Accountable Strategies blog

A blog about accountability issues in the public, private, and nonprofit sectors

Archive for the ‘campaign finance and lobbying’ Category

Is GM serious about its future this time?

Posted by David Kassel on July 20, 2009

Given General Motors’ campaign against its own electric car, the EV1, in the 1990s, it’s hard to be confident that they are serious this time around with their second electric model, the Volt.

Also, what happened with the EV1 may say a lot about why the company want bankrupt  in 2009. 

As The Washington Post recently reported,  it’s not clear that GM has learned any lessons from that short-lived bankruptcy.   The company is continuing to put money into the gas-guzzling Chevrolet Camaro SS, which has a 400-plus horse power V-8 engine and gets 25 miles to the gallon on the highway.  Bob Lutz, a vice chairman at GM, is quoted as saying that the Chevrolet Volt, the electric car under development, is a “symbol”  for the company. 

That’s fine, but is it only a symbol, or is there going to be substance this time to GM’s campaign for the Volt?

It’s important to keep in mind that once the bankruptcy dust settles, the federal government will have poured in $49 billion to help reorganize and save the company.   The result will be the closing of thousands of dealerships, a dozen assembly plants, and the loss of more than 100,000 jobs.  Along the way, GM missed the opportunity that Toyota grabbed in the development of the hybrid Prius.  What happened with the EV1 really was a murder of sorts.

GM killed off  the EV1  after corporate officials balked at more than $300 million for further development.  At the time, GM nearly had the alternative-car market to itself, according to The Washington Post. 

I recently watched the documentary, Who Killed the Electric Car?,  for the first time.   For me, one of the most shocking parts of the  film was footage of the company repossesing all existing models the EV1 from people who were leasing them and who wanted to keep them, and then taking the cars to be crushed in scrapyards.  Apparently, every last car had to be removed and all record of its existance erased.   The film makes a convincing case that GM was in bed with the oil industry, which feared that electric vehicles would take away part of their vast market. 

When a company destroys its own inventory in order to stop the technology of the future, you know something is very wrong.  Here’s hoping things will go differently with the Volt.

Posted in campaign finance and lobbying, Corporate responsibility, Private, Public | Tagged: , , , | Comments Off on Is GM serious about its future this time?

Reining in the campaign bundlers

Posted by David Kassel on December 13, 2007

We all know by now that the life-blood of government has become special interest money, which increasingly underpins our entire electoral process.

Public Citizen’s Watchdog blog reports that in 2008, winning the presidency is going to cost $1 billion between the two major-party candidates.  It’s the lobbyists and fundraisers who have become the conduits of that wealth between the special interests and the politicians, who, if and when they win office, aren’t inclined to forget who got them there.

But while we all know this is the case, we lack the will to change the system.  The fitful series of campaign reform efforts since the 1970s seems to have brought along loopholes with every new rule.  Thus, campaign finance reform may have stemmed the tide of this history a bit, but the tide has still been relentless. 

One of these loopholes has led to the emergence of “bundlers,” who increasingly operate on behalf of businesses and wealthy special interest groups.   While individuals are legally limited to spending $2,300 on a particular candidate, bundlers can round up contributions from numerous individuals from a single business or industry. 

Currently, bundlers have to disclose their roles only if they personally hand over these checks to the campaigns, according to Public Citizen.  The campaigns get around this rule by employing a tracking system that enables the bundlers to cover their tracks. Campaigns give bundlers a tracking number, which the bundler asks the contributors to write on their checks.  This allows the campaigns to know who the bundler is, but keeps the public in the dark as to the bundler’s identity.

Here’s the quid pro quo.  Public Citizen found that one out of every four elite fundraisers to the Bush campaign in 2000 and 2004 received some form of governmental appointment, including ambassadorships and cabinet posts. 

