t seem to see any problems with the arrangement. When I asked Rick Tyler, the campaign’s senior communications adviser, if he was worried about potential conflicts, he said, “No way.”
Mercer has long backed conservative candidates, and he’s spending heavily on Cruz through a new breed of super PACs started by the super rich.
An anonymous Cruz source told Bloomberg on Wednesday that a franchise of pro-Cruz super PACs—formed just this week—will have raised $31 million by end of the day on Friday. There are four super PACs, called Keep the Promise, Keep the Promise I, Keep the Promise II, and Keep the Promise III.
This is not normal; presidential candidates usually give their imprimatur to one such group, which then rakes in contributions and makes independent expenditures to help the candidate. After all, there are legal limits on how much donors can give to presidential candidates, but no limits on how much they can give to these PACs.
One longtime campaign lawyer said the widespread Republican donor buyer’s remorse exists from the 2012 general elections—when a few powerful super PACs spent massive sums of money to get Mitt Romney elected, and were left empty-handed on Election Night. As a result, billionaires are starting their own PACs to fund political campaigns to have more control on how their money gets spent.
It’s worth noting that this explanation doesn’t make sense to everyone. Dan Backer, an attorney who’s worked extensively with Republican and Tea Party groups on campaign finance issues, said he thought having multiple super PACs could make life unnecessarily difficult for everyone involved.
“All you’re doing is multiplying your reporting and compliance burden for no good reason,” he said. “At first blush, it just strikes me as a little weird.”
Regardless, the operating assumption seems to be that having a cadre of super PACs will give mega-donors like Mercer more power over the dynamics of the presidential election. Saul Anuzis, a Michigan Republican operative who started a Mercer-funded super PAC in the 2014 midterms, indicated as much in an interview with Mother Jones. He told the magazine that he expected to see “more and more super-PACs starting that are donor-centric or district-centric.” In Cruz and Mercer’s case, that prediction seems remarkably prescient.
In 2010, 2012, and 2014 the billionaire spent significant money trying (unsuccessfully) to take out Oregon Democratic Representative Peter DeFazio, who has made his support of higher Wall Street taxes a signature issue. And DeFazio has used the fact that he’s a Mercer target to burnish his fiscal-progressive bona fides.
Mercer helped Lee Zeldin defeat former Securities and Exchange Commission prosecutor George Demos in a 2014 Republican House race primary. Mercer also helped Zeldin win the general election, where he defeated a Democratic incumbent who was a vociferous defender of Dodd-Frank.
But his areas of interest are broader than just elections. He singlehandedly paid for a $1 million TV ad campaign opposing the so-called Ground Zero Mosque. And his affinity for conservative causes seems to go back to his early days doing research for the Kirtland Air Force Base’s weapons lab in New Mexico.
Mercer hinted at his political evolution in a 2014 speech he gave to accept the Association for Computational Linguistics lifetime achievement award. He described rewriting a computer program so that it worked more efficiently, and then said that his bosses at the lab decided to just make the program do more complicated computations.
“I took this as an indication that one of the most important goals of government-financed research is not so much to get answers as it is to consume the computer budget, which has left me ever since with a jaundiced view of government-financed research,” he said.
Excepting Zeldin, Mercer’s chosen candidates haven’t fared particularly well. The billionaire spent $1 million to help pay for the 2012 Republican National Convention, and also gave Karl Rove’s Crossroads GPS significant funds to try to boost Republicans’ fortunes. And he spent $200,000 on Wendy Long’s Senate race. Who’s Wendy Long, you ask? Right.
There’s a kind of funny flip in the media narrative here, too. After Cruz announced that he would run, a Politico sub-hed blared that he was “months behind his competitors in recruiting mega-donors and bundlers.” If the storied $31 million materializes, then those concerns were probably meritless.
But, to paraphrase the poet, with new money comes new problems. And it remains to be seen how a cozy alliance with a guy whose hedge fund allegedly dodged $6 billion in taxes could play out for the senator.
