Shakedown

Resources on Congress and lobbyists.

Ten Races to Watch: An irreverent look at the midterms Citizens’ Revolt: Voters face some radical ballot initiatives Bathed in the rose-orange hues of a springtime sunset, the Capitol dome gleamed in deceptive brilliance as the U.S. Senate voted last May to ban itself from taking freebies from lobbyists. No gifts, no junkets, no winings-and-dinings. Soon to be gone, forevermore.

Bathed in the whitehot TV light that is now the official afterglow of every Washington news-moment, Common Cause crusader Fred Wertheimer was more than glowing–he was gushing–about the 95 to 4 vote. “This will fundamentally change the way business is done in Washington and on Capitol Hill,” he declared.

Bathed in the light gloss of perspiration, a passel of self-proclaimed populist senators dashed off the Senate floor, out the Capitol door, down the street, and into the special non-taxpayer-supported offices of their campaign committees. There they reached for their phones and began conducting their twilight ritual: dialing for dollars.

Nothing in their overwhelming vote was going to fundamentally change their daily quest for campaign cash from the lobbyists who represent the special interests their committees oversee. If that Senate vote dealt with any kind of change, it was just chump change–a ban on baubles, bangles, and bright shiny beads. It said nothing about quasi-bribes, the very legal solicitations that senators and representatives undertake each day.

Make no mistake: The senators and representatives who are now posing as populist reformers by banning themselves from taking small gifts are still campaigning for re-election under rules that permit (some would say “compel”) them to solicit (some would say “shake down”) special interests for contributions. American folklore is rife with tall tales (handed down from Will Rogers to Mort Sahl to Johnny Carson to Jay Leno) about lobbyists with bulging wallets who prowl the Capitol corridors, buying (or at least renting) legislators for the price of a campaign contribution. But the truth is that it works mainly the other way.

Every day, our elected officials dial up lobbyists and lawyers who control the PACs (political action committees) of the special interests (corporations, labor unions, and citizen do-gooders) whose fates and fortunes are under the jurisdiction of their congressional committees. The legislators are not dialing to swap pleasantries. They are calling, quite simply, for money: $5,000 or $10,000 or even $15,000 if they are soliciting the maximum amount for a primary, a primary runoff, and a general election. It is about as close to soliciting bribes as payments of money can legally be. Every senator and representative and lobbyist knows the law. So no one mentions any specific piece of legislation. They know the rules. But they also know how to play the game.

PLAYING THE GAME

Sen. John Glenn, D-Ohio, is sitting comfortably at a private phone in the posh offices of the Democratic Senatorial Campaign Committee. He has just voted to ban himself from taking trinkets from lobbyists. Now he is asking lobbyists to give him big bucks–$5,000 and $10,000–and the irony does not escape him.

“There is this dichotomy that drives you crazy,” Glenn says. “We’d just voted in these new ethics rules that say we can’t accept a hamburger from the lobbyists. But we can ask them for $5,000 from their PAC and $1,000 from him and his wife. It’s just plain crazy.”

Understand where Glenn is coming from: Three decades ago, he was astronaut John Glenn, circling the world in a semi-crouched position, jammed into a cramped space capsule the size of a golf bag, while the world held its breath. But now Glenn, who remains an Eagle Scout by Washington standards, finds himself jammed into another uncomfortable position. He feels forced to pander.

Campaign finance costs have skyrocketed to sheer lunacy. Senator Dianne Feinstein must raise $22,000 a day to keep her seat in november.

“It’s gotten so gosh-darned expensive to campaign that you have to work every day for six years to raise enough money to run for re-election,” he says. “If you haven’t come into someone’s home via television, you’re not going to get their vote. So here we are, spending an inordinate amount of time each day, not doing the people’s business but just raising money.”

The reason? The cost of campaigning for Congress has skyrocketed to sheer lunacy. Sen. Dianne Feinstein, D-Calif., who raised $8.1 million to win her Senate seat in a special election less than two years ago, now finds she must raise a reported $22,000 a day–yes, each day!–to amass the $10 million she figures she’ll need to keep her seat this November. The system by which we now finance our democratic process virtually forces Feinstein and her colleagues to quit doing the public’s business for hours each day so they can dial for dollars.

