Political Conventions ain’t what they used to be. I
remember them as fun events, people wore crazy hats, waved funny and
serious signs, partied and smoozed and had a wonderful time. That may
still happen, but the ordinary, back-home people from our communities
who go may not even know about the real smoozing going on. I present for
you from Public Citizen “the rest of the story:”
The Democratic and Republican national conventions — which are
supposed to be publicly financed electoral events with reasonable ethics
restrictions on influence-peddling by lobbyists – have turned into
mostly privately financed soirees funded by corporations and lobbying
firms that seek favors from the federal government. Today, less happens
at the presidential nominating conventions, because the presumptive
nominees are chosen in advance. Fewer people care about the conventions,
as declining viewership shows. Yet more money is raised and spent at
the conventions than when the conventions were major political events.
Two separate codes were intended, but largely have failed, to make
the nominating conventions more respectable political events. The first
is the decades-old ban imposed by the Federal Election Campaign Act
(FECA) on the use of “soft money” — funds from corporate or union
treasuries or large individual contributions in excess of the legal
limits — to pay for conventions. The second is the 2007 congressional
ethics rules that restrict the manner in which lobbyists and lobbying
organizations may host parties and offer gifts to members of Congress.
The presidential public financing system was created to replace
potentially corrupting “soft money” with public money in the selection
of the president, largely in response to a soft money slush fund scandal
at the 1972 Republican National Convention. In May 1971, the giant
International Telephone and Telegraph Corporation (IT&T) pledged up
to $400,000 to attract the 1972 Republican National Convention to San
Diego. The company was facing several anti-trust lawsuits under the
Nixon administration. Just eight days after the selection of San Diego
for the Republican convention, Attorney General Richard Kleindienst
agreed to an out-of-court anti-trust settlement with IT&T that the
company considered very favorable. In the wake of this scandal, Congress
approved a system of public financing for presidential elections, which
included full public financing of the conventions, removing the
potentially corrupting corporate money from the convention process.
1. The Law Regarding Convention Financing
FECA’s public financing program for the presidential nominating
conventions created a system in which the parties, in exchange for
accepting reasonable spending ceilings on their conventions, would
receive a block grant from the federal government to pay for nearly all
convention expenses. Originally, the spending ceiling and block grant
was set at $2 million, to be adjusted for inflation. FECA was soon
amended to increase the spending ceiling and block grant to $4 million.
The law began to unravel after a series of controversial Federal
Election Commission (FEC) advisory opinions and regulations issued in
the 1980s. The FEC decided to allow corporate and union soft money to
help pay for the conventions through “host committees.” Originally, the
FEC limited the soft money loophole for host committees and municipal
funds to corporations and unions with a “local tie” to the community
hosting the convention. In 2003, the FEC dismissed the requirement of a
“local tie” for corporate contributions to host committees and municipal
funds altogether.
[1]
FEC Commissioner Thomas Harris back in the early 1980s saw the danger
of these exemptions getting out of control. He wrote in a dissenting
opinion: “By permitting corporations and unions to donate unlimited
amounts of money to fund political conventions, the Commission is
ignoring one of the clear concerns of 2 U.S.C. 441(b) and its
predecessor statutes – that is, the fear of the influence of aggregated
wealth on the political process.”
[2]
2. The Flood of Soft Money into the Conventions
Commissioner Harris’ prediction that the host committee exception could
become a gaping soft money loophole has come true with a vengeance. In
1976, both parties paid for their conventions almost exclusively with
public funds, about $2 million each. In 1980 and 1984, the parties still
relied mostly on public money to pay for their conventions, at slightly
more than $4 million in 1980 and somewhat more than $7 million in 1984.
Soft money had only begun to creep into the picture.
Then, in 1996, the use of privately financed “host committees” by the
parties overwhelmed the public financing program. Both conventions
received private funds amounting to nearly double the public grant.
Today, public funds make up only a modest share of the total
(inflated) cost of the conventions. In 2000, for example, each party was
awarded about $13.5 million to pay for its nominating convention. In
reality, private sources chipped in an additional $52 million for the
Democratic convention in Los Angeles and $60 million for the Republican
convention in Philadelphia. In the 2004 election, the Republicans spent
$101 million on their convention and the Democrats spent $72 million,
all while the official public funding grant intended to pay for the
conventions was $15 million. In 2008, each party was awarded $16.4
million in public grants to pay for their conventions, but total
expenditures through the host committees amounted to more than $55
million for the Democratic convention and $57 million for the Republican
convention.
[3]
This year, each party has been given a public grant of $18.3 million,
but private sources are expected to add another $37 million for the
Democratic convention and $55 million for the Republican convention.
