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- 08/29/17--02:02: _Members of Congress...
- 08/31/17--01:59: _Campaign regulation...
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- 08/31/17--08:03: _Democrats say ‘Citi...
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- 09/24/17--14:49: _Ethics experts say ...
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- 09/28/17--17:58: _FEC fines contracto...
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- 08/29/17--02:02: Members of Congress scoring personal loans from political supporters
- 08/31/17--01:59: Campaign regulation foes targeting state-level restrictions
- 08/31/17--05:21: Statehouses, not Congress, hosting biggest political money fights
- The Keeping Our Campaigns Honest Act of 2017, filed by Rep. Ben Ray Luján, D-N.M., which would direct the Federal Communications Commission to require the inclusion of the names of major donors in political ads. (H.R. 1439)
- Rep. Raul Ruiz, D-Calif., introduced the Campaign Spending Integrity Act (H.R. 838), which would prohibit a candidate from spending campaign cash on vendors owned or controlled by the candidate or by an immediate family member.
- The Get Foreign Money Out of U.S. Elections Act (H.R. 1615), sponsored by Rep. Jamie Raskin, D-Md., which would apply the ban on contributions and expenditures by foreign nationals to “foreign-controlled, foreign-influenced, and foreign-owned domestic corporations.”
- Sen. Jon Tester, D-Mont., proposed the Senate Campaign Disclosure Parity Act (S. 298), which would require Senate reports and statements to be filed electronically. Seven of the bill’s 43 co-sponsors are Republicans.
- 09/08/17--07:42: Los Alamos laboratory director announces he will step down
- In 2012, Los Alamos sent unlabeled plutonium to a laboratory at the University of New Mexico where graduate students sometimes work, requiring the lab’s decontamination.
- In 2014, Los Alamos workers mispacked drums of radioactive nuclear waste, one of which then burst inside the nation’s only underground waste storage facility and rendered that storage site inoperable for years – costing the government more than a billion dollars.
- A few months later in 2014, a specialized machine in Nevada operated principally by Los Alamos scientists spewed radioactive uranium particles that were then inhaled by 31 technicians and scientists without their immediate knowledge.
- In 2015 a powerful electrical arc-flash blew an electrician out of the cubicle at Los Alamos where he was working and burned him over 30 percent of his body.
- And just this June, as the Center began publishing its series on safety problems at Los Alamos and other nuclear weapons labs, Los Alamos mistakenly sent three containers of radioactive plutonium to two other labs by air, instead of using ground transportation, as federal rules require.
- 09/08/17--12:51: Will Donald Trump let the Federal Election Commission rot?
- 09/08/17--14:15: Center for Public Integrity wins science journalism award
- 09/24/17--14:49: Ethics experts say Trump administration far from normal
- 09/27/17--09:11: Your favorite companies may be political black boxes
- 09/28/17--17:58: FEC fines contractor that gave pro-Clinton super PACs illegal cash
- 10/03/17--02:37: The future of the internet is up for grabs — theoretically
- 10/06/17--09:14: Center for Public Integrity invests in future with new hires
- 10/07/17--18:51: Center for Public Integrity wins investigative reporting award
- 10/15/17--20:40: Donald Trump campaign ramps up 2020 re-election fundraising
It began on a golf course.
That’s where textile executive George Moretz and now-Rep. Robert Pittenger, R-N.C., forged a friendship during the early 2000s. The two belonged to Grandfather Golf & Country Club in Linville, North Carolina, a club where elite clientele pay up to $65,000 for memberships.
In 2008, Pittenger ran for lieutenant governor. As election day loomed, Pittenger loaned his own campaign $1.2 million, on top of $500,000 his wife, Suzanne, had already sunk into his effort. It didn’t matter: He lost anyway.
Now, with more than $1 million tied up in a failed campaign, Pittenger seemingly needed money. But he didn’t go to a bank. Instead, he went to Moretz, who had already contributed $7,250 to Pittenger’s failed effort, and in 2009, he borrowed hundreds of thousands of dollars from him.
When Pittenger ran for Congress and won in 2012, he still owed Moretz between $250,001 and $500,000. (Loan values are reported in broad ranges.)
Pittenger isn’t the only member of Congress with such generous friends.
A review of mandatory personal financial disclosure forms filed by all current members of the House and Senate reveals at least 19 have accepted loans from organizations or moneyed individuals instead of a bank or traditional financial institution. Often, these organizations and individuals rank among the lawmakers’ key political supporters. In two of these cases, the loans were made to members' spouses.
Two of the loans were made in the early 1990s; the rest were made in 2003 or later. While two of the congressional members in question have recently paid off their loans, the other 17 or their spouses remain in debt to their benefactors. The loans range in value from $15,000 to $5 million.
Some of the members in question borrowed the money before being elected to Congress, effectively indebting them to wealthy benefactors during their initial days and months as elected federal officials.
There’s nothing illegal about such loans, even when the lender is also a campaign contributor. And there’s no explicit evidence of a quid pro quo in which legislative action was taken in exchange for the loan. But government watchdog groups and others say such arrangements raise serious concerns about possible conflicts of interest.
A review of campaign finance data revealed that at least seven of the members with non-bank loans also received campaign contributions from their lender.
That circumstance “raises the issue that this loan is no longer just an impartial business transaction,” said Craig Holman, government affairs lobbyist for Public Citizen, a non-partisan government watchdog group. “It strongly suggests that the source of a loan has a vested interest in the lawmaker.”
The practice is bipartisan: 13 Republicans and six Democrats (or their spouses) have accepted such loans, including two members who have guaranteed loans from a company or political committee.
Can money buy love?
Some of the loans identified during the review of the financial disclosure forms didn’t come from campaign contributors or others with clear business interests before Congress.
Some, such as in the case of Rep. Markwayne Mullin, R-Okla., came from family members; others came from businesses controlled by the members themselves, as in the case of newly-elected Rep. Roger Marshall, R-Kansas.
Mullin took out a loan in 2007 from his father, Jim Mullin, to purchase a plumbing business. The value of such loans is reported in broad ranges, and Mullin’s is valued at up to $1 million.
Marshall, a doctor, and his wife, took out two separate loans from businesses to which he’s tied.
His financial disclosure forms list him as the president of LVMC, Inc. and the chairman of Great Bend Regional Hospital. In January 2014, GBRH Properties 2009 LLC, lent Marshall between $15,001 and $50,000. The loan is not listed on his most recent filing, indicating it has been repaid. However, in April 2015 his wife received a loan of between $10,000 and $15,000 from LVMC, Inc. That loan is now listed as his own liability on Marshall’s most recent filing.
On the other side of the aisle, Rep. Jerrold Nadler, D-N.Y., borrowed somewhere between $50,001 and $100,000 from Gordon Kupperstein, a retired lawyer and actor, so that he could purchase shares in an upstate New York co-op of which Kupperstein is also a member.
In 2012, Rep. Gregory Meeks, D-N.Y., was investigated by the House Ethics Committee regarding a personal loan worth $40,000, after being investigated by both the FBI and the Office of Congressional Ethics.
Meeks failed to mention the loan on his 2007, 2008 and 2009 financial disclosure forms, and didn't make payments for three years. The House Ethics Committee acknowledged Meeks didn’t properly report the loan but ultimately cleared him of wrongdoing — in part because the lender, Edul Ahmad, had recently been convicted of mortgage fraud and didn't testify. The FBI investigation never led to charges.
In order to pay off his debt, Meeks secured a separate loan from a company run by a prominent Democratic donor. Meeks continues to represent New York's 5th district.
Bill Shaheen, the husband of Sen. Jeanne Shaheen, D-N.H., has received no less than four promissory notes from Marcia Kimball, a Democratic party activist who owned a children’s clothing store in Florida.
Kimball has been a financial supporter of Shaheen since at least the New Hampshire politician’s first run for the Senate in 2002, a race that she narrowly lost. The longtime contributor issued the first of the notes to Shaheen’s husband just over a decade later, in 2013. Altogether, the notes may have initially been worth as much as $550,000.
Reform advocates say these kinds of transactions, in which the lender has no obvious interest that could be influenced by Congress, are seemingly less problematic.
As the sums involved suggest, however, such loans have the potential to dwarf the amounts allowed in campaign contributions.
“The reason we have contribution limits on the books, the reason that an individual is limited in how much they can give to a candidate or an official is to limit corruption, and to limit the opportunities for influence and to make sure that no official is overly indebted to any particular person,” said Brendan Fischer, director of the federal reform program for the Campaign Legal Center, a nonpartisan election reform group based in Washington, D.C.
“While one would be limited to making a $2,700 campaign contribution to a candidate, they can, under the rules, make a $1 million loan to the same candidate,” Holman notes. “That buys a whole lotta love.”
‘A matter of concern’
Maybe it was just "love" that helped Delbert Ray Ellis and David Valadao, R-Calif., find each other.
In May 2008, before he was elected to the House, Ellis loaned Valadao between $1 million and $5 million to provide “financing for Valadao Dairy,” according to Valadao’s financial disclosure statement.
Valadao’s dairy farm has been in the family since his parents, immigrants from Portugal, started it in 1973. Ellis’ family owned nearby Mid-Cal Farms until 2014, when the company was dissolved.
Reached by phone, Ellis said he “didn't even talk to” Valadao and the loan actually financed a property Valadao bought from him. Ellis said he did not remember the exact amount of the loan, or the terms, but added that Valadao had already paid it off.
Before he could be asked any further questions Ellis hung up.
Valadao’s most recent filing still shows the loan as an active liability. A spokesperson for Valadao did not return emails seeking clarification about the loan.
Ellis has been a contributor to the congressman since the latter’s days in the California State Assembly, when he donated $2,500 to his first campaign. Since then Ellis has donated another $13,100 to Valadao’s campaigns for his seat in the House, according to Federal Election Commission records, maxing out in the last two election cycles.
As the vice chairman of the House Appropriations Committee’s Subcommittee on Agriculture, Valadao has come to be known in Congress as an advocate for cuttingregulations on the farming industry. Ellis is described as retired in federal campaign filings as early as 2011, though he continued to be listed as a director of Mid-Cal Farms in state filings after that year.
“If Valadao is in a position to take action that might benefit Ellis,” says the Campaign Legal Center’s Fischer, “then the fact that Valadao owes over a million dollars to Ellis is a matter of concern.”
Both Valadao and Pittenger’s debts raise questions about their independence, Fischer said.
“In neither instance do these appear to be arms-length commercial relationships,” Fischer said. “These individuals made significant contributions to the campaigns of these candidates and then also extended loans that greatly exceeded contribution limits … it certainly could have the appearance of these individuals trying to offer something of value to candidates in order to curry favor with the officials.”
There is one requirement members of the House have to meet beyond simply reporting these transactions: They’re required under congressional rules to pay established commercial interest rates, Holman notes. But since they don’t have to report the rate, it’s not clear whether the rate they paid was an established commercial interest rate.
That’s potentially important, because interest rates vary from bank to bank. Banks aren’t often forgiving if someone can’t pay a loan back on schedule. Private loans could prove to be more flexible for the borrower.
‘Everything was reported fully’
Texas Democrat Henry Cuellar had his eye on some property in his hometown of Laredo. Like Pittenger and Valadao, he didn’t bother with a bank. Instead, he turned to his longtime campaign contributor Rasoul Khaledi, who lent him as much as $100,000.
Khaledi, who made the loan to Cuellar in December 2011, runs a company that owns 11 duty-free stores along the Mexican border, including a flagship store situated on property leased to him by the city of Laredo, Texas.
Khaledi and his relatives have contributed at least $31,000 to Cuellar’s campaign committee since 2002.
In Cuellar’s case, his relationship with Khaledi extends beyond the purely financial. During the summer of 2015, four of Khaledi’s children were awarded unpaid internships in Cuellar’s office.
And Cuellar has long shown interest in issues tied to Khaledi’s businesses. As one of the founders of the Congressional Pro-Trade Caucus, he is an influential voice on U.S. trade policy. Cuellar played a role in the passage of Trade Promotion Authority legislation and supported various international trade agreements.
A representative for Cuellar insisted the congressman followed all the rules when he borrowed the money from Khaledi.
“Everything was reported fully, properly and transparently,” campaign spokesperson Colin Strother said.
Khaledi did not respond to requests for comment.
While Cuellar disclosed the existence of the loan and its approximate value, he did not disclose the loan’s interest rate and repayment schedule, since he didn’t have to.
Unlike the House, the U.S. Senate requires members to disclose the terms of a loan.
The requirements were laid out years ago by the respective chambers under the Ethics in Government Act.
While the U.S. Senate requires members to provide enhanced disclosure, the U.S. House provides what’s “required by the statute but no more,” said Robert L. Walker, who served as chief counsel and staff director for both the House and Senate Ethics committees.
Members of the House aren’t even mandated to share the terms of a loan with the House Ethics Committee itself before accepting it. The House Ethics manual devotes a mere two paragraphs to the subject.
The manual says only: “Before entering into a loan arrangement with a person other than a financial institution, Members … should contact the Committee for a review of the proposed terms, and a determination by the Committee on whether the loan is acceptable.”
“‘Should,’ in this instance, apparently does not mean 'shall,'” the Campaign Legal Center’s Fischer said. “There is no hard-and-fast requirement.”
Reform advocates say the lack of disclosure of the terms by the House is particularly problematic.
“We have to take it at their word. And we really haven't got a clue,” Holman of Public Citizen said. “That's key to telling us whether or not there's some effort to curry favor.”
Under the rules, the House Ethics Committee and its Senate equivalent could in principle deny a member of Congress permission to accept a loan if it posed a significant conflict of interest, or penalize them for accepting one that did.
In practice, that has not happened, at least in recent memory.
The House Ethics Committee declined to comment on the record, so it’s not clear how many of the House members involved contacted the panel.
Big money, modest disclosure
As for Pittenger, his relationship with Moretz became professional when Moretz last decade invested in Pittenger’s real estate firm.
Moretz then began supporting Pittenger’s political career. Since 2007, he’s given Pittenger’s various campaigns for office at least $9,500.
Pittenger disclosed the loan he’d received from Moretz in his first required financial statement upon being elected to the House in 2012. At the time, he listed the value of the loan as at $250,001 to $500,000.
But the original value of the loan is unknown. House disclosures only indicate how much a member still owes, not the loan’s initial dollar figure.
“Having run for office myself, and being unsuccessful, you get kind of wrapped up in a campaign and you end up spending more than you planned,” said Moretz, who launched an unsuccessful bid for Congress in 2004. “You get emotionally involved in the thing. I’ve been there, I’ve done that, I’ve spent more money on my campaign than I meant to or originally planned to, but I sorta knew where [Pittenger] was coming from and he needed some help.”
When asked about the loan’s timing, Moretz said: “It was when he [Pittenger] ran for lieutenant governor.”
Jamie Bowers, a spokesperson for Pittenger, stated that the loan was a “campaign issue” and suggested speaking to a representative of the 2008 lieutenant governor campaign.
Pittenger’s financial disclosure statement lists the loan as a note payable, with no indication as to the purpose of the loan.
The treasurer for Pittenger’s 2008 campaign for lieutenant governor, Charles T. Greer, did not respond to repeated requests for comment.
Pittenger reported the loan as a liability on his personal financial disclosure forms for 2012, 2013 and 2014. The loan had been partially paid off by 2013, and did not appear on his 2015 disclosure form, supporting Moretz’s assertion that Pittenger had paid the loan off in full.
Although Moretz’s loan was to Pittenger himself, it was hundreds of thousands of dollars more than the state’s limits would have allowed him to lend Pittenger’s campaign. According to the North Carolina State Board of Elections, the campaign finance laws at the time dictated that no one outside a candidate’s immediate family — a spouse, parent or siblings — could loan a campaign more than $4,000.
So while not illegal, the amount of the loan and its apparent purpose — to help out a friend who was out more than $1 million after a failed political campaign — raised ethics watchdogs' eyebrows.
As far as the Campaign Legal Center’s Fischer is concerned, most political aspirants must have a network of wealthy friends who will finance their run for higher political offices. And they need to be comfortable with asking wealthy people for money.
“Another way of looking at this is this is a symptom of the broader problem of money in politics, and the way that the role of money in elections acts as a barrier to entry,” Fischer said.
It’s a barrier that, sometimes, doesn’t extend to fairways and putting greens.
Rahima Essop, Maria Elena Garcia and Renata Mosci contributed to this report
Federal courts — not the White House, not Congress — have triggered the most earthshaking changes in how recent U.S. elections are funded.
Think Citizens United v. Federal Election Commission, where the Supreme Court allowed corporate spending in elections.
Or SpeechNow.org v. Federal Election Commission, which created super PACs.
Or McCutcheon v. Federal Election Commission, which let donors give money to as many federal political candidates as they pleased.
But the latest Supreme Court decision on campaign finance, in May, maintained the status quo.
In Republican Party of Louisiana v. Federal Election Commission, the justices affirmed a lower court decision and upheld restrictions on “soft money,” or unlimited funding streams to parties banned in 2002 by the Bipartisan Campaign Reform Act, otherwise known as “McCain-Feingold” for the two senators who sponsored it.
These limits are one of the few pillars left standing from that legislation — although a new kind of “soft money” has nevertheless found its way into party politics thanks in part to the McCutcheon decision.
Having won significant battles at the federal level, political groups and libertarian nonprofits are now targeting state-level rules in district and appellate courts across the country.
The effects could be wide-ranging. The most notable battles deal with when groups need to disclose their donors, and whether contribution limits trample on donors’ freedoms of speech and expression.
“It’s a strategy we’re seeing across the country,” said Megan McAllen, senior legal counsel at the Campaign Legal Center. “There’s not much left of campaign finance law to target.”
Political organizations with significant cash reserves are fighting to keep the identities of their major backers private.
The attorney general’s office threatened to revoke the foundation’s tax exemption if it did not turn over a list of donors who gave more than $5,000 during a year. (Nonprofits are already required to provide the Internal Revenue Service such a list.)
Americans for Prosperity sued the state and argued the rule violated its donors’ rights to privacy. If the group turned over its supporters’ names, Americans for Prosperity argued, the supporters would face retribution from people — such as California officials — who oppose the Koch brothers.
“Donors whose associations with the Foundation are known to the public have received threats of physical harm, have had their businesses boycotted, and have been subjected to character assassination in their hometown newspapers,” the group’s complaint said.
A U.S. District Court temporarily blocked the law, but the 9th Circuit reversed the ruling, saying the donor reports are kept confidential and stay in the attorney general’s office. In a later proceeding, the district court again sided with Americans for Prosperity. The case is now back in the 9th Circuit.
“It’s free speech for me and not for thee,” McAllen at the Campaign Legal Center said. “It’s an attempt to, under the guise of free speech, to be able to say and spend without limit, while at the same time seeking protection” from the consequences.
A similar case in New York features Citizens United, the 501(c)(4) “social welfare” nonprofit behind the eponymous 2010 campaign finance case. Citizens United is asking for the same thing as Americans for Prosperity: Grant the nonprofit an exemption from reporting its donors or hold the requirement unconstitutional.
The case is now in the U.S. Court of Appeals for the 2nd Circuit after a Southern District of New York judge ruled in favor of the state in August 2016, saying that the rule is necessary to prevent tax fraud.
Few states have managed to change their contribution limits in the legislature. So, many groups are turning to the courts to erode the restrictions.
Related article: "Statehouses, not Congress, hosting biggest political money fights"
Don Zimmerman, an Austin, Texas, city council member running for reelection, argued his city’s campaign-finance limits violated contributors’ freedom of speech.
Voters passed a campaign finance law in 1997 that capped city council donations at $100. It also carved out a “blackout” period when candidates could not receive donations and required unused funds to be spent or donated to charity. The district court upheld what is now a $350 limit, but struck down the blackout period and charity requirement.
Both Zimmerman and the city appealed; Zimmerman wanted the limits struck down, and the city of Austin aimed to reinstate the two invalidated measures. The case is now in the 5th Circuit.
An Illinois case has taken a similar back-and-forth route since 2012.
Illinois Liberty PAC challenged Illinois’ $50,000 donation limit from political action committees to state candidates. It also challenged the state’s $5,000 limit from individuals to candidates.
The case meandered from federal district court to the 7th Circuit Court of Appeals then back to district court, which upheld the limits after the trial. The case is now back before the 7th Circuit.
The Illinois Liberty PAC, which supports conservatives, has received donations over the years from Republican megadonor Richard Uihlein ($62,000), developer Michael Keiser ($61,500) and former retail CEO Ed Bachrach ($30,500), according to Illinois Campaign for Political Reform data.
