“Corporate Money Machine Grinds On”: Lobbyist Parties At RNC Narrowly Skirt Ethics Rules
The convention stage may have been empty on Monday, thanks to Hurricane Isaac, but the corporate money machine grinded on as special interests with business before Congress put on swanky gatherings for key lawmakers.
It’s actually against Congressional ethics rules for lobbyists to throw parties for lawmakers at the national conventions—thanks to a 2007 reform bill passed in the wake of the Abramoff scandals—but Monday night showed that the system can easily be gamed.
For example, only about a half-mile from the Tampa Bay Times Forum, a collection of big transportation companies threw a party for transportation “leaders” in Congress. Actually, to be technically accurate, a front group called GOP Convention Strategies sponsored the party—and that’s how everyone involved avoided violating ethics rules. Since GOP Convention Strategies is not a registered lobbyist, it was free to throw a party for whomever it wanted. But it was crystal clear to everyone involved who was paying for the party, and what the goal was.
For $20,000, a corporation could “sponsor” the GOP Convention Strategies event, which would get it prominent placement on all advertising and marketing for the party, as well as twenty-five tickets to the party and a chance to address the crowd personally. This presented any interested transportation company (and its lobbyists) the opportunity to meet and glad-hand key lawmakers from the House and Senate—the exact same thing the 2007 law was trying to outlaw. “In reality, lobbyists are behind this party, but the ethics rules are too porous to recognize the reality,” said Craig Holman of Public Citizen.
Outside the event, which was held at Stump’s Supper Club in the Channelside district, there was a prominent sign that said “THANK YOU” above the logos of many major transportation companies, including BNSF Railways, Canadian National Railway, Norfolk Southern, Expedia and several others. (No advertising for GOP Convention Strategies, though).
I spotted Representative John Mica, chair of the House Transportation and Infrastructure Committee, holding court on the patio before the event began. His committee passed out a massive transportation bill this year that was repeatedly slammed as a massive giveaway to special interests. (“This is an earmark for a handful of wealthy people who own these companies. This is a windfall,” a transportation union official told the Huffington Post.) Among many heinous provisions, his committee’s version stripped rail-industry workers of federal minimum wage and overtime protections. Rail companies—the very ones sponsoring this party—often pay workers only the minimum wage, and many employees are forced to work long hours during long-distance hauls.
Senator Jim Inhofe, the ranking member and potential future chair of the Senate Public Works Committee and a key figure in getting that transportation bill through the Senate, was also there. I caught him coming out of the party after about ninety minutes inside, and he amiably said he had a “great” time. I asked who was throwing the party, and he responded “it’s a transportation thing. Transportation industry.” I asked if he spoke with any lobbyists, and Inhofe said “it’s funny, I don’t remember meeting many,” before his staff shooed me away. (And called me a “punk” for good measure).
This is hardly the only party of this nature in Tampa Bay this week. The calendar is full of them, each carefully calibrated to avoid violating ethics rules—the storm may stop the speeches, but won’t stop the all-important cash from flowing.
“Who’s Paying For What?”: The Flood Of Secret Campaign Cash Is Not All Citizens United
The emergence of nonprofits [1] as the leading conduit for anonymous spending in this year’s presidential campaign is often attributed to the Supreme Court’s 2010 Citizens United [2] ruling, which opened the money spigot, allowing corporations and unions to buy ads urging people to vote for or against specific candidates.
But a closer look [3] shows that there are several reasons that tens of millions of dollars of secret money are flooding this year’s campaign. Actions — and inaction — by both the Federal Election Commission and the Internal Revenue Service have contributed just as much to the flood of tens of millions of dollars of secret money into the 2012 campaign. Congress did not act on a bill that would have required disclosure after Citizens United and other court rulings opened the door to secret political spending.
To understand how all this happened, it’s worth returning to Justice Anthony Kennedy’s opinion [4] in Citizens United, and the political system the court envisioned. In the decision’s key finding, Kennedy and four other justices said the First Amendment entitled corporations and unions to the same unlimited rights of political speech and spending as any citizen.
