Watchdog Blog

Insider Trading: How Congress Can Make Big Bucks at Our Expense

It has been a difficult start for the financial services sector thus far in 2009 - yet it may be even more difficult to excuse the multitude of bad decisions made by Wall Street already (refusing to release information about bailout spending, Bank of America's $10 million super bowl ads, obscenely large bonuses for AIG executives...the list goes on).  Thankfully, it looks like Congress and the federal government are finally getting more serious about oversight of Wall Street and the financial sector.

Now also would be a good time to put an end to secret spending and insider trading immunity for government officials. 

A recent piece of legislation proposes to do just that.  Introduced by Reps. Brian Baird (D-Wash.), Louise McIntosh Slaughter (D-NY) and Tim Walz (D-Minn.), the “Stop Trading on Congressional Knowledge Act” (H.R. 682) would ensure that those with access to privileged "non-public information" gathered through oversight proceedings would not be able to use that information for personal benefit in securities and commodities trading.

Specifically, H.R. 682 would negate a little-known loophole in the law which could allow members of Congress as well as executive staffers and government officials to practice insider trading in order to enrich themselves as well as their associates.  Of course,  this type of insider trading would be wholly illegal for citizens like you and me.

The act would also be effective in combating corrupt lobbying practices, since lobbyists and stock traders ("political intelligence consultants") who haunt the halls of Congress precisely in order to glean insider tips from staff would also be banned from insider trading.

The legislation would require members of Congress and their staff to disclose stock transactions of $1,000 or more within 90 days, and require “political intelligence consultants” to register under the Lobbying Disclosure Act and disclose their financial activities.

The time to pass this legislation is now, before our tax dollars pay for any more lucrative insider investments.

Posted by Craig Holman

Editorials, Conn.'s Experience Suggest Pro-Public Funding Sentiment

Barack Obama's $150 million haul in September so dramatically exceeded the $84 million grant he would have received had he opted in to the presidential public funding system that many pundits have declared the system moribund.

But a recent spate of newspaper editorials, the successful implementation of a public funding system in Connecticut and general disgust with the current regime among politicians suggest that sentiment in favor of public funding lives on, and may be increasing.

McCain-Feingold Reality Clashes With WSJ Narrative

The Wall Street Journal's editorial board on Wednesday leveled an oft-repeated but misleading attack on the law commonly known as McCain-Feingold. The Journal, an opponent of campaign finance reform, took a measure of satisfaction in arguing that John McCain's fundraising deficit is due to the very legislation he sponsored: 

The ultimate irony – perversity, if you're a Republican – is that the great champion for today's system is none other than John McCain. Having pushed for the government to limit money in politics, he is being outspent – and, should the polls hold, beaten – thanks in part to the laws he worked tirelessly to put on the books.

What the Journal and other drive-by critics of campaign finance reform miss is that McCain-Feingold was not really intended to limit money in politics and certainly was not intended to limit campaign contributions to candidates. The law actually doubled the maximum amount an individual could contribute to candidates, from $1,000 to $2,000 per election (a figure since adjusted for inflation to $2,300). 

What McCain-Feingold did was stop the political parties from accepting corporate or union contributions, which candidates were already prohibited from doing. An honest attack on McCain-Feingold would have to start with a claim that the country was better off with the political parties trading favors in exchange for corporate and union contributions of hundreds of thousands – and sometimes millions – of dollars (in 2002, for example, Fannie Mae and Freddie Mac lavished $4.2 million in soft money on the two major parties). 

If the Journal wants to make that argument, we would welcome the debate.

Obama's Other Shoe Drops

There was much attention this weekend to the Obama campaign’s claim that it raised a whopping $150 million in September. This figure dwarfed the $84 million grant the campaign would have needed to live with for September and October if Obama had opted to participate in the public funding system, as McCain did.

But Obama evidently raised much more than even that. This weekend, Obama's joint-fundraising committee – which solicits money in Obama's name and funnels most of it to the Democratic Party – reported that it vacuumed up $69 million. The $69 million appears to be largely in addition to the campaign's purported $150 million bonanza, but we will not know for sure until the campaign issues its official September report, which is due tonight.

Contributors to Obama's joint committee are allowed to give up to $30,800, in contrast to the $2,300 maximum they can give to Obama's official campaign committee. More than 600 people wrote checks of at least $25,000 to the joint committee last month, the New York Times reports.

As we wrote on Thursday, Obama's rival for the presidency, John McCain, also has made significant use of these joint-committees, which are technically legal but make a mockery of the intent of campaign finance laws. McCain's joint committees reported last week that they raised $87 million between July and September, bringing their joint-fundraising total to $150 million.

McCain's 'On-the-Side' Fundraising Rises to $150M

During last night's debate, John McCain attacked Barack Obama for abandoning his pledge to accept public funding for the general election if his opponent did so. While we wish Obama had opted in to the public system, it's also worth noting that McCain left out a few inconvenient truths about his on-the-side fundraising.

When McCain accepted an $85 million public funding grant, he agreed to stop raising money except for modest amounts to pay for book-keeping. But McCain kept raising big money. The only difference was that he focused his effort entirely on raising checks for special "joint fundraising committees," which funnel most of the money they receive to the Republican Party. Lax campaign finance rules are allowing McCain to rake in contributions of up to $67,800 for these committees (slightly down from $70,100 while his official committee was still in business). That's nearly 30 times the maximum that Obama's campaign committee can receive.