There’s almost zero chance Congress will this year seriously consider a single bill aimed at reforming the nation’s weakened money-in-politics laws.
Going local is a different story: State lawmakers this year are engaging in full-throated debate on campaign finance proposals — with some surprising outcomes.
New Mexico’s secretary of state may have found a way to enact rules that the governor vetoed months before.
The South Dakota legislature voided a ballot measure citizens passed — and banned it from being considered again.
And the governor of Montana vetoed an attempt to raise giving limits to candidates, triggering a court battle. In these three states and others, ideologically-driven groups are hammering away at laws to loosen restrictions on campaign money, in order, they say, to protect Americans’ freedom of speech.
So far this year, lawmakers in at least 18 states have introduced legislation to change the amount of money people can give politicians, according to a Center for Public Integrity analysis of proposed legislation in the nation’s 50 statehouses.
Half of the bills aim to increase contribution limits in attempts to keep pace with the rising number of outside forces that can spend unlimited amounts of cash. The other half try to decrease the limits to blunt the amount of money in politics.
Two initiatives have passed. Two have been vetoed. Eight bills are in progress, while six have failed.
All the while, lobbying forces from Washington, D.C. — some backed by mega-donors such as the billionaire Koch brothers, others supported by national government-transparency organizations — have swarmed statehouses and city halls, sometimes to the suspicion of locals.
These national coalitions are targeting donor-disclosure laws, pay-to-play and lobbyist rules and the role corporations, unions and certain nonprofits may play in elections, in addition to campaign fundraising limits.
This special-interest influx comes at a time when some statehouses are also struggling to update their statutes to comply with the 2010 U.S. Supreme Court case, Citizens United v. Federal Election Commission.
The ruling, which upended many state laws on the books, said corporations and labor unions could raise and spend unrestricted amounts of money to advocate for or against political candidates — as long as they did not coordinate their spending with candidates.
When it comes to political money, national-level political organizations also see statehouses and city councils as the real battleground for change. Bills here — unlike at the federal level — sometimes move through chambers with relative ease and bipartisan support.
“It’s vitally important that we build momentum, win victories on reform at the municipal level, at the state level, and doing that increases the likelihood of eventual wins at the federal level,” said Paul S. Ryan, vice president of policy and litigation at Common Cause, a national campaign finance reform group.
Only two of the 30 bills introduced in Congress that pertain to money in politics — both sponsored by Republicans — have even been formally debated.
At the local and state levels, by contrast, more sweeping money-in-politics experiments, such as public financing of political campaigns, are succeeding.
New York City, for example, has since 1988 slowly increased the amount candidates could earn in its matching-fund system: For any small donation (under $175), the city will give six times that amount to the campaign. So, for every $50 donation, a politician would receive another $300 from public financing.
Seattle voted in 2015 to give every voter four “democracy vouchers” worth $25 each. Voters can give the vouchers to political candidates who agree to limit their spending. And Portland, Oregon, will in 2019 bring back a matching fund program similar to that of New York City.
Kentucky, a state that hasn’t increased its campaign contribution limits since 1998, saw Gov. Matt Bevin, a Republican, sign a measure in March that increased almost all campaign contribution thresholds.
Kentuckians may now give $2,000 to candidates per election (double the $1,000 previously allowed) and $5,000 to political party committees (up from $2,500), among other increases.
The law also establishes an account for party committees to buy or maintain their office buildings — money that cannot be used to influence elections. These funds can accept an unlimited amount from any source, including corporations.
Despite the increases, Kentucky’s limits remain relatively low compared to other U.S. states, said state Sen. Damon Thayer, the Republican floor leader and the sponsor of the bill.
“But at least it’s a step in the right direction to allow campaigns and political parties to raise more money to keep up with the rising costs to run an election and the increased role of super PACs,” he said.
Thayer said he supports Citizens United.
But the decision “diminished the role of campaigns to amplify our message,” he said. “The downside of super PACs is that we can’t coordinate our message with them.”
National interest in statehouse drama
Amid the various statehouse battles over political money, New Mexico is unique in its theatrics.
In April, Gov. Susana Martinez, a Republican, vetoed legislation that doubled contribution limits but tightened donor-disclosure rules.
Just two months later, newly elected Democratic Secretary of State Maggie Toulouse Oliver proposed a campaign-finance rule that included elements of the failed bill, though not the increased contribution limits. This angered opponents of increased disclosure requirements.
Burly Cain, state director for Koch-backed Americans for Prosperity, called the process “an unconstitutional power grab” during a public meeting.
“The proposed rule attempts to legislate rather than implement existing law,” Tyler Martinez, an attorney with the conservative Center for Competitive Politics and no relation to New Mexico’s governor, wrote in public testimony to the secretary of state.
Toulouse Oliver disagrees. She said in an interview that she’s not overstepping her authority because she is not creating new law — only clarifying it — in the wake of court decisions, such as Citizens United.
“We’re just trying to take this cloudy, confusing, and in some cases unconstitutional state statute and apply clarity for groups to follow,” Toulouse Oliver said.
Another Koch-connected group, Concerned Veterans for America, launched an ad campaign, sending out mailers and circulating a letter calling the measure “an attempt to circumvent the legislative process and silence citizens through executive rulemaking.”
Former New Mexico governor and 2016 Libertarian presidential candidate Gary Johnson signed onto the letter.
“Gov. Johnson is generally and pretty aggressively an advocate of transparency, but this goes too far,” Johnson spokesman Joe Hunter said. “This is something Gov. Martinez had vetoed, and might have a chilling effect on the nonprofits across the spectrum.”
The effort shocked rulemaking proponents, who note that the two conservative groups don’t voluntarily disclose their donors.
“I’ve never seen mailers for a rulemaking!” Viki Harrison of Common Cause New Mexico said.
Michael Daly, a Gallup, New Mexico, resident, was more blunt. After receiving one of the mailers, he presented it at a public hearing, where he called the lack of disclosure “the penicillin-resistant syphilis destroying the American democracy.”
This debate stemmed from a bill state Sen. Peter Wirth, now the Democratic floor leader, has introduced in one form or another every session since 2011. This session, he was finally gaining momentum: The legislation was fast-tracked through the House, and sent to Martinez to sign or veto in February.
“I’ve been trying to do the one thing we can do after Citizens United, which is require disclosure,” Wirth said. “Over the years, the bill unanimously passed the Senate three times, but we just couldn't ever get through to the House floor for debate.”
The bill would have doubled — to $5,000 — the maximum contribution to state lawmakers. This served as a compromise between lawmakers who wanted no limits and those who wanted to tighten them. It also included new donor disclosure rules for groups spending money to influence elections.
But Martinez vetoed the legislation.
“The requirements in this bill would likely discourage charities and other groups that are primarily non-political from advocating for their cause and could also discourage individuals from giving to charities,” Martinez wrote in her April veto.
Toulouse Oliver, New Mexico’s secretary of state, has recently conducted public hearings on the rules and aims to have the final rules go into effect in October. On Wednesday, she vowed to go to court, if necessary, to defend the rules.
New Mexico could serve as a model for other secretaries of state who want to update campaign finance rules when lawmakers are unwilling to do so, some reformers say.
“I mean, nothing is going to happen on the federal level in terms of campaign-finance reform, and you have these secretaries of state that could single-handedly get in there and try to reshape these rules,” said Craig Mauger, executive director of the Michigan Campaign Finance Network.
Michigan’s secretary of state, Ruth Johnson, did just that.
In 2013, she proposed a rulemaking that would require reporting of the donors behind “issue ads” — political commercials that don’t specifically support or denounce a candidate. These ads, however, often come within a micrometer of overtly advocating for or against a candidate. Often, the ads cast a politician in a decidedly negative light and urge voters to do something along the lines of, “Call lawmaker X and tell them you don’t support bill Y.”
Michigan lawmakers didn’t respond kindly. Instead of letting Johnson have her way, they passed legislation that in part lets “issue ad” funders keep their identities secret. Gov. Rick Snyder, a Republican, signed the bill.
"Our democracy thrives and our government is at its best when there is openness and accountability, all while our freedoms of speech and association are protected," Snyder said in a statement.
Snyder was referring to a part of the bill that requires groups airing ads or paying for robo-calls to add an “authorized by” disclaimer. They do not, however, need to name their donors, as Johnson attempted to require.
Michigan is considering a bill that essentially renders the state’s political contribution limits moot, according to Mauger and the Campaign Legal Center. Candidates would be allowed to solicit unlimited contributions on behalf of a super PAC, and can use the same vendors or lawyers or strategists as the outside groups that support them.
“When they first introduced this bill, supporters said we’re finally putting Citizens United into state law, but what they’re doing is also coloring in all these things that doesn’t match federal law,” Mauger said.
‘What is the point of voting?’
Things didn’t go as expected for South Dakota voters who thought they had scored a victory for limiting the influence of money in politics.
In November, almost 52 percent of South Dakotans voted yes on IM 22, a ballot measure that lowered contribution limits, established an ethics commission and set up public financing in elections, among other measures.
This was a win for Massachusetts-based Represent.Us, which had been pushing the initiative, against Americans for Prosperity, which tried to kill it.
“If supporters of IM 22 had their way, taxpayers would be paying for expensive political ads for politicians, instead of prioritizing funding for necessary budget items like education, public safety, and infrastructure improvements,” Americans for Prosperity said in a statement.
But the majority’s victory was short-lived.
Lobbying group South Dakota Family Heritage Alliance Action and 24 state legislators filed a lawsuit, arguing the measure is unconstitutional and limits free speech. The judge stopped the law from being implemented from taking effect as he considered the case.
Then came the real legislative blow: South Dakota lawmakers repealed the overhaul less than three months after the measure passed and included a clause preventing voters from putting it back on the ballot.
“It’s not responsible to use taxpayer money to fund political campaigns at the cost of education. And I’m certain that voters of this state did not support that," Gov. Dennis Daugaard, a Republican, said of the public financing proposal during a budget address in December, two months before he signed the repeal bill. “They were hoodwinked by scam artists who grossly misrepresented these proposed measures."
Daugaard signed nine bills in March as replacement bills that watchdogs decry as “toothless,” none of which changes any of the campaign contribution limits or donor disclosure rules.
Some voters sensed a pattern: Lawmakers were not respecting their decisions at the ballot box. In 2014, South Dakotans passed an initiative that increased the minimum wage. A year later, the governor signed a bill that watered down the rule, exempting workers under 18 from earning the $8.50 wage.
“That feeling that we were being ignored, weren’t being listened to, was prevalent across the state,” said Doug Kronaizl, organizer with Represent South Dakota, a local branch of Represent.Us. He spent the spring putting thousands of miles on his 1999 Ford Contour driving across the state organizing events with locals.
Howard Swenson, 65, a retired teacher who grew up in northeast South Dakota, is one such voter who feels frustrated. Swenson attends as many legislative town halls as possible each year (“probably the most painful thing I do to myself,” he said.)
“Twice we have voted for certain things and the Legislature has taken them away from us with power they seem to think they have,” Swenson said. “The vote, in my opinion, is about as strong a position as a citizen can have, so them taking it away from us upsets me a great deal.”
After the legislature overturned IM 22 and prevented it from being reintroduced, Swenson took a microphone at a town hall-style meeting at Northern State University in Aberdeen, South Dakota.
“What is the point of voting if our vote doesn’t stand?” he asked.
He took out his wallet and held up his voter registration card.
“Who do I give this to, since it doesn’t mean anything to us?”
A legislative task force is meeting to discuss campaign finance law, and more bills will likely be introduced in 2018. Represent South Dakota is gathering signatures for a constitutional amendment that would further restrict lobbyist gifts and contribution limits.
State house and courthouse
Raising campaign contribution limits, not naming donors, led Montana Gov. Steve Bullock, a Democrat, to veto the campaign finance bill lawmakers sent to his desk earlier this year.
“The increases in contribution limits are far above what Montanans believe to be acceptable,” Bullock wrote in his veto.
Montana’s allowable campaign donations have been fluctuating since 2012.
That year, a U.S. District Court judge ruled the 1994 limits enacted in a ballot measure violated First Amendment protections because the limits were so low. The U.S. Court of Appeals for the 9th Circuit reversed the ruling and sent the case back to District Court in 2015, where the limits were again struck down, yet again, in May 2016. The case, Lair v. Motl, is back on appeal.
As Montanans wait to hear the latest ruling, the state is using pre-1994 campaign finance limits adjusted for inflation, according to Montana’s office of the commissioner of political practices. The vetoed bill would have at least allowed individuals to give $2,640 to gubernatorial candidates (up from $1,990) and $700 to state lawmaker candidates (up from $330 for House and $530 to Senate candidates.).
The courthouse is another avenue for groups to enact campaign finance changes, or comply with Citizens United.
At the time of the ruling, 24 states had bans or restrictions on corporate spending in elections that had to be overturned or rewritten, according to the National Conference of State Legislators.
At least six recent court cases involve a tug-of-war over contribution caps.
Related article:“Campaign regulation foes targeting state-level restrictions”
The 9th Circuit is also handling an appeal on the constitutionality of Alaska’s limits for state candidates. Alaska’s law includes a cap on out-of-state donations, upheld by a district court last November.
David Thompson filed suit after he tried to give $100 to his brother-in-law, former Alaska state Rep. Wes Keller, a Republican from Wasilla, in 2015. The Keller campaign had to return the money because it already received the maximum amount of out-of-state money the law allowed.
“I can see that being a larger battle we see more of, because of libertarian objections to these laws and a number of reformers interested in passing more such requirements,” said Daniel Weiner, senior counsel at the Brennan Center. “If you could limit money from out of state, they argue you could to some degree restore sovereignty of state citizens.”
Illinois, Kentucky, South Dakota and the city of Austin, Texas, have recently faced or are currently facing challenges to their campaign contribution limits.
“There has been a concerted effort … to try to find every vulnerability in existing limits,” said Tara Malloy of the Campaign Legal Center. “And they’ve had success.”
And not all statehouses are done debating political money this year: At least eight states still have campaign finance bills they’re considering.
Iowa, which has no contribution limits, will discuss a $1,000 cap for statewide candidates.
Tennessee’s House and Senate could not agree on a final bill to send the governor after the Senate passed an amendment to adjust campaign limits every two years, benefiting senators, who serve four-year terms. Lawmakers will continue to debate the bill in 2018.
“It’s the wins that we’re achieving at the municipal and state level that get me out of bed in the morning, [that] get me excited to come to work and inspire me to stay late and work hard,” said Paul S. Ryan at Common Cause. “And those wins keep coming. We are not losing any momentum in recent years on that front.”
Sarah Kleiner contributed to this report
Catastrophe seemed imminent.
“In a certain real way, the republic is at stake,” said Sen. Chuck Schumer, D-N.Y.
“We’re really stress-testing our democracy in a way we never have before,” said attorney Lawrence M. Noble.
The menace under the microscope? “Dark money” in politics.
But the doomsday scenarios played out one by one in a subterranean Capitol Hill hearing room that was far from packed, and Republicans were notably absent from the July event.
The event is a metaphor for Democrats’ larger battle against big and secretive political cash: lots of pomp, underwhelming circumstances.
Seizing on the specter of Russian election influence, they’ve ramped up their quixotic effort — with minimal effect — to blunt Citizens United v. Federal Election Commission, the controversial 2010 Supreme Court decision that unleashed a torrent of special interest spending on U.S. elections.
In doing so, they’ve introduced two dozen bills related to money in politics. Some are aimed at increasing donor transparency, others are targeting massive contributions from special interests. A couple are intent on reforming the Federal Election Commission, the government agency charged with enforcing election laws.
None, a Center for Public Integrity analysis indicates, have had a single formal hearing, much less an up-or-down vote in either the U.S. House or Senate.
Related article: “Statehouses, not Congress, hosting biggest political money fights”
Election reform-minded Democrats are also hobbled by their party’s recent history. When they had opportunities during President Barack Obama’s first two years in office to significantly alter the American campaign finance structure through legislation, they didn’t.
And in a twist that’s infuriated acolytes of Sen. Bernie Sanders, among others, Democrats are following Republicans’ lead by raising millions of dollars in so-called “dark money” contributions, the origins of which are largely untraceable.
All the while, Republicans, who now control every branch of government, have expressed little interest in stanching the ever-increasing flow of big money into federal elections.
For his part, President Donald Trump, an early critic of big-moneyed interests, continues to pledge to “drain the swamp.” Swamp draining, however, doesn’t appear to involve political money matters, as Trump rarely addresses the issue these days. (Trump’s press office did not respond to multiple requests for comment.)
“Whether you like it or not, whether you believe in bipartisanship or not, if you don’t have a strategy to attract Republican votes, you’re just not going to win,” said Meredith McGehee, chief of policy, programs and strategy for Issue One, a nonpartisan government accountability nonprofit.
As for the package of bills the Democrats have proposed, McGehee said: “It has zero chance in hell of going anywhere.”
Citizens United: a love-hate relationship
Federal-level campaign finance reform used to be something both Republicans and Democrats got behind.
Congress passed the Federal Election Campaign Act of 1971, which mandated reporting requirements of contributions and expenditures. And in 2002, Sens. John McCain, a Republican, and Russ Feingold, a Democrat, teamed up to champion the Bipartisan Campaign Reform Act, which restricted soft money contributions to parties.
Fred Wertheimer, founder and president of reformist nonprofit Democracy 21, points out that legislation to close disclosure loopholes passed with overwhelming bipartisan support in 2000. Republican senators favored it 48-6.
A decade later, disclosure loopholes were again back before Congress following the Citizens United decision. But this time, every Republican senator voted against the bill. The DISCLOSE Act lost 59-39, one vote shy of the 60 votes needed to break a filibuster led by Republican Sen. Mitch McConnell, the minority leader at the time.
Citizens United changed the political calculus. Along with SpeechNow.org v. Federal Election Commission, it notably paved the way for the creation of so-called super PACs — turbo-charged political action committees that can raise unlimited amounts of campaign cash from wealthy donors, corporations and nonprofits.
Several reform advocates said they believe Republicans want to preserve the post-Citizens United system because they’ve benefited the most from it.
They also wonder whether Democrats would actually push through reforms were they to control Congress again — particularly because many Democrats have takenfulladvantage of the fundraising freedoms Citizens United has granted them.
Democratic presidential nominee Hillary Clinton, for example, railed against Citizens United. But she, too, benefited from a small army of super PACs and millions of dollars in secret political money.
This summer, Democrats are asking supporters to fight against Citizens United. Their messages, however, amount to little more than opportunities for Democrats to collectsupporters’ demographicinformation— andraisemoney.
In the 2016 election cycle, special interests spent at least $183.5 million in “dark money,” up from $5.2 million in 2006, according to the Center for Responsive Politics, a nonprofit that tracks political spending. Of that, “liberal” special interests spent at least $41.3 million, or 22.5 percent; “conservatives” spent most of the rest.
In all likelihood, “dark money” expenditures were higher because political nonprofits only have to report money spent within 30 days of a primary election and 60 days of a general election.
Rep. Walter B. Jones, R-N.C., is the only Republican who has signed on to cosponsor a campaign finance reform bill this session that’s widely supported by Democrats. Jones said he has pushed for campaign finance reform for nearly three decades — and continues to do so despite his party’s general lack of interest.
Why? Because he believes money has too much influence in elections. Jones predicts it will take a major scandal, perhaps on the scale of Watergate, to prompt either party to reform the system.
“I’m not sure anyone in Washington wants to change it,” Jones said. “They talk about it but they don’t do much about it. Both parties benefit from the current system.”
Craig Holman, government affairs lobbyist for the nonprofit Public Citizen, said he believes Democrats are more serious about reform now than they were in the past.
But there’s a caveat.
“Any time a party is in control of the federal government, they tend to be not as enthusiastic about changing the rules of elections, because they’re winning,” Holman said.
Obama was “a big disappointment” to advocates of campaign finance reform, he said.
Obama knew how to work within the post-Citizens United framework, and he didn’t push for the reforms he championed on the campaign trail, said Holman and Paul S. Ryan, vice president of policy and litigation at the nonprofit Common Cause.
“A lot of Democratic Party politicians believe in the legislation, but when push comes to shove and they seek the advice of their lawyers, they often back away or their support weakens,” Ryan said.
Obama’s office did not respond to requests for comment.
Rep. John Sarbanes, D-Md., said Democrats were busy juggling health care reform and climate change legislation when Obama first took office and Democrats had the majority in Congress, leaving little time for campaign finance reform.
Plus, some Americans’ anger toward and resentment of special interests hadn’t reached the fever pitch of today, Sarbanes said.
