Trying to shed light on a shadowy figure in Proposition 23 battle
Since last spring, the outstanding riddle of the campaign for Proposition 23 has involved one of its leading donors, the mysterious Adam Smith Foundation of Jefferson City, Mo.
Proposition 23 is the November ballot initiative aimed at overthrowing AB 32, the state’s pioneering regulation of emissions of greenhouse gases such as carbon dioxide. Most of the money pushing the initiative has come from the oil industry, the primary target of AB 32.
And most of those donors are out in the open, appearing by name in campaign disclosures — they include Tesoro Corp. ($525,000), Valero Energy Corp. (more than $4 million so far) and Occidental Petroleum Corp. ($300,000).
One can’t say the same about the backers of the Adam Smith Foundation, which contributed $498,000 to the Yes on 23 folks back in April. You might think this signified that the foundation had a pantload of cash to throw around, but no. On Dec. 31, four months before making the contribution, it had $109 in its bank account.
Who put up the money for the Proposition 23 donation remains a mystery, although the opposition side suggests that it came from the coal and utility industries.
Should we care about such anonymity? Of course we should.
There’s nothing wrong with anonymity — in its place. For instance, many people engage in discourse and commerce on the Internet anonymously (assuming the websites they’re dealing with have any scruples) for sound personal reasons.
Political campaigns are a different story. When money comes into an election by the carload, in a quantity that might help swing the result, it’s not only useful for the public to know the source — it’s essential. That’s especially true when the motivations of the putative source are ambiguous.
In that vein, let’s take a look at the Adam Smith Foundation.
The organization was established in 2007 by a group of conservative political activists, some of whom were associated with former Missouri Gov. Matthew Blunt (whose father is Roy Blunt, the former House Republican leader currently running for U.S. Senate).
Its guiding spirit is James Harris, a political consultant in the Missouri capital, who says he was driven to found the group by “a need to have right-of-center organizations to counter the aggressive policies of the left, radicals like George Soros, and their ideas that are truly in contradiction to free markets.”
I asked him why the foundation got involved in California. “When you look at — no offense — liberal politicians out there running California into the ground, often crazy radical ideas start in California and start moving,” he said. (No offense, but the environmental program that Proposition 23 would overturn is a pet project of our Republican Gov. Arnold Schwarzenegger.)
“California has some pretty crazy lawmakers who want to attack families’ and individuals’ opportunities to provide for themselves, and these are disastrous ideas,” Harris continued. “We want to make sure these types of ideas out West do not take hold.”
I’m not so convinced the foundation’s interest is so principled. Until now, it confined itself to a couple of local issues in Missouri. It spent $4,000 last year to support a proposal to kill the state’s nonpartisan judge-selection process in favor of one subject to more political wrangling, and $2,500 to defeat a 63-cent tax levy in a local school district. The year before that it raised $30,000, made a single $2,000 grant, and spent $22,500 on professional fees and payments to “independent contractors.”
The foundation’s president, John Elliott, told me the Proposition 23 campaign is its first venture outside Missouri. He said the money for the donation came from “fewer than 10 individuals, not industry or corporations.” He said the foundation’s involvement in the California campaign was initiated by the donors, not the foundation’s four-member board.
Who in Missouri could have an interest in killing a California greenhouse gas program? Harris and Elliott both went out of their way, curiously, to mention the effect environmental regulations have on coal. “Anything to do with energy affects Missouri, No. 1 because we rely heavily on coal,” Elliott said. Harris observed, “We in Missouri generate 80% of our electricity from coal.”
The No on 23 campaign points out that Ohio-based Murray Energy Corp., which bills itself as the nation’s largest privately owned coal company, has contributed $30,000 to the Proposition 23 campaign. It also turned up the fact that several utilities are clients of a marketing and website design firm run by Elliott and his wife.
When I asked Elliott about that, he repeated that the money funneled to Proposition 23 “is not industry money, it is not corporation money.”
Elliott and Harris refused to identify the donors by name, citing the anonymity granted to donors of tax-exempt foundations under section 501(c) 4 of federal tax law. Lobbying organizations subject to that section are tax-exempt, but donations to them generally aren’t tax-deductible.
As it happens, the foundation’s tax-exempt status has been questioned by state Senate President Pro Tem Darrell Steinberg (D-Sacramento) and Assembly Speaker John Perez (D-Los Angeles). Earlier this month, they asked U.S. Atty. Gen. Eric Holder to investigate whether the foundation abused its tax exemption by contributing to the Proposition 23 campaign.
The law, they contend, allows such foundations to engage in political issue campaigns only if that’s incidental to their main purpose, which must be “the promotion of social welfare.” Since the Adam Smith Foundation seems to have done precious little but donate to Proposition 23, they posit that it may be breaking the law. Holder hasn’t yet replied to them.
Anita Mangels, a spokeswoman for the Yes on 23 campaign, calls the action by Steinberg and Perez, who oppose the initiative, “a political vendetta.” She observes that they aren’t complaining about some of the big foundations fighting Proposition 23, such as the Natural Resources Defense Council and the Green Tech Action Fund.
But her comparison isn’t apt. For one thing, we know a lot more about the NRDC and the Green Tech fund than we do about the Adam Smith Foundation.
Green Tech, which has contributed $500,000 to defeat Proposition 23, is affiliated with the San Francisco-based Energy Foundation, which is backed by foundations established by the late William Hewlett and David Packard of Hewlett-Packard fame, and several other charitable funds identified on its website.
The NRDC may not disclose the names of all its contributors, but it’s tolerably open about its activities. Its spending of about $1 million to fight 23 (based on the latest campaign filings) comes from an annual budget of about $80 million. It boasts a 40-year record of legal action on environmental issues and has offices in both San Francisco and Los Angeles. It’s not a front for special interests, but an interest group in its own right.
By comparison, the Adam Smith Foundation looks like a bunch of (no offense!) nobodies who couldn’t find California with a road map until some people rolled up with a tub filled with dollars but without the courage to donate the money under their own names.
These people are trying to swing a California election without emerging from the shadows. Could there be a better reason for a political vendetta than that?
Michael Hiltzik’s column appears Sundays and Wednesdays. Reach him at email@example.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik, and follow @latimeshiltzik on Twitter.