September, 2011

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Bloomberg: Secret Campaign Money Will Lead to Political Scandal, Group Says

Wednesday, September 28th, 2011

Executives from major corporations to unions expect that the unfettered flow of cash into elections will eventually lead to scandal.  They’re right.

Bloomberg

Undisclosed campaign money that began pouring into political groups during last year’s congressional elections will, without reform, only grow and lead to scandal, a group of business leaders and university professors said yesterday.

An estimated $500 million was spent to influence congressional elections in 2010 by non-profit groups, trade associations, labor unions and corporations with no trace of where the money came from or how it was used, according to the report by the Committee for Economic Development.
This lack of transparency poses a grave threat to our democracy,” concluded the report, which was signed by 32 business leaders and university professors, including representatives from Citigroup Inc., Avaya Inc. and Prudential Financial Inc.
The group says the Federal Election Commission watered down disclosure rules against the advice of the U.S. Supreme Court, opening new routes for secret money to get into elections. It is calling on Congress to pass legislation to require disclosure of all money spent to influence elections and discouraging its members from giving to such groups.
“The system we have now takes good men and women who are elected and corrupts them,” said Edward Kangas, the former chairman and chief executive officer of Deloitte Touche Tohmatsu, at a panel discussion yesterday about the committee’s reform proposal.
Executives from pharmaceutical companies Merck & Co. and Pfizer Inc., and from American Electric Power Co., also spoke at the event in support of more disclosure.
Citizens United
The Supreme Court, in a 2010 case known as Citizens United, allowed corporations and unions for the first time to spend unlimited money on ads advocating the election or defeat of a candidate.
In the decision, the high court expressed confidence that interested voters could easily discern the identities of those paying for campaign ads.
“With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters,” Justice Anthony Kennedy wrote for the 5-4 majority.
Disclosure Requirements
The FEC, however, loosened requirements for disclosure of donors, making groups report the names of contributors only if they are paying for a particular ad, the group said.
The FEC, the agency responsible for implementing campaign finance law, has eviscerated the disclosure regulations applied to campaign advertising,” the report said. “Instead of promoting transparency, the agency has added a new element of secrecy in campaign finance.”
The risks to companies of publicly supporting a political candidate became clear immediately after Citizens United when Target Corp. made a $150,000 donation to MN Forward, a business advocacy group which in turn ran ads supporting a gubernatorial candidate who opposed gay marriage. Gay rights groups boycotted the company and Target CEO Gregg Steinhafel apologized.


That incident showed that “there’s a big risk for companies to go out and be so public politically,” said Barbara Bonfiglio, senior corporate counsel at Pfizer. “It’s just not a place that too many companies are going to be comfortable playing in.”
However, they may be comfortable if their donations aren’t made public, said Fred Wertheimer, president of Democracy 21, a Washington-based group that advocates for limits to money in campaigns.

Electioneering Communications
In the 2010 election cycle, 308 non-party groups reported spending money to influence voters, and only 166 of those reported where the money came from. The U.S. Chamber of Commerce, which reported $31 million in “electioneering communications” spending to the FEC, won’t name any of the companies or individuals who gave it the money.
Independent groups are already raising money for the 2012 elections, with their sights set even higher.
American Crossroads and Crossroads Grassroots Policy Strategies — created with support from Karl Rove and Ed Gillespie, former aides to President George W. Bush — set an initial goal to raise $120 million for 2012 and then doubled that target earlier this month.
They gathered $71 million in 2010, according to spokesman Jonathan Collegio. Crossroads GPS keeps its donor list secret.
Priorities USA and Priorities USA Action, two groups founded by Bill Burton and Sean Sweeney, former aides to President Barack Obama, are trying to raise $100 million to help keep the president in the White House.

Bloomberg: Election Spending to Exceed $6 Billion Thanks Partly to Jim Bopp

Thursday, September 22nd, 2011

Campaign spending has increased exponentially in part because of the efforts of Jim Bopp.

Here’s more information about him from Bloomberg

Bloomberg

Attorney James Bopp Jr. has spent 30 years fighting limits on campaign spending, and next year’s political landscape could be transformed by his labor: An election season in which at least $6 billion is likely to be spent, more than $700 million higher than 2008.

“The presumption is the gloves will be off in 2012,” said Sheila Krumholz, a campaign finance analyst who developed the spending estimate for next year’s presidential and congressional races independently of her Center for Responsive Politics. “It’s safe to say that groups on the left and right have Jim Bopp to thank for their new-found freedom.”

Of 31 lawsuits challenging campaign finance regulations tracked by the Washington-based Campaign Legal Center, Bopp filed 21, including a case that led to creation of independent groups that raise unlimited sums of money to run political ads. Today, the Republican National Committee member will argue a case in a U.S. appeals court in St. Louis to overturn a Minnesota state law banning corporations from donating to candidates and political committees.

