Follow the Money

excerpted from the book

Dollars and Votes

How Business Campaign Contributions Subvert Democracy

by Dan Clawson, Alan Neustadtl, and Mark Weller

Temple University Press, 1998

p5
... if voting with dollars replaces voting at the ballot box, then the votes will be very unequally distributed: the top I percent of the population by wealth will have more "votes" than the bottom 90 percent of the population.

p7
The interests of business are diametrically opposed to those of the public.

p12
Why are business campaign contributions more of a problem than contributions by labor (or women, or environmentalists)? First, because business contributes far more money. According to a study by the Center for Responsive Politics, in the last election business outspent labor by an II to I margin. Most reports about campaign finance give the impression that labor contributes roughly as much as business-a distortion of the reality.

Second .. beyond the world of campaign finance, business has far more power than labor, women's groups, or environmentalists.

Third, business uses campaign contributions in a way few other groups do, as part of an "access" process that provides corporations a chance to shape the details of legislation, crafting loopholes that undercut the stated purpose of the law. Other groups do this on rare occasions; business does so routinely. Businesses are far more likely than other donors to give to both sides in a race; nearly all the soft money donors who gave to both sides were corporations.

Fourth, there is a fundamental difference between corporate and labor PAC contributions. That difference is democracy; unions have it, corporations don't. This overwhelmingly important distinction is concealed by almost all public discussion. No one talks about it, no one seems to take it seriously. There is a virtual embargo on any mention of this fact, but it merits serious consideration.

The original legislation ratifying the creation of PACs, passed in I971 and amended in 1974 after Watergate, intended that corporations and labor unions be treated in parallel fashion. In each case, the organization was permitted a special relationship to the group that democratically controlled it-stockholders in the case of corporations, members in the case of labor unions. The organization was permitted to communicate with those individuals and their families on any issue (including political issues), to conduct registration and get-out-the-vote campaigns, and to ask those people for voluntary contributions to a political action committee.

In the I975 SUN-PAC decision, the Federal Election Commission, for almost the only time in its existence, took a bold step. In fact, it essentially threw out a key part of the law and then rewrote it, permitting corporations to solicit PAC contributions not just from their stockholders but also from their managerial employees. This had two consequences. First, corporate PACs-but no others-are able to coerce people to contribute. Second, corporate PACS are not, even in theory, democratically controlled. Each of these consequences needs to be examined.

Neither stockholders nor union members can be coerced to contribute-the organization doesn't have power over them, they have power over the organization. Managers, however, can be coerced. As a result, virtually all corporate PAC money comes from employees rather than stockholders.

If your boss comes to you and asks for a contribution, saying he or she hopes that all team players will be generous, it's not easy for you, an ambitious young manager, to say no. Some companies apparently do not pressure employees to contribute, but others do. For example, at one company we studied, the head of government relations told us that each year he and the company's lobbyist go to each work unit and hold an employee meeting: "We talk about the PAC and what it means to the company and what it means to them as individuals, and we solicit their membership; if they are members, we solicit an increase in their gift." Then the employees' boss is asked "to get up and say why they are members and why they think it's important for an employee to be a member." The upper-level manager clearly has no confidentiality, which in itself sends a key message to others. A number of coercive elements converge in this solicitation: The meeting is public, employees are to commit themselves then and there in the public meeting, the boss recommends that subordinates contribute, and an impression is probably conveyed that the boss will be evaluated on the basis of his or her employees' participation rate. The PAC chair insists there is no pressure, but admits employees feel differently:

And yet regardless of how many times you say that, there's always going to be some employees who feel that you got them into that meeting to put pressure on. But if they feel pressure it's self-imposed from the standpoint of the solicitation. Because there will be several of us, including myself, who will get up and say, we want you to be a member and here's why.

However, even his definition of "no pressure" is cause for concern: "But as far as a manager or anybody getting up and telling you that if you don't participate we're going to fire you, . . . there's no pressure." No one is told they will be fired for failing to contribute, but it seems probable that they will assume their boss will be disappointed and that their contribution or non-contribution will be remembered at promotion time.

The second consequence of the I975 SUN-PAC decision is even more important. Corporate PACs are not democratic. Many corporations have steering committees that vote to decide to whom the PAC will contribute, but the committees are appointed, the corporate hierarchy selects individuals who are expected to take the corporate purpose as their own, and managers know that they will be evaluated on their performance on the committee. As one senior vice president explained: "Policy is made by the top of the company, and it filters down. They tell you what they want, and you do it."

