The Corrupting of Congressman Erik Paulsen

Money in EnvelopeThe following article was posted on November 19, 2015, on the CityPages website:

For Omar Ishrak, CEO of Medtronic, these are fabulous times.

Through a flourish of paperwork, Ishrak was instrumental in turning the Minnesota company into a pretend Irish one to skirt corporate taxes. It’s one of the reasons he made $40 million in last year — a $28 million raise over the previous year.

His company’s fortunes have been equally sweet. Last year’s profits pushed $3.1 billion.

But that’s apparently not enough riches for one company. At least if Congressman Erik Paulsen (R-Eden Prairie) has anything to say about it. He’s the author of the regally-titled the Protect Medical Innovation Act. The bill repeals the 2.3 percent tax on medical devices that was enacted to help pay for the Affordable Care Act.

“The medical device tax continues to stifle innovation, cost American jobs, and drive up health care costs…,” said Paulsen when he introduced the legislation earlier this year.

By killing the toll paid on defibrillators, pacemakers, and the like — it costs Medtronic about $150 million annually — America’s deficit will swell by another $25 billion over the next decade, according to Congressional Budget Office estimates.

But Paulsen wanted to hook Ishrak up one better. He wanted taxes already paid to be refunded as well, thus providing Medtronic with another windfall.

“The language is retroactive because the tax … has been a bad idea since Day One,” Paulsenexplained to MPR months ago.

Paulsen, whose district constituency extends from Bloomington to Champlin, has largely argued that nixing the tax is a must because it kills jobs. The facts don’t support his case.

The Congressional Research Service has estimated that, industry-wide, 1,200 jobs at most were lost due to the tax. But the likely number was less than 100. Compared to the 16.9 million people who now have health care due to Obamacare, either figure would seem a fair trade.

Yet Paulsen may be motivated less by facts than the size of his campaign treasury. His unfailing advocacy is a case study in how political favor is purchased.

SInce 2008, the medical devices and supply industry has employed an army of about 400 lobbyists while spending an average of $30 million annually to make friends on Capitol Hill.

Last year, Paulsen was the No. 1 beneficiary of all that loot. The industry gave him almost $100,000. Finishing a distant second was Rep. Ron Kind (D-Wisconsin) with $60,000.

As coincidence would have it, Paulsen’s pushback to the tax began about the same time the industry’s money found its way into his campaign coffers. The industry was a bottom dweller among the Republican’s list of financial supporters in 2010.

But over the course of his career, Paulsen has now pulled in almost $500,000 from device makers, according to the Federal Election Commission. (He did not respond to repeated interview requests.)

His bill was somewhat neutered when it passed the House in June. Scratched was the refund taxpayers would have sent the likes of Ishrak. But after slipping him a half-million dollars, rest assured the industry still sees him as its principal shill.

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