Campaigning for Money
The Cost of Money
excerpted from the book
How big corporate money buys
elections, rams through legislation,
and betrays our democracy
by Mark Green
Regan Books (HarperCollins)
Former Senator Bill Bradley, 2000
"Today's political campaigns function as collection agencies
for broadcasters. You simply transfer money from contributors
to television stations. "
Like the designation "cc" (for "carbon copy")
on an e-mail screen, "running for office" is an outdated
term. Thanks to today's high-cost races, candidates spend very
little time running in the traditional sense of the word-mobilizing
voters, communicating ideas, debating opponents, attending public
meetings. Instead, candidates fund-raise for office. Their time
is dominated by the incessant chore of pleading, cajoling, schmoozing
for campaign cash.
Because television is by far the most effective means of reaching
potential voters, the candidate who wins the battle of the airwaves
usually wins the war at the polls. The only way to assure airwave
victory is to outspend-and therefore outraise-your opponent.
... 94 percent of congressional races end in victory for the candidate
who outspends his or her opponent.
To get an idea of the scope of this political arms race, consider
that in 1972, the year the Federal Election Campaign Act became
law, total campaign expenditures by House and Senate candidates
was $77 million. Twenty-eight years later, in the 2000 elections,
total hard money spending by congressional candidates reported
to the Federal Election Commission reached $999 million, an increase
of nearly 1200 percent.
... television advertising ... is, without question, the single
largest expense item on the typical campaign balance sheet.
A recent Bear Stearns study revealed that "in even-numbered
election years, political advertising is now the third biggest
category of ads sold on local broadcast television-behind automotive
and retail stores, but ahead of movies and fast foods."
According to an analysis of the top seventy-five media markets
during the 2000 election by the Alliance for Better Campaigns,
political ad sales accounted for $771 million; when the nation's
remaining smaller markets are included, that figure would likely
cross the $1 billion mark. These figures represent the sales revenues
of broadcast television only, not cable, and include hard-money
expenditures by candidates as well as soft money expenditures
by parties and interest groups.
Candidates are under increasing pressure to buy "paid media"
because of the gradual decline I of "free media." Television
news programs are covering political campaigns less, as they themselves
compete with cable news by airing more "sexy" stories
that appeal to hard-to-please viewers. After if-it-bleeds-it-leads
coverage of crime, terrorism, and war, plus local features and
weather, there's rarely time left for local campaigns*-not to
mention that television stations have a market incentive to create
a demand for candidate ads by undercovering elections.
Compounding this problem is the fact that
most of the debates from the 2000 election were not even televised.
A report by the Committee for the Study of the American Electorate
found that only 37 percent of debates in ten states were actually
aired, with a paltry 18 percent broadcast on a major network affiliate.
"For the vast majority of citizens in these states and districts,
it was as if these debates never happened," said Curtis Gans,
director of the group. "These debates are the only means
to cut through the demagogic advertising that dominates campaigns,
the dearth of coverage, and the interpretations of journalists."
... the Telecommunications Act of 1996, along with the deregulation
fervor of the Federal Communications Commission, has encouraged
a concentration of powerful conglomerates in broadcast and newspaper
markets, including Disney, AOL Time Warner, News Corporation,
General Electric, and the New York Times Company. From the early
1980s to 2000, the number of owners of major media outlets in
the United States dropped from about fifty to just six. Less competition
produces higher ad rates.
"People don't like them, but they work," believes media
consultant McMahon of negative ads. "Repetition is what it
takes to make the message stick, and positive ads need a lot more
repetition than negative ones. If you show ten advertisements
to a focus group-nine positive, one negative-then ask them their
impressions, almost without fail they will prefer the positive
ads. But in a blind callback two or three days later, they will
invariably be able to recite the negative ad and have forgotten
the positive ones."
In the past three congressional election cycles, only 88 winners
out of 1399 races were outspent, or barely 6 percent. With those
odds, an underfunded candidate has as good a shot at lasting a
couple rounds in the boxing ring with Lennox Lewis as he does
at winning an election. No matter your record, skills, or integrity,
odds are you lose if you can't reach the voters.
Consequently, raising money is the number
one activity by far of American politics.
Because it's unlawful for members of Congress to use government
offices to make fund-raising calls, "you go to the Democratic
National Committee headquarters into what they call a clean room,"
Georgia Senator Zell Miller, an outspoken critic of the process,
recalled last year. "You have an aide who's getting somebody
on the line and handing you a card or sheet of paper that tells
you who this person is, what their main interests are, what their
spouse's name is, and what you might be able to extract from them.
