Spend billions, get trillions: Fixed Fortune of big Corporations
Between 2007 and 2012, over 200 of America’s most politically active corporations spent a combined $5.8 billion on federal lobbying and campaign contributions.
A year-long analysis by the Sunlight Foundation suggests that what they gave pales compared to what those same corporations got: $4.4 trillion in federal business and support.
Bill Allison and Sarah Harkins investigations this Nov. 17, 2014
The $4.3 trillion the federal government paid the nation’s 50 million Social Security recipients over the same period, is the result of an unprecedented effort to quantify the less-examined side of the campaign finance equation: Do political donors get something in return for what they give?
Four years ago, the U.S. Supreme Court suggested the answer to that question was NO
Corporate spending to influence federal elections would Not “give rise to corruption or the appearance of corruption,” the majority wrote in the landmark Citizens United v. Federal Election Commission decision.
Sunlight decided to test that premise by examining influence and its potential results on federal decision makers over 6 years, three before the 2010 Citizens United decision and three after.
We focused on the records of 200 for-profit corporations, all of which had active political action committees and lobbyists in the 2008, 2010 and 2012 election cycles — and were among the top donors to campaign committees registered with the Federal Election Commission.
Their investment in politics was enormous. There were 20,500 paying lobbying clients over the six years we examined.
The 200 companies we tracked accounted for a whopping 26% of the total spent. On average, their PACs, employees and their family members made campaign contributions to 144 sitting members of Congress each cycle.
After examining 14 million records, including data on campaign contributions, lobbying expenditures, federal budget allocations and spending, we found that, on average, for every dollar spent on influencing politics, the nation’s most politically active corporations received $760 from the government.
The $4.4 trillion total represents two-thirds of the $6.5 trillion that individual taxpayers paid into the federal treasury.
Welcome to the world of “Fixed Fortunes,” a seemingly closed universe where the most persistent and savvy political players not so mysteriously have the ability to attract federal dollars regardless of who is running Washington.
During the six years we studied, newly elected Democratic majorities took control in the House and Senate.
Two years later, the White House shifted from Republican to Democratic control, and two years after that the GOP came back to take the House.
The collapse of the housing bubble in 2007 led to massive bailout efforts by the Treasury Department and the Federal Reserve Board, two massive stimulus bills and the loss of more than eight million jobs.
Congress passed laws that overhauled health care insurance and financial industry regulation. Troops surged in Afghanistan and withdrew from Iraq. There were 16 separate “continuing resolutions” to fund the government, a debt ceiling standoff that caused a downgrade in the nation’s credit rating and a “super committee” to wrestle with the federal budget. As middle class Americans lost ground, the Fixed Fortune 200 got what they needed.
What they needed included loans that helped automakers and banks survive the recent recession while many homeowners went under.
It included full funding and expansion of federal programs started in the 1930s that, year after year, decade after decade, help prop up prices for agribusinesses and secure trade deals for our biggest manufacturers.
It included budget busting emergency measures that funneled extra dollars to everything from defense contractors to public utility companies to financial industry giants. The record suggests that the money corporations spend on political campaigns and Washington lobbying firms is not an unwise investment.
The Fixed Fortune 200 come from a wide range of industries. There are a host of familiar names among them, like Ford Motor Company, McDonald’s and Bank of America, as well as some less famous, like MacAndrews & Forbes, the Carlyle Group and Cerberus Capital Management.
(For the complete list, including what they gave and what they got, click here.)
There are retailers and investment banks, construction and telecommunications firms, health insurers and gun makers, entertainment conglomerates, banks and pharmaceutical manufacturers, among others.
Overall, the Fixed Fortune 200’s PACs, employees and their family members gave $597 million to political committees and disclosed spending $5.2 billion on lobbying. They make this enormous investment in politics in large part because their businesses are inextricably entwined with government decisions — including spending decisions.
For example, the federal government issued contracts to purchase goods and services that totaled a little more that $3 trillion during the period.
Companies among the top 200 corporate political givers won $1 trillion of that, a third of the total. The Treasury Department managed $410 billion in loans and other assistance issued under the Troubled Asset Relief Program, created by Congress to cope with the 2008 financial crisis; of that amount, $298 million, about 73%, went to 16 firms among the Fixed Fortune 200.
When the Federal Reserve took extraordinary measures in the wake of the 2008 financial crisis, it funneled nearly $2.8 trillion through 29 Fixed Fortune firms.
The companies that participated the most in politics got huge returns.
Of the 200 corporations we examined, we could sum the financial rewards for 179.
Of those, 138 received more from the federal government than they spent on politics, 102 of them received more than 10 times what they spent on politics, and 29 received 1,000 times or more from the federal government than they invested in lobbyists or contributed to political committees via their employees, their family members and their PACs.
As for the other 21 companies on our list, while we could not quantify the financial benefits that some received, we were able to identify them. Some examples:
Of the 200 companies analyzed for Fixed Fortunes, 28 are in what the money in politics research organization the Center for Responsive Politics classifies as the communications and electronics sector, 21 in healthcare, 13 in defense and aerospace, 13 agribusinesses, 11 in energy and natural resources, and 7 in transportation.