By: Betsy Woodruff, The Daily Beast, April 10, 2015
“Super-Wacko-Birds”: Another Step In The Evolution Of Super-PACs As Instruments For Donor Control Of Politicians
Ted Cruz has managed to distract attention from Rand Paul’s campaign launch by letting it be known that four Super-PACs have been set up to support his own candidacy, with commitments already in for a cool $31 million. If you boil off all the chattering about the size of the contributions (not really all that much in the larger scheme of things) and the amnesia about the role Super-PACs played in 2012, two things seem to make this noteworthy: how early the money came in, and the structure of the Cruz Super-PACS, which suggest an unprecedented degree of specialization and micro-managing of Grandee dollars.
This latter dimension was explored at Bloomberg Politics (which broke the story on the Cruz Super-PACs) by Julie Bykowicz and Heidi Przybyla:
One of the constellation of committees first reported Wednesday by Bloomberg appears to be underwritten by Republican mega-donor Robert Mercer and his family. Campaign lawyers said the arrangement is unlike anything they’ve ever seen before.
“It’s something to watch,” said Jason Abel of Steptoe & Johnson, who is not involved with the super-PACs. Abel and other lawyers speculated that multiple committees, all of which are named some form of “Keep the Promise,” were created to satisfy the whims of individual donors.
“It appears that setting up multiple super-PACs would allow maximum flexibility for certain donors to push their issues,” Abel said. The Campaign Legal Center’s Paul Ryan suggested that the arrangement creates “different pots of money for donors to fund different things.”
A strategist involved with the committees, who asked not to be named because he’s not authorized to speak publicly, corroborated those theories. Each of the super-PACs—Keep the Promise and three “sub-super-PACs” dubbed Keep the Promise I, Keep the Promise II and Keep the Promise III—will be controlled by a different donor family, and will likely develop different specialities, such as data mining, television advertising and polling, the strategist said.
If that’s accurate, it means another step in the evolution of Super-PACs as instruments for donor control of politicians. The 2012 versions were organizations set up by candidates to serve as conduits for big donor dollars that didn’t just go into the hungry maw of the campaign, much less national “issue organizations,” but went directly into ads or other tangible products. It seems the Cruz Super-PACs will allow even greater targeting of dollars beyond the control of the candidate and his dollar-hungry consultants. Add in the early timing, and it’s plausible that these Super-Wacko-Birds feel they are steering rather than simply maintaining the Cruz campaign. I guess that’s how these people want to roll.
By: Ed Kilgore, Contributing Writer, Political Animal Blog, The Washington Monthly, April 9, 2015
“Ted Cruz, Christian Warrior Supreme”: Hell-Bent On Outhustling Everybody For Allegiance Of Evangelical Crackro-Americans
Even as we learn that on at least one occasion the scion of the Ultimate WASP Family, Jeb Bush, identified himself as “Hispanic,” an actual Hispanic proto-candidate for president, Ted Cruz, seems hell-bent on outhustling everybody for the allegiance of conservative evangelical Crackro-Americans. Per a report from Politico‘s Alex Isenstadt, Cruz ran the first campaign ads of the cycle over Eastern Weekend on programs (especially the latest biblical docum-drama, A.D. The Bible Continues, which premiered last night) with special appeal to Cruz’s fellow Southern Baptists. Cruz’s staff was very open with Isenstadt about their candidate’s dedication to Bible-thumping:
Ted Cruz’s aggressive pursuit of the evangelical vote began with a deliberate choice of venue for his presidential announcement two weeks ago: Liberty University, which bills itself as the largest Christian university in the world.
The Texas Republican senator’s strategic play for Christian conservatives comes into even sharper focus this weekend as he rolls out the first television ad of the 2016 race. Titled “Blessing,” the commercial is aimed directly at evangelical and social conservative voters in early voting states, timed for Easter weekend and slated to air during popular Christian-themed programming.
It’s an exercise in narrowcasting that telegraphs exactly how Cruz intends to win the GOP nomination against better-funded and better-known rivals. His advisers say the Liberty University backdrop, the TV ads and even his recent two-day tour of Iowa are all part of a detailed blueprint designed to tap into the power of two distinct GOP wings — evangelicals and the tea party movement.
