Making Government Transparent and Accountable
The Sunlight Foundation uses cutting-edge technology and ideas to make government transparent and accountable. Underlying all of our efforts is a fundamental belief that increased transparency will improve the public's confidence in government
The Sunlight Foundation Blog
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Hidden ‘Bundles’ of Lobbyist Giving Show Full Court Press by Health Care Donors
Sunlight and the Center for Responsive Politics have teamed up on a collaborative investigative project that shows never-before-seen “contribution clusters” from outside lobbyists and their health care industry clients to key members of Congress.
We found that Sen. Max Baucus, D-Mont., chairman of the powerful Senate Finance Committee and author of the main health care reform bill now being debated in the Senate, was one of the biggest beneficiaries of this one-two punch from lobbyists and the interests they represent. Between January 2007 and July 2009 (the period we studied), Baucus collected contributions from 37 outside lobbyists representing PhRMA, the pharmaceutical industry’s chief trade association, and from 36 lobbyists who listed drug maker Amgen Inc. among their clients.
In all, 11 major health and insurance firms had their contributions to Baucus boosted through extra donations from 10 or more of their outside lobbyists. (See our visualization and the full list from CRP.)
Nor was Baucus alone—other members also received contributions from the employees, their family members and political action committees of health care firms and from the outside lobbyists that represented them. Senate Minority Leader Mitch McConnell, R-Ky., collected lobbyist “bundles” from 14 major health care organizations. Sen. John McCain, R-Ariz., actually led the list, with 22 organizations—though much of that money was directed at his presidential campaign last year. (see the full list.)
PhRMA and Amgen were the organizations with the most outside lobbyists chipping in with extra contributions. Some 32 members of Congress got money from 10 or more PhRMA lobbyists over the last two-and-a-half years. Amgen’s lobbyists did the same for 24 members.
There is no indication that the extra giving by lobbyists was part of a planned effort by the health care firms to solidify their support among key members of Congress. But whether coordinated or not, the newly-found clusters of lobbyist giving clearly illustrate the intensity of the full-court press that the industry is currently waging on Capitol Hill.
The research into the lobbyist-and-client giving was conducted by combining campaign contribution records with reports filed by lobbyists that identified their clients (read more on how we did it; full methodology here). The Center for Responsive Politics has been collecting that data for years, but this was the first time the two databases were combined to identify all cases where outside lobbyists contributed to the same members of Congress as their clients.
Overall, the research found that about 90 percent of the lobbyist donations were given by the lobbyists themselves. Another 10 percent came from members of their immediate families, mainly spouses. Interestingly, about one-third of the contributions were given not to the members’ campaign committees, but to their leadership PACs—separate funds that members control—but that get far less media scrutiny than their reelection campaigns. The leadership PACs also have higher contribution limits, enabling lobbyists to give well beyond the nominal $2,400 limit that applies to campaign committees.
To see Sunlight’s previous visualizations of health care lobbying–which also relied on data from the Center for Responsive Politics–click here.
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After FEC Eviscerates Bundling Disclosure Law, Only One Bundler Discloses
According to The Hill, only one political action committee (PAC) reported bundling campaign contributions for a political candidate during the first filing period for disclosed bundlers. The PAC of Gilead Sciences, a health care company, disclosed raising $17,500 for Rep. Henry Waxman’s PAC, LA PAC. It should come as no surprise that disclosure is virtually nil since the Federal Election Commission (FEC) eviscerated the bundling disclosure law when it implemented its regulations for disclosure.
In 2007, Congress passed a large ethics and lobbying reform package, the Honest Leadership and Open Government Act, containing disclosure requirements for lobbyists bundling campaign contributions for candidates. The law for bundling disclosure was not implemented immediately as the FEC, then dormant due to controversy surrounding appointments, was required to set out regulations for the filing of disclosure reports. When the FEC finally issued their regulations, they took knocked the wind out of the law.
The two major rules that they issued were:
- Candidates would have to show that, either, the lobbyist bundling contributions received a “benefit” — i.e. a honorary award, an autograph from the candidate — or the candidate must maintain a tracking system that gives credit to lobbyists bundling contributions for their campaign or PAC.
- Lobbyists who are co-hosting a fundraiser for a candidate can divide the amount raised between them, thus circumventing the $16,000 disclosure threshold. This division of raised contributions goes so far to allow co-hosting non-lobbyists to be alotted a portion of the total raised amount.