The partisan disparity for the 2012 conventions is the result of the
Democratic Party’s new policy of reining in out-of-control financing of
its convention. As part of the agreement between the Democratic Party
and the convention host committee, direct corporate contributions to the
convention are banned, lobbyist contributions are prohibited and all
other contributions are capped at $100,000. At the time of the
announcement, U.S. Rep. Debbie Wasserman-Schultz (D-Fla.), chairwoman of
the Democratic National Committee, said, “We will make this the first
convention in history that does not accept any funds from lobbyists,
corporations or political action committees. This will be the first
modern political convention funded by the grassroots, funded by the
people.”
[4]
The self-imposed Democratic constraints on special-interest funding
are expected to significantly reduce private funding for the Democratic
convention — even given some of the loopholes in the policy. For
example, while corporations cannot make direct contributions to the
Democratic convention, they can provide in-kind products and services to
the host committee to help finance the convention, which likely will be
worth a substantial amount. Furthermore, with the host committee
struggling to make its contractual obligation of arranging $37 million
in additional private funds for the convention, the host committee has
incorporated New American City Inc., a non-profit entity run by the
convention host committee. New American City reportedly received funds
from Bank of America, Wells Fargo and Duke Energy, calling into question
the value of the pledge against accepting direct corporate
contributions with this backdoor avenue in place.
Meanwhile, the Republicans have not imposed any such limits on the
sources and amounts of special interest money to finance their
convention.
3. What Do They Get for Their Money?
Nearly all of the private donors to the convention host committees have
business pending before Congress or the White House and have made
substantial campaign contributions and lobbying expenditures to press
their causes. With the 2008 convention, for example, 173 organizational
donors to the host committees have been identified, and all but two are
corporations. These donors made more than $100 million in direct
campaign contributions to federal candidates and party committees, and
about $1.5 billion in lobbying expenditures between 2005 and 2008.
[5]
Clearly, most companies that donate to the conventions want something
from the federal government — and they are willing to pay.
Corporations and their lobbyists also purchase a great deal of
one-on-one time with lawmakers at the conventions. In return for their
donations to the convention host committees, corporate sponsors to the
conventions are promised a variety of benefits, ranging from advertising
opportunities to VIP tickets to the convention centers. Each host
committee advertises numerous levels of sponsorship — the greater the
contribution, the greater the access to advertising opportunities and
elected officials. Additionally, the sponsorship packet offers
contributors the chance to buy access to party luminaries by hosting or
sponsoring events such as state delegation receptions.
So far, no data on contributions to the 2012 conventions are
available. Unlike the 2008 conventions, in which the governors and
mayors of the convention sites (as members of the host committees)
provided early data on donors in response to Freedom of Information Act
(FOIA) requests by the Campaign Finance Institute, the governor’s office
of Florida and local offices of the cities of Tampa and Charlotte
provided no similar information on donors in response to FOIA requests
by Public Citizen. Each of the offices this year claimed that the host
committees are private entities not under their control or jurisdiction.
The governor’s office of North Carolina did not respond to our inquiry.
Host committees and municipal committees are required to file their
financial disclosure reports with the FEC either 60 days following the
convention or 20 days prior to the general election (Oct.15), whichever
is first.
[6]
B. Party Time on the Lobbyists’ Dime? Not So Fast
One way of buying influence with lawmakers is to make soft money
contributions to the convention host committees. Another is to pay for a
lavish reception or party at the convention for lawmakers and party
leaders. Many of the corporate donors, like AT&T, make extensive use
of both tactics.
Eight years ago, the parties at the national conventions were more
numerous and more pointedly set up for influence-peddling by their
corporate sponsors. The Consumer Electronics Association, for example, a
lobbying organization with business pending before the House Energy and
Commerce Committee, hosted a luncheon at the 2004 Republican convention
to honor committee members. Media companies, seeking specific
legislation from Congress, hosted a $300,000 “Caribbean Beach Bash” at
the 2004 Democratic convention in honor of U.S. Sen. John Breaux, a
leading advocate of media interests over the years. Individual
partygoers could pony up an additional $20,000 for some one-on-one time
with the honoree. Though Breaux was retiring, the media lobbyists sent a
clear message to his colleagues who remain: We support our friends.
[7]
New congressional ethics rules adopted in 2007 placed constraints on
this type of influence-peddling at the conventions by lobbyists and
lobbying organizations. The “Honest Leadership and Open Government Act”
contains a sweeping set of lobbying laws and ethics rules enhancing
disclosure of lobbying activity and regulating the behavior of
lobbyists, lobbying organizations, members of Congress and their staffs.
(For a detailed summary of the lobbying law,
click here.)