Last night, about the same time McCain attacked Obama for his fundraising, 10 of the Arizona senator's joint committees reported that they have raised $87 million since the beginning of July, bringing their total to $150 million.

McCain's methods are technically legal, and indeed Obama has mimicked them by setting up a committee in his name to raise money for the Democratic Party. But aside from circumventing the public funding agreement, they defeat the overall campaign finance system's goal of prohibiting large contributions directly to politicians. The system permits larger contributions to party committees to facilitate party building. But by personally raising money for these committees so close to an election, McCain and Obama have erased the line separating party and candidate.

Obama’s Mistake on Public Financing (and how McCain is skirting the law, too)

Originally by Andy Wilson at TexasVox.org

Today’s New York Times reported that life is not all peaches and cream for the Obama campaign after they opted out of the presidential public financing system.  (See Article “Straining to Reach Goal, Obama Presses Donors“)

Pushing a fund-raiser later this month, a finance staff member sent a sharply worded note last week to Illinois members of its national finance committee, calling their recent efforts “extremely anemic.”

The signs of concern have become evident in recent weeks as early fund-raising totals have suggested that Mr. Obama’s decision to bypass public financing may not necessarily afford him the commanding financing advantage over Senator John McCain that many had originally predicted.

But the campaign is struggling to meet ambitious fund-raising goals it set for the campaign and the party. It collected in June and July far less from Senator Hillary Rodham Clinton’s donors than originally projected. Moreover, Mr. McCain, unlike Mr. Obama, will have the luxury of concentrating almost entirely on campaigning instead of raising money, as Mr. Obama must do.

It is not yet clear whether the Obama campaign will be able to ratchet up its fund-raising enough in the final two months of the campaign to make up the difference.

Public financing is a boon to any politician who accepts it, as it allows her or him to run free from the strings attached to big-dollar-donations and to focus the campaign’s time on where it should be spent: connecting with voters.  This is why when I explained Public Financing to Congressman Nick Lampson, currently running in the most competitive House race in the country, he was exuberant to think of a time when he would no longer have to dial for dollars. Considering the other two competitive House races in Texas, in CD 7 and 10, think of the race it would be if the campaigns were on equal footing moneywise and ideas, not dollars, affected the outcome of the race.

Lobbyists Trying to Hide in Plain Sight at the DNC

by Eric Encarnacion

Over the last month, we've talked about the pervasive corporate presence at the national conventions and the ways that big-money special interests will try to influence politicians through their stomachs and their general taste for the good life. Now, with the Democratic National Convention in Denver this week, the evidence is in: Corporations and their lobbyists are throwing lavish parties for lawmakers. They're hard to miss, as the mainstream media has started covering them.

Crashing the Convention Parties

The Democratic Party Convention is now in full swing. As you might imagine, it's quite the jet-set party scene, with well-heeled lobbyists and corporate CEOs schmoozing with our members of Congress and other luminaries.

Like you, we're sick of special interests coming before voters - just look at the mess we're in thanks to this pay-to-play system. Big Oil, Big Pharma and other corporate titans have had their way with our government for too long.

That's why we're crashing their parties!

Lobbyists gone wild!

By Joe Newman, originally posted on Citizen Vox.

How much would you need to throw a great party for several thousand friends? Imagine what you could do with $1 miilion. The possibilities boggle the mind.

I’m thinking little meatballs served with 14-carat gold toothpicks. Now, imagine if you had $112 million at your disposal. That’s how much money corporate sponsors and lobbyists are contributing to this year’s Democratic and Republican conventions, events that have become less about the American political process and more about seeing who can throw the most lavish soirees.

A report released today by Public Citizen shows how corporations and lobbyists are exploiting loopholes in election law and congressional ethics rules to turn the conventions into a place where they can wine and dine lawmakers and lobby them away from Capitol Hill.

Some of these parties appear to cross the line and put lawmakers who attend in violation of their ethics rules, the report says. You can learn more and read the Public Citizen report at www.SayNoToLobbyists.org.

Big Corporate Influence is in the Bag

When the welcome bags for the 2008 DNC national party convention were revealed earlier this month, bloggers took notice. Why? Because the bags are covered in corporate logos.

As blogger and New York Times Bestselling author Glenn Greenwald points out, the national party is making little effort to conceal which companies are financing the convention, instead placing their logos unabashedly on the bag that every delegate and member of the media will receive when they arrive at the conventions [Salon.com, July 20, 2008].

But the benefits of corporate sponsorship go well beyond prominent advertising on welcome bags. A quick look at the sponsorship packets that the host committees give to possible sponsors betrays the true purpose of corporate sponsorship - a guarantee that big-money contributors will have special access to elected officials attending the conventions. The fact that corporate donors have been so reluctant to disclose the exact amount of their contributions further suggests that their interest in sponsorship is far from benevolent.

The Denver host committee packet promises donors who give more than $500,000, "Platinum" and "Presidential" sponsors, access to premier Denver venues for corporate hospitality events and receptions. The Campaign Finance Institute (CFI) has reported that the original Minneapolis St. Paul host committee packet offered top sponsors a golfing outing with Republican leadership, in addition to a reception with local party officials and US Senator Norm Coleman.   

Though these perks were removed from the packet following a number of critical articles in local and national media, the fact remains that the primary benefit that host committees offer to corporate sponsors is exclusive access to decision makers. To ensure that ordinary voters have a voice at the conventions, Congress must act to close the conventions soft-money loophole.

