Monday, January 9, 2012

American Politics - Who's Funding the Candidates and How Easily Can Funds Be Tracked?

I spent a bit of time today looking through the Federal Election Commission (FEC) website at the funding for the remaining Republican Presidential candidates.  I did find some interesting contributors as I will outline in this posting and I will concentrate on only four out of the hundreds that have made running for political office a "race for the bucks".  There are two purposes for this particular posting; first, to show my readers a sampling of who is behind the political party of their choice and how vast their financial power is and second, to show readers how difficult it can be to police the current political contribution limits as prescribed in Federal election laws.  

I would like to open with a quick look at political contribution limits for 2011 - 2012 from the FEC website explaining the limits of contributions to candidates and political committees:

With that as background information, let’s move to the first of our four political contributors or Political Action Committees (PAC).  The first one that stuck out was POET PAC.  At first glance, one would think that perhaps a group of rhyming writers got together and formed a political action committee.  Alas, that is not the case.  POET happens to be the world's largest ethanol producer, producing more than 1.6 billion gallons of ethanol annually from their network of 27 plants in seven states.  They claim the following:

"The people of POET are currently replacing millions of barrels of imported oil every year with clean, renewable energy. All while pumping billions of dollars back into the American economy."

I think that they forgot to mention the 45 cent per gallon or $6 billion per year subsidy that Washington (i.e. you the taxpayer) gives to ethanol refiners.  According to the Environmental Working Group, between 2005 and 2009, American taxpayers spent $17 billion subsidizing domestic ethanol production; for all of this effort, America's overall oil consumption dropped by the equivalent of a very, very meagre 1.1 mile per gallon increase in fuel economy.  The authors of this study claim that, rather than spending $17 billion to subsidize the ethanol industry, these fuel savings could have been achieved for free.

Back to POET PAC.  Here is a screen capture from their website:

That's right.  POET is not allowed to directly contribute to federal political candidates so they formed POET PAC to do it for them.  Once again, as we all know, Corporate America is a whole lot smarter than Washington and there's always a way around any given law.  While they claim to be bipartisan, in the 2012 cycle, 76 percent of their donations went to Republicans.

Here is a screen capture showing which issues are important to POET PAC:

Apparently, POET PAC will support any candidate of any Party that is seen to "support candidates...who stand up for issues that are important to our future.".  I'm not certain whether they mean issues that are important to America’s overall future or more specifically to POET’s future but I think that I can guess.

Here's what POET has been up to during the 2011 - 2012 cycle:

Most of their contributors during 2011 were farmers (one would assume corn farmers in particular since it is the feedstock for ethanol) and various POET executives including the company's President, COO, General Counsel, VP of Communication and VP of Corporate Finance.

Now, after that detour, let's go back to the GOP Presidential candidate finances and how much POET has contributed to each candidate:

Mitt Romney: $5000
Newt Gingrich: $5000
Tim Pawlenty (withdrew): $5000

Now, on to the next interesting donor/committee.

Rick Santorum who, until recently, was trailing the pack at fundraising, has only a handful of Committees that have made contributions to his efforts as shown here:

In Mr. Santorum's case, the committee that stuck out was the rather innocuous sounding Citizen's United Political Victory Fund (CUPVF).  I wonder who thinks of these names?  The mission of CUPVF is to support conservative candidates running for federal office who share their vision of reducing the size and scope of government, lowering taxes, cutting spending, promoting traditional family values and winning the war on terror.  Motherhood statements, right?

CUPVF is the fundraising side of Citizens United, an organization dedicated to “…restoring our government to citizen's control”.  The President of Citizens United, David N. Bossie, was chief investigator for the U.S. House of Representatives Committee on Government Reform and Oversight and spent at least part of his time in Washington in the 1990s investigating President Bill Clinton's involvement in Whitewater and foreign fundraising during the 1996 Clinton re-election campaign.  More interestingly, his organization has produced various documentaries, one of which was hosted by Newt and Callista Gingrich.  Citizens United has also just released a pro-life documentary video entitled The Gift of Life, hosted by none other than Mike Huckabee, yours for a "donation" of only $19.95 plus shipping and handling.

Now, let's see what CUPVF has been up to during the 2011 -2012 cycle:

They seem to be quite efficient at fundraising for a non-corporate entity, don't they?  According to Open Secrets (and not surprisingly), 100 percent of their contributions went to Republican candidates in 2012 and 2008 when they raised a whopping $3.732 million and donated $3.067 million.  That's not chump change!

