In hyperpartisan political environment, major corporations stay away from controversial super PACs

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Amid the hectic, 
historically expensive 2018 election cycle, one group of wealthy donors was surprisingly quiet — corporations.

Thanks to the landmark 2010 Citizens United v. FEC Supreme Court decision and subsequent rulings, corporations can give unlimited funds to super PACs, which can spend unlimited sums on ads and other literature to influence elections.

But five elections later, most corporations aren’t taking advantage of their potential political influence. Corporations contributed $71.5 million to super PACs and hybrid PACs in the 2018 election cycle, accounting for less than 5 percent of contributions to the powerful outside groups.

Last cycle’s total corporate spending was a midterm record, but overall, this kind of giving remains stagnant compared with rapidly rising individual contributions. Instead, wealthy executives of corporations personally cut large checks to outside groups, somewhat distancing themselves from their organizations. The top 10 individual donors to outside groups in 2018 combined to contribute $427 million, surpassing the sum of direct corporate contributions to super PACs since Citizens United.

Within the small subset of politically-active companies, most major corporations stay far away from super PACs. Thirty-six S&P 500 companies and their affiliates have given $25,000 or more to these outside groups since 2012.

Companies on the index combined to give more than $15 million in 2018, almost all of which came from oil companies. Chevron led the way, doling out a combined $3.65 million to the GOP leadership-connected Congressional Leadership Fund (CLF) and Senate Leadership Fund (SLF). Marathon Petroleum ($2 million), Valero Energy ($1.9 million), Pinnacle West Capital ($1.75 million) and Occidental Petroleum ($1.15 million) were among other oil companies on the index to give to super PACs — all conservative groups — in 2018. Republicans typically receive the lion’s share of support from oil companies.

SLF and CLF, also favorites of foreign-owned corporations, were the top recipients of corporate money in 2018, taking $17.5 million and $12.5 million respectively. Pro-Trump America First Action ($5.3 million) and pro-Rick Scott New Republican PAC ($4.7 million) followed closely behind. Senate Majority PAC, aligned with Democratic leadership, took $2 million from corporations, more than any other liberal group.

Corporate contributions are likely to experience a jump in the 2020 cycle, as they historically have preferred to give to presidential-focused super PACs. Mitt Romney’s Restore Our Future took nearly $28 million in 2012 from corporations and Jeb Bush’s Right to Rise received $25 million in 2016, $1.3 million of which was flagged as illegal foreign contibutions from the U.S. subsidiary of a Chinese company and resulted in a record fine from the FEC.

These PACs, funded by employees of the company, are hindered by strict contribution limits and have fewer candidates to give to with Democrats increasingly rejecting corporate PAC money. Thus, corporate PAC giving has stagnated. Business PACs, which include corporate and trade association PACs, gave $395 million to candidates in 2018, only a slight increase from 2014 ($379 million).

On top of that, corporations face another dilemma. People are paying attention.

Politics becoming a risky proposition

Despite his lengthy history of controversial comments, not many social media regulars cared about Rep. Steve King (R-Iowa) until recently. And they definitely didn’t care about which corporate PACs gave to the longtime congressman.

Then in March 2017, King tweeted, “We can’t restore our civilization with somebody else’s babies.” The tweet produced an unprecedented spike in mentions of King, according to data analyzed by Michael Cornfield, a graduate political management professor at George Washington University and director of GWU’s PEORIA Project.

It wouldn’t be the last time King went viral for all the wrong reasons. In October 2018, King met with a far-right Austrian political party founded by a former Nazi SS officer, around the same time as the Pittsburgh synagogue shooting that left 11 people dead. That news, followed by King’s controversial quote in a January New York Times article, created so much social media buzz that Republicans stripped him of his committee assignments.

The social media firestorms also provoked calls from social media users, particularly liberal activists, to boycott companies that contributed to King. Those calls may have had an effect, as King donors such as Land O’Lakes said they would no longer make contributions while other companies distanced themselves from their contributions.

“It illustrates a power associated with social media and presents a new kind of risk for companies to take into consideration,” Cornfield said, likening social media users’ angry messages to corporations to boos from an audience. “Even if nothing comes of it, boos hurt … people don’t like being booed. Who knows what kind of effect this has on executives of these companies.”