But in a less-noticed portion of the ruling, Kennedy and seven of his colleagues upheld disclosure rules and emphasized the role of transparency. Undue corporate or union influence on elections, he wrote, could be addressed by informed voters and shareholders who would instantly access campaign finance facts from their laptops or smart phones.
“With the advent of the Internet,” Kennedy wrote, “prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.”
If a company wasted money on politics, the justices agreed, its shareholders could use the publicly available information to “determine whether their corporation’s political speech advances the corporation’s interest in making profits.” Separately, the sunshine of public disclosure will let “citizens see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”
“The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way,” Kennedy concluded. “This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”
A very different system has taken shape. As our reporting this week showed, money for political ads is pouring into non-profits ostensibly dedicated to promoting social welfare. These groups are paying for many of the negative ads clogging the airwaves, but are not disclosing their donors.
As a result, it’s entirely unclear whether these ads are being paid for by unions and corporations empowered by Citizens United or by wealthy individuals.
Separately, corporations have resisted calls [5] to list their donations to political social welfare nonprofits or other political spending. So far, the Securities and Exchange Commission has not responded to a rulemaking petition [6] asking for it to develop rules to require public companies to disclose that spending.
The Supreme Court’s opening of the door to hefty flows of secret money began years before Citizens United. In a 2007 case (PDF) [7] involving a nonprofit called Wisconsin Right to Life [8], the justices ruled that unions and corporations could buy ads that mentioned a candidate in the weeks before an election as long as the commercials stopped short of directly advocating the candidate’s election or defeat. Even if these ads, known as “electioneering communications,” clearly attacked the positions of one candidate, they were permissible unless they were “susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.”
The flood began and the identities of hardly any of the donors were disclosed. The reason? A decision by the FEC, the oversight panel with three Republicans and three Democrats who frequently deadlock.
After Wisconsin Right to Life, the FEC told social welfare nonprofits that they had to disclose only if the donors specifically earmarked the money for political ads. “It proved to be the exception that swallowed the rule,” said Paul S. Ryan, general counsel of the Campaign Legal Center, a nonprofit, non-partisan group that tracks campaign finance. The day the FEC adopted this rule, Ryan wrote on his blog that it would allow massive amounts of secret money into politics. He proved correct.
In 2006, ads bought by groups that didn’t disclose their donors amounted to less than 2 percent of outside spending, excluding party committees, research by the Center for Responsive Politics [9] shows. By 2008, that number hit 25 percent; by 2010, more than 40 percent.
All of this raises an intriguing question: Was Kennedy aware when he drafted the January 2010 Citizens United opinion that nonprofits were being widely used to avoid public disclosure of political spending?
At the least, critics say, Kennedy was poorly informed.
“Justice Kennedy was living in a fantasy land,” said Ciara Torres-Spelliscy, a professor at Stetson University College of Law who tracks campaign finance issues. “I wish the world he envisaged exists. It doesn’t.”
Instead, this is the disclosure world that exists: Someone who gives up to $2,500 to the campaign of President Barack Obama or challenger Mitt Romney will have his or her name, address and profession listed on the FEC website for all to see. But that same person can give $1 million or more to a social welfare group that buys ads supporting or attacking those same candidates and stay anonymous.
This year, a federal judge struck down the FEC rule stemming from Wisconsin Right to Life. The FEC announced in July that major donors to electioneering communications — ads that focus on issues without directly advocating for candidates — would have to be named.
Already, groups are looking for work-arounds. They’re running different kinds of ads. Some will name other social welfare nonprofits as their donors.
The loose oversight by the FEC helped bring so much anonymous money into campaign finance. But no one expects the commission to take a more assertive role anytime soon. Dan Backer, a lawyer who represents several conservative nonprofits, likened the deadlocked agency to a “cute bunny” while referring to the IRS as a “500-pound gorilla.”
The IRS or Congress are more plausible avenues for change, experts say. Ryan said he was hopeful that Congress and the IRS might some day limit ads from groups that don’t disclose their donors. The 2012 campaign, though, appears to be a lost cause. “I think this election will be mired and perhaps overwhelmed by secret money,” Ryan said.