The new rules ban any congressional lawmaker from
participating in an event at the convention honoring that lawmaker if
the event is hosted by a lobbyist or lobbying organization.[8]
This rule expressly prohibits members of Congress from attending any
convention party thrown by a lobbyist or lobbying organization where a
specific member or members are identified by name and title as the
honoree (including as a “special guest”), as well as events honoring a
group composed solely of members, such as a congressional committee or
congressional caucus. Member participation also is prohibited if the
member is to receive a special benefit or opportunity that would not be
available to some or all of the other participants, such as if the
sponsor were to offer the member an exclusive speaking role or a very
prominent ceremonial role.
This is precisely how the Senate ethics committee has interpreted the
rule, issuing guidelines to that effect. The House ethics committee,
however, has issued partly erroneous guidelines on this matter, which is
likely to cause confusion and possibly violations of the rule at the
upcoming conventions. In describing the nature of the rule, the House
ethics committee has interpreted the ban on parties honoring a member as
not applying to parties that honor groups of members in which no
specific member is identified, such as congressional committees or
caucuses.
[9]
The House ethics committee has also limited application of the rule to
the formal dates of the convention itself, rather than the heavy party
weekends immediately before and after the convention.
Both interpretations by the House ethics committee are inappropriate
and fail to honor the letter and spirit of the rule. The clear intent of
the rule is to prohibit lobbyists from hosting parties honoring one,
two or even 100 members, either specifically or by committee or caucus
name.
Congressional gift rules also prohibit members and staff from
accepting gifts from lobbyists or lobbying organizations at the
conventions, except under the following circumstances:
- Reception – Members and staff may attend a
reception hosted by a lobbying organization, including food and
refreshment of nominal value offered other than as part of a meal, known
as the “toothpick rule.”
- Widely attended event – Members and staff may
accept dinner, refreshments and entertainment at a widely attended
event. An event is considered widely attended when at least 25 people
from outside Congress are expected to attend and the member’s attendance
should be related to official duties. Free attendance does not include
entertainment collateral to the event, such as a concert.
- Charity event – Members and staff may accept free
attendance at a charity event, provided the primary purpose of the event
is to raise funds for a legitimate charitable organization.
- Campaign fundraiser – Members and staff may accept
free food, refreshments and entertainment in connection with any
fundraising events sponsored by party organizations, campaign committees
and other political organizations. Such fundraising events must comply
with federal or state campaign finance limits and disclosure
requirements.
- Convention event – Members and staff may accept
food, refreshments, entertainment or other gifts offered by the
convention committees, party organizations and federal, state and local
governments.
Public Citizen and seven other reform organizations sent a letter to
Congress last month urging all members to abide by the new ethics rules.
The letter is available at
http://www.citizen.org/documents/convention-letter-2012-house.pdf.
The House Ethics Committee guidance on the conventions is available at
http://www.citizen.org/documents/house-convention-guidance-2012.pdf.
The Senate Ethics Committee guidance is available at
http://www.citizen.org/documents/senate-convention-guidance-2012.pdf.
C. Conclusion: Lobbyists Gone Wild
Corporations and their lobbyists see the national nominating
conventions as an ideal opportunity to buy access and influence with the
presidential campaigns, lawmakers and party leaders. The conventions
constitute a campaign media blitz for the campaigns and provide a golden
opportunity for lobbyists to extend their lobbying activity off Capitol
Hill.
The soft money loophole created by the FEC has derailed part of the
original intent of the presidential public financing program: to remove
the potentially corrupting corporate money (such as from IT&T) from
the convention proceedings. The FEC should reverse its previous rulings
on corporate sponsorship of host committees and municipal funds. If the
FEC will not step up to the plate – and there is no indication that it
will do so — then Congress must revisit this issue when it considers
strengthening the presidential public financing system.
Meanwhile, corporate lobbyists will be partying, schmoozing and
lobbying at the national conventions. Though new ethics rules are
forcing significant adjustments in the behavior of lobbyists and
lobbying organizations at the conventions, there is still confusion that
could lead lawmakers to disregard the rules.
It is imperative that members of Congress and their staffs are clear
on the ethics rules and approach the party scene prudently. The House
ethics committee needs to revisit its guidance so as not to contribute
to the confusion. And the public and press must do their best to monitor
the convention festivities to ensure compliance with the rules. No one
else will.
Public Citizen and the Sunlight Foundation set up a bird-dogging
campaign for the 2008 conventions to crash the soirees and identify
which are in violation of the ethics rules. We were able to shut down
only one party sponsored by a lobbying organization out of the hundreds
that took place at both conventions.
Public Citizen and the Sunlight Foundation will be repeating this bird-dogging campaign for the 2012 conventions.
So, if you think money is buying our elections? It is worse than you thought. A rule is just something to break or get around.
