ProPublica: Government & Politics

Higher Corporate Spending on Election Ads Could Be All but Invisible

2010-03-10T09:04:22-05:00

by Chisun Lee, ProPublica -

The Supreme Court recently freed corporations to spend more money on aggressive election ads. But if businesses take advantage of this new freedom, the public probably won't know it, because it's easy for them to legally hide their political spending.

Under current disclosure laws for federal elections, it's virtually impossible for the public to track how much a business spends, what it's spending on, or who ultimately benefits. Experts say the transparency problem extends to state and local races as well.

"There is no good way to gauge" how much any given company spends on elections, said Karl Sandstrom, a former vice chairman of the Federal Election Commission and counsel to the Center for Political Accountability. "There's no central collection of the information, no monitoring."

Companies invest in politics to win favorable regulations or block those "that could choke off their business model," said Robert Kelner, chairman of Covington & Burling's Washington, D.C., political law group. But they'd rather hide these political activities, he said, because they fear backlash from customers or shareholders.

For instance, a company may want to help Democratic politicians who support health care reforms that would benefit the company, but it worries about offending "Republican shareholders who may care more about their personal ideology than about their three shares of stock in the company," said Kelner, who says he represents many politically active Fortune 500 companies. "The same would be true on the other side of the political spectrum."

Businesses must reveal their identities on public reports to the Federal Election Commission if they buy advertising on their own. But one popular and perfectly legal conduit for companies wanting to influence politics under the radar is to give money to nonprofit trade groups such as the U.S. Chamber of Commerce.

The Chamber and its national affiliates spent $144.5 million last year on advertising, lobbying and grass-roots activism -- more than either the Republican or Democratic party spent, according to a Center for Responsive Politics analysis of public records -- while legally concealing the names of its funders. The Los Angeles Times reported this week that the Chamber is building a grass-roots political operation that has signed up about 6 million non-Chamber members.

Some of the positions the Chamber has successfully advanced on behalf of its donors include a nationwide campaign to unseat state judges who were considered tough on corporate defendants and opposition to a federal bill that would have criminalized defective auto manufacturing.

Now the Jan. 21 Supreme Court ruling that increases the potential political clout of businesses is drawing fresh attention to the problem of tracking them.

That decision (PDF), Citizens United v. Federal Election Commission, allows corporations to run television ads that don't merely speak to an issue but say outright whether a candidate should be elected, and allows them to do so any time they want to, using their general funds. The ruling also gives nonprofit groups like the Chamber these new freedoms, because they are technically structured as corporations.

Before, corporations had to rely on employee and shareholder contributions to a separate political account to finance the most explicit commercials and, in the months before an election, any issue ads that mentioned a candidate. Although the decision addressed federal election rules, its constitutional rationale also dismantles similar restrictions in 24 states.

Soon after the ruling, two Democrats -- Rep. Chris Van Hollen of Maryland and Sen. Charles E. Schumer of New York -- announced they were writing a bill to make it easier to tell which companies are backing which ads in federal elections. An outline (PDF) of that bill, which is expected to be introduced this week, proposes forcing nonprofit groups to identify those who fund their political commercials.

At present, nonprofit groups don't have to disclose the sources of their advertising money, unless the donors specified that their contributions were intended for political ads.

"Unless you're sort of dumb enough to designate your contribution to the Chamber," said Meredith McGehee, policy director of the Campaign Legal Center, "no one will ever know who's the source of those funds."

Politically active nonprofits exist across the ideological and policy spectrum and include unions as well as trade groups. Their funders include both corporations and individuals, some of them very wealthy. But campaign finance experts say groups that advocate specifically for business tend to have the greatest resources, simply because corporations have the most money to give.

The lack of tracking mechanisms sometimes leaves company officials themselves in the dark about their organization's political activities, said Adam Kanzer, managing director and general counsel of Domini Social Investments, which files shareholder resolutions to push corporations to adopt self-monitoring and disclosure practices.