Nearly half of the people who responded to a Center for Public Integrity-Ipsos poll conducted last week said they opposed Citizens United, compared to 30 percent who said they support it. And 57 percent of respondents said they favor limiting the amount of money super PACs can raise and spend.
Raising money, or “dialing for dollars,” is quite time-intensive for members of Congress. Yet the public doesn’t seem to realize it.
According to the Center for Public Integrity-Ipsos poll conducted last week, 58 percent of respondents believe congressional members spend 10 hours or less a week fundraising. But members, on average, spend 20-to-30 hours per week fundraising, according to research by Issue One.
“Campaign finance reform appears to be one thing Republicans and Democrats can agree on, with a majority in both parties coming out in support for limits on super PACs and increased transparency on nonprofit donors,” said Chris Jackson, vice president of public affairs at Ipsos.
Rep. David Cicilline, D-R.I., said there’s overwhelming support for money-in-politics reforms on his side of the aisle. And there’s no question Democrats will reform the system if given another opportunity, he insisted.
“We’re seeing the consequences of a democracy that is driven by the checkbooks of a few rather than the voices of the many,” he said.
Laying groundwork in the age of Trump
Spending by so-called “outside” groups — super PACs, nonprofits, unions and political organizations — soared to more than $1.6 billion in 2016 from $286 million in 2006, according to the Center for Responsive Politics.
The portion of that considered “dark money” grew to 11.2 percent last year — up from 1.8 percent in 2006.
There’s no way to comprehensively track how much “dark money” is coming from foreign interests, because it is largely untraceable. Still, the potential for foreign influence has attracted attention on Capitol Hill.
“The same dark money channels that are protected by the big special interests who use them to such effect are also fully available to Vladimir Putin,” Sen. Sheldon Whitehouse, D-R.I., said during an informal hearing he called earlier this summer. “If the channel is dark enough to hide the hand of Charles and David Koch, it is dark enough to hide the hand of Vladimir Putin.”
If Democrats keep their word and push for reforms, the legislative agenda they’ve introduced is a preview for the changes they’ll seek if they regain a majority.
This year, Democrats have proffered 24 bills that relate to money in politics, compared to six filed by Republicans, according to an analysis by Issue One. Only a handful of those proposals have more than one sponsor from the other side of the aisle.
Cicilline proposed a bill earlier this year, the DISCLOSE 2017 Act, that would require the disclosure of certain campaign donations and funders behind political ads. H.R. 1134 has 128 co-sponsors — all Democrats.
“It’s designed to bring greater transparency at the very least until we can prevent corporations from spending money in our elections,” Cicilline said in an interview. “Let’s make sure people know, where did the money come from? Who is behind the ad? Who paid for it?”
Cicilline said Republicans have been unwilling to move forward on his bill — it’s been referred to committees but hasn’t had a hearing.
But he said it would be a mistake to wait to introduce it until Democrats had control of Congress again. Even though it’s unlikely to pass, he hopes it can be used as a tool to hold other lawmakers accountable.
“Members of the public need to know, does my member of Congress or does a candidate running for Congress support reforming our political system and fixing our democracy,” Cicilline said.
Sarbanes has proposed another sweeping change to campaign finance laws, but he too acknowledged the struggle he’s facing.
Sarbanes’ Government By the People Act of 2017 (H.R. 20) has 156 co-sponsors, and all but one — Jones — is a Democrat. The bill aims to create a system that increases the number of small-dollar donors to political campaigns. It does this, in part, through tax credits and a new pilot program that gives voters campaign contribution vouchers that they may distribute to candidates they support.
The bill was introduced in January and referred to three committees for consideration. And it’s sat, untouched, ever since.
In touting the By the People Project in July, Sarbanes said Americans harbor deep-seated anger and frustration because they feel their voices have been drowned out by special interests and big donors.
“The president said … he was going to drain the swamp, that he was going to bring accountability to Washington,” Sarbanes said. “He’s basically said to the big money and the special interests, ‘If you pay for the red carpet, I’ll roll it right into the White House and give you influence.’”
Respondents to the Center for Public Integrity-Ipsos poll offered a wide range of answers when asked what “drain the swamp” means to them. Responses included reining in special interest groups, reducing the influence of money in politics, wiping out government debt and getting rid of career politicians. Some said they simply don’t know.
The small-dollar matching system and public campaign financing Sarbanes has proposed would dilute the voices of the wealthy few who today contribute the most money to political campaigns, Sarbanes said.
In an interview, Sarbanes said his bill probably won’t be passed by the current Congress, but it’s important to put it out there now to give Americans a choice in the midterm elections, he said.
“We’ve got to put positive, constructive solutions in front of the public and say, ‘Here is what we would do if we had the gavel,’” Sarbanes said. “People here on the Hill move on issues when they feel pressure coming from constituents.”
Only two of the Democrats’ 24 money-in-politics bills have more than one Republican cosponsor.
One is Rep. Derek Kilmer’s Restoring Integrity to America’s Elections Act (H.R. 2034), which has five Democratic and six Republican cosponsors. Kilmer is a Democrat from Washington.
The bill would shore up the Federal Election Commission, which is charged with enforcing and administering campaign finance laws, and attempt to eliminate the ideological gridlock that’s plagued the watchdog agency for years. Kilmer wants to accomplish this, in part, by reducing the number of commission members from six to five, which would eradicate deadlocked votes.
It was referred to the House Committee on House Administration in April, but it hasn’t had a hearing yet.
Other money-in-politics bills that have been filed by Democrats this year — and appear to have little chance of passing — include:
Democrats are also attempting to reverse Citizens United by proposing constitutional amendments.
One such proposal, sponsored by Rep. Theodore Deutch, D-Fla., (H.J.Res. 31), would give Congress and the states the ability to set “reasonable limits” on the raising and spending of money to influence elections.
The amendment also would give Congress and the states the power to prohibit corporations or other entities from making political expenditures, a controversial component of Citizens United. A similar constitutional amendment proposal, S.J.Res. 8, has been filed in the Senate by Sen. Tom Udall, D-N.M.
Another proposed constitutional amendment would specify that rights guaranteed under the Constitution are for people only — not corporations and other entities (H.J.Res. 48, by Rep. Richard Nolan, D-Minn.).
But constitutional amendments are exceedingly rare. An amendment requires two-thirds of each congressional chamber to vote for it. Then, three-fourths of all U.S. states must ratify the amendment for it to become part of the Constitution.
The most recent, the 27th Amendment, which deals with congressional salaries, didn’t get ratified until 1992. Congress submitted what would become the 27th Amendment to the states for ratification more than 200 years earlier, in 1789.
Since 1993, Congress has considered more than 1,000 constitutional amendment proposals. All of them have failed.
Democrats rightly are trying to tap into populist outrage over wealthy campaign donors, said Daniel I. Weiner, senior counsel for the Brennan Center’s Democracy Program at New York University’s School of Law.
“It’s also a political reality that the Democrats right now aren’t going to get anything passed, so they’re messaging,” he said.
And “messaging,” at least in part, means raising money off their fight against political money.
The other side
Republicans control Congress, so it stands to reason their bills have a better chance of passing. They’ve introduced six bills that relate to money in politics.
Rep. Steve Scalise, R-La., filed the Free Speech Fairness Act (H.R. 781), cosponsored by 57 Republicans. The bill amends the Internal Revenue Code to permit tax-exempt organizations to make statements related to a political campaign without losing their tax-exempt status.
The bill has been referred to the House Committee on Ways and Means. An identical bill on the Senate side (S. 264), sponsored by Sen. James Lankford, R-Okla., has been referred to the Committee on Finance.
Other Republican-sponsored bills include one that would end a largely defunct system for taxpayer financing of presidential election campaigns (H.R. 133) and one that would expand the ability of trade associations to seek contributions from employees of their member corporations (H.R. 2101).
None of the Republican bills would crimp campaign spending or expand disclosure requirements.
“The Republicans are making a political calculation that’s aligned with their ideology that the majority of the outside money that’s going to come in, particularly between now and 2018, is going to benefit Republicans,” said McGehee of Issue One. “That’s the bet that [Senate Majority Leader] Mitch McConnell has made from the get-go.”
Only one of the Republicans’ bills appears to have bipartisan support.
Rep. Paul Gosar’s Stop Foreign Donations Affecting Our Elections Act has 37 co-sponsors — 11 of whom are Democrats. Gosar is a Republican from Arizona.
His H.R. 1341 would amend the Federal Election Campaign Act of 1971 to prohibit campaign donations made with credit cards with foreign billing addresses. U.S. citizens living abroad who want to contribute with credit cards would have to provide the mailing address that they use as a registered voter.
Gosar introduced the bill in March, and it’s languished in committee since then.
Sen. Ted Cruz, R-Texas, offered up a measure last year that would have eliminated contribution limits for federal candidates. The bill, which also called for instant disclosure of political contributions, would almost certainly render super PACs obsolete, as people could contribute as much money as they wanted directly to politicians’ own campaign committees.
Cruz’s office said he was unavailable for an interview because he was coordinating response to Hurricane Harvey. But Cruz in November lamented the nation’s campaign money system, declaring it “absurd” — serving the interests of neither free political speech nor transparency.
Bradley A. Smith, a former Republican chairman of the FEC, said campaign finance deregulation, in general, makes sense.
Smith, founder and chairman of pro-deregulation nonprofit Center for Competitive Politics, sees many of the Democratic proposals on the table now as efforts to rig the system in their favor.
The FEC, for example, isn’t as divided as some people make it out to be; the vast majority of money raised and spent in U.S. elections is already disclosed; and government probably shouldn’t be in the business of financing campaigns, he said.
There’s strong reason to believe people such as Sens. Chuck Schumer and Sheldon Whitehouse want reform because “they think it will stifle speech that opposes their agenda,” Smith said.
‘Existential threat’ vs. the long game
Sixteen Democratic senators popped in and out of Whitehouse’s July hearing at the Capitol to discuss their ongoing dismay at Citizens United and the potential added threat of foreign entities’ financial involvement in the 2016 election.
Five panelists took turns painting the picture in increasingly bleak brushstrokes.
“We have an existential threat to our democracy right now,” said American Enterprise Institute resident scholar Norman Ornstein.
In the realm of campaign finance reformers, there are those who see the current system through a lens of absolute urgency — i.e., “the republic is at stake.” They believe the country is on the verge of plunging into plutocracy.
And there are those who believe plutocracy is nothing new; America has always been ruled by an elite class, but through the decades she has marched, slow and steady, toward inclusiveness.
To them, Citizens United was a setback, but one they hope is temporary. They’re in it for the long game.
Put Craig Holman, government affairs lobbyist for the nonprofit advocacy organization Public Citizen, in the former camp.
For Holman, time is ticking for American democracy, and Citizens United is largely to blame.
Campaign finance laws are meant to put a wall between the nation’s equality-based political system and an economic system that’s based on inequality, Holman said. If the inequality of capitalism overwhelms the political sphere, democracy collapses, and those with money take control.
Holman sees the situation as dire, just as Schumer, Ornstein and Noble did on Capitol Hill last month.
“If voters don’t react in 2018 to what’s going on, I think we’re well on a course of no return,” Holman said. “If they don’t react in 2018 congressional elections, we’re going to re-elect Trump in 2020, and it’ll just go on from there. So in other words, I’m saying about a year and a half.”
Ryan, of Common Cause, is in the latter camp of reformers.
Ryan believes the Supreme Court erred gravely in its Citizens United decision, but he bristles when he hears fellow campaign finance reformers pine for the old days when monied interests didn’t control politics.
“That time never existed,” he said.
While Citizens United was a bad decision, Ryan said, the system that preceded it was far from perfect. The United States is more inclusive now than it was decades ago.
“I feel like I’m part of this, not 10- or 15- or 20-year trajectory of campaign finance reformers improving democracy, but this several-hundred-year effort of marginalized and excluded communities fighting for their political rights,” Ryan said.
Most of the action related to campaign finance reform is happening on the local and state levels now, Ryan said.
McGehee of Issue One said campaign finance reform on the federal level won’t happen without bipartisan agreement — and it’s not something that can accomplished overnight. She points to civil rights and smoking bans.
“If I walked in the door of any Republican other than Walter Jones on the House or Senate side and I said, ‘Hey, I want to talk about public financing,’ they’re going to say, ‘Don’t let the door hit you in the ass on the way out,’” McGehee said. “It’s a nonstarter.”
But if she approaches politicians to talk about how much time they feel like they have to spend raising money for their campaigns, she gets a far more enthusiastic reaction — and an opening for conversation.
“It’s like feeding a baby,” McGehee said. “You don’t give a baby steak.”
This article was co-published by TIME.
A groundswell of anti-Trump activism has helped inspire an expanded field of Democratic legislative candidates in Virginia this fall, but a Center for Public Integrity analysis found that those office-seekers are lagging badly in fundraising as they prepare to face well-funded GOP incumbents.
These often-ignored races may be a harbinger of the "Resist" movement’s political clout nationwide — and the steep challenges it faces — in the coming years.
For the first time in at least two decades, 60 of Virginia’s 100 House of Delegates seats — which are all in play this fall — have candidates representing both major parties. The total represents a major increase from each of the last three cycles. In 48 of these races, Democrats are attempting to unseat Republican incumbents. Senate races will not occur until 2019.
“The state has a lot of motivated Democrats in it right now, and a lot of House seats held by Republican incumbents,” said Stephen Farnsworth, a political science professor at the University of Mary Washington in Fredericksburg, Virginia. That’s a stark contrast from some previous cycles, he added, when Democrats have struggled to field candidates.
The boost in Democratic candidates is part of a broader trend nationwide largely stemming from President Donald Trump’s stunning election victory last fall. The November upset was a wake-up call for Democrats and motivated them to begin building a deeper bench of candidates, especially at the state level where they’ve been pummeled in recentyears. The GOP now holds a record 34 governors’ offices and controls 69 of the nation’s 99 state legislative chambers.
Since last fall’s election, Emily’s List, a political action committee that supports pro-abortion rights women candidates, said more than 16,000 women nationwide have contacted the organization about running for office since Trump’s election, up from 920 women in the previous two years combined.
Another example of the newfound energy: An estimated 3,000 scientists interested in becoming candidates are asking for similar support from PAC 314 Action, a new political group that says it is trying to elect candidates focused on “evidence-based policy solutions to issues like climate change” and “fighting the Trump administration's attacks on science.”
Virginia in the spotlight
Virginia, with its off-year elections, represents Democrats’ next major opportunity to see if this anti-Trump fervor will translate to victories — and is thus being watched closely by pundits and politicians alike.
New Jersey, the only other state with major elections this fall, isn’t much of a contest: Democrats already control the Legislature and are polling far ahead of Republicans in both the gubernatorial and legislative elections.
In Virginia, a close race for governor between current Democratic Lt. Gov. Ralph Northam and former Republican National Committee Chairman Ed Gillespie is attracting national headlines and abundant cash. Democratic candidates for the House of Delegates are hopeful their races may receive some of the attention, too.
One of those new House of Delegates candidates is Democrat Hala Ayala, who said she was dismayed by President Trump’s election. The Women’s March on Jan. 21 helped drive her decision to run for office against Republican Del. Rich Anderson in the 51st District in Prince William County, just southwest of Washington, D.C. After winning the primary, Ayala quit her job as a cybersecurity specialist with the Department of Homeland Security to focus on the race.
“You need to step up, you need to run for office,” Ayala said of her decision. “You need to take a stand.”
Anderson, who is seeking his fifth term, did not face a challenger during the last election in 2015, and in 2013 he beat his opponent by 7 percentage points. But one statistic makes Ayala hopeful: Last fall, Democratic presidential candidate Hillary Clinton won the 51st District by 7 percentage points.
Tapping into Clinton’s base
The 51st District is one of 17 in the Virginia House that went for Clinton but are currently held by Republicans. The majority of these seats are located in northern Virginia, where housing complexes have taken over farmland as the exurbs of Washington continue their relentless expansion and attract a demographically diverse workforce.
If the Democrats were to win all 17 of those districts, they would flip control of the House of Delegates, giving them a narrow 51-seat majority. Republicans currently have a 21-19 majority in the Senate.
The chance to flip the House has helped draw national attention to races that are often won and lost over local issues like traffic and schools.
Flippable, an organization founded after the 2016 elections by Clinton staffers, is among the groups pushing for Democratic victories in Virginia and elsewhere. The organization is focused on identifying districts that could be flipped from Republican to Democrat, and is providing challengers with a national platform and fundraising dollars from across the country.
“Incumbency and dollars are big predictors of victory,” said Catherine Vaughan, CEO of Flippable. “We’re bringing some star power to these challengers.”
Democratic candidate Danica Roem, who is looking to make history as the first transgender member of the House of Delegates, notably attracted $115,000 from Milwaukee County Executive Chris Abele in Wisconsin. Even before receiving the bulk of Abele’s donation, Roem had raised more than $149,000 as of the last reporting period; that’s twice as much as incumbent Del. Bob Marshall, who has represented portions of Prince William County and Manassas Park since 1992.
Although Roem welcomed the donation from Abele, whom she has yet to meet in person, she added that she has raised more than her opponent across the board since she entered the race.
“We’re outraising him locally, we’re outraising him in the county, we’re outraising him in the state and we’re outraising him nationally,” Roem said of her opponent.
Marshall declined to comment.
Candidate Ayala, even without the same level of national attention, has been competitive with incumbent Anderson in terms of fundraising. Anderson had raised $83,078 compared with $72,154 for Ayala as of the end of June, the latest figures available from the Virginia Public Access Project, which gathers state election filings.
Anderson did not respond to requests for comment.
The fundraising gap persists
Taken as a whole, however, the House of Delegates races show that Democrats are seriously behind in fundraising, and still have their work cut out for them.
In the 60 House of Delegates races being contested by both parties, Republicans have raised nearly twice as much as Democrats, $7.43 million to $3.73 million, according to the Center for Public Integrity’s analysis of the most recent campaign filings available. In the districts Clinton won last fall, which are expected to be more competitive, Republicans have raised $2.75 million to Democrats’ $1.61 million.
Democrats are leading in fundraising in only 15 of those 60 contested races and only six of the 17 District races where Clinton won. In two races, the Democrats even trail both the Republican and Green Party candidates.
Although two more months remain until the election — a time period that’s typically among the busiest for fundraising — the name recognition and pre-existing donor base for Republican incumbents may make it difficult for Democrats to close the gap.
“I definitely think that Democrats will give us a good run for fundraising efforts,” said Republican Party of Virginia Chairman John Whitbeck. “But I don’t expect they will outspend us in any [Republican incumbent] delegate races, even where Democrats are competitive.”
Katie Baker, spokesperson for the state's House Democratic Caucus, countered in an email: “We have seen unprecedented support both on the ground here in Virginia and from outside groups offering a range of support.”
Outside political groups doing their own campaign fundraising may not make much difference. So far this cycle, independent campaigning by advocacy groups hasn’t been much of a factor in the legislative races, according to a review of state records. Virginia does not place a cap on donations to candidates, so outside spending by other groups seeking to affect elections has represented a relatively small percentage of the money put into legislative races in recent years.
Democratic candidate Lee Carter is among those struggling to keep up. The first-time candidate is running against incumbent Republican Del. Jackson Miller in the 50th District, centered in Manassas, about 25 miles outside of Washington.
Trump only won 41 percent of the vote in that district last fall, but Miller has held his seat for 11 years. Carter has raised less than his opponent — $83,764 to $202,627 — while pledging not to take donations from for-profit corporations.
Of course, raising more money does not guarantee a victory in the fall. But in contentious elections, everything from yard signs to television ads come at a steep cost.
“When you’re challenging someone with a 10-year head start, there’s never enough money,” Carter said. “You always feel like you need more.”
September 6, 2017: This story has been corrected.
The director of Los Alamos National Laboratory has told employees there that he will retire at the end of 2017, eight months before the private contractor he leads is scheduled to be displaced as the laboratory’s manager.
The announcement on Tuesday follows years of costly turmoil at the nuclear weapons facility and comes on the heels of the Center for Public Integrity’s disclosure in June and August of harrowing safety incidents and other snafus there during McMillan’s tenure.
A laboratory press release about McMillan’s announcement did not say why he was resigning after 6 years as director, ahead of next year’s unusual handover of the lab by his consortium to another group of private companies, still not yet chosen by the Department of Energy. A spokesman for the laboratory, Kevin Roark, declined to elaborate.
But the Center’s articles about the laboratory’s troubles had attracted the concern of Washington lawmakers and the mishaps at the lab had angered senior officials at the Energy Department and the National Nuclear Security Administration (NNSA), a unit of the department that directly oversees the lab’s work.