The internal functioning of corporate PACS suggests how they relate to and value democracy. Most aspects of the political system are beyond the direct control of corporations, but they can determine how their PACS operate and make decisions. As a result, in all but a handful of corporate PACs democratic control is not even a theoretical possibility. The PAC raises its money from employees, but employees do not and cannot vote on the leadership or direction of either the PAC or the corporation.

p17
In practice, campaign finance is today less regulated than it has been at any time since I907 (when the Tillman Act was passed).

p18
We won't try to cover all the technicalities of the current law; the outlines are confusing enough. Individuals may contribute $1,000 per candidate per election. But since most candidates face both a primary and a general election, that limit doubles; the creative use of family members can further expand it. No individual may contribute more than $25,000 in total (to all candidates) per year, though people may also contribute $5,000 per year to a PAC.

Political action committees, or PACs, are entities that collect money from many contributors, pool it, and then make donations to candidates. Corporations, unions, and trade associations may sponsor PACS, paying all of their operating expenses (rent, phone, mailings, the salaries of individuals who work only on the PAC), but they can't put their own money directly into the PAC, because all PAC money must come from voluntary donations. PACS may contribute up to $5,000 per candidate per election (with primaries again doubling the limit), and may give an unlimited total amount.

Candidates must disclose all PAC donations (of any size), the names of all individuals who donate $200 or more, and the total amount spent and received (including the amounts received from donations of less than $200). PACS must disclose all donations, and report the names of all individuals who contribute $2000 or more.

By far the most important recent change in campaign finance is the explosion of so-called soft money ... "Hard money" refers to donations made (more or less) within the framework of the law as it was originally intended; "soft money"-which could equally well be called "loophole money"-is money that escapes the requirements of federal law. Like most such distinctions, it's less clear than it seems-for example, a 1991 federal regulation requires that soft money contributions be reported: That reporting is itself a (minimal) form of regulation.

Soft money differs from hard money in two critical ways. First, there is absolutely no limit on the amount of the contribution. A corporation can give one hundred thousand dollars, a million dollars, or more. Second, corporations, unions, and other organizations can take the money directly from their central treasuries. PACS must get their money from (at least supposedly) voluntary donations by individuals to the PAC. That placed some limit on corporate giving. Stockholders contributed very little, and although corporations could successfully coerce the money out of their managers, doing so became, at least, a problem. Now corporations may take the money directly out of their treasuries-and they have astonishingly deep pockets.

The Federal Election Commission (FEC) is supposed to monitor candidates and contributors and enforce the rules, but it is underfunded and takes-literally-years to reach decisions. In terms of action, the FEC is paralyzed on most important issues, since by law its commissioners are evenly balanced-three Democrats and three Republicans-but it requires a majority vote to act. Typically, the FEC takes (roughly) forever to officially consider a violation. Then it either fails to reach any decision or imposes a minimal fine.

p23
Corporations are unlike other "special interest" groups not only because business has far more resources, but also because of its acceptance / and legitimacy. When people feel that "the system" is screwing them, they tend to blame politicians, the government, the media-but rarely business. In terms of campaign finance, while much of the public is outraged at the | way money influences elections and public policy, the issue is almost always posed in terms of politicians, what they do or don't do. This is part of a pervasive double standard that largely exempts business from criticism.

p24
Lee Atwater, George Bush's I988 campaign manager

In the I980 campaign ... big government was the enemy, not big business. If the people think the problem is that taxes are too high, and the government interferes too much, then we are doing our job. But, if they get to the point where they say that the real problem is that rich people aren't paying taxes, then the Democrats are going to be in good shape.

p25

... today business has enormous power and exercises effective hegemony, even though (perhaps because) this is largely undiscussed and unrecognized. Politically, business power today is similar to white treatment of blacks in I959-business may sincerely deny its power, but many of the groups it exercises power over recognize it, feel dominated, resent this, and fight the power as best they can. At least until very recently, economically, business power was more like gender relations in I959: Virtually no one saw this power as problematic. The revived labor movement is beginning to change this, and there are signs that a movement is beginning to contest corporate power. Nonetheless, if the issue is brought to people's attention, many still don't see a problem: "Well, so what? how else could it be? maybe we don't like it, but that's just the way things are."

Dollars and Votes

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