Conventions ‘96: Public Will Pick Up Most of Tab

As party animals, it’s hard to beat the Republicans and the Democrats.

Every four years, they hold multi-day wingdings in major American cities to select their presidential tickets. The dining, drinking, singing, celebrating, sightseeing and mugging for television are nonstop for the delegates and their guests. Freebies, frivolity and VIP treatment are in abundance.

While most Americans have yet to be swept away by the early stirrings of the quadrennial slugfest, among party professionals, the feverish countdown to the 1996 nominating conventions is well under way.

The Republicans will head to San Diego and the Democrats to Chicago for what promise to be the most expensive, most lavish conventions in history. Together, the two parties will spend more than $80 million on their conventions. It may come as a surprise to discover who is footing most of the bill for the political merriment: the American taxpayer.

“I doubt if you took a poll that many Americans would know that their tax money pays for the conventions,” said E. Mark Braden, a Washington lawyer and former counsel to the Republican National Committee.

The public subsidies start with the $12 million each party will get from the federal treasury for its 1996 convention, from the $3 contribution many Americans make on their 1040 tax forms. (The 1040 form and booklet mention campaigning but nothing about conventions.)

Then there are the municipal subsidies for the political conventions: The multimillion-dollar allocations from room-tax funds, countless hours of police protection, free trolley and bus rides and other city services.

Last, but hardly least, are the tax breaks enjoyed by party faithful who donate to the conventions’ fund-raising appeals.

Due to an interpretation of the tax code by the Internal Revenue Service, a well-heeled Republican or Democrat or a politically savvy corporation can get the same tax write-off for contributing to a political convention that others get for giving money to organizations such as United Way or the Salvation Army.

The IRS contends that contributions to a political convention are not really political contributions but rather contributions to the economic well-being of the host city, because conventions help promote tourism and other businesses.

All that is needed is that the contributions be made to a nonprofit organization that has been given tax-deductible status by the IRS.

Recently, the San Diego City Council quietly jiggered around the bylaws of a charitable organization established by the city in 1988 to host a festival of art from the Soviet Union and provide for the city’s cultural enhancement.

With scant public notice, the Republican-dominated council, upon Braden’s advice, changed the festival corporation’s name and moved to add donations to political conventions among its fund-raising purposes.

The local committee in San Diego serving as host for the GOP convention hopes to raise $11.2 million from donors to pay for such things as hospitality suites, sound systems, video screens, computers and a two-story rostrum for the convention center.

Thanks to the council, donations to the newly renamed Civic Events Corp. can be listed as charitable contributions, with commensurate tax write-offs. The money will be passed on to the host committee, made up primarily of politically connected business leaders.

The same is happening in Chicago, where the host committee (Chicago ‘96) hopes to raise between $10 million and $12 million in private contributions for the Democratic convention, the first convention in Chicago since the bloody debacle of 1968. Chicago ’96 has applied for tax-exempt status.

All of this comes during a time when both national political parties are on the prowl to eliminate public subsidies wherever they find them, and when nonprofit organizations, including the American Assn. of Retired Persons, are under continuing scrutiny lest they lose their tax-break status by engaging in politicking.

In San Diego, Peter Navarro, an unsuccessful mayoral candidate in 1992 and an associate professor in the graduate school of management at UC Irvine, finds something peculiar in the way the Republicans, in particular, are preparing to pay for their 1996 bash.

“Here we have not only the federal taxpayers but the taxpayers of San Diego providing massive subsidies to the party of free markets, lower taxes and balanced budgets,” said Navarro. “It may replace the existing definition of irony in Webster’s Dictionary.”

There is, of course, a kind of built-in conflict of interest when it comes to the wooing and financing of political conventions by local political officials.

The national parties, mindful of how eager cities are to host a convention, play one city against another. On the other side of the bargaining table are local officials whose careers stand to be enhanced by landing a convention, particularly from their own party.

“The parties have become experts at whipsawing local officials to get cities to up the ante,” said Steven Erie, political science professor at UC San Diego. “When it comes to getting a convention, all local officials are tax-and-spend liberals, even the Republicans. . . . It’s all about getting to host a prestige event with big media exposure.”

In San Diego, the host of the GOP convention will be Mayor Susan Golding, a Republican who will be in the midst of a reelection campaign and is rumored in political circles to be considering a bid for the U.S. Senate in 1998.

In Chicago, the host will be Mayor Richard Daley, a Democrat and the son and namesake of the mayor who ran the city for 20 years.

The spiraling cost of conventions stands in contrast to their waning significance as forums for debating issues or as arenas for selecting nominees.

Gone are the days when the action on the floor of a convention can be “so melodramatic and obscene, so unimaginably exhilarating and preposterous that one lives a gorgeous year in an hour,” as H. L. Mencken wrote after the 103-ballot Democratic convention in 1924.

The trend in modern presidential campaigning is for one candidate to sew up the nomination in party caucuses and state primaries in the spring. In four decades, no party has needed a third ballot to select a presidential candidate. Vice presidential selections are rubber-stamped, and party platforms soon forgotten.

