Almost 70 charitable foundations asked the Securities and Exchange Commission this month to require corporations to disclose their political spending, and NPR spotlighted the Center for Political Accountability’s work in a related news report.
“Shareholders have a right to know what public companies are spending to influence the political process,” Stephen Heintz, president of the Rockefeller Brothers Fund, told NPR. The foundations’ letter said shareholders don’t get a realistic picture of the risk of corporate political spending and that secret political spending undermines democracy.
“Our foundations invest substantial sums in the market,” the letter said. “As investors we believe there is a clear and obvious necessity to require public and accessible information regarding political spending by corporations. We are deeply concerned about how our political system is being negatively impacted by huge inflows of company funds following the Supreme Court’s Citizens United decision. We are also concerned about the impact on companies in which we invest if they are involved in questionable or controversial political expenditures.”
Among the signers were leaders of the Carnegie Corporation of New York, the Rockefeller Brothers Fund and the Ford Foundation. The NPR report was headlined, “Foundations To SEC: Force Corporations To Disclose Political Giving.” It mentioned opposition to a political disclosure role from the U.S. Chamber of Commerce, and growing acceptance of voluntary corporate political spending disclosure as championed by CPA:
“Bruce Freed, president of the center, said 140 companies now have such standards, including a majority of the Standard and Poor's 100.
“He said the chamber and other opponents are ‘trying to stop something that's happening — and that we know is happening, because we deal with companies all the time, and we know what support there is in the corporate community.’"
The NPR report summed up, “This dynamic seems to be gaining momentum. The political money system is still adapting to Citizens United and other deregulatory developments. As the shock of change wears off, corporations may be embracing their new latitude in politics, and disclosure may come to seem less risky.”
In addition, two former SEC chairmen, Arthur Levitt and William Donaldson, urged the commission to adopt a disclosure rule, according to Bloomberg News. “The Commission’s inaction is inexplicable,” they wrote in a letter to SEC Chair Mary Jo White. “It flies in the face of the primary mission of the commission, which has since 1934 been the protection of investors.”
By Marian Currinder
Things are out of whack in Washington, according to critics, because corporations spend more on lobbying expenditures than taxpayers spend to fund the Congress. This view is itself out of balance, however, because it underplays the corporate spending that helps elect lawmakers while opening the door to the relationships that are so crucial for lobbying.
Today, corporate spending on political electioneering is not only surging — like lobbying expenditures — but it is increasingly made up of anonymous “dark money.” That makes it near impossible, to paraphrase Justice Anthony M. Kennedy in Citizens United, for shareholders to tell whether their corporation’s political speech advances its profit-making interest, or for citizens to check which moneyed interests are supporting their elected officials.
Because this spending poses a threat to companies and our democracy, it warrants close attention and action. Interestingly, this kind of aggressive engagement of American businesses and trade associations in elective politics appears central to an historic paper that Lee Drutman, author of “The Business of America is Lobbying,” cites in describing the evolution of business lobbying.
In a now-famous 1971 memorandum, Lewis F. Powell Jr., a leading corporate lawyer who would become a Supreme Court justice, claimed that “(a)s every business executive knows, few elements of American society today have as little influence in government as the American business, the corporation, or even the millions of corporate stockholders. If one doubts this let him undertake the role of ‘lobbyist’ for the business point of view before Congressional committees.”
There’s a greater scope to what Powell was arguing, however. He did not dwell on lobbying. Rather, he discussed the importance of business interests no longer avoiding “confrontational politics,” assuming instead a higher profile in direct “political action.” He advised, “Business must learn the lesson” learned far earlier by labor and others “that political power is necessary, it must be used aggressively and with determination.” Business should not be reluctant, he added, “to penalize politically those who oppose” the American enterprise system.
Fast-forward to 2015, more than four decades later. The landscape of political giving to support and to “penalize” politicians has been transformed, and American corporations are major players in confrontational politics. Business interests are the dominant spenders in federal elections with an advantage over competing voices of about 15-to-1.
The 2014 congressional elections, for example, cost $3.77 billion. Business was responsible for close to half of that amount, or $1.65 billion. Labor contributions in the 2014 election cycle, by contrast, added up to $140 million.
There is no shortage of research linking political contributions with access to politicians. Jennifer Brown of Arizona State University found that companies pursuing a long-term, contribution-based approach to building relationships with lawmakers fare better in lowering their tax rates than companies that relied chiefly on lobbying. Contributions buy a point of entry and, over time, regular access for those who lobby.
Two years ago, University of California at Berkeley researchers found that donors are more likely to gain high-level access to members of Congress and staff than are their constituents who haven’t paid. More recently, two Stanford professors studied patterns of giving to current and former congressional committee members and reported “evidence that corporations and business PACs use donations to acquire immediate access and favor — suggesting they at least anticipate that the donations will influence policy.”
Unlike company expenditures for lobbying (at least at the federal level), which must be disclosed, a soaring proportion of political electioneering spending is hidden. Since Citizens United in 2010 lifted restraints on “independent expenditures” to support or oppose candidates, the decision’s top beneficiaries have included business-connected trade associations and 501(c)(4) “social welfare” groups that are politically active.
Accordingly, more than $169 million in political “dark money” was reported spent in the 2014 election cycle, and a striking 73 percent ($124 million) was spent by conservative groups that receive corporate contributions. These groups spent more in a single election cycle than liberal groups have spent in the aggregate since 2000, a period of seven election cycles. And when corporations make secret political contributions, shareholders have no way of knowing if they do so consistently with company policies.
Today, the overemphasis on money spent to lobby politicians distracts attention from money spent to elect them to office. It’s imperative to focus foremost on transparency and accountability for the political money that puts politicians in office because election losers don’t get lobbied.
Marian Currinder is the associate director of the Center for Political Accountability and is the author of “Money in the House: Campaign Funds and Congressional Party Politics” and co-author of “Congress in Context.”