The Huffington Post: Paul Ryan Sought Tariff Breaks For Wisconsin Corporate Donors

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(Original Post)

Jason Cherkis

Posted: 10/11/2012 6:23 pm EDT Updated: 10/11/2012 6:37 pm EDT

WASHINGTON -- Before he became known for his devotion to Ayn Rand novels and his expertise on the ballooning U.S. deficit, Rep. Paul Ryan concerned himself with air freshener components -- specifically, electric air fresheners, including those with "warmer units."

In 2005, the Wisconsin Republican authored legislation that would suspend the tariffs on such parts. The future GOP vice presidential nominee made no effort to hide the reasons behind his sudden interest in air fresheners. After introducing the two bills, he highlighted SC Johnson, a Racine, Wis., company that would benefit from the legislation.

"I rise today to introduce legislation on behalf of SC Johnson, a family-owned and family-managed company," Ryan stated in prepared text inserted into the Congressional Record. "The company is a global manufacturer and marketer of a broad range of well known consumer household brands including Windex, Raid, Glade, Pledge, Edge shaving gel, Ziploc and Scrubbing Bubbles. SC Johnson has 12,000 employees worldwide and 3,000 employees located in Racine, WI."

Ryan then got down to the air-freshener business. "The two bills that I am offering today will help accomplish this important objective by suspending duties for multiple components of unique air freshener products that are imported from abroad and incorporated into finished products assembled by SC Johnson in the United States," he stated. "One of the devices is a continuous-action device that pumps fragrance throughout a room. The other device is plugged into an electrical outlet and diffuses warmed fragrance throughout an area. No comparable products are produced in this country. Suspending the tariffs will bring down SC Johnson's costs of doing business at home."

Ryan's tariff legislation was recently noted by American Bridge 21st Century, a Democratic research group, which tipped off HuffPost.

Like earmarks and corporate welfare, tariff bills are some of the clearest -- and most unreported -- examples of influence peddling in Washington. Instead of government funds being funneled to a politician's pet project, tariff suspensions offer what are essentially tax breaks to targeted corporations.

They're the fruits of lobbying at its most direct. "It's in these obscure things where influence really happens because nobody is paying attention," said Lee Drutman, a senior fellow at the Sunlight Foundation, a nonpartisan, nonprofit government watchdog group. "The only people that are paying attention is the company that benefits and that congressman that's supporting this. It's a pretty direct version of giving a subsidy to a company."

In a blog post on tariff bills, Drutman's Sunlight colleague Ryan Sibley referred to the practice as "nearmarking." The numbers are large. In 2004, Congress passed a miscellaneous bill with 433 tariff suspensions. Two years later, 280 suspensions passed, generating a savings of $660 million for corporations. "It's obvious that these are favors," Sibley said in an interview with HuffPost.

More recently, Ryan suggested he believed such favors should be off-limits when he spoke to The Christian Science Monitor in February 2012. "Republicans made the mistake of thinking, 'I am being pro free enterprise because I helped X company get this thing in the [tax] code,' when actually what you are doing is ... damage to the free-enterprise system" because you are helping tamp down competition, he said.

As for the Romney campaign, it has been extremely critical of China's trade policies, accusing the country of "cheating" by manipulating those policies to benefit its own companies. Mitt Romney has insisted that President Barack Obama has not been tough enough on China for such behavior.

The Romney campaign did not respond to a request for comment.

Tariff suspensions are "another example of Congress picking winners and losers," said Rebecca J. Wilkins, senior counsel for federal tax policy with the nonpartisan Citizens for Tax Justice.

SC Johnson's then-CEO Bill Perez contributed thousands of dollars to Ryan prior to his introducing the air freshener bills.

The company defends the tariff suspensions now. "We've talked to Rep. Ryan over the years about tariff trade barriers," said Jam Stewart, a SC Johnson spokesperson. "Through congressional action, SC Johnson has sought temporary suspensions to the duties for certain component imports for its manufacturing of products at our largest global manufacturing facility located in Mt. Pleasant, Wis. The temporary suspension of tariffs helps increase our global competitiveness."

Stewart added that Ryan had introduced a third tariff bill "on our behalf." Only one bill, she said, was passed by Congress and enacted into law. Wisconsin Democrats also supported the tariff legislation, she noted.

That same year, Ryan sought to suspend the tariff on microphone parts that are installed in cars -- "electret condenser microphone modules." Again, in introducing the bill, Ryan tied his request to a company based in Wisconsin.

"Johnson Controls, Inc. (JCI), a Fortune 500 company headquartered in Milwaukee, Wisconsin, employs 2,500 workers in the state and thousands more throughout the country. As the world's largest producer of automotive interiors, JCI works to develop and produce seating systems, instrument panels, door systems, overhead systems, and automotive electronics," said Ryan's statement in the Congressional Record. "The microphones covered in this legislation are a key component of JCI's electronic telecommunications systems. ... [B]y temporarily eliminating this tariff, this bill will reduce JCI's production costs and help them remain competitive against international competition."

The car microphone tariff ended up in a subsequent bill that was enacted into law. Johnson Controls' former CEO, James Keyes, donated more than $12,000 to Ryan's congressional campaigns.

"We will not be in a position to offer any comment," the company's spokesperson emailed HuffPost.