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Money in Politics This Week: Freshmen on House Financial Services Committee Reaping Big Donations

The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform.

  • Syed Zaidi
August 16, 2013

The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Syed Zaidi.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.



Former Charity Leader Facing Inquiry into Political Donations

The former head of the Metropolitan Council on Jewish Poverty, William E. Rapfogel, is under investigation by an anticorruption task force formed by the state’s attorney general and comptroller. Rapfogel has been accused of overpaying the Met Council’s insurance company, Century Coverage, and asking the insurer to contribute to certain political candidates. On Monday, he was removed from his position at the charity after an investigation by outside counsel. Rapfogel has long been a power player in the Jewish community and both city and state politics, and his wife has served as chief of staff to Assembly Speaker Sheldon Silver for many years. Rapfogel’s lawyer said that neither his wife nor Speaker Silver were aware of his actions. As the investigations unfold, New York City has suspended all funding to the Met Council, and several mayoral candidates have returned contributions from Century Coverage.   

Democrat and Chronicle Calls on Moreland Commission to Investigate Fracking Contributions

The Rochester-based Democrat and Chronicle editorialized in favor of comprehensive campaign finance reform this month, saying “The longer state lawmakers wait to act on meaningful campaign finance reform, the more examples advocates can point to for why it is so badly needed.” The editorial decried the Empire State’s loose campaign finance laws and “casual” enforcement. Common Cause/New York and Fair Elections New York released reports indicating that backers of hydrofracking have funneled $14 million to Western and Southern Tier New York lawmakers, in an attempt to tilt decisions regarding the controversial practice. The editorial urged the Moreland Commission to Investigate Public Corruption to look thoroughly into the matter.



House Financial Services Committee Members Reaping Big Donations from Financial Industry

Some freshmen in the U.S. House of Representatives are seeing a flood of donations due to their position on the Financial Services Committee. The panel is sometimes called “the cash committee” because of its members’ ability to attract big contributions; for example, PACs have donated more than $10 million to Financial Services Committee members, more than any other committee. Seven freshmen Democrats on the committee have raised more PAC money from the financial industry than minority committee chair Representative Maxine Waters (D-CA). One lobbyist made the financial industry’s intention clear: “It is almost like investing in a first-round draft pick for the N.B.A. or N.F.L. There is potential there. So we make an investment, and we are hopeful that investment produces a return.” These freshman also joined with Republicans earlier this year, over the objection of Representative Waters and the Obama administration, to roll back some of the strictest provisions of Dodd-Frank financial reform. Freshman Representative Andy Barr (R-KY), who has received $150,000 from the financial industry in only six months, has also been a vocal critic of financial regulations. Last month, he introduced legislation to eliminate a new federal rule intended to prevent banks from issuing mortgages to customers who could not afford to repay the debt – a measure that was backed by bank lobbyists that had visited his office. Former Representative Brad Miller (D-NC) explains, “It’s only natural that it has got to be on your mind that a vote one way or other is going to affect the ability to raise money.”

Thirty-One Percent of Former Governors Now Work As Lobbyists or Consultants

A review of post-government employment for 32 former governors by USA Today, shows that 31 percent of them now work for trade associations, consulting businesses or lobbying firms. The revolving door between Congress and K Street has been widely discussed in the press: two-thirds of former Congressmen from the 112th Congress now work for lobbying firms or industries that lobby the federal government. Now “Governors are seeing that it’s lucrative to trade in on their public service” as well, according to Danielle Brian, executive director of the Project on Government Oversight. Earlier this year, former Pennsylvania Democratic governor Ed Rendell wrote an op-ed urging New York state officials to allow hydraulic fracturing. He also worked as a paid consultant for a private equity firm with investments in the gas industry, a fact he failed to disclose at the time of publication. Former Mississippi governor Haley Barbour, a Republican, now runs a lobbying shop in D.C. that hosts multinational clients including Chevron, Toyota and Motorola. Former Kansas governor Mark Parkinson, a Democrat, is now president and CEO of American Health Care Association, which spent $2 million on lobbying Congress on legislation related to assisted-living facilities and nursing homes.

Former Rep. Kennedy: Elections Need Transparency

Former Congressman Joseph P. Kennedy II (D-MA) urges the IRS, in a Boston Globe op-ed, to bring transparency for citizens to the election process. In accordance with the current interpretation of the law, groups organized under section 501(c)(4) of the tax code are allowed to spend up to 49 percent of their funds on politics. Although legitimate 501(c)(4)s spend over $40 billion annually on social welfare projects, the law allows political groups to collect and spend exorbitant sums on narrow political goals without having to disclose their donors, as they would if they were organized as political committees.  In the 2012 election cycle, politically active 501(c)(4)s spent nearly $300 million. Yet many of these same groups checked “no” on their tax forms when asked if they plan to engage in campaign activity. “No one should be able to spend tax-free dollars — or be able to deduct donations as a business expense — to elect candidates” Kennedy argues. Unfortunately, the IRS has been relying on key word searches such as “tea party” and “occupy” to examine 501(c)(4)s that may be using tax-free money for political activities. What is ultimately needed, Kennedy argues, is federal legislation to close the loophole, but he suggests the IRS improve transparency by requiring political contributions of $250 by 501(c)(4)s to be publicly reported, and codifying regulations for what constitutes political speech.

NYC Public Advocate: 28 States Already Possess Power to Mandate Disclosure

Federal laws and regulations are one avenue for enhancing transparency in our elections. Enacting strong disclosure regimes in states is another. In a new report, “Building a Frontline Defense to Stop Secret Political Spending,” New York City Public Advocate Bill de Blasio outlines that 28 states already have the ability to tighten rules around independent expenditures. These states can use legal or regulatory authority vested in the Attorney General or the Secretary of State to help unmask major donors to 501(c)(4) groups – organizations that seek to sway local and state elections without disclosing who bankrolls their efforts. This summer, New York Attorney General Eric Schneiderman led the way when he crafted new regulations requiring groups that spent more than $10,000 on New York elections to file itemized lists of expenditures above $50 and donors that gave over $1,000. This type of rule has the potential to bring massive amounts of political spending into the sunlight. IRS applications for non-profit 501(c)(4) status more than doubled during the presidential election – from 1,735 in 2010 to 3,357 in 2012, and spending shot up from $92.2 million to $256.3 million.

Fundraising Now Increasingly Important in Congress

With growing partisanship and excessive demands for fundraising, many former Congressmen are glad they are no longer on Capitol Hill. Representative Rodney Alexander (R-LA) announced this week that he would retire after serving 10 years in the U.S. House, citing frustrations with continual gridlock on important issues. “Rather than producing tangible solutions to better this nation, partisan posturing has created a legislative standstill.” Former Representative Brad Miller (D-NC) also expressed dissatisfaction with Congress, noting the consistent demand for raising money. Following the Citizens United decision, independent expenditures have flooded elections, and members must raise more and more money to keep their jobs. Recent live tweets about a freshman Congressmen’s attempt to raise money are illustrative of the broader problem. Miller reflected, “It’s hard to imagine that that’s really what democracy should really be about. It means that members of Congress have to spend their time in a little room with a phone, calling up lobbyists and asking them to contribute from their PACs, then rushing to the floor to vote on a lot of issues that very few members have had time to think about and certainly not to shape in any important way.” Sunlight Foundation’s Party Time app reveals that there were 12 political fundraising events this week, and 55 this month, despite the August Congressional recess.