Corporate Political Funding Goes Underground—and Reappears at the Conventions

by Jim Tarbell

Campaign finance reform laws in 1974 and 2002 prohibited corporations from donating directly to political candidates, parties or conventions. Instead, Democratic and Republican politicians decreed that our federal government give $32.8 million of taxpayer money to fund their political conventions, “on condition that the parties spend no other funds on these events.” Now the political parties cannot spend more money on the conventions, but their host committees can.

The Federal Elections Commission conveniently decided that corporations could contribute to the convention host committees since “the host committee activity is motivated by a desire to promote the convention city and not by political considerations.” An extensive study by Steve Weissman of the Campaign Finance Institute, however, concludes that “the party holding the convention and its local host committee look very much alike. And with regard to spending, the party convention committee and the host committee simply meld into each other.”

As a result, political party insiders have been crisscrossing the country for over a year raising corporate funds to help finance the 2008 political conventions. Denver and Minneapolis St Paul Host Committees promise to raise over $100 million for the conventions. The Republicans collected 85 donors. Ninety percent of those donors were corporations. The Democrats came up with 118 corporate donors. . Qwest donated $6 million and Excel Energy gave $1 million to each convention. Level 3 Communications, Molson-Coors and Union Pacific all gave a million dollars to the Democrats while United Health Group gave 1.5 million to the Republicans and US Bank Corp and St. Jude Medical, Inc. gave another million. A full accounting of the contributions will not be available until later this year.

Observers of such political contributions have long wondered if they are attempts at extortion or corruption. Certainly in their private communications and initial appeals there were promises of “various events with CabinetVP/and/other elected officials to thank donors for their contributions,” “Private dinner with Republican leadership and elected officials to kick-off the convention,” and “Golfing with Republican leadership during the convention.” Public criticism of such offers led the host committees to retract these offers. But as Steve Weissman says “"In return for this money, the parties, through the host committees, offer access to top politicians, to the president, the future president, vice president, cabinet officials, senators, congressmen. They promise these companies who are giving that they will be able to not only get close to these people by hosting receptions, by access to VIP areas, but they'll actually have meetings with them." In the end, access is the name of the game. With elected officials handing out billions of dollars in government contracts and tax benefits, donors must see their contributions as small down payments on large benefits down the road. On top of this, since the host committees are non-profits, all contributions are tax deductible.