Since probably about 80% of these two “wings” overlap, it’s an even narrower casting than Isenstadt’s account indicates. But there’s no question the Texan doesn’t have the luxury of being able to rely on any subtle dog-whistling. Mike Huckabee, after all, is an ordained Southern Baptist minister who’s been working this particular audience for eight years. Rick Perry has deep Christian Right roots. Rick Santorum is an accomplished veteran of the campaign to build counter-cultural ties between conservative evangelicals and “traditionalist” Catholics. And Bobby Jindal’s tongue has been lolling out for about a year now in his relentless pursuit of the mantle of the Christian Right’s very best friend.
So Ted’s got to just come right out and say things others may just imply. One indicator of how it’s going may well be the extent to which he deploys the powerful but perilous weapon of his deranged father, the Rev. Rafael Cruz. In “Blessing,” he plays the bit role of a drunken would-be deadbeat dad saved by Jesus. If Rafael starts speaking in his son’s ads, Ted’s campaign to become the Christian Warrior Supreme is either going really well or really badly.
By: Ed Kligore, Contributing Writer, Political Animal Blog, The Washington Monthly, April 6, 2015
“Boldly Claiming Things That Aren’t Even Remotely True”: Ted Cruz’s Biggest Liability Is Probably His Constant Lying
Politicians lie. It’s almost non-controversial; elected officials are advocates who want to show themselves and their causes in the best possible light. Nobody tells the whole truth.
Senator Ted Cruz wants you to think he is different: the video he released Monday morning ahead of his presidential campaign announcement was titled “Time for truth.” Those were also the first words he spoke at Liberty University after making his official announcement.
If Cruz is different, however, it’s because of how boldly he claims things that aren’t even remotely true. His vacations from reality take on a gleeful exuberance, like a college freshman on his first trip to Daytona.
Cruz told a CPAC crowd, for example, that Democrats issued an ominous threat to the Catholic Church: “Change your religious beliefs or we’ll use our power in the federal government to shut down your charities and your hospitals.” Politifact naturally deemed this “both incorrect and ridiculous.”
A quick survey of some other Cruz gems:
- Cruz said ISIS is “right now crucifying Christians in Iraq, literally nailing Christians to trees.” It wasn’t, and Cruz wasn’t able to offer any evidence.
- Cruz described a “strong bipartisan majority” in the House that voted to repeal Obamacare. Two Democrats joined the Republicans.
- He bluntly claimed that “the jurisdictions with the strictest gun control laws, almost without exception … have the highest crime rates and the highest murder rates.” This is not true.
- In recent weeks, Cruz has been using some variation of this line: “There are 110,000 agents at the IRS. We need to put a padlock on that building and take every one of those 110,000 agents and put them on our southern border.” The IRS doesn’t have 110,000 employees, let alone agents. (There are 14,000).
This may read as an oppo-dump of misstatements from a guy who’s now running for president. But anyone who has followed Cruz’s career knows it’s the tip of the iceberg—he frequently just seems to be free-associating conservative grievances with “facts” pulled from nowhere.
In some ways this is a huge asset for Cruz: he is clearly trying to establish himself as not only the most right-wing presidential candidate, but the truth-teller who isn’t afraid to say what conservatives know to be right. (They got that e-mail forward about it, after all!)
Combined with his aggressive play for evangelical voters, in this way Cruz is not unlike the Michele Bachmann of years past—except with a much better political resume and a bigger bankroll.
Of course, the last image many people have of Bachmann is being chased down a hallway by CNN’s Dana Bash in the final days of her congressional career; Bash wanted to confront Bachmann over the thoroughly ludicrous claim that Obama was spending $1.4 billion on personal expenses each year. It wasn’t the first time the mainstream media made hay with Bachmann. Even normally credulous reporters just couldn’t resist the easy layup.
One wonders if Cruz, too, might eventually see his truthiness turn into a liability. Speaking at CPAC is one thing, but standing on the national stage seeking to be president is another.
By: George Zornick, The Nation, March 23, 2015
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