Learn more about corporate sponsorship of the conventions and take action today!

Big Money Influence at the Conventions

Written by Zoe Bridges-Curry and Angela Canterbury.

"I look forward to the day, by 2008, when Americans can turn on their TVs and watch the Nokia Democratic Convention, or the AT&T Republican National Convention."

                                                        - Bradley Smith, former Republican member of the FEC

What happened to putting voters first?  Well, yesterday, our own Craig Holman threw down the gauntlet and told CQ [$] that campaign finance and ethics watchdogs will be out in force, keeping tabs on the events and making noise over rules violations.

Campaign finance laws like the Fair Elections Campaign Act (FECA) were created in part to end the undo influence of corporate donors.  Contradicting the spirit of these laws, political parties continue to use the national party conventions to secure millions of dollars in corporate contributions, funneling contributions through the supposedly nonpartisan host committees.  The Federal Elections Commission (FEC) has even approved this maneuver, thereby allowing wealthy corporations privileged access to elected officials at the conventions.

For the political parties, the conventions are the perfect opportunity to circumvent existing restrictions on soft-money donations, because donors can make lavish contributions to the conventions’ host committees. A report recently released by the Campaign Finance Institute (CFI), estimated that approximately 80% of the estimated $112 million needed to hold the conventions will come from private donors, primarily large corporations.

As both the report and a quick visit to the DNC convention website make clear, in return for sizeable donations, host committees for both parties offer corporations and other big donors exclusive access to elected officials at the conventions.  The greater the donation, the greater the access to advertising opportunities and influential convention attendees. In his talking points for meeting with potential corporate donors, Republican Governor Tim Pawlenty from Minnesota offered corporations the chance to “connect with influential government officials (Cabinet, President, next President)” [New York Times, June 7, 2008]. An added bonus for donors: corporate donations to the host committee are tax deductible, meaning that, ultimately, it is taxpayers who subsidize corporate privilege at the conventions.

The CFI report documents that “Presidential” donors who give $1 million to the DNC Convention receive VIP access to the Pepsi Center convention hall and all Host Committee-sponsored events, numerous advertising opportunities, and the opportunity to attend private events with Colorado Governor Bill Ritter, U.S. Senator Ken Salazar, and other party officials. As advertised in brochures given to potential donors, corporate donors to the GOP Convention receive similar perks for a $5 million donation.

To ensure that voters’ voices are not drowned out by big-money interests, it is crucial that Congress act to prevent unlimited soft-money donations to convention host committees and to ensure public financing for elections.

Take Action! Tell your members of Congress to comply with existing ethics laws at the conventions.

Campaign Finance Reformers Open the Floodgates

By David Arkush and Craig Holman. Originally published in Roll Call ($).

The presumptive presidential nominees, Sens. John McCain (R-Ariz.) and Barack Obama (D-Ill.), are exploiting a major loophole in the campaign finance law. Both Senators are setting up joint fundraising committees that allow the wealthy to donate $70,000 or more on behalf of their campaigns.

You might wonder how this squares with the $2,300 limit on contributions from individuals - contribution limits that the Bipartisan Campaign Reform Act of 2002 sought to protect by banning large soft-money contributions.

Heres how McCain Victory 2008, one of the candidates new joint fundraising committees, is accepting $70,100 from donors: The first $2,300 is treated as a contribution to the McCain campaign. Then, $2,300 goes to McCains compliance fund. The next $28,500 is earmarked for the Republican National Committee. And the remainder - up to $37,000 - is split between the Colorado, Minnesota, New Mexico and Wisconsin Republican parties.

McCain set up at least six joint fundraising committees. Obama announced on April 25 that he, too, will set up a joint fundraising committee with the Democratic National Committee.

Bundlers in Limbo

Yesterday, Roll Call ($) pointed out that a hard-won ethics reform is languishing because the Federal Election Commission (FEC) remains without a quorum.  The political wrangling over the Commission – and downright stubbornness of the Republicans in their insistence on the appointment of Hans von Spakovsky has left candidates and lobbyists in limbo.

Public Citizen worked to pass the landmark lobbying and ethics reform bill last year in the wake of continual congressional scandals.  One of the benefits of this new law is that it requires federal candidates – running for Congress or the presidency – to disclose if lobbyists are “bundling” campaign contributions of their behalf.  The FEC is supposed to implement and enforce this new law, and they are out-of-commission (so to speak).

Roll Call quoted Taylor Lincoln, research director of Public Citizen’s Congress Watch division:

The delay in implementing the rule is depriving the public of important information. It’s best the public knows as much as it can.  We’d rather have disclosure of all the bundlers, but lobbyists are the best place to start. By definition, they’re in business to ask the government for favors, so their contributions should be looked at the most skeptically.

Obama's Answer

On February 15, we sent a letter to Senator Barack Obama urging him to keep his promise to opt-in to the Presidential Public Financing system if he were the Democratic nominee, and the Republican nominee also used public funds. The likely Republican nominee, Senator John McCain, has agreed to these terms, but a spokesperson for the Obama campaign recently made a statement that conflicts with the committment made by Senator Obama. 

Read Obama's response printed in USA Today:

Both sides must agree
I will seek a good faith pact that results in real spending limits.