The Center’s stories disclosed, for example, how a 2011 incident involving the careless positioning by two lab workers of unstable plutonium rods nearly provoked a runaway nuclear chain reaction that could have killed those nearby. The episode helped cause many nuclear safety engineers at the laboratory to leave their positions, convinced that their warnings about dangerous practices were being ignored by contract managers.
The managers were motivated mostly by profit-seeking, some of the engineers said, partly because they received so-called “performance bonuses” not given to lower-tiered workers.
“The structure of the contract and performance-based incentives contributed to a perception among some personnel that production – not safety – was the most important measure of success” at Los Alamos, a previously-undisclosed internal NNSA review of the episode concluded in 2014. The lab also was not penalized for its repeated shortcomings, such as “inattention,” according to the review – instead it “continued to receive its fee even after significant safety events.”
When the number of safety personnel dropped precipitously in 2013, the NNSA’s acting director in Washington talked McMillan – a nuclear physicist whose government-funded compensation exceeded a million dollars a year — into taking an extraordinary step while new safety experts were recruited and trained: He shuttered the nation’s only facility for fabricating new plutonium cores for nuclear weapons and aggressively examining how well or poorly existing cores were aging.
The shutdown was meant to be short-term, but it mostly persisted through late 2016, and the laboratory is still struggling to restart the remaining portions. The NNSA has said that as a result of all the lab’s difficulties, it is studying whether to hand off key weapons-related plutonium work to another lab.
The Center’s stories detailed other problems at Los Alamos, the largest of the nuclear weapons labs and until now a linchpin in the complex of privately-run facilities that sustains America’s nuclear arsenal:
The shipping incident resulted in an unusual public reprimand of the lab by Lt. Gen. Frank Klotz, the head of the NNSA, which overseas nuclear weapons work. “This failure to follow established procedures is absolutely unacceptable,” he said in a press release. The Department of Energy ordered a three-week halt to all shipments in and out of Los Alamos.
A subsequent CPI investigation found Los Alamos to be a repeat offender in mislabeling shipments of hazardous materials, including plutonium, and also revealed that the lab incorrectly claimed in its initial report to the government that the shipment had to go by air because it was urgently needed by its recipient, Lawrence Livermore National Laboratory in California. A Livermore spokesperson told CPI however that there actually was “no urgency” at all in its request.
Even before the incident, the fate of the company McMillan led, Los Alamos National Security LLC (LANS) – composed of Bechtel National, the University of California, BWXT Government Group, and AECOM – had already been sealed. The NNSA decided in 2015 not to extend the consortium’s contract, under which it had earned up to $76 million in annual profits, and the contract was put out to bid in June of this year. Officials say they expect the winning bidder to take over the lab in September, 2018.
Norm Pattiz, the chairman of LANS , said in Los Alamos’ press release that McMillan had planned to retire earlier but was persuaded by the board to stay through the end of the year. He provided no details. “We appreciate Charlie’s commitment and believe he has put this iconic institution in a strong position to continue serving the country for many years to come,” Pattiz said.
McMillan told his staff, in announcing his retirement, that the lab was healthy. It hired 1,000 employees in the previous fiscal year and its annual budget had grown approximately $400 million from FY 2013 to $2.5 billion in 2017, he said.
Referring to a major effort initiated by the Obama administration that President Trump wants to enhance with an extra billion dollars in funding, McMillan added, “the long overdue modernization of the nuclear weapons complex and its infrastructure, including facilities at our Laboratory, now appears to be firmly underway.”
Correction, 5:15 p.m., September 6, 2017: This article has been updated to correct McMillan’s term of directorship. McMillan served as director since 2011. Previous to that he was principal associate director at Los Alamos.
The Federal Election Commission is running low oncommissioners.
President Donald Trump on Thursday nominated Republican Matthew Petersen to a federal judgeship, meaning the FEC is poised to putter on with the minimum number of commissioners — four — required to take official action on most anything of consequence.
Three of those remaining four commissioners are themselves wavering on whether they’ll continue serving. With 2018 midterm campaigns alreadyafoot, what would it mean if the FEC fell short of a quorum? Plenty.
No penalizing candidates and committees found breaking campaign laws.
No completing new investigations of political actors suspected of misdeeds.
No new rules or opinions governing how campaign cash must be raised and spent.For example, in July, the commission ruledthat members of Congress, still reeling from the shooting of House Majority Whip Steve Scalise, R-La., could use campaign funds for home security systems.
“In a very practical sense, the FEC has no margin of error,” said Adav Noti, senior director for trial and litigation at the nonpartisan Campaign Legal Center who until April served as the FEC’s associate general counsel for policy.
And losing that quorum of four commissioners is hardly hypothetical: Republican Commissioner Lee Goodman wants to quit the FEC before Christmas.
In an interview Thursday with the Center for Public Integrity, Goodman wouldn’t say whether Petersen’s nomination will cause him to delay his own resignation. “Matt’s nomination certainly adds a dimension to my plan,” Goodman said.
Independent Steven Walther, meanwhile, hasn’t committed to staying on much past his one-year term as FEC chairman, which ends at the year’s conclusion.
And Republican Vice Chairwoman Caroline Hunter, a nine-year commission veteran who couldn’t be reached for comment, has previously been coy about whether she soon plans to leave the FEC for other potential opportunities — private practice, party politics, a spot in the Trump administration.
Even with a quorum, FEC action of any sort would require almost unprecedented unanimity among members of a frequentlyfractious foursome. If just one of the four commissioners fell ill, or declared a recusal-triggering conflict of interest, the remaining regulators would be forced to shelve commission business, at least in part.
The FEC is already “so dysfunctional now,” said Ann Ravel, a former Democratic commissioner who frequently clashed with her Republican colleagues and resigned March 1. “But it may [now] be exacerbated so people will understand that there is literally no chance of there being any consequence to the failure to abide by the law.”
As it stands, Trump could nominate a new slate of regulators to fill all six FEC commissioner slots.
That’s because Petersen and his four commissioner colleagues continue to serve as “holdovers” despite their six-year FEC terms having all long ago expired.
Ellen Weintraub, the commission’s lone Democrat, is an extreme: her term ended in April 2007 — two years before a certain billionaire businessman with an NBC reality show would tweet his first tweet. (Weintraub, who said Thursday she lamented how “people now may feel even more empowered to push against the law,” added she has no plans to leave the FEC voluntarily.)
His lack of interest is even more striking given that his White House counsel, Don McGahn, is a campaign finance and elections lawyer previously best known for waging war on campaign finance restrictions as an FEC commissioner.
Trump has yet to nominate anyone to fill Ravel’s seat, which has been vacant for more than six months.
White House spokeswoman Lindsay Walters declined to answer Center for Public Integrity questions about when the president plans to replace Petersen or nominate other new FEC commissioners. She also did not say whether Trump considers the FEC integral to fighting political swampiness.
Walther, the FEC chairman, said Thursday he hasn’t spoken with the president and has “no information at all” about Trump’s plans — if he has them — to name new commissioners.
While the FEC’s situation may look bleak, Andrew Woodson, an election law attorney at Wiley Rein LLP and Goodman’s former staff counsel, noted it might not be as rotten as some assume. Even an FEC without commissioners would still employ more than 330 staff members who in turn would field inquiries, process paperwork and attend to the agency’s most basic function: public disclosure of political committees’ spending and fundraising, as required by law.
That’s what happened in 2008, when the FEC lost its quorum for almost half a year while the U.S. Senate, which must confirm a president’s FEC nominees, clashed over then President George W. Bush’s picks.
Noti of the Campaign Legal Center added that a commission shutdown could, in the long run, even help the agency by “getting the press to write a bunch of stories about how the commission is powerless, which is the sort of pressure that, finally, could lead to significant changes and stop it from living in this zombie state.” But in the interim, “it is going to lead to confusion and uncertainty.”
One issue more than a dozen current and former FEC officials of all political ideologies could agree upon during interviews Thursday: they’ll miss having Petersen around.
“He has the temperament and competence to be an outstanding judge. He’s a gentleman,” Walther said.
“Matt was a calm and deliberate commissioner more than any commissioner I’ve ever witnessed,” Goodman said. “Some of us press the envelope a little with each other. Matt is a grounding force with a faithful and studied approach” to FEC business.
In a statement, Petersen indicated he would not immediately leave the FEC but declined to comment on when he might resign or whether the White House has committed to naming someone to fill his soon-to- be-vacated commissioner position.
Petersen is slated to join the U.S. District Court for the District of Columbia, which routinely reviews cases involving the FEC.
Given this, Petersen is “reviewing the relevant standards to determine when recusal would be appropriate,” he said.
It remains an open question whether Petersen would recuse himself if faced with an FEC case involving a U.S. senator who will ultimately vote on his judicial nomination or Trump himself, since the president nominated Petersen in the first place.
A landmark Center for Public Integrity series illuminating the troubling impact of distorted, industry-supported science has been honored by the National Association of Science Writers.
The project, Science for Sale, received the group’s Science in Society Journalism Award for longform reporting — one of five such awards in various categories that NASW has awarded annually. The prizes are “intended to encourage critical, probing work that would not receive an award from an interest group.”
The Center’s pieces, which ran from February — May 2016, were written by reporters Jie Jenny Zou and David Heath and managing editor, environment, Jim Morris, and were edited by Morris.
“We’re deeply honored to receive this award, particularly given the importance of the subject matter,” said Center for Public Integrity CEO John Dunbar. “The insidious creep of industry-backed ‘science’ used to upend established, bona fide research into public health hazards is something that should be of great concern to us all.”
Similar sentiments were reflected in comments by the contest’s judges.
“In this timely, multi-part series,” they wrote, “the reporters expose an insidious, widespread, and shockingly successful effort by industry-funded ‘experts’ to cast doubt on established scientific evidence of numerous health hazards — at an incalculable cost to public safety.”
The NASW prize is but the latest in a series of honors bestowed on ”Science for Sale.” The project also was a finalist in the John B. Oakes Award for Distinguished Environmental Journalism and won a Dateline Award from the Society of Professional Journalists D.C. Pro Chapter.
Winners of the NASW awards receive a cash prize of $2,500, to be awarded at an October reception in San Francisco at the 10th World Conference of Science Journalists.
JEROME, IDAHO — Over 30 years, the jade-green Snake River, generous bank loans and old-fashioned muscle have transformed southern Idaho’s Magic Valley from desert to dairy powerhouse.
In excess of 400,000 cows reside in the valley, more than twice the number of humans. Workers in rubber boots pull long shifts feeding livestock, clearing mountains of manure and extracting millions of pounds of milk all day, every day, all year, on ranches tucked into the rock and sagebrush-studded landscape.
Sleek silver tankers filled with milk barrel down Interstate 84 toward dairy processing plants, among them one owned by Chobani, which opened the world’s biggest yogurt factory five years ago just down the road in Twin Falls.
Since 2000, milk production has doubled in Idaho, providing the state with $10.4 billion in direct sales, according to University of Idaho economists.
Chobani’s gleaming $750 million, cream-colored plant is just one of the many big businesses linked to Idaho’s voluminous milk production, now around third- or fourth-largest among states.
In short, the Magic Valley’s dairy boom is a contemporary rural American success story — the kind that President Donald Trump railed as a candidate is too often missing across the country. Unemployment here was less than 3 percent this summer, about as good as it gets, and optimism should be high.
Yet on dairy farms, among both owners and workers, a sense of dread hangs in the dry southern Idaho air.
In a word: Immigrants.
Dairy farmers lean heavily Republican in this deeply red state of only 1.7 million people, where 88 percent of the voting-age population are non-Hispanic whites. But in the age of Donald Trump — who won Idaho handily — even the farmers who supported the new president fear the fate of their businesses is about to run headlong into a harsh political reality.
They’re frightened that Trump’s aggressive deportation policies will soon start to pick off or push away the mostly Hispanic immigrants who do the gritty work here that Americans aren’t interested in doing at dairies. Many of these workers are probably undocumented, farmers acknowledge, yet they’re the sturdy backbone of a surging industry. Here in the Magic Valley, the farmers’ perspective is starkly different from the president’s rhetorical claim that undocumented workers “compete directly against vulnerable American workers.”
And the farmers’ view is pitting them against a vocal contingent of neighbors who’ve responded both to Trump’s rhetoric and far-right media that’s targeted immigrants as a threat. Southern Idaho, in fact, became a flashpoint for xenophobia this past year when outlets like Breitbart and InfoWars seized on false reports about Muslim refugees — accusing them of gang rapes and the spread of fatal diseases like tuberculosis — and turned the remote area into an anti-immigrant cause celebre. But locally, it's starting to sink in that Trump’s vows to oust undocumented workers could actually kick the legs out from under the “Made in America” model the Magic Valley exemplifies.
Idaho dairy industry representatives estimate that between 85 to 90 percent of on-site dairy workers in the state are foreign-born. The U.S. Department of Labor and other estimates suggest that nearly half to 70 percent of all U.S. farm laborers are undocumented — certainly enough to shut down many of the milk pumps here if workers are ousted as a result of Trump’s policies.
That’s why farmers’ groups have for years pushed Congress, unsuccessfully, to make it possible for them to legally employ immigrants they say are desperately needed. Prospects don’t look any rosier now. In recent months, anti-immigrant rhetoric has only grown more vitriolic, and Trump supporters — including some here — are expecting the president to follow through on campaign promises and deport more people.
Those who understand the dairy business here fear that a political solution won’t materialize before it’s too late, if ever. And that means businesses could struggle due to labor shortages and plummeting production.
“The dairy industry is a big money maker. But without workers, without somebody that’s going to be there 12 hours a day, milking your cows, getting dirty, there’s no business,” said Shannon Pérez, a non-Hispanic Anglo, as people here say, who’s worked on dairy and calf ranches. She’s already watched helplessly as her own family was split by deportation.
The tension burst into the open this summer in Magic Valley — home to 70 percent of Idaho’s dairy herd — when news broke that Jerome’s county commissioners were close to signing a potential $1.37 million-a-year deal to rent county jail beds to the U.S. Immigration and Customs Enforcement agency, which would use them to house detainees before possible deportation.
The commissioners were intrigued by the prospect of guaranteed federal dollars. ICE officials said in a statement to the Center for Public Integrity that “ensuring there are sufficient beds available” to meet the demand for detention “is crucial to the success of ICE’s overall mission.”
But in Jerome, panic ensued. Fractures emerged. People took sides. And the issue still isn’t resolved.
Jerome, home to 55 dairies and fewer than 23,000 people, erupted into an angry homegrown version of the national debate over immigration.
Opponents of the deal who envisioned workers fleeing and agents closing in on employers and employees mobilized.
Chobani, which employs more than 1,000 Magic Valley residents, warned in a letter to commissioners that without high-capacity dairies, “our business simply could not exist in its current and thriving form.” An ICE contract would “exponentially increase the fear of families being broken apart and communities being ritually interrogated — an outcome that would ripple far and wide,” wrote Michael Gonda, Chobani’s senior vice president of corporate affairs.
Chobani itself is an immigrant story. Its founder, Hamdi Ulukaya, is a Turkish immigrant who’s come under attack for welcoming Muslim immigrants — including refugees who’ve been hired to work at Chobani’s plant in Twin Falls.
Supporters of the ICE proposal weighed in too, remarking that if immigrants were legal, they had nothing to fear. “I am tired of the illegals running things,” one supporter wrote on a Facebook page set up to push for the deal. “If you want to come here, then do it the right way.”
Local dairy farmers appealed to elected officials and the public to understand that the current immigration system does not provide visas for dairy workers to enter the United States “the right way,” or a path for undocumented workers already here to become legal.
“It’s an education struggle,” said Bob Naerebout, a self-described moderate-to-liberal Republican (he declined to say whom he voted for in the presidential contest) who’s director of the Idaho Dairymen’s Association.
Other than through refugee or asylum programs, the only way that foreigners abroad can even qualify to apply for work or residency visas is through sponsorship by an eligible family member, a potential employer with access to visas or through a lottery for only certain nationalities.
The dairy farmers favor a solution that would permit undocumented workers already here to stay and earn legal work status and an eventual right to try to get a green card that grants legal permanent residency. The farmers’ ideal solution would also create temporary visas allowing dairies to legally fill future shortages as workers age out of the industry. But Republicans in Congress have increasingly hardened a line against earned legalization. Some GOP lawmakers will only support enabling dairy workers already here to adjust to a status as guest workers — with no path to green cards or citizenship.
“Agriculture is the first rung of the American Dream,” said Naerebout. “You also have to look at it from a moral position. These people have helped our industry grow to where it is. They should be the highest priority for us.”
In southern Idaho, farmers insist, immigrants who labor year-round at dairies are creating jobs for Americans, because dairies generate positions in factories, trucking and shipping, banking, technology, construction, feed and vitamin outfits, retail and services. The 8,100 jobs on Idaho dairies statewide generate 3,700 jobs in dairy processing and 27,600 jobs in other businesses, according to research done by University of Idaho agricultural economists at the request of dairymen. In the Magic Valley, researchers estimated, half the jobs are directly or indirectly created by agribusiness.
“The dairy industry is the backbone of your tax base in Jerome County and we cannot be successful without a vibrant Hispanic community,” Naerebout wrote to Jerome’s commissioners in July, urging them to vote against renting beds to ICE.
“Your decision has the potential to take a prosperous Jerome,” he warned, “which has low unemployment and transform it into a struggling rural community with high unemployment like so many other rural communities in America.”
‘Not enough statesmen’
Weaving his truck through a maze of pens, corrals, barns and warehouses, a Jerome County farmer who employs more than 200 people offered his thoughts about immigration policy.
The number one issue facing U.S. dairies today is access to labor that’s documented, said the farmer, who didn’t want his name disclosed because he’s nervous about ICE and a hostile public.
“And it’s all the way from Maine to California to Idaho,” he said. “Put yourself in our shoes. The perfect storm is brewing. They’re building a wall. Tougher immigration policies. A low unemployment rate.”
As he drove, the farmer asked Naerebout, who was riding in the passenger seat, “Bob, why can’t we get an immigration bill?”
“Because we’ve got too many politicians and we don’t have enough statesmen,” replied Naerebout.
“If it were Tip O’Neill or Bob Dole,” the farmer said, referring to Democratic and Republican congressional leaders in the 1980s known for hammering out compromises, “this would have been done by now because they’d cross the aisle.”
As news spread about the possible ICE contract in July, the farmer said he noticed that a husband and wife who worked on his farm caring for thousands of cows had resigned. The couple moved because of the proposal, a supervisor told the farmer, leaving the impression that the couple had a reason for not wanting to stick around.
Fear over the ICE contract, workers here say, has sparked recruiters from dairies in states as far away as Minnesota to poach labor from the Magic Valley. Some local workers “have basically said this is not a safe place for us to be anymore,” Naerebout said.
Moving is exactly what an undocumented woman who arrived in the United States at 18 plans to do if the ICE contract is signed. Now 32, she spoke in between whistling and pushing 1,000-plus pound cows into a barn for milking at a dairy she didn’t want identified.
“I would change states. I wouldn’t want to take the risk,” said the mother of four, who asked that her name not be disclosed. “Agents would be in Jerome, on the streets, going into restaurants. How would they not be asking people about their papers? Until now, people really haven’t had to be afraid much.”
Nationwide, as undocumented immigrants tell it, the status quo has been that if you wanted work, it was there. For decades, immigrant workers linked by networks of friends and relatives have showed up at U.S. farms with genuine-looking documents, which businesses aren’t legally required to authenticate. Since Congress approved the last big immigration reform in 1986, employers have only been required to record information on employees’ documents and keep it on file.
It’s a “don’t ask, don’t tell” arrangement that’s kept farms going for years.
To keep workers here, Naerebout said dairies are starting to pay $14 an hour on average in the area, almost double the state’s minimum wage of $7.25. Workers in town say the pay can vary, as low as $10 an hour for shifts that can last 12 hours. Even if out-of-towners, U.S. citizens nor not, were interested, reasonable pay might not attract them to remote Jerome — two hours from Boise and three from Salt Lake City.
Dairies have also turned to newly arrived refugees for labor.
Twin Falls, 16 miles south of Jerome, has absorbed small waves of refugees for nearly 40 years, starting with Southeast Asians, and more recently Africans and people from the Middle East. The College of Southern Idaho in Twin Falls coordinates this resettlement and has helped find jobs for refugees in some dairies, where they earn between $100 and $120 a day, said Zeze Rwasama, a Congolese refugee who’s now a U.S. citizen and director of the college’s Refugee Center.
But politics is intruding. Rep. Raul Labrador, one of Idaho’s two Republican congressmen, is sponsoring a bill that would allow governors or city officials to prohibit the settlement of refugees in their jurisdictions. The bill passed the House Judiciary Committee in June.
