Companies Pause PACs While Fighting Democracy Reforms – Sludge

Companies Pause PACs While Fighting Democracy Reforms – Sludge

After pro-Trump protestors assaulted the Capitol Building on January 6, politically-active corporations responded quickly by announcing changes to their PAC contributions. In the period of a week, dozens of major companies pledged to suspend all political donations or to stop donating to members of Congress who objected to the Electoral College count.

On Jan. 10, three large corporations—Marriott, BlueCross BlueShield, and Commerce Bank—told Popular Information that they were halting PAC donations to the 147 Republican members of Congress who objected to the Electoral College certification. Their going public was shortly followed by similar statements from companies including Citigroup and 3M, which said they were pausing all contributions, and T-Mobile and Wal-Mart, which were stopping donations to the 147 objectors, Then on Jan. 11, AT&T, Dow, and Mastercard announced they too would be stopping donations to the 147 Republican objectors.

The trend grew as more corporations joined in halting donations to Republican objectors to the Electoral College vote, including Amazon, American Express, Comcast, Dell, Disney, GE, Morgan Stanley, and Verizon. As tracked by the Center for Responsive Politics (CRP), around 100 companies have altered their giving policies—including Charles Schwab, which says it will dissolve its PAC, and Hallmark, which is requesting a refund of its PAC donations made to Sen. Josh Hawley (R-Mo.) and Sen. Roger Marshall (R-Kan). About half of the companies tracked in CRP’s public spreadsheet say they’re suspending all donations for some time or indefinitely, pending review, while about 20 companies as of this writing are cutting off the 147 Republican members.

Contributions from corporate PACs, which are capped at $5,000 per election or $10,000 per election cycle, make up a modest share of House Republicans’ typical campaign hauls—on average, nearly 21.3%, according to a CRP analysis of 2020 campaign cash, compared to 68.7% that came from individuals. About 16% of the 147 Republican objectors’ total raised in 2020 came from corporate PACs, according to CRP. 

PAC contributions are just a slice of the total amount businesses and their affiliated entities and individuals spend to support their preferred candidates. Much larger amounts are contributed by corporate executives and business employees to super PACs, which can accept donations of any amount and account for hundreds of millions of dollars spent every cycle on advertisements, while funneling tens of millions more to state PACs. The Daily Poster reviewed CRP data and found that the two major super PACs affiliated with Republican congressional leaders took in more than $578 million in the 2020 election, with another $50 million spent by their “dark money” arms on TV ads. The amount given directly to Republican congressional candidates by all corporate PACs combined was less than half that amount. 

For example, the PAC of Charles Schwab gave $923,000 to federal-level Republican candidates in the 2020 cycle, while the firm’s founder, Charles R. Schwab, and his wife, Helen O’Neill Schwab, together gave an additional $7 million to the Senate GOP’s super PAC, the Senate Leadership Fund. 

Several of the companies that announced a pause in PAC contributions said they are doing so out of concern for the integrity of the Electoral College results—for example, Blue Cross Blue Shield’s statement said, “BCBSA will suspend contributions to those lawmakers who voted to undermine our democracy.” But many of them are longtime members of trade groups that fight against reforms to protect democracy from threats like voter suppression, dark money, and undue corporate influence through revolving-door lobbying.

Lobbying Against Reforms to Limit Corporate Influence

Another enormous source of corporate political influence untouched by this month’s round of pledges is federal lobbying. While federal lobbying reports do not require clients to disclose specific expenditures made regarding particular issues, many of the corporations that recently paused their PAC spending are members of trade associations and industry groups that lobbied heavily against H.R. 1 when it was introduced in 2019. The bill would challenge the influence of corporate PAC dollars through the creation of a public campaign finance system and force dark money donors to be revealed, among other measures designed to address under-disclosed corporate influence in politics.  

Known as the For The People Act, H.R. 1 is a comprehensive ethics and campaign finance reform package that passed the Democratic-controlled House in March 2019 on a party-line vote of 234-193 and died in the Senate. The bill was introduced again earlier this month, with some updates to reflect changes in the campaign finance landscape, and continues to be supported by non-partisan good government groups. 

One key enhancement in H.R. 1 is its updating of the outmoded definition of “lobbyist” to encompass the practice of “shadow lobbying,” where former government officials or congressional staffers join lobbying firms and carefully tailor their activities so they don’t have to register as lobbyists and comply with ethics laws. H.R. 1 would expand what is considered lobbying to include strategic advice and counseling in support of lobbying efforts, even if the lobbying firm employee does not themselves contact a public official, and would lower the threshold of time spent on lobbying that triggers a registration requirement from 20% to 10%.