"In a lot of our conversations with companies, they say, 'We don't know exactly how our money is getting spent. It's hard to get those answers,'" Kanzer said. One major drug manufacturer, he said, signed on for voluntary disclosure after learning that its funds had supported a state judicial campaign that many voters -- who could be customers or shareholders -- viewed as racist.

The public price of spotty disclosure is not being able to gauge the real effects of corporation-backed politics, McGehee said. She questioned one argument, often made by defenders of the Citizens United decision, that the 26 states that have long allowed unlimited corporate advertising in their elections haven't suffered more political corruption than the rest of the nation.

"How would you know? Most of those states have next to no disclosure," McGehee said. Corporations "could be buying outcomes left and right, but because of no disclosure, we don't know." A 2007 examination by the National Institute on Money in State Politics found that, while 39 states required some degree of disclosure by political advertisers, the laws in most were riddled with loopholes. Only five states required enough detail to link sponsors with specific ads, the report said.

Rep. Van Hollen said the disclosure requirements he and Schumer are drafting would uncover the corporate political money flowing through nonprofit channels.

"If corporations spend money in these campaigns, we cannot allow them to hide behind sham organizations and dummy corporations that mislead voters," he said in a written comment to ProPublica. "Voters have a right to know who is delivering and paying for the message."

The requirements would apply to unions and liberal nonprofits as well as trade groups, according to the early outline of the bill. The proposal mentions additional transparency requirements -- such as mandating corporate disclosures to shareholders and "stand by your ad" appearances by CEOs of companies that finance commercials directly -- and seeks outright bans on political advertising by government contractors, bailout recipients and companies significantly controlled by foreigners.

A strong disclosure law would be "hugely effective" in revealing who is paying for political speech, said Trevor Potter, a former FEC chairman and head lawyer for John McCain's presidential campaigns, who is now general counsel at Campaign Legal Center.

But precisely for that reason, Potter said, politics may get in the way of any serious reform. He expects trade groups on the right, unions on the left and other cause groups across the board to fight hard against such legislation.

Already the political battle is taking shape.

Asked to comment on the push for more disclosure, the Chamber's chief legal officer and general counsel, Steven Law, instead attacked the political motives of the proponents. "Unions overwhelmingly support those who are pushing this legislation," he said in an e-mail. "This isn't about reform, it's about politicians trying to secure advantages for themselves before an election."

That reaction drew fire from one of the nation's most politically active unions, the Service Employees International Union, which also declined to comment on the new disclosure proposals. "The coming flood of corporate and foreign money into our elections through the U.S. Chamber of Commerce is a threat to democracy, plain and simple," said Anna Burger, SEIU's secretary-treasurer, in an e-mail. She called on legislators to "drag the Chamber's practices into the light of day."

The Chamber revealed more about its view of disclosure in an amicus brief (PDF) it filed in the Citizens United case on behalf of the 3 million business members it says it has. It supported the plaintiff, a nonprofit corporation called Citizens United, which wanted the Supreme Court not only to lift corporate advertising bans but also to strike down the existing disclosure requirements.

The Chamber argued that those requirements inhibited corporations from speaking out. If the public discovered that corporations were "taking controversial positions," it might punish them, the brief said. As an example, it pointed to a 2005 boycott of ExxonMobil products after the public learned the company was lobbying Congress to open the Arctic National Wildlife Refuge to drilling.

That argument failed to persuade the high court, which by an 8-1 majority decided to leave the current disclosure laws intact.

Transparency is important, wrote Justice Anthony Kennedy for the majority, because it helps voters "give proper weight to different speakers and messages," and because it allows citizens to "see whether elected officials are 'in the pocket' of so-called moneyed interests."