Todd Winer, Labrador’s communications director, said that “the purpose of America’s refugee program is humanitarian, not to expand the labor pool.”
Naerebout called the refugee prohibition proposal an idea to appeal both to the GOP’s far-right base and concerns about the admission of Syrian Muslims. The local farmer has hired and trained Congolese and Asian refugees to milk cows alongside the more numerous Hispanic workers. He scowled at the proposal. “We’re at the mercy of politicians,” he said.
A variety of pollsshow that most Americans agree with the farmers that undocumented workers shouldn’t be prevented from a way to stay legally in the United States, even in states like Idaho that supported Trump.
Failed bids for legalization
As he drove, the farmer pointed to Latino men in manure-covered boots wrestling a calf; one held a hypodermic needle. Every calf bears a radio frequency tag that transmits data to workers that tell them when shots are required as well as other needed care. Immigrant women in a warehouse were sanitizing hundreds of bottles they would later fill with formula and stack on a wagon. The bottles feed newborn calves.
Inside a milking parlor outfitted with computers, workers moved with factory-like precision lining up cows that are each milked three times a day.
A woman who works 12 hours a day frenetically moved from animal to animal, attaching suction devices to udders. She said in Spanish, wrinkling her nose, that the cows defecate “all the time.” It’s hard to escape manure and mess, although this ranch looked exceptionally clean, with showers and lockers and a spotless lunchroom for workers.
Outside, on three poles rising from a landscaped island of bright green grass, flew the American, Idaho and Mexican flags. The farmer said it shows respect for his workers. Jerome County is now about 34 percent Hispanic.
Expecting American-born workers to fill all dairy jobs is unrealistic, farmers say, because Americans have their pick of other jobs that aren’t as grimy and can pay more. Hildegardo Torres, in his 50s and an immigrant who received amnesty in 1986, is a supervisor who watches over milking and storage equipment for an unidentified farm. He’s often on call night or day to ensure the system that funnels milk to tanks keeps it chilled at the specific temperature processors require.
“Sometimes they come, these American guys,” Torres said. “They work, they try, they leave. And the next day they don’t come anymore.”
In their quest to legalize workers, Idaho farmers were enthusiastic about a once-promising proposal called the AgJOBS bill, which former Sen. Larry Craig, R-Idaho, first introduced in 2003. The bill was a rare compromise crafted by labor activists and employers that once had 62 co-sponsors. But it faltered multiple times under withering attacks by activists favoring less immigration.
Craig’s bill would have opened an earned legalization program for undocumented crop and dairy workers who stayed on farms for a set number of years. It would also have let dairy employers in on temporary work visas, issued by the H-2A visa program, and allowed their workers to eventually apply for available immigrant visas.
The H-2A non-immigrant farmworker program is currently only available for employers to sponsor foreign workers who perform seasonal crop work for around 10 months or less, with only limited extensions of time. Dairies are prohibited from using the program to sponsor workers who milk and remove manure because those jobs are year-round.
The United States also sets aside about 5,000 low-skilled immigrant visas a year that allow U.S. employers to sponsor workers to legally immigrate. But this program isn’t a viable option for dairy farmers given how few visas are available and the years-long backlog.
The realities and nuances of visas are lost on a public that has listened to years of far-right talk radio and television, which has vilified the undocumented, Naerebout said.
In the Magic Valley, Bill Colley, a right-wing talk radio host, has used his perch at Fox affiliate KLIX to cast doubt on the resettlement of Muslim refugees locally, and to scoff at the concerns of the area’s dairy farmers. KLIX broadcasts from Twin Falls, the valley’s biggest city, with 48,000 people. Colley also writes a column for the Twin Falls Times-News newspaper.
During a broadcast after Trump was elected, Colley said Hispanic workers who cross the border without permits “obviously don’t have any of what you’d call morals to begin with,” and end up “dropping anchor babies.”
“And we want these people here?” he snarled.
Colley did not respond to requests for comment.
“Talk radio’s purpose,” Naerebout said, is to deliver high ratings, not facts. “When it boils the blood of listeners they just hype it all the more.”
In April, Chobani sued Internet shock jock Alex Jones, accusing him of “defamatory” remarks in a video and tweets that linked the company’s hiring of Muslim refugees to crime and disease in Idaho. Jones responded by retracting and acknowledging his missives as “wrong.”
Small city, divided lives
In downtown Jerome, a city where half of the county’s 23,000 residents live, the hip café Renew serves cappuccinos, and streets are lined with Mexican restaurants such as La Campesina and auditoriums where locals celebrate weddings, rodeo parties and Hispanic girls’ 15th birthdays, called quinceañeras.
Founded in 1919, Jerome retains the flavor of a Western pioneer town surrounded by open space, where settlers put down roots near the Snake River. Several prominent local buildings are on the National Register of Historic Places, including the Depression-era Jerome County Courthouse built with federal New Deal funds. That’s where hundreds of Hispanic residents and dairy farmers jammed into a July 10 hearing to protest the ICE jail beds proposal.
The unusual show of protest by immigrant families and employers carrying “No ICE” signs left Charles Howell, the chairman of the Jerome County Commission, “flabbergasted.”
Howell, an electrician, said it didn’t occur to him that renting jail beds to ICE would frighten people. Based on what the local sheriff and ICE representatives told commissioners, he envisioned ICE agents dropping off people at the jail they’d picked up elsewhere and not conducting any more enforcement in Jerome than usual.
“This is the hardest thing I’ve had to deal with as a commissioner,” Howell said. “Jerome’s economic driver is the dairies and agriculture.”
He suggested “the feds get off their rears” to figure out how to create a dairy labor force that’s not undocumented.
The commissioners have yet to issue a decision.
At Jerome’s El Sombrero restaurant on Main Street, an undocumented worker who’s been in the United States for 20 years — half her life — sat with other women who’ve worked in dairies or are related to dairy workers.
The woman, too nervous to disclose her name, said she’s arranging her affairs in case she’s deported. She’s designated a niece to take over the home she owns here. Her two daughters are older teens living elsewhere.
The woman has done all sorts of jobs at dairies, from feeding calves to milking and driving trucks carting feed. "We get up, we milk, we eat, we sleep,” she said. “Now we’re waiting to see if it’s our turn to get deported.”
She said Americans in town mostly seem “indifferent” to immigrant workers.
Three recent Magic Valley incidents underscore how vulnerable to abuse immigrant workers can become — and why labor activists also want to legalize workers. In 2016, two men drowned in manure when trucks they were driving fell into farms’ unmarked waste ponds and the U.S. Occupational Safety and Health Administration issued $5,000 fines for unsafe conditions.
This year, six Mexican veterinarians who had been sponsored on special professional work visas in 2014 filed a human-trafficking lawsuit alleging that Jerome employers evaded U.S. immigration laws by offering them “false promises of professional work as animal scientists” and temporary work visas issued under provisions of the North American Free Trade Agreement. The dairy companies deny the allegations.
Rare penalties for employers
Even as the dairy industry has expanded in Jerome, it’s been rare up to now for federal agents to interrupt operations due to immigration violations.
In 2012, immigration agents arrested only 240 managers for criminal immigration-related violations in a four-state area that includes Idaho, Montana, Utah and Nevada. That was the highest annual total in recent years in an area with nearly half a million businesses.
For now, individual immigrants are the prime targets.
President Obama directed ICE to focus on undocumented people with serious criminal records, and less on those with longtime ties to communities and close relatives who were U.S. citizens. Trump ended that policy, and now cases of parents and spouses of U.S. citizens being taken into custody and deported are appearing with greater frequency nationwide.
Jerome resident Pérez, 38, who keeps the books for a calf ranch, said most people in town assume all foreigners have to do is patiently fill out paperwork to obtain a green card — especially if they’re married to a U.S. citizen. After she married an undocumented Mexican dairy worker in 2003, she found out that was far from true. The couple applied for Pérez’s spouse to get a green card, through her sponsorship, but it was denied because he was undocumented and had been deported before. The Pérez family moved to Mexico for two years to see if applying from abroad would help smooth a request for waivers. But ultimately, Pérez’s husband was told he would be barred for life because he had been deported multiple times prior to their marriage. Pérez returned to Jerome with the couple’s four children. And the husband ventured north illegally again.
“He came back to support his family,” she said. He was deported again in 2006 after Pérez was pulled over in a traffic stop while she was driving, and her husband was quizzed about his status. He returned in 2009, but was deported again last year.
“So my kids are without their dad,” she said. The couple ended up divorcing, but she doesn’t want the children to be fatherless. “The government is making it that way,” she said.
Tension over immigration has also split Pérez from her relatives.
One close relative, she said, watches television news focusing disproportionately on crimes committed by undocumented people. Trump won 69 percent of votes in Jerome County, and Pérez believes Trump’s negative focus on the undocumented contributed. Yet it’s immigrants, she said, who occupy the bottom-rung jobs that must be done.
“The documented side of the country doesn’t want those dairy jobs,” said Pérez. “Would you want to come home smelling like rotten milk? Like cow manure?”
Not far from a small office in downtown Jerome that Pérez rents, a group of non-Hispanic friends were gathered at Jerome’s Steelhorse Motorcycle Leathers and Accessories shop on South Lincoln Avenue. They applauded Trump’s stepped up deportations. But none complained that immigrant dairy workers were taking jobs from Americans.
“If they want to be here, get them legal,” said a shop worker, Marty Fuqua. “The problem is they’re coming across illegally, doing their drugs, doing their crimes, you know, rape, rob and murder. And then they expect a free ride. Well, you’re going to get a free ride. Straight to our jail and back to your country.”
Another man insisted dairy farmers could get temporary work visas for workers and was surprised to learn that they couldn’t. The tone of conversation began to soften.
Ryan Bennett, the youngest of the group at 23, works in the warehouse of the Jerome Cheese Co., a major processor that operates day and night. He said he was upset that one of his best friends was deported. Bennett grew up in Jerome and went to school with many Hispanic kids.
“Get all the ones that they know about, the undocumented immigrants, and if they don’t have any felony charges, violent crimes on their record, [then] do whatever the state and federal agencies can do to legalize them,” Bennett said. “And get them back to work.”
“We need them,” Bennett said.
Back in Washington, finding a way to do that remains a challenge.
In 2013, the Senate passed a bipartisan bill 68-32 that would have created an earned path to permanent legal status for undocumented people that included farm and dairy workers. Labrador of Idaho, who was newly elected to the House in 2010 when a wave of tea party candidates was voted in, participated in talks about crafting a House version of the Senate bill. But talks fell apart, with Labrador staking out his opposition to allowing anyone who “knowingly” came illegally to eventually become eligible for citizenship.
“They’re not clamoring for it,” Labrador said, referring to undocumented immigrants and citizenship. “It's only the activists here in Washington, D.C., who keep clamoring for it.”
An earlier vote to defund the controversial DACA program shows just how difficult it has been to muster support for provisional legal status for even the most sympathetic subset of the undocumented. In 2015 the GOP-controlled House voted 218-209 to stop DACA, President Obama’s 2012 Deferred Action for Childhood Arrivals program. DACA provides two-year renewable work permits, and temporary protection from deportation for undocumented youths brought here as children.
Only 26 GOP lawmakers broke with the Republican majority and joined Democrats to vote against defunding DACA. The measure, which the House attached to a Homeland Security funding bill, was killed at the last minute in the Senate. Earlier this month, Trump rescinded DACA, announcing the program would end in six months, and saying it was up to Congress to deal with the issue.
Back in 2015, Rep. Marsha Blackburn, R-Tenn., who sponsored the measure to rescind funding, called DACA an “amnesty” that would attract more illegal immigrants and take jobs from Americans. It is the same argument many GOP lawmakers use for why they oppose legalizing farm and dairy workers. Supporters of legalization argue the best way to prevent undocumented immigration is to pass a reform, like the 2013 Senate bill, that legalizes workers while phasing in mandatory use of E-Verify, a computer system developed in 1997 that flags a mismatch between a job applicant’s name and Social Security number.
As recently as April, U.S. farm representatives tried to get reassurance from Trump at a White House meeting that he understood their fear that workers would be deported. Zippy Duvall, president of the American Farm Bureau Federation, said Trump “assured us we would have plenty of access to workers,” according to Reuters.
But so far, Trump hasn’t supported any GOP proposals introduced this year that would steer dairy workers into the same H-2A program used to bring in temporary seasonal crop workers.
Rep. Sean Duffy, R-Wis., is sponsoring a dairy-guest-worker bill that was introduced in April and hasn’t moved forward. Rep. Dan Newhouse, R-Wash., added an amendment into the Homeland Security spending bill in July that would essentially do the same. The amendment passed the House Appropriations Committee and is now awaiting a floor vote.
The Newhouse measure would allow dairy workers to remain at work for up to three years. But just as the H-2A program for seasonal crop workers doesn’t have a way to earn points toward legal permanent residency, none of the congressional proposals have a provision for dairy workers to earn a green card either. Labor activists have long opposed this H-2A policy as an abuse that legally creates an underclass.
Dairy workers on some farms struggle with “brutal, dangerous” conditions and low pay, said Giev Kashkooli, the political and legislative director for the United Farm Workers of America. Guest workers, which these bills and the amendment would create, have historically had little leverage to demand improvements.
“I think it’s a terrible policy,” he said of Newhouse’s amendment.
Kashkooli said dairy workers are not seasonal workers; they’re a permanent and critical part of the workforce for that industry.
The UFW supports a bill similar to the old AgJOBS measure, a bill that Sen. Dianne Feinstein, D-Calif., introduced this year. But the GOP is in charge and unlikely to move the bill to a vote — even though, as Kashkooli pointed out, House Speaker Paul Ryan, R-Wis., was a co-sponsor of a House version of AgJOBS in 2009.
Another powerful House figure, Rep. Bob Goodlatte, R-Va., plans to introduce a guest worker solution for agribusiness. Goodlatte’s staff said they couldn’t release details, but Goodlatte, chairman of the House Judiciary Committee, is a hardliner against earned legalization and including dairy workers in the guest-worker status.
Republican Rep. Mike Simpson, who represents the Magic Valley and is widely considered more moderate than the district, did not support the AgJOBS bill in 2009. In a statement forwarded by staff in August, Simpson said he favored an “effective guest worker” program. Simpson did not respond to an interview request.
Rep. Labrador’s communications director, Todd Winer, said Labrador “does support modernizing the ag guest-worker program and is working closely with Chairman Bob Goodlatte on a bill which does that.”
Naerebout said some dairy workers would welcome becoming guest workers so they wouldn’t have to live in fear. But he also noted that if workers returned to their home countries and applied to become guest workers, they’d be ineligible because of a 10-year ban that punishes people for undocumented status.
If Congress doesn’t find a solution, the growing dairy industry in Idaho at least wants Americans to know what’s at stake.
“As a country,” Naerebout said, “we have to decide whether we want to import food or import the laborers to help us raise our own food.”
The international climate-fighting pact would create jobs, Google said. Leaving the deal known as the Paris accord would be bad for business, top executives from Bank of America and Coca-Cola argued. When President Donald Trump committed to yanking the U.S. out anyway, PayPal and Western Union countered “We are still in.”
These corporate titans and at least 22 others were among those who sought to preserve the United States’ role in the landmark Paris agreement ratified by about 160 countries. So why exactly would these 27 business powerhouses also support a GOP group that’s fought to undo a key Obama-era domestic climate initiative?
The answer is, well, complicated. The overwhelming majority of these companies have no overt incentive to undermine the U.S. climate effort. One leading solar company, in fact, had a driving financial imperative to cheer it on. These companies’ donations of more than $3 million to the Republican Attorneys General Association over the past three-and-a-half years speaks instead to the difficulties for corporations trying to navigate the political system in a country that's polarized — particularly on climate change.
The Obama-era Clean Power Plan provides a stark example. Starting in 2014, the group comprising many states’ Republican attorneys general spoke out against this Obama-era rule aiming to reduce climate-changing carbon emissions in the U.S. power sector. Nearly all the Republican attorneys general sued in 2015, alongside fossil fuel groups, to quash the power plan. A few Democratic attorneys general did as well; the majority pushed back in court to try to save it.
In giving to the GOP group, many of the big businesses said they were simply following a time-honored corporate tradition of donating to both parties — though most of these companies donated more to the Republican group than its Democratic counterpart. And they nodded at the political reality: A business needs to engage with elected officials on both sides of the aisle to influence policy, they said.
“This is a function of our democratic system,” Verizon subsidiary Oath said in a statement, speaking on behalf of one company on the list that it recently acquired, Yahoo.
But campaign finance experts countered that business officials can influence policy without writing a check to decision-makers like attorneys general — advocating their policy positions through lobbyists, for example. Because these businesses have said climate action is a priority, making political contributions that can work against that goal puts their reputations or even revenues at risk, these experts said.
“I don’t doubt that their public statements about the Paris climate agreement are sincere but it matters that when it actually comes down to how they spend their money, they’re giving to politicians that have almost the exact opposite goal,” said Daniel Weiner, senior counsel for the Brennan Center for Justice’s Democracy Program, which advocates for campaign finance reform. “It doesn’t mean that they’re actually lying, but it does lead one to wonder how strong their commitment to fight global warming actually is.”
Attorneys general and climate change
The job of state attorney general has in recent years become increasingly high-profile and partisan. The GOP group, also known as RAGA, and the competing Democratic Attorneys General Association didn’t even exist until 1999 and 2002, respectively. Now, both are sharply focused on election fundraising to increase their parties’ control of top state prosecutor jobs.
Attorneys general have flexed their muscles in a variety of ways, most recently when the Trump administration said it was partly threats of litigation from GOP AGs that caused the president to halt a program protecting from deportation certain immigrants brought to the country as children. A coalition of Democratic AGs then promptly sued.
But it’s the domestic Clean Power Plan that has received an outsize share of energy from Republican attorneys general. RAGA has called the rule “unlawful” and a prime example of the federal Environmental Protection Agency exerting authority that it doesn’t have to carry out a political agenda against fossil fuels. The GOP group has warned that it would kill jobs, raise electricity prices and put in jeopardy the power grid’s reliability. (These arguments were disputed by the Obama administration.)
RAGA, which did not respond to requests for comment, isn’t the only Republican fundraising group whose elected officials have doubts about global warming or the necessity of combating it through federal action. But the attorneys general association has stood out for making the power plan specifically its Enemy No. 1. The victory that tops RAGA’s list of accomplishments on its website: Convincing the U.S. Supreme Court in 2016 “to halt implementation of Obama’s signature climate change initiative.”
The Republican attorneys general were likely crucial in securing the Supreme Court decision to keep the rule from taking effect while a lower court considered its legality because they “gave the opposition to the plan a legitimacy it wouldn’t otherwise have had,” said Daniel Farber, a law professor with the University of California, Berkeley. That pause left the still-in-limbo plan more vulnerable to the new administration, which is now determining its next steps after Trumpvowed to dismantle it.
“As we've seen with Obamacare,” Farber said by email, referring to health care reform efforts, “once something has gone into effect, it becomes a lot harder to undo it.”
Intended and unintended consequences
Some political contributors couldn’t be happier. Though RAGA has said it reached its conclusion that the power plan was an unconstitutional overreach on its own, separate from political contributions, coal conglomerate Murray Energy was among those that donated to the group, then urged legal action, Bloomberg News reported.
The 27 companies that spoke out against leaving the Paris accord and then supported RAGA are another matter.
Only two pushed back in some way against the Obama administration Clean Power Plan fought by RAGA — Exxon Mobil, which panned it, and General Electric, which advocated for several changes while it was still a proposal. Far more were active on the other side, urging officials to support the rule — or even, in the case of Google and Microsoft, filing arguments in court to try to counteract the lawsuit by the attorneys general whose political group they’d helped fund.
The most striking example? SolarCity, the nation’s largest residential solar-panel provider. Its investors were certain the Obama power plan would be good for business — and its absence was bad news. The company’s stock nose-dived 26 percent the morning after the Supreme Court paused the rule.
Still, three months later, SolarCity donated $20,000 to RAGA, on top of the roughly $15,000 it donated to the group the year before.
Dues for “membership”
So why did it do that? SolarCity declined to comment. Several others didn’t respond, including Bank of America and Google. But other companies, such as PayPal, echoed a common theme: the need to support or work with candidates and organizations on both sides of the aisle that deal with issues central to their business.
During the timeframe that the 27 companies donated about $3.3 million to the Republican group, 23 of them collectively gave about $1.9 million to the parallel Democratic organization.