SHAKING DOWN THE MONEY TREES

Collegiality, of course, is the official rule in the House and Senate. But the competition gets fierce, back in the cloakrooms, when members joust for committee assignments. Yes, some still look to match their expertise–but most are seeking a committee that will provide an enriching experience. Enrichment, in the form of campaign contributions, comes with the turf for those who get seats on the House Ways and Means and Senate Finance committees, tax-writing panels where lobbyists anxiously work the corridors daily. But all committees that oversee major industries–banking, commerce, energy–prove lucrative for the campaign contribution needs of their members.

The greening of the members of the Senate Banking, Housing, and Urban Affairs Committee stands as a living, self-renewing monument to the price we pay for the system by which we underwrite democracy. The extent to which special interests from banking, Wall Street, real estate, and insurance underwrote the campaigns of senators who oversee their industries is meticulously documented in “Open Secrets: The Encyclopedia of Congressional Money and Politics” by Larry Makinson and Joshua Goldstein of the Center for Responsive Politics (where I am a senior fellow). Their analysis shows that contributions are bipartisan–the special interests are far more interested in influence than ideology.

A conservative–Sen. Alfonse D’Amato, R-N.Y.–was the Banking Committee’s champion shaker of the banking and financial money trees. D’Amato received $1,143,033 for his winning 1992 campaign from banking, finance, real estate, and insurance interests. A liberal–Sen. Christopher Dodd, D-Conn.–received almost as much from the same special interests: $967,075. A moderate–Sen. Arlen Specter, R-Pa.–collected $844,347 from those whose business is overseen by the Senate Banking Committee.

Contributions to members of the parallel committee in the House–Banking, Finance, and Urban Affairs–also illustrate the corrosive influence of special interests. Consider Rep. Charles Schumer, liberal Democrat from New York: It was his House Judiciary Committee work on crime-fighting issues that put him in the news spotlight so frequently–but it was Schumer’s seat on the House Banking Committee that put him in the chips as he raised $407,746 in 1992 campaign contributions from banking, finance, real estate, and insurance interests. Schumer was the committee’s number-two recipient of money from industries it oversees. The champion shaker was Rep. Tom Campbell, R-Calif., who got $842,114 from these industries for his unsuccessful Senate race.

THE WAY IT WORKS

Some members of Congress make their own solicitation calls, and others have an aide solicit for them, but lobbyists say it makes little difference. The thing that gets their attention–and their PAC money–is whether the representative or senator has the clout to make a difference to their special interest.

House Ways and Means Chair Dan Rostenkowski, whose desire for dollars has been chronicled in a 17-count indictment, never called to ask for money, lobbyists say. “And yet we all lined up to give him all the money he wanted,” concedes one of Washington’s most prominent lobbyists. Senate Minority Leader Bob Dole also shuns the chore of dialing for his own dollars. Dole’s aide makes the call; then if the contribution is promised, Dole calls later, just to say thanks.

But many of Washington’s grandest congressional celebs do make their own calls. Sen. Orrin Hatch, the everdapper, ever-conservative Republican from Utah who holds positions of influence on the Senate Labor, Finance, and Judiciary committees, makes his own solicitation calls–and does not like to take no for an answer. Lobbyists from finance and industry hold Hatch in high regard but cite him as a member who, while always proper, can be most persistent, even if he is not always persuasive.

A typical call from Orrin Hatch to a lobbyist from the world of finance and industry goes like this (we won’t put the words in quotation marks, because no one was taking notes; but lobbyists swear this is the way it sounds from their end of the phone):

Hi. Orrin Hatch here. How are you doing? Have you heard about the fund-raiser I’m having? I need $10,000 from you. (The lobbyist says that’s more than the PAC can afford.) But I need it. (The lobbyist says the PAC doesn’t give that kind of money anymore.) But this is ME!

Rep. Henry Waxman, a liberal Democrat from California, is both a major power on the House Energy and Commerce Committee and an influential voice of reform. But he says that while he’s pro-reform, he can’t afford to be shy about picking up the telephone and making some calls to raise money. He raises money for himself and for his colleagues, and he does it just the way everyone else does–by calling those who have particular interests before his committees. As chairman of the subcommittee on health and the environment, Waxman has been adept at getting maximum allowable contributions from some lobbyists whose special interests rarely coincide with Waxman’s more progressive politics. And when Waxman doesn’t get the full $5,000 contribution he requested from a health interest group he rarely supports, he’ll usually come away with $3,000. “I’m sure they are thinking, ‘Well, most of the time Waxman won’t be doing us any good, but sometimes he’ll do what he can’–so they contribute something,” Waxman says.

