Every cloud has a silver lining -- Campaign finance reform (This Blanche is depending on the kindness of Wal-Mart)
Friday's wsj has a fascinating article entitled: "Closing the Spigot -- In New Law's Wake, Companies Slash Their Political Donations. Instead, They Urge Employees To Vote, Donate and Lobby; No Funding for the 527s. Wal-Mart Hosts Sen. Lincoln"
For years, Republicans and Democrats solicited donations from casino giant MGM Mirage. Usually, Chairman J. Terrence Lanni coughed up at least $1 million of the company's money to secure access to lawmakers who were also getting money from MGM's competitors.
Last year, new campaign-finance laws barred these kinds of unlimited contributions to party coffers. Instead, independent but partisan groups nicknamed 527s -- for the section of the tax code under which they fall -- rushed to fill the void, scooping up cash the parties couldn't take.
A representative from one such Republican-leaning group telephoned Mr. Lanni a few months ago. Mr. Lanni doesn't remember which one but does recall "it took me about three nanoseconds" to say no. Mr. Lanni says Las Vegas-based MGM isn't giving a penny to 527s, which he says violate the spirit of campaign-finance laws.
Some of the nation's most prolific corporate donors have seized on the restrictions of campaign-finance laws to largely drop out of the political money race. Verizon Communications Inc., International Paper Co., and other companies that in the 1990s poured unprecedented amounts of cash into the political system have sharply cut donations. Of the top 10 corporate political donors in 2000, which contributed more than $21 million in total to both parties, not one is giving to the 527s.
"It was an opportunity to draw a line in the sand and say no," said Kristin Krouse, a spokeswoman for FedEx Corp.
The collapse of corporate funding marks a major shift in the history of political finance. Labor unions haven't hesitated to transfer funds formerly earmarked for unregulated or "soft money" donations to the new groups. By contrast, corporations have been disinclined to fund 527s. The shift has left Republicans, by far the major beneficiary of their money, at a financial disadvantage for the short term at least.
Instead, companies are seeking a more direct role in the electoral process. Rather than simply writing checks, they're encouraging employees to lobby Congress on particular issues or support individual candidates. Companies are reviving old-fashioned but smaller political fund-raising operations that solicit donations from employees. And in a tight race where voter turnout could play a critical role, corporations have gone from being campaign underwriters to get-out-the-vote machines. Dow Chemical Corp. is even reaching out to its 37,000 retirees for extra lobbying clout on pet issues.
This could have the unintended effect of drawing companies closer into the political fray, even as they pare back their financial commitments. Companies, having narrowly focused their political ambitions, might find themselves with more clout about specific policies than they ever did doling out cash to the national parties. That's particularly true of companies' efforts to boost turnout.
"I haven't seen a previous election cycle when businesses did this in a concentrated way," says Matthew Dowd, a political adviser to President Bush.
Take the case of Stamford, Conn.-based International Paper, which previously handed over $500,000 in total to the two main parties at election time. Now employees can use special software to track political issues. This year, 2,500 workers sent e-mails to the Senate encouraging postal reform. Many of International Paper's customers suffer when postal rates rise.
Before a Republican Senate primary in South Carolina earlier this year, John Runyan, who oversees International Paper's fund-raising, sought out 300 politically active employees in that state and sent e-mails urging them to vote for South Carolina Rep. Jim DeMint. The pro-free-trade stance of Mr. DeMint was supported by International Paper, a company that depends on exports. Mr. DeMint's chief Republican challenger, backed by textile giants, was advocating a more protectionist agenda.
After squeaking into a runoff race, Mr. DeMint won the nomination. Mr. DeMint says he was unaware of the forestry-products company's support but notes it was more useful to him than a check written to a national committee. "I'd much rather have the voters," he says. International Paper isn't giving any money to 527 groups.
Giving Back
The link between corporate money and politics became firmly established in the early 1990s when politicians turned the business of extracting money from companies into an art form. Democrats rewarded corporate contributors with overnight stays in the Clinton White House. Republicans matched that with exclusive briefings and getaways with their leaders in Congress. Previously, campaign-finance rules and memories of the Watergate scandals had prompted companies to shy away from actively funding political parties.
