Public Financing of Elections: Putting an end to 'Pay to Play' Politics

With no limits on political spending in sight, corporate contributions and political favoritism has become a way a life for elected officials. The big losers of course are middle class and working families, as tax dollars are routinely wasted on "over priced no-bid contracts", and tax cuts are passed that increasingly favor the rich.

Getting corporate money out of politics is one of the most urgent problems facing America today. Bought and paid for politicians, with little concern for the will of the people, are making it nearly impossible to solve critical problems in areas such as health care, education, and the environment.

The only way to end pay to play politics is to implement a system of public financing of elections. Today about 70 percent of all democracies have some form of public financing of elections and nearly half provide free media for qualified candidates. The few that do not include Ecuador, Honduras, Malaysia, Taiwan, Tanzania, Trinidad and Tobago, ... and the United States.

Lobbyist and other opponents of public financing often complain that such funding wastes needed tax dollars on political campaigns. What they don’t often say, however, is that private funding of elections cost taxpayers hundreds of times more money in the form of subsidies, tax breaks, and "no-bid contracts" given out to corporate donors.

The truth is that without ending corporate control of elections, the massive redistribution of wealth that has taken place over the last half century - from the middle class and poor to the richest members of society - will continue unabated.

Now that is something to complain about.

The following are just a few examples of how corporate funding corrupts our democracy and directly steals money from the average citizen.

Energy Deregulation

Between 1996 and 2002 the investor owned utilities such as PG&E and Southern California Edison, and the private power producers (e.g. Enron) spent more than $17 million in political contributions and lobbying expenses to influence energy policy makers in California.[1]

One forth of the cash these energy interests doled out during the 1999-2000 campaign went to the three elected officials who had the greatest influence over energy policy: Governor Gray Davis ($600,000), Speaker of the Assembly Robert Hertzberg ($220,000), and President Pro Tempore of the Senate John Burton ($250,000). [1]

One of the promises of energy deregulation was that "Green friendly" alternative energy retailers would flourish under a free market deregulation scheme. This proved to be a mirage.

Alternative energy retailers have never made significant campaign contributions. In the two election cycles following deregulation these groups together spent only $13,500 on state campaign contributions. That amounts to less than 1 percent of what Investor Owned Utilities and Private Energy Producers spent during this same period.

Therefore, it is not surprising that the deregulation legislation was stacked against the alternative energy retailers from the start. Under deregulation in-state alternative energy generators were more restricted in whom they could sell their power to and consequently received much lower prices for their electricity. When the state began to purchase power from out-of-state producers like Dynegy, Reliant, Enron, and Duke, alternative energy generators were forced to continue to deliver their electricity to the utilities that were no longer paying them for it.

California's electricity crisis wreaked havoc on consumers and businesses from the summer of 2000 to June of 2001, resulting in four days of rolling blackouts, hundreds of emergency power alerts and forced the state's largest utility, Pacific Gas & Electric, into bankruptcy.[2] The crisis cost the state more than $70 billion. [3]

The return on its investment that the Energy Companies wanted in the 1990's was deregulation. They hoped this would get the government off their backs, freeing them from alternative energy quotas and price caps.

When California decided to deregulate its electric utilities, politicians told consumers that increase competition would drive consumer electric bills down by 20 to 30 percent. What they neglected to say was that since only a few giant corporations controlled all of the power plants in the state, these companies suddenly had a huge opening to grossly increase electric rates without fearing competition.

By 2000 the top ten sellers of electricity had tripled their rates and boosted their profits by 55 percent.[4]

Drug and Health Care

Drug companies are notorious for resisting legislation that would make health care cheaper and safer for patients. To increase their wealth they have spent untold millions on campaigns contributions, lobbyists and soft money ads to ensure large profits. One result of this effort is that American seniors typically pay more than double what others pay for the same prescription drugs in other countries.[5]

A prime example of how the influence of drug money on policy has cost Americans millions is a 1997 law that extends the patient of many of the most expensive drugs on the markets including Cipro - which became well known during the 2001 Anthrax scare.