The biggest sector, accounting for 48 of the 200, was finance, insurance and real estate, which is consistently the largest source of campaign funds for politicians cycle after cycle.
Congress and the executive branch have paid particular attention to the industry, approving hundreds of billions in aid to help it weather the financial crisis. Meanwhile, the Federal Reserve advanced trillions in credit, which the nation’s central bank hoped would trickle down through the rest of the economy.
Companies with the biggest returns on their political investments include three foreign financial service and banking firms, UBS and Credit Suisse Group from Switzerland, and Deutsche Bank of Germany, all of which benefited from the Treasury Department’s taxpayer-financed rescue of American International Group.
Investment banks Goldman Sachs and Morgan Stanley as well as commercial banks like JPMorgan Chase & Co., Citigroup, Wells Fargo and Bank of America also received far more from government than they put into politics: They benefited from the bailouts of the financial industry undertaken by Treasury and the Federal Reserve.
Weapons manufacturers like Boeing and Lockheed Martin, both of which disclosed spending more than $10 million each year on lobbying, also made the list.
So did McKesson, a pharmaceutical wholesaler that is the biggest vendor for Veterans Affairs, and the Carlyle Group, a wealth management firm started by former government insiders who invest in firms that have significant involvement with government, such as defense, telecommunications and health care.
To catalogue the money flowing to and from the Fixed Fortune 200, we examined data on campaign contributions and lobbying expenditures. We compiled and queried a host of government spending records, including spending approved through the normal budgeting process.
We also looked at additional spending measures — extra-budgetary spending on the Global War on Terror, renamed Overseas Contingency Operations in 2009, and emergency or one-time measures like the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009. And because the Federal Reserve made use of its power to advance credit to private firms in extraordinary circumstances, we also examined its interventions in the economy.
See our methodology for a complete explanation of how we arrived at these numbers and more.
Some of the gets are harder to quantify. While corporate interests disclose lobbying on federal spending — the budget and appropriations process — more than any other issue, they also seek to influence trade agreements, labor rules, environmental regulation and the Internal Revenue Code.
Blue Cross and Blue Shield has its own provision in the tax code, section 833, that saves its companies an estimated $1 billion a year.
Life insurance companies like New York Life and Pacific Mutual, and their customers, are eligible for tax breaks that save the industry $30 billion a year, with about $3 billion going to the companies and the balance going to their policyholders.
The corporate tax code is full of loopholes and subsidies that companies lobby for to help their bottom lines; Citizens for Tax Justice researched the Securities and Exchange Commission disclosures filed by publicly traded corporations in an effort to determine their effective tax rates; its analysis included 89 members of the group Sunlight examined.
The average effective tax rate of those companies was 17% between 2008 and 2012. Federal law, meanwhile, sets the corporate tax rate at 35 percent.
As far as we can tell, one thing the Fixed Fortune 200 did not do, for the most part, was take advantage of the new opportunities to spend on politics that the Citizens United decision afforded them.
The 200 corporate donors gave just $3 million to super PACs, with the bulk of that amount a single $2.5 million donation from Chevron to the Congressional Leadership PAC, a super PAC that’s been linked to House Speaker John Boehner.
It’s important to note that contributions by these companies to politically active nonprofits (a category that includes the Chamber of Commerce) are impossible to track because of tax laws that allow those entities to shield donors.
Though beyond the scope of our study, which focused on the federal government, it is worth noting that 174 of the 200 corporations won subsidies from state and local governments, according to Good Jobs First, an organization that tracks economic development programs. The Citizens United decision also applies to state election laws, giving corporations the right to speak at the state and local levels as well.
Nonetheless, opinion polls show that majorities of Americans generally trust governments in their city halls, township boards and state capitals. That doesn’t compare well to the mere 19% of Americans who trust their federal government. Frustration with Washington runs high for any number of reasons, but consider:
More than 7 years after Washington passed the first measures to stimulate the economy as the housing bubble started to burst, more and more Americans are living on less and less, without as much savings and other assets to fall back on in hard times.
Washington policies that have restored corporate profits and made the stock market boom have left much of the country behind. Perhaps that’s why a whole host of polls, from networks and news organizations and nonprofit groups, show large majorities of Americans, year after year, saying that the country is on the wrong track.
In its Citizens United decision, the court took for granted that “favoritism and influence” are inherent in electoral democracy and that “democracy is premised on responsiveness” of politicians to those who support them. We found ample evidence of that.
“The appearance of influence or access,” the court said, “will not cause the electorate to lose faith in our democracy.”
It appears that the electorate — who stayed away from the polls this year in droves — might not agree.
“You do not know, my son, with how little wisdom the world is governed.”
Paul Krugman published an article on July 21, 2011 in The New York Times. Krugman is a Nobel laureate in economics and has been frequently explaining the current world financial problems. I will exhibit a few extracts with my own editing style, and develop my comments.