In 2007, shortly after I became a candidate for president, I asked the Federal Election Commission to clear any regulatory obstacles to a publicly funded general election in 2008 with real spending limits. The commission did that. But this cannot happen without the agreement of the parties' eventual nominees. As I have said, I will aggressively pursue such an agreement if I am my party's nominee.

Lobbyists Playing Bigger Role in Presidential Fundraising

The number of lobbyists raising money for the 2008 presidential candidates already has eclipsed the total for the entire 2004 campaign, according to a Public Citizen study released today.

So far, candidates still in the race have recruited 142 federal lobbyists to raise money for their campaigns, compared to 136 lobbyist fundraisers in 2004.

A clearinghouse of the 2008 presidential candidates’ big fundraisers is available at www.WhiteHouseforSale.org.

Sen. John McCain (R-Ariz.) has 59 lobbyist-bundlers raising money for him, almost twice as many as former New York Mayor Rudy Giuliani, who has the second-highest number. Among Democrats, Sen. Hillary Clinton (D-N.Y.) has garnered the most support from lobbyists, 20, a predictable outcome because her two main remaining competitors have eschewed support from individuals currently serving as lobbyists.

The roster of known lobbyist-bundlers for McCain grew substantially on Monday, when his campaign held a fundraiser at a tony Washington steakhouse. Among 29 co-chairs listed on an invitation for the event were 24 registered lobbyists. Lists of the lobbyists raising money for each candidate are included in the study’s appendix.

Download the Public Citizen study [pdf].

Fair Elections Gets Stump Time

Our friends over at Common Cause highlight the recent Democratic debate in Nevada where public funding of elections got some air play.  Senator Obama explained: 

Ultimately, what I would like to see is a system of public financing of campaigns and I am a co-sponsor of the proposal that is in the Senate right now.  That's what we have to fight for.

Watch it.

In fact, all of the Democratic candidates have expressed their support for a congressional public funding system modeled on those in Arizona and Maine.  Senator Clinton announced her support back in April.

The publicity is great.  However, in the meantime, nearly all of the candidates could be doing a lot more to disclose where their private money is coming from.  Yesterday, we sent letters to candidates asking them (again) to make the information on how much money their bundlers are raising for their campaigns public. 

A keystone benefit of public funding is that special interest money can no longer buy influence with candidates.  Until we fix the presidential public financing system, the voters at the very least have the right to know who is bankrolling the candidates.

Candidates Still Not Disclosing: Public Citizen Demands More on Bundlers

Public Citizen today sent letters to the seven major presidential candidates who have yet to provide any insight into how much their top fundraisers have raised. The letters asked the candidates to promptly disclose the names of bundlers who have brought in at least $100,000. The letters note that this minimal standard for disclosure was set by then-Gov. George W. Bush in his 2000 presidential campaign.

All of the candidates who have a realistic chance of capturing their party’s nomination are using bundlers, but only Sens. Barack Obama and Hillary Clinton have provided any insight into how much their bundlers have raised. Obama names bundlers who have raised at least $50,000, $100,000 and $200,000; Clinton discloses bundlers who have raised at least $100,000.

The eventual winner of this presidential election will almost certainly feel a debt of gratitude to his or her bundlers. Voters have a right to know who these superfundraisers are before they choose which candidate to send to the Oval Office.

Letters to the candidates can be viewed here.

A New Chance to Make Presidential Campaigns about Voters Not Dollars

Today, amid considerable fanfare, bipartisan legislation was introduced in both houses of Congress to overhaul the way we finance the presidential campaigns. It is long, long overdue.

In 2008, winning the nation’s highest elective office is going to cost $1 billion between the two major party candidates. The figure is even higher if you include the vast sums spent by all the other candidates, parties and political committees.

Let’s put this figure into a little perspective. Viable presidential candidates must raise at least $100 million each by the end of 2007, before even entering the actual election year. This means collecting five $2,300 campaign contributions “every single hour, every single day, including weekends and holidays, for an entire year,” estimates political scientist Michael Malbin.

And then the fundraising really kicks into gear next year.

Where does all this money come from? Mostly from the same special interests who have business pending before the federal government. In order to make sure that jingle of the pocket books of any particular special interest are heard loud and clear, businesses and wealthy special interest groups will be represented by a “bundler.”

Bundlers usually are CEOs or lobbyists of a business or industry. They will approach a campaign and receive tracking identification from the campaign, say, a tracking number. The bundler then reaches out to all the managers and other individuals of the business or industry and ask them to mail in their individual campaign contributions of $2,300 (the legal limit from an individual to a federal candidate), and write the company’s tracking number of the check. That way the campaign knows which business or industry is responsible for those contributions.

Bundlers Lurking in the Smoky Backroom Again in 2008

Bundlers bring more to the table than just cash. Just ask anyone on the receiving end of a Norman Hsu or Jack Abramoff special delivery. While not all bundlers will be as obviously scandal-tainted as a man wearing a bright yellow prison jumper, Hsu and Abramoff weren’t the first, and likely won’t be the last big fundraisers to bring along a little corruption with the loot.

Bundling is the new smoked-filled room of campaign fundraising. In fact, bundlers are starting to knock other means of financing right off the map. They are swamping the candidates with more money from than the frontrunners could possibly get from the presidential public financing system, thus helping to hasten its tragic demise.

Whether bundlers deliver $50,000 or $1 million, they expect something in return. The favor may be as simple as a photo opportunity that allows them to enhance their status with business associates, or it may be even more nefarious, like a government contract or tax break. In a world of six- and seven-figure campaign contributions, corruption and scandal may not be far behind.