By: Stephen Engelberg and Kim Barker, ProPublica, August 23, 2012
“Aiding The Masters Of The Universe”: With Romney-Ryan, GOP Becomes Grand Old Private-Equity Party
The ticket Republicans will nominate in Tampa next week is uniquely connected to the “vulture capitalist” constituency, and uniquely committed to protecting the interests of today’s robber-baron class.
Paul Ryan grew up in a wealthy family with a Republican bent and all the right political and corporate connections.
He could easily have made his way into the private sector—doing business with family and friends, as have generations of wealthy Ryans.
But Paul was always the starry-eyed, perhaps wild-eyed. idealist. He read Austrian economic texts and far-right authors with a passion, committing to memory the writings of Friedrich Hayek, Ludwig von Mises, Milton Friedman and his intellectual heartthrob, Ayn Rand. Reading Rand, the newly minted Republican vice presidential contender once said was “the reason I got involved in public service.”
Ryan has since tried to distance himself from Rand’s militant atheism and even more extreme attitudes regarding the least among us. But his older brother, Tobin, told reporters: “Paul can still quote every verse out of Ayn Rand.”
Rand’s greed-is-good thinking plays well with hedge-fund managers, private equity players and the “vulture capitalist” class that enjoys taking a break from pillaging to plod through novels about, well, guys like them.
But as the youngest Ryan child, Paul got a little mavericky. Much as he talks up the private sector, Paul Ryan forged a career in the public sector. He’s worked as a Congressional aide and congressman—with brief breaks as a conservative “think tank” associate and a speech writer for Jack Kemp’s 1996 presidential campaign—since leaving college.
But older brother Tobin followed the more traditional route for sons of privilege.
As Fortune magazine notes, Tobin Ryan is a full partner with Seidler Equity Partners, a California-based “private equity investment firm that partners with visionary executives to grow their businesses.” Before he went to Seidler, Tobin worked with a politically connected Wisconsin-based private equity firm, King Capital (founded by former Republican Party of Wisconsin chairman Steve King, who served as finance chair for Paul Ryan’s Congressional runs). He also put in a stint with Bain & Company, the consulting firm where Mitt Romney says he “enjoyed working with a team of people to arrive at ideas and solutions” for what Texas Governor Rick Perry described as “vulture capitalist” interventions.
Tobin Ryan joined the Bain & Co. team after Romney moved to the private-equity firm that the consulting firm spawned, Bain Capital. But the connection has raised eyebrows, and spawned plenty of headlines, in the financial press.
The Ryan brothers are, in Tobin’s words, “very close.” Indeed, they live “about a three-wood away from each other” in the town where the Ryans have for decades been a pre-eminent (construction and contracting) business family. Tobin, a frequent media spokesman and surrogate for his brother, refers to Paul’s first US House race as “our first campaign.”
“So we’ve now got a former private equity executive running for president alongside the brother of a current private equity executive,” observes Fortune senior editor Dan Primack.
And Paul Ryan, like Mitt Romney, is politically committed to the aiding the masters of the universe who run the private-equity empires that now so dominate the US economy.
The “Roadmap for America’s Future” budget plan that Ryan wrote in 2010—the document that, arguably, launched into orbit as a Republican star—pledges to change tax policies to create “an enhanced investment climate.”
Specifically, Ryan proposed to:
* eliminate taxes on “interest, capital gains, or dividends” and estate taxes
* allow investments to be “fully deducted immediately” by corporations
* “eliminate the corporate income tax entirely” and replace it with “a single-digit consumption tax” that businesses and investors would calculate themselves.
* repeal the alternative minimum tax, which was designed to assure that millionaires and billionaires who take advantage of tax-code loopholes will have to pay something
How good would a Romney-Ryan administration be to the private-equity constituency?
According to a study by the chairman’s staff of the Joint Economic Committee of Congress, most working Americans who earn under $200,000 a year would see their taxes go up under the latest version of the Ryan budget. By the same token, Mitt Romney—whose income is “comprised of interest income, capital gains and dividends”—would pay less than 1 percent of his income in taxes.
The Romney-Ryan approach, forged and advocated for by candidates with personal and family ties to private-equity concerns, will yield great benefits for those very wealthy Americans who understand private equity as a personal reality.
