Here’s your weekly roundup of the important political corruption stories we’ve been tracking.
President Trump is getting business favors from foreign governments
Foreign governments with interests before the Trump administration are finding creative ways to give Trump special gifts that will enrich his businesses.
President Trump has refused to divest from his businesses to eliminate conflicts of interest. Instead, he has handed control to his two oldest sons and promised not to engage in any dealmaking. But he’s still getting paid from his business holdings, which means that interests that want to butter him up in hopes of getting special treatment from the President of the United States can do favors for his businesses, knowing that the President will directly reap the rewards.
McClatchy reports this week that foreign governments including Uruguay, India, the Philippines, and Panama have donated land, eased environmental regulations, approved permits, and more in order to help Trump-branded developments. Here are just two examples from the article:
- In Indonesia, a local government plans to build a road to shorten the drive between the main airport on the island of Bali and the new high-end Trump resort and golf course.
- In Panama, the country’s federal government intervened to ensure a sewer system around a 70-story Trump skyscraper shaped like a sail in Panama City would be completed.
All of this very well may violate the Constitution’s Emoluments Clause, which states that Presidents and other government officials can not accept any “present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” The founders were concerned that government officials could be induced through gifts and other things of value to compromise their loyalty and use their office to benefit foreign interests, so they included this hardline restriction in Article I of the Constitution.
The bottom line: The Trump organization’s international holdings create major conflicts of interest for the President, and they give foreign governments new ways to curry favor with the White House.
Corporations are funneling money to politicians in states that try to block corporate contributions
Companies have found a loophole that lets them donate unlimited amounts of money to gubernatorial candidates that aren’t supposed to take money from corporations under state law.
In many states, corporations are not allowed to give directly to politicians, or they are strictly limited in how much they can give. So they have been turning to a loophole to get around these restrictions — give the money to the national governors associations (the Republican Governors Association and the Democratic Governors Association) and let the groups know which candidate they want their money to be spent on behalf of.
The Wall Street Journal this week published a great piece describing this widespread, and growing, practice. It really sounds quite brazen.
Donors can’t earmark money for a particular candidate. Instead, they can simply—and legally—tell the groups they have “an interest” in a race or are making a donation “at the request” of a gubernatorial candidate, these officials say.
An internal tracking system, sometimes called the “tally,” allows the DGA to keep tabs on how much individual governors raise for the association from companies and other donors, which later helps it figure out how to allocate the money, former DGA officials said. The RGA has a similar system, former RGA officials say.
In case you’re interested, here are the top donors to the RGA in 2016, and here are the top donors to the DGA. Interestingly, both groups are getting large contributions from pharmaceutical companies, including Blue Cross/Blue Shield, Pfizer, and the Pharmaceutical Research & Manufacturers of America.
The bottom line: Gubernatorial candidates are able to dodge corporate fundraising restrictions by having money donated to national governors associations on their behalf.
Political ads on Facebook will now come with info about who paid for them
Finally, some good news on political ads transparency.
The Federal Elections Commission decided last week that political ads on Facebook that include videos or images must include disclaimers about who paid for them. This change will bring transparency around political spending on Facebook in line with the current rules for political ads that appear on television or in print.
Facebook has become one of the most important sources for political information, so this is an important and welcomed decision. According to the Campaigns & Elections journal, more than $1.4 billion was spent on online political ads in the 2016 election, with about 2/5ths of that spending taking place on social media. Online political ad spending was thrust into the spotlight more recently following revelations of Russian interests buying Facebook ads with the intention of stoking resentment and influencing election results in the U.S.
Still, because of the rise of dark money and spending by outside political groups, the disclosures on Facebook won’t tell us everything we may want to know about who’s buying political ads. Super PACs have intentionally vague names that don’t tell us anything about who they support or what their ideological foundation is. And dark money groups aren’t required by law to disclose their donors, so knowing the name of the group behind an ad does little to reveal the true source of the ad spend.
The bottom line: This is a good step that will reveal some important information about who is spending money on Facebook to influence how we vote. Now the FEC and Congress should take action to stop dark-money groups from keeping the real identities of political donors secret.
Senator Corker flipped to a ‘yes’ on the tax bill after a provision benefitting his real estate investments was mysteriously added
Corker claims the provision didn’t affect his decision.