Become a Bundler and Travel the World

WhiteHouseforSale.org has become the go-to source for finding out who is bundling for whom.

Many wonder what all these people are paying for. What happens to bundlers who “invest” in the winning candidate?  If Bush's treatment of his bundlers is any indication, then the current crop of bundlers can look forward to rewards like easy access to power and appointments to plum positions here and overseas.

Read and watch CBS's investigation of the bundlers behind the presidential candidates, including comments from Congress Watch division director Laura MacCleery.

What do bundlers get for all their dough?

Charles Swindells became Ambassador to New Zealand; John Palmer, the ambassador to Portugal. Charles Cobb's wife, Susan got the post for Jamaica. All raised at least $100,000.

What's most troubling about bundling is the common occurrence of industry shills buying their way into positions of power with piles of campaign contributions.  At the regulatory agencies, this cronyism can translate into relaxed enforcement, big tax breaks and special earmarks for big business.  It seems that bundling is a seriously good investment.

Workin' Too Hard For His Money

On Thursday, John Edwards announced that his campaign will accept public financing for his presidential campaign. Edwards told reporters that the decision was about taking “a principled stand” in favor of public financing and challenged his top opponents, Sens. Hillary Clinton and Barack Obama, to do the same.

The public funding system was designed to help candidates like Edwards, whose polling in states like Iowa clearly demonstrates his ability to appeal to voters, just not the ones with the deepest pockets. That system hasn’t kept up with the times, however. Both Clinton and Obama will probably raise $100 million by the end of this year, money they’ll be able to spend freely. Edwards, meanwhile, will have his spending in most areas restricted to less than half of that. The frenetic pace set by this season’s primary schedules unfortunately tilts the playing field toward the most heavily-funded candidates. Restoring the public financing system would put some much needed balance back into the contest, giving all voters a better voice.

Clinton to Return Tainted Money

In a surprise move, Hillary Clinton announced that she would return contributions totaling $850,000 from convicted felon and captured fugitive, Norman Hsu.  Hsu bundled this obscene amount of contributions from about 260 other donors. Clinton’s campaign is following the urging of Public Citizen and others to return the tainted cash to each donor.

As we’ve mentioned before, Clinton is not the first to deal with unsavory fundraisers, and Clinton is not the only candidate to have received money from Hsu.  Around 24 Democrats have accepted campaign contributions from Hsu since 2004.

One can’t help but wonder who the 260 people Hsu collected money from are and what influence was promised in exchange.  So far, Clinton’s campaign isn’t disclosing the names of the donors bundled by Hsu.  The names of these individuals and their ties to Hsu should be public record – just as all bundled contributions should be.

Unfortunately, the ’08 candidates have been even more secretive than Bush and Kerry were in ’04 about who their bundlers are and how much they have raised (are there more Hsus waiting to drop?). None of the presidential candidates in this election are adequately disclosing their bundlers to the public, and none of the campaigns – until now – have bothered to fully check the bundler’s backgrounds. You can bet that each campaign is feverishly doing background checks on anyone who has given them (or their opponents) hefty sums of money. 

New Report on Lobbyists-Fundraisers

Today, Public Citizen released a new report on its website www.WhiteHouseforSale.org comparing current lobbyist-fundraisers to those from the 2004 presidential campaign.

There is more and more news of candidates returning money from fundraisers with illicit pasts.  You would think the presidential hopefuls would be persuaded to end the practice of allowing lobbyists to funnel money into their campaigns, but so far most have remained hooked on this bundled cash.

One key finding of our report is that the number of lobbyist-fundraisers for 2008 is fast approaching the number from the 2004 election cycle. The total number of lobbyist-fundraisers for the entire 2004 cycles was 136. As of today, based on the best data available (many campaigns have not been forthcoming with information on their fundraisers – Rudy Giuliani’s office, for example, has not responded to our requests for a list of his bundlers) there are already 92 federal lobbyists fundraising for presidential candidates. 

With more than a year left in the 2008 season, there is reason to believe many more lobbyists will stake a claim on a candidate and bundle contributions to a campaign.  So far, fewer than 30 percent of 2004 lobbyist-fundraisers have shown up on the 2008 candidates’ lists of fundraisers; most are still sitting on the sidelines waiting for a front runner to emerge (many likely see fundraising for a loser as a bad investment ...).

The Real Dirt on Presidential Fundraisers

The newspapers lit up this week with revelations that Norman Hsu, a top fundraiser for Hillary Clinton, not only may have violated campaign finance laws by laundering contributions through family members but is also a fugitive facing jail time.

While the press enjoyed a reprieve from the dog days of August, partisans delighted in the chance to score some points. Michelle Malkin, Washington’s reigning queen of indignation and a stand-in host on the “fair-and-balanced” network, gleefully taunted, “What say you now, Hillary?” on her blog. Malkin later opined that even Clinton’s pledge to return Hsu’s contributions could not erase the “stain.” Oooooooh.

Clinton’s troubles are about the same as the unpleasant circumstance Mitt Romney faced in mid-August when news broke that a Maryland grand jury had returned a 23-count indictment against a co-chairman of his national finance committee. Ouch. Malkin’s blog item scolding Romney for his failure to perform due diligence on the co-chairman, Alan B. Fabian, is available here. (Oops. Curiously, a review of Malkin’s archive was unable to unearth any such item.)