Some companies, including JPMorgan Chase, told the Center that their contributions to RAGA are “dues” or that they are “members” — as if the political group with a mission of getting officials elected is no different than a trade association. Western Union said its membership in both attorneys general groups allows it to “properly educate” state prosecutors and support other initiatives in individual states.
Indeed, RAGA has pitched itself that way (and still does) to would-be contributors, laying out the “membership benefits” — access — for various amounts of money, according to internal documents obtained by The New York Times. The Democratic group has done the same, the newspaper reported in a 2014 investigation.
Sean Rankin, executive director of the Democratic Attorneys General Association, said the money flowing to its attorneys general isn’t changing their stance on issues. But they see an existential need to catch up with their Republican counterparts’ fundraising. The attorneys general for twenty states and the District of Columbia are Democrats, down from 32 in 2010.
Between 2014 and mid-2017 alone, RAGA raised nearly three times as much as the Democratic group from all sources.
“The money is significant,” Rankin said. “It was money that played a role to put more Republican AGs into office.”
For Coca-Cola, which gave just over $200,000 to the Republican group and about $75,000 to the Democratic group between 2014 and mid-2017, political donations aren’t earmarked to support all the policy positions held by recipients. “Our goal is not perfect philosophical alignment,” the company said.
Intel, which gave $50,000 to the Republican group and $25,000 to its counterpart, was more direct.
“We recognize that it is impractical and unrealistic to expect that we or our stockholders and stakeholders will agree with every issue that a politician or trade association may support, particularly given our strategy of bipartisan giving,” William Moss, a spokesman for Intel, wrote in an email.
Risks to the bottom line
But the implicit dilemma is that political spending is an action, even when companies split their contributions to the country’s two major parties down the middle, said Ann Skeet, director of leadership ethics at Santa Clara University’s Markkula Center for Applied Ethics.
“There’s actually policy implications that go with the money that they spend,” Skeet said.
The Conference Board, a business membership and research association, warns companies flat out in its corporate political activity handbook that that they “must be mindful of the risks” to their reputation or bottom line if they belong to trade groups opposing their positions on major issues. Bruce F. Freed, a co-author of that report — which cites climate change as a potent example of priority clash — said the same point is true of corporate political giving to any group. Freed is president of the Washington watchdog Center for Political Accountability.
Target, which is not one of the 27 companies on the Center’s list, could tell them a thing or two about PR problems. The company, which built a reputation for gay-friendly policies, faced boycotts in 2010 after contributing $150,000 to a super PAC backing a candidate who opposed gay marriage. The company apologized after initially saying the donation fit into Target’s strategy of giving to pro-business candidates “on both sides of the aisle.”
“There are real consequences,” said Freed, “when there is a disconnect.”
AUSTIN, Texas — President Donald Trump’s young administration has already sharply diverged from the ethical norms that typically govern the executive branch, exposing vulnerabilities in the system, a small group of ethics experts and former government officials agreed Saturday.
The consensus emerged at a panel titled “Trump, Ethics and the Law” at the Texas Tribune Festival in Austin, Texas. The panel was moderated by Dave Levinthal, a senior reporter at the Center for Public Integrity. (Watch it here.)
“There have been untidy administrations in the past, but usually it takes a while to see these things develop,” said Ken Starr, a lawyer and judge who served as solicitor general under President George H.W. Bush and is best known for heading the investigation that led to the impeachment of President Bill Clinton.
Ethics laws are based on the idea that norms will be followed, said Walter Shaub, former director of the U.S. Office of Government Ethics (OGE).
“When they’re not followed, we suddenly discover how completely vulnerable our system is,” Shaub said.
For example, Shaub said that before he resigned from OGE in July, he had to fight to get his hands on financial disclosures for President Trump’s appointees.
“We didn’t have the chance to resolve conflicts of interest and the White House ethics officials not only didn’t want to fulfil their responsibilities in support of ethics, they didn’t know how,” Shaub said.
Shuab said he didn’t feel able to confidently sign off on some financial disclosure reports. Since resigning, he has become senior director of ethics for the Campaign Legal Center, a nonpartisan legal advocacy group, and has been a frequent critic of the Trump administration.
Matthew Miller, a former Director of the Office of Public Affairs for the Department of Justice under President Barack Obama, said Trump’s firing of FBI director James Comey, reportedly after the director refused to pledge loyalty to him, also was outside the norm.
Miller, now a partner at strategic advisory firm Vianovo, said an ongoing investigation into ties between Trump’s campaign and Russia has the potential to lead to more firings. Robert Mueller, the special counsel leading the investigation, has a broad mandate to investigate and he is moving aggressively, Miller said.
“This is, in some ways, the most important investigation the Department of Justice has ever conducted. It goes to the question of whether the president of the United States himself has been compromised by a foreign power,” Miller said.
If Mueller gets too close to a member of Trump’s family or the president himself, Miller said he expects Trump might try to rescind the rules governing the appointment of the special prosecutor so that he can fire Mueller. Trump could potentially also pardon those involved in the case.
“How we respond to that, whether Republicans in Congress see that as a red line, is going to answer the question of whether the president is above the law or not,” Miller said.
Another panelist, Richard Painter, the vice chairman of Citizens for Responsibility and Ethics in Washington (CREW) who was the chief ethics lawyer for the administration of President George W. Bush, said that the Mueller investigation is worrying, but it’s far from the only concern.
“There are many other issues that fall outside of the scope of his investigation that I am very worried about and that Americans ought to be worried about and that Congress ought to be worried about,” he said.
In late January, CREW filed a lawsuit against Trump, claiming that his refusal to sell his businesses generates conflicts of interest and violates the Constitution’s foreign emoluments clause.
You book a hotel on Expedia.com.
You buy a Garmin to navigate highways.
Finally, you stream Netflix movies to keep the kids occupied on the trip.
Just know you’re patronizing companies that volunteer virtually nothing about their political practices and spending, according to a new study on corporate political disclosure and accountability by the nonpartisan Center for Political Accountability and the Zicklin Center for Business Ethics Research at the University of Pennsylvania’s Wharton School.
Other familiar names such as travel website TripAdvisor, satellite service provider Dish Network Corp. and energy drink-maker Monster Beverage Corp. rank among 58 companies within the S&P 500 that earned a score of zero on the study’s 70-point scale.
Scores are calculated based on 24 indicators that range from whether a company publicly discloses corporate contributions to political committees and organizations — including politically active nonprofit organizations that don’t themselves disclose their donors — to whether it posts a detailed report of its corporate political spending on its website. The study also awards points to companies that have established clear political spending and disclosure policies.
Other notable companies receiving low political transparency scores include toymaker Mattel Inc., discount stores Dollar General Corp. and Dollar Tree Inc., Michael Kors Holdings Ltd., Tyson Foods Inc.
Also among the basement dwellers: consumer credit reporting agency Equifax, which is facing congressional hearings after a massive breach of its data systems that compromised the security of about 143 million Americans’ personal information.
When asked about Tyson Food’s score of three points out of a possible 70, Caroline Ahn, a Tyson Foods spokeswoman, said the company complies with federal disclosure requirements.
“We report to the U.S. House and Senate any corporate expenditures paid to trade associations that are involved with advocacy efforts,” she said in an emailed statement.
But other companies, such as Microsoft Corp., eBay Inc., HP Inc. and PG&E Corp., fared much better with scores of at least 65 points out of a possible 70.
The number of these “trendsetter” companies, those that scored 63 points or more, increased by nine companies from the 41 companies that had the distinction in the 2016 report.
This year was also the first time in the Center for Public Accountability/Zicklin study’s seven-year history that a company received a perfect score. This distinction goes to Becton, Dickinson & Co., a global medical technology company.
The average score for all 499 companies in the study was about 30 points on its zero-to-70 scale. That’s a slight uptick from 2016.
Several companies significantly improved their scores from 2016 to 2017. Among them are chemical company LyondellBasell Industries NV, Host Hotels & Resorts, CenterPoint Energy Inc. and Ralph Lauren Corp. each boosted their score by dozens of points by voluntarily disclosing more spending or clarifying political spending practices.
Until recently, Host Hotels and Resorts didn’t have a staffer to focus on disclosure and corporate political spending, said Kevin Gallagher, the company’s vice president and assistant general counsel. Now the company does.
“We were just really happy to improve our disclosure, and I think we can do even better next year,” Gallagher said.
Food spice outfit McCormick & Company Inc., pharmacy chain Walgreen Boots Alliance Inc. and Costco Wholesale Corp. are well-known companies that also scored well, according to the study.
Bruce Freed, president of the Center for Political Accountability, said corporate disclosure has held even and he thinks it will continue to grow at a steady pace even in the shadow of a president who hasn’t released his tax returns.
“Political disclosure and contributions are now becoming a standard that companies are expected to follow,” he said. “Those companies that don’t disclose are going to be viewed as outliers.”
This year’s Center for Political Accountability/Zicklin study showed a slight dip — from 305 last year to 295 this year — in the number of companies that disclosed some or all their election-related spending, or banned such spending altogether. Freed said the year-to-year change in which companies are listed within the S&P 500 may have caused this decrease.
But the Center for Political Accountability/Zicklin study has also revealed a growing trend toward more managerial and board oversight of political spending and more disclosure or prohibition of political spending, said Freed, noting the study has measured the full S&P 500 for the past three years.
For instance, the numbers of senior managers overseeing political spending grew from 237 in 2015 to 292 this year.
The number of companies banning contributions to 501(c)(4) “social welfare” nonprofit organizations is now at 177, versus 83 in 2015.
The study also notes that more companies are voluntarily disclosing their election spending without being told to do so.
The Center for Competitive Politics is a longtime critic of the Center for Political Accountability/Zicklin transparency study. While Center for Competitive Politics senior policy analyst Luke Wachob hasn’t yet seen the newest study’s findings, he faulted past studies for “misrepresenting the issue of corporate disclosure and for using a ‘one-size-fits-all’ policy for the thousands of different entities that comprise ‘corporate America.’”
Wachob said his organization hopes the study’s “defects” have been addressed in its latest iteration.
Kelli Mleczko, a spokeswoman for Sempra Energy, said public policy engagement is important for all companies — but so is transparency. Sempra Energy earned a score of 68 points out of 70.
“While the CPA-Zicklin Index can be used as a benchmark for areas to focus on in terms of accountability, our principle motive is that we believe maintaining transparency and accountability is core to being a responsible company,” she said.
Among Trump’s most outspoken critics: corporate CEOs, who resigned from White House advisory councils and issued vehement statements breaking with the president.
But when the Center for Public Integrity this month asked nearly four dozen large public companies whether they would continue making contributions to funds or political committees related to the Trump administration, none would commit to withholding money from Trump going forward.
That list included several companies with CEOs who stepped down from Trump advisory bodies to protest the president’s comments after the Charlottesville violence, or who have publicly pilloried Trump’s other policies, such as those on immigration or climate change.
Many companies, including Coca-Cola and Qualcomm, didn’t respond to questions. Others, such as Amgen and Exxon, referred the Center for Public Integrity to their political giving, lobbying and advocacy policies. A few said contributions to Trump’s inauguration shouldn’t be considered the same as direct political support, such as funding a presidential campaign.
(All corporate contributions or corporate political action committee contributions reviewed by the Center for Public Integrity were made prior to the events in Charlottesville to Trump’s inaugural committee, to Trump’s presidential transition entity or to Vice President Mike Pence’s recently formed leadership PAC.)
JPMorgan Chase Chairman and CEO Jamie Dimon is among business leaders who explicitly condemned racism after the Charlottesville violence and said he disagreed with Trump’s reaction to it. He also stepped down from a position in which he advised Trump.
“There is no room for equivocation here,” wrote Dimon, who also leads the Business Roundtable, a high-profile Washington-based group made up of “chief executive officers of America’s leading companies” — and at least in that capacity is likely to continue to weigh in on government policies.
Nonetheless, a spokesman for JPMorgan Chase, Andrew Gray, said questions about whether the company would ever again give to a fund or committee connected to the Trump administration were “vague or speculative.”
Intel CEO Brian Krzanich, upon stepping down from a Trump manufacturing council, wrote in a blog post that: “I have already made clear my abhorrence at the recent hate-spawned violence in Charlottesville, and earlier today I called on all leaders to condemn the white supremacists and their ilk who marched and committed violence.”
Asked about future contributions, Intel spokesman William Moss declined comment except to say, “We are bipartisan in our approach to contributions and our engagement activities, and expect that to continue.”
Intel gave $500,000 to Trump’s inaugural committee.
The Center for Public Integrity also reached out to the National Football League, whose marketing and promotions arm gave Trump’s inaugural committee $100,000. In addition, seven NFL franchise owners gave $1 million each.
Trump and NFL Commissioner Roger Goodell spent the weekend trading barbs after Trump slammed players for kneeling, as a form of protest, during the national anthem. Goodell said the comments were “divisive,” and “demonstrate an unfortunate lack of respect for the NFL.” Several team owners, including some donors, also criticized the president.
The league did not respond to a request for comment on future contributions. The White House press office also did not respond to requests for comment.
Seven-figure support for Trump affairs
Many companies have policies against contributing corporate or corporate PAC dollars to presidential candidates, sticking instead to backing congressional or local candidates.
Typically, though, special events, such as political conventions and presidential inaugurations, are permitted. And these events provide solid opportunities to mingle with officeholders and policymakers and augment corporations’ multimillion-dollar government lobbying efforts. This prompts corporations to open their checkbooks every four years no matter who wins the White House.
The chance to influence an incoming administration was particularly valuable.
But companies’ support of such events can still invite unwelcome scrutiny.
In the summer of 2016, a number of firms and big donors scaled back on giving directly to convention host committees, reportedly because of controversies dogging both Trump and then-Democratic nominee Hillary Clinton.
Some companies found more creative ways to support the conventions and score coveted access to lawmakers without having their corporate names appear on disclosure forms: sponsoring delegations or throwing private parties, for instance.
Seven-figuredonors— including corporate behemoths AT&T (roughly $2.1 million, including some in-kind services), Dow Chemical Co. ($1 million), Pfizer Inc. ($1 million), Bank of America Corp. ($1 million), Qualcomm Inc. ($1 million) and Boeing Co. ($1 million) — received almost unprecedented access.
Their donor package was advertised to include tickets to a “leadership luncheon,” a candlelight dinner and other events featuring Trump, Pence, members of their family and prospective Cabinet secretaries and senior appointees.
Many of those companies did not respond to requests for comment.
A Pfizer spokeswoman, Sharon Castillo, stressed that the company always gives to the inauguration, “which is not a political campaign committee,” no matter who the incoming president is.
The committee has drawn thousands of dollars in contributions from corporate PACs. So far this year, it’s transferred $5,400 to Trump’s presidential committee.
“Honeywell supports those who support policies that are good for our business and help to create jobs in the United States,” Honeywell spokesman Rob Ferris said in an email.
Corporations ‘much more sensitive’
Star athlete and sneaker magnate Michael Jordan, asked to endorse a Democrat in a North Carolina Senate race decades ago, reportedly demurred, saying, “Republicans buy sneakers, too.”
Some question whether Jordan really said it, but the point stands: Getting involved in politics means ticking off customers. In 2010, facing calls for a boycott, Target was forced to apologize for contributing $150,000 to a group promoting candidates opposed to same-sex marriage. The company said the money was meant to support pro-business policies.
The episode came shortly after the Supreme Court’s decision in Citizens United v. FEC allowed unlimited corporate, union and nonprofit spending on elections. It was a clear warning: Political spending could backfire.
In recent years, shareholders have pushed for more disclosure of corporate spending on lobbying and politics, and some companies have been targeted for boycotts. Some business groups, notably the U.S. Chamber of Commerce and the Business Roundtable, have vocally opposed the transparency efforts.
Meanwhile, customers, investors and employees are all monitoring whether corporate political spending aligns with stated corporate values, said Bruce Freed, president of the Center for Political Accountability, which advocates for more transparency around corporate political spending.
“Companies are becoming much more sensitive about who they are being publicly associated with,” Freed said.
A public campaign led by the nonprofit group Color of Change, which describes itself as “the nation’s largest online racial justice organization,” was credited with convincing companies not to support the Republican National Convention over the summer.
In the wake of the Charlottesville violence and Trump’s response to it, Color of Change also targeted executives at companies including PepsiCo Inc. and General Motors with a social media campaign urging them to step down from executive branch advisory councils.
“They are a public-facing company that talks openly about diversity,” the group’s executive director, Rashad Robinson, told Advertising Age about the group’s reasons for taking aim at PepsiCo CEO Indra Nooyi.
PepsiCo, which contributed more than $250,000 to the inauguration and the maximum $5,000 contribution to the transition, as well as $5,000 to Pence’s leadership PAC via its own corporate PAC, did not respond to a request for comment.
A complete break with the president and his administration isn’t a realistic option for most public companies, business lobbyists interviewed by the Center for Public Integrity said, although the companies may choose to distance themselves from the White House.
The lobbyists wouldn’t speak for attribution. But they said walking away from engaging with the administration isn’t possible for their clients. Moreover, companies are unlikely to pick a fight, by publicly ruling out making contributions related to Trump, with a president known for holding grudges and tweeting negatively about corporations he believes have wronged him.
How should companies engage with government?
In recent years, controversial political proposals in states have prompted corporate blowback and economic losses for the states.
One example is a religious freedom measure in Indiana. Signed by then-Gov. Pence, the measure faced harsh criticism from opponents who argued it discriminated against lesbian, gay, bisexual and transgender people. Another is North Carolina’s so-called “bathroom bill.”
More companies are speaking out on diversity and discrimination issues, said Heidi Welsh of the Sustainable Investments Institute, a nonprofit that studies efforts to influence corporate behavior on social and environmental issues.
Companies “actually do see that as a bottom-line issue,” Welsh said. “They are not dumb on the issue of diversity. If you piss off a whole wide swath of your customer base, people can shop elsewhere, and they do.”
Aaron Chatterji, a professor at Duke University’s business school and an expert in CEO activism, said CEOs’ increasing outspokenness could lead companies to reevaluate their political engagement.
“It seems like a natural extension,” he said.
He added that he expects a “renewed sort of scrutiny on companies and their political strategies, and I think it’s an indication of a broader shift where the political polarization that has characterized how we vote, where we live ... It’s increasingly going to come into how we evaluate businesses.”
Companies are getting more pressure from employees who care about corporate values, said Douglas Chia, the executive director of the governance center of the Conference Board, a business membership and research association that offers members a handbook on corporate political activity.
Chia said corporations must analyze corporate political spending “in light of there being more sensitivity in the public and particularly in the investment community.”
Companies must stay engaged with the government, he said, but can choose how they do that.
When companies contributed to Trump’s inauguration, he said, they were “trying to be optimistic in terms of this president being good for business interests,” especially after years of feeling ignored by the Obama administration.
But Trump’s behavior “reached a tipping point when companies said we need to not just distance ourselves, but we need to come out and condemn that behavior because we are getting so much pressure from our main stakeholders, and that goes back to reputational risk.”
It will be interesting to see, he said, were Trump to be re-elected, “what the contributions would be to the next inauguration.”
The Federal Election Commission has fined Boston-based Suffolk Construction Co., a federal government contractor, for making illegal contributions to a pro-Hillary Clinton super PAC, according to a letter from the agency.
The $34,000 settlement between the FEC and Suffolk appears to mark the FEC's first penalty against a government contractor for illegally contributing money to a super PAC — a kind of political group that may raise unlimited amounts of money from corporations and unions.
The Center for Public Integrity first reported in April 2016 that Suffolk Construction had made a pair of $100,000 contributions to Priorities USA Action, the main super PAC supporting Clinton's 2016 Democratic presidential campaign. Campaign finance reform groups Democracy 21 and the Campaign Legal Center filed a joint complaint with the FEC in July 2016, based in part on the Center for Public Integrity's previous reporting.
"We applaud the FEC for upholding the integrity of the contractor contribution ban,” said Brendan Fischer, the Campaign Legal Center's director of federal and FEC reform. “The reason federal contractors have been banned for 75 years from making political contributions is to prevent pay-to-play in the contracting process. Hopefully, this decision by the FEC deters companies with business before the government from attempting to buy influence in the future."
Priorities USA Action, which the FEC cleared of wrongdoing in connection with the Suffolk Construction contribution, was run by close Clinton allies and spent more than $126 million on ads and other messaging attacking then-Republican presidential nominee Donald Trump, according to FEC records.
In July 2016, Priorities USA Action returned the contributions to Suffolk Construction, which from 2008 to 2015 had earned $168.8 million worth of federal contracts, according to federal records. Federal law generally prohibits federal contractors from making political contributions.
But in October 2016, Suffolk again attempted to help fund a pro-Clinton super PAC.
