Many Businesses Root for Reform to Limit Political Contributions
If it succeeds, the drive to reform the campaign finance system figures to deprive business of one of its great advantages in the Washington influence game: the ability to pour nearly unlimited sums of money into the political system.
So how did a lobbyist for a major entertainment company react when asked recently about the McCain-Feingold campaign finance reform bill, which had just passed the Senate?
He flashed a surprising grin and offered an enthusiastic thumbs up.
In public, most large companies are steering clear of taking a position on campaign finance reform, fearful that any public stance might backfire with lawmakers, who are deeply divided on the issue.
But privately, many corporations and their lobbyists--even if they now donate millions a year--are rooting for the McCain-Feingold bill. They hope it will rescue them from an aspect of the fund-raising treadmill that they particularly resent: “soft-money” donations to political parties.
The McCain-Feingold bill would ban soft money--contributions of unlimited size to the political parties--in federal elections. Soft money is supposed to be used for such party-building activities as get-out-the-vote drives, but the parties have learned how to funnel soft money into particular federal races without violating this restriction.
For the Democratic and Republican parties, that discovery put a premium on contributors with the deepest pockets. That meant business. And though companies had eagerly contributed “hard money” to individual candidates in amounts strictly limited by federal campaign law, they proved to be less enthusiastic about unlimited soft money.
“Many businesses just consider soft money to be a shakedown,” said Charles E.M. Kolb, president of the Committee for Economic Development, a business research group with offices in New York and Washington. “Politicians have businesses believing that they’ve got to play this game. Companies are afraid to say no.”
The CED surveyed 300 senior executives of large companies in October and found that 60% favored a ban on soft-money contributions. Nearly 80% agreed that the current campaign-finance system was “an arms race for cash that continues to get more and more out of control.”
Soft money, many businesses say, gives them less bang for their buck than hard money, and is more susceptible to public scandal and controversy. Worst of all, it is growing at an alarming rate with no end in sight.
In the two years leading up to Bill Clinton’s election in 1992, soft-money contributions to the Republican and Democratic parties totaled less than $50 million, according to the Center for Responsive Politics in Washington, which tracks campaign funds. During the election season that ended last year, soft money exploded to nearly $500 million, divided nearly equally between the parties.
“We see it as an expense that would just go away” if the McCain-Feingold bill were law, said an executive for a telecommunications company who, like many other soft-money donors, refused to speak on the record for fear of alienating lawmakers. And no company would be disadvantaged, he noted, because all would have to abide by the same rules.
None of the top five corporate soft-money contributors in the last election--AT&T;, Freddie Mac, Philip Morris, Microsoft and SBC Communications--has taken a position on the soft-money ban and none would agree to speak publicly about the issue.
“Companies fear retribution from politicians,” Kolb said.
Only a handful of large companies, including General Motors, Ford Motor and AOL Time Warner, have taken a public stance against soft-money contributions. But these companies haven’t given up on political giving.
Instead, they rely upon corporate political action committees to contribute hard money--tightly limited contributions to individual candidates. Individuals may contribute no more than $1,000 to a single candidate per election (an amount the McCain-Feingold bill would raise to $2,000) and PACs may give no more than $5,000.
Apart from the magnitude of the contributions, businesses have several other objections to soft money.
In large part, companies contribute to gain access to lawmakers who are in a position to help them. But soft-money contributions do little to build relations between companies and individual politicians.
“The advantage of hard money is that it’s direct,” said Larry Noble, executive director of the Center for Responsive Politics. “You are giving to a candidate. So they are going to know who you are when you call them.”
Companies also complain that they can never be sure how the political parties will use their soft-money contributions. Such funds might be used for negative advertising or to support issues contrary to the company’s interests.
“A business wants to give to a person who believes in the same issues, not to a committee,” added E. Floyd Kvamme, co-founder of Technology Network, a Silicon Valley political fund-raiser. Kvamme was recently named by President Bush to head his Council of Advisors on Science and Technology.
But it is the growing pressure to give soft money in unlimited amounts that particularly worries corporations at a time of slowing national economic growth.
“When a company is laying people off, it’s harder to justify to shareholders or Wall Street that you are writing big soft-money checks,” said Grant Seiffert, a lobbyist for the Telecommunications Industry Assn.
Soft-money contributions by Verizon Communications rose so much in the last election--reaching nearly $1.5 million--that the telephone company’s board voted earlier this year to impose its own internal cap.
“We needed to bring some discipline into the budgeting process,” said Verizon spokeswoman Susan Butta. The company has not revealed what the new cap is.
Other companies say they worry their soft-money contributions might spur a public backlash or embarrassment because of the growing public scrutiny of soft-money fund-raising practices. In the CED survey, 71% of executives said media accounts of large corporate contributions were hurting the image of U.S. businesses.
One lobbyist said, “It’s a scandal waiting to happen.”
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The Softest Five
The companies that contributed the most soft money to federal campaigns during 1999 and 2000. Figures include contributions by executives and employees.
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Total To Democrats To Republicans AT&T; $3,944,000 $1,557,000 $2,388,000 Freddie Mac 2,398,000 1,025,000 1,373,000 Philip Morris 2,382,000 297,000 2,085,000 Microsoft 2,376,000 1,057,000 1,318,000 SBC Communications 1,856,000 872,000 984,000
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Source: Center for Responsive Politics
