Schumer’s Way

Senator Schumer is on a roll. After coasting to an easy and well funded re-election in 2004, the senior senator from New York is thriving as the chairman of the Democratic Senatorial Campaign Committee. Under Mr. Schumer's leadership, the DSCC has out-raised its counterpart, the National Republican Senatorial Committee, and has nearly twice as much cash-on-hand as the NRSC heading into the summer.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />

Mr. Schumer, you see, is a fund-raising machine, prolific at filling the coffers for his own races as well as the races of his party's other senators and Senate hopefuls.

The secret to Mr. Schumer's success is his close friendship to big business, especially Wall Street. In the last election cycle, according to the Center for Responsive Politics, Mr. Schumer was among the top three lawmakers (not counting presidential candidates) at getting contributions from many industries, including securities and investing, accounting, real estate, architects, liquor, banks, software, and textiles. In turn, the key to his friendship with big business is his liberal big-government agenda.

Mr. Schumer's philosophy and voting record – favoring higher taxes, greater federal regulation, and increased government control over private property – have won him the favor of big business. Eminent domain, federal regulation of tobacco, and tax-code tinkering provide recent examples of Mr. Schumer's big business-big government plans.

Eminent Domain

Last June, the U.S. Supreme Court upheld the authority of state and local governments to seize private property through eminent domain and hand it over to developers. The Supreme Court was split 5-to-4 on the Kelo v. New London case, but the public was far less divided, roundly cursing the decision as an affront to basic property rights. Congress is currently considering a bill that would limit governments' ability to use eminent domain for private gain, but homeowners shouldn't expect Mr. Schumer to take their side.

Three days before Kelo, Mr. Schumer was touting the work of a task force he had chaired and helped create a few years back. Mr. Schumer's “Group of 35” set out to find more office space in Manhattan. In a June 2001 report, one of the obstacles Mr. Schumer's group cited was “incomplete assemblage.” In other words: Sometimes other people own the land you want to build on.

The report lamented: “If a potential development site requires the purchase of numerous parcels controlled by various owners, this process can be quite a challenge. … [A]n existing property owner can refuse to sell….”

Mr. Schumer's group had a solution to this vexing problem. His report recommended “[m]aking greater use of public condemnation for assemblage,” explaining that “[t]he use of the powers of eminent domain eliminates a number of the barriers to assemblage by compelling property owners to sell and severing the leases of existing tenants.”

Mr. Schumer's paper specifically called on the government to go after “holdouts,” those pesky landowners who won't sell, even when it is for the greater good (remember, we're talking office buildings here, not schools or military bases).

The report exhorts the government to “[a]dopt the practice of removing office site holdouts via condemnation. Holdout condemnation would permit the completion of assemblage when 85% of a site is controlled and development plans are ready to proceed. This would eliminate the leverage of one or two small property owners who might refuse to sell, thereby allowing private developers to move ahead on a development.”

What Mr. Schumer advocated in 2001 was what the Kelo Court approved in 2005: using eminent domain to take property from small landowners and give it to bigger landowners. The justices ruling in favor of this eminent domain for corporate gain included Mr. Schumer's favorites: Justices John Paul Stevens, Ruth Bader Ginsburg, Stephen Breyer, and David Souter. The dissent included Mr. Schumer's boogey men, Chief Justice William Rehnquist, and Justices Clarence Thomas and Antonin Scalia.

Given his full-throated support of eminent domain for corporate gain, it is no surprise that Mr. Schumer reeled in $1.8 million from the real estate industry during his first term, according to the Center for Responsive Politics – more than any other Senate candidate that year.

Big Tobacco

Mr. Schumer was also the top recipient of tobacco money of all senators seeking re-election in 2004, pulling in even more than Senator Bunning, the Kentucky Republican who faced a tough re-election battle that year.

Why does Big Tobacco love Mr. Schumer? Maybe it's because Mr. Schumer knows that federal regulation can protect the biggest cigarette companies from smaller competitors.

In July 2004, Mr. Schumer voted to grant the Food and Drug Administration the authority to regulate tobacco. It might seem odd that Big Tobacco would want FDA regulation over its products, but it's true. In its 2004 annual report, Altria (the parent company of Philip Morris) reports that it, “endorsed federal legislation introduced in May 2004 … known as the Family Smoking Prevention and Tobacco Control Act, which would have granted the FDA the authority to regulate the design, manufacture and marketing of cigarettes and disclosures of related information.”

All regulation adds to overhead, which creates what economists call a “barrier to entry.” Philip Morris controls half of the tobacco market, but it faces serious threats from small local cigarette companies. Regulation might keep out potential start-ups. Also, the FDA would curb cigarette advertising, which is just fine if you own the brands such as Marlboro that everyone already knows.

Mr. Schumer this year proposed a bill that would outlaw selling cigarettes by mail – a measure that would shut down some of Philip Morris's competition, including Indian reservations or small cigarette companies without the same sort of massive access to retailers that the big companies have.


On taxes, Mr. Schumer plays a similar game. He is a near-automatic vote against tax cuts and for tax increases. Mr. Schumer has voted against repealing the marriage penalty, against repealing the estate tax, and against lowering all individual income tax rates. He argues that the government can't afford to cut taxes, especially not when the rich will benefit.

Meanwhile, in 2004, Mr. Schumer inserted into an unrelated bill a special tax break for one wealthy developer. In a press release at the time, Mr. Schumer bragged, “that the Senate late last night passed a tax bill that moves the DestiNY mega-mall in Syracuse deal closer to completion.” Mr. Schumer had crafted the special favor for the mega-mall, creating tax-exempt “green bonds” that would provide tax incentives for investors in this specific project.

DestiNY mega-mall is the gargantuan project of a wealthy upstate developer whose family has contributed $6,500 to Mr. Schumer's campaigns in recent years, Robert J. Congel, who also funds dozens of politicians in both parties.

Those tax-exempt bonds are made even more attractive when tax rates are higher – which has always been Mr. Schumer's goal.

Mr. Schumer's success as a fundraiser involves his keen perception that if you want to help big business, the best tool is often big government – as long as you are willing to pass the cost onto consumers, taxpayers, and competitors.