Kansas and Vermont Are the Latest Unemployment Insurance Debtors

2010-03-09T11:22:57-05:00

by Olga Pierce, ProPublica -

Kansas and Vermont have become the two latest casualties of record unemployment insurance claims. Both states have exhausted their unemployment insurance trust funds and have turned to borrowing from the federal government to keep unemployment benefits flowing.

The 50 states, the District of Columbia, Puerto Rico and the Virgin Islands operate separate unemployment insurance systems, and have widely varying tax rates and benefits. While a few entered the recession with ample reserves, most had far less than the 18 months’ worth recommended by the federal government.

To see how your state’s fund is faring, click here for our unemployment insurance tracker, which has the most recent data available about funds in all the states plus D.C.

Besides Kansas and Vermont, 27 other states and the Virgin Islands have together borrowed more than $30 billion. The federal loans are interest-free until 2011, but after interest kicks in, it must be paid from the states’ general funds, taking money away from roads, schools and other priorities.

While Kansas has borrowed only about $7 million so far, officials estimate the state will borrow as much as $750 million this year. That’s a significant sum relative to the state’s $25 billion budget. (It’s also small potatoes compared with other states, which have borrowed billions. We’re looking at you Michigan and California.) Even a scheduled increase in the tax on employers, from an average of $162 to $350 per worker, will likely not make much of a dent in the Kansas’ borrowing.

Vermont, which has borrowed about $4 million so far, has already increased the average tax per worker from $239 to $329 by increasing the amount of workers’ wages that are taxed from $8,000 to $10,000, and lawmakers also canceled a scheduled benefit increase.

But that will not be enough to shore up the state’s trust fund, and lawmakers are considering legislation that would take the unusual step of imposing a .02 percent payroll tax directly on employees. (Most states fund their unemployment benefits solely through employer taxes; only Alaska, Pennsylvania and New Jersey also ask for worker contributions.) They would also increase the tax rate on employers by an as-yet-undecided amount. That tax rate has not been increased since 1983.

To see how your state’s fund is faring, click here for our unemployment insurance tracker, which has the most recent data available about funds in all the states plus D.C.

No Matter What Happens, Paterson Gets His Pension

2010-03-05T13:44:30-05:00

by Ryan Knutson, ProPublica -

Gov. David Paterson of New York insisted this week that he wouldn't heed calls for his resignation, despite his administration's being roiled by two scandals. But no matter what he does, he is still entitled to his full pension once he retires. In fact, there is nothing any New York state employee can do that would cause them to lose a pension; not even a corruption conviction, being fired for embezzlement or a prison sentence.

A provision in the New York State Constitution, written in 1938 and approved by voters, protects pensions for state employees from being "diminished or impaired." Here's the wording:

After July first, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired.

This means that politicians receive their pensions even after they become convicted felons, such as State Sens. Joseph Bruno ($8,007.11 monthly pension) and Guy Velella ($6,251 monthly pension). (Messages to the former senators have not been returned, but we'll update you if we hear from them.) Pensions are determined essentially by averaging the largest three consecutive years of an employee's salary.

The provision comes from public outcry following a 1935 case in which the court established that a pension was a "legislative gratuity," according to a 1996 article in the Temple Law Review. The provision was created to protect public employees from losing their pensions because of "political manipulation and possible collapse," according to the review article.

Harry Corbitt, the State Police superintendent who resigned this week following revelations that he knew that state troopers had visited a woman who was intending to file assault charges against one of Paterson's aides, will receive a $7,064 monthly pension from the state, according to the state comptroller's office. Even if he had been fired, it wouldn't have made a difference.

New York is not alone with its "non-forfeiture" law allowing criminals to keep state pensions, according to the National Association of State Retirement Administrators. More than half of the states have this provision, said Keith Brainard, the organization's research director. "The pension benefit is part of a compensation package," he said. "It's a form of deferred compensation. It's promised amount to pay at a later date."

In other words, state pensions in most states are considered an employee's property. Typically, a pension is considered property after five years of service, said Ron Snell, director of the state services division of the National Conference of State Legislatures. Private companies, on the other hand, sometimes have looser pension protections, Snell noted.

