‘Soft Money’ Era Not Back Yet as Few Companies Contribute

By Kenneth P. Doyle

To illustrate what the 1990s era of “soft money” political contributions was like for American business, Mike Petro tells of a colleague who at that time once got a call from Sen. Ted Kennedy, asking for $1 million.

“And, I’ve never even met him,” Petro’s colleague said of Kennedy, the Massachusetts Democrat who died in 2009.

Big corporations were pressed hard, Petro and others said, to provide much of the $1.5 billion in soft money raised by the Democratic and Republican parties before the 2002 Bipartisan Campaign Reform Act, also known as the McCain-Feingold law, placed strict limits on party contributions. That pressure to give isn’t there anymore for American business, according to Petro, a veteran congressional staffer, campaign aide and nonprofit executive. He’s now executive vice president of the Conference Board’s Committee for Economic Development (CED), a business-led public policy and research organization.

Some observers thought the calls for big corporate checks would make a comeback after court rulings in 2010 allowed companies to spend money directly to influence federal elections and to contribute to independent campaign spending groups. Outside campaign spending did rise, but there’s been almost no direct corporate spending for or against candidates, Petro said. Meanwhile, relatively few big companies have given any money to campaign spending groups.

‘Definite Shift’ From Soft Money Era

“We can see a definite shift from 15 to 20 years ago” when corporate America was a major political funder at the federal level, Petro told Bloomberg BNA in a phone interview. Now, corporate executives generally think giving money to influence federal campaigns is “just not worth it,” compared to the reputational risk for a company due to heightened controversy over politics.

In a recent study of corporate political spending, CED found that less than 1 percent of disclosed contributions to major super political action committees came from publicly held corporations. Petro highlighted the study results in a briefing last fall and the interview with Bloomberg BNA.

Additional, undisclosed corporate money may be funneled through trade associations, like the U.S. Chamber of Commerce, or through Section 501(c)(4) “social welfare” groups, Petro acknowledged. But, all of this type of spending combined was only about 3.5 percent of the $840 million in total independent spending in the 2014 campaign, the CED study found.

Billionaires, Not Companies, Biggest Givers

Outside campaign spending was even higher in the 2016 election cycle, reaching a total of nearly $1.5 billion, according to Federal Election Commission reports analyzed by the nonprofit Center for Responsive Politics. But, the level of corporate money in campaigns didn’t rise much, if at all, according preliminary findings by CED. The latest research, Petro said, found that most super PAC money in the 2014 and 2016 election cycles continued to come from individual billionaires, with additional money coming from privately held companies, unions and other organizations.

The CED study found that only 36 publicly held companies made any contributions to super PACs in the 2014 election cycle, while 33 had made contributions in the last cycle through July of 2016. The companies gave a total of $4.6 million in 2014 and $5.3 million in 2016—less than 1 percent of total super PAC receipts.

Only 16 of the Fortune 500 top publicly traded companies made a contribution to a super PAC in 2014, while 11 of these largest corporations gave in 2016, CED found. The business group’s final study of campaign money in 2016 is due to be completed in February, according to Petro.

Chevron, Altria Gave to GOP Super PACs

The latest data follow the pattern established since the Supreme Court’s 2010 ruling in Citizens United v. FECCitizens United and a subsequent federal appeals court ruling in SpeechNow.org v. FEC, which allowed unlimited contributions to campaign spending groups, sparked an explosion of campaign spending by super PACs and other outside groups not formally linked to a candidate or political party.

There were at least a few signs in the 2016 campaign, however, that corporate political contributions could make a bigger comeback at some point in the future. For example, two big-time corporate contributors from the soft-money era—energy giant Chevron Corp. and Altria Client Services, a subsidiary of Altria Group Inc., the parent of tobacco company Philip Morris—made major contributions in the last election cycle to super PACs linked to Republican leaders in the Senate and House. Chevron and Philip Morris each had donated millions of dollars to party committees during the soft money era.

Chevron led all publicly held companies in corporate contributions to super PACs in the 2016 election cycle, giving a total of $3 million—$2 million to the Republicans’ Senate Leadership PAC and another $1 million to the GOP’s Congressional Leadership Fund. Altria gave $75,000 to each of these Republican super PACs. Another publicly traded energy company, Devon Energy Production Co. of Oklahoma City, also gave a total of $1.25 million to the same Republican super PACs.

