Corporate America’s War on Political Transparency

It’s a modest notion.

Companies that bid for government contracts should disclose their campaign spending, in order to diminish the likelihood that contracts are a payoff for political expenditures.

The Obama administration has indicated that it plans to impose such a rule, through an executive order. Ideally, the rule would prohibit contractors and lobbyists from campaign spending, but a disclosure standard is a very positive if modest step.

The U.S. Chamber of Commerce, the trade association for big business, however, takes a somewhat different view.

“We will fight it through all available means,” Bruce Josten, the chief lobbyist for the Chamber, told the New York Times. “To quote what they say every day on Libya, all options are on the table.”

Other business lobbyists use less charged rhetoric* but echo Josten’s stridency. “The President and his administration seem to be using the executive order powers for political purposes,” says John Engler, president of the Business Roundtable, an association of major company CEOs. “The suggestion that federal procurement choices are the result of contributions is being seen as discouraging free speech by intimidating business donors.”

Gosh, is it really a stretch to suggest that contractors think political donations help them obtain contracts? Did Lockheed really spend $16 million on campaign contributions over the last two decades — divided fairly evenly between the two major parties (55-45 split for Republicans) — for any other reason? Heck, the company spent $60 million over just the last five years on lobbying, primarily to affect how the government spends money.

This is a case — there have been precious few — where the President is going head to head with the Big Business lobby. It’s up to us to help him stand strong for what’s right. Go here to urge President Obama to ignore the business pressure and issue the executive order requiring disclosure of contractors’ election expenditures.

The need for such action is directly traceable to the Supreme Court’s decision Citizens United v. FEC, which lifted restrictions on political spending by corporations, and paved the way for companies to make massive expenditures from their general treasuries to influence election outcomes. While companies are prohibited from making direct contributions to federal candidates, and while direct contributions from individual managers and employees of companies and their political action committees are publicly reported, it remains nearly impossible to trace most of the corporate political spending designed to curry favor and access with government officials. After Citizens United, corporations can now easily make secret and unlimited donations directly out of their corporate treasuries to “front” organizations like the U.S. Chamber of Commerce that then use the money for campaign expenditures.

Not only did Citizens United badly damage the functioning of our democracy, it invited a major uptick in corruption narrowly defined.

While government corruption comes in many forms, nowhere is it more prevalent than in government contracting. “Pay-to-play” deals are a form of government contracting abuse in which a business entity makes campaign contributions or expenditures on behalf of a public official in order to obtain preferential treatment in receiving government contracts. Occasionally, pay-to-play constitutes outright bribery for a government contract. More often, pay-to-play involves a contractor buying favoritism. The practice is widespread in local, state, and federal contracting but is usually kept well hidden due to inadequate monitoring of government contracting procedures. The pay-to-play system encourages fraud and abuse of power, prevents contracts from being awarded to businesses based on merit, wastes taxpayer dollars, and facilitates privatization and contracting out of services that otherwise could or should be provided by government agencies.

An example of pay-to-play abuse is the scandal surrounding impeached former Illinois Governor Rod Blagojevich. Charges against Blagojevich included a pay-to-play scheme in which he allegedly provided a lucrative highway contract to a contributor in exchange for a donation.

Short of a constitutional amendment to overturn Citizens United, the best way to prevent pay-to-play abuses is to bar contractors and lobbyists from political expenditures. Eight states, the Securities Exchange Commission and several local jurisdictions currently restrict government contractors from making campaign contributions to those responsible for issuing government contracts.

President Obama has proposed not restrictions on contractor spending, but mandatory disclosure, something many states already do. Under the proposed executive order, government contractors would have to report all bundled contributions from their executives and PACs, as well as any direct campaign expenditures or donations to front groups used for campaign expenditures.

For the Big Business lobby, even simple disclosure of contractor political spending is too much. If the public knows about corporate campaign expenditures, fears the U.S. Chamber and its allies, they may seek to hold companies accountable. Then, the argument goes, those companies might be deterred from making political expenditures and expressing their views. Welcome to the next step of illogic in a post-Citizens United world.

Even under Citizens United, however, disclosure rules, and rules aimed at prohibiting narrowly defined corruption, remain permissible.

The President’s proposed executive order would not turn back the clock on Citizens United. That’s going to take a constitutional amendment.

But deterring contractor corruption is a worthy goal in its own right. Tell the President to stand strong.

*Imagine for just a moment if a prominent political player from the left used language that could be interpreted as calling for drone attacks on a Republican president. This is of course not to say that Josten really means to urge violence, but his words are what they are. A firestorm would erupt if the script were flipped.

Robert Weissman is president of Public Citizen