Last week, Berkshire Hathaway’s
Standard & Poor’s recent U.S. downgrade underlined our country’s alarming levels of indebtedness. As much as the debate about the debt ceiling captured Americans’ attention (and brought us very close to default), the political class hasn’t given much indication that any real fixes to the government’s fiscal situation are coming anytime soon.
The CEO suggestion box
Howard Schultz’s suggestion was certainly interesting. If CEOs and businesses cut off their financial support to politicians, maybe politicians would have a little more incentive to get things done.
However, early indications showed few CEOs were willing to publicly rally behind Schultz’s fighting words (money does talk, after all). But Cypress Semiconductor’s
CEOs are clearly an influential bunch. Even though these individuals rake in the big bucks, they can donate to whatever political candidates they wish, just like the rest of us.
However, Schultz’s call to arms reminds us of another factor that’s important to shareholders, which is corporate political spending.
Shareholder advocates have been increasingly pushing for transparency in corporate campaign donations. Take a look at some corporations that fielded shareholder proposals regarding political spending reports in 2011 as tracked by Proxy Monitor’s database (and votes in favor):
(NYSE: S): 40.97%
(NYSE: NOC): 38.07%
(NYSE: JPM): 30.29%
(NYSE: T): 30.98%
Last October, the Center for Responsive Politics compiled a list of the top 10 corporate campaign contributors between 1989 and 2010. AT&T came in at No. 1, having contributed a whopping $45.6 million to both Republican and Democratic candidates. AT&T also shelled out $25 million in 2006 in lobbying expenses alone.
However, let’s not forget that while business is a major source of campaign contributions, it’s not the only one. When the Center for Responsive Politics expanded the scope of its search and looked at the highest contributors for the 1989 to 2010 timeframe, AT&T was the only corporation to make the top 10; the rest of the list is comprised of unions and special-interest groups. Howard Schultz might need to get a few more folks on board with his plan to cut off the funds.
The buck stops here
Howard Schultz has said he’s been “stunned” by the response to his plan, particularly the responses he’s received from regular working Americans supporting his idea of a bipartisan boycott of campaign funds donations.
Personally, I’d like to see less shareholder money directed to political campaigns; trying to sway the marketplace through political influence is no competitive advantage and defies free-market principles.
Clearly, though, many “corporate persons” indulge in this behavior anyway. At the very least, I’m glad shareholder advocates are fighting for campaign financing transparency.
One thing’s for sure, though: Howard Schultz’s move has made news headlines and a distinct impression. Hopefully constituents great and small can remind politicians that instead of acting like toddlers in a partisan sandbox, they must do the right thing in taking responsible measures to get the U.S. economy on more secure footing.
Schultz is saying the buck should stop here. Will others -- particularly politicians -- listen?