But as the Joint Economic Committee report says, “House Budget Committee Chairman Representative Paul Ryan claims that the policies outlined in his budget will reform the broken tax code and put ‘hardworking taxpayers ahead of special interests.’ In reality, the Ryan plan gives the largest tax cuts to the wealthiest Americans and will pay for those tax cuts by raising the tax burden on middle-class workers.”
Indeed, the report concludes, “The richest households would receive the greatest benefit from these changes. The top 0.1 percent, for example, would receive an estimated average federal tax cut of close to $1.18 million per taxpaying household in 2015.”
America’s robber barons have had to wait for more than a century—since Teddy Roosevelt went rogue and joined the anti-trust campaigners—for a Republican ticket that would truly represent their interests.
But every indication is that the Romney-Ryan ticket will be of, by and for the private-equity managers who have become the masters of America’s economic universe.
The Romney-Ryan ticket rejects the American faith of not just Democratic presidents such as Harry Truman and Franklin Roosevelt but of Republican presidents such as Dwight Eisenhower and Teddy Roosevelt.
“The absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power,” Teddy Roosevelt warned at Osawatomie, Kansas, in 1910. “The prime need to is to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise.”
That remains the prime need.
Now, unfortunately, the party of Teddy Roosevelt is preparing to nominate a ticket that is passionately at odds with the principle that the general welfare must prevail over the passions of men “whose chief object is to hold and increase their power.”
By: John NIchols, The Nation, August 20, 2012
“A Runaway Train”: Corporations Gone Wild In The Year Of The Super PAC
What do Marriott, Waffle House, Orlando Magic, New Balance, Omni Hotels, Charles Schwab, Ritz Carlton, Georgia Pacific, Menards, Dixie, Brawny, and Venetian Hotel Las Vegas have in common? .
These companies and their owners have donated millions to Mitt Romney’s super PAC Restore Our Future, Karl Rove’s American Crossroads, the Koch brothers’ anti-Barack Obama operations, and other purveyors of attack ads.
According to Think Progress, Bill Marriott has given over $1,000,000; so has Omni’s co-founder Robert Rowling; so has Jim Davis of New Balance; so has John Menard. Charles Schwab has contributed at least $250,000. And, of course, the Koch Brothers and Sheldon Adelson are into the super PACs and 501(c)4’s for tens of millions of dollars.
The list is growing larger—more and more companies putting millions into this year’s political race for president, almost all of it on the Republican side, much of it secret. When the dust settles, hundreds of millions of dollars will have been spent to defeat Barack Obama and the Democrats in the Senate and House. Many believe it will top a billion dollars in this election cycle.
The press and pundits believed that after Citizen’s United few corporations would play seriously in this political space. Boy, were they wrong. If anything, the proliferation of executives and businesses that are writing six-figure checks, even seven and eight-figure checks, is astounding.
What can be done about this run-away train? Not much this election cycle. But we need to move on this soon after November.
At the very least, we should make all donations public. No more secret contributions to political groups and organization that skirt the law. There should be legislation brought up in the Congress repeatedly that requires groups to file political contributions and expenditures when a candidate’s name is mentioned in advertising. Make the Republicans vote on this over and over until it is passed. With electronic filing there is no reason that transparency should not be the norm and our process should not be open and honest.
Second, many of these organizations have been given tax-exempt status by the government. If they are given such status they should be investigated if they are engaging in political campaigns. They should be forced to become political organizations or stop hiding their donors under their tax-exempt status.
Finally, we should stop the sham that these groups are independent from the campaigns. There are more often than not interlocking directorates with the same band of consultants, advisers, spokespeople, operatives, contributors, friends, colleagues, associates—for all practical purposes they are one and the same, joined at the hip.
All this adds to the public’s cynicism about politics and campaigns. The sooner we deal with it the better.
By: Peter Fenn, U. S. News and World Report, July 26, 2012
“CEO vs Politician”: Romney’s Claim That Shrinking The Government Help’s Americans Isn’t Rational
It’s time for us to cut back on government and help the American people.” — Mitt Romney
Chief Executive Magazine annually surveys CEOs about the best and worst American states for doing business.