But there is a slow creep toward tighter pension laws that would prevent corrupt officials from cashing in, Snell said. Lawmakers have proposed two bills in Louisiana in the past few weeks, and one passed in Connecticut in 2008. Such a law in Illinois recently prevented former Gov. George Ryan, who was convicted of felony corruption in 2006, from receiving his pension.

Efforts are under way in New York, too. State Sen. Liz Krueger, a Democrat, sponsored a bill that would revoke pensions from elected officials following certain convictions. That bill, however, has yet to see a vote.

Map: Fundraising Requests as ‘Census’ Surveys

2010-03-01T08:41:51-05:00

by ProPublica

Map: Fundraising Requests Posing as 'Census' Surveys

by Ryan Knutson and Krista Kjellman Schmidt, ProPublica - March 1, 2010

A few weeks ago we wrote about a faux "Census" survey being sent out by the Republican National Committee. We asked you to tell us if you've gotten similar mail. We've gotten about 40 responses pointing us to other examples of questionable invocations of the census and other official-sounding surveys that are actually fundraising requests.

Read the related article.

Follow up: The Faux Census Surveys You Received

2010-03-01T08:41:11-05:00

by Ryan Knutson, ProPublica -

One, called the "Official Ask America Datascan Survey," was sent out by the National Republican Senatorial Committee, and makes the questions on the faux "Census" form look tame. (One question from the survey: "Barack Obama and Nancy Pelosi want to confiscate legal fire arms from law abiding American citizens. Do oppose [sic] this liberal effort to restrict your Right to Bear Arms?")

In another instance, a supporter of local Democratic candidates in Connecticut tacked contact information onto brochures about jobs with the Census and mailed them out. And the FBI office in Kansas City issued a public warning over a "Census of Senior Citizens" that was really a fundraiser. Other readers shared their discontent with more innocuous surveys, like this one from Florida.

But any survey that asks for money draws the ire of the American Association of Public Opinion Research, says Peter Miller, the association's president and associate professor at Northwestern University.

"The Republican Census example is just a way-far-out-there example of a much broader problem," he said. "If you go back until about the time our organization was formed in the late 1940s, one of the major issues they mentioned at the first convention" was fake surveys that are really meant to raise money.

Miller says fake or misleading surveys contribute to an overall distrust in public opinion research, which has fueled a decline in response rates.

Miller added that the RNC's "Census" was one of the most egregious examples of this problem he's seen during his 30-year career. "It is such a blatant miscommunication, or misrepresentation," he said. "The fact that it attaches itself to the Census, it's really more pernicious than other efforts that I've seen." Late last month, Miller sent a letter to Michael Steele, the RNC chairman, asking him to end the mailers. He hasn't heard back.

Court Upholds Release of Corporate Jets List Sought by ProPublica

2010-02-26T19:03:03-05:00

by Michael Grabell, ProPublica -

A federal district judge ruled Friday that a list of private planes whose flights are blocked from the public view should be released under the Freedom of Information Act.

We at ProPublica have been seeking the list since December 2008 after the CEOs of the Big 3 automakers flew to Washington, D.C., on corporate jets to ask Congress for financial help.

The flights became known because reporters and members of the public were able to track the jets on Web sites that provide real-time information from the Federal Aviation Administration. The bad publicity led GM to try to prevent the public from tracking its planes in the future.

Under the little-known Block Aircraft Registration Request Program, companies can request that their flights be kept secret to protect the security of their executives and to prevent disclosure of business trips that could affect stock prices or give competitors an edge about potential deals.

After the GM incident, ProPublica filed a public records request to find out which other companies had tried to block their planes. The list contains only tail numbers and would not provide any information about the flights themselves.

The FAA agreed to release the list in June. But the National Business Aviation Association filed a lawsuit to block it.