Then you call them up and act like you're their best buddy and
ask, 'How's Mary and the kids?' and 'By the way, how about donating
$1000 to my campaign?' I always left that room feeling like a
cheap prostitute who'd had a busy day."
So, in midafternoon of an election year,
one can see streams of members leaving their government work for
the political work of dialing for dollars. West Coast members
have it worse: since their constituents are three hours behind
Washington, D.C., they feel pressured into using the evenings
As special-interest dollars in elections go up by the millions,
voter participation goes down. While Israel reliably achieves
over 80 percent turnout in its elections for prime minister, and
France and the United Kingdom typically turn out about three quarters
of their voting-age populations, the United States has not broken
60 percent since 1968. The turnout for American elections is no
higher today than it was in the 1930s-with roughly half of eligible
voters staying home in presidential elections, and nearly two
thirds in congressional elections.
Robert Putnam's much discussed Bowling Alone: The Collapse and
Revival of American Community:
* Just 11 percent of eighteen- and nineteen-year-olds
eligible to vote for the first time in 1998 actually did so.
* Beyond a 25 percent decline in voting,
there has been a 50 percent dip in political involvement (measured
by campaign activities) over the last forty years. In 1973, a
majority of Americans wrote an article, signed a petition, made
a speech, or sent a letter to an elected official; twenty-one
years later, most Americans did none of these.
* In 1973, two-thirds of Americans attended
at least one organization or club meeting a year; in 1994, the
reverse was true. Over the same time span, membership in social
and civic organizations fell 16 percent, while active participation
in these same groups dropped by 50 percent.
Curtis Gans, Committee for the Study of the American Electorate
... citizens watching six hours a day
of TV are left with little time to do much else but work, eat,
and sleep; their civic information base is unvaried and limited
because it's filtered nearly exclusively through the TV screen.
... since Buckley v. Valeo permits the wealthy to contribute as
much to their own campaigns as they like-because the Court reasoned
a person can't corrupt himself, never considering how such spending
could corrupt the process-the strategy is legal, and often a winning
If something doesn't change soon, there will be only three types
of people running for and holding office in the future: super-fund-raisers,
celebrities, and multimillionaires.
The Energy Industry
The energy industry had few friends more
loyal during the 1980s than Senator Bennett Johnston (D-LA), chair
of the Senate Energy and Natural Resources Committee. Johnston
carefully passed a bill through his committee in March 1989 opening
the coastal plain of the Arctic National Wildlife Refuge in Alaska
to oil and gas drilling. After years of trying, he finally squeezed
the bill out of committee by an 11-8 vote. Then, nine days later,
a ship called the Exxon Valdez dumped 10 million gallons of crude
oil into the Prince William Sound. This case of colossal bad timing
led Johnston to withdraw the proposal, because, he said, it would
be "politically foolish" to push it at the time.
That setback notwithstanding, Johnston
has had his fair share of success stories on behalf of the industry.
In 1986, he succeeded in enacting legislation that favored privately
owned utilities over public utilities in federal licensing of
hydroelectric power. In 1988, he fought back legislation making
contractors at nuclear facilities owned by the Department of Energy
(DOE) liable for accidents caused by their own gross negligence.
Looking at a 1954 law that required the
DOE to price its enrichment services so that it recovers program
costs, the General Accounting Office reported in 1987 that the
DOE had not recovered $8.8 billion in the prior year. Two years
later, at the behest of the commercial nuclear power industry,
Senator Johnston helped propose an initiative to restructure the
uranium industry by setting the amount of unrecovered costs at
roughly $364 million, a figure approved by the utilities and a
break of over $8.4 billion.
Johnston's friendship with energy was
not one-sided. While up for reelection in 1984, he received more
than $121,000 from energy PACs and at least $84,000 from individuals
who worked in the business. In 1988 he earned $8000 in honoraria
from General Electric, Chevron, and electric utilities. The year
before, he set up his own Pelican PAC, and had it managed by former
aides who had become big-energy lobbyists. Funds for the PAC came
in large part from individuals working for energy companies. Those
helping him raise money for Pelican included Robert Szabo, a electric
utilities lobbyist, and Charles McBride, a nuclear utilities lobbyist.