The sponsor of the "Cipro bill", California Democrat Anna Eshoo, received over $130,000 in drug industry contributions during the time period that she sponsored the bill. In 2004 alone, Eshoo received over $114,000 from pharmaceutical companies.[6]

A similar effort has taken place at the state level in California, by one of the biggest drug company lobbying groups ironically called "Cure". They have worked to kill a flood of legislation that would allow Californians easier access to cheaper drugs from Canada. [7]

Cure is just one of several altruistic-sounding lobbying entities with financial links to the drug industry that have materialized around the Capitol to stop what they see as the threat of imported drugs.

In 2004 and 2005, drug companies donated over $325,000 to Governor Schwarzenegger's ballot measure and his election campaign, according to the Foundation for Taxpayer and Consumer Rights.

Not surprisingly, Schwarzenegger returned the favor to the drug industry and vetoed a bill that would have made it easier to bring lower-priced drugs into the state from Canada.

With the industry's lobbying expenditures in California jumping by about 25% in 2004, and expenditures now reaching over $4 million dollars the industry is well poised to protect its bottom line at the health expense of California citizens.[6]

War profiteering

One of the worst influences of corporate contribution has been their over riding control on our foreign policy and the re they receive in over the top "no-bid" contracts to rebuild countries after the U.S. has invaded them. No where is this better illustrated than the recent handout of corporate contracts to companies charged with "rebuilding" Iraq.

Many key Iraq contracts were dished out in a secretive bidding process to companies with strong ties to the Bush administration. For instance, a no-bid $11 Billion contract to rebuild and operate oil systems in Iraq was awarded to Kellogg, Brown & Root - a subsidiary of Halliburton, the energy giant formerly chaired by Vice President Dick Cheney.

Another $680 million contract for Iraq's power grid, water system, and airport facilities went to Bechtel Group Inc., after a secret bidding process. Together, the six companies invited to bid on the Bechtel contract contributed $3.6 million to federal election campaigns, two-thirds to Republicans, according to the Center for Responsive Politics.

Bechtel itself made over $1.3 million in political contributions between 2001 and 2002 (59 percent to Republicans; 41 percent to Democrats). In return they have received more than $ 2.4 Billions in contracts to provide emergency repair and construction services in Iraq.[8]

A recent study by the Center for Public Integrity shows how well-connected firms are reaping war profits of from their political contributions in Iraq. Among their findings was that the top 14 the companies with the most lucrative contracts in Iraq and Afghanistan have given more than $23 million in political contributions to both the Democratic and Republican parties since 1990.[9]

California taxpayer's share of the cost of the Iraq War through May 2004 was $19.5 billion. War profiteering by corporations is not only robbing the nation of hundreds of billions of dollars in needed revenues, it is also hampering the ability of California to dig its way out of debt.

References

[1] Wiring the Capitol: Power Industry Political spending fuels energy crisis, by Peter Asmus. Common Cause

[2] Federal Energy Regulators Find Widespread Abuse During Calif Energy Crisis; Billions In Refunds Ordered, by Jason Leopold. Dow Jones News Service. March 27, 2003

[3] Price-gouging Inquiries Target Enron: Overcharges in California May Exceed $40 Billion, by Kathleen Sharp. Boston Globe. March 03, 2002

[4] Attorney General's Energy White Paper: A law enforcement perspective on the California energy crisis. Attorney General Bill Lockyer. April 2004.

[5] Department of Health and Human Services, Report to the President: Prescription Drug Coverage, Spending, Utilization, and Prices, 96 (April 2000).

[6] Drug Firms Say, 'No Canada', by Robert Salladay and Jordan Rau. Los Angeles Times. May 23, 2004

[7] Drugmakers go furthest to sway Congress, by Jim Drinkard. USA TODAY. April 26, 2005

[8] The War Profiteers, by Barry S. Willdorf. Gauche Press, February 3rd, 2005

[9] The Center for Public Integrity. http://www.publicintegrity.org/