The Knives Are Coming Out in the Race for Congress

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June 1, 2020

By Barrett Seaman –

Going into the final three weeks before the June 23^rd primary, the race for the District 17 congressional seat is getting a little edgy.

In one of the Zoom debates, which have been remarkably civil overall, Mondaire Jones took a shot at David Carlucci for suggesting that he favored Medicare for all when his actual position includes a public option. Then another campaign dug up a YouTube video of Jones, speaking at a forum in Nyack back on February 20^th, in which he allowed that he would support a public option as an interim step towards a single payer system, an apparent contradiction of Jones’ most differentiating position in the campaign.

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Last week, a Westchester-based pro-choice group launched a very public campaign to educate voters (especially in Rockland County) about David Carlucci’s ties to the Independent Democratic Caucus that helped to squelch a lot of progressive legislation in Albany. What is remarkable about the anti-Carlucci mailers and robocalls is that they do not favor any of the other candidates—just anybody but Carlucci.

This week comes another exchange in what is looking more and more like a circular firing squad. A pledge was circulated among all seven remaining candidates, asking them to sign onto the following commitment: “To provide our potential constituents with the peace of mind to know that our personal financial interests will never interfere with our responsibility to crack down on this industry, we the undersigned pledge to liquidate any direct stock holdings in pharmaceutical companies before assuming office in January of 2021.”

Now which of the seven candidates might that pose a problem for?

Not surprisingly, the one with all the pharmaceutical stock. According to his campaign, Schleifer first learned of the pledge a few hours before the Journal News story went up online. All the others had by then seen it and signed it. Schleifer refused.

It is well known that Schleifer’s campaign has been largely funded from appreciated stock holdings in his father’s company, Regeneron, the Tarrytown-based pharma company that is in the forefront of the search for a treatment for COVID-19, coming off the successful development of a treatment for Ebola. As reported by Tax Watch columnist David McKay Wilson in the Journal News, Adam has about $25 million in Regeneron stock and perhaps that much again in other pharmaceutical companies.

The only other candidate with direct (not held in a mutual fund) drug company holdings is Evelyn Farkas who, in signing the pledge, promised to sell those shares before taking office.

The part of Schleifer’s platform position on healthcare dealing with drug policy reveals no favoritism towards Big Pharma. He advocates expanding Medicare’s ability to negotiate drug prices, capping out-of-pocket drug costs, requiring rebates if drug prices increase faster than the pace of inflation and penalizing companies who try to “game the patent system” by delaying their competitors from producing cheaper generic drugs.

So why didn’t he sign the pledge, like all the others? It’s widely known that his family money is funding the most robust and ubiquitous TV and mail campaign of any candidate in the race. This week, his latest TV ad began airing, featuring real citizens of CD-17 vouching for the benefits Schleifer has already brought to them in his limited local governmental roles. If these prove effective and he wins the primary, he can figure out later how best to fulfill a divestment pledge.

Schleifer did, when pressed during an earlier forum say that he “would look at something like a blind trust or whatever it would be and consider that possibility,” but when confronted on short notice with the pledge, he chose to punch back. “This ‘pledge,’” he was quoted in Wilson’s story as saying, “is a cynical and transparent attempt by career politicians and bureaucrats trying to obscure their substantial holdings, campaign contributions, and family connections to payday lenders; defense-industry bombmakers; fossil-fuel companies, and, most ironically ‘big pharma.’” Without going too far into the weeds as to which of his opponents Schleifer was referring to, there’s plenty of grist in there for opposition researchers to grind in the weeks ahead.

The pledge placed Schleifer between a rock and a hard place. If he divests of his Regeneron holdings, he would face enormous capital gains taxes. And if, as it is assumed, some portion of his holdings are in Class B voting stock, he could only sell them to other Class B stockholders, meaning his family and maybe one of two company founders outside the family. Anyone who knows anything about family company stock will understand that there’s no real market there and that the best Schleifer could do would be to place those shares in some sort of trust while serving in Congress. Even if he did, those vast holdings could still influence his position on a prospective vote affecting the industry.

A side issue is, who’s idea was it to launch this pledge. No one has ‘fessed up to authorship (one campaign manager called it “a group effort”). All six of the others signed the pledge. In a race in which roughly twice as many voters are undecided as are supporting any one candidate, anyone might reap the benefit of a softening of support for Schleifer.

More polls are now being undertaken that will, in the coming days, shed more light on voter movement, if there is any. Cable channels are now thick with candidates’ ads. The New York Times editorial board is expected to endorse soon, which will matter to some. And yet nothing, to date, has caused one of the campaigns to call it quits, making it no less difficult to predict the outcome than during the heart of COVID darkness in March and April.

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