“A Fatal Curse On Democracy”: Corporate Cowards Divert Shareholder Funds Into “Dark Money”
If corporations are people, as the Supreme Court pretends, they certainly are loudmouths, constantly telling us how great they are and spreading their names everywhere.
Amazingly, though, these corporate creatures have suddenly turned demure, insisting that they don’t want to draw any attention to themselves. That’s because, in this case, corporations are not selling, they’re buying — specifically, trying to buy public office for their pet political candidates by funneling millions of corporate dollars through such front groups as the U.S. Chamber of Commerce. In turn, the fronts use the money to air nasty attack ads that smear the opponents of the pro-corporate candidates.
Why do corporations need a middleman? Because the ads are so partisan and vicious that they would appall and anger millions of customers, employees and shareholders of the corporation. So, rather than besmirch their own names, the corporate powers have meekly retreated behind the skirts of Republican political outfits like the Chamber.
But don’t front groups have to report (at least to election authorities) who’s really behind their ads, so voters can make informed decisions? No. Thanks to the Supreme Court’s infamous Citizen United edict in 2010, such groups can now pour unlimited sums of corporate cash into elections without ever disclosing the names of their funders. This “dark money” channel has essentially established secret political campaigning in America.
That’s why shareholders and other democracy advocates are asking the Securities and Exchange Commission to rule that the corporate giants it regulates must reveal to shareholders all political donations their executives make with corporate funds. After all, the millions of dollars the executives are using to play politics don’t belong to them — it is shareholder money. And by no means do shareholders march in lockstep on which political candidates to support or oppose.
Hide and seek can be a fun game for kids, but it’s infuriating when CEOs play it in our elections. Last year, corporate interests sought to elect their candidates by hiding much of their politicking not only from company owners but also from voters. In all, $352 million in “dark money” poured into our 2012 elections, the bulk of it from corporations that covertly pumped it into secretive trade associations and such scams as “social welfare charities,” run by the likes of Karl Rove and the Koch brothers.
Since underhanded, anonymous electioneering puts a fatal curse on democracy, the SEC should at least compel corporate managers to tell their owners — i.e., the shareholders — how and on whom their money is being gambled in political races. It’s a simple reform, but — oh, lordy — what a fury it has caused among the political players.
A rare joint letter from the U.S. Chamber, Business Roundtable and National Association of Manufacturers has been sent to the CEOs of the 200 largest corporations in our country, rallying them to the barricades in a frenetic lobbying effort to stop this outbreak of honest, democratic disclosure.
House Republicans are even going to the extreme of trying to make it illegal for the SEC to let shareholders (and the voting public) know which campaigns are being backed by cash from which corporations. Hyperventilating, these powerful scaredycats claim to be intimidated by the very suggestion that they tell the people what they’re doing in public elections.
Their panic over having a little sunlight shine into their deepest bunker reveals just how destructive they intend dark money to be for our democracy. Ironically, the Supreme Court’s chief assumption in allowing unlimited corporate cash into the democratic process was that shareholders would be informed and involved, and provide public accountability for their companies’ political spending.
Even Justice Antonin Scalia, long a cheerleader for corporate politicking, is no fan of hiding it from the electorate: “Requiring people to stand up in public for their political acts fosters civic courage,” he has written, adding that a campaign “hidden from public scrutiny” is anathema to self-governance. He also deems it cowardly: “This does not resemble the Home of the Brave,” he pointedly noted.
By: Jim Hightower, The National Memo, May 8, 2013
“Because Corporations Lie”: Voluntary Political Transparency Is Just Not Enough
The Securities and Exchange Commission took a bold step in considering new rules that would require publicly traded companies to disclose political donations. This is a good idea because since the Citizens United decision, corporate entities have moved away from disclosed campaign committees, and instead have begun funneling cash into secret campaign funds, mostly 501c nonprofits.