It is also instructive to look at Waxman’s quick rise to power in the House. Working squarely within the system and the law, Waxman created his own PAC and contributed some $24,000 to the 1978 campaigns of his House Energy and Commerce Committee colleagues. These recipients were, in turn, duly grateful, and they voted to make Waxman a subcommittee chairman, bypassing the more senior moderate who was in line for the job, Rep. Richardson Preyer, D-N.C., who eventually retired.

SHOWDOWN AT THE K STREET CORRAL

“CAMPAIGN FINANCE SHOWDOWN NEARS; HOUSE, SENATE LEADERS DEADLOCKED Over Limiting PAC Donations.”

All along Washington’s K Street, the lawyers and lobbyists who mass-produce loopholes–it’s the capital’s only local industry–know this “showdown” fuss is bogus. The law limits contributions by a PAC to $5,000 per election, and well-intentioned reformers want to cut that in half. But these limits aren’t hard to get around: In 1992, 21 senators and 29 representatives received campaign contributions from an individual corporation or special interest that exceeded $20,000 (twice the legal limit), and one received $130,405–13 times the legal PAC limit from a single special interest! It’s all perfectly legal–through a loophole called bundling, in which a company or other special interest has its executives write out personal checks to a candidate’s campaign, then wraps the checks as one big bundle of joy to make sure the candidate can measure just how grateful he or she should be.

BUNDLING, a favorite loophole, allows companies to group executives’ checks together to make sure the candidate knows how grateful to be.

Since 1907, it has been illegal for companies to give direct contributions. But they can create PACs through which they can give in limited amounts. Or they can use the bundle loophole and give as much as they want. Securities firms have been the most energetic corporate bundlers; seven securities firms made the “Open Secrets” list of 1992’s biggest bundlers for needy senators. Lobbyists are understandably proud of their bundling loophole and know it won’t be effectively closed by any “showdown” compromise.

Ironically, Capitol Hill’s 1992 recipients of the biggest and second-biggest bundles from a single special interest were two liberal first-termers. Sen. Barbara Boxer, D-Calif., received $130,405; Sen. Carol Moseley-Braun, D-Ill., received $83,190. They topped all of corporate America’s traditional pals because women’s rights groups got their activism together and outbundled the big boys.

The women’s rights PAC, called EMILY’s List (for “Early Money Is Like Yeast”), bundled almost $1 million in reported large contributions of $200 or more; EMILY’s List actually takes credit for bundling as much as $6 million when individual small donations are included. But lest the liberals and women’s rights advocates get swept away by their success, the sobering fact is that their money (be it $1 million or $6 million) is dwarfed–and will always be dwarfed–by the total from corporate America.

Right behind the bundles received by Boxer and Moseley-Braun, for instance, was D’Amato’s $62,051 bundle from Bear, Stearns & Co. He also got a $32,600 bundle from Goldman, Sachs & Co.; $28,450 from Morgan Stanley & Co.; $24,605 from Merrill Lynch; $23,600 from Smith Barney; $22,990 from Coopers & Lybrand.

JUST SAY NO TO PACS (WITH A WINK)

Bundling and other schemes to organize individual contributions enable high-minded politicians to refuse publicly to take PAC contributions–but still get plenty of special interest money. Sen. John Kerry, a liberal Democrat from Massachusetts, has taken a firm stand against taking money from PACs. But Kerry, a vocal supporter of campaign reform, has taken gladly from special interests, according to Makinson and Goldstein. About 30 percent of Kerry’s contributions of $200 or more came from individuals representing special interests voted upon by the Senate Commerce, Science, and Transportation Committee on which Kerry sits. His contributions included $239,125 from entertainment and communications firms regulated by that committee; among them: Time Warner, Walt Disney Co. and the Disney Channel, Continental Cablevision, and MCA Inc.

About 27 percent of his contributions of $200 or more came from individuals representing special interests before the Senate Banking, Housing, and Urban Affairs Committee on which Kerry also sits. He received $853,441 from finance, insurance, and real estate interests. Kerry also received $670,205 from Washington lawyers and lobbyists–individuals who no doubt represent interests before his committees.