During that time, contributions to parties were unlimited, while donations to individual candidates were -- and still are -- capped at specific levels.
In 2002, businesses pumped $215 million into the political process, or about 42% of the $507 million given to party committees in unregulated donations. More than 70% of that went to Republican committees, according to Political Money Line, a nonpartisan watchdog that tracks political financing.
Companies long disliked handing over shareholders' cash because it looked as if the money disappeared into a black hole with little accountability. But many felt they couldn't abandon the practice as long as their competitors kept on donating. The McCain-Feingold campaign-finance law barred those unregulated donations.
But with the rise of the 527 groups, which were exempt from the law's strictures, companies realized they would have even less control. "You give your money over to some entity that is loosely affiliated with a particular political purpose and loosely regulated," complains David French, senior vice president for government relations at the International Food Services Distributors Association.
Company executives still personally contribute to candidates and companies are increasing fund raising directly from their employees. At least 29 companies donated money to both parties' convention committees, up from nine in 2000, one of the last remaining opportunities to hand over unlimited funds. In addition, during this week's Republican convention in New York, they're buying access to lawmakers by hosting lavish parties in their honor. But all that combined will likely total only about 10% of what had previously been given in unregulated donations, according to public financial disclosure reports.
By and large, corporate money "is probably gone. I don't think we're going to change their minds," says Charlie Black, a longtime Republican activist and informal adviser to the Bush-Cheney re-election campaign.
Thomas J. Tauke, a Verizon executive vice president and former Republican congressman from Iowa, received dozens of calls from activist groups hoping to grab some of the $1.6 million in unregulated donations Verizon gave to party committees in 2002. Uneasy with the unstable legal environment surrounding the groups, Mr. Tauke said no and won support from the phone company's board for his decision.
He had little fear of a backlash from lawmakers, who aren't allowed to coordinate with the 527 groups. Besides, he noted, there is safety in numbers: "The vast majority of corporations are not making contributions," he says.
Instead, campaign-finance laws are "forcing corporations to get more creative as far as how they are going to be political," says Jeff Pannozzo, the political-advocacy-program manager at DuPont Co. "Before, they could write a check and that was their participation."
A survey after the 2000 election by the Business Industrial Political Action Committee, a nonpartisan business advocacy group known as BIPAC, found that employees ranked their employers as the most credible source of information about public policy affecting their jobs. Yet only 7% of those surveyed heard from their companies about those subjects in the 2000 elections while 17% heard from union representatives.
PAC Revival
One remedy has been to revive companies' political action committees, or PACs, groups that solicit contributions from employees. Up to $5,000 can be given to a candidate each election. PACs have been around since the 1970s but were superseded by the rise of unregulated donations in the 1990s. Companies are rediscovering that they're an easy way to get credit for helping a specific candidate. PACs also help identify employees who want to volunteer to support certain political causes. Companies aren't allowed to coerce employees into donating to their PAC, or punish those who decline.
There are now 201 corporate PACs, according to Political Money Line, an increase of more than 30% over the past four years. The amount of money collected by corporate PACs in 2003 totaled $111 million, nearly $20 million more than was reported in the entire 2001-2002 political cycle. That doesn't include money raised in 2004, which hasn't yet been tallied.
Fannie Mae, a government-sponsored home-mortgage financier, was counted among the titans of political largesse, giving more than $1.8 million in unregulated donations in 2002. Once the campaign-finance law passed, Fannie Mae decided to focus on its PAC instead of giving the money to 527 groups. The company quickly discovered that its PAC accounts were empty. Employees hadn't been asked to donate for more than a decade.
Fannie Mae's top brass sent out a call for contributions in January. Since then, 600 employees have contributed nearly $600,000. Rather than mailing off a few big checks to party committees, Fannie Mae deposited 40 smaller checks into the campaign coffers of every member -- Democrat and Republican -- of the House Financial Services Committee, the panel that oversees the heart of the mortgage giant's business. Total spent in donations to that one committee: $67,000.
"There was a new environment we were in that pointed to PACs as the way to go," says Brian Faith, a Fannie Mae spokesman.