Both of these rules allow bundlers to easily evade disclosure requirments. The second of those rules was denounced by then-Sen. Barack Obama, an early supporter of bundling disclosure, before the FEC enacted it, when he said on the floor of the Senate, “In a situation where a fundraising event is co-hosted by a number of different lobbyists, I am concerned that some might want to avoid reporting bundled contributions by dividing up the total receipts of a fundraising event among many sponsors or co-hosts of the event. Certainly, that was not our intention.”
That was not their intention, but that is what the FEC enacted. And now we have one disclosure, despite bundling being a common form of fundraising in Washington.
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FEC Thwarts Transparency
Yesterday, the Federal Election Commission unanimously approved new disclosure rules regarding bundling, the practice of collecting campaign contributions from friends, co-workers, clients and other associates. (Currently an individual can give up to $2,300 per election to a candidate for president or Congress. But by collecting multiple checks from various sources, bundlers have no limit on what they can raise for a candidate, gaining much favor with the campaign. Lobbyists are masters at the practice.) The FEC was finally creating guidelines for the implementation of the Honest Leadership and Open Government Act of 2007, which Congress passed partly to bring more transparency to bundling.
Unfortunately, the FEC ruling compromises the transparency purpose of the law to ‘provide for the broadest possible disclosure’ of bundling activities. The FEC ruled that campaigns, parties and candidate-affiliated political action committees would now have to disclose the names, addresses, employers and amounts raised by these called “bundlers,” according to CQ. Sounds good, right? But this requirement applies only to registered lobbyists. (Hint: not all influence peddlers are registered.) Plus, the rule applies only when there is a written record of the bundling, or when the candidate gives something to a lobbyist in return like a title or a gift of appreciation, such as an autographed photo. “Knowledge on the part of a candidate that a lobbyist has bundled contributions is not enough under the new FEC rule to trigger reporting requirements, according to the Campaign Legal Center (CLC). “Instead, in the absence of a written record, knowledge plus a tangible benefit to the lobbyist is required to trigger the reporting requirements.”
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In Broad Daylight: Massage Chairs and Sled Dogs
- Lawyers allege that Sen. Ted Stevens received additional gifts outside of the over $250,000 in labor and renovations to his chalet. These gifts included a $2,695 massage chair, a $1,000 sled dog, and a $3,200 “hand-designed” stained glass window.
- Rep. Charles Rangel will recommend that the House Ethics Committee look into his personal finances after reports from the New York Post and New York Times revealed that Rangel failed to properly report income from a Dominican vacation home on both his personal financial disclosures and his income taxes.
- However, an Ethics Committee investigation may take time as the committee does not have a chairman at this time following the tragic death of Rep. Stephanie Tubbs Jones. Rep. Gene Green is the likely temporary replacement, although Speaker Nancy Pelosi won’t appoint Green until after a Sept. 10 memorial service for Tubbs Jones.
- The Federal Election Commission will hold a hearing on Sept. 17 on proposed rules for the disclosure of contributions bundled by registered lobbyists.
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Bundlers Galore
Three makes a trend, right? Today, there are three news stories on presidential bundlers – campaign contributors who solicit money from other contributors and bundle it together – and their activities. All of these stories highlight the need for bundling disclosure rules from the Federal Election Commission. But two of these stories pinpoint the potential for abuse in the bundling system.
The Washington Post looks at the odd practices of one Harry Sargent III, the owner of an oil trading company with billion dollar defense contracts. Sargent has raised over $50,000 for Sen. John McCain’s presidential bid from a collection of Arab-Americans who refuse to discuss why they gave money to the Republican’s campaign: (Continue reading…)
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Bundle Up
Earlier today, the Campaign Finance Institute (CFI) and Public Citizen released an extensive study that found the majority of the bundlers and other fundraisers raising cash for the various 2008 presidential campaigns, over 2,000 individuals, come from only three segments of the U.S. economy: lawyers and law firms, three finance industries, and real estate. Among those industries, Republicans hold an edge in raising money from the real estate and lobbying industries. Democrats are receiving more funds from lawyers and law firms, as well as the entertainment industries. Democratic and Republican fundraisers appear to be doing a comparable job of raising cash from the securities and investment industry.
The two organizations are quick to point out that it is impossible to really know how much money each industry has given since the campaigns are not disclosing the precise amounts their fundraisers are raising. Each campaign is disclosing partial information, and each has different disclosure procedures. "The sporadic and incomplete reporting by campaigns of their designated fundraisers points to the need for legislation on this matter," the report says.
"Disclosure is important because these prodigious fundraisers are some of the people who will get their phone calls returned by the White House and will get chances at prestigious positions," Lisa Zagaroli with McClatchy Newspapers reported last month. Bundled contributions are among the most insidious sources of campaign money because they give a single donor the opportunity to get credit for raising contributions that are often hundreds of times greater than the legal limits applied to individuals.