But the nominating fests grow ever more spectacular--and the efforts to pay for them ever more sophisticated.

Convention financing has three components: the direct federal subsidy, a municipal subsidy of cash and “in-kind” services, and the mostly tax-deductible private contributions to host committees.

All told, the GOP convention in San Diego is targeted to cost upward of $38 million and the Democratic convention in Chicago close to $45 million.

In 1992, the Republican convention in Houston cost $21 million and the Democratic convention in New York $38.6 million. One reason for the disparity is that the Democrats insist that union labor be used.

Not only will the 1996 conventions be the costliest in history, the dependence on private contributions is being ratcheted upward nearly 100% by the Republicans and 200% by Democrats as a result of city officials’ zeal to bring the convention home.

In 1992, the host committee in Houston raised $6.5 million, and the host committee in New York raised $4.3 million. One way San Diego outbid New Orleans and San Antonio for the 1996 GOP convention was to significantly increase the amount the host committee is pledged to raise.

The risk in that strategy, however, is that the private fund raising, even with the tax advantages, will fall millions of dollars short and the taxpayers in each city will be forced to make up the difference. “Ultimately the city is responsible for any shortfalls that occur,” said John Robbins, executive director of the San Diego host committee.

The trend toward financing lavish conventions with private contributions--often from corporations or individuals with business pending in Washington--has already raised alarm among political watchdogs such as Common Cause and Public Citizen.

“This is just another example of wealthy interests buying access and influence in the political system and enjoying tax breaks while they’re doing it,” said Ann McBride, president of Common Cause. “It’s one of those things that has just built up over time, and it has to be stopped.”

It was not supposed to be this way.

Post-Watergate legislation--championed by Common Cause and Public Citizen and providing for public funding of presidential nominating conventions and campaigns--envisioned that the full cost of the conventions would be paid with public money. The goal was to eliminate the need for private contributions and thereby limit the possibility of individuals or corporations proffering such contributions to buy influence.

But both parties found quick and easy ways around the reform laws.

For anyone looking to make a sizable contribution to the political process and be remembered by the beneficiary, contributions to conventions are a good deal.

The Federal Elections Commission has ruled that contributions to conventions are not bound to the laws imposed for presidential candidates, which limit individual contributions to $1,000 and ban contributions from corporations. For conventions, there are no limits and corporations are free to contribute. Further, contributions can be kept secret in some states.

Within days of the San Diego council changing the charitable corporation’s bylaws to allow for tax-deductible donations to the GOP convention, a single Republican backer donated $500,000. At the donor’s request, city officials have pledged to keep the name secret. Officials say the confidentiality is legal because it is a gift to the city, not technically a political contribution.

A list of big business and big labor contributors to the 1992 conventions is a virtual roll-call of American economic powerhouses, according to a study done by political scientists Herbert E. Alexander and Anthony Corrado for their soon-to-be-published book, “Financing the 1992 Election.”

For the Republicans, convention contributors included American Express, Arco, Coca-Cola, Delta Airlines, Shell Oil, Exxon and Sony. For the Democrats, A T & T, American Express, Time-Warner, Coca-Cola, Delta Airlines, the National Education Assn. and the American Federation of State, County and Municipal Employees.

Alexander, a professor at USC, and Corrado, a professor at Colby College, conclude that “the development every four years of new means of introducing private money undermines the premise in the 1974 law that public funding would essentially replace private funds.”

The host committee strategy for garnering contributions is akin to methods in which “soft money” finds its way into campaigns. Soft money is money contributed to political committees which, while not directly under a candidate’s control, advances the candidate’s interests by organizing voter registration efforts or get-out-the-vote drives.

Like convention contributions, soft-money contributions to so-called independent committees are not subject to limitations, although such contributions do not enjoy tax-deductible status.

Bob Schiff, attorney for Public Citizen, a group founded by Ralph Nader, said the soft-money committees and the convention host committees “are both ways to undermine public financing and spending limits.”

Among convention planners and most local officials, however, it is an article of faith that political conventions bring a financial bonanza to a city far beyond similar-sized conventions.

So overjoyed were politicians in San Diego and Chicago to land a convention that they immediately booted out groups that had made reservations to rent the San Diego Convention Center and Chicago’s new United Center next July and August of 1996. The political conventions will use the giant halls rent-free.

“A political convention is unmatched for a city to showcase itself to the world,” said Leslie Fox, executive director of Chicago ’96.

Fox’s buoyancy, and that of Reint Reinders, executive director of the San Diego Convention & Visitors Bureau, is based on the assumption that media coverage of a convention provides publicity of immeasurable value for the host city.

Easier to quantify is the fun and games that the political conventioneers will enjoy: the gifts, the limousines, the trips to theaters, museums and sporting events, the meals, the alcohol, the hobnobbing with celebrities.

At Houston in 1992, trucks made the rounds of 50 hotels each day with more goodies for delegates, including plastic cowboy boots filled with red, white and blue M & Ms.

“The buffets at conventions are fabulous,” said Prof. Alexander. “Anybody who works at it even a little can eat and drink all week for free.”