There has never been a presidential election campaign like 2012. It will by far shatter records for spending – $1 billion worth already pledged on the Republican side and possibly nearly as much on the Democratic side.
It is not just the ungodly amount of spending (especially as you consider that the nation is still groping with economic recession). 2012 marks the intersection of the fallout of Citizens United unleashing unlimited anonymous funds, a corporate media industry that profits, even survives, by campaign spending so is relinquishing any actual “journalistic” responsibility, technology (internet) which has enabled propaganda and outright lies to overwhelm; and the greatest disparity between rich and poor, the dislocation of people who have been foreclosed or had to move to take on new jobs (have they checked their voter registration?).
Add to this mix the result of Republican-dominated states that have effectively redistricted and implemented laws designed to suppress votes by youth, minorities, and elderly – those most prone to vote Democratic. There are many other areas that voting outcomes can be manipulated, such as through the vulnerabilities of “black-box” voting machines.
Each one alone would have an impact but not completely upend democracy. But taken together…
I want to focus in on one aspect of this: the tsunami of funding from corporations and billionaires who can quite literally “own” candidates – either by buying their election or buying their defeat. (We will examine voter suppression in the future.)
When the Supreme Court’s rightwing activist majority decided in Citizens United that money is speech and that somehow corporations are people entitled to use their money as speech, they did it knowing full well that this would give unequal political power to those who had a monetary advantage.
As predicted, the Supreme Court’s Citizen United decision unleashed a tsunami of unlimited, anonymous funding by corporations and billionaires to essentially buy individuals candidates’ election or defeat. It is no longer necessary to spend millions on lobbyists – they can simply purchase the officials. The impact of that decision is already demonstrating how “We the People” democracy is being destroyed, like a flesh-eating bacteria.
But one impact of allowing unlimited, anonymous funding , is particularly perverse because of who is inadvertently funding the political spending: employees, customers and shareholders who may well be financing the politicians and policies that go counter to their own self-interests. And they are powerless to do anything about it.
Publicly held companies like Exxon-Mobil, News Corporation, JP Morgan and Citibank have an unlimited ability to take from their treasuries and fund entities including ALEC (responsible for voter suppression and Stand Your Ground Laws), the U.S. Chamber of Commerce (responsible for massive campaign to defeat health care reform, clean energy investment), and Karl Rove’s SuperPacs dedicated to defeating progressives and electing candidates who will make laws that go against union rights, women’s reproductive rights and equal pay, cap-and-trade, financial reform (the list goes on and on).
It is not as if the Supreme Court’s right-wing activist majority was not informed of such possibility – Scalia, that sleaze at the heart of the blatantly unconstitutional Bush v. Gore decision – snidely pressed his argument on then-Solicitor General Elena Kagan that surely, shareholders would read their quarterly reports and know what corporations were spending their money on. His implication was that shareholders would restrain corporations from making donations that were adverse to their collective interest, let alone cut into their dividends.
The Supreme Court deliberately ignored the obvious reality that corporations have a single-minded, even a legally mandated purpose – to maximize profits – and the way they do this is most likely a specific area (energy, health care, finance). Indeed, corporations today are operated for the financial interest of senior management and board, rather than for the best interest of the company as a whole (as we have seen with Bain’s business practices).
In contrast, shareholders are not ideologically or politically homogenous or monolithic as a group and as individual people, unlike a corporation which has fairly specific mission, have many different interests, values and concerns that they weigh, including environment, women’s rights, civil rights, education, health care, and on and on. Corporate interests can be more black and white; most individual voters are complex, nuanced and see grey.
More significantly, Scalia and the rightwing activist, ends-justify-the-means justices, also deliberately ignored the reality that most shareholders have no say and no vote in political action the corporate management takes: Not only is there no requirement that corporations actually disclose their investment – I mean political spending – they do not seek permission from their shareholders or stakeholders on which candidates or policies they should support.
Consider, too, how most people are invested in companies: if they are invested through mutual funds, including their retirement funds, they have no direct vote at all, the fund managers vote (do you think the fund managers would be on the side of more regulation of Wall Street, or on the side of reforming the tax code so that they pay income tax instead of lower capital gains tax on their earnings?).