Questioned about the propriety of such an arrangement, Johnson
answered, "I'm very much playing by the rules.
Johnston was right: for the energy industry,
money was and is the heart of the matter. From 1990 through early
2002, the industry invested $140 million in the political system,
including $40.6 million in PAC money and $49.1 million in soft
money. One instance in which the industry's benevolence paid off
was the $5.5 billion Shoreham Nuclear Power Station built by the
Long Island Lighting Company (LILCO). Viewed as a safe and economical
way to provide 500,000 homes with electricity, the Shoreham plant
was originally expected to cost $75 million, but accidents, increased
costs, community opposition, and licensing issues ran the total
cost to more than 70 times the expected figure. When Shoreham
was unable to recoup the billions in added costs, state regulators
allowed LILCO to raise its electric rates, and Long Island residents
became the highest-paying electricity consumers in the United
States-through no fault of their own.
"The industry in large part has been
spared by its customers," wrote Deborah Lutterbeck of Common
Cause magazine. "Just as LILCO's ratepayers continue to pay
for the Shoreham plant, ratepayers across the country are paying
for their electric companies' bad investments." Alan Noia,
president of New York's Allegheny Power System, estimated in 1995
that consumers had paid $38 billion in excess costs. While the
ratepayers paid the price, the electric companies had copped a
bargain, giving approximately $ 1 million or so to congressional
candidates in the 1993-1994 election cycle and $1.5 million in
soft money from 1988 to 1995.
The return on its investment that the
energy industry was seeking in the mid-1990s was deregulation,
through which the industry hoped to be freed from government requirements
that had been forcing them to buy alternative forms of energy
or cap the prices they charged. The proponents of deregulation
promised smaller bills to consumers, strong stock returns, and
stability and reliability. But, as California would later show,
consumers don't often benefit from energy laissez-faire. Industry
When California decided to deregulate
its electric utilities in 1996, proponents of the move promised
that market competition would drive consumer electric bills down
by at least 20 percent. But they have been proven wrong. Because
just a few corporations controlled the power plants sold by the
California utilities, in the deregulation deal these companies
suddenly had an opening to grossly increase electricity rates
without fearing the competition-and they did. By charging three
times more in 2000 than the year before, the top ten sellers boosted
their profits by 54 percent.
In early 2001, eight western governors
(half of them Republicans) asked the federal government to put
a temporary cap on the region's wholesale electricity prices,
citing ballooning costs and low supplies. They were joined by
two of the Congress's most conservative Republicans, who sponsored
a bill urging the installment of caps. Yet President Bush ignored
their calls, despite a manufactured crisis that was exploiting
taxpayers and consumers. Why?
One explanation is that ten of Bush's
largest contributors in 2000, whose gifts totaled $4.1 million,
were energy suppliers who were poised to benefit from such a hands-off
policy. Three of the corporations making large profits in California
were Texas-based companies that gave $1.5 million to the President's
campaign. Another was Reliant, whose board includes James A. Baker
III, the former secretary of state who oversaw Team Bush's recount
struggle in Florida. Baker's law firm, Baker Botts LLP, which
contributed $113,621 to BushCheney in 2000, received $14.5 million
for services provided to Reliant in 1999. Electric utilities,
which donated $825,000 to the President's inaugural committee,
and Reliant, whose CEO, Steve Ledbetter, gave $47,000 to Bush's
gubernatorial campaigns in 1994 and 1998, gained enormously by
this hands-off policy.
Energy companies did not restrict their
influential donations only to federal officials. The 2000 election
cycle saw the industry spend over $17 million in contributions
and lobbying to state and local energy policy makers in California.
Nearly $1 million alone was given to the three state elected officials
with the greatest influence over policy: Governor Gray Davis got
over $600,000 (though he wasn't even on the ballot that year),
while State Senate President Pro Tempore John Burton received
over $250,000, and Assembly Speaker Robert Hertzberg $220,000.
To cover their bases, investor-owned utilities (IOUs) contributed
to every single state legislator but one. "Nobody in the
legislature is standing up for what's right because they don't
want to give up campaign contributions," complained Harry
Snyder, spokesperson for Consumers Union.
While the IOUs had pushed the failed deregulation
policies of 1996, they nevertheless were able to influence new
policy because of their $4 million in contributions to those in
power. In the words of Laura Tyson, dean of the Haas School of
Business at UC-Berkeley, "The solution to the policy problem
is moving agonizingly slowly because there are several powerful
political groups that can block any piece of legislation."