Aside from the fact that partisans will use campaign finance scandals for their own advantage, here is what the Hsu and Fabian episodes really show: Our campaign finance system attracts unsavory fundraisers - and candidates have little incentive to ferret out the bad apples. In reality, their true incentive is to remain blithely ignorant of their donors’ histories.

No More Campaign Cash from Lobbyists

I just learned from on rssrai on MyDD that a Gallup Poll released today shows that more Americans believe that the presidential candidates should NOT take money from lobbyists:

Eighty percent of Americans say that candidates for president (generically) should refuse to accept campaign contributions from Washington lobbyists; only 18% say it is okay to accept these donations.

Wow.  We are in really good company.

Gallup also asked how people felt about Hillary Clinton taking cash from Washington lobbyists with stunning results:

Even Clinton's base supporters -- rank-and-file Democrats -- say the New York Senator should refuse to accept campaign contributions from lobbyists. Sixty-nine percent of Democrats say Clinton should refuse lobbyist contributions -- not much different than the 71% of Republicans and 75% of independents who share this point of view.

On previous occasions, when asked, Senator Clinton has said that she will continue to take campaign contributions from lobbyists who “represent real people”.  I guess folks aren’t buying that anymore.

If you’d like to be the next person to ask her about lobbyist campaign contributions, check out our guide to finding the candidates and getting real answers (otherwise known in the rabblerousing trade as bird-dogging).  Of course, we'd also like to ask all of the candidates to stop taking gobs of money from the special interests those lobbyists represent.

Will McCain Run on the Presidential Public Financing System?

Yesterday, McCain became the first candidate eligible to receive funding from the presidential public financing system, having applied to the Federal Elections Commission earlier in the month.  He has not yet said whether he will accept the matching funds. 

It could be a lifeline for his campaign and make the system once again functional in the primary.  However, it is a tough call for McCain’s campaign since the system badly needs updating and he would be the sole candidate running accepting the spending limits in exchange for the federal funds. 

The fact that the system is still being considered in the primary shows it’s not dead yet.   However, it also highlights the real need to breathe new life into the system so that it can be an asset to more of the qualified candidates who could opt in and stay competitive.  Read what must be done to improve it on White House for Sale.

Edwards Agrees to Opt In

Edwards is the latest candidate to agree to use the presidential public financing system if he is the Democratic nominee and the Republican nominee also opts into the system. 

The Washington Post rightly gives Edwards kudos, and notes that he joins Obama and McCain in making the pledge. 

How about the others?

Until now Clinton has hedged, saying she would “consider” it.  Any candidate who says they support public funding of elections has an opportunity to walk the talk now.  Time to bird-dog.

Laura MacCleery on WVOX

Last week, Laura MacCleery, director of Public Citizen's Congress Watch division, spoke to New Yorkers about the recently passed Lobbying and Ethics bill, the role of lobbyists in campaign fundraising, Fair Elections, and presidential bundlers.

Listen to her interview on WVOX.

Romney Should Come Clean About Tainted Bundler

The indictment last week of Alan Fabian continued a rich tradition of major presidential fundraisers – or bundlers – running aground with the law.

If convicted, Fabian will follow in the footsteps of Jack Abramoff, Ken Lay and Thomas Noe, to name a few presidential bundlers who were subsequently convicted of felonies. And Fabian would enjoy a rare distinction among convicted bundlers: He would manage to taint not one, but two presidential candidates, Bush in 2004 and Mitt Romney in the current cycle.

A federal grand jury in Maryland indicted Fabian on nine mail fraud counts, nine money laundering counts, one obstruction of justice count, two bankruptcy fraud counts, and two perjury counts in a scheme that allegedly defrauded several companies and financial institutions of $32 million. Read about it in the Boston Herald and the Boston Globe

For its part, the Romney campaign is providing lessons in how to do the absolute least to make amends when the law comes knocking on a bundler’s door. In the wake of the indictment, the campaign announced that it was returning Fabian’s $2,300 contribution, but not the untold thousands (or hundreds of thousands) that Fabian brought in from other sources. The campaign wouldn’t even say if it would return the money contributed by Fabian’s wife.

“The money he helped raise was donated by people who have not been accused of any wrongdoing, and so there is no reason for returning it,” a campaign spokesman said.

In point of fact, there is plenty of reason to be suspicious of money raised by Fabian if the allegations against him prove true. Corrupt bundlers sometimes hit their fundraising targets by furnishing money to others on the condition that they contribute it to candidates. This shortcut was one of the things that landed Bush bundler Thomas Noe in the slammer. (Stealing from the Ohio’s Bureau of Workers' Compensation fund was the other.)

But there is a more fundamental question that remains unanswered: Who did give to Romney at Fabian’s behest?

The modern era of bundling took root in George W. Bush’s first campaign when the campaign figured out how to track the money arranged by bundlers without having to comply with disclosure requirements that would kick in if the bundler actually handled the checks. Bundlers had the contributors they solicited send checks directly to the campaign with their bundler’s number written on the check. The Bush campaign agreed to provide some information about who its bundlers were but not who the bundlers solicited contributions from.

If Romney really wanted to demonstrate that his Fabian-arranged donors were clean, the least he could do is say who they are.

White House for Sale on Counterspin

Laura MacCleery, director of Public Citizen's Congress Watch division, was interviewed about the White House for Sale project on FAIR's CounterSpin last Friday, August 10th.

