Thursday, February 7, 2008

The business of presidency: favors, bundling, donations

Nothing in life is free, and there is never something for nothing - except perhaps in the Bible.

In effect, people give money to other people because, they expect something in return, such as:
1) the money they gave you plus interest or
2) for you to do something for them.

There are no exceptions to this rule. Even a doting mom giving her son money when he is in college expects (hopes?) that her son will get decent grades.

With this in mind...

Lets look at the presidential election circus shall we?

Look at the top industries who give money to Barack and Hillary; you will see Lawyers and Law firms as well as Retired dominating.

What gives?
Here is where the lawyers get their money: tobacco settlements and other class action lawsuits. Now, to the uninitiated - a class action lawsuit works thus: Say a company wrongs a lot of people. For example, asbestos workers get sick from working with the stuff, or people get sick from smoking cigarettes. Now, it would be impractical for each victim to sue independently.

So what happens is lawyers sue on behalf of ALL the victims, win the case, and keep the money they won.... without giving it to the victims. For example, to receive money from the tobacco settlement, somebody would have to know which lawyer to write to, and prove to the lawyer that he smoked and was affected by the cigarettes.

From Wiki entry: "Class members often receive little or no benefit from class actions. Examples cited for this include large fees for the attorneys, while leaving class members with coupons or other awards of little or no value; unjustified awards are made to certain plaintiffs at the expense of other class members; and confusing notices are published that prevent class members from being able to fully understand and effectively exercise their rights."

In other words the lawyers keep the money. The wronged people who should get the money - do not.

Its extortion.

Its stealing...

There you go - that is why lawyers and law firms are the number 1 donor to the Democrats in 2008. The lawyers want to continue the laws that allow them to steal money from corporations, who should be paying the money to their victims (the people they wronged) and not the lawyers claiming to represent them but getting the majority of the money. It is good business for lawyers to give, for example, 9.5 million to Obama, while raping the USA economy for 30 billion.

Yes, 30 billion. With a capital "B".

Again, if you haven't read this yet, article: "Trial lawyers who represented the states during the tobacco lawsuits of the 1990s were scheduled to receive contingent fees of $750 million per year for the first five years and $500 million annually thereafter, in perpetuity. Estimates as to the total amount they will get vary from $10 to $15 billion to as much as $30 billion."

What do they expect in return? The status quo to continue and the laws to stay the same, so the lawyers can make money off the lawsuits.

That is the number 1 donor to the Democratic party - thieves (don't worry - they are bipartisan and donate to Republicans also. Just to hedge their bets...).

Lets look now at number 2 - the Retired.
Is it as simple as grandpa and grandma finding $10 under the sofa, and saying to themselves: "Golly, lets donate this money to Huckabee - I like that man because he is a christian!"

Yes, that is it exactly. Since the campaign finance law came into effect, an individual can contribute a maximum of $2300 per election (primary and presidential general elections count as separate so in effect $4600 to a candidate).

Which is good, right? Power to the people?

Not quite. While grandpa and grandma scrounge up their $10, $20 or $100, the businesses scrounge up $30,000 or $107,000 or $316,000. And who will the presidential candidate remember - the thousands of retired people who contributed millions, or the CEO of Goldman Sachs which company contributed $421,763 to Obama and $407,561 to Hillary?

My $10 bet is on the big corporation which donated $200,000 being remembered more than the Skalazoo family (name fictional) who donated a $100...

Number 3 donation is from the Securities & Investment category. Simply put, this is big business. Both Obama and Hillary got a $5 million and change. This is just Wall Street minding the store and keeping a pulse on the election - no surprise there.

Soft Money Donations. their ban and their replacement
Where there is a will, there is a way (to break the law). Since the draconian limits imposed by the campaign finance reform, how a is a rich corporation to donate its money to a presidential candidate? I mean they really want a candidate that will "understand" their point of view, and Obama or Hillary will scoff at the legal $5000 limit donation....

What to do?

Simple. Break the law.

NYTimes from 1996:

The biggest force behind the surge in fund-raising is the growth of what are known as soft-money donations, money from rich individuals and corporations that goes to the parties, not to the candidates. Critics say that soft dollars have become a backdoor source of money in the Presidential race that is easy to raise, hard to trace and makes a mockery of laws designed to prevent corporate influence peddling in Washington.

