Here’s your weekly roundup of some of the important political corruption stories we’ve been tracking.
Oil and gas companies got a special gift added to the tax bill at the very last second
This was one of those illegible, hand-written amendments that was added to the Senate’s tax bill in the dead of night.
When the tax overhaul legislation was crammed through the Senate at 2am last Saturday, several provisions were inserted at the last moment to benefit specific industries and secure the final votes that the Republican leadership needed to pass it. Here’s just one example.
Senator John Cornyn (R-TX) added an amendment to the bill that offers a lower tax rate to investors in “master limited partnerships,” financial vehicles used primarily by oil and gas companies to avoid paying corporate taxes. Under Cornyn’s amendment, pay outs from these partnerships would be considered pass-through income, and the investors—which often include the parent company or its subsidiaries—would be able to pay the a discount pass-through rate that is created in the bill.
This means that companies and individuals investing in oil and gas projects won’t have to pay the personal income tax of up to 39.6% on their returns, and will instead get to pay the lower pass-through rate of 25%.
There are not a lot of master limited partnerships, but the ones that exist include subsidiaries of Shell, Valero, BP, TransCanada, and other fossil fuel giants. According to OpenSecrets, the oil and gas industry has given Senator Cornyn more than $3.1 million in campaign contributions over the course of his career, more money than any other sector has given to him.
The bottom line: When corporate interests fund elections, they tend to get lots of benefits. This is just one example of how corporate interests will benefit if Congress’ tax legislation becomes law.
Super PAC running ads against Roy Moore finds a new way to hide its donors
Voters in Alabama won’t know who’s funding the group until after the election.
“Highway 31” is a new super PAC that has spent more than $4 million on ads supporting Democratic Senate candidate Doug Jones and attacking Republican Roy Moore. The group has pumped more money into Alabama’s hotly contested Senate race than anyone else.
Unfortunately for Alabama’s voters, Highway 31 has found a new loophole in campaign finance disclosure rules that is allowing them to keep their donors secret. Despite reporting to the FEC that they have financed nearly $2 million in election ads, their recently filed itemized disclosure form shows that they have received and spent $0. Instead they reported working with a number of Democratic vendors that ran the ads for them on credit.
Highway 31 will have to address their debt to these vendors, and when they do they will be required to report the source of that money to the FEC. A donation could be made at a later date, or the vendors could forgive the debt and essentially claim financing of the ads for themselves. Regardless, this isn’t going to happen until after next Tuesday’s election, so voters will go to the polls without knowing the organization(s) or individual(s) behind the single largest source of spending in the race.
Bottom line: With super PACs empowered to raise and spend unlimited amounts of money in elections, it’s more important than ever for voters to know who’s behind the money. This new technique to hide the source of political money is creating a dangerous precedent that could help politicians and big donors keep the public in the dark.
State lawmakers around the country are using their positions to benefit themselves and their friends
This isn’t exactly a shocker, but the extent of the problem is troubling.
The Center for Public Integrity and the Associated Press teamed up on a major review of state legislatures to reveal how lawmakers across the country routinely sponsor and vote on bills that affect their own interests.
Some of their examples, copy/pasted:
- A North Dakota legislator was instrumental in approving millions of dollars for colleges that also are customers of his insurance business.
- A Nevada senator cast multiple votes that benefited clients of the lobbying firm where he works.
- Two Hawaii lawmakers involved with the condominium industry sponsored and voted for legislation smoothing the legal speed bumps their companies navigate.
In part, the conflicts between lawmakers’ public work and private interests are a function of the structure of state legislatures: 40 states have less-than-full-time legislatures, meaning that lawmakers are encouraged to maintain separate professional lives alongside their work in the government. CPI and AP examined the records of nearly 7,000 people serving as state legislators in 2015 and found 76 percent had outside employment. And though 47 states require lawmakers to submit financial disclosures—Idaho and Michigan remain holdouts, while Vermont will implement such reporting in 2018—the forms themselves vary, and are often vague or over-broad.
The bottom line: In many states, lawmakers maintain private-sector careers while serving in the legislature, so the arrangements are ripe for corruption and conflicts of interest. In these states it’s extra important that ethics rules are strongly designed and rigorously enforced. Unfortunately, as this report shows, that tends not to be the case.
Oil pipelines propped up by astroturf campaigns and corporate-funded research
Groups that have taken money from these oil companies can’t see anything wrong with their plans to build pipelines across watersheds and through sacred tribal lands.
The researchers at Little Sis have been looking into controversial oil pipeline projects and have found several sneaky ways that companies that would benefit from the project are funding efforts to drum up political support for it.
In Minnesota, a debate has been raging over the Line 3 project, a proposal by Enbridge to leave an old, deteriorating pipeline in the ground and build a new pipeline through the state’s watershed and tribal areas. Little Sis revealed that an economic impact study that has been repeatedly cited by pipeline supporters in Duluth News Tribune op-eds was financed by a non-profit that both the newspaper and Enbridge help to fund. That conflict of interest was never disclosed in the articles. They also found that a supposedly grassroots effort to support the pipeline is actually an out-of-state PR campaign funded by fossil fuel interests.
In Louisiana, it’s a similar story. A company called Energy Transfer Partners has funded research at Louisiana State University that is being used by the company to support their proposal to build an oil pipeline that would cross 700 acres of wetlands, they reported. While this conflict was disclosed, the university’s willingness to work with the oil and gas industry on research that helps them advocate for a controversial pipeline project shows how academics can be used to legitimize corporate talking points and influence policy.
The bottom line: This is just another form of lobbying. Rather than hiring a lobbyist to recite talking points to regulators, the oil companies are using their money to make it look like their positions are backed up by a range of outside entities.
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.