This time, the company's charitable arm gave $250,000 to Correct the Record, which at times worked directly with Clinton's own campaign. Such charitable organizations are prohibited from giving political committees money. Correct the Record returned the contribution after questions about it from the Center for Public Integrity.
A representative from Suffolk Construction could not immediately be reached for comment Thursday evening. Last year, company spokesman Dan Antonellis said the contribution to Correct the Record was an “accounting error" and blamed the Priorities USA Action contributions on "internal accounting ... ambiguity."
The Trump administration is weighing one of the most significant rulings on how the internet will operate in the future — broadly affecting both the U.S. economy and how Americans get crucial information — but the decision is already a foregone conclusion.
Unlike three years ago, when Washington was abuzz over the Federal Communications Commission enshrining net neutrality into hard-set rules, this time around it’s crickets. And that has net-neutrality supporters worried.
The FCC, led by Ajit Pai, whom President Donald Trump appointed this year, has proposed killing the net-neutrality rules the agency passed under the Obama administration in 2015. Those regulations prohibited internet providers such as Verizon Communications Inc. and Comcast Corp. from favoring certain online content, or charging firms like Netflix or Facebook Inc. to deliver their offerings at faster speeds. The rules, shepherded through by then-Chairman Tom Wheeler, treated the internet more like a public utility needed by everyone, like regular telephone service or power, which are regulated by the government.
When Wheeler, a Democrat whom President Barack Obama appointed in 2013, proposed those rules, progressive consumer advocates were thrilled by the idea — but internet providers were livid. Armies of lawyers and lobbyists representing AT&T Inc., Verizon, Comcast and others poured into FCC’s headquarters, about a half mile from the iconic Washington Monument. They came armed with binders, briefs and PowerPoint presentations to confront and cajole FCC commissioners and staff.
In all, FCC commissioners and staff held 79 meetings between the release of Wheeler’s proposal in May 2014 and the comment deadline in September 2014, more than a meeting every two days, according to an analysis of FCC documents by the Center for Public Integrity. Nearly 63 percent of those get-togethers were with businesses or their trade groups. In the end, the Democratic-majority commission voted 3-2 along party lines to reclassify internet providers as a utility-like “common carrier,” much like telephone service.
But that was then.
Now, three years later, current FCC Chairman Pai, a free-market Republican and staunch critic of government regulations, has proposed to reverse Wheeler’s rules, aggressively pushing a return to classifying internet providers as an “information service,” a designation with far fewer regulations.
The change, which the FCC is likely to vote on later this year, would both neuter the commission’s ability to rein in providers and open the possibility, again, of creating slow and fast lanes for internet traffic — determined in part by who is willing to pay.
This time around, Republicans control the commission. And it’s a lot quieter at the FCC — perhaps because the internet titans see a friend in the chair who isn’t prone to considering other opinions.
From May 18, when the FCC released Pai’s proposed rules, to the end of the public comment period on Aug. 30, commissioners and agency staff met only 16 times with companies and other organizations — about one meeting every six days, or one-fifth as many as when Wheeler issued his proposal in 2014, according to the Center’s analysis.
No one from AT&T set up a meeting. No Verizon. No Comcast. In fact, of the 16 meetings, the FCC met with only two, relatively small, internet providers: Antietam Cable Television Inc., a provider serving a rural county in Maryland, and Home Telephone Company Inc., which provides service north of Charleston, South Carolina.
Most of the people sitting down with the FCC worked for advocacy groups such as the National Hispanic Media Coalition, which lobbies for inclusive and affordable communications, and the Voices for Internet Freedom Coalition, a group of minority organizations that support net neutrality.
The reason for so few meetings, say broadband policy experts, lies in the stark differences between Wheeler’s and Pai’s approaches. Wheeler, despite having run powerful wireless and cable associations in Washington, was seen as trying to solve a regulatory puzzle, attempting to balance consumer interests with business priorities. That attitude drew a horde of disparate groups seeking to influence the debate by having face time with FCC staff, those who worked with him said.
Conversely, Pai, a former Verizon attorney, is widely viewed as driven to give the telecommunications industry what it wants, despite surveys showing more than half to two-thirds of the public support keeping net-neutrality rules as they are.
“You had, under Wheeler, a search for an answer, and under Pai, you begin with an answer,” said Michael Copps, a former FCC commissioner and now a special adviser at the left-leaning consumer-advocacy group Common Cause. “You’ve got a chairman with his mind already made up.”
The Senate voted Monday to confirm Pai to a second term as a commissioner and continue as chairman.
While the big providers have largely skipped meeting with FCC staff, what they have done is wage a PR campaign claiming they want an internet open to all without conditions, while simultaneously filing comments at the FCC seeking to kill the rules implemented under Wheeler. Big firms say they simply want to eliminate needless regulation. Their critics say the large providers are cynically trying to play both sides of the street.
Still, it’s the face-to-face meetings that have the most influence over FCC policies because executives and lobbyists can sit down across the table from rulemakers to discuss how a regulation would impact their business.
“If there is a point you really want to make, and you really want to make sure the commissioner or the chairman hears it, you go in and talk to them, one on one,” said Gigi Sohn, a former top adviser to Wheeler. “To not meet at all, on a docket like this, is highly unusual.”
The message in the few meetings is clear: Internet providers have little doubt that Pai intends to kill net-neutrality rules without considering other views.
“There was a lot of effort to shape what [Wheeler’s] notice would say,” said Harold Feld, a senior vice president at the telecommunications and internet advocacy group Public Knowledge. “Pai is about as pugnaciously pre-decided as it is possible to get.”
Pai’s public push to spike net neutrality has now drawn notice on Capitol Hill, where lawmakers want to meet with a variety of internet players and craft a possible legislative solution that would clearly spell out providers’ limits. So far that’s been a rocky process. But if the Republican-controlled Congress finds a way to pass legislation, it’s likely to align with Pai’s position.
‘Damascus road experience’
The current net-neutrality rules are also called the open internet order or Title II, a reference to the section of the Communications Act of 1934 that provides regulation of common carriers, like telephones — and it allows for tighter regulations. The current rules prohibit internet providers from charging online companies more for delivering services such as video faster to consumers, referred to as “paid prioritization.” Internet providers also can’t block or slow the delivery of content, and that prevents them from favoring their own programs and companies. Comcast, for example, owns NBC Universal and part of the on-demand video service Hulu LLC.
Pai argues that from 2014, the year before the net-neutrality rules went into effect, through 2016, those rules caused internet providers to cut spending on upgrading and expanding their broadband networks by $3.6 billion, a 5.6 percent drop, because they can’t expect a reasonable return on their investment. The analysis behind the claim was conducted by Hal Singer, a principal at Economists Inc. and a professor at Georgetown University’s McDonough School of Business. Singer said he did not receive funding for the study. Other groups, such as the left-leaning advocacy group Free Press, dispute Singer’s conclusion, arguing investments have actually increased during that time.
When the FCC proposes regulations, such as for net neutrality, it provides the public time to file comments to the agency. Companies, advocacy groups, lobbyists and the public can also meet in person with commissioners and agency staff. If they do, they must file a so-called ex parte notice with the FCC, identifying who was at the meeting and the topics discussed.
During the 123-day-comment period for Wheeler’s proposed open internet order, commissioners and FCC staff met with businesses and trade associations 50 times out of 79 total meetings, or 63 percent. During the 99-day-comment period for Pai’s proposed rules, only seven, or 44 percent, of the 16 meetings were with companies and their trade associations. The comment period for Wheeler’s proposal was longer because the FCC extended the comment and reply-comment periods after the agency’s computer system to file comments crashed.
One company that met a lot with the FCC in 2014 was AT&T. The third-largest broadband provider in the nation sat down with FCC staff more than any other provider, visiting the agency six times. Comcast, the largest internet provider, had three meetings. Verizon and broadband providers CenturyLink Inc. and Charter Communications Inc each met with the commission once.
During one meeting in September 2014, Jim Cicconi, then AT&T’s top lobbyist, and Robert Quinn Jr., then head of AT&T’s federal regulatory group, met with Ruth Milkman, Wheeler’s chief of staff, and Jon Sallet, FCC’s general counsel. Cicconi and Quinn suggested the FCC could, instead of forbidding paid prioritization, impose a “commercial reasonableness standard” on payments for faster speeds. They also warned that regulating providers as utilities would create “significant harms” and “a chilling effect on investment and jobs in the broadband economy.”
AT&T, Comcast and Verizon didn’t respond to requests to comment on why they haven’t met with the FCC this year.
Executives at Mediacom Communications Corp., which offers internet service in the Midwest and parts of the South, met with FCC staff twice in 2014 because they thought Wheeler could be persuaded to include their opinions.
“We believed, incorrectly, that Chairman Wheeler had an open mind about net neutrality and that there was an opportunity to influence the record,” said Tom Larsen, a spokesperson for Mediacom. “You could see that Chairman Pai sort of has his mind made up for what he believes the right path is for net neutrality. … You don’t often spend a lot of time convincing people on your side to stay on your side.”
Those supporting strong net-neutrality rules said Wheeler wrestled with what to do and reluctantly concluded that internet providers should be reclassified under Title II as utility-like.
Wheeler said it was a decision he didn’t expect he’d come to.
“My description of the whole process was that I had a Damascus road experience,” Wheeler said, using an idiom to describe a radical, religious-like conversion. “It was an evolutionary process, and I think that's the way the administrative-procedural process is designed to work.”
‘I can’t think of anything’
Broadband experts doubt Pai will experience a similar epiphany.
That may be why only two internet providers have met with FCC staff. Antietam Cable, in a July 12 meeting with Pai and local Maryland officials in a town library, told Pai that Wheeler’s net-neutrality rules had a “detrimental impact” on the company’s expansion of new technology. “Restoring the light-handed regulatory approach … will remove the threat of carrier rate regulation and relieve us of the fear of moving forward with our plans,” the company wrote.
South Carolina-based Home Telecom met with an FCC staffer to express the rare — for internet service providers (ISPs) — support for net neutrality: “Rural subscribers served by Home could face blocking or discrimination” and without the regulations, “the largest [internet service providers] could produce adverse results with respect to both quality and cost of broadband transmission services.”
The FCC didn’t respond to requests for an in-person interview with Pai.
But at a press conference in August at FCC headquarters, the Center for Public Integrity asked Pai why he thought so few internet providers and other organizations have come to meet with FCC staff about his proposal. Pai said he couldn’t think of a reason.
“Nothing in particular” comes to mind, he said.
Pai, as well as many of the executives at the largest internet providers, were involved in the 2014 net-neutrality debate — Pai was a commissioner — and may not be interested in rehashing the same arguments in even more meetings, said George Ford, an economist at the Phoenix Center for Advanced Legal and Economic Public Policy Studies, which typically opposes broadband regulations.
“Chairman Wheeler didn’t know anything when he started off” debating the net-neutrality rules, said Ford, whose analysis Pai also cited in his proposed rules. “Ajit [Pai] has already been through this, he’s not new to this. There’s probably a sense in the industry that what’s been said has already been said a thousand times over.”
But that’s not the only interpretation. Former Wheeler adviser Sohn, now a fellow at Georgetown Law’s Institute for Technology Law & Policy, said the lack of meetings may be the result of internet service providers not wanting their names recorded in a public document supporting a rollback of Wheeler’s net-neutrality rules, which numerous pollsshow that Americans favor by as much as 76 percent.
“In the case of the ISPs, the position they're taking is extraordinarily unpopular,” Sohn said. “I don’t think they necessarily want to put anything on paper.”
Public relations ploy
Internet providers who have ducked meetings to discuss Pai’s proposal to roll back Wheeler’s net neutrality rules have chosen to weigh in in other ways. Verizon, Comcast, and AT&T have all published comments with the FCC. In filings, which range from a couple dozen pages to more than 100, as well as in blog posts on company websites, the providers are careful to show support for the concept of net neutrality — just not the rules Wheeler implemented to enforce it.
“Comcast has been a longstanding and consistent supporter of the Commission’s policy of ensuring that the Internet remains free and open to all,” the company wrote in a filing.
In a blog post on its website, AT&T said it supported an open internet that ensures “freedom of expression and a free flow of ideas.” But, it added that current net-neutrality rules create “an environment of market uncertainty that does little to advance internet openness.”
After Pai announced his intentions to reclassify broadband, Verizon released a video on YouTube called “Where we stand on Net Neutrality,” featuring its general counsel, Craig Silliman.
“The FCC is not talking about killing the net neutrality rules. In fact, not we, nor any other ISP, are asking them to kill the open internet rules,” Silliman said.
But there’s no shortage of folks who disagree. The net neutrality that internet providers claim to support is not the net neutrality defined in the existing rules, said Nicholas Economides, an economics professor specializing in telecommunications at New York University’s Stern School of Business. For providers, an open internet means an internet free of regulations that prevent them from affecting speeds, blocking, and prioritizing content, and it’s a public relations ploy, he said.
Internet service providers “may have a PR position in which they say they love the open internet, but what they mean by open internet, does not include network neutrality,” Economides said. “It’s stuff that lobbyists put around because it sounds good to the average congressman or even the average voter, but it has nothing to do with the public interest.”
Congress steps in
Congress, which has the ultimate say in what the FCC can or cannot do, has begun to weigh in, hoping to pass legislation that will set into law what level of regulation the FCC can impose.
But that is proving to be difficult.
Rep. Greg Walden, R-Oregon, chairman of the House Energy and Commerce Committee, this summer invited CEOs from Verizon and Comcast, as well as internet companies such as Facebook, Google and Netflix — supporters of current net-neutrality rules — to testify this month on how a compromise might be hammered out.
“It’s time for Congress to call a halt on the back-and-forth and set clear net neutrality ground rules for the internet,” Walden optimistically said in a statement released in July. “In some form or another, we have been working for at least 20 years on the intertwined goals of incentivizing the huge investments needed to connect Americans, while keeping the internet open and protecting consumer privacy.”
The hearing, which was set for Sept. 7, was postponed, however, because no company had accepted the invitation to appear, according to Reuters.
Republicans said they postponed the meeting to allow more time for providers and internet companies to discuss possible solutions. In the meantime, GOP leadership, which supports scaling back Wheeler’s rules, have reportedly warned Google, Facebook and other technology companies to back off their strong support of the current regulations, according to Axios.
Rep. Marsha Blackburn, R-Tenn., chairman of the Subcommittee on Communications and Technology, introduced a bill in February 2015 to overturn Wheeler’s rules. The bill, which has 31 Republican cosponsors and no Democrats, has not been taken up by the subcommittee since, and Blackburn said this year there are no plans to because she wants the FCC to act first on net neutrality.
Most Democrats oppose any rollback of the net-neutrality rules. Eleven Democratic representatives who sit on committees with jurisdiction over the FCC and the internet filed a comment last month with the FCC calling into question Pai’s commitment to protecting the public interest.
“The agency’s responsibility is to the entire public and it is required to balance multiple important considerations,” the representatives wrote. “The FCC’s current proposal does not satisfy the Commission’s legal obligation to consider the breadth of important national priorities.”
Economides for one is doubtful that Congress can pass any sort of net-neutrality legislation. With pressure to pass tax reform, health care changes, immigration reform, and fund a border wall and construct a budget, net neutrality is unlikely to be a high priority, he said.
“It’s very difficult, time consuming and complicated to pass a telecommunications law,” Economides said. “People are going to say, ‘Why doesn’t Pai do the job and let’s see what happens?’”
The Center for Public Integrity is a nonprofit investigative news organization in Washington, D.C.
The Center for Public Integrity has taken advantage of fresh investment and unprecedented interest in Washington, D.C.-based investigative reporting to hire a spate of new journalists, beefing up coverage in existing departments and adding positions in new areas.
The jobs address needs in data reporting, audience engagement, national security and the environment, among other areas. The Center has also created a new beat covering immigration.
The positions have been made possible in part through support from the Democracy Fund, the Carnegie Corporation of New York, the MacArthur Foundation, the Grantham Foundation, the Knight Foundation, the California Endowment, the Annie E. Casey Foundation and the Wellspring Philanthropic Fund, as well as from numerous individual contributors.
“We’ve brought on board some tremendously talented individuals as well as invested in and repositioned some folks who have been with us for years,” said John Dunbar, the Center’s CEO. “We’re extremely grateful to our donors and to our readers who have made this possible.”
Chris Zubak-Skees is the Center’s new data editor. Zubak-Skees was previously CPI’s news application developer. Projects he contributed to have won Loeb, Goldsmith and Philip Meyer awards. Zubak-Skees graduated from Rochester Institute of Technology with a degree in journalism and a computer science minor. He previously served as a reporting fellow at the Sunlight Foundation.
Also joining the data team is Joe Yerardi, a former Center intern who most recently worked for inewsource, based in San Diego. He also has worked as a data editor at the San Antonio Express-News and as a database analyst for Investigative Reporters and Editors. Yerardi will be combining traditional reporting techniques with data analysis, visualization and programming to craft investigative stories. Yerardi earned undergraduate degrees in history and journalism at New York University and his master’s in journalism at the University of Missouri.
Nesima Aberra has come aboard as the Center’s new audience engagement editor. In that capacity, she’ll be responsible for outreach on myriad platforms, and will shepherd the Center’s social media efforts. Aberra recently completed her graduate degree in international media at American University. Her previous experience includes reporting at Vox, strategic communications at Neimand Collaborative and nonprofit marketing at the Mission Asset Fund. Originally from Arizona, Aberra received undergraduate degrees in journalism and global studies from Arizona State University.
Rachel Leven worked most recently for Bloomberg BNA’s environment desk, where she covered issues ranging from coal mining to environmental justice. Prior to that she was at The Hill, where her work earned a Society for Professional Journalists investigative reporting award. She received a bachelor's degree in journalism from the University of Maryland’s Philip Merrill College of Journalism.
Jeff Stern has signed up as a reporter with CPI’s national security team. He’s the author of two books, “The 15:17 to Paris” which is being made into a motion picture, and “The Last Thousand,” which tracks a coed school in Kabul as foreign troops depart. Stern has also written for The Atlantic, Vanity Fair, Esquire, Slate, Time, Newsweek and The Huffington Post, and has reported from numerous outposts overseas. He is a 2007 public policy graduate from Duke and received a master’s degree in international policy studies from Stanford in 2012.
Susan Ferriss will bring years of expertise to the Center’s new immigration portfolio. Ferriss, who joined the Center in 2011, previously was a decorated immigration reporter at The Sacramento Bee, and was stationed in Mexico City for nearly a decade as the Latin American correspondent for Cox Newspapers. Susan was also co-author of “The Fight in the Fields,” a history of Cesar Chavez and the farmworker movement. Her work has been honored by the Education Writers Association, the Overseas Press Club and Columbia Journalism School. She was a Knight Fellow at Stanford University and is a graduate of both the University of California, San Cruz and UC Berkeley.
Jared Bennett will take over a reporting slot in the Center’s “No Way Up’ project focused on inequality and barriers to economic advancement; he had previously worked as the Center’s digital editor. Bennett has a bachelor’s degree in English literature from Geneseo State University and a master’s in multimedia journalism from Emerson College. He previously served as a digital producer at Boston’s WBUR.
Kristian Hernández is the Center’s latest American University fellow; he will be working part-time on CPI’s state government project while obtaining a master’s degree in journalism from AU. Hernández previously covered crime and immigration at The Monitor in McAllen, Texas. He earlier worked for Hispanic Link news service and Homicide Watch D.C., and he interned at the Minneapolis Star Tribune and the Scripps Howard Foundation. Hernández is a graduate of the University of Texas at El Paso.
Ryan Barwick is the Center’s new Soles Fellow, which honors former University of Delaware professor James Soles, an inspiration to Center founder Charles Lewis. At Delaware, Ryan worked as executive editor of the student newspaper, The Review, and also interned for The Philadelphia Inquirer. Barwick graduated this spring from the University of Delaware with a degree in American History and English.
The new hires follow closely on the heels of three additions this summer to the Center’s federal politics team, which specializes in accountability and transparency in Washington, and shines light on the effects of big money in American elections. Lateshia Beachum joined the team in June after serving as a Kellogg Investigative Reporting Fellow at the Center; Ashley Balcerzak arrived in July after working at OpenSecrets.org, and Sarah Kleiner came aboard in July as well, after serving most recently as an enterprise reporter at The Richmond Times-Dispatch.
An in-depth Center for Public Integrity investigation unveiling close ties between state insurance commissioners and the industry they regulate has been honored with a prestigious Online Journalism Award.
The project, Drinks, dinners, junkets and jobs: how the insurance industry courts state commissioners, received the Al Neuharth Innovation in Investigative Journalism Award in the small newsroom category on Saturday at the Online News Association’s conference in Washington, D.C.