These amounts were dwarfed by super PAC contributions from billionaires like Thomas Steyer, the San Francisco financier who led all donors with a total of $86.3 million in the 2016 election cycle given to Democratic-leaning super PACs. Close behind was Sheldon Adelson, head of the casino company Las Vegas Sands Corp., who gave $77.7 million to Republican super PACs for last year’s campaign.

But the corporate contributions—few as they were—showed that some companies may be increasingly willing to travel this road. Altria’s $150,000 in super PAC contributions made last June, for example, were the company’s first such direct federal contributions ever reported by the company.

Trump Super PAC Got Private Prison Funds

A handful of other publicly traded companies also contributed to super PACs linked to some of the 2016 presidential candidates. While much of this corporate money went to support the failed primary campaigns of Republican presidential contenders Jeb Bush, the former Florida governor, and Sen Marco Rubio (Fla.), there was at least one public company that made disclosed contributions to a super PAC supporting President-elect Donald Trump.

The $100,000 contribution by GEO Corrections Holdings Inc. to the pro-Trump super PAC Rebuilding America Now could be a harbinger of both the possible risks and rewards of corporate contributions. The contributor, a unit of the private prison company GEO Group Inc., gave the money last August right after the Obama administration’s Justice Department announced it wanted to end use of private prisons. GEO’s stock plunged 40 percent on that news, but the stock shot back up after the election of Trump, who made campaign statements supporting private prisons. GEO’s current stock price is now nearly double the low of $19.51 reached after DOJ’s announcement last summer.

On the downside, however, the private prison company has also been cited in a high-profile complaint filed with the Federal Election Commission. The complaint filed by the nonprofit watchdog Campaign Legal Center alleged that GEO violated a ban on campaign spending by government contractors—a ban that remains in federal law despite the Supreme Court’s holding in Citizens United that corporations generally are allowed to provide campaign money to influence federal elections.

The FEC has not announced a ruling on the GEO complaint. The commission dismissed a similar complaint against Chevron in 2014, ruling that the super PAC contribution at issue in that enforcement matter came from a different Chevron subsidiary than the unit which held federal contracts. However, the FEC also appeared to confirm that legal restrictions on contractor contributions to super PACs could apply in some circumstances.

GEO Stock Rose After Trump Win

An analysis by Ciara Torres-Spelliscy, a law professor at Florida’s Stetson University and a fellow at the nonprofit Brennan Center for Justice at New York University Law School, noted that GEO’s $100,000 contribution to the pro-Trump super PAC came the day after the Obama Justice Department made its Aug. 18 announcement of plans to end use of private prisons. The corporate contribution followed a previous $50,000 contribution from the company’s PAC.

Not only did GEO do work for DOJ’s Bureau of Prisons, Torres-Spelliscy pointed out, it also operates detention facilities for Immigration and Customs Enforcement—a business that could grow significantly with Trump’s call to detain and deport millions of undocumented immigrants.

Torres-Spelliscy’s analysis of FEC reports yielded a list of at least 10 publicly traded companies that made large contributions to super PACs in the last election cycle, providing a total of nearly $7 million.

Three of the companies that contributed to super PACs gave mainly to Right to Rise, the super PAC that raised and spent a total of $86.8 million to support Jeb Bush, Torres-Spelliscy found. These contributors were led by Nextera Energy Inc., a “clean energy” company based in Florida, which gave $1 million to the pro-Bush PAC and later gave $100,000 to the pro-Rubio super PAC Conservative Solutions. Two other public companies, Brown & Brown Inc. and Alico Inc., also gave $100,000 each to the pro-Bush super PAC, according to Torres-Spelliscy’s list.

Another company, Alliance Holdings GP, gave $475,000 to the House Republicans’ super PAC, the Congressional Leadership Fund. In addition, GEO Group, the private prison company that gave $100,000 to a pro-Trump super PAC, also gave $200,000 to the Republicans’ Senate Leadership Fund.

Torres-Spelliscy said she could find only one publicly traded company that made a large contribution to a Democratic super PAC in the 2016 election cycle. Masimo Corp., a medical technology company, based in Irvine, Calif., gave $100,000 to the Democrats’ Senate Majority PAC.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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