Most companies shy away from being explicit in their messages to employees. Jay Allen, Wal-Mart Stores Inc.'s senior vice president for media affairs, says the company's voter-turnout program is nonpartisan. "About half [of employees] are Democrats and half are Republicans, just like the rest of the country. We don't want to offend anybody," he says.
But in communications with PAC contributors or executives in the main office, Wal-Mart feels free to be more explicit in pushing specific candidates or issues. Recently, Sen. Blanche Lincoln, an Arkansas Democrat who is up for re-election, chatted with Wal-Mart managers at a regular Saturday meeting at the company's Bentonville, Ark., headquarters. "We emphasized what a good friend she's been to Wal-Mart," says Mr. Allen.
The big health insurer Cigna Corp. mobilizes its 30,000-strong work force to push for specific health-care reforms. This year, Kristin Julason, vice president of federal affairs, e-mailed workers urging them to lobby their senators to pass the 2004 Class Action Fairness Act, which aimed to limit jury awards in such suits. She included a copy of the legislation, a simply written summary and proposed wording for the messages. About 7,000 Cigna workers sent Capitol Hill pleas to pass the bill, which ultimately failed.
With most analysts predicting another presidential-election squeaker, companies' get-out-the-vote efforts are assuming even greater importance. In Ohio, a critical state for the Bush campaign, BIPAC, the business advocacy group, has set a goal for local businesses to encourage 80,000 employees who didn't vote in 2000 to go to the polls, a move that could boost pro-business turnout. The U.S. Chamber of Commerce is running a similar program in Minnesota.
Company efforts have been extended to overseas employees. Many of Caterpillar Inc.'s 37,000 expatriate workers are located far from capital cities where U.S. embassies are situated, making it hard to figure out absentee-ballot voting procedures. Using software designed for the purpose, employees can now download ballots and easily find information on deadlines and where to mail their votes.
The heavy equipment and engine manufacturer says it doesn't endorse candidates, but its Web site does provide candidates' voting history on critical issues such as trade. John T. Disharoon, a Brussels-based public-affairs official, downloaded absentee ballot request forms for him and his wife, shaving six weeks off the process. That's given them "plenty of time to mull things over, fill them out and make sure our vote is counted."
For years, Republicans and Democrats solicited donations from casino giant MGM Mirage. Usually, Chairman J. Terrence Lanni coughed up at least $1 million of the company's money to secure access to lawmakers who were also getting money from MGM's competitors.
Last year, new campaign-finance laws barred these kinds of unlimited contributions to party coffers. Instead, independent but partisan groups nicknamed 527s -- for the section of the tax code under which they fall -- rushed to fill the void, scooping up cash the parties couldn't take.
A representative from one such Republican-leaning group telephoned Mr. Lanni a few months ago. Mr. Lanni doesn't remember which one but does recall "it took me about three nanoseconds" to say no. Mr. Lanni says Las Vegas-based MGM isn't giving a penny to 527s, which he says violate the spirit of campaign-finance laws.
Some of the nation's most prolific corporate donors have seized on the restrictions of campaign-finance laws to largely drop out of the political money race. Verizon Communications Inc., International Paper Co., and other companies that in the 1990s poured unprecedented amounts of cash into the political system have sharply cut donations. Of the top 10 corporate political donors in 2000, which contributed more than $21 million in total to both parties, not one is giving to the 527s.
"It was an opportunity to draw a line in the sand and say no," said Kristin Krouse, a spokeswoman for FedEx Corp.
The collapse of corporate funding marks a major shift in the history of political finance. Labor unions haven't hesitated to transfer funds formerly earmarked for unregulated or "soft money" donations to the new groups. By contrast, corporations have been disinclined to fund 527s. The shift has left Republicans, by far the major beneficiary of their money, at a financial disadvantage for the short term at least.
Instead, companies are seeking a more direct role in the electoral process. Rather than simply writing checks, they're encouraging employees to lobby Congress on particular issues or support individual candidates. Companies are reviving old-fashioned but smaller political fund-raising operations that solicit donations from employees. And in a tight race where voter turnout could play a critical role, corporations have gone from being campaign underwriters to get-out-the-vote machines. Dow Chemical Corp. is even reaching out to its 37,000 retirees for extra lobbying clout on pet issues.
