Money in Politics This Week

CAMPAIGN FINANCE REFORM AND ETHICS NEWS

NEW YORK

State of the State: Gov. Cuomo Once Again Calls for Public Financing

In his 2013 Stateof the State Address on Wednesday, New York Governor Andrew Cuomo reemphasized his support for comprehensive reform of the state’s campaign finance laws including effective disclosure, lower contribution limits, and public financing. The Governor asserted that public financing would strengthen small donors and embolden them to participate in the electoral process. “It works well in New York City, it will work well in New York State,” Cuomo stated. Cuomo proposed requiring all political and lobbying contributions over $500 to be disclosed within 48 hours. The Governor also announced plans to lower contribution limits across the board. Currently, New York has the highest limits for political contributions among states that bother to limit them at all. Our representatives in Albany are also far too dependent on a few large donors, but the Governor’s plan would give regular New Yorkers are stronger voice than they have now.

Ed Koch and Peter Zimroth Support Reform in New York Daily News

In a recent op-ed in the New York Daily News, former New York City Mayor Ed Koch and former New York City Corporation Counsel Peter Zimroth ask Albany to empower small donors. The current campaign finance system in New York, they argue, breeds cynicism and distances citizens from their government. Sky-high contribution limits — $41,000 for statewide races in the general election — mean that candidates spend more time courting big donors, who in turn exercise disproportionate influence over policy-making. “The end result is that the vast majority of citizens who can’t afford to make big donations feel shut out, and in many cases actually are.” Both Koch and Zimroth view New York City’s small donor matching funds system as a good model for financing state elections. Several good government organizations have supported this reform initiative for decades. However, for the first time, the New York business community is joining in. Prominent New Yorkers in business, finance, real estate and philanthropy, are coming together under the banner of NY LEAD. “They are fed up with elected officials not doing the people’s business and sick of reading about corrupt state officials being indicted. And as the ones on the receiving end of so many fund-raising pleas, they know that elected officials are spending too much time courting big donors and not enough time doing the people’s business.”

State Comptroller Files Suit Against Qualcomm for Political Records
Last year, we informed Reform NY readers about Attorney General Eric Schneiderman’s effort to crackdown on non-profit 501(c) groups engaging in secretive political spending. Last week, we learned that New York State Comptroller, Thomas P. DiNapoli, is seeking disclosure of political contributions from corporations in the state pension fund. DiNapoli is obligated to protect the value of the pension fund’s investments, which include $378 million shares in tech giant Qualcomm. The pension fund requested information about Qualcomm’s political spending through letters and shareholder resolutions. After failing to receive a response, DiNapoli filed suit against the firm in Delaware, seeking to examine corporate accounts for contributions to non-profits that do not report their donors. “Without disclosure, there is no way to know whether corporate funds are being used in ways that go against shareholder interests,” DiNapoli said in astatement released last Thursday. “How is the spending raising the bottom line of the company?” he added on YNN on Monday.

NATIONAL

DISCLOSE Act Re-introduced in Congress

On the first day of the 113^th Congress, Representative Chris Van Hollen (D-MD) re-introduced the DISCLOSE Act, calling it a “first step to clean up the secret money in politics.” The legislation would require all corporations, unions and Super PACs to report campaign expenditures in excess of $10,000. Reform is desperately needed after more than $213 million in undisclosed spending by organizations with anodyne names like the “Coalition to Protect Seniors” and “Citizens for Strength and Security” during the 2012 general election cycle. David Early, counsel at the Brennan Center, explains in The Hill that the DISCLOSE Act rests on firm constitutional ground. The Supreme Court has commended disclosure, stating that it allows voters to be better informed about the messages they receive and holds elected officials accountable for their actions. According to the Supreme Court, “disclosure requirements may burden the ability to speak, but they impose no ceiling on campaign-related activities and do not prevent anyone from speaking.” It is beyond time for these secret spenders to come out of the shadows.