Beyond Enron, the power of corporate contributors
to influence energy policy has begun to garner national attention.
Vice President Cheney's refusal to release the list of participants
on his energy task force and Energy Secretary Spencer Abraham's
private meetings with energy executives have already been noted.
The Center for Responsive Politics estimates that six of the individuals
and groups Abraham met with accounted for nearly $3.3 million
in political contributions to Republicans over the prior three
years-almost triple what the same group gave Democrats.
One group that was consulted in crafting
the energy plan was Exelon, the nation's largest nuclear energy
company, whose wish was granted when the administration endorsed
its new nuclear reactor. In supporting the so-called pebble-bed
reactors, which environmentalists have questioned as vulnerable
to terrorist attack, Vice President Cheney explained, "The
industry has an interest in this." According to the New York
Times, only Exelon, which provided hundreds of thousands of dollars
to Republican (and Democratic) campaigns in recent years, has
an interest in the reactor. As is typical with these kinds of
money-for-favors transfers, Exelon's name is not mentioned in
the energy report (the corporation itself conceded its identity
to the Times), and the task force's endorsement of the reactor
takes up just one small paragraph in the report. But that doesn't
make the endorsement less important-just harder for journalists
and the public to discover. In 2001, the year preceding the task
force's recommendation, Exelon had upped its contributions to
the Republican Party to $347,514.
As these revelations were appearing in
newspapers across the country, the nuclear energy industry won
another massive victory in February 2002. Over the protests of
environmental groups, scientists, and the state of Nevada, President
Bush approved Secretary Abraham's recommendation to store 77,000
tons of nuclear waste permanently in the Yucca Mountains. The
Nuclear Energy Institute-self-described on its Web site as "the
policy organization of the nuclear energy and technologies industry"-had
donated over $ 18 million to Republicans soft money from 1991
Drugs and Health Care
In an effort to widen their wallets, the
health care industry has often resisted measures that would make
medicine and health care cheaper and safer for patients. To do
so, it has spent millions on campaign contributions, lobbyists,
front groups, soft money, and issue ads. One result: the lack
of a prescription drug plan for elderly Americans and a health
care economy in which our seniors pay more than double what others
Drug companies profit from their patents.
If a company has a monopoly patent on a drug, other companies
cannot market it. So cheaper competitors or generic alternatives
are not available. For example, many drug companies are capable
of manufacturing the antibiotic known as Cipro, which became well
known during the anthrax scare in the fall of 2001. But by law
only Bayer can sell it, because the giant firm holds the monopoly
patent on the drug.
But after September 11, Bayer pushed for
legislation (S. 838) that would reauthorize a 1997 law that extended
by six months the patents of many of the most expensive drugs
on the market, including Cipro. All drug companies would have
to do to get their monopoly patents lengthened was to test the
drugs for safety (and effectiveness) in children. But pediatric
testing is something that many groups, such as Public Citizen
and the Elizabeth Glaser Pediatric AIDS Foundation, feel should
be required as a condition of FDA drug approval anyway.
The pediatric patent extension has long
been a sticking point in drug industry legislative negotiations.
Companies have often refused to test their products for safety
and efficacy in children, because the children's market for prescription
drugs is smaller and therefore less lucrative than the adult market.
"Because of the small market for pediatric formulations,
a pharmaceutical manufacturer has no incentive to invest resources
in such trials," admitted the drug industry's trade association,
the Pharmaceutical Research and Manufacturers of America. This
would explain why some children's advocacy and health groups agreed
to what was essentially a bribe-they needed to give the drug companies
the incentive to perform the pediatric tests. "This is an
incentive that has become such a windfall for blockbuster drugs,"
said Paul Glaser, chairman of the Elizabeth Glaser Pediatric AIDS
Foundation. "However, as I see it, that is all part and parcel
of buying into our system that stresses money and power and where
there is very little room for mandating a moral imperative. There
is no choice."
Why is pediatric testing so important?
Children react differently to medicines than adults do, and without
information on how children will respond to a given medication,
pediatricians have to guess when prescribing drugs how a child
According to a study by the Tufts Center
for the Study of Drug Development, pediatric tests cost an average
of $3.87 million per drug. Since the FDA has requested tests on
188 drugs, the total cost to the industry would be about $700
million. By contrast, the FDA estimates that patent extensions
on the drugs are worth at least forty times that number, or $29.6
billion, in added sales for the companies holding the patents.