Last year, The Nation published an investigation that debunked the idea that corporate money has flowed mostly to so-called Super PACs in the wake of Citizens United. Rather, big business has embraced nonprofit trade associations and issue advocacy groups to pour hundreds of millions into direct campaign advocacy. The distinction is important because Super PACs, for all their problems, at least disclose their donors and spending records; trade associations and issue advocacy groups do not.
To the credit of reformers, particularly the Center for Political Accountability and several investor groups, many large corporations have voluntarily adopted transparency measures. While we should applaud corporations that go beyond the letter of the law in disclosing these funds, a system based on voluntary participation does not come close to solving the problem of secret political slush funds. In some cases, voluntary disclosure actually obscures the truth.
Take health insurance companies. Aetna, Aflac and WellPoint are among several that have adopted voluntary disclose rules to provide the public and shareholders with a window into their giving patterns. There’s one problem: they aren’t truthful.
In 2009, the major health insurers, including the aforementioned companies, secretly funneled over $86.2 million to the US Chamber of Commerce, a trade association, using another trade association as a proxy to move the money, to run television and radio advertisements against health reform. Aetna’s disclosures that year only revealed $100,000 to the Chamber. WellPoint and Aflac failed to report those donations, as well. The following year, during the midterm elections, Aetna again secretly provided $7 million to “American Action Network,” a social welfare nonprofit used to run partisan attack ads against Democrats, along with the Chamber, which spent over $50 million on a partisan campaign to elect mostly Republicans that year. Again, Aetna’s voluntary disclosure report made no mention of the money, which became public through an inadvertent regulatory filing.
Similarly, several major oil companies have adopted voluntary disclosure guidelines that are fairly useless. ExxonMobil and Valero Energy are two examples: Both firms proudly produce annual reports on which candidates and political parties they fund. The problem? That data can be found already on the Federal Elections Commission website and related state-level disclosure websites, so there’s nothing new. As The Nation has reported, oil companies often work through secretive trade associations like the American Petroleum Institute, which has become more active in financing campaign-related advertisements and grants to other dark money groups.
As Senator John McCain and others have noted, the hundreds of millions slushing in secret money is bound to lead to another major scandal. And that scandal will likely to produce a lot of liability for the corporations involved. Moreover, as attorney Jerry Goldfeder noted in a letter to the New York Times this week, the I.R.S. has sent a questionnaire to 1,300 nonprofit groups questioning their tax exempt status. The increased scrutiny could lead to new questions that could increase liability for corporations: Are these groups being used to violate the Foreign Corrupt Practices Act, by funneling cash to foreign governments? Are consumer brands secretly funding ads that could harm the perception of their product (as was the case with Target and their donations to an anti-gay politician in Minnesota)?
Under the current system, only corporate executives, their lobbyists, and certain politicians really understand where the money is flowing. Shareholders, the public, and reporters have a right to know, too.
By: Lee Fang, The Nation, March 29, 2013
“Freedom For The Few”: Corporations, Miniature Governments With Their Own Undemocratic Governance Structures And Election Systems
We should be done by now with the idea that a corporation is a single thing. Corporations contain a multitude of conflicting interests and are much more like miniature governments with their own governance structures and election systems than is commonly recognized. While these structures are far more hierarchical and undemocratic than we require of our public institutions, Americans should not be resigned that this is the best or the only way the private sector can be structured.
The debate over corporate disclosure currently going on at the SEC exposes some important fissures within the modern American corporation. On the one hand, corporate managers and their allies have argued that corporations should be able to engage in political activities without having to disclose how much they spent or who that money went to. But there is a subtle slight-of-hand to this argument. It conflates the overall interests of the corporation with the desires of management and directors. What proponents of this view really mean is that management and directors should be able to make political expenditures without getting any input from shareholders or other constituencies within the corporation.
