FOOL ON THE HILL

Political Favors for Sale

Why are corporations allowed to contribute even one dollar to politicians? Have we forgotten that our government is meant to be operated by and for us -- the people? Corporate political donations have gotten out of hand. Perhaps we should explore ways to stop it.

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By Selena Maranjian (TMF Selena)
September 30, 2002

A question recently entered my head, and I haven't been able to make it go away. I'll share it and my thoughts, and perhaps you can give me an answer. The question:

Why are corporations permitted to contribute even one dollar to politicians?

I know there's a long history of corporate political contributions, and that, in recent years, the amount of contributions and lobbying has reached unbelievable heights. I've bristled at how corporations seem to bankroll politicians, and I've applauded efforts to rein in these activities.

But then that question pops up again -- why are we just trying to reduce such contributions, and why are we bothered by what seems like too much corporate lobbying, when really, they shouldn't be allowed to contribute a single dollar?

My position may seem anti-Foolish, since Foolishness is, to a large degree, all about investing in corporations and rooting for them to grow and grow and grow. It may seem like a good thing, investment-wise, for companies to try and shape laws to their advantage. I don't think it is, though. Why? Two reasons:

Of the people, by the people, for the people
Despite the importance of capitalism to our society, our nation isn't -- or at least shouldn't be -- a corporocracy.

Remember Abraham Lincoln's famous Gettysburg Address? (Here's a rare photo of him there.) In it, he nicely summed up what America is all about: [italics mine] "... this nation under God shall have a new birth of freedom, and that government of the people, by the people, for the people shall not perish from the earth." Well, maybe such a government hasn't perished from the earth, but it sure seems like it's perishing in America. It's morphing into a government of the corporations, by the corporations, for the corporations. Or one of the money, by the money, for the money. Ick.

Check out the bold and daring Declaration of Independence, too:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed...

Notice the words I italicized. They don't say, "from the consent of the corporations formed by some of the governed and owned by some of the governed."

It's not their money
As I mentioned in a Fool Take a month or so ago, when corporations donate money to charity (and to political causes), it's problematic -- because it shouldn't really be the CEO's money to spend. The money belongs to the company, to its owners -- in other words, to you and me.

As an example, although it might behoove our nation to move away from gas-guzzling vehicles (and for our cars' average miles per gallon to increase), the auto industry has lobbied hard against any legislation in that direction, as generally fuel-inefficient SUVs are among their most profitable offerings. Sigh. (Here's Ralph Nader on this topic. You may not agree with his politics, but I think he makes sense here.)

Why do we let them get away with it?
It just doesn't make sense, this status quo. Don't let yourself think political contributions are meaningless or harmless. After all, why would any special interest group donate to a politician, except in the hope of getting political favors? Why would corporations and others continue to plow more and more money into political coffers if it wasn't working -- getting them something in return?

You and I vote and elect representatives, but then companies (including many we've invested our hard-earned money in) are the ones often dictating the agendas of politicians.

Whatever happened to all that "for the people" stuff? Where are the principled politicians we deserve? Where are the civil servants who go to Washington to serve?

Why aren't all politicians, when grappling with issues, asking themselves questions such as: What's the right thing to do? What helps the most and hurts the fewest? What is fair? What will make this a stronger nation? How can we improve our great country so that as many people as possible can pursue happiness?

Why don't our elected representatives show more courage? I bet that if some of them took surprising stands, working to create legacies that would impress and inspire future generations, they'd also earn the admiration of today's voters. (Even if they weren't reelected, they'd be respected.)

If only they had the courage to ignore corporations and face the people. They could legislate a ban on all special interest contributions, and then they'd all be on a more level playing field, perhaps able to spend more time on issues and less time pandering.

Some scary numbers
Just in case you don't know, here are some factoids.

There are two main kinds of contributions: "hard money" and "soft money." Hard money has been the more restricted, as it involves funds earmarked for specific political campaigns. Soft money, meanwhile, has been meant for general "party-building" purposes. But times have been changing lately, with some soft dollars being used in hard ways.

According to CorpWatch, in the 2000 campaign, "George W. Bush raised a $193,088,650 war chest, more money than any presidential candidate in U.S. history, according to the Center for Responsive Politics. Al Gore came in second in the record donations, raising $132,900,252, more than any Democratic presidential candidate in history. And that doesn't include 'soft money' contributions to the candidates."

This depressing article goes on to point out how both sides seem to just follow the money, with, among other atrocities, the telecommunications industry (WorldCom, anyone?) leading Democrats by the nose and the energy industry (cough Enron) setting Republican agendas.

Campaign finance reform has been a hot topic lately, but it's always hotly contested and, in my thinking, doesn't go far enough. Here's an update on where we are now, with a law that bans soft money contributions (which topped $500 million in 1999-2000). Just think of that: Half a billion dollars that could have been spent in more productive ways than in a battle to outspend "the other guys" and get political favors.

There's one more disgusting practice to note. You've likely heard of big investment banks awarding hot initial public offering (IPO) shares to corporate bigwigs (such as WorldCom's Bernie Ebbers), hoping to get more business from them. Well, they've also done the same to many politicians, for, presumably, favors or favorable consideration. Here are some unsettling details on how some politicians were handed millions.

It's not inconceivable that a company may have some valid arguments or suggestions to make to politicians. But these should be delivered with persuasive logic, not dollars.

The unlikely can happen -- speak up!
If this all seems hopeless to you, it usually does to me, too. After all, who are we to think we can compete with deep-pocketed corporations and well-connected executives? But we can. Think back a little, and you'll see that many times in history, the unexpected -- the unbelievable -- has happened.

Who expected the Berlin Wall to be torn down? Who ever imagined that a U. S. presidential election would come down to just a few hundred votes? Who thought that some progress on campaign finance reform and corporate disclosure (such as via Regulation Fair Disclosure) would ever come about? The unexpected does happen, and it's often due to people getting ideas in their heads and not letting them go.

But let me step back a second. Perhaps, in my political naivet�, I'm all riled up about nothing. Maybe there's a good answer to my question.

Take action!

  • If you've got an answer, share your thoughts on our Fool on the Hill discussion board. (Or just tune in to see what others are saying.)

  • Share your thoughts with your representatives in Washington and your local newspaper, too.

  • Do a little digging and see what kinds of contributions the companies you hold stock in are making. Be an informed investor.

  • If you liked what you read here, send this article to some friends simply by clicking on the "Email this article" link down below.

To learn more about this and related topics, visit:

Reclaim Democracy

Public Campaign: Clean Money, Clean Elections

Open Secrets: Your Guide to Money in U.S. Elections

Political MoneyLine

CorpWatch: Holding Corporations Accountable

Common Dreams: Breaking News and Views for the Progressive Community

Center for Public Integrity

Selena Maranjian wonders, since there are laugh tracks to reinforce a TV show's comedy, why aren't there "cry tracks" for dramas? To see Selena's complete stock holdings, view her profile. The Motley Fool is Fools writing for Fools.