chapter 9 lecture
TRANSCRIPT
Chapter 9 Lecture:Business in Politics
“The proposal of any new law or regulation of commerce which comes from [business should be] listened to with great precaution. It comes from [people] who have a general interest to deceive and even oppress the public.”
- Adam Smith, 1776
“[W]e must guard against the acquisition of unwarranted influence…by the military-industrial complex. Only an alert and knowledgeable citizenry can…[ensure a proper] balance in and among national programs.”- Dwight D. Eisenhower, 1961
Business in American Politics: Dominant From the Start
Business has been an important, if not a dominant, influence on U.S. government from the start.
Some say the Revolutionary War was fought to free colonial business interests from smothering British mercantile policies!
The Founders who drafted the Constitution were an economic elite.
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Alexander Hamilton was a very pro-business Secretary of the Treasury.
Business in American Politics: The Civil War (1860-1865)
During the Civil War, some corrupt army purchasing agents accepted bribes to purchase shipments of bad meat.
When the war ended, the power base of southern agriculture had been decimated, and a major counterweight to the power of northern industry was lost.
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Grant’s first term: 1869-1872: The Whiskey Ring scandals.
Second term: 1873-1877: The Credit Mobilier scandal.
President Ulysses S.
Grant
The Seventeenth Amendment
Passed in 1913, instituted the direct election of U.S. senators
Previously, state legislators had chosen senators.
Corporations fought the amendment, but their motives were not pure.
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Business in American Politics: 1900-1923
The great political reforms of the progressive era (1900 – 1923) seemed to herald a change from “business as usual.”
But modern scholarship has revealed that the corruption in federal politics continued apace.
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President Warren G. Harding:
1920-1923The “Teapot Dome” scandal
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The Great Depression: 1929-1935
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Franklin Delano
Roosevelt and the
“New Deal”
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The 1960s and 1970s
National politics became dominated by a liberal reform agenda
New groups rose to defy corporations
Business was saddled with massive new regulatory schemes
Two Broad Areas of Business Involvement in Politics
LOBBYINGELECTORALPROCESS
Business Lobbying Activities
Self-representation More than 700 corporations have
staffs of government relations experts in Washington.
Private lobbyists 75% of large firms hire private
lobbyists Most lobbyists are lawyers Many are former U.S. officials
Business Interest Groups
Business Interest Groups
Peak Associations Half a dozen Business Roundtable
Trade Associations Have more influence than the peak
associations because the interests of its members are more cohesive
Number over 6,000! Often try to avoid publicity
Do Lobbyists Lie to Legislators?
Probably not If they did, they would have trouble
getting access to the legislator in the future
Instead they try to be useful Provide technical information about bills Provide politically valuable information
about how constituents and special interests stand on a particular issue
Mostly argue why it is best for the country or the state
Efforts to Limit Corporate Influence
The Tillman Act of 1907 Implemented by progressive
reformers angry about the role of corporate contributions in the presidential election of 1900
Prohibited banks and corporations from making direct campaign contributions to candidates
The Federal Election Campaign Act (FECA) of
1971 Required public disclosure of
campaign contributions and expenditures
Data for the 1972 Presidential elections brought public attention to the issue
Watergate investigations revealed illegal contributions
1974 FECA Amendments
The limits on campaign expenditures were struck down as unconstitutional in Buckley v. Valeo (1976)
The limits on contributions were upheld
PACs in the U.S. (2006)
Type NumberCorporate 1,621
Trade Association
935
Labor 283Other 1,371Total 4,210
How Corporate PACs Work To start a PAC, a corporation
must set up an account for contributions.
Corporate PACs get their funds primarily from contributions by employees.
The money in a PAC is disbursed to candidates based on decisions made by PAC officers, who must be corporate employees.
There are no dollar limits on the overall amounts that PACs may raise and spend.
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Corporate PAC
A political committee carrying a company’s name formed to make campaign contributions.
Soft MoneyThere are various definitions of soft
money, but the broadest one is “money raised or spent for the purpose of winning elections that is exempt from the reporting requirements and contribution limits of FECA.”
Under this definition, there used to be 4 kinds of soft money, but now there are only 3.
Soft MoneyThe 3 kinds we still have are Soft money raised and spent by state
party committees, Soft money raised and spent by section
501c and 527 organizations, and Independent expenditures by
individuals.The kind we don’t have any more is Soft money raised and spent by
national party committees.
The Bipartisan Campaign Reform Act of 2002
National parties are prohibited from raising or spending soft money
State parties may raise soft money, but cannot use it for issue ads
Corporations can give soft money to new 527 and 501c groups, but can’t use it for ads advocating election or defeat of a candidate during blackout periods.
The Bipartisan Campaign Reform Act of 2002
Individuals can give soft money to new 527 and 501(c) groups, and that money CAN be used for ads advocating election or defeat of a candidate during blackout periods!
Candidates’ reelection committees can still use hard dollars for such ads
Section 501(c) Groups
These are classic non-profit groups They were originally set up mostly
for “educational” purposesExamples include The Cato Institute The Heritage Foundation Americans for Job Security
The 501(c) Loophole
These groups are prohibited from conducting “political campaign activities to influence elections to public office.”
But they are permitted to educate individuals about issues.
Section 527 Groups
Another type of tax exempt group But this time, explicitly set up for the
primary purpose of influencing the nomination, election, appointment, or defeat of candidates for public office
Cannot make expenditures to directly advocate the election or defeat of any candidate for federal elective office
Section 527 Groups
Can make expenditures to directly advocate the election or defeat of candidates for state or local elective office
Can raise money to spend on issue advocacy ads
Can raise money to spend on voter mobilization
Section 527 Groups
The line between issue advocacy and candidate advocacy is a source of continued debate and litigation.
Any coordination between the activities of a candidate’s election committee and any 527 group is prohibited by law.
Section 527 Groups
Federal Election Commission rulings after the 2004 election put advertisements which questioned a candidate’s character and fitness for office off-limits to 527-organizations.
What I Think
I agree with the positions taken by the U.S. Public Interest Research Group and Common Cause.
I think Presidential and Congressional Races should be 100% publicly-financed.
This would require a Congressional Amendment.
U.S. PIRG’s Position
1. Provide candidates with a full public financing option.
2. Provide free media for candidates.
3. Provide incentives for small political contributions.
4. Lower contribution limits.5. Limit campaign spending.