On the other side of the debate, shareholders and shareholder advocacy groups have been calling for greater disclosure regarding how corporate money is spent in politics. Shareholders have pointed out, rightly, that management’s political activities are not necessarily good for business. The money spent on political activity is money that shareholders might otherwise see reinvested in the company or have paid out in dividends, and it is money they have residual legal claims to. And, importantly, it often expresses political views that shareholders have no interest in supporting.
Shareholders have been introducing and voting on proposals to improve disclosure. But even when these measures pass, they are merely advisory and do not bind managers. It’s simply not the case that corporate political spending reflects the views of all the people who make up a business. Under existing corporate law, these intra-business disputes already tend to be resolved in management’s favor. And right now it is only management and directors whose views are reflected in political activity. It’s also noteworthy that employees’ interests aren’t even a part of this picture.
In spite of all that, management continues to push back against shareholders. Likely emboldened by Citizens United, proponents of management-dominated corporate speech have begun to claim First Amendment freedoms against their own shareholders. Consider this rather surprising statement from former SEC Commissioner Paul Atkins:
shareholder activists, including unions, state pension funds, and ‘socially responsible investors,’ have increasingly turned to shareholder proposals to selectively burden American businesses exercising their First Amendment rights.
Leaving aside the fact that nobody has First Amendment rights against other private actors, this is an extremely bold assertion. This is tantamount to saying that the interests of management should trump all others and that neither private nor public actors should be permitted to interfere.
Frighteningly, recent developments have begun to enshrine this pro-boss, pro-management bias elsewhere in the law as well. This trend can be seen in a number of settings. During the last election cycle, a number of journalists were reporting that employers were asserting a First Amendment right to trample on the voting rights of their employees. In the ongoing fights over the Affordable Care Act, a number of employers have asserted a constitutional right not to pay for employees’ access to birth control and reproductive health services. (And in the religious non-profit setting, the Obama administration appears prepared to give them the exemption they were seeking.)
Corporations are a “they,” not an “it.” And it’s vitally important that this “they” doesn’t only mean corporate management. More democratic private sector institutions would be an important start. But we need a new constitutional framework for understanding people’s positive rights in the private sector as well. Freedom under the First Amendment doesn’t simply mean, as Paul Atkins might like, protecting bosses from public and private accountability. It means empowering a variety of people, shareholders, workers, communities, and the broader public, to shape the political conditions they live in.
By: Anthony Kammer, The American Prospect, February 6, 2013
“War Against Reality”: Neutron Jack Welch And The Jobless Numbers Conspiracy
Opening yet another front in their endless war against reality, right-wing conspiracy-mongers have moved on from polling data to federal unemployment statistics, apparently because – like the political polls they’ve disputed in recent weeks — the latest jobless number is not sufficiently damaging to President Obama.
Shortly after the Bureau of Labor Statistics released its September unemployment numbers on Friday morning, showing that the jobless rate fell last month from 8.1 percent to 7.8 percent, outraged expressions of doubt began to appear on the Internet.
Nobody cited any substantive evidence to support allegations that the BLS had suddenly “cooked” its data to promote the president’s re-election, of course. Evidence isn’t required or expected in Fox Nation.
What sustained at least momentary interest in this new “truther” flurry, however, was a Twitter effusion from Jack Welch, the former General Electric chairman, who described the BLS number as “unbelievable” and complained that “these Chicago guys will do anything” because Obama “can’t debate.” (He later admitted to Chris Matthews on MSNBC’s Hardball, “I have no evidence to prove that [the White House influenced the BLS], ” adding disingenuously that “I just raised the question.”)
Although Welch is superficially a credible figure — indeed, still an idol in certain quarters of American business — he is also a particularly enthusiastic and volatile Romney surrogate. “Neutron Jack,” as he used to be known, admires Romney deeply, perhaps because both have become symbols of “corporate greed, arrogance, and contempt for workers.” His tweet about the BLS was a political expression, not an expert assessment, and invites skepticism. But Welch certainly is familiar with dubious numbers and political manipulation.
