Republican Sen. Rand Paul, in a splashy announcement of his presidential bid Tuesday, seized his momentary monopoly on the spotlight to signal what kind of campaign he plans to run. True to form, the freshman Senator from Kentucky and former small-town ophthalmologist — who rose to national prominence in 2010 as an anti-establishment Tea Party darling — is once again running as an outsider.
He’s spelling out that oppositional appeal in his newly unveiled slogan, “Defeat the Washington machine. Unleash the American dream.” And it was the organizing theme of the speech he delivered to a whooping, midday crowd gathered at the Galt House Hotel in downtown Louisville, Ky.
“We’ve come to take our country back from the special interests that use Washington as their personal piggybank,” Paul said in his opening salvo before blasting “the special interests that are more concerned with their personal welfare than the general welfare.”
But a successful insurgent candidacy can be like a firework, good for one-time use only. Once you’ve won, you join the power structure you tilted against. With an eye fixed on just this sort of a White House run from the start, Paul has done better than most holding at himself apart. And the policy grist of his kickoff address hewed to Tea Party bedrocks: a balanced-budget amendment, term limits, and a “read the bill” requirement for members of Congress. Yet Paul’s central challenge — calibrating his rabblerousing sales pitch against the need to court the moneyed interests who’ll help fund this multimillion-dollar project — only grows more acute as he steps onto the national stage.
Evidence of that uncomfortable balancing act popped up in the middle of Paul’s speech, when he flogged his proposal to let multinational corporations, which collectively have $2 trillion in profits stashed overseas, bring that money home at a bargain-basement rate. The bill, which he introduced in January along with California Democrat Sen. Barbara Boxer, would give companies five years to repatriate their offshore profits paying only a 6.5% tax rate, compared to the 35% rate that the current code demands. They named it the Invest in Highway Transportation Act because the idea would be to use the revenue generated by the tax holiday to shore up the federal highway trust now cruising on fumes.
But the nonpartisan Joint Committee on Taxation panned a similar bill in 2014 as a long-term revenue loser, projecting it would cost the government $95.8 billion over 10 years. The analysis pointed to a sort of moral hazard behind such holidays: If companies can reasonably expect that policymakers will periodically wave their overseas earnings home at such steep discounts, they’ll never bring that money back in the interim. In fact, that phenomenon likely goes a long way toward explaining the situation today, since the corporate interests pushing a holiday already succeeded once in convincing Congress to approve one, back in 2004. The chairman of the tax-writing Senate Finance Committee, Utah Republican Orrin Hatch, shares the Join Tax Committee’s skepticism, noting in a statement responding to the Paul-Boxer plan that “tax holiday proposals designed to pay for the transportation bill sound great until you look at the details,” adding that it is “just wrong” and “just bad policy, plain and simple.” And Hatch is hardly a populist crusader.
So how did Paul emerge as the newest Republican advocate of this corporate tax gambit? The provenance of his Democratic cosponsor offers a clue: Boxer has backed the plan since the first holiday, on behalf of home-state Silicon Valley tech giants that have led the lobbying charge for it (think: Apple, Cisco and Oracle). Paul has assiduously courted those tech elites, finding he can make common cause with their anti-tax approach without straining his libertarian bona fides.
Indeed, he first landed on the industry’s radar in May 2013, when he stood up for Apple at a Senate hearing designed as a bipartisan shaming of the company’s tax avoidance schemes. A week later, he made his first trip as an officeholder out to Silicon Valley and received a hero’s welcome. He’s been back many times since, seeking to build something of a fundraising home base there to offset the campaign contributions he’ll forego from the financial services industry as the candidate who rails against “fat cats, rich people, and Wall Street.” But a pol who stakes his case on inveighing against entrenched power in all its guises can’t be seen serving it. That may help explain why Paul infamously shushed CNBC anchor Kelly Evans when she challenged him on the merits of the tax holiday. Unfortunately for the newly minted presidential hopeful, that tactic won’t resolve the more basic tension at the heart of his bid.