Indeed, public workers union pension funds are among the biggest shareholders in these very same companies.
The only antidote that is available to mitigate against this viral corruption of campaign finance is to force companies and big donors to disclose – that way, they face some consequence from customers and shareholders for taking a policy that damages the brand, and therefore the shareholder value.
We have seen how effective disclosure can be when corporations funding the secretive group ALEC were revealed after the Stand Your Ground Law in Florida (which ALEC, which counts the NRA and gun manufacturers as major donors, championed in dozens of states) backfired. The resulting outcry from a citizens’ movement was to force Coke, Pepsi, Kraft, McDonald’s, Wendy’s, Intuit, Reed-Elsevier to resign their membership (arguably none of the groups that are pushing legislation on gun control, environment, women’s rights or voter suppression, and in fact, the damage is already done).
Still, the exercise demonstrates the adage that “sunlight is the best disinfectant.” If these companies were proud of what their political spending had achieved, they would not be embarrassed by disclosure.
And so we have the Disclose Act, which would require disclosure at some point of any donating over $10,000, which was up for consideration by the Senate this week.
Republicans repeatedly have successfully blocked the legislation from even coming to the floor, and are expected to again use the filibuster (which is a contrivance, not specified in the Constitution but the ramifications are to require 60 votes, instead of 51, to adopt legislation), to block the legislation from being voted on in the Senate this week. Because Democrats do not have 60 votes to overcome the filibuster. there will be no Disclosure.
In this gridlocked atmosphere, which the Republicans have successfully employed since Day One of the Obama Administration, the Administration has been forced to undertake Executive Actions and administrative positions – as it did with a mild version of the Dream Act which Republicans similarly filibustered, though it achieved a majority vote (it even passed the House in 2010 but was filibustered by the Senate).
Indeed, the Securities & Exchange Commission does have the power to mandate such disclosure of political spending by publicly traded corporations, and can even force corporations to put political spending to a vote of shareholders.
I do not understand why the SEC has not done this.
Another way that corporations could be forced to disclose is from its largest investor groups. Indeed, some of the biggest institutional investors are the pension funds of public workers, themselves.
New York State Comptroller Tom DiNapoli is the sole administrator controlling $150 billion worth of public workers’ pension funds – one of the largest public pension funds in the country – and he has been a champion to force companies to disclose.
“There’s cause for concern when corporations make it their business to finance campaigns,” DiNapoli said back in September, when his office announced commitments to disclose from the first three Fortune 500 corporations: Marriott International, Yum Brands and Limited Brands clothing.
“As shareholders, we want to be assured that these companies aren’t endangering our investments by taking positions that may not be in the best interests of shareholders. We’ve had various examples of campaign funding mishaps across the nation. Now we’re asking corporations to do the responsible thing for their shareholders and for the public. These three companies have heeded the call.”
Subsequently, DiNapoli announced agreements with three California companies, Pacific Gas and Electric (PG&E), Safeway and Sempra Energy, mandating the disclosure of political spending made with corporate funds. The agreement with PG&E also includes a ground-breaking provision to provide further disclosures of the company’s policies and procedures regarding political lobbying activities.
DiNapoli certainly deserves plaudits for his effort, but with all due respect, the 20 or so companies that have made disclosure agreements or even put political spending to a vote of shareholders is a dismal number out of the thousands of companies and entities the NYS pension fund owns shares in.
On the other hand, I am reminded that this isn’t as open-and-shut as it may appear. DiNapoli would be limited in what he could do unilaterally since his primary responsibility is to achieve the best returns for the funds invested. In only rare and extreme situations (such as divesting from companies that invest in Iran), would he sell off stocks that are doing well in the portfolio to achieve this policy change.
In addition to working with the Council of Institutional Investors, DiNapoli also is working alongside the Center for Political Accountability and is a founding member of the non-partisan national Coalition for Accountability in Political Spending (CAPS); both are calling for full disclosure of corporate involvement in elections in the aftermath of the “Citizens United” decision.