''The parties find it is a lot easier to raise $100,000 in soft money with one phone call to a corporation than to try to collect $1,000 donations from individuals,'' said Ellen Miller, executive director at the Center for Responsive Politics, a nonprofit research group.

''Soft dollars are like cyberspace accounting -- it's hard to follow where it goes,'' Ms. Miller added. ''This is classic 'wink and a nod' behavior. Soft money barely makes the letter of the law. And within the spirit of the law, it's a joke.''

They are now banned - since the McCain-Feingold law in 2002. Now no corporate money may be taken above the limit set by the law.

So what is the replacement?

Read up the discussion on Campaign Finance and the 2008 Presidential Election - it is fascinating stuff (at least to a geek like myself).

The thing that emerged in 2004 partially in response to the shut-down of soft money for the political parties and the shut-down of issue ads by the political parties were things called 527 Committees. On the Democratic side, America Coming Together, were famous for that. The Media Fund on the Republican side, Swift Boats group is most famous.

527 refers to a section of the tax code, and it's basically the section of the tax code that provides for the organization of political committees. What it really says is that income received by political committees is not taxable, otherwise, you'd have the oddity of campaign committees having to pay taxes on the contributions they receive. So basically it says that they are tax -- the income they receive is not taxable so long as they engage in political activities. And this became a device for people needing to get around the Election Law regulations.

So a couple of years ago some reporting was required as to who exactly is giving to these committees and what are they doing. But so long as these committees restrict themselves to election activities that doesn't fall within either express advocacy or electionary communication -- electionary communication being really defined mostly in terms of broadcast ads in 60 days before the election -- they too are not subject to the general limits, the dollar limits and the corporate and union prohibition, which is why they emerged as somewhat significant in 2004 mostly with large individual contributions and union contributions.

Perfect! Power to the people indeed. The very very VERY rich people.

One of the interesting developments in 2004 is that the amount of corporate soft money largely disappeared. There have been something like $500 million worth of soft money in 2000 of which about half was corporate. In 2004 there was over $400 million in 527 money. The exact number is debatable. But maybe no more than $30 million was corporate. Corporate money largely disappeared. Union money went up.

What really -- it occurred very dramatically in 2004 was the role of extremely large individual amount -- individuals giving huge amounts of money. I think I did some research on this, and it's all public records, something like there were 25 individual or married couples who together gave $150 million. George Soros led that with about $25 million of his own money. So that was really the huge turnout in 2004 was, some of it was union money, but very little of it was corporate money. Most of it was extremely wealthy individuals on both sides. Soros was obviously giving to committees that were helping Democrats and opposing Bush, so, on both sides.

Corporate soft-money disappeared, to be replaced by the super-individuals.
So who is going to be remembered by the candidate - the whats her name grandma with her measly $100 donation or... George Soros who gave about $25 million to the campaign?

There is also bundling. "(...)Bundling is basically gathering up checks from a number of people and then handing that pile of checks over to the candidate or over to the PAC or to the party. " A good primer to read on bundling is here:
The bundling of political donations once was an innocuous play in the game book of Washington political operatives. Now, the fund-raising practice has grown so widespread, and some of its practitioners so brazen, that bundling has become the chief source of abuse in the American campaign-finance system.

Mr. Hsu was charged with surpassing the legal limits on his own contributions by secretly reimbursing others for the donations he bundled together. Wisconsin developer Dennis Troha has pled guilty for repaying others for their donations to both Democrats and Republicans. Last week, the former chairman of Miami-based engineering firm PBS&J Corp. pled guilty in federal court in Florida for crimes related to funneling $200,000 to $400,000 in illegal donations to congressional candidates from Florida to Alaska.

Bundlers raised at least $109 million for the presidential candidates during the first nine months of the 2008 campaign. That figure is based on the number of bundlers that Public Citizen says raised money for each campaign, multiplied by the minimum amount that campaigns and fund-raisers say they are required to bring in to be considered bundlers. The actual share contributed by bundlers is likely higher, because top practitioners raise far more than the minimum -- nearly $1 million in Mr. Hsu's instance.

The funds bundled so far this election cycle represent at least 28% of the record $379 million raised overall for this campaign. By comparison, figures compiled by Public Citizen show bundlers accounted for 18% of funds raised in the 2004 contest, and 8% in 2000.

