LDN - Business

Special Report: How a corporate PR machine is trying to kill a Wall Street tax

[May 02, 2020] By Pete Schroeder and Michelle Price

WASHINGTON (Reuters) - As Democratic presidential hopefuls descended on New Hampshire prior to the state’s Feb. 11 primary, John Tackeff was busy.

The 27-year-old attended candidate events across the state to raise concerns about a proposed tax on Wall Street financial transactions that much of the field supported. Bespectacled, unshaven and casually dressed, Tackeff wasn’t shy about asking questions.

At a Dec. 22 gathering with former Massachusetts Governor Deval Patrick, Tackeff introduced a woman he said was his mother. Reuters could not verify her identity. Any tax on stock and bond trades would hurt seniors like her and parents trying to save for their children’s college, Tackeff said.

He also raised the issue at meetings hosted by U.S. Senator Elizabeth Warren, Representative Tulsi Gabbard and businessman Andrew Yang, according to video of the four New Hampshire political events reviewed by Reuters.

Tackeff told the candidates he was part of a group called the Partnership to Protect Our Retirement Future. He declined to comment for this story.

But he was no ordinary citizen hanging out at campaign events with his mom, rather a professional political organizer, according to his LinkedIn profile. And the Partnership to Protect Our Retirement Future was the creation of a major Washington public relations firm.

That company, Locust Street Group, tried to create the impression of widespread voter opposition to a financial transaction tax as Democratic voters considered which candidate to nominate to face Republican President Donald Trump in this year's presidential election.

Last year, Congressional lawmakers introduced four bills that would impose a tax on financial transactions of one kind or another. Some of those bills have prominent backers, including Democratic Senators Kirsten Gillibrand, Brian Schatz and Chris Van Hollen, and Representative Alexandria Ocasio-Cortez.

Depending on how such a tax were structured, it could hit the profits of brokers, hedge funds and high-speed traders which process millions of transactions a day.

Locust Street has presented the Partnership as a group powered by average citizens. In fact, Locust Street has been orchestrating the effort on behalf of a client or clients whose identity has not been made public, according to a Reuters examination of Partnership materials, company records, public filings, social media, emails and interviews with people involved.

A Virginia retiree told Reuters she was approached by a Locust Street employee to “become involved as a background person” and paid a “stipend” for her efforts. A South Carolina school counselor said she was recruited to join the Partnership in February and later voiced her opposition to the tax at a campaign event for candidate Tom Steyer. A community organizer hired by Locust Street in December to push the Partnership in Iowa said she quit within weeks because she felt misled about "who we were actually working for."

None of the three were told who is funding the Partnership, they told Reuters.

David Barnhart, founding partner of Locust Street Group, would not discuss the firm’s clients or say who is paying for the campaign.

“We have various stakeholders who are extremely interested in this issue, they came together and asked us to provide the strategy and the grassroots,” Barnhart said. “This is a really diverse coalition and it is comprised of stakeholders from all walks of life.”

Locust Street's website boasts a suite of "grassroots" services it can provide to corporate clients, including ginning up supporters for their causes. An effort to disguise an orchestrated influence campaign as a spontaneous, grassroots movement while masking its true sponsors is often described as "astroturfing."

Industries have employed the strategy for decades to battle regulation in a variety of areas -- smoking bans in restaurants and bars is one example -- by claiming to represent workers who allegedly would lose jobs or consumers who would be inconvenienced.

But some people familiar with astroturfing say Locust Street's recent efforts were the first time they've seen it used in an attempt to influence a presidential primary.

"Targeting Democratic voters as a wedge issue, that’s unique," said Susan Harley, deputy director for the Congress Watch division of Public Citizen, a liberal watchdog group based in Washington D.C. "We haven’t seen those voters be a target of this work before."

Locust Street's Barnhart, who worked on presidential campaigns for Democrats Hillary Clinton and John Kerry, said he believed campaigns that mobilize everyday people to raise issues with their elected officials are important for public policy.

“Strategically, we wanted this to be about the people, and I wanted people to be the face of this,” he said, adding: “These are issues that affect voters. Without these types of efforts they don’t hear about it.”

Barnhart confirmed that Tackeff, the Partnership representative in New Hampshire, was a contract employee.

Locust Street also tried to shape public opinion in Iowa, whose first-in-the-nation caucus was held on Feb. 3. The Partnership attempted to recruit Democratic officials to put their names to op-ed media commentaries declaring their opposition to any financial transaction tax because it allegedly would harm mom-and-pop savers by shrinking their retirement accounts.

