Sen. Al Franken (D-Minn.) has spent weeks pounding his Republican challenger’s involvement in a deal that allowed a U.S. pharmaceutical firm to slash its tax bill by putting its headquarters in Ireland.
Franken has latched on to Mike McFadden’s role in the 2012 Jazz Pharmaceuticals merger to make the broader populist case that he’s better suited to help the middle-class, and that McFadden has taken advantage of an economic system rigged for the wealthiest.
{mosads}“Inversions are among the many issues the campaign is discussing,” said Alexandra Fetissoff, a spokeswoman for Franken’s campaign. “Mr. McFadden’s ties to them, and the fact that his company made $11 million on one such deal, further illustrate the differences between the two candidates.”
Franken is widely projected to win a second term over McFadden, an investment banker, with the last public poll giving him an 18-point lead in the race.
His television spots on the offshore tax deals known as inversions, struck this year by Burger King and a string of pharmaceutical companies, are among the few examples of Washington Democrats seizing on the issue in their campaigns.
Senate Majority Whip Dick Durbin (D-Ill.), who fought to keep the pharmacy chain Walgreen from reincorporating in Switzerland, and Rick Weiland, a candidate in the narrowing South Dakota Senate race, have denounced the tax deals.
But Democrats in the highest-profile Senate races have barely touched the issue.
Those Democrats include incumbents in Southern states like Arkansas, Louisiana and North Carolina that have a history of supporting populist policies.
Even those close to Franken’s campaign insist that the issue hasn’t been a central focus, despite Minnesota’s own Medtronic being involved in one of the most prominent inversion deals.
Over the summer, President Obama and senior Democrats such as Durbin and Sen. Chuck Schumer (N.Y.) had pushed inversions as a campaign issue, with Obama tagging companies as “corporate deserters” in July.
But Washington Democrats now acknowledge that inversions haven’t caught on, even as they insist that the party’s candidates are making the case for a fairer economy and tax system.
Justin Barasky, a spokesman for the Democratic Senatorial Campaign Committee, said how that message is delivered varies by the state. Senate candidates have campaigned to increase the minimum wage and extend expired jobless benefits. And in Georgia, Michelle Nunn, the Democratic candidate for Senate, has knocked Republican David Perdue for saying he made his career out of “outsourcing” jobs.
“I think it happens far too often that folks in D.C. think something is going to have a huge impact on elections when often voters are more focused on the two candidates on the ballot and local issues at hand,” Barasky told The Hill. “Inversions haven’t been at the top of the list of campaign issues this cycle.”
Democrats have been far more likely to campaign on taxes this midterm season, running roughly three out of every four advertisements in Senate campaigns, according to Kantar Media Intelligence.
But those spots are more likely to accuse Republicans of seeking tax breaks for corporations that want to shift jobs overseas — a more familiar line of attack that allows Democrats to avoid the more complicated details of inversions.
Even so, some liberals think Democrats shouldn’t have abandoned the offshore deals as a midterm issue, especially given the blowback Burger King received for its merger with the Canadian doughnut chain Tim Hortons.
“I’m a little mystified,” said Frank Clemente of Americans for Tax Fairness.
Clemente said that Democrats shouldn’t have much trouble explaining the issue to voters. Americans for Tax Fairness also has sponsored polling that found that seven in 10 voters in Iowa and Colorado opposed inversions, and Clemente said the issue appeals more to swing voters than issues like raising the minimum wage.
“In these deeper red states, I think that this would have been a good issue because of how it bridges to the middle of the electorate,” Clemente said. “I don’t know why it’s not.”
In Minnesota, Franken has become an unlikely champion for inversion opponents.
Franken has not been one of the Democrats pushing legislation to make it harder for companies to reincorporate abroad. In June, he called the tax implications of Medtronic’s proposed merger with another medical device maker, Covidien, troubling. But he also said the potential job growth for Minnesota was “great.”
McFadden’s campaign didn’t respond to requests for comment. But McFadden downplayed his role in Jazz Pharmaceuticals’ merger with Azur Pharma, the Irish pharmaceutical company his firm represented, in an August interview with the Associated Press.
“I think inversions are bad for America,” McFadden said.
Lazard Middle Market, McFadden’s firm, made $11 million off that deal, the AP reported. Franken’s campaign has also used McFadden’s ties to Bermuda — the tax haven where Lazard’s parent company is incorporated — against the Republican.
But even as Franken goes on the attack, some Democratic strategists say inversions never had a shot to be a broader campaign issue.
One operative said Democrats were right to focus on economic matters in an election where voters clearly are frustrated.
But Democrats themselves aren’t totally united on how to deal with inversions, with the DSCC chair, Sen. Michael Bennet (Colo.), among those publicly wary of proposed fixes. Senate Democrats didn’t hold an inversion vote before leaving Washington for the election, and Obama deferred to Treasury Secretary Jack Lew when his administration announced new executive actions last month.
Republicans have also made the case that they’re not pro-inversion, but that they believe the only true fix comes with a broader overhaul of the tax code.
“If Sen. Schumer thought this was going to be an issue on the campaign trail, he was sadly mistaken,” the Democratic operative said. “Some of these folks were trying to jam it into the campaign, when Democrats are still trying to work through this.”