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The Looming Pay-to-Play Problem

An FEC ruling gives government contractors license to donate to campaigns.

Students in my elec­tion law seminar this semester tell me that I’m depress­ing them by teach­ing about money in polit­ics. I really don’t mean to be depress­ing; just factual. And from my point of view I only gave them a taste of what’s wrong. A little BuckleyCitizens United with only a hint of McCutcheon sprinkled on top.

But I remem­ber when I was in their shoes. One of my law profess­ors at Columbia told us that only small busi­ness thinks of govern­ment as a burden, while big busi­ness thinks of the govern­ment as a lucrat­ive customer. The thought, while simple, shook how I saw the way Amer­ica works. My profess­or’s paradigm was thor­oughly disquiet­ing. I’m sure he didn’t mean to be depress­ing; just factual.

What I’ve been teach­ing about campaign finance and what I learned as a law student about the govern­ment as a customer has a nexus known as “pay-to-play” corrup­tion. Busi­nesses which are govern­ment contract­ors want that gravy train to keep on flow­ing — tax dollars are an intox­ic­at­ing revenue stream. The risk is that busi­nesses will try to ensure those govern­ment contracts by giving gener­ously to elec­ted offi­cials who control the contract­ing process. This giving can take the form of gifts, campaign contri­bu­tions and even out-and-out bribes.

The risk of pay-to-play corrup­tion in the federal contract­ing was recog­nized decades ago. Since 1940, the Hatch Act prohib­its federal contract­ors from giving campaign contri­bu­tions. Pursu­ant to 2 U.S.C. § 441c:  “It shall be unlaw­ful for any person – (1) who enters into any contract with the United States …dir­ectly or indir­ectly to make any contri­bu­tion of money or other things of value, or to prom­ise expressly or impliedly to make any such contri­bu­tion to any polit­ical party, commit­tee, or candid­ate for public office or to any person for any polit­ical purpose or use; or (2) know­ingly to soli­cit any such contri­bu­tion from any such person for any such purpose ….” In other words, govern­ment contract­ors cannot give or raise money for candid­ates.

While the language of the Hatch Act is incred­ibly broad, it appar­ently has a gaping hole in it because it does not cover certain money going to super PACs. The voting public discovered this the hard way. In 2013, Public Citizen launched a complaint against Chev­ron for giving $2.5 million to a super PAC called the Congres­sional Lead­er­ship Fund (CLF). This expendit­ure was the largest one from a for-profit publicly traded company in the 2012 elec­tion cycle. 

This should have be a slam dunk of a case since Chev­ron is a govern­ment contractor covered by the Hatch Act. But the FEC did not see it that way. As Mother Jones repor­ted, “The FEC bought the company’s argu­ment, which is that Chev­ron Corpor­a­tion (the organ­iz­a­tion that donated to CLF) and Chev­ron U.S.A. (the organ­iz­a­tion with govern­ment contracts) are entirely differ­ent entit­ies.” It did not matter that Chev­ron U.S.A. is 100 percent owned by Chev­ron Corp. Now it is open season for govern­ment contract­ors to spend in federal elec­tions since all they have to do is spend through a differ­ent subsi­di­ary. The Hatch Act is now barely worth the paper it’s writ­ten on if this is how the FEC is going to “enforce” it.

And while super PACs are trans­par­ent, list­ing publicly where they got their funds, the donors to super PACs can be dark money conduits like 501(c)(4)s or 501(c)(6)s. Consequently, federal contract­ors could be hiding among the donors of $600 million in dark money that has been spent in the past four years. This is why so many groups have urged the Pres­id­ent to issue an exec­ut­ive order requir­ing greater trans­par­ency of polit­ical spend­ing by govern­ment contract­ors.

The chances of pay-to-play corrup­tion being discovered by an enter­pris­ing journ­al­ist is still out there. The Aaron Schock take down should make those who engage in pay-to-play sit up and take notice. (Former Rep. Schock was brought down by his own boast­ful Instagram photos which journ­al­ists cross matched with his govern­ment reports to reveal his travel on private planes of polit­ical donors.) But the less trans­par­ency there is, the fewer leads journ­al­ists will have to suss out the corrupt.

The Obama admin­is­tra­tion has stated that it has no plans to address this trans­par­ency prob­lem. Respect­fully, they should change those plans. The admin­is­tra­tion entered the White House with high hopes of being the paragon of trans­par­ency. That legacy can still be fulfilled by adopt­ing better disclos­ure rules as sugges­ted by Robert Bauer and Samuel Issachar­off among half a million others. But time is decidedly running out to do the right thing. 

The views expressed are the author’s own and not neces­sar­ily those of the Bren­nan Center for Justice.

(Photo: Flickr)