Listen to hear Laura explain the role of bundlers and the state of transparency thus far in the 2008 presidential election (roughly two-thirds of the way through the program).

Tying it all together

Yesterday morning, the Washington Post explored how the dash for cash puts pressure on lower level employees and others to pony up when the boss has signed on to financially support a candidate. The Post found that 526 secretaries, administrative assistants and executive assistants have contributed to the presidential candidates in the first half of this year, a roughly four-fold increase from the 127 donors with those occupations who contributed during the same time period four years ago.

In a somewhat dismissive aside, the Post cited Former Federal Election Commissioner Scott Thomas' reading that pressuring low-paid subordinates isn't even necessarily illegal as long as supervisors don't "facilitate" the donations. Bundlers would, however, be breaking the law if they are reimbursing their employees under the table. The paper seemed to be making light of what seems to be a credible explanation. What are we supposed to think when an employee, who may only take home $20,000 to $30,000 a year after taxes, is forking over as much as a tenth of their paycheck to a candidate?

They talk big, but will candidates deliver the fundraising transparency we need?

Originally posted on Laura MacCleery's diary at MyDD

Last night, Presidential hopeful Barack Obama reiterated once more that he does not take money from lobbyists:

OLBERMANN: Thirty seconds. Senator Obama, I know you and Senator Edwards have taken a firm stand against accepting money from lobbyists, yet you allow them to raise money for you and, as the phrase goes, "Bundle it." What's the difference between those things?
OBAMA: No, no. I do not have federal registered lobbyists bundling for me, just like I don't take PAC money.  (APPLAUSE) And the reason that's important is because the people in this stadium need to know who we are going to fight for. And I want to be absolutely clear that the reason I'm in public  life, the reason I came to Chicago, the reason I started working with  unions, the reason I march on picket lines, the reason that I'm  running for president is because of you... (APPLAUSE) ... not because of the folks who are writing big checks. And that's a clear message that has to be sent, I think, by every candidate.

Click here for full transcript. 

Presidential Candidates Debate Lobbyist Campaign Contributions

At the Yearly Kos convention this past weekend, presidential candidates sparred over accepting contributions from lobbyists (which would include having lobbyists as bundlers). They all agreed, however, on the need for public funding of elections.

The Debate Heats Up on Bundlers

In this week’s CNN/YouTube debate, former Sen. Mike Gravel (D-Alaska) took on Sen. Barack Obama (D-Ill.) on the question of his bundlers. 

Here’s the exchange:

GRAVEL: We're not united. I'm not united on many of their views. And I want to take on Barack Obama for a minute, who said he doesn't take money from lobbyists. Well, he has 134 bundlers. Now, what does he think that is?

And, besides that, he has received money from a Robert Wolf, the head of the USB (sic) bank in the United States, who raised $195,000 -- from this bank -- wait a second -- who has lobbyists in Washington...

COOPER: Your time is up.

GRAVEL: ... and it's a foreign-owned bank.

COOPER: Senator Obama, I'm going to have to let you respond.

OBAMA: Absolutely.

Well, the fact is I don't take PAC money and I don't take lobbyists' money.

And the bundlers -- the reason you know who is raising money for me, Mike, is because I have pushed through a law this past session to disclose that.
And that's the kind of leadership that I've shown in the Senate.

That's the kind of leadership that I showed when I was a state
legislator. And that's the kind of leadership that I'll show as president of the United States.

GRAVEL: Wait a minute...

I’ll have to sort this out later….

Kudos to Gravel for bringing some attention to the role that bundlers play in presidential politics.  But what do we really know about bundlers?

White House for Sale

Welcome to White House for Sale 2008! 

This new and revitalized destination site gives you the scoop on big bundlers who are powering today’s billion-dollar race to the White House.  Bundlers have enormous influence in determining election winners because they funnel huge sums from other people to candidates.  Candidates, for their part, often bestow cutesy titles on them (remember Bush’s “Rangers” and “Pioneers”?) and reward them with access and plum government positions if they win.

In the 2004 presidential campaign, more than 60 of Bush’s big bundlers were federal lobbyists, including disgraced lobbyist Jack Abramoff, whose influence-peddling scandal laid down breadcrumbs into several congressional offices as well as the Interior Department and landed Abramoff in prison.  Bush’s bundlers back in 2000 included former Enron CEO Ken Lay, who was subsequently allowed to help choose two of the five regulators charged with overseeing energy companies.  We all remember what happened there.

We think it's long past time for the “For Sale” sign on the White House lawn to come down and stay down.  So, we are at it again for the 2008 campaign.  This time, the task is more challenging because most of the major candidates are opting out of public financing and being showered with cash collected by bundlers.

The current crop of White House hopefuls is actually worse than the very minimal disclosure standards set by Bush, Dean and Kerry.  In 2004, those candidates made bundlers’ names readily accessible and provided at least some insight into how much money bundlers raised.  So far in this election, only one 2008 candidate (Barack Obama) is disclosing anything about how much his bundlers are raising.

We don’t plan on letting that slide.  We are going continue to demand disclosure by bird-dogging the candidates and relentlessly pursuing better disclosure of the big donors.

Hearing on Fair Elections

Ordinary voters are being drowned out by corporate and wealthy special interests that co-opt our elected officials and raid the treasury for earmarks and tax breaks.  The result is policy for Big Pharma, Big Oil and Wall Street.  We can change all that with the Fair Elections Now Act.