The group argued that the list of tail numbers was commercial information because it could allow competitors to track historical data on where executives have traveled to and thereby gain sensitive information about the companies’ operations. It also argued that the past information could jeopardize the security of executives.

But Judge Rosemary Collyer ruled that the argument was overly expansive and outweighed by the public’s right to taxpayer-funded government records. Even if someone were to use the list to look up past flights, it would not allow the public to determine who was on the flight or what the business purpose was, she said.

Tail numbers themselves are readily searchable by owner on the FAA’s Web site, allowing any member of the public to track the same historical information about a company’s flights. And the association has long argued that general aviation does not represent a significant security threat.

“We are delighted that the court upheld the FAA’s determination and look forward to the prompt release of these records, which are clearly a subject of public interest,” said Richard Tofel, general manager of ProPublica.

The business aviation association said in a press release that it was disappointed with the judge’s decision.

“Obviously, NBAA views this as an unwise decision on the part of the court,” said Bob Lamond, the association’s director of air traffic services. “Nevertheless, our legal counsel has advised us that further appeals on the matter would not likely be productive.”

Rangel Denies Breaking Rules on Caribbean Trips, but Here Are the Questions He Still Faces

2010-02-26T12:14:02-05:00

by Alexandra Andrews, ProPublica -

The House ethics committee wagged its finger at Rep. Charles Rangel, D-N.Y., on Thursday for taking corporate-sponsored trips to the Caribbean in 2007 and 2008, a violation of congressional rules. But those trips are just the tip of the iceberg of ethics allegations that Rangel is facing. (Here’s our backgrounder on the panoply of allegations against Rangel.)

The Caribbean trips were organized by the nonprofit Carib News Foundation and attended by members of the Congressional Black Caucus, which has itself come under scrutiny lately. The ethics committee found that the other members were in the clear because the nonprofit misled them about the sources of funding. Two members of Rangel’s staff, however, knew that corporations had contributed funds to the nonprofit specifically for those Caribbean conferences. (The sources of funding were hardly a secret, though: The event’s program clearly listed its corporate sponsors, according to The Wall Street Journal, and conference posters were dotted with corporate logos.)

The fact that the trips were paid for by corporations was first reported by the New York Post and the conservative National Legal and Policy Center, which filed the complaint (PDF) with the ethics committee.

Rangel defended himself on Thursday night, saying, "I don’t want to be critical of the committee, but common sense dictates that members of Congress should not be held responsible for what could be the wrongdoing or mistakes or errors of staff, unless there’s reason to believe that the member knew or should have known. And there’s nothing in the record to indicate the latter."

Rangel may have a few more tussles with the ethics committee in his future.

According to Politico, the ethics committee is "continuing to investigate several other matters involving Rangel, including one involving his use of a rent-controlled apartment in New York and another involving allegations that he used his congressional office to raise funds for a New York research center that bears his name." Those investigations are dragging on …

Read our full backgrounder on Rangel’s troubles.

DOJ Report on Waterboarding Memos in Our Document Viewer

2010-02-26T08:00:25-05:00

by Eric Umansky, ProPublica -

The Department of Justice’s report released last week on the Bush administration’s waterboarding memos is still causing a stir. If you’re interested in looking at the report itself, check it out in our handy document viewer. It’s all searchable, and you can bookmark specific pages. We’ve also posted the responses of the main subjects of the report: John Yoo and Jay Bybee.

Many Gov’t Agencies Still Missing Required Transparency Sites

2010-02-24T13:55:40-05:00

by Jennifer LaFleur, ProPublica -

To the novice observer of transparency, the Obama administration’s directives ordering a more open government should apply to all agencies -- right? Not necessarily, according to the White House Office of Management and Budget.

Last December, OMB ordered government agencies to create “open government” pages, which it said should provide opportunities for public input. Via our handy Transparency Tracker, we’ve been following which agencies have followed through and created open government pages. The directive required them to do so by Feb. 6.