“These are interesting times, in the worst way. We are currently looking at not one, but two looming crises, either of which could produce a global disaster. In the United States, right-wing fanatics in Congress may block a necessary rise in the debt ceiling, potentially wreaking havoc in world financial markets. Meanwhile, if the plan just agreed to by European heads of State fails to calm markets, we could see falling dominoes all across southern Europe — which would also wreak havoc in world financial markets.”
“In fact, policy makers seem determined to perpetuate what I’ve taken to calling the Lesser Depression, the prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than two years after the recession supposedly ended. Why our economies are (still) so depressed.
The great housing bubble of the last decade, which was both an American and a European phenomenon, was accompanied by a huge rise in household debt. When the bubble burst, home construction plunged, and so did consumer spending as debt-burdened families cut back.
Everything might still have been bearable if other major economic players had stepped up their spending, filling the gap left by the housing plunge and the consumer pullback. But nobody did. In particular, cash-rich corporations see no reason to invest that cash in the face of weak consumer demand.
Nor did governments do much to help. Some governments — those of weaker nations in Europe, and State and local governments here — were actually forced to slash spending in the face of falling revenues. And the modest efforts of stronger governments — including the Obama stimulus plan — were, at best, barely enough to offset this forced austerity. So we have depressed economies. What are policy makers proposing to do about it? Less than nothing.
The disappearance of unemployment from elite policy discourse and its replacement by deficit panic has been truly remarkable. It’s not a response to public opinion. In a recent CBS News/New York Times poll, 53 percent of the public named the economy and jobs as the most important problem we face, while only 7 percent named the deficit. Nor is it a response to market pressure. Interest rates on U.S. debt remains near historic lows.
Yet the conversations in Washington and Brussels are all about spending cuts (and maybe tax increases, I mean revisions). That’s obviously true about the various proposals being floated to resolve the debt-ceiling crisis here. But it’s equally true in Europe.
On Thursday, the “heads of State or governments of the euro area and the E.U. institutions” — that mouthful tells you, all by itself, how messy European governance has become — issued their big statement. It wasn’t reassuring. For one thing, it’s hard to believe that the “Rube Goldberg statement” can really resolve the Greek crisis, let alone the wider European crisis.
But, even if it does, then what? The statement calls for sharp deficit reductions “in all countries except those under a program” to take place “by 2013 at the latest.” Since those countries “under a program” are being forced into drastic fiscal austerity, this amounts to a plan to have all of Europe slash spending at the same time. And there is nothing in the European data suggesting that the private sector will be ready to take up the slack in less than two years.
For those who know their 1930s history, this is all too familiar. If either of the current debt negotiations fails, we could be about to replay 1931, the global banking collapse that made the Great Depression great. But, if the negotiations succeed, we will be set to replay the great mistake of 1937: The premature turn to fiscal contraction that derailed economic recovery and ensured that the Depression would last, until World War II finally provided the boost the economy needed. The European Central Bank seems determined to make things even worse by raising interest rates.
The lack of wisdom is on full display, as policy elites on both sides of the Atlantic bungle the response to economic trauma, ignoring all the lessons of history. And the Lesser Depression goes on.” (End of quote)
I am wondering: What if Congress agrees to raise the ceiling of the debt? How the US government used to pay off, in the first place, the nominal portion of its dept? It is not through the surplus of its economic activities, or the savings of the citizens, or the slashing of military spending…
The US has been borrowing heavily by encouraging foreign State governments, which managed to save money, into purchasing US Treasury Bills and bonds. Currently, this mechanism of relying on foreign savings is not working, and the Federal Reserve has been manufacturing money and lending it to the US government to cover short-term and urgent immediate deficit.
The dollar has been effectively being devalued consistently by 10% per year since 1945, and this rate in devaluation is increasing rapidly since 2007.
Do you realize what a deficit amounting to 14 trillion means? It is more than the total worth of France, if sold stock, lock, and land. Imagine thousand of years of labor by millions of “French people” to sustaining a country, who could not accumulate enough wealth to pay off the US public deficit!
All these economic and financial decisions are meant to buy short-term leverage, before the inevitable global crisis fall on our head, very shortly. How can the US people pay-off this huge deficit if not by “creating a preemptive global war”, as were the cases in 1914 and 1939?
The US has nothing much to offer economically for stabilizing world economy and finances. What Europe needs from the US are two things:
First, releasing the huge ammunition reserves for resuming the small-scale preemptive wars in Libya and the potential unstable regimes around the Mediterranean Sea and parts of Africa. It is the abundance of the US military hardware and ammunition that is making NATO organization an acceptable agreement to the EU.
Second, the EU hopes that the dollar will maintain its global status for a couple of years before a basket of currencies is agreed upon. What else the US can be of any help for the time being?
These spring uprising of youth movements around the world have a common denominator: “We want to have a direct say in public decisions”
Adonis Diaries 