So how does it compare to the industry breakdown from Obama's and Hillary's industry donation breakdown?
"A name-by-name analysis of bundlers reveals that this year's operatives are drawn from the same pools as fund-raisers past. Lawyers account for about 27% of the bundlers named by Public Citizen, according to an analysis of that list conducted for the Journal by the Washington-based Center for Responsive Politics. Another 11% work in securities and investment and 8% in real estate. Lobbyists account for about 3% of these fund-raisers."

So the industry breakdown is roughly the same in bundling as in other types of donations. As if the business interests used this bundling practice to replace the soft-money contributions which are now banned. Same shit, different method.

Amazing how easy it is to break the spirit of the McCain-Feingold law?

Now, if you think about it using your own common sense, you will notice that it is very easy to cheat. A billionare may pay a few hundred thousand here and there, say it was bundled money from himself and other people... and will be all right, because how the heck can you investigate this claim?

Simply set up an internet organization, make a webpage, then donate your own money to it, and presto - unlimited presidential campaign funds. Heck, skip the webpage:
"Bundlers have become -- they play a bigger and bigger role, especially as you have more hard money requirements. And bundling is basically gathering up checks from a number of people and then handing that pile of checks over to the candidate or over to the PAC or to the party.

And the way I think about it is the campaigns are outsourcing the trouble of raising money to well-connected individuals. And sort of the reform question is, is that a problem because the one person can still only give that $2,300. But if they can drop off a pile of checks that is a million dollars, have they in essence evaded the spirit of the law?

Right now, bundlers who bundle checks bigger than $200 have to disclose, but there's no limit on how much you can bundle."

Fine. So grab a bunch of people, say that they pay $199 each, and then donate your fortune to a presidential candidate. Unless you want to do it using the 527 paragraph of the tax code.... as that money will go to your presidential candidate and not be taxed by the IRS. What a system!
""Bundling by its very nature has the potential to be coercive," says Craig McDonald, the executive director of Texans for Public Justice, a nonprofit organization that tracks bundlers for Mr. Bush. "The money often comes from people who don't want anything except to please their boss."

The dynamic extends to local campaigns. After a top executive of an Ohio company called Check 'n Go sent emails asking employees to give at least $200 to a hopeful in a local race, one employee quit. "We were told that this was voluntary, but our understanding was that a failure to do so would impact our careers," said the employee, Michael Donovan, a district director of operations."

Where there is a will (to break the law), there is a way...

But please, keep in mind this is peanuts. The REAL behind the scenes lobbying, bribes (umm sorry donations) and wheeling and dealing goes on day in day out, in Congress.

I recommend you read the Charlie Wilson's war book and my take on it to get that picture.

Bonus Material: Why I have ignored the Republicans in this post?

My theory is that the USA needs to better its image around the world. The bush presidency has damaged our international relations, and even our allies in Europe such as the UK, Germany, Italy etc, look at America as a world bully out of control.

The election of a woman or a black president will give the facade of America changing, becoming more progressive, while in reality the same policies will be continued as they were under bush, bill clinton, etc.

It will be in effect "putting lipstick on a pig" to make the pig look better.

That is why the media concentrated only and exclusively on Obama and Hillary, and literally ignored everyone else, republican and democrat.

The Ron Paul people saw and see this happening to their candidate (for example, Mr. Paul not being invited to presidential debates), similarly, the Kucinich supporters saw this happening to their candidate... But each failed to see that this is systemic, that the media and the business establishment blatantly picks our president for us.

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1 comment:

Anonymous said...

completely true and has been for many years. i suppose, at some point, you have to consider the purpose of campaign reform. do we want to reduce the amount of money involved so that more people can run? to eliminate, essentially, bribery? both?

it's unclear that any amount of reform will impact the problem. even if you were to eliminate all of these loopholes, leading candidates could still whore themselves on the television by selling (indirectly) ad time for the networks. there's no way in the world that could be policed, either. same way with promising future services in exchange for air time, etc.

i guess the sad part is that many (most?) people do not believe the extent to which this influences not only candidates but policy, as well. most of this goes back to the majority of wealth being controlled by an extreme minority, as you mentioned. but yeah, not much you can do there.... talk about it and prepare to be la[i]beled a communist, pinko traitor :) not much else.