This could have the unintended effect of drawing companies closer into the political fray, even as they pare back their financial commitments. Companies, having narrowly focused their political ambitions, might find themselves with more clout about specific policies than they ever did doling out cash to the national parties. That's particularly true of companies' efforts to boost turnout.
"I haven't seen a previous election cycle when businesses did this in a concentrated way," says Matthew Dowd, a political adviser to President Bush.
Take the case of Stamford, Conn.-based International Paper, which previously handed over $500,000 in total to the two main parties at election time. Now employees can use special software to track political issues. This year, 2,500 workers sent e-mails to the Senate encouraging postal reform. Many of International Paper's customers suffer when postal rates rise.
Before a Republican Senate primary in South Carolina earlier this year, John Runyan, who oversees International Paper's fund-raising, sought out 300 politically active employees in that state and sent e-mails urging them to vote for South Carolina Rep. Jim DeMint. The pro-free-trade stance of Mr. DeMint was supported by International Paper, a company that depends on exports. Mr. DeMint's chief Republican challenger, backed by textile giants, was advocating a more protectionist agenda.
After squeaking into a runoff race, Mr. DeMint won the nomination. Mr. DeMint says he was unaware of the forestry-products company's support but notes it was more useful to him than a check written to a national committee. "I'd much rather have the voters," he says. International Paper isn't giving any money to 527 groups.
Giving Back
The link between corporate money and politics became firmly established in the early 1990s when politicians turned the business of extracting money from companies into an art form. Democrats rewarded corporate contributors with overnight stays in the Clinton White House. Republicans matched that with exclusive briefings and getaways with their leaders in Congress. Previously, campaign-finance rules and memories of the Watergate scandals had prompted companies to shy away from actively funding political parties.
During that time, contributions to parties were unlimited, while donations to individual candidates were -- and still are -- capped at specific levels.
In 2002, businesses pumped $215 million into the political process, or about 42% of the $507 million given to party committees in unregulated donations. More than 70% of that went to Republican committees, according to Political Money Line, a nonpartisan watchdog that tracks political financing.
Companies long disliked handing over shareholders' cash because it looked as if the money disappeared into a black hole with little accountability. But many felt they couldn't abandon the practice as long as their competitors kept on donating. The McCain-Feingold campaign-finance law barred those unregulated donations.
But with the rise of the 527 groups, which were exempt from the law's strictures, companies realized they would have even less control. "You give your money over to some entity that is loosely affiliated with a particular political purpose and loosely regulated," complains David French, senior vice president for government relations at the International Food Services Distributors Association.
Company executives still personally contribute to candidates and companies are increasing fund raising directly from their employees. At least 29 companies donated money to both parties' convention committees, up from nine in 2000, one of the last remaining opportunities to hand over unlimited funds. In addition, during this week's Republican convention in New York, they're buying access to lawmakers by hosting lavish parties in their honor. But all that combined will likely total only about 10% of what had previously been given in unregulated donations, according to public financial disclosure reports.
By and large, corporate money "is probably gone. I don't think we're going to change their minds," says Charlie Black, a longtime Republican activist and informal adviser to the Bush-Cheney re-election campaign.
Thomas J. Tauke, a Verizon executive vice president and former Republican congressman from Iowa, received dozens of calls from activist groups hoping to grab some of the $1.6 million in unregulated donations Verizon gave to party committees in 2002. Uneasy with the unstable legal environment surrounding the groups, Mr. Tauke said no and won support from the phone company's board for his decision.
He had little fear of a backlash from lawmakers, who aren't allowed to coordinate with the 527 groups. Besides, he noted, there is safety in numbers: "The vast majority of corporations are not making contributions," he says.
Instead, campaign-finance laws are "forcing corporations to get more creative as far as how they are going to be political," says Jeff Pannozzo, the political-advocacy-program manager at DuPont Co. "Before, they could write a check and that was their participation."
