Donors Sit on Their Checkbooks

Posted March 7, 2003 at 6:04pm

From AT&T to Verizon, Washington’s most generous political donors have decided not to send checks to any of the controversial campaign accounts set up by Republican and Democratic loyalists in the days after the new campaign finance law took effect last year.

Dozens of corporate executives and lobbyists said in interviews that they remain confused about the law — which sought to outlaw soft-money contributions to the national parties — and will not contribute to the new “shadow” campaign accounts until the courts sort out all of the legalities.

Meanwhile, K Street lobbyists are warning their corporate clients that donations to some of the fundraising organizations could irritate the champion of campaign law, Sen. John McCain (R-Ariz.), who holds tremendous power over the way businesses are regulated in his role as chairman of the Senate Commerce, Science and Transportation Committee.

The decision by Corporate America not to contribute to the groups has left the newly created Republican and Democratic fundraising organizations on life support. But it has already saved millions of dollars for businesses during a time in which unsteady economic growth has hindered Washington offices.

“People are uncomfortable with what the rules are and they don’t want to break them,” said Dan Cohen, a lobbyist with Loeffler, Jonas & Tuggey. “In the past there was no enforcement mechanism. Now, you go to jail.” Added another corporate lobbyist: “Everybody is nervous because they don’t want to be the above-the-fold story in Roll Call.”

At issue are the shadow campaign accounts that sprouted up soon after the McCain- Feingold law banned unlimited soft-money contributions to the Republican National Committee, Democratic National Committee and other national party organizations.

Republican lobbyists like ex-GOP staffer Susan Hirschmann and former Rep. Bill Paxon (N.Y.) set up the Leadership Forum, while former Democratic Senatorial Campaign Committee aide Monica Dixon created a Democratic counterpart.

“The chill has been pretty significant for all 527s because everybody has been waiting for the court to rule and the FEC to decide on the affiliation issues,” said Randy Evans of the Leadership Forum.

As the partisan loyalists set up the controversial fundraising organizations — known as 527s by the section of the law under which they are established — the law’s opponents launched what could be a lengthy legal challenge of the law in federal court.

“There is a certain amount of trepidation on behalf of all companies given that the rules are still fuzzy,” said Doug Wiley, a lobbyist for Alcatel.

Other lobbyists have told their corporate clients that contributing to the newly created 527 organizations could make life much more difficult for them when dealing with McCain and the Commerce committee.

“Love him or hate him, he is still the chairman of the Commerce committee and everyone still wants to make him happy,” said one corporate lobbyist with business before the panel. “Nobody wants their company to be the leading example of Corporate America trying to get around these laws.”

McCain has promised to take the shadowy 527 committees to court and publicize their benefactors if they continue to raise money. McCain and a set of public interest groups also filed a complaint with the Federal Election Commission earlier this year.

“We made a big push to put the word out to donors that these things were not set up in a way that is legal,” said Rick Davis of Davis Manafort, a firm that advises McCain.

The complaint, now pending at the FEC, could be a precursor to a federal lawsuit that could enmesh any companies that have given money to the outside groups.

“We are cognizant of the fact that McCain wants to see soft money go away and he is the chairman of the Commerce committee,” said one telecommunications lobbyist.

To be sure, lobbyists do not think McCain will suddenly shift ideological positions on legislation in order to target a company that has contributed to the 527s. But they worry that a donation could prove to be the decisive factor when McCain has not made up his mind.

“The real question is: In a 50-50 call, what will tip the balance?” asked a lobbyist who has worked closely with the Senator.

“He is not all of a sudden going to slap all kinds of new regulations on broadband because Broadband Inc. has given all this money. But if you get into the weeds on how you are going to do it, his lingering distaste for Broadband Inc. may tip him over in a 51-49 kind of thing.”

But several lobbyists close to McCain dismissed such reasoning, saying that companies are simply looking for excuses not to give large contributions to 527 organizations.

“They won’t say this, but a lot of them are saying, ‘Thank God that we don’t have to give,’” Davis said.

For his part, McCain said: “I’ve been here for 12 years and I haven’t seen anyone you can argue that I have taken retaliatory action against anyone. I’ve disagreed, but I’ve never mixed political issues with policy issues.”

Aside from McCain, several corporations say they are reluctant to give to the shadowy groups because they are too stealthy.

“Let’s face it, one of the reasons that you give soft money is to get credit,” said a corporate lobbyist. “If the credit is not there, people have less desire to give. They are not giving because they are interested in the get-out-the-vote campaign in Iowa.”

As a result, the 527 organizations are having a tough time raising money. In fact, the groups have stopped soliciting funds altogether.

“I have not received one solicitation,” said Tim McKone of SBC Communications.

Due to the loose disclosure laws that govern the committees, it is unclear how much soft money the two groups have raised since their inception last year. But according to a year-end report filed by the hard-money wing of the Democratic committee set up by Dixon, the group was $60,000 in the hole.

While corporations are reluctant to give unlimited sums to the 527 groups, they have redoubled their efforts to pump valuable hard dollars into the re-election accounts of Members of Congress — even to McCain.

Corporate lobbyists helped raise about $1 million in hard money for McCain at a lavish fundraiser the Senator held in Phoenix during the President’s Day recess.

Though Washington lobbyists made up only a fraction of the 650-person crowd, many of K Street’s biggest names were on the 32-member host committee for McCain’s “20th Anniversary Celebration” for his two decades in Congress.

Among the co-hosts and sponsors who paid up to $10,000 for a table were many of the same corporate executives and lobbyists who are wary of contributing big dollars to the 527s, including Dick Notebaert and Gary Lytle of Qwest Communications, Tom Tauke of Verizon Communications, Mary Arnold of AT&T and SBC’s McKone.

Asked about the fundraiser, McCain said simply that it was “very successful.”