THE SIPPER-AND-SUPPER SUPER LOOPHOLE

Senators and representatives also need not stop shaking the lobbyists’ money trees just because a lobbyist’s PAC has maxed (that’s Washingtonspeak for having contributed its maximum legal contribution). They then ask the lobbyist to host a fund-raiser at his or her home or office and invite other lobbyists to come for cocktails and check-writing. Or, if the member of Congress has enough Capitol clout, for dinner.

Washington lawyers work at hosting these affairs where fellow lobbyists can meet-and-greet members of Congress with the sort of indefatigable energy that lawyers in other cities employ inside courtrooms. According to fellow lobbyists, attorney Thomas Boggs of Patton, Boggs, and Blow–son of the late House Majority Leader Hale Boggs and retired Rep. Lindy Boggs of Louisiana, brother of ABC’s Cokie Roberts–is the undisputed champ at hosting a meet-and-greet. “I must get one invite a week from Tommy to come to a meet-and-greet in his office,” says one lobbyist.

LOBBYISTS’ LAMENT

As viewed by the lobbyists, heavy-handed hits from senators and representatives are a bad problem that has gotten worse. The solicitations pour daily into the K Street office of Neal Gillen, a well-connected and well-respected lobbyist for the cotton industry, by phone, by fax, by midday mail. His cotton industry PAC is quite modest in size. But there is nothing modest about the volume of solicitations he receives.

“It never stops,” Gillen says. “About half of my faxes these days are solicitations. The worst are the guys who call and ask you to host something at your home–a fund-raiser dinner. They say, ‘My campaign is tapped out, and I’ve got to raise money to get out a mailing.’ Mostly I just say no.”

Some years ago, Gillen and fellow lobbyist Clarence Martin of the American Psychological Association tried to find a humorous way to bring some law and order to the shakedown system. They drew up a bill that made it a violation of federal law for senators or representatives or their staffs to solicit funds from anyone registered as a lobbyist with Congress. Figuring that members might not see the humor in a threat to send legislators to the calaboose, they decided the bill should be sponsored by two representatives: one had the surname Love, the other Kindness. But their visions of “The Love and Kindness Bill to Protect Lobbyists” came acropper because of unforeseen difficulties. They discovered that Love was no longer in Congress–and then Kindness didn’t take kindly to the idea. “He threw us out of his office,” Gillen laughs.

Even in the doldrums of June, one lobbyist received 34 requests for funds in one week. One celebrated lobbyist says the solicitations have gotten so out of hand that lobbyists now play a little trick on senators and representatives. Because the law prohibits politicians from soliciting contributions from offices supported by federal tax dollars, the politicians go to special facilities set up by their party’s campaign committees to do their dialing.

“When we get a call from a senator or representative, we need to know if it is a call about legislative business, or a solicitation for money. So we have our secretary tell the senator or representative, ‘He’s on the phone now, but if you give me your phone number, he’ll call you right back–just as soon as he gets off the phone,’ ” says the lobbyist.

“Now, if we see that the senator is calling from a 224 exchange or the representative is calling from a 225 exchange, we know it’s from the Capitol and we call right back. But if they leave a 675 or 863 or 479 number, we know they’re in their campaign fund-raising office. And then, well, we often don’t get around to returning their call.”

LOOPING THE LOOPHOLES: PUBLIC FUNDING

There is only one way the American people can end the abuses by which special interests now invest in campaigns and reap huge profits on their investments at our expense. We must be willing to support a new system of democratic financing of congressional campaigns–with public financing as the centerpiece. We will discover that we have bought ourselves a bargain.

Here’s why: Special interests do not think of it as contributing–they consider it investing. And they are investing so grandly in political campaigns because they have calculated that they’ll reap grander profits in return, in the form of legislative decisions–an unwarranted subsidy here, an undeserved tax break there. What Americans must recognize is that the tax money that the government spends to finance all or most of the Senate and House campaigns will cost us millions less than what our government is now spending on subsidies, tax breaks, and assorted bonanzas that are often just paybacks to the special interests.

Various proposals for public financing have gained credence in recent years. The Working Group on Electoral Democracy, an organization of grassroots organizers and researchers, advocates “democratically financed elections” based upon total public funding of campaigns. To qualify for public financing in a primary election, House candidates would need to demonstrate their initial public support by raising 1,000 contributions of $5 each; Senate candidates would need to raise 2,000 contributions of $5 plus 250 additional contributions from each of the state’s congressional districts.