As we discussed earlier this month, among the potentially meaningful and important changes to campaign finance law in the Honest Leadership and Open Government Act is a provision that requires candidates for federal office to report the bundled contributions they receive from lobbyists.
At Sunlight, we believe bundled contributions from any party-CEOs, non-lobbyist lawyers and law firms-should be publicly disclosed. But, the new law limits such disclosure to registered lobbyists, which at least begins to get to the heart of the problem. The Federal Election Commission has the responsibility of crafting regulations that carry out the intent of the new law, and is expected to have its final regulations completed by March. As this great report from CFI and Public Citizen highlights so thoroughly, we hope the FEC’s regulations support more transparency rather than helping to conceal who’s funding the candidates.
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Comments on Bundling Disclosure Now at the FEC
Among the potentially meaningful and important changes to the law in the Honest Leadership and Open Government Act is a provision that requires candidates for federal office to report the bundled contributions they receive from lobbyists. Bundled contributions are among the most insidious sources of campaign money because they give a single donor the opportunity to get credit for raising contributions that are often hundreds of times greater than the legal limits applied to individuals. The massive contributions no doubt result in greater access to elected officials. At Sunlight, we believe bundled contributions from any party-CEOs, non-lobbyist lawyers and law firms-should be publicly disclosed. But, the new law limits such disclosure to registered lobbyists, which at least begins to get to the heart of the problem.
The key to this well-intended provision is to ensure that when it is applied, it is not so full of loopholes that any lobbyist worth her $500 an hour fee finds a way to avoid reporting the bundled contributions she forwards to candidates. The Federal Election Commission has the responsibility of crafting regulations that carry out the intent of the new law. The FEC asked for public comment on its proposed rules, and made those comments available yesterday. The comments came from three Members of Congress, groups that champion ethics reform, and others who, for reasons of their own (or their clients) seem to want to keep bundled contributions hidden in the shadows.
To focus on the positive, we applaud Sen. Feingold and Sen. Obama and Representative Van Hollen for their joint comments reminding the FEC that it has a statutory duty to provide "the broadest possible disclosure" of bundled contributions. This group’s comments make clear that they will oppose narrow reporting requirements that would allow bundlers to easily skirt disclosure. For example, when an individual who is not registered as a lobbyist bundles contributions from, say, a group of employees of a corporation that lobbies, the comments submitted by the Members of Congress make clear that those bundled contributions must be disclosed if the corporation’s lobbyist gets credit from the campaign for bringing them in. Comments that were submitted by lawyers for candidates argue that the bundling reporting requirements should apply only when registered lobbyists bundle. They claim the law was not intended to cover people who are clearly acting as the lobbyists’ agents. It doesn’t take a rocket scientist to see that such a limitation would provide a foolproof way for lobbyists to skirt the disclosure provisions of the law.
Another recommendation proffered by a representative of business interests would similarly provide an instant loophole to the disclosure provisions. The argument is that when lobbyists hold fundraisers, the total amount raised should be pro-rated among the number of hosts. Again, it’s not a stretch to imagine that enough lobbyist "hosts" could be added to every fundraiser so that, when the total amount raised is divided among the hosts, the $15,000 disclosure threshold would never be met. We agree with Senators Feingold, Obama and Congressman Van Hollen that the total amounts raised should be attributed to each host. A disclosure form could easily be crafted to ensure there is no risk of over-reporting the actual total amount brought in at each fundraiser.
On one final issue, we would again urge the FEC to listen to the drafters of the legislation rather than the lawyers looking to game the system. Politicians have multiple ways of knowing whom to credit for delivering bundled contributions, not the least of which is when the chief fundraiser says to the candidate, "Lester Lobbyist brought in $50,000 last week." This type of credit is not documented, nor does it need to be, as when Lester wants to make an appointment with the Senator, the Senator will surely remember the bundled contributions. The authors of the legislation recognize that "campaigns could easily avoid [disclosure] by simply forgoing documentation, and the goal of shining a public spotlight on fundraising by lobbyists would be foiled." Granted, we at Sunlight have a hard time seeing how this particular provision will be enforced, but at the very least the rule should be crafted in a way that recognizes the reality of how bundled contributions work.
The FEC expects to have its final regulations completed by March. We hope they take their advice from the parties who have long demonstrated a commitment to improving disclosure rather than those who have everything to gain by keeping bundled contributions in the dark.