During an interview at his Terre Haute, Indiana, office, the white-haired, 63-year-old lawyer was unapologetic about his defense of free speech. The founding fathers “didn’t trust the government to write the laws because the government would write the laws to protect itself from the citizens criticizing it,” said Bopp, seated behind a two-foot-high stack of successful case files yet to be stored in office cabinets.

Citizens United

Bopp in 2007 introduced the Citizens United v. Federal Election Commission case, which three years later resulted in the repeal of restrictions on the roles of corporations and labor unions in political campaigns, then leading to an explosion of spending by independent, outside groups.

The Center for Responsive Politics, the Washington-based group led by Krumholz that tracks political money, said spending by independent groups for the 2010 midterms was $305 million, compared with $69 million in 2006. She estimates that figure will reach $450 million in the 2012 presidential cycle.

Scott Thomas, a former Democratic FEC chairman now with Dickstein Shapiro LLP in Washington, said Bopp’s cases have almost gutted the 2002 campaign finance act intended to rein in outside groups and the influence of wealthy donors.

“We should now call the statute, ‘The Federal Election Campaign Act paid for and authorized by Jim Bopp,’” Thomas said in an interview.

An Indiana native, Bopp’s tenacity in attacking campaign finance laws is matched by his loyalty to his home state.

Hoosier Fan

He earned his bachelor’s degree from Indiana University. After getting his law degree from the University of Florida, he returned home and has never considered relocating — even when a Chicago firm offered him a job. A photo of the Hoosiers’ game- winning shot against Syracuse University to win the 1987 NCAA basketball title adorns his wall alongside an autographed photograph with former President George W. Bush.

Clad in a green polo shirt and sipping coffee from an American flag-emblazoned mug, the father of three daughters said “we thought it was a more culturally conservative area to raise our children, and we weren’t forced to move because clients were willing to come to me in Terre Haute even though they were in D.C. or other places.”

To help pay his legal fees, Bopp set up the James Madison Center for Free Speech in 1997 with the help of Senate Republican Leader Mitch McConnell of Kentucky.

Legal Fees

The center, also based in Terre Haute, reported donations of $579,935 from 2008 to 2010, of which $578,091 went to Bopp for legal fees, according to Internal Revenue Service filings. Donors have included an arm of the Susan B. Anthony List, a Washington-based anti-abortion organization, and the American Justice Partnership, created by the National Association of Manufacturers to lobby for state limits on civil lawsuits.

Board members include David Norcross, former Republican National Committee general counsel; Wanda Franz, former president of the National Right to Life Committee; and Betsy DeVos, who raised at least $100,000 for Bush’s 2004 re-election and, with her husband, donated $2 million to outside groups that ran ads attacking Democratic nominee John Kerry.

Bopp’s rise as a leading opponent of campaign finance laws was a two-step process. In 1976, the then-28-year-old attorney was offered a job at the Indiana Right to Life Committee. Two years later, he was hired as general counsel for the National Right to Life Committee. From that position, he helped the anti- abortion community incrementally challenge abortion rights — a tactic he adapted to the field of campaign finance law.

First Case

His first challenge of campaign regulations was a case in 1983 that overturned FEC limits on voter guides, including fliers the National Right to Life Committee distributed in churches before the 1980 presidential election.

Since then, his advocacy has repealed state laws that provide additional funds to candidates whose opponents spend more, tossed out state restrictions on judicial elections and overturned limits on interest group advertising in the weeks running up to an election.

His cases laid the groundwork for creation of so-called “Super PACs,” political committees that take unlimited donations and operate independently of candidates and which were fueled last year by new labor and corporate cash.

“It’s so complicated to win big victories that you have to go after these cases piecemeal,” said David Bossie, president of Citizens United, the Washington-based advocacy group that hired Bopp to bring the case that bears its name.

Bittersweet Victory

The victory was somewhat bittersweet. When the case reached the Supreme Court, Citizens United hired former U.S. Solicitor General Theodore Olson to argue the case rather than Bopp. While “disappointed” by that decision, Bopp said, he thought “we certainly accomplished a lot in the case.”

Bossie, who made the switch, said he did so after learning of Olson’s record of winning more than 75 percent of his cases before the Supreme Court.

In today’s case, Bopp will argue against laws banning corporate donations to candidates before the U.S. Court of Appeals for the Eighth Circuit. A federal judge in Virginia in May threw out a federal ban in a separate case now on appeal in the Fourth Circuit. Bopp is also challenging requirements that interest groups running political ads disclose donors and expenditures.

He’s been financed by people who don’t like these rules,” said Trevor Potter, a Republican former FEC chairman who is president of the Campaign Legal Center, which supports campaign finance limits. “There are plenty of people who evidently would like money in politics to be secret.”

Not About Money

Bopp said his mission isn’t about money; it’s about free speech and inclusion in the political process. “We have the First Amendment,” he said. “The whole idea of that was to ensure robust participation by citizens in our democracy.”