The Coalition for Accountability in Political Spending, a group which was formed in January 2010, just days after the Citizens United decision (Jan 21, 2010), also includes California State Treasurer Bill Lockyer, who sits on the governing boards of the nation’s two largest public pension funds – the California Public Employees’ Retirement System and the California State Teachers’ Retirement System with $370 billion in investments between them – is also a member, as is New York City Public Advocate & CAPS Founder Bill de Blasio.. Altogether, CAPS’ members represent $1 trillion in investments. You would think these guys had pretty substantial clout. What does it say that it has not been enough?
This brings us back to the SEC which has the power to require corporations to disclose their political spending.
In May, CAPS had a meeting with SEC Chair Mary Shapiro to demand immediate action to confront the rise of secret corporate spending in our elections. The meeting was the first time Shapiro met with organizations and public leaders who have been fighting to curb the role of corporate spending in elections. De Blasio, Common Cause President Bob Edgar and other advocates attended the meeting to demand that Shapiro take immediate action on the S.E.C’s rule making petition (filed August 3, 2011) on corporate political disclosure.
More than 290,000 people (a record breaking number), have already submitted letters to the S.E.C. in support of these reforms.
In its comments to the SEC on the rule-making, CAPS (including DiNapoli), stated, “This is not an argument in favor of limiting the right to contribute to campaigns, or limit speech. However, as owners, and elected representatives with responsibilities to constituents, we know that lack of transparency regarding political spending contributes to an atmosphere of secrecy and anonymity that our constituents find abhorrent.
“We strongly believe that corporate political spending transparency is in the best interests of investors, companies and the general public, and that the Securities and Exchange Commission is the most appropriate agency to require such disclosure.
“Finally, we believe the time has come for a clear rule requiring all public companies to disclose this information, and that such a rule would be simple to draft and to implement, as some of the largest U.S. companies have clearly demonstrated.”
When we attempted to learn whether any progress has been made in terms of rule-making the SEC refused to elaborate on its position beyond its official statement from SEC spokesman John Nester: “The rule-making petition is still under staff review”.
Mind you, the SEC has had almost a year to “review” and clearly will not be making any rule that would impact the 2012 election.
When I posed this conundrum to Kate Coyne McCoy, CAPS executive director, she responded, “I can’t answer for the SEC. We had a record number of public comments. Clearly, this is within their purview, and one of their public commissioners said it should be done, and done now.
“We are facing a historic election cycle where the spending – the auctioning – is unprecedented. Frankly shameful that the SEC is not moving forward,” she added.
CAPS has only asked that the SEC require corporations to disclose political spending to shareholders; it has not sought SEC-rule-making to require publicly traded companies to require shareholder approval of political spending, though McCoy said that CAPS would also support such a rule.
More recently, in advance of the latest effort to pass the Disclose Act in the Senate, some 250,000 people signed online petitions circulated by Senate (led by Sherrod Brown and Bernie Sanders). Little good it does.
So, disclosure is not moving forward by the legislative branch, the executive branch and certainly not the judicial branch of government.
What’s left? Is it possible to apply Occupy Wall Street tactics, and have the people take matters into their own hands?
Here’s how: I’m betting that just about everyone owns stock. Call up every company that you own stock in, ask for Investor Relations, and demand a list documenting the company’s political spending. The sheer annoyance might be enough to get them to re-think the policy. But then demand that such lists be sent to all shareholders, included in quarterly and annual reports to shareholders, and be up for vote at the annual meeting. Circulate your own petition to shareholders. And when you get the lists, publicize them yourself.
If individual investors get to vote on resolutions for political spending, this could even result in a majority vote to fund campaigns that are adverse to top management’s interests (whose interests don’t necessarily jibe with the company’s, with compensation based on short-term results, for example), and the company’s long-term interests (such as Exxon-Mobil being forced to fund the campaign of candidate pledged to policies to end tax subsidies or reduce the use of fossil fuels).
The resulting double-bind quagmire, though, might actually stop political spending by corporations altogether.
And that would be the best outcome of all.