Senator Bob Corker (R-TN) was a “no” on the tax bill when it passed the Senate the first time, but he switched to a “yes” when it came back after being amended by the conference committee.
The bill hadn’t changed in any fundamental way. The conference committee bill still adds $1.5 trillion to the deficit over the next ten years, which was the reason Corker originally gave for opposing it. However, one major provision that was added would provide a big personal benefit to Senator Corker.
The tax bill reported by the conference committee allows people with investments in real estate LLCs that have no or few employees to deduct a portion of their income from these investments from their taxes. Senator Corker has as much as $41 million in real estate investments that would be eligible for tax savings under this provision.
Why was the provision—which wasn’t in the versions that passed originally passed the Senate or House—added in the conference committee? Senate Majority Whip John Cornyn explained on ABC’s “This Week” that it was added in order to “cobble together the votes [they] needed to get this bill passed.” Remember, Corker was the only GOP holdout on the tax bill the first time around.
Corker, of course, denies that he switched to a “yes” because of the provision. His official statement for why he switched from a “no” to a “yes” is vague but says he decided that the bill “could have significant positive impact on the well-being of Americans.”
The bottom line: This smells. Corker will try to establish plausible deniability, but the basic facts here are pretty damning all on their own.
Appropriations bill will help politicians work more closely with big donors
Another nail in the coffin of campaign finance restrictions in U.S. elections.
Under current campaign finance law, politicians are not supposed to cooperate with or consult with outside groups that spend money on their behalf. Donors can only give a total of $5,400 to a candidate per cycle, and any money beyond that limit must be spent through outside groups that are supposed to operate totally independently from political campaigns.
But a provision tucked into the 2018 Financial Services and General Government Appropriations Bill could make it easier for politicians and donors to undermine these restrictions. Donors are allowed to give as much as $2.5 million to political party groups, and under the new language in the appropriations bill politicians would be able to work more closely with these party groups by providing them with information about how they should spend the money on their behalf.
Right now party groups are restricted from spending funds “in cooperation, consultation or concert, with, or at the request or suggestion of [the] candidate.” The new bill revises that language and limits the restriction to only spending that is “controlled by, or made at the direction of, the candidate.”
That means politicians would be able to effectively control how the money is spent on their behalf, as long as they aren’t technically controlling it. The distinction between party groups, which can take $2.5 million from a donor, and political committees, which can only take $5,400, would be blurred and politicians would be able to work much more closely with the biggest donors.
The bottom line: This would be yet another way for wealthy donors and interests to influence politicians and play an outsized role in determining who runs for office and who is ultimately elected. This is the wrong direction for our campaign finance restrictions if the goal is to guard against corruption and make sure ordinary people have a voice in politics.
Big Pharma bulks up to stave off concerns over high drug prices
Facing public pressure, the pharmaceutical industry is using its power and money to fight reforms that most Americans want, and millions of patients desperately need.
Last year, while pharma bro Martin Shkreli was in the news and presidential candidates from both major parties were calling out the high costs of drugs, Big Pharma was shoring up its political wing so they could fight off efforts by politicians to regulate drug prices.
NPR reported this week that in 2016 the pharmaceutical industry’s trade group, PhRMA, collected more than $271 million in member dues from companies like Johnson & Johnson, Merck, and Eli Lilly, boosting its revenue by a quarter from the previous year. Their 2016 budget was the highest it’s been since 2009, the year they successfully fought to make sure the Obamacare legislation didn’t contain measures that would alter the way they do business.
Their political strategy in recent years has involved a wide range of tactics, including campaign ads, political contributions, lobbying, and donations to non-profit groups that represent patients who are struggling with high drug prices.
They have specifically directed money at states that are considering measure to limit prices or increase pricing transparency. PhRMA spent $64 million to defeat Prop. 61 in California, a proposal that sought to lower drug prices by requiring state agencies to pay no more for drugs than does the federal Department of Veterans Affairs. They also sued this year to block a new California law requiring drug companies to give notice and explanation when they jack up prices.
The bottom line: The pharmaceutical industry is one of the most powerful interests in American politics. Calling them out for outrageous pricing of life-saving drugs will continue to be a winning message for politicians, but until the industry’s political power is limited through campaign finance and lobbying restrictions, it’s not likely that we will see any real progress on reining them in.
That’s all for this week, folks. If you have a corruption story you’d like to see covered here, send me an email at donnydonny [at] gmail [dot] com.