How far into the body politic have the bundlers buried themselves?  Public Citzen’s  http://www.whitehouseforsale.org/ website reports that top tier candidates for president have used them to raise hundreds of millions of dollars:

Hillary Clinton raised $88.5 million from 320 bundlers

Barack Obama: $78.9 million from 354 bundlers

Rudy Giuliani: $46.5 million from 218 bundlers

Mitt Romney: $44 million from 346 bundlers

John McCain: $31.4 million from 442 bundlers 

John Edwards:  $29.9 million from 666 bundlers

 So, what can be done?  It doesn’t appear that imposing new rules is going to work.  The only viable solution that I can see is to work toward more reliance on public financing of campaigns.

The proposed Presidential Funding Act of 2007 appears to go in the right direction.  Public Citizen reports that it would overhaul the current public financing system for presidential campaigns by increasing spending ceilings for publicly funded candidates.  Publicly funded candidates receive federal campaign funding in exchange for giving up special interest contributions. 

The bill would also raise the voluntary tax check-off system for public campaign financing from $3 to $10 per individual and would provide a 4-to-1 match of public funds to private donations of $200 or less.  The measure also does propose some additional rules, including requiring presidential campaigns to disclose all of their fundraising bundlers (this would compliment the Lobbying and Ethics Reform Act of 2007, S. 1 and H.R. 2316, which is currently pending in Congress), and prohibiting national parties from using unregulated special interest money to pay for their national party nominating conventions.

At the state level, public financing needs to be enhanced as well.  The Boston Globe reported that Massachusetts Governor Deval Patrick and Lt. Gov. Tim Murray have raised more than $1.4 million in campaign contributions in the past year, much of it from special interest groups regulated by government.  Murray, a Democrat, has turned to Robert M. Platt, a State House lobbyist and Republic fundraiser who happens to be supporting Romney’s presidential campaign this year.

Although Massachusetts law restricts individual donors to a limit of $500 to statewide candidates, bundling appears to be a way of getting around that limit, just as it is at the federal level. 

The federal public funding legislation, which has bipartisan support in the House and Senate, has been co-sponsored by Clinton, Obama, and Sens. Christopher Dodd and Joe Biden.  One would hope that the major Republican presidential contenders are in favor of it as well.  

Posted in campaign finance and lobbying, Private, Public | Tagged: , , , , | 2 Comments »

Lobbying and ethics bill ends up with big loophole

Posted by David Kassel on August 8, 2007

 Last week, The House and Senate overwhelmingly approved a landmark bill that would tighten ethics and lobbying rules for Congress.  But among the political compromises that led up to its passage was the removal of a measure that would have shone some needed light on nonprofit organizations that are being used more and more frequently to hide the lobbying activities of corporations, industry associations and others.

While the new lobbying bill will require lawmakers to disclose “bundled” campaign contributions from lobbyists and require lobbyists to detail their own campaign contributions, missing from the bill is a provision that would have imposed some minimal disclsure requirements on organizations that engage in so-called “Astroturf lobbying.” 

Public Citizen’s Clean Up Washington website describes Astroturf lobbying as involving the creation of organizations that appear to be grassroots coalitions with populist-sounding names to lobby Congress.  These groups, however, are not grassroots organizations at all, but are often bankrolled by large corporations, industry trade associations or wealthy individuals.

The disclosure measure appears to have succumbed to groundless claims made by opponents in persuading members of both parties in Congress to sink it.

“It’s a setback,” said Craig Holman of Public Citizen, which spent two years with other disclosure advocacy organizations in refining the Astroturf disclosure measure in order to respond to the continuing objections.   “We couldn’t overcome the alarmist talk.”  Conservative activists had begun spreading the false claim that all nonprofit organizations that are engaged in legislative advocacy in Washington would have to register as lobbyists under the measure.

But as Democracy21.org noted, the dropped provision would actually have required only professional Astroturf lobbying firms to register and report the amounts they receive to conduct Astroturf lobbying campaigns, and would have required lobbying organizations already registered to report the amount they spend on Astroturf lobbying efforts, if the amount is more than $25,000 per quarter.  According to Holman, the measure would not even have required those organizations to disclose their contributors, which would seem to be an important way to distinguish between true grassroots and Astroturf organizations.