As a safe incumbent with a seat on three committees, King was a natural fit for corporate PAC contributions. The King saga represented one of several instances where social media users launched boycott campaigns over political contributions that corporate PACs regularly make without much thought. In 2018, companies were forced to defend their contributions to Sen. Cindy Hyde-Smith (R-Miss.) when her controversial “public hanging” comments went viral. Countless corporations asked for their money back.

“Going forward, companies are going to be much more careful with their contributions, because now they’re facing a reputation risk, a bottom line risk and the threat of a controversial contribution going viral on social media,” said Bruce Freed, president of the Center for Political Accountability (CPA).

CPA works with shareholders of major corporations to improve company disclosure of political spending. In 2018, more than 227 regulars on the S&P 500 fully disclosed or prohibited contributions to candidates, parties and committees, up from 196 in 2015. The number of companies that disclose or prohibit independent expenditures jumped from 141 to 198 over that time.

Goldman Sachs is one of 10 companies that doesn’t use corporate assets to directly influence elections, only giving money through its official PAC. The policy eliminates the prospect of funding a super PAC.

“By having a process in place, corporations can have much greater control over their political spending,” Freed said. “They’ll be able to say no to candidates and other political groups when they are asked for a contribution, and it’s not personal, because the company can say their policy prevents them from making the contribution”

The controversial and often misleading nature of super PAC ads makes them another precarious proposition for corporations aiming to maintain a clean public image, given that contributions to these groups are disclosed to the public.

A brazenly misleading ad in 2014 from Senate Majority PAC attempted to tie then-Senate candidate Bill Cassidy (R-La.) to a nonexistent effort to cut off hurricane relief funds for Louisiana. CLF landed in hot water for airing several misleading ads in 2018, including one that labeled Antonio Delgado (D-N.Y.), a Rhodes scholar, an “extreme and offensive” rapper.

Special interests have other interests

Direct contributions to outside groups make up a microscopic fraction of any major corporation’s budget. These companies shell out more when their money will make a more direct impact.

Federal lobbying spending reached an 8-year high in 2018, totaling $3.4 billion, as corporations and interest groups lobbied Congress and the federal government on policies that directly affect their bottom line.

When a statewide ballot measure directly threatens the profitability of an industry, corporations and trade associations truly open up their pocketbooks.

Pharmaceutical Research & Manufacturers of America (PhRMA) spent $59 million opposing the historically expensive 2017 Ohio ballot measure that would have required state programs to purchase prescription drugs at prices no higher than the U.S. Department of Veterans Affairs pays. Johnson & Johnson ($3.3 million), Amgen ($3.2 million) and Pfizer ($3.2 million) were the three top contributors to the effort that disclosed contributions, according to CPA’s corporate spending database.

In 2018, kidney care companies DaVita and Fresenius respectively spent $67 million and $34 million to defeat a California ballot measure that would have limited the profits of dialysis clinics.

State-level contests provide better bang for a corporation’s buck. Spending to influence statewide elections, 527 committees for both parties happily raise the bulk of their funds through corporations and trade associations.

According to CPA data, of the $562 million raised by the Republican Governors Association from 2010 to 2018, 37 percent came from publicly held corporations and their trade associations and another 17 percent came from private companies. The Republican State Leadership Committee, which focuses on state legislature races, raised 59 percent of its funds from publicly-traded corporations and their trade associations. CPA is currently collecting data on the Democratic counterparts, which will be released next week.

Then there’s “dark money” 501(c)(4) nonprofits, shell companies and trade associations, to which corporations can transfer unlimited sums for political activity and avoid detection. These groups’ ads are generally even more misleading than super PAC ads, as funders can safely hide their identities.

Dark money spending reported to the FEC has exceeded $1 billion since Citizens United and these non-disclosing groups transferred $176 million to super PACs in the 2018 cycle.

Of the major corporations to disclose contributions to dark money groups, CVS Health Corp stands out by giving to both liberal and conservative causes. It gave $250,000 to the Senate Democrat-aligned Majority Forward and $500,000 to pro-Trump America First Policies.

CVS, along with two other top donors to America First, announced last year they would stop making contributions to the group after CNN reported that one of America First Policies’ staffers praised Nazis and made other offensive remarks.

For other a majority of S&P 500 companies, it’s impossible to know how much they give to these groups. Only 121 of these companies disclosed contributions to 501(c)(4) groups in 2018. That’s a big increase from 81 in 2015, but far behind the disclosure of other types of political spending that can be found elsewhere in public databases — signaling that major corporations could be keeping serious political spending concealed.

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