Senator Dick Durbin: Political Thug

by Stephen Moore
The government intimidation campaign against Walgreens worked.

Score another victory this week for the Senate’s lead political thug, Dick Durbin. The second-highest-ranking Senate Democrat and lead political henchman coerced retail giant Walgreens to stay in Illinois and not move as planned to Switzerland.

The government’s intimidation campaign against Walgreens was so heavy-handed that it would make Richard Nixon blush. Walgreens was set to move in order to reduce its tax liability and avoid the 40 percent income tax rate it pays as an Illinois-based corporation. This would have saved the company and its mostly American shareholders an estimated $4 billion over five years.

But back in July Mr. Durbin sent an astounding letter to Walgreens CEO Gregory Wasson warning the company, and demanding that it abandon its plans to relocate.

He lambasted the company’s move as a “clever tax dodge,” and threatened that “deeply patriotic” customers would not “support Walgreen’s decision to turn its back on the United States.” He added, subtly, that “nearly all of your $2.5 billion in profits earned last year were from sales to U.S. taxpaying customers.”

That was followed by other threats of political retaliation. “Much of Walgreens financial success was built on programs and infrastructure provided by the U.S. government” and “the future success of Walgreens will continue to depend on U.S. taxpayers and government-funded programs.” Just in case Mr. Wasson didn’t get the point, he reminded him that “nearly 25% of Walgreens profits were from U.S-funded Medicare and Medicaid programs.”

Unfortunately, our elected officials in Congress now feel they have the political power to carry out these threats with impunity.

Now Mr. Durbin is celebrating the Walgreens shakedown. The big losers here were the shareholders — including thousands and thousands of middle class Americans — whose retirement funds include Walgreens stock. The stock fell in the 24 hours after the announcement by more than 10 percent and so shareholders lost at least $6 billion on the announcement. That’s a lot of financial wreckage from one single senator.

In case there is any doubt that Mr. Durbin’s threats were heard, the statement by Walgreens about why it was not moving after all was revealing. The firm cited big risks of “consumer backlash and political ramifications, including the risk to our government book of business.” In other words: We got your message, Mr. Durbin.

This isn’t nearly the first time Mr. Durbin has abused his powers of office in order to get his way. In another high-profile incident, the Illinois senator wrote a letter to 300 major corporate and foundation backers of the conservative state legislative group, ALEC. In the letter Mr. Durbin demanded to know whether these donors were still supporting ALEC and whether they supported Stand Your Ground laws in states. Mr. Durbin also demanded of ALEC that is release its donor list to the senator. But educational groups like ALEC aren’t required to disclose their donors — and, of course, left-wing groups don’t do so.

ALEC publicly and courageously challenged the propriety of the Durbin letter. “Donors to 501(c)3 organizations are specifically protected by the Internal Revenue Service and the Supreme Court to shield them from the type of political intimidation found in Sen. Durbin’s letter,” said ALEC first vice chair and Iowa Majority Leader Linda Upmeyer, in a statement.

But Mr. Durbin lives by his own set of laws. He sits on a political perch that he uses as a weapon to hurt companies and organizations he doesn’t like or who won’t lick the jack boots he applies to their necks. This isn’t just hard-ball politics, it is shake-down politics.

As for the Walgreens situation, it is certainly good news for Illinois that the firm is staying in the Chicago area for now. But the competitiveness of the Land of Lincoln and the country as a whole will continue to erode thanks to Mr. Durbin’s refusal to fix our tax system. Mr. Durbin is first in line to ridicule supply siders who believe that tax rates matter in terms of where businesses and jobs are located. But the entire Walgreens saga is nothing if not a shining example that tax rates matter a lot. Mr. Durbin has worked to keep the corporate tax rate at 35 percent — and he was supportive of the move in Illinois to raise its rate to about 9 percent. This means that Illinois is about the most expensive place in the world to do business when it comes to corporate taxes. And he wonders why companies are leaving.

Mr. Durbin is up for reelection this November and the race doesn’t show up on many lists as competitive because this is a blue state. But don’t be surprised if fed up Illinois voters have tired of Durbin’s ham-handed antics and his economic illiteracy. Illinois voters may vote for hope and change in November, and if they do, Dick Durbin could be the nation’s biggest surprise casualty.

You heard it here first.

— Stephen Moore is chief economist at the Heritage Foundation.

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