The Senate Rules Committee is holding the first congressional hearing in more than a decade on publicly funded elections.

Watch it live on June 20, 10:00 a.m. EST!

Take a minute to become a Citizen Co-Sponsor of the bill and tell your Senators to break free from corporate and wealthy special interests.

Why do you think publicly funded elections are so important?

UPDATE: You can still watch the hearing at the link above.

Dodd offers support for Clean Elections - Who's Next?

In the first Democratic presidential debate last week, Senator Chris Dodd of Connecticut separated himself from the pack as the only candidate who vocalized his support for Clean and Fair Elections.

According to Washington Post's David Broder:

Dodd, who has been in office longer than any of the other candidates, said it is true that he has accepted money from interest groups but insisted that he is a longtime advocate of public financing of campaigns.

Specifically, Dodd said:

We have already talked a bit about campaign finance reform. I’ve been a long advocate of public financing of campaigns. I believe this is one of the great threats to our country; that not enough people are qualified and want to seek public office. Put aside the presidency of the United States, talking even about congressional seats or local seats, it’s becoming prohibitive. Certainly, until the law changes, you have to do what you can to raise the resources.

No one knows more about the costs of our current financing system than incumbents.  Special interest money plays a major role.  And you better believe those special interests consider their campaign contributions a good investment.

Aside from removing the pressure to return favors to special interests, most candidates would prefer not to spend valuable time leading up to Election Day scrambling for a few extra dollars, but rather get their views out and motivate the electorate to cast their ballot.

Hopefully, we will hear more about the need for public funding from Dodd -- and the other candidates will stand up for a fundamental change, as well.

Joan Claybrook at The New School

Check out a video of Public Citizen President Joan Claybrook's recent panel discussion at The New School.  The panel was well-attended – focusing on "How to Return Democracy to the People."  Joined by former lawmakers and political scientists, the vibrant discussion dealt with the burden on politicians to drum up campaign cash and  showed how full public funding for congressional elections would do a lot to end the money chase.  Joan was joined by former Senators Bob Kerrey and Warren Rudman, John Rauh of Americans for Campaign Reform, Costas Panagopoulos, PhD., and Brennan Center Executive Director Michael Waldman.

(If you have trouble viewing this video, try here.)

$28,500 per Couple...

This is what it costs to rub elbows with House Speaker Nancy Pelosi (D-Calif.) and ten other important House committee chairs.

This week, the Democratic Congressional Campaign Committee hosted the pricey event at the estate of Albert Dwoskin, a local real estate baron.

ABC News' Jake Trapper raises a valid concern:

"The event will be one of the highest-dollar fundraisers since the McCain-Feingold campaign finance limits were enacted in 2002 and it opens Democrats — who campaigned against the GOP's 'culture of corruption' last November — to charges of hypocrisy."

It's time to end this endemic hypocrisy by fundamentally changing the rules of the game.  The Fair Elections Now Act would do the job, allowing members of Congress to recuse themselves from the pay-to-play system we have today.

Who is Killing the Presidential Public Funding System?

Suspect #1: Sen. Mitch McConnell (R-Ky.) - He recently called for the abolishment of the presidential public funding system.  His defense is that presidential candidates are choosing not to opt-in and that the public doesn't want to pay for it. McConnell says fewer people are checking a box on the federal tax forms to give $3 to program.  Is it true that the public doesn't want to pay for this?  A poll from last summer showed that 74% percent of the public supports publicly funded elections.  They believe the cost of running for office is out of control and would rather it be paid for by the public than by special interests.  Also, many states and municipalities have passed public funding or “Clean Elections.”

Suspect #2: The Presidential Candidates - Current candidates have all decided to fund their campaigns from private sources.  Sen. Hillary Clinton (D-N.Y.) is asking her biggest supporters to fork over $1,000,000.  At this rate, the 2008 presidential candidates could be expected to raise more than $500,000,000.  With these exorbitant entrance fees for the presidential elections, it is no wonder the public funding system can’t keep up.  No one in 1974 ever expected this kind of largess.

Clinton puts 'Rangers' to shame - Clinton Should 'Tell All' About Bundlers

Today, the Washington Post editorialized about Sen. Hillary Clinton's (D-N.Y.) one-million-dollar ask of supporters for her presidential bid. This dwarfs the $200,000 which Bush asked prospective Rangers to raise. Every four years, the bar for presidential fundraising shoots skywards - 2008 will surely take us to new stomach-turning heights.

The Federal Election Commission sets contribution limits at $2,300 per person for the primary, and allows another $2,300 per person for the general election. Big donors get around these limits by driving truck loads of cash through a loophole known as bundling. It allows people (especially those of the lobbyist variety) to keep funneling money to candidates long after reaching their personal limit. Examples of bundling include lobbyist who host fundraisers or corporate CEO who ask employees to make donations.

If running for president means asking supporters to gather this obscene amount of money, the public deserves to know who the bundlers are, whose money they are bundling and how much they bundle. Both Bush and Kerry chose to tell the public this information in the 2004 election, but such disclosure of bundling is entirely voluntary. It should be mandatory.

Reps. Chris Van Hollen (D-Md.) and Marty Meehan (D-Mass.) are co-sponsoring a bill (H.R. 633) that would require disclosure of bundling by lobbyists for all presidential and congressional candidates. The Senate already passed this measure in their lobbying and ethics reform bill (S. 1). You can take action here to ensure the House does the same.