Public Citizen has identified 12 organizations, which falsely represented themselves as grassroots entities and spent millions of dollars in recent years to persuade Americans to pressure legislators to support controversial legislative measures such as national energy policy, the estate tax and Medicare prescription drug legislation.   Among the organizations were Americans for Tax Reform and United Seniors Association, Inc. or USA.   According to Public Citizen, USA spent millions of dollars in 2002 in favor of candidates in House races who supported prescription drug legislation desired by the Pharmaceutical Research Manufacturers of America, the trade association for the pharmaceutical industry.

USA’s latest IRS tax filing for 2005 indicates that the organization’s financial heyday may be over, however.  The filing noted that USA, which is based in Purcellville, VA, received $678,406 in contributions that year, yet the organization ran a $1.14 million deficit.  The contributors were not disclosed on the tax filing.  Among the expenses were $503,874 in unidentified professional fees and outside services.  The filing also noted that the organization received a $42,001 personal loan from Charles Jarvis, the organization’s president, who was paid a salary and other compensation totaling $113,141.

USA’s website, which lists Art Linkletter as the group’s national chairman, portrays the organization as a grass-roots alternative to the American Association for Retired Persons.  But the website appears to be somewhat out of date, bolstering the charge that USA was never more than a front group.  The most recent news postings on the website appear to date from 2005.  The  website attacks the AARP and supports the now defunct proposal for privatized Social Security accounts (again all from 2005).  Many of the links are no longer working, such as one in which the organization claimed to have “filed a private attorney general action against tobacco companies on behalf of Medicare and Taxpayers.”   Nine members of the USA Board of Directors were listed on the organization’s IRS 2005 tax filing.  Linkletter was not listed.

Public Citizen charges that Americans for Tax Reform (ATR) served as a conduit through which money from special interest organizations was funneled on its way to other groups.  One of the relationships in which ATR acted as a conduit was coordinated by now-convicted lobbyist Jack Abramoff.  

ATR’s  website highlights its no-tax pledge, which the organization claims to provide to all candidates for state and federal public office to sign.  The website also claims that ATR serves as  a “national clearinghouse for the grassroots taxpayers’ movement…”

ATR’s 2005 IRS filing shows that the group took in $3.1 million in contributions that year.  The organization’s president, Grover Norquist, was paid $279,821.  The organization listed contributions totaling $3,171,076, ranging from from $5,000 to $445,000; and like, USA, did not disclose the names of the contributors.  The group also listed $795,300 in grants and allocations it had given out, including $200,000 to the National Alliance for Worker and Employer Rights, in Fairfax, Va.   The National Alliance for Worker and Employer Rights’ website states that that organization opposes unions and union-backed labor laws and opposes amnesty or guest worker programs for illegal immigrants. 

U.S. Rep. Martin Meehan (D-MA) made a last-ditch effort in May to offer the Astroturf lobbying disclosure provision as an amendment to the ethics and lobbying bill in the Judiciary Committee.   Accordng to OMB Watch , Meehan decried “distortions” that had been made about the provision.   But opposition by both Democratic and Republican lawmakers led to the rejection of the amendment by the committee.

Posted in campaign finance and lobbying, Nonprofit, Public | 1 Comment »

The candidates and nonprofits

Posted by David Kassel on July 30, 2007

Nonprofits have come under increasing scrutiny in recent months for issues ranging from nonpayment of payroll taxes to a lack of financial transparency  to the simple fact of their increasing involvement in delivering federal and other governmental services.

Some of that scrutiny has lately been brought to bear on the connections that some politicians, particularly candidates for president, have with nonprofits.

In The Nonprofit Quarterly, Rick Cohen calls for higher standards of disclosure regarding nonprofit charities, particularly those charities that are connected to the candidates.  He writes:

Although it is difficult to imagine that the behavior of presidential candidates would be a role model … full disclosure of donors and expenditures of politicians’ charities should start with those established by or run by candidates, their family members, their aides, and their campaign staff.