Several years after he retired from General Electric in 2001 — where his legendary managerial successes brought him accolades as the “CEO of the century” in the business press — the Securities and Exchange Commission opened an investigation of the company’s accounting practices. What the SEC eventually uncovered were long-running schemes to inflate earnings, reminiscent of Enron.
While nobody held Welch personally accountable, the violations that cost the conglomerate $50 million in fines occurred on the watch of the chief financial officer he had appointed in 1998. Other accounts of questionable business practices at GE date back much further.
More pertinent than GE’s accounting misadventures is Welch’s controversial role in the 2000 election, when he became known as an outspoken supporter of George W. Bush. (Considering the dismal history of the Bush presidency, voters might think twice before taking Welch’s political advice this year.) At the time, GE owned NBC and its cable networks CNBC and MSNBC, and Welch was known to make his presence felt in the studios and newsrooms. Nobody at 30 Rock had the slightest doubt about Welch’s hatred toward President Clinton and the Clinton administration, or about his desire to see Clinton replaced by Bush.
On Election Night, as witnesses later told Rep. Henry Waxman, Welch came into the NBC newsroom while the network’s political staff tried to determine who had won the historically-close contest between Bush and Vice President Al Gore. In what news executives later acknowledged was a serious mistake, they called the election for Bush, following a trend started by Fox News, where a Bush cousin was running election coverage under the watchful eye of former Bush consultant and Fox boss Roger Ailes.
According to Waxman’s findings, Welch blatantly tried to influence the decision by NBC election producers to name Bush the winner, based on Florida numbers that were too preliminary and too close to support that call.
Witnesses said that Welch personally examined the raw election data and told the NBC director of election coverage, Sheldon Gawiser, that he believed Bush had won. When Fox called the election for Bush, Welch could be overheard asking Gawiser why NBC had not yet done the same. Not long after that alleged conversation, NBC announced that Bush had won.
NBC News strongly disputed Waxman’s stated concerns over undue influence by Welch. But an internal evaluation later “recommended that the network [should] sequester the election decision desk and protect its election analysts from “unnecessary interruptions.”
Welch himself dismissed the Waxman investigation as “pure crazy” — which is pretty much how economists and government experts are describing his BLS tweet.
But whatever Welch’s present attitude and past behavior, is there any real reason why he should doubt the BLS jobs data — compiled by a corps of dedicated civil servants (not political appointees), many of whom are Republicans, month after month and decade after decade?
The short answer is no.
But before closing this pointless episode, there is another bit of sordid irony involving a different Romney associate. There was once a White House that sought to manipulate BLS statistics for its own partisan purposes. Before the Watergate scandal toppled him from power, Richard Nixon was constantly frustrated by his inability to exercise political control over the agency’s professional civil servants. In his paranoia, Nixon blamed this “problem” on “the Jews” that he believed were running BLS and their animosity toward him – so he and Charles Colson instructed Fred Malek, one of their political stooges, to ferret out the Jews and get rid of them.
Their anti-Semitic plot failed, Nixon resigned to escape criminal prosecution, Colson went to prison for Watergate offenses, and Malek languished in disgrace. Eventually he recovered his reputation, got rich working for Marriott, and buddied up to the Romneys. Last April, he and his wife hosted a “birthday party” fundraiser in Washington for Ann Romney, at $1,000 a head.
So the Republican accusations about gaming the BLS statistics may simply be another case of projection. Perhaps they think Obama is doing it because they always wanted to.
By: Joe Conason, The National Memo, October 5, 2012
“Mitt vs Stubborn Facts”: A Difficult Relationship For The Romney Campaign
John Adams once said, “facts are stubborn things.” These days, another Massachusetts politician has found that saying to ring especially true.
While it’s still unclear how Mitt Romney can be the CEO, chairman, president and sole shareholder of Bain Capital, a company that he claims no responsibility for, it’s become increasingly evident that candidate Romney simply doesn’t want to talk about the facts of his business record.