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Bundlers
Lisa Zagaroli, writing for McClatchy Newspapers, reports on the growing importance of bundlers in presidential campaign fundraising. These "mega-fundraisers" are very skilled at using their business and personal contacts to raise large amounts of campaign cash for a specific candidate. Only a few presidential candidates have released any information on who is doing the bundling but we know that the bundlers usually have super access to the candidates. No presidential campaign has released both the names of their bundlers and the amount each individual fundraiser has raised. Each campaign has adopted varying degrees of disclosure on who is raising their big bucks.
On October 30, Congressional Quarterly reported that Federal Election Commission is working on new bundling rules. One proposal, which came out of the Congress, is to only disclose the bundlers who are federal lobbyists. The McClatchy report indicates that the FEC is interested in going beyond this.
McClatchy highlights Public Citizen’s Congress Watch and its site as the place to go to find out who some of the bundlers are. They also have a very good proposal on bundling openness and transparency.
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Young Donors Max Out, Need Diapers Changed
Competition among bundlers is getting so competitive that fundraisers are getting their children to chip in. These aren’t grown children by the way; these are toddlers, babies, and prepubescent children without incomes – unless of course they’re working as cockney bootblacks (“Straight shine’s a nickel; super buff’s a dime!”). The Washington Post reported yesterday on this effort by bundling donors using their children and nieces and nephews as ways of funneling ever more money into the coffers of their favored candidate.
Such campaign donations from young children would almost certainly run afoul of campaign finance regulations, several campaign lawyers said. But as bundlers seek to raise higher and higher sums for presidential contenders this year, the number who are turning to checks from underage givers appears to be on the rise.
"It’s not difficult for a banker or a trial lawyer or a hedge fund manager to come up with $2,300, and they’re often left wanting to do more," said Massie Ritsch, a spokesman for the Center for Responsive Politics. "That’s when they look across the dinner table at their children and see an opportunity."
These children can be as young as two years old as is this Toddler for Obama:
Elrick Williams’s toddler niece Carlyn may be one of the youngest contributors to this year’s presidential campaign. The 2-year-old gave $2,300 to Sen. Barack Obama (D-Ill.).
So did her sister and brother, Imara, 13, and Ishmael, 9, and her cousins Chan and Alexis, both 13. Altogether, according to newly released campaign finance reports, the extended family of Williams, a wealthy Chicago financier, handed over nearly a dozen checks in March for the maximum allowed under federal law to Obama.
The Federal Election Commission does not explicitly set an age limit on donors however these donations will likely have to be returned. Obama’s campaign has already stated their intent to return the contributions from these children. Other campaigns will similarly have to figure out what to do with money donated from little kids.
The real problem here may lie with the parents who are going to have to explain to their kids that they gave their Christmas present to Barack Obama or Rudy Guiliani. For the non-voting under-10 population $2,300 could be used in much more useful ways, like buying this:
These kids are going to be unhappy to find out that not only did they miss out on this awesome cotton candy machine but that their Easter present is an audit from the FEC.
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Diggin’ a Little Deeper
Mike McIntire’s front page story in the Times this morning put a little more meat on the bones of the Wall Street Journal story that outing Norman Hsu as a problematic political fundraiser (forget, for the moment, the fugitive on the lam piece of this tale.)
Here are some of the telling details:
The records show that Components Ltd., a company controlled by Mr. Hsu that has no obvious business purpose and appears to exist only on paper, has paid a total of more than $100,000 to at least nine people who made campaign contributions to Mrs. Clinton and others through Mr. Hsu….
The records make clear that the group was more than just a loose collection of friends, family and co-workers that bundlers typically rely on when raising money for a candidate. Rather, each person had a direct financial relationship with Mr. Hsu, either receiving money from his company or paying into it, even though many of them appear to have other jobs or businesses independent of him….
The records show that during that one-month period, Components Ltd. took in close to $600,000, about a third of it wired to the company’s account by two people in California and New York who also were part of Mr. Hsu’s circle of campaign contributors. At the same time, the company issued checks and wire transfers totaling $660,000, much of it to the same group of people, including two checks for more than $100,000 apiece that bounced because of insufficient funds….
And here’s what, in major part, has made figuring all this out so difficult. Its a great summary of a political money tracker’s nightmare.
On campaign finance disclosure forms, he listed his employer as one of a half-dozen companies, some of them with names that seemed to change with each retelling. On some forms, the company was Components Limited or Next Components or Next Consultants. Other times it was Next Limited or Consultants Limited. And his title was different from one form to the next, sometimes appearing as president or managing director, other times as consultant, supplier or partner.