Here are some thoughts on some nonprofit connections held by some of the major candidates for president:

John Edwards:

John Edwards’ connection with a Georgia-based nonprofit called The Center for Promise and Opportunity has generated a lot of scrutiny, starting with a June 22 article in The New York Times, which itself drew heavy criticism in the blogosphere.  The gist of the NYT piece was that Edwards established the nonprofit ostensibly to fight poverty, whereas in reality, he used it to finance his own travels and other political activity after his 2004 vice presidential campaign and before he announced his current campaign for the presidency. 

 The 2005 IRS tax filing for the Center for Promise and Opportunity doesn’t disclose the names of the donors of the $1.3 million in contributions it received, nor does it disclose the names of the consultants to which the Center paid $259,000.  The Center’s directors included members of Edwards’ political staff, including one who received more than $105,000 in compensation from the organization and another who received $70,000.

In the rebuttal to the piece noted above, Greg Sargent at TPM Cafe makes the valid point that the Times didn’t prove its assertion that Edwards used the nonprofit for political purposes and that it should have said only that the arrangement “raised questions” about whether that was its purpose.  The piece was “badly botched,” Sargent maintained.

Sargent’s criticism is fair, but the known facts about this nonprofit are still troubling.  Nearly 60 percent of the organization’s budget went to payments to employees and consultants.  And with the exception of the two directors, the recipients of those payments are not disclosed in the 2005 tax filing.  The stated purposes of the organization—which included “mobilizing young people to join the fight against poverty…” and “retreats and seminars with foreign policy experts to discuss Iraq, promotion of democracy and freedom throughout the world…”-are elastic and unfocused.  And the fact that Edwards himself, who founded the organization, isn’t listed as a director or anywhere else on the tax filing, simply invites suspicion.

Cohen maintains that “some of (Edwards’s) philanthropic connections are quite serious, positive, and heart-wrenching,” such as foundations and nonprofits that John and Elizabeth Edwards started in honor of their teenaged son, Wade, who died in a car accident.  Those organizations have provided scholarships and awards.

But as Cohen points out:

The Edwards 501(c)(3) nonprofit world, combined with his PAC and 527s, suggests that the candidate has a somewhat blurry conception of the distinctions between public charities and political tools. And this undermines the potentially noteworthy work of the foundations and charities he and his wife established in honor of his son.
Particularly disturbing about the Edwards scenario is his absolute unwillingness to reveal the names of donors. Politicians’ hiding donors and expenditures behind the confidentiality of the 501(c)(3) public charity status is an abuse of the public trust.

Let’s hope Edwards’ 2006 tax filing provides this needed disclosure.

Mitt Romney:

Mitt Romney may be a classic case of a politician trying to have it both ways with respect to 527s, a class of political nonprofit organizations set up to influence political elections.

527s remain largely unregulated by the 2002 McCain-Feingold campaign reform bill, which limited soft money spending by national political organizations.  Before he announced his intention to run for president, Romney, then governor of Massachusetts,  benefited from his chairmanship of the Republican Governor’s Association, a 527 organization, to run $900,000 in ads touting his accomplishments.  Ostensibly, these were ads in support of Kerry Healey to succeed him as Massachusetts governor, but as the GOP blog, GOPProgress, pointed out, Healey got significantly less face-time on the ads than Romney himself.

Romney has since gone on to attack 527s, in explaining his opposition to the McCain-Feingold campaign finance reform bill.  In an interview with The Washington Post, Romney criticized the legislation as having “made things worse, not better,” adding that, “the law that he (McCain) passed that is in place now in our country has created a circumstance where those 527s rule the day. That’s what he put in place.”

Hillary Clinton:

The biggest nonprofit-related controversy involving Hillary Clinton I could find in an Internet search stemmed from a front-page February 27 Washington Post article, which began breathlessly:  “Sen. Hillary Rodham Clinton and former president Bill Clinton have operated a family charity since 2001, but she failed to list it on annual Senate financial disclosure reports on five occasions.”