Democrat John Norris, past chairman of the Iowa Democratic Party and a former Iowa gubernatorial candidate, showed Reuters an email he received in December from a Partnership representative seeking his help in that effort. Norris declined to participate.

He said it was the second time Locust Street had sought his help to torpedo the financial transaction tax. Norris said that in November, Locust Street contacted his public-policy consulting firm, Iowa-based State Public Policy Group (SPPG), about working on the campaign. Norris said SPPG took a pass because Iowa labor leaders do not oppose higher taxes for Wall Street firms. He said SPPG has performed work for Locust Street in the past.

Barnhart confirmed Locust Street approached SPPG but subsequently "went in a different direction."

'SMOKE AND MIRRORS'

A website touting the Partnership’s efforts, retirementtax.org, exhorts readers to provide their personal information and sign what appears to be an online petition: “Help Us Defeat The Retirement Tax!” The website provides no contact details, address or information about who founded the Partnership. The site champions the interests of “plumbers, electricians…teachers” and other working people who allegedly would be hurt by a financial transaction tax.

Because Locust Street is a public relations firm, not a full-time lobbying shop, it rarely has to disclose who hires it. Barnhart confirmed that Locust Street did some work for embattled e-cigarette maker Juul Labs Inc, which had hired the firm to drum up popular support for its product among Juul customers in anticipation of regulatory bans following a rash of vaping-related injuries and deaths in the United States. Several media outlets reported on the arrangement last year.

The company also did polling work in 2019 and 2020 for the Partnership for America’s Health Care Future, a coalition of hospitals, insurers and pharmaceutical companies that opposes universal health care programs such as “Medicare for All,” according to a press release issued by the healthcare group.

A spokesman for the Partnership for America’s Health Care Future declined to comment. Juul Labs Inc did not respond to requests for comment.

Public Citizen's Harley has been tracking the Partnership since it emerged towards the end of 2019. She said its polished effort is different from that of a true grassroots movement, particularly because its website does not solicit donations or provide any information about the group’s founders and backers.

"It really is a smoke and mirrors campaign," Harley said.

ALARM ON WALL STREET

Progressive Democratic candidates Warren and U.S. Senator Bernie Sanders were among the earliest and most vocal proponents of a “tax on Wall Street” to help fund social programs and close yawning deficits created by Republican-led tax cuts under Trump.

But the idea caught on with centrists too. Former South Bend, Indiana Mayor Pete Buttigieg put it in his tax plan. Billionaire Michael Bloomberg, a former investment banker, shocked his former industry by backing the tax.

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John Tackeff, representing the Partnership, queries presidential candidate Tulsi Gabbard on a financial transaction tax at a campaign event in Portsmouth, New Hampshire, U.S., December 31, 2019. Public News Service/Kevin Bowe/Handout via REUTERS

Even Joe Biden, long seen as a friend to business, has voiced support for taxing trades of stocks and bonds. The former vice president is the presumptive Democratic nominee to face Trump in the Nov. 3 election.

The prospect of a tax on financial transactions has alarmed powerful business groups, including the U.S. Chamber of Commerce.

"With the populism that’s out there on the campaign trail, I think people are taking this a lot more seriously," Tom Quaadman, an executive vice president focused on financial policy for the organization, said earlier this year. The Chamber opposes the tax but is not affiliated with the Partnership, he said.

Reuters contacted four other groups that have come out publicly against a financial transaction tax: the Securities Industry and Financial Markets Association, the Modern Markets Initiative, the Managed Funds Association and the American Retirement Association. All said they had no involvement with the Partnership.

DIRECTOR 'NOT EXACTLY SURE' OF HER ROLE

Brian Parks works as a “grassroots advocacy professional” for Locust Street. His job is to “identify and empower key activists” for the company's clients, according to his biography on the Locust Street website.

Virginia retiree Eileen Greenberg said Parks, an acquaintance from her synagogue, approached her last year about becoming the director of a new venture that would fight the so-called retirement tax. Greenberg agreed, she told Reuters.

Company records show the Partnership was formed on Nov. 14 with Greenberg as its director. Greenberg said she had been helping with administrative tasks like going to the post office and collecting paperwork, for which she receives a "small stipend." She declined to say how much.

"They have professionals that are going to be doing all of the political stuff," said Greenberg. "There's more to come but I'm not exactly sure…what exactly I’m doing," she told Reuters earlier this year.

Parks confirmed that Greenberg had been paid for her work on the Partnership. He told Reuters that Locust Street hired a handful of staff for the Partnership in Iowa, New Hampshire, South Carolina and Nevada -- states whose early Democratic contests gave its voters significant influence in picking the nominee.