Beyond $592 million in additional profits each year for drug companies,
the added costs to consumers will be over twenty times that, or
$14 billion, because consumers will lack access to cheaper generic
Presumably, convincing members of Congress
to support a plan that drives drug prices up would be a tough
sell. Consequently, drug companies are very prolific donors to
assure that their access to policy makers can make them more susceptible
to industry arguments.
In all, the drug industry spent $262 million
on lobbying, campaign contributions, and issue ads in 1999-2000,
more than any other industry. The Democratic sponsor of the Cipro
bill, Representative Anna Eshoo (D-CA), received $131,544 in drug
industry campaign contributions from the time she was elected
in 1992 until she sponsored the bill. All this generosity worked
to yield the desired result: subcommittee members who supported
the patent extension received 250 percent more in campaign contributions
from the industry ($64,691 on average since 1990) than did those
voting to reduce it ($25,492). After initially standing by Bayer-even
though it would take the company twenty months to meet the government's
demand for the drug, while generics could jointly reach the goal
in three-Health and Human Services Secretary Tommy Thompson eventually
succumbed to public criticism and forced the company to reduce
its price for Cipro.
Claritin is another example of what Public
Citizen's Frank Clemente calls the industry's "uncontrolled
drive for monopoly patent extensions and sky-high profits."
Drug manufacturer Schering-Plough's legislative vehicles, S. 1172
and H.R. 1598, would allow three-year patent extensions for this.
multibillion-dollar allergy drug and six other "pipeline"
drugs (so named because they were in the FDA review process as
the 1984 Hatch-Waxman Act, which made it easier for generic manufacturers
to market copies of brand-name drugs, became law). This extension
would cost Claritin consumers an extra $7.3 billion, and extensions
for all seven drugs would cost a cumulative $ 11 billion. After
Schering-Plough began its drive in 1996 to persuade Congress to
extend the company's patent on Claritin, it significantly increased
its soft money contributions and lobbying expenditures, giving
nearly $1 million in soft money to Democratic and Republican party
committees. The company gave 4.5 times more in 1999 than it did
during the previous two election cycles.
New Jersey Senator Robert Torricelli,
who received the greatest amount of contributions from the corporation's
PAC and executives ($31,050), became a major supporter of the
Claritin patent extension bill. Orrin Hatch (R-UT), then the Senate
Judiciary Committee chairman and its second-highest recipient
of Schering-Plough PAC and executive contributions ($16,000),
was treated to the company's corporate jet on multiple occasions
in July and August of 1999, within days of speaking in support
of the legislation at a committee hearing.
One legislative director for a midwestern
congressman explained how drug industry lobbyists try to capture
legislators. "What happens on a day-to-day scale is [that]
lobbyist organizations hold fund-raisers, get the ear of the Congress
member, and the member is beholden to them. And then, when there's
legislation that affects the lobbying group, they call and make
their opinions known." She acknowledges that "a good
member is open to hearing but not accepting verbatim. But members
not in leadership positions-and thus not guaranteed to continue
getting industry money-have ethically difficult decisions to make."
One "ethically difficult decision"
was keeping Medicare from providing coverage for prescription
drugs, leaving 13 million Americans under Medicare to pay top
retail prices for their prescriptions. Studies show that consumers
without prescription drug coverage are charged retail prices double
the amount manufacturers charge their most favored customers.
To maintain this lucrative status quo, the industry spent approximately
$230 million in the 2000 election cycle on lobbying, campaign
contributions, and issue ads to block Democratic-backed legislation
that would provide such coverage.
The industry's spending included $170
million for lobbying, almost $15 million in direct campaign contributions,
at least $35 million in campaign ads (produced by a front group
benignly called Citizens for Better Medicare, which is really
run by the industry), and $ 10 million funneled to the U.S. Chamber
of Commerce for pro-drug industry issue ads. Such spending was
required, industry lobbyists believed, because polls showed expensive
prescription drugs to be an issue paramount to voters.
So far the investment has paid a healthy
dividend, for the industry but not seniors: the industry's push
has kept Congress from providing prescription drug coverage through
Medicare. And it keeps coming: the constituency that gave the
most $250,000 donations to President Bush's record-setting $30
million fund-raiser in June 2002 was the drug industry.