Fiscal Cliff Deal Preserves Huge Tax Breaks for Powerful Interests

As Congress welcomed the New Year by barely averting the fiscal cliff, special interests made sure their kickbacks were not sacrificed in the process. Tax levels reverted to higher rates for payroll taxes, but NASCAR, Hollywood, mining companies, renewable energy firms and U.S. multinationals all preserved or expanded their tax breaks and subsidies. The American Tax Payer Relief Act included several deductions and credits for favored industries. General Electric was one of the biggest winners. Section 322 of the bill allows multinationals to shift profits to offshore financial subsidiaries and thus avoid paying U.S. corporate income taxes. This exception played a central role in GE paying $0 in taxes in 2011 even with $5.1 billion in U.S. profits. GE’s PAC contributed $2,000 to Senator Max Baucus, the chief architect of the fiscal cliff bill, for a total of $10,000 for the election cycle. The legislation also extends tax breaks for racetrack owners estimated at $43 million, a provision that was presented in 2011 in the Motorsports Fairness and Permanency Act, sponsored by Senator Debbie Stabenow (D-MI) and Representative Vern Buchanan (R-FL). In 2012, Buchanan received more than $530,000 from the automotive industry, while Stabenow received $430,000.

Obama’s Inauguration Flush With Mega-Contributions

In 2008 candidate Obama touted his efforts to “change business as usual in Washington” by establishing strict rules for the inauguration ceremony; corporate donations were prohibited; individual contributions were limited to $50,000 and the amount donated by each contributor was identified immediately. This year the practice has dramatically changed. Obama’s inaugural committee has accepted contributions from major corporations including AT&T, Microsoft and Financial Innovations, offering them perks in return. Caps on donations have been lifted as well. Furthermore, donors will only be made public 90 days after the event. As the Obama administration gears up for a second term, advisers say that their team is focused on the federal budget deficit, gun violence and immigration — not campaign finance reform, despite Obama’s enthusiasm for it on the website reddit last year. The administration has yet to replace five members of the Federal Election Commission who are serving expired terms, and has retracted an executive order requiring companies with federal contracts to disclose their political spending. According to Larry Noble, former general counsel to the FEC, the administration fails to realize that its legislative agenda will not succeed without changing the “campaign finance system that puts enormous power behind special interests.”

SEC Considers New Rule to Disclose Corporate Political Expenditures

The U.S Securities and Exchange Commission plans to consider a new rule this year requiring publicly traded corporations to release information about the use of corporate resources for political activities. Ian Vandewalker, counsel at the Brennan Center, explains in the Huffington Post that “corporations are not required to tell their shareholders anything about the political spending that corporate management decides to engage in. This leaves the company's investors in the dark about whether political expenditures benefit or hurt the bottom line.” Furthermore, since corporations can donate unlimited sums to tax exempt 501(c) organizations, which in turn spend millions on elections without disclosing their donors, voters remain ignorant about the real source of the political advertising they get bombarded with. Nearly 77 percent of Americans support a requirement that companies publicly reveal their contributions to political organizations. The SEC has admirably completed the first hurdle to bring corporate political expenditures out of the darkness. With a complete rule, the SEC can protect investors by providing them with financial information necessary for investing responsibly.

American Tradition Partnership Loses Another Key Court Decision

The American Tradition Partnership, an anti-environmentalist non-profit that has been engaged in an ongoing dispute with the state of Montana over its failure to file regular reports regarding its donors and expenditures, lost another key court decision last Friday. The State District Court Judge Jeffery Sherlock of Helena adopted Montana’s proposed finding that ATP acted as a political committee in 2008, and therefore must report its donors and expenditures. Sherlock ruled that members and officers of ATP used its corporate, nonprofit status “as a subterfuge to avoid compliance with state disclosure and disclaimer laws during the 2008 Montana election cycle.” Montana’s Commissioner of Political Practices, Jim Murry, stated that he will seek financial penalties against ATP for the legal violations.