Two experts, Jamin Raskin and John Bonifaz, worked up some detailed cost figures for such a system in an article published in the Columbia Law Review in May. They say it will cost the federal treasury $500 million a year–about $5 per taxpayer, each year–to finance all congressional campaigns. Their plan, however, would require TV and radio stations to provide free time to candidates.

My own view is that we shouldn’t ask the stations to donate their revenue-producing product when we don’t require newspapers, cable TV, airlines, phone companies, and even button- and bumper-strip makers to do the same. Some counter that TV and radio broadcast stations are different because they use public airwaves. That’s true, but no longer really relevant. Years ago a community had only public airwaves–no cable channels–and station owners had a real monopoly. In today’s cable-wired world viewers choose from among scores of TV cable channels. So why penalize a broadcast station owner and give every cable station owner a free ride?

TV ads account for a third or less of most campaign spending, so double or even triple that $500 million figure to pay for broadcast media ads and taxpayers would still get a bargain rate for democracy–we would be paying $1 to $1.5 billion a year. That’s a lot of money, but it pales when compared to the $500 billion that the General Accounting Office says we’ll pay over the next 40 years to bail out the savings and loan industry. We’re paying that price because in the ’80s, members of Congress became too willing to look the other way when their S&L contributors decided to get richer quicker.

NEW LINES OF SUPPORT

As fund-raising pressures force senators and representatives to spend more and more time dialing for dollars, a strange phenomenon is starting to take hold: The idea of public financing, in full or in part, is gaining new receptivity and even glimmerings of sound support. Politicians don’t like to talk about such matters publicly. They know the public rates them even below car dealers and journalists. And they know that a voter’s reflex reaction will be to shout: “I don’t want one dollar of my taxes going to some politician’s campaign!” But the pols also know how many billions of tax dollars go to the special interests who are their prime contributors.

The only way to end the abuses is through a system of public financing. We will discover that we’ve bought ourselves a bargain.

On the rare occasions when you hear a pol speak out for public financing, you’ll usually find you’re listening to a liberal. So you won’t be surprised that liberal Henry Waxman, though himself a masterful raiser and dispenser of private funds, is a strong advocate of some form of public financing. “This system is just no good–period,” says the California Democrat. “There’s a never-ending chase for money. We need to get the idea of raising money off the minds of the members of Congress.”

But you might be surprised to hear a cautious moderate like John Glenn, not given to impetuous pronouncements, declare that it is time for a change: “It’s difficult and obnoxious to have to run the way we do now, having to spend every waking hour worrying about raising money. I think we should be at least doing something for the Senate and House races like we do for the presidential races–maybe a [federal income tax] checkoff or some way of providing matching funds to candidates.”

And you should be astounded to hear Sen. Larry Pressler, a conservative Republican from South Dakota, begin to rethink the unthinkable. “I’m not for public financing in any way,” he begins, adding: “Campaign reform has gone nowhere–backwards, in fact, in my view.” But after we talk about the time wasted dialing for dollars, and why big givers are really giving, Pressler shifts slightly. “You may be right,” he says. “I’m sort of on an intellectual odyssey, struggling with this. I have to rethink this. We have to do something.”

MEANWHILE, THE BEAT GOES ON

The irrepressible Sen. Alfonse D’Amato is surrounded by influential lobbyists. They are wining and dining in one of Washington’s fine private clubs, as these lobbyists do regularly, inviting one official as their guest. It is a time for light banter and heavy candor. Not dealmaking, but a time when all sides can learn which positions have been taken just for public show, which ones can be bartered, and which ones are bottom line.

On this evening D’Amato informs his hosts that this is their last get-together. After all, he says, the Senate just banned lawmakers from accepting free wining-and-dining from lobbyists–“and I ain’t paying for bleep.”

To which one of the lobbyists creatively constructs a new loophole: “Hey, Al, you can pay for it with the money our PACs give to your campaign committee.”

D’Amato thinks it over and replies: “So it’s your money anyway? OK! OK!”

Martin Schram is a syndicated columnist and is a regular panelist on CNN’s “Reliable Sources.” He is the author of “The Great American Video Game: Presidential Politics in the Television Age.”