Now, let's see which GOP Presidential candidates benefited from their largesse:

Michele Bachmann (withdrew): $5000
Newt Gingrich: $5000 (no surprise there!)
Rick Perry: $5000
Rick Santorum: $5000

Now, let's move along to the third donor/committee that I found interesting, particularly since I come from the energy sector.  Valero Energy Corporation Political Action Committee or VALPAC is affiliated with Valero Energy Corporation, a Fortune 50, San Antonio, Texas-based refiner and marketer of petroleum products.  It owns 16 refineries and 10 ethanol plants throughout North America, the United Kingdom and the Caribbean, making it the world's largest independent petroleum refiner and marketer.  Valero believes that:

"…it is in the best interest of Valero’s stockholders that federal, state, and local governments understand how their actions impact Valero’s business and stakeholders. Accordingly, Valero communicates with governmental organizations and officials about its business concerns."

Since law forbids Valero from using corporate funds to make contributions to political parties and candidates, it raises money voluntarily from employees and shareholders through VALPAC.  According to the Open Secrets, VALPAC has historically been a rather large PAC as shown here:

In the 2012 cycle, VALPAC had total receipts of $877,000 and disbursed $821,000 thus far, 92 percent of which went to Republicans as shown here:

In its best year back in 2008, VALPAC raised a massive $2.476 million and disbursed just over $2.5 million, 83 percent of which went to Republicans.

Now, let's see which Republican candidates benefitted from VALPAC:

Rick Perry: $5000

That's the only GOP Presidential candidate that VALPAC has deemed worthy of their support in 2012.  Perhaps VALPAC was just a wee bit more comfortable with a boy from Texas.  In the immortal words of Rick Perry and, on behalf of VALPAC, I'd say "Oops"; at this point in time, it wouldn’t appear as though that particular donation was worth it.  Now, it will be interesting to see which GOP candidate VALPAC throws its ample weight behind when Mr. Perry decides that enough is enough and withdraws from the race.

Let's look at one last donor from the past.  E*Trade is best known for it's cheaper than cheap online stock trading commissions.  Apparently, they were also known for their political activism through donations to many of the "name brand" politicians in the United States.  For instance, Barbara Boxer received $8500 between 2000 and 2004, Eric Cantor received $10,000 between 2001 and 2004, Hillary Clinton received $10,000 in 2004 and Barak Obama received $5000 from E*Trade Financial Corporation PAC.  Back in May 2007, Mitt Romney, also received a small contribution of $5000 toward his Presidential candidacy.  According to Open Secrets, E*Trade Financial is no longer active, having spent a massive $10 during the past year, however, they have raised up to $330,000 and spent up to $220,000 during the 2006 cycle as shown here:

I was rather surprised to see a company best known for its discount brokerage arm in among the “business big boys” but perhaps it’s a case of keeping up with the Joneses.  One never knows when one might need the lend of an ear in Washington.

I hope that you learned a bit about four of the fundraisers with differing agendas that back America's politicians with rather large sums of money.  Now I’d like to take a very brief look at how difficult it can be to track political contributions as they work their way through the system.

As I've said before, the Federal Election Commission website is a veritable fount of information.  It certainly does provide everyday Americans with a sense of who the power brokers are that are supporting their favoured political candidates and parties with huge amounts of money.  That said, there is one problem with this so-called "transparency", unless you are willing to connect all of the dots between one PAC and all the PACs that they donate to (in the case of large PACs like VALPAC, there are dozens), it is very, very difficult to follow the trail of money.  For example, while VALPAC did not support Michele Bachman's 2012 run for the Presidency, she did receive $7000 back in 2006 and 2007 from VALPAC.  On a more interesting and less apparent note, she received another $13,896 in 2006 and 2008 from the Rely on Your Beliefs Fund which received $32,500 from VALPAC between 2003 and 2010.  Here's another example of the obtuse relationships between committees; between 1999 and 2005, Rick Santorum received $12,000 from Fund for a Conservative Future which received $50,000 between 2002 and 2011 from VALPAC even though Mr. Santorum received nothing from VALPAC directly.  It is those nested donations from one committee to another that makes following the money trail from donor to ultimate recipient very, very difficult for Main Street Americans who wish to know who is backing their particular brand of politics.  It's almost like a money laundering scheme; if a given donation moves between enough PACs, its origins are hard to trace.  While I understand the need for contribution limits as I noted at the opening of this posting, the current system makes it nearly impossible to really determine if Federal Campaign Finance Laws are being followed.  It would certainly appear that, at the very least, the intent of the law is being flouted.

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