"This was a vitally important investigation that shined a revealing light on the little-understood conflicts-of-interest that continue to plague state government," said Gordon Witkin, the Center's executive editor.
Using interviews, lobbyist reports, regulator financial disclosures, court documents, campaign finance records and more than 3,700 pages of emails obtained through open records laws in 13 states, the initial piece documented the cozy relationships between the nation’s insurance companies and their regulators.
It documented the extent of a revolving door in which jobs are sought over lunches and dinners while commissioners are still in office. It mapped the financial ties regulators have to the insurers they oversee, even as their government offices are underfunded and understaffed. And it showed how these tight bonds diminish consumers’ voices as insurers press rate increases, shape regulations and scuttle investigations.
A follow-up piece highlighted the millions of dollars in political contributions that insurers made to sway 2016 races determining who would regulate the nation’s insurance companies.
Versions of the stories were co-published in The Washington Post, the Hartford Courant, the St. Louis Post-Dispatch and TIME.
The project was also honored as a finalist for the Gerald Loeb Awards and the Awards for Excellence in Health Care Journalism from the Association of Health Care Journalists.
The Center has been recognized by the ONA digital journalism contest at least 19 times since the awards were launched in 2000. Among other honorees this year were The New York Times, The Washington Post, ProPublica, the Marshall Project and Reveal from The Center for Investigative Reporting.
New financial disclosures President Donald Trump’s re-election committee filed Sunday with the Federal Election Commission tell a story of two Trump campaigns.
On one end, Trump, both by choice and circumstance, remains tethered to his 2016 presidential election effort. A federal investigation is probing whether he or his political aides colluded with Russians, and Trump himself frequently skewers his Democratic foil, Hillary Clinton, as if he didn’t defeat her in November. Trump’s campaign committee this summer spent more than $1 million on legal bills, disclosures show — much ostensibly stemming from the Russia controversy.
All the while, Trump is racing forward with unprecedented haste to win re-election in 2020. He’s conducting campaign rallies and raising millions of dollars in cash despite no one of stature — save, perhaps, for Rep. John Delaney, D-Md. — yet running against him.
Here’s a by-the-numbers look at some of the more intriguing, telling and odd figures the Center for Public Integrity discovered in the latest round of campaign finance filings for Trump and other federal politicos:
$10,129,336: Amount Trump’s re-election campaign committee raised from July to the end of September. A few notable donors that made contributions include majority Washington Redskins owner Dan Snyder, billionaire John Catsimatidis and Ashley Furniture founder and chairman Ronald Wanek. And two corporate political action committees also got an early head start in helping Trump fundraise: CVS Health and Lending Tree LLC.
$36,469,896: How much money Trump’s campaign raised during the first nine months of 2017.
$18,004,854: How much cash Trump’s campaign committee had in the bank as of Sept. 30.
1,114: Number of days until Election Day 2020.
25: Percentage of Trump’s expenses that went to legal fees. Trump’s campaign is helping foot the bill for his fees in special counsel Robert Mueller’s investigation into Russian interference in the 2016 election. Among the firms paid: Jones Day, Williams & Jensen, Liebowitz Law Firm, Belkin Burden Wenig & Goldman, Larocca Hornik Rosen Greenberg & Blaha and the Law Offices of Alan S. Futerfas. The Trump Corporation also received $25,800 for legal consulting.
$95,241: Amount Trump’s campaign spent from July 1 through Sept. 30 on businesses starting with the name “Trump.”
$167,149: Amount Trump’s campaign spent on merchandise, including hats, mugs, stickers, signs and shirts.
$9,708,151: How much money two of Trump’s joint fundraisingcommittees raised from July 1 through September. Part of the funds raised by these joint fundraising committees go to Trump’s own campaign, while the rest goes to the Republican National Committee.
8: Minimum number of major 2016 presidential candidates still in debt, including Democrat Bernie Sanders; Republicans Marco Rubio, Scott Walker, Chris Christie, Rick Santorum, Jim Gilmore and George Pataki; and Libertarian Gary Johnson. But no presidential campaign in U.S. history still owes more than Newt Gingrich’s 2012 campaign, which remains $4.63 million in debt through September. Gingrich campaign creditors include Comcast Corp., Twitter and a company run by Herman Cain, another 2012 presidential also-ran.
4: Minimum number of major 2016 presidential candidates with zero debt, including Trump, Carly Fiorina, Ben Carson and Ted Cruz. (Clinton’s campaign, which reported no debt earlier this year, had yet to file an updated disclosure Sunday afternoon.)
14: Number of municipal governments and public safety agencies Sen. Bernie Sanders’ presidential campaign committee paid to settle disputed debts stemming from Sanders campaign rallies. Sanders’ committee, as of Sept. 30, still owed nine more municipalities or agencies a combined $305,103, and a Sanders spokesperson could not immediately be reached for comment. The presidential campaigns of Trump and Clinton also continue to dodge numerous police protection bills. But unlike Sanders’ campaign, Trump and Clinton don’t acknowledge owing the money despite protestations from their municipal and law enforcement creditors.
$67,867: Amount Rubio’s 2016 presidential campaign earned renting out information about its supporters.
$146,425: Amount Fiorina’s presidential campaign transferred to a pro-Fiorina super PAC.
6: Number of incumbent Republican senators former White House chief strategist Steve Bannon reportedly wants to oust.
88: Percentage $2.9 million worth donations to of Sen. Claire McCaskill, D-Mo., that came from small donations under $100, according to her campaign. McCaskill could face a tough re-election campaign next year as a Democrat in a state Trump decisively won.
$421,788: Amount the congressional campaign of former Rep. Michael Grimm, a New York Republican, owed law firm Squire Patton Boggs for past legal work. Grimm spent seven months in federal prison after pleading guilty to tax evasion and was released last year.
$25,000: Amount Grimm paid Squire Patton Boggs to settle the debt as he launches a 2018 bid to reclaim his old seat. A spokesman for Squire Patton Boggs did not immediately respond to a request for comment.
$5,000: Amount pro-Trump hybrid super PAC Committee to Defend the President contributed last month to Rep. Chris Collins, R-N.Y., who’s under congressional investigation for his private financial dealings. Several dozen other PACs gave Collins’ committee money, too, including those of Verizon, Lockheed Martin, Altria, the National Association of Realtors and the American Bankers Association.
$0: Amount actor and Trump supporter Antonio Sabato Jr. received from Trump for his run for the U.S. House, where he’s challenging Rep. Julia Brownley, a Democrat, for her California seat. He raised a mere $41,855 so far this year through September. Brownley raised eight times that just through the end of June.
Unknown: How much Sen. Robert Menendez, D-N.J., raised this summer while facing trial on federal corruption charges. Menendez has been activelyfundraising for his re-election in 2018 campaign despite his legal woes. But because Senate candidates file their campaign finance disclosures on paper— not electronically as House and presidential candidates do — it’ll be several more days until they reveal their fundraising figures.
Carrie Levine contributed to this report
This article was co-published by TIME.
News sources today are reporting the tragic death of Daphne Caruana Galizia, a journalist who reported on the Panama Papers investigation and was renowned for her own investigations into corruption in Malta.
Caruana Galizia, 53, was reportedly killed in a car bombing near her home. Local media reports indicated that in recent days she had filed a police report complaining of death threats.
Caruana Galizia was a fearless journalist and blogger who exposed numerous offshore dealings of prominent figures in Malta. She was also the mother of International Consortium of Investigative Journalists (ICIJ) developer and data journalist Matthew Caruana Galizia.
ICIJ spun off from the Center for Public Integrity earlier this year. John Dunbar, CEO of the Center condemned the attack, saying it was “not only a tragic killing of a courageous journalist but an attack on the profession as a whole. This must not go unpunished.”
ICIJ released a statement condemning the attack:
“ICIJ condemns violence against journalists and is deeply concerned about freedom of the press in Malta,” wrote its director, Gerard Ryle. “ICIJ calls upon the Maltese authorities to investigate the murder and bring the perpetrators to justice. ICIJ’s thoughts are with the Caruana Galizia family at this time.”
No group or individual has come forward to claim responsibility for the attack according to news accounts at this writing.
Donald Trump declared last year in his populist presidential nomination acceptance speech that he’s “not able to look the other way” when the nation’s political system “has sold out to some corporate lobbyist for cash.”
But behind the scenes, several major corporations and trade groups secretly bankrolled a plush hideaway for lawmakers at the same Republican National Convention in Cleveland where Trump gave the speech, records obtained by the Center for Public Integrity show.
Comcast Corp., Microsoft, Koch Companies Public Sector, the National Retail Federation, Health Care Service Corp., the American Petroleum Institute, Chevron and AT&T are among the companies, associations and lobbying powerhouses that funded a limited liability company called “Friends of the House 2016 LLC,” according to bank records.
Friends of the House 2016 LLC, in turn, paid for the design and outfitting of an exclusive office, lounge and gathering space for Republican lawmakers — including House Speaker Paul Ryan — and controlled access to the so-called “cloakroom.”
The limited liability company effectively hid the corporations’ contributions from public view at a time when activist groups were pressuring companies to scale back giving to the Republican convention, and a few of the companies had publicly minimized their participation.
“The immediate effect is it looks like it hid certain donors to the convention,” said Lawrence Noble, senior director and general counsel for the Campaign Legal Center, a nonpartisan nonprofit that advocates for campaign finance reform.
The “cloakroom” was constructed on the Cleveland Cavaliers practice court inside the Quicken Loans Arena in Cleveland.
One company that helped pay for the “cloakroom” confirmed its contribution bought it entry to the space.
“As a sponsor of the hospitality venue, we were invited to use it, as well,” said Jori Fine, a spokeswoman for Health Care Service Corp. The company paid Friends of the House 2016 LLC $100,000, according to bank records, a payment that Fine said “supported hospitality and other events during the 2016 GOP Convention in Cleveland.”
The Center for Public Integrity obtained the bank records from a lawsuit filed in Cuyahoga County Court of Common Pleas in Ohio. To confirm the payments shown in the bank records and to determine the purpose of them, the Center for Public Integrity attempted to reach representatives of the 20 corporations and trade associations named in the records. Of the 20 companies, 15 either declined to comment or did not respond to questions.
Except for Health Care Service Corp., the companies that responded did not offer specific responses about the purpose of the payments to Friends of the House 2016 LLC or detail what they expected to receive in exchange for the payment.
The Cleveland 2016 Host Committee, which oversaw logistics for the Republican National Convention, received $923,100 from the Friends of the House 2016 LLC. The host committee facilitated construction of the “cloakroom” space, said Emily Lauer, a spokeswoman for the Cleveland 2016 Host Committee.
“This type of secure space for dignitaries has been provided at most recent conventions but is not under the control of the Host Committee,” Lauer said in an email. She directed questions about the use of the space, and who had access to it, to Friends of the House 2016 LLC.
But Jeffrey Livingston of Friends of the House 2016 LLC didn’t respond to multiple inquiries from the Center for Public Integrity.
Livingston, a political fundraisingconsultant whose clients include Ryan, was Friends of the House 2016 LLC’s registered agent, according to Virginia corporate records. A court filing by Livingston’s lawyer said that Friends of the House 2016 LLC was “established to manage and raise funds for hospitality activities and events during the 2016 Republican National Convention.”
A marketing booklet featuring photographs of the “cloakroom” space, credited to contractors Master Plan Design and Joe Mineo Creative, said Ryan’s representatives helped design the space and supervise construction.
Kevin Seifert, a spokesman for Ryan’s congressional campaign committee, said Master Plan Design’s description wasn’t accurate and that Ryan’s office “was not involved in supervising construction or consulted about the design of the cloakroom.”
Friends of the House 2016 LLC wasn’t created on Ryan’s behalf, and Ryan did not raise money for it, Seifert said.
Seifert did not respond to a request to confirm Ryan had access to and used the “cloakroom” space.
Seifert did say the only relationship between Friends of the House 2016 LLC and Ryan for Congress was a single $100 payment to purchase “a decorative item … after the convention had concluded.” He did not respond to a question about what the “decorative item” was.
’One big loophole’
Corporate donors last year faced pressure from activists to scale back their giving to the political conventions, especially the Republican convention. A prime example: Color of Change, an online group that describes itself as a “racial justice organization,” said giving to the convention was tantamount to endorsing Trump.
But national political conventions are legendary opportunities for access to lawmakers, despite ethics reforms Congress passed in the wake of influence peddling scandals. Complex rules govern even the details of events, such as food menus, but often turn on technical points, forcing lawyers to double-check legal advice every four years.
For example, although individual congressional members can’t be honored by special interests, certain delegations of lawmakers can be — and frequently are. The rules for U.S. House members and U.S. senators aren’t identical. And companies have many routes to court those in power, like sponsoring delegations or events that raise money for charity.
“The convention is one big loophole to the limits of corrupting money on politics,” said Paul S. Ryan, vice president for policy and litigation at Common Cause, a nonpartisan nonprofit that advocates for limits on money in politics. He is not related to House Speaker Paul Ryan.
Friends of the House 2016 LLC appears to have provided companies an especially discreet opportunity to support the GOP convention.
For several of the companies that didn’t otherwise donate cash directly to the Cleveland 2016 Host Committee — a list that includes 12 of the entities listed in the bank records — there was little or no public evidence of their use of corporate dollars to support of the 2016 Republican convention.
For example, Comcast Corp., which wrote a $200,000 check to Friends of the House 2016 LLC, isn’t listed as a donor by the Cleveland 2016 Host Committee.
Neither is Koch Companies Public Sector, which wrote a $100,000 check to Friends of the House 2016 LLC. In fact, a Koch Industries spokesman in June said the billionaire brothers Charles and David Koch, well-known Republican megadonors, weren’t planning to contribute to the convention at all.
Neither firm responded to a request for comment about the payments to Friends of the House 2016 LLC.
Microsoft gave a $1.8 million in-kind contribution of software to the Cleveland 2016 Host Committee, records show, but no cash.
Microsoft explained its decision in an April 2016 blog post by Fred Humphries, corporate vice president of U.S. government affairs for Microsoft. Humphries wrote: “We decided last fall to provide a variety of Microsoft technology products and services instead of making a cash donation” to the Cleveland 2016 Host Committee. Microsoft did contribute cash to the Democratic convention host committee.
Microsoft did, however, pay $100,000 to Friends of the House 2016 LLC, according to bank records. Friends of the House 2016 LLC then donated money to the Cleveland 2016 Host Committee.
In response to questions, Microsoft sent a statement through a spokeswoman saying, “We were unaware of any payments made by Friends of the House LLC to the convention committees.”
Other entities contributing to Friends of the House 2016 LLC, such as the American Petroleum Institute, Anthem Inc. and AT&T, also made separate contributions directly to the Cleveland 2016 Host Committee that appeared in public disclosure filings. Those companies did not respond to requests for comment.
In response to questions about its $100,000 payment to Friends of the House 2016 LLC, Melissa Ritchie, a Chevron spokeswoman, said, “We are committed to supporting policies and candidates that promote an economic environment where business can thrive. We follow policies and processes so that our political contributions comply with applicable laws.”
Ritchie did not respond when reminded that Friends of the House 2016 LLC is not a political committee. She also did not respond to questions about what specific policy or candidate Chevron was supporting by making the contribution to Friends of the House 2016 LLC.
Chevron contributed $250,000 directly to the Cleveland 2016 Host Committee, records show.
Diane Zappas, a spokeswoman for PNC bank, said, “Given our large presence in Cleveland and Philadelphia, which both hosted political party conventions in 2016, PNC contributed to the host committees for these cities in 2016.”
Asked to specifically address PNC’s $15,000 payment to Friends of the House 2016 LLC, she declined to comment.
PNC Foundation contributed $250,000 to the Cleveland 2016 Host Committee, records show, and also made a $1,980 payment labeled “hotel rooms.”
Luis Sahagun, a spokesman for insurer Farmers Group, which bank records show paid Friends of the House LLC $25,000, responded to detailed questions with a one-line statement: “Farmers Insurance has a long, proud history of bipartisan participation in the democratic process at both the state and federal level.”
‘Not seeing who really gave the money’
During Friends of the House 2016 LLC’s life — it materialized in August 2015 and shut down in December 2016 — it made four direct contributions to the Cleveland 2016 Host Committee. They totaled $923,100, much of which was used to pay contractors that helped create the “cloakroom.”
The Cleveland 2016 Host Committee disclosed the four contributions from Friends of the House 2016 LLC on required public disclosure reports showing contributions and expenditures.
But the disclosures, which gave almost no hint of the corporate money underlying the contributions, were opaque, especially compared to the reports filed by the 2012 Republican host committee.
In 2012, the host committee for the Republican convention in Tampa Bay, 2012 Tampa Bay Host Committee, Inc., reported receiving contributions from a similarly named limited liability company, Friends of the Host Committee.
The 2012 Tampa Bay Host Committee Inc., however, listed the names of the corporate contributors that funded the Friends of the Host Committee limited liability company.
The Cleveland 2016 Host Committee disclosed just one contribution — a $200,000 contribution from Marathon Petroleum Corp. — that carries the notation “Convention Services LLC & Friends of the House.” Marathon Petroleum Corp. isn’t referenced in the Friends of the House 2016 LLC bank records filed in court.
Democrats, meanwhile, also had a “cloakroom” space with food and drink for elected officials at their convention, where they nominated former Secretary of State Hillary Clinton. But “we did not have a separate LLC or separate fund” raising contributions earmarked for the cloakroom, said Anna Adams-Sarthou, a spokeswoman for the Philadelphia 2016 Host Committee.
The Democrats used an existing lounge space in Philadelphia’s Wells Fargo Arena. The only cost involved was for the food and drinks served there, Adams-Sarthou said. That cost was included in the total amount the host committee budgeted for food and beverages, not broken out separately.
Lauer, the spokeswoman for the Cleveland 2016 Host Committee, said in an email that she “can’t speak to how the Tampa Host Committee received its funds and reported those donations. For the Cleveland Host Committee, we received funds directly from Friends of the House which is why the organization is listed as the provider of funds.”
The Cleveland 2016 Host Committee has complied with all reporting and disclosure requirements, she said, and any questions about the source of the money should be directed at the contributing organization – Friends of the House 2016.
But if the corporate payments to Friends of the House 2016 LLC were earmarked for the convention host committee, “they should have reported the actual contributor,” said the Campaign Legal Center’s Noble.
Noble said it’s difficult to know exactly how the money was solicited or who knew the original source of it, but “the effect is that you’re not seeing who really gave the money for this.”
In addition, Noble said, if contributors believed they were giving to benefit Ryan, which isn’t certain, the situation could brush up against rules that limit spending for the purposes of honoring or benefiting a member of Congress.
The Cleveland 2016 Host Committee did label some expenditures as “rec’d via Friends of the House.” More than $235,000 in payments labeled that way went to Joe Mineo Creative, which posted photographs of the “cloakroom” space on its website.
Many of the same photographs are featured in glossy marketing materials published online.
“Defining a memorable space, in an expansive room, for our nation’s patricians can be a daunting task,” part of the text reads. The text is on a page featuring a “before” picture of the basketball court and an “after” picture showing the transformed space, which boasts wooden beams, pendant lighting and areas featuring comfortable seating, pub-style tables and chairs, flat-screen TVs mounted on the wall, and other amenities.
Master Plan Design did not respond to a message from the Center for Public Integrity. A representative of Joe Mineo Creative said the company’s “client relationships are confidential, as is the work we do for our clients, unless directed otherwise by them.”
‘Rec’d via Friends of the House’
The sources of the limited liability company’s money might have remained secret if it weren’t for a lawsuit over a series of concerts that took place during the 2016 Republican National Convention.
The lawsuit was filed in May in Cuyahoga County Common Pleas Court in Ohio by Allied Debt Collection of Virginia, a company owned by Robert Jennings, one of the concert organizers.
The suit names several defendants, including Livingston. Friends of the House 2016 LLC isn’t a party to the lawsuit. Nonetheless, the limited liability company’s bank records were attached to a court filing.
In addition to the money contributed to the Cleveland 2016 Host Committee, bank records show the limited liability company paid the Townsend Group, the firm Livingston works for, almost $386,000.
The Cleveland 2016 Host Committee’s disclosures show it paid the Townsend Group about $557,000. Two of the three disbursements include a notation that says “Rec’d via Friends of the House.”
Livingston asked the court to seal the Friends of the House 2016 bank records, arguing they were “confidential and sensitive business records that are immaterial.”
The judge granted the motion and sealed the records, but they had already been publicly available for more than a month.
The Center for Public Integrity obtained the filing before the records were sealed.