In the previous 116th Congress, H.R. 1 was lobbied against by a pro-business PAC group called the National Association of Business Political Action Committees (NABPAC), as well as the Conservative Action Project, the advocacy arm of the shadowy Council for National Policy, and FreedomWorks, a right-wing advocacy group behind the Tea Party and member of the State Policy Network. 

Also included in H.R. 1, an anti-corruption package, is the DISCLOSE Act, a bill first introduced by congressional Democrats in 2010 that would require groups that spend money on elections to promptly disclose donors who have given them $10,000 or more, adding transparency to the sources of dark money spending on elections. In 2010, Senate Republicans twice filibustered the DISCLOSE Act, which also contains a provision requiring groups to show the names of their top donors in advertisements.

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This provision would significantly affect the disclosures in advertisements paid for by the U.S. Chamber of Commerce, the lobbying group to which many of the companies whose PACs are suspending contributions belong. An analysis by the cross-partisan reform nonprofit Issue One of the Chamber’s $1.3 billion raised between January 2010 and December 2016 could identify only 7% of its funding sources, making the Chamber among the top dark money spenders nationally. The Chamber is also the highest-spending federal lobbying group, at close to $60 million spent in 2020, according to CRP. Several of the largest donors to the Chamber are suspending their PAC contributions, including Dow Chemical, 3M, and Intel.  

Heavy Lifting by Trade Groups

Two prominent corporations that recently vowed to halt all campaign contributions for six months were oil giant BP America and JP Morgan Chase. The two companies’ PACs generally make less than one quarter of their in-cycle contributions during the first six months of a new Congress, according to a Sludge review of FEC records, indicating that donations during this period are not seen as a crucial time window of influence. BP’s contributions during this time period averaged $70,875, about 17% of its average total in the election cycle, while Chase’s contributions averaged $354,800, about 23% of its average total in the election cycle. These contribution amounts, currently on pause, are likely less than each company spends every year on lobbying groups that oppose H.R. 1. 

The U.S. Chamber does not disclose its full membership roster (mostly, its founding members) or company dues, but the association does promote BP’s charitable work on its foundation’s website. The U.S Chamber filed four amicus briefs on behalf of BP after the 2010 Deepwater Horizon oil spill seeking a high degree of corporate immunity, the progressive nonprofit Public Citizen found in a Sept. 2016 report. Shortly before the full House vote on H.R. 1 in March 2019, the Chamber released a key vote alert against the bill, arguing its disclosure provisions would have the effect of “pushing certain voices, representing large segments of the electorate and U.S. economy, out of the political process altogether.” 

The Chamber was joined in opposition by 300 conservative and business groups including the American Petroleum Institute (API), of which BP is a member, that signed a March 5, 2019 letter. API has used pop-up nonprofits as dark money vehicles in recent elections, such as helping to fund a shadowy group called American Workers for Progress that ran advertisements in a Texas U.S. House Democratic primary defending the incumbent Rep. Henry Cuellar. If H.R. 1 were to pass, the group’s advertisements on topics like health care would have required it to broadcast its $1.3 million received from API. 

JP Morgan Chase is also promoted on the website of the U.S. Chamber Foundation, and the company is a member of the American Bankers Association, a major trade group that signed the 2019 letter opposing H.R. 1. 

It’s not possible to know with precision how much the Chamber has spent lobbying on H.R. 1, but the bill is mentioned as one specific issue among at least four of the Chamber’s quarterly lobbying reports from 2019 to 2020, whose amounts totaled nearly $65 million. Lobbying relationships lay the groundwork for the revolving door, when individuals leave government to work for groups like the Chamber. CRP says that political scientists have used data to show that lobbyists’ compensation is closely tied to the status of their former bosses, indicating that the ability to secure government access is more highly valued than expertise. A 2018 report by progressive watchdog group Public Citizen found that of 157 current and former Chamber employees, 90% previously worked for Republican officeholders or conservative groups.

BP is also a member of the Global Business Alliance (GBA), a trade association for multinational companies that reported lobbying on H.R. 1 across four reports totaling $1.4 million in 2019 and 2020. The reports mention, for example in the fourth quarter of 2019, lobbying on “Application of the DISCLOSE Act in the For the People Act (H.R. 1) to U.S. subsidiaries and their ability to participate in the U.S. political process and operate connected political action committees.” Other GBA members whose PACs paused all political donations include Novo Nordisk and Toyota Motor North America. In its company lobbying, Novo Nordisk mentioned H.R. 1, among other topics, in four reports totaling over $2.5 million in spending, according to disclosures. 

Among a number of other provisions strengthening ethics rules in the Executive Branch, H.R. 1 would create an easily-searchable online database of lobbying registrations, one more sortable than the current versions, which would increase transparency in tracking influence peddling.


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