In such crucial early races, candidates compete for support at gatherings as small as a few dozen people. These intimate settings allow voters easy access to ask candidates questions and share their concerns with others present.

Tackeff, the face of the Partnership in New Hampshire, said in a Jan. 9 Twitter post that he had attended campaign events for every Democratic candidate. He has worked on a variety of political campaigns in the state, according to his LinkedIn profile.

As Tackeff was voicing his worries about a financial transaction tax in New Hampshire, Michele Dickerson, another political organizer, was airing hers in Iowa with a group called the West Des Moines Democrats. Representing the Partnership, she spoke about a “retirement tax” at the group’s Dec. 21 meeting, according to a post on the organization’s Facebook page.

Victor Dutchuk, president of the West Des Moines Democrats, told Reuters he had not heard of such a tax before that meeting. He said Dickerson’s presentation raised “a lot of concern” among members about potential harm to their retirement accounts.

Dickerson said she applied for her paid role as a "community organizer" through an online job advertisement placed by Locust Street. The ad, seen by Reuters, said it was seeking a registered Democrat in Iowa "to inject a key policy issue into the campaign dialogue surrounding the Democratic caucus."

Dickerson said she resigned that contract job within roughly a month after growing suspicious as to the true nature of the Partnership.

"When I began, I felt great about what we were doing," she said. "But the further along I got into the campaign, I became concerned that perhaps we were no longer attempting to influence policy, but rather influence an election outcome."

Barnhart said that Dickerson had not understood that the purpose of the campaign "was to educate candidates on how damaging the tax would be to millions of Americans."

Locust Street also hired Cornerstone Government Affairs to support the Partnership in Iowa by helping it to "navigate" events surrounding the caucus, Parks said.

Cornerstone is a Washington lobbying giant whose clients have included Google Inc, Boeing Co and Exxon Mobil Corp, according to federal lobbying disclosures.

David Adelman, a Cornerstone director at the firm’s Iowa office, wrote in an email to Reuters that the company had been working on the tax “as part of a campaign organized by the Partnership.” He would not elaborate on his role.

"We've seen a tremendous response here on the ground," Adelman wrote.

RECRUITING PARTICIPANTS

Locust Street’s Parks would not say how many citizen volunteers had signed on to work with the Partnership.

In response to a request from Reuters, he provided contact details for a school counselor in her early 20s from Charleston, South Carolina, who asked to be identified only by her first name: Danya.

Danya said she volunteered for the Partnership in February after being recruited by an acquaintance named Matthew Miller whom she met while both were in college. Miller works for a South Carolina PR and advocacy firm called SPEAK Strategic that does work for Locust Street, Parks confirmed.

Neither Miller nor SPEAK Strategic responded to requests for comment.

Danya said she attended several campaign events in her area, including a February gathering for candidate Steyer, the billionaire philanthropist, where she voiced her worries about the financial transaction tax. She told Reuters she had become "passionate" about the issue and was not paid for her efforts.

She said she was not aware of Locust Street’s involvement with the Partnership or who was funding it, but acknowledged it would be worthwhile to know that.

"I think it's important to know…who is pushing for it for sure," she added.

Parks also provided Reuters with contact details for a Nevada culinary worker named Shamar, who did not return calls.

In Iowa, Norris, the former state Democratic party chair, said a local PR firm also tried to recruit him to the effort.

He said he got a “cold call” in December from a Des Moines-based firm named LS2Group. Norris said an employee of that firm, Jordan Goode, told him she represented the Partnership and asked him to put his name to an op-ed her firm was drafting in opposition to the financial transaction tax.

In a follow-up email to Norris seen by Reuters, Goode said she hoped they could "work together to make this issue known among Iowans, community leaders, and presidential candidates." The email did not mention Locust Street.

Goode did not respond to a request for comment. Joe Shannahan, Partner at LS2Group, confirmed that Goode approached Norris but did not respond to further requests for information.

Barnhart and Parks confirmed that LS2Group was providing Iowa-level expertise to Locust Street, including identifying people to write op-eds.

Reuters found nine op-eds opposing the tax, including several penned by current and former Democratic officials from Iowa and South Carolina. All echoed the Partnership's talking points about how the tax could hurt retirees and pensioners.

Among them was a Jan. 5 piece by Phil Wise, a former Iowa Democratic state representative, that appeared in The Gazette, a Cedar Rapids newspaper.

Wise said he decided to write the piece after hearing through political colleagues that the transaction tax was stirring up voters in candidate town halls.

"It's bubbling up," he told Reuters in January.

(Reporting by Pete Schroeder and Michelle Price in Washington, D.C.; additional reporting by Lawrence Delevingne in New York; Editing by Marla Dickerson)

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