America’s CEOs consider: Texas, Florida, North Carolina, Tennessee and Indiana the Five Best for Business States (BfB); and Michigan, Massachusetts, Illinois, New York and California the Five Worst for Business States (WfB). The survey’s rankings have been stable over long periods. Massachusetts, for example, has been known as a high tax, heavily-regulated state for at least the last forty years.
According to the survey, America’s BfB have what America’s CEOs want — smaller government, low taxes and business-friendly regulations. The BfB clearly have lower taxes and smaller government with an average per capita state tax of $1,843, compared to the WfB at $2,520. So, let’s examine whether smaller government is better for Americans.
CEOs, paradoxically, prefer to live and work in the high tax, heavily-regulated WfB. Of the Fortune 500 companies, 165 are headquartered in the WfB, while only about 100 are headquartered in the BfB. Among America’s 50 fastest growing corporations, about twice as many have headquarters in the WfB, as in the BfB. Even CEO Romney selected Massachusetts (ranked 47th on the survey) for Bain Capital’s headquarters, and it’s where he’s lived (on and off) for the last 30ish years.
The State Human Development Index ranks American states on well-being and opportunity for their residents (rank 1 is best). On this Index, the WfB are better places to live (average rank 13) compared to the BfB (average rank 36). Metrics such as: household income, life expectancy, infant mortality, and educational opportunity demonstrate that the BfB — are worse for people.
WfB median household incomes are much higher ($57,000 in the WfB vs. $47,000 in the BfB). Further, people live longer and have lower infant mortality rates in the WfB, compared to the BfB. The WfB average rank (rank 1 is best) is 14 for life expectancy and 15 for infant mortality, while comparable BfB ranks are respectively 31 and 36. In highway fatalities, WfB are safer (average rank 8) compared to BfB (average rank 31).
In higher education, the WfB (as a percent of their college-age population) graduate 50 percent more students with advanced degrees than the BfB. Also, the WfB have 23 of our nation’s top universities, compared to the BfB’s four.
No wonder CEOs choose to live, and establish growth companies in, the so-called Worst for Business states.
Mitt Romney’s shibboleth that shrinking government helps the American people — isn’t based on any rational analysis of costs and benefits. Government isn’t a parasite destroying the American economy. Government is the provider of public goods (infrastructure, education, police, safety standards, etc.) that the private sector can’t or won’t provide. If citizens select lower taxes, smaller government and less regulation, they’ll get: less infrastructure, fewer police, teachers and inspectors, resulting in worse outcomes.
This isn’t a universal defense of every government employee or program. Nor am I claiming that bigger government is always better government. Government programs should be evaluated, and terminated (or restructured), if they aren’t efficiently serving taxpayer needs.
Throughout my career (in the Bloomberg administration, at the World Economic Forum and its Davos conferences, and at McKinsey), I’ve had the honor of working with some of the world’s leading CEOs, venture capitalists and entrepreneurs (such as, my co-judges for NYCBigApps).
I found these business leaders incredibly talented at what they did. However, business expertise conveyed no automatic insights on public policy.
My old boss, NYC Mayor Michael R. Bloomberg (who made a highly successful transition from private to public sector), emphasized that the public sector must make investments the private sector won’t risk making. Consider President Obama’s successful public sector rescue of the auto industry vs. the private sector approach, which would have left millions more unemployed.
Another smart public sector investment is Applied Sciences NYC (Mayor Bloomberg’s plan to bring a major new engineering campus to NYC). The mayor’s team did all the work to develop Applied Sciences NYC, but won’t reap any tangible benefits — the benefits are for future generations of New Yorkers. But that’s what the public sector must do, to benefit the governed: make major, long-term investments in education, infrastructure, health and other public services.
CEO Romney’s actions, in selecting Massachusetts as his base, suggest he understands the importance of government in making America a better place. But, Politician Romney’s statements suggest otherwise.
Which Romney are we supposed to evaluate for president?
Disclosure: As the Bloomberg administration’s head of policy and strategy for economic development, I was an architect of Applied Sciences NYC.
By: Steven Strauss, Business Insider, July 16, 2012
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