In an interview with CNN’s Piers Morgan, Romney suggested that to question his experiences is to “attack success.” If this is the case, and if we’re also not supposed to talk above a whisper about Mitt’s record as governor, including his signature accomplishment in health care reform, then which parts of his biography remain on the table?
Romney clearly prefers his largely undisclosed experiences in the private sector over his publicly poor record in Boston. At every turn, Romney and his campaign have attempted to steer the discussion toward business matters for just this reason.
But when the Washington Post took him up on it last month and published an article headlined “Romney’s Bain Capital invested in companies that moved jobs overseas,” the Romney campaign was caught flatfooted. The Post found that Bain Capital, the firm Romney spent much of his professional life building up, had invested in companies that had not only shipped jobs overseas — a practice of some concern to working- and middle-class Americans — but had pioneered the practice.
Romney’s campaign pushed back hard, claiming that the Post had its facts wrong. The campaign met with the Post’s editors and demanded a retraction, claiming that Romney had left Bain in 1999, supposedly before the outsourcing investment began. The Washington Post listened to the Romney side of the story but stood its ground.
Now we know why. The Boston Globe reported two weeks ago that Romney had signed official documents claiming to be the president and CEO of Bain Capital as late as 2002, when the company was actively building up firms that outsourced American jobs. He didn’t just say this casually at some dinner party; he swore it was the truth on Securities and Exchange Commission filings.
What did the Romney campaign do this time? It hit the “repeat” button and demanded a retraction from the Globe. Who are you going to believe, the campaign asked its hometown paper, me or your lying eyes? Once again, the investigative journalists stood by their reporting.
Since the Globe story, the hits have kept coming. The AP reported this week that Romney stayed in “regular contact” with Bain during his so-called absence, “personally signing or approving a series of corporate and legal documents through the spring of 2001.” Several sources are now saying that Romney made repeated trips to Boston to meet with Bain executives during this period, even though he recently told CBS’s Jan Crawford that he doesn’t “recall even coming back once to go to a Bain or a management meeting” during the period in question.
So despite what the Romney campaign claims, media interest in this story has nothing to do with attacking personal success in the private sector. It has nothing to do with avoiding the real issues of the campaign.
It has everything to do with attempting to get to the bottom of a situation in which what a candidate is saying seems to have come unglued from the stubborn facts.
Americans know that a level playing field empowers a successful economy. You want to talk about soaking the rich? Mitt Romney’s father, George Romney, paid an effective tax rate of nearly 37% in 1967. The elder Romney didn’t complain and released his tax returns to prove his compliance with the law of the land he wanted to lead. In 2010, Mitt Romney’s tax rate bobbed and weaved its way below 15% — and we know that only because the public had to pry his return (he has released only a full one) out of his clenched hands.
Even more fascinating than the fact that Romney’s father released 12 years’ worth when he ran for president in 1968 is the reason why. “One year could be a fluke,” the elder Romney said, “perhaps done for show.”
This country has a noble habit of withholding elected office from people who have trouble with the facts. Romney could end these discussions overnight by releasing his tax returns, as he has been called on to do by Republicans like Alabama Gov. Robert Bentley, former Mississippi Gov. Haley Barbour and Iowa Sen. Chuck Grassley.
Until he makes peace with the facts, Romney will be stuck at the intersection of what is both a character issue and a policy issue. If Romney won’t stand by his record at Bain, just like he won’t stand by his record as governor of Massachusetts, how exactly is the American public supposed to evaluate the candidate? And if he won’t disclose his own relationship with tax loopholes and offshore tax havens, leaving voters more questions than answers, how can the American people trust him to reform our tax code in a way that closes loopholes, eliminates free-riding and ensures that everyone is playing by the same rules?
Facts and the Romney campaign have a difficult relationship these days. But they do share one thing in common: They’re both stubborn.
By: Donna Brazile, CNN Contributor, CNN Opinion, July 27, 2012
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