A survey after the 2000 election by the Business Industrial Political Action Committee, a nonpartisan business advocacy group known as BIPAC, found that employees ranked their employers as the most credible source of information about public policy affecting their jobs. Yet only 7% of those surveyed heard from their companies about those subjects in the 2000 elections while 17% heard from union representatives.
PAC Revival
One remedy has been to revive companies' political action committees, or PACs, groups that solicit contributions from employees. Up to $5,000 can be given to a candidate each election. PACs have been around since the 1970s but were superseded by the rise of unregulated donations in the 1990s. Companies are rediscovering that they're an easy way to get credit for helping a specific candidate. PACs also help identify employees who want to volunteer to support certain political causes. Companies aren't allowed to coerce employees into donating to their PAC, or punish those who decline.
There are now 201 corporate PACs, according to Political Money Line, an increase of more than 30% over the past four years. The amount of money collected by corporate PACs in 2003 totaled $111 million, nearly $20 million more than was reported in the entire 2001-2002 political cycle. That doesn't include money raised in 2004, which hasn't yet been tallied.
Fannie Mae, a government-sponsored home-mortgage financier, was counted among the titans of political largesse, giving more than $1.8 million in unregulated donations in 2002. Once the campaign-finance law passed, Fannie Mae decided to focus on its PAC instead of giving the money to 527 groups. The company quickly discovered that its PAC accounts were empty. Employees hadn't been asked to donate for more than a decade.
Fannie Mae's top brass sent out a call for contributions in January. Since then, 600 employees have contributed nearly $600,000. Rather than mailing off a few big checks to party committees, Fannie Mae deposited 40 smaller checks into the campaign coffers of every member -- Democrat and Republican -- of the House Financial Services Committee, the panel that oversees the heart of the mortgage giant's business. Total spent in donations to that one committee: $67,000.
"There was a new environment we were in that pointed to PACs as the way to go," says Brian Faith, a Fannie Mae spokesman.
Most companies shy away from being explicit in their messages to employees. Jay Allen, Wal-Mart Stores Inc.'s senior vice president for media affairs, says the company's voter-turnout program is nonpartisan. "About half [of employees] are Democrats and half are Republicans, just like the rest of the country. We don't want to offend anybody," he says.
But in communications with PAC contributors or executives in the main office, Wal-Mart feels free to be more explicit in pushing specific candidates or issues. Recently, Sen. Blanche Lincoln, an Arkansas Democrat who is up for re-election, chatted with Wal-Mart managers at a regular Saturday meeting at the company's Bentonville, Ark., headquarters. "We emphasized what a good friend she's been to Wal-Mart," says Mr. Allen.
The big health insurer Cigna Corp. mobilizes its 30,000-strong work force to push for specific health-care reforms. This year, Kristin Julason, vice president of federal affairs, e-mailed workers urging them to lobby their senators to pass the 2004 Class Action Fairness Act, which aimed to limit jury awards in such suits. She included a copy of the legislation, a simply written summary and proposed wording for the messages. About 7,000 Cigna workers sent Capitol Hill pleas to pass the bill, which ultimately failed.
With most analysts predicting another presidential-election squeaker, companies' get-out-the-vote efforts are assuming even greater importance. In Ohio, a critical state for the Bush campaign, BIPAC, the business advocacy group, has set a goal for local businesses to encourage 80,000 employees who didn't vote in 2000 to go to the polls, a move that could boost pro-business turnout. The U.S. Chamber of Commerce is running a similar program in Minnesota.
Company efforts have been extended to overseas employees. Many of Caterpillar Inc.'s 37,000 expatriate workers are located far from capital cities where U.S. embassies are situated, making it hard to figure out absentee-ballot voting procedures. Using software designed for the purpose, employees can now download ballots and easily find information on deadlines and where to mail their votes.
The heavy equipment and engine manufacturer says it doesn't endorse candidates, but its Web site does provide candidates' voting history on critical issues such as trade. John T. Disharoon, a Brussels-based public-affairs official, downloaded absentee ballot request forms for him and his wife, shaving six weeks off the process. That's given them "plenty of time to mull things over, fill them out and make sure our vote is counted."
posted by Sid Cottingham | 11:55 AM
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