Bopp’s successful advocacy has led others to join the mission, said Bradley Smith, another Republican former FEC chairman who founded the Alexandria, Virginia-based Center for Competitive Politics to dismantle campaign regulations.

“Jim had been a lonely guy out there, litigating and litigating,” Smith said. “People started putting money into it. I don’t think Jim is as lonely as he used to be.”

Bloomberg: Supercommittee Pits Lobbying Firms’ Clients Against One Another

Monday, September 5th, 2011

The bipartisan congressional supercommittee charged with finding $1.5 trillion in budget savings is leaving Washington lobbying firms in a quandary, seeing their clients pitted against one another in a competition for government cash.

Bloomberg

The bipartisan congressional supercommittee charged with finding $1.5 trillion in budget savings is leaving Washington lobbying firms in a quandary, seeing their clients pitted against one another in a competition for government cash.

Major defense contractors such as Boeing Co. (BA) and Lockheed Martin Corp. (LMT) have a dozen or more lobbying firms working for them, many of whom also represent the health-care industry, another likely target of budget cuts. While firms often deal with conflicts of interest, the supercommittee represents an unusual challenge, said Clyde Wilcox, a government professor at Georgetown University in Washington.

“This actually is going to be much more like a zero sum game,” Wilcox said. “If someone wins, someone loses.”

Trying to protect clients by stalling action — a classic lobbying tactic — isn’t an option for most because the committee’s failure to meet a Nov. 23 deadline would trigger $1.2 trillion in across-the-board spending cuts in both defense and non-defense spending beginning in 2013.

Lobbying firms will probably try “to finesse any conflicts of interest” and go about business as usual, said Jeffrey Berry, a political science professor who specializes in lobbying at Tufts University in Medford, Massachusetts.

“What they do behind the scenes is not highly visible,” Berry said. For instance, the firms wouldn’t run major advertising campaigns that prompt a client to “say, hey, why are you lobbying for them when you should be solely concerned with our interest?’” Berry said.

Lobbyists’ Bottom Line

If all else fails, “I suspect that they’ll be rational businesspersons and make a decision based on their long-term financial interest,” Berry said. “They have a bottom line, just like their clients.”

The 12-member panel, whose work has taken on greater urgency since Standard & Poor’s downgraded the U.S. credit rating in August, will be the central focus of political and lobbying activity for the next few months.

Akin Gump Strauss Hauer & Feld LLP, which Washington’s Center for Responsive Politics ranks as the second-largest lobbying firm with 2011 revenue of $17.7 million, is among those with competing client interests. The firm’s more than 100 clients include companies in insurance, energy, finance and chemicals. The roster also includes Chicago-based Boeing and New York-based Pfizer Inc. (PFE), the world’s biggest drugmaker with stakes in the future of Medicare, the government program for the elderly.

Akin Gump

Akin Gump is also a law firm and as a result has a set conflict of interest policy, said Joel Jankowsky, a senior executive partner at the firm in Washington. Even so, some clients may first look to their industry trade groups to take their case to Congress rather than his lobbyists, he said.

“It’s largely a question of what they decide their strategy is going to be and whether or not they want us to engage on their behalf,” Jankowsky said.

Tony Podesta, whose Podesta Group ranks third among lobbying firms with 2011 revenue of $13.7 million, said he will do what he always does: advocate for all of his clients and try to persuade panel members that their programs are meritorious. Lobbyists won’t be in the position of suggesting cuts to rival programs, he said.

“It doesn’t feel to me that this is going to be the ’Sophie’s Choice’ of lobbying,” Podesta said.

‘Affordable Medicines’

Boeing and Bethesda, Maryland-based Lockheed didn’t respond to requests for comment on their lobbying of the supercommittee. Lockheed “will continue to work with our customers throughout the process to understand the potential impact to our business,” spokesman Rob Fuller said in a statement.

Pfizer wouldn’t comment on its lobbying plans or potential conflicts, though Chief Executive Officer Ian Read has said his company will fight attempts to cut Medicare payments for medicines. Spokesman Raul Damas said the company “will continue raising awareness” about how the government prescription drug benefit has provided “affordable medicines” for seniors.

The firms downplayed the potential for problems. Patton Boggs LLP, which ranks at the top of the lobbying list with $18.8 million in revenue this year and is also a law firm, has “very formal and thorough mechanisms” for resolving conflicts of interest, said Nicholas Allard, who runs the lobbying, political and election law practice.

Persuasion of the supercommittee might be comparable to the general lobbying always under way on behalf of a range of clients or an omnibus spending bill, said Stewart Verdery, partner and founder of Monument Policy Group. The firm’s clients include Boeing, defense contractor General Dynamics Corp. (GD), drugmaker Eli Lilly & Co. (LLY) and the Pharmaceutical Research and Manufacturers of America, the trade group representing drugmakers.

“It’s akin to working with congressional leadership, which we — as most firms — do all the time,” Verdery said. “They may have a role to play in pretty much everything of importance.”