The article went on to note that the Clinton Family Foundation has “enabled the Clintons to write off more than $5 million from their taxable personal income since 2001, while dispensing $1.25 million in charitable contributions over that period.  Hillary Clinton’s office immediately amended her Senate ethics reports after receiving inquiries from the Post.

This article received scathing criticism in Media Matters, which noted that the Post piece fueled numerous right-wing attacks on Sen. Clinton, “including the distorted claim that she had been operating a ‘secret foundation that has allowed her and her husband to avoid paying taxes on more than $5 million.'”

The WaPo article was, indeed, a largely baseless attack on Sen. Clinton.  It focused on a technical violation of the disclosure requirements for members of Congress under the Ethics in Government Act; but it didn’t establish that Clinton would have had any motive to keep the foundation secret.  In fact, as the article noted, not only did Clinton immediately provide the disclosure on her ethics reports, but the Clintons had duly provided tax filings for the foundation to the IRS.

When reporting on potential violations of the law, journalists have an obligation to establish some basis for a person’s motive in doing so.  If the violation can’t be shown to be more than an oversight, it isn’t worth more than a paragraph in the political-roundup section of the paper.  The Post article did imply that the Clinton foundation provided less in charitable contributions than it should have.  But the piece provided little context for the amounts foundations should contribute. 

Rudy Giuliani:

Giuliani appears to have had at least one controversial relationship with the long-time head of a nonprofit, the Twin Towers Fund, that Giuliani set up in response to 9/11, according to Cohen at The Nonprofit Quarterly.

Long-time Giuliani confidant Bernard Kerik, who was vice chair of the nonprofit, was the subject of much controversy over his presidency of another nonprofit, the New York City Correction Foundation.  During Kerik’s watch, that foundation was looted of $137,000, Cohen noted.  Giuliani later cut his ties to Kerik in the wake of that and other “personal and marital” issues involving Kerik.  But Cohen contended that Giuliani exhibited “a blindness to predatory behavior by one (of his) closest friends and confidants.”  That was not a great sign, he said “for a White House occupant in charge of appointing board members for nonprofit and quasi-governmental boards, and for setting a tone of accountability for the nonprofit sector.”

Barack Obama:

Obama appears to be benefiting from at least one nonprofit established on his behalf, which is employing a careful interpretation of campaign finance laws to maximize contributions to his campaign. 

Vote Hope, a Political Action Committee, which seeks to tap voters who have already given the maximum of $2,300 directly to the candidate, has been formed to provide a projected $2 million to Obama to help him win California. 

While campaign finance law prohibits PACs from spending unlimited amounts of money to further a specific candidacy, the Vote Hope PAC isn’t directly connected with Obama.  According to The Boston Globe, the donations to the PAC are considered legal as long as individual donors to the PAC “don’t retain control over how the money is spent.”

Although he is not connected with the PAC, the arrangement nevertheless is forcing Obama to walk somewhat of a political tightrope, since he has also been critical of 527s and their soft money role in financing campaigns.  Obama, however, never directly headed a 527, as Romney did, and thus has somewhat more of a basis for his criticism.

John McCain:

McCain was, of course, one of the two principal sponsors of the 2002 McCain-Feingold campaign finance reform legislation, and has since spearheaded efforts to bring 527s to heel under it.   In February, he reintroduced legislation to end 527 donations and supported a suit filed in court in 2005 to force the FEC to regulate 527s. But as The Washington Post has reported (in a legitimate story this time), McCain is financing his current presidential campaign with the help of some of the same GOP “fundraising giants who created and flourished in the soft-money system.”

At least six of McCain’s first eight national finance co-chairmen have given or raised large donations for political parties or 527 groups, the Post reported.  In all, the finance co-chairs have given at least $13.5 million in soft money and 527 donations since the 1998 election.  The piece doesn’t show McCain to be a complete hypocrite, since he’s apparently not tapping into 527s directly. But it does effectively tarnish his reformer image.

Posted in campaign finance and lobbying, Nonprofit, Public | 3 Comments »