After that deadline passed, some agencies still did not have open government sites. It’s now been more than two weeks since the deadline, and at our last check this morning, 27 of 64 independent agencies don’t have such sites.

The White House, too, has tracked agencies’ transparency progress, but its Open Government Dashboard lists only 29 agencies – all of which have open government sites.

“In terms of the agencies for which we are actively tracking compliance, this would be the 24 largest agencies” plus five departments within the Executive Office of the President, said OMB spokesman Tom Gavin.

We’ve gone back and forth with OMB about why so many agencies still don’t have sites. Gavin told us that independent agencies were not required to create transparency Web sites.

Required or not, President Barack Obama certainly wants them to. As he said in his January 2009 memo on transparency:

… Open Government Directive, to be issued by the Director of OMB, that instructs executive departments and agencies to take specific actions implementing the principles set forth in this memorandum.The independent agencies should comply with the Open Government Directive.

So which agencies need to be transparent remains unclear.

“It’s disingenuous with those who are trying to hold them accountable if they keep moving the goal post down the field,” said Charles Davis, executive director of the National Freedom of Information Coalition, an open government advocacy group. “A truly transparent dashboard would say: ‘We won this one.’ ‘We’re still leaning on these people to do what the hell we asked them to do.’”

While our tracker followed a sampling of agencies, we also checked to see whether all the independent federal agencies have open government sites. We found open sites for 37 of 64 independent agencies. (Eight of those pages went up went up today, after we contacted OMB.) Some lesser-known agencies, such as the Office of Government Ethics, complied with the directive. Others, such as the Office of Compliance, did not. The directive told agencies to create open government sites at the agency’s Web address plus “/open.” It is possible that some agencies have open government pages at other addresses that we did not find.

The next deadline set by the OMB directive is March 8. By that date, OMB is supposed to provide a framework for “how agencies can use challenges, prizes and other incentive-backed strategies to find innovative or cost-effective solutions to improving open government.”

See a list of all deadlines on our Transparency Roadmap.

Stay tuned. And we’ll keep tracking.

Mass. Unemployment Insurance Fund Goes Into Red

2010-02-22T12:57:00-05:00

by Olga Pierce, ProPublica -

The Massachusetts unemployment insurance fund is now borrowing money from the federal government to keep paying benefits.

So far, the state has borrowed just over $40 million, but state officials estimate borrowing will top $1 billion before the Great Recession is over.

As we projected last month, Massachusetts joins 26 other state funds that are also insolvent. So far, they have borrowed a total of more than $30 billion just to keep benefit checks in the mail. (Is your state’s trust fund in danger?)

The mass insolvency has also taken a human toll: unemployment insurance taxes increased for employers in 36 states this year, and a handful of other states have frozen or cut benefits.

Massachusetts businesses have been slated for a hefty tax increase in 2010, which would slow the state's rate of borrowing (but not halt it altogether), but Gov. Deval Patrick recently proposed eliminating the tax increase as part of a job-creation plan that might prove popular, given that the state already has the highest unemployment insurance tax rate in the nation. A cancelled tax increase would likely lead to even more borrowing.

The states, D.C., Puerto Rico and the Virgin Islands operate separate unemployment insurance systems with minimal federal oversight. They are given wide latitude to set tax rates and benefits, and while a few entered the recession with ample reserves, most had far less than the 18 months' worth recommended by the Department of Labor. Likewise, benefit levels range from generous to bare-bones.

Massachusetts entered the recession with just under five months of reserves, and it also has the nation's second highest average weekly benefit, $423.30, which meant that when the number of unemployed workers receiving benefits spiked in early 2009, those reserves were quickly depleted.

The stimulus bill made unemployment insurance trust fund loans interest-free until 2011, but if states don't pay back their loans by then (which most states will not be able to do), they face an interest rate of just over 4 percent, meaning they will have to pay tens of millions of dollars per year in interest out of their general funds.