reasoned thought for an age of uncertainty
With the 2012 presidential election in full swing and the Citizen’s United decision having opened the doors to unlimited corporate contributions, corporations are opening their coffers to promote candidates friendly to their interests. Corporate contributions to candidate and to super PACs come from a variety of business interests, including finance, law, energy and unions (for sources on the above data, visit opensecrets.org). By examining how corporations donate, and to whom, we can learn a lot about the presidential candidates and the interests they are likely to promote as president. Here’s a look at what is behind the curtain for the political agendas of Barack Obama, Mitt Romney and Rick Santorum. (Note that all figures represent donations by individuals within corporations or through super PACs. )
Perhaps the first thing that jumps out about the financial interests contributing to Barack Obama’s re-election campaign is its dispersion in fields highly educated in democratic process, including law, academia and government. Institutions with significant contributors to Obama include Harvard University, Stanford University, Columbia University and the University of California, as well as a number of this nation’s top law firms. Also included are a number of interests in entertainment and media, including a number of donors bundled by DreamWorks CEO Jeffrey Katzenberg that topped $2 million .
But the most impressive statistic about Barack Obama’s donors is what is not directly reflected in the above breakdown: about half of all of Obama’s contributions have come from small individual contributions (under $200). Perhaps this is why Obama’s donor base, more than any other presidential candidate, looks more like a reflection of voter profiles than company profiles. (By comparison, small contributions to Romney make up about 10% of his donations.)
The most striking aspect of the corporate contributions to Mitt Romney’s campaign is that the vast majority of them come from financial companies. In fact, every one of the top U.S. investment banks is represented in Romney’s top donors. Other financial companies backing Romney include several major non-U.S. investment banks, such as Credit Suisse, Barclays and UBS, as well as a number of hedge funds and Romney’s own Bain Capital. In short, Wall Street is backing Romney in a big way.
Mitt Romney has also received large donations bundled by employees of Ogilvy Government Relations, a lobbying firm which represents hundreds of financial companies, energy companies and a diverse array of other interests.
Given the support for Mitt Romney from Wall Street and private equity shops, there are a number of initiatives that Mitt Romney as president would likely pursue. These include, notably, restricting the scope of regulatory reform occurring right now under the Dodd-Frank Act. Wall Street’s big complaints here include the development of disclosure and reporting requirements for derivatives, especially swaps. Swaps are used for risk management in connection with investment activities by every major bank, but also for speculation by hedge funds (and prior to the bank bailouts, by they were used by commercial banks for speculation as well).
Wall Street wants Romney in the Oval Office because they want to halt or slow the regulation of derivatives by the CFTC and SEC. According to the FDIC, the notional value of derivatives held by U.S. banks is upwards of $250 trillion, while banks hold about $12 trillion in assets and $1.4 trillion in shareholder equity. (A bank’s actual exposure to a derivative generally would be a very small percentage of the notional amount, and could be positive or negative. That being said, there is still a lot of money involved here, it is hard to track, and it is cheaper for banks if they do not have to).
Hedge funds and private equity shops want Mitt Romney in power because they currently benefit from a favorable rate of taxation, and they want to keep it that way. Profits earned by hedge funds and private equity funds, including those engaged in leveraged buyouts like Bain Capital, pay taxes at a capital gains rate rather than as ordinary income. In short, fund managers are making more money than the average American and paying less in taxes, and because a lot of money is involved, they want to maintain their privilege. It should come as no surprise then, that the #1 corporate contributor in the 2011-12 election, Contran Corporation, is owned by Texas billionaire Harold Simmons, who made his fortune through leveraged buyouts and an “all debt no equity” philosophy. In fact, before the line-item veto was ruled unconstitutional by the Supreme Court, a previous tax-avoidance scheme included in a Congressional bill on Simmons’ behalf was vetoed by President Clinton.
So while Mitt Romney has touted his business experience as relevant preparation for the job of president, Romney’s policies are not likely to create jobs; they are only likely to perpetuate institutions and policies which benefit the wealthy and create inequalities.
Rick Santorum’s contributors are a somewhat more eclectic group, partly due to the fact that corporate contributions to Santorum have been much smaller than those to Obama and Romney. Santorum has received his biggest support in the health care industry, followed by real estate and finance. The support Santorum has received from the health care industry reflects a sort of unholy alliance. Santorum’s extreme views on a variety of health issues, including premarital sex, contraception and abortion, have made him a loud critic of the Affordable Care Act passed under the Obama administration. Because the Act places restrictions on health care companies (for example by prohibiting them from dropping patients when they become sick or refusing coverage due to pre-existing conditions), the health care industry wants to peel back the requirements of the Affordable Care Act, and so have found an ally in Rick Santorum.
Other positions of Santorum can be traced back to his corporate sponsors, including his anti-environment stance and blatantly incorrect statements about climate change–donor Consol Energy was subject to several government lawsuits last year due to a massive fish kill caused by a toxic spill from one its mines in Pennsylvania. Another of Santorum’s donors, El Dorado Holdings, markets foreclosed homes at wholesale prices–this is the “market” fix that you have heard Santorum and Romney talking about.
But perhaps the most interesting donor on Santorum’s list is Citizens United. Yes, that Citizens United; the one responsible for the notorious Supreme Court decision that opened the floodgates to unrestrained corporate contributions in elections. (Citizens United makes conservative documentaries and sued the Federal Election Commission in Decenber 2007 so that they could run an electioneering ad maligning Hillary Clinton within 30 days of a primary, claiming that their right to do so was protected under the 1st Amendment.) According to Opensecrets.org, Citizens United has donated to each of Rick Santorum, Newt Gingrich, Rick Perry and Michele Bachmann, but not Mitt Romney.
Citizens United’s contribution to Santorum is an exclamation point on an otherwise clear trend towards the marriage of corporate money and politics in Republican circles. As the election season unfolds, the voices of average Americans are going to become increasingly challenged by the overtones of big money, and it will be up to us voters to make sure that our voices are still heard, and that our votes are cast for the right causes.