ALEC Explained: Why Many Corporations Don’t Even Know How Their Political Donations Are Spent

With corporate political spending at the top of the agenda this proxy season and a consumer boycott of the American Legislative Exchange Council underway, Mark Schmitt of The New Republic provides an enlightening explanation of how and why companies participate in politics the way they do.  Corporate executives want to buy confidential access to policy makers.  Investors on the other hand, need transparency to understand the risks of corporate political giving.

 

A Surprisingly Effective New Path to Neutralizing the Political Influence of Big Business
The New Republic – April 15, 2012

Every four or five years, it seems, progressives and the media discover ALEC, the American Legislative Exchange Council, anew. I’m old enough that the latest “OMG!” reaction to the existence of the conservative legislative network, following the revelation of its role in promoting voter ID laws and the “Stand Your Ground” gun laws that briefly shielded George Zimmerman, is probably the third “discovery” of ALEC I’ve witnessed. (ALEC played a significant role the PowerPoint presentation called “The Conservative Message Machine Money Matrix,” created by Rob Stein in 2004 and that led liberal donors to organize The Democracy Alliance.)

In the past, progressives have responded by trying to create a “counter-ALEC,” a network of progressive and moderate state legislators, though they’ve never quite reached the necessary scale. (I served on the board of one such counter-ALEC, the Center for Policy Alternatives, which dissolved in 2008.) And they’ve tried various means to expose ALEC’s operations to scrutiny, publicizing its role in drafting and promoting model legislation at the state level, and its funding by the now-notorious Koch brothers. This time, progressives tried a new tactic, encouraging a boycott of the mainstream corporations that fund ALEC. And it seems to have worked: Coca-Cola, Kraft, Wendy’s, and several other large corporations on ALEC’s “Private Enterprise Board” announced they would drop their support of the organization.

Conservatives have responded with harrumphing about “the liberal boycott machine.” Brad Smith, a former member of the Federal Election Commission and opponent of nearly all regulation of campaign money, wrote on the blog of the libertarian Center for Competitive Politics that calls to boycott ALEC supporters constituted “intimidation” to suppress political speech and were a good reason to oppose even campaign contribution disclosure requirements, because they would enable “harassing, bullying and boycotting” of companies. “Society is going to have to ask itself whether it wants the meanness of its current trajectory,” Smith wrote, in an unsually civic-minded tone.  But what’s actually been remarkable about the corporate reaction is how little meanness and acrimony there has been. And therein lies an important lesson about corporate money in politics.

IT WAS A FAIRLY modest consumer action that spurred the corporations to respond quickly and decisively to detach themselves from ALEC. The boycotts were organized by ColorOfChange.org, an organization co-founded by Van Jones which claims 900,000 members, with a budget of roughly $500,000, making it 8 percent the size of ALEC. No disrespect to the organization, which is remarkably effective for its size, but it’s hard to imagine that its boycott threat alone, coupled with meetings with company executives (the strategy is described well by Nancy Scola in The Atlantic) could convince a company to do something it really didn’t want to do, and certainly not this quickly.

It’s pretty easy to imagine what actually did happen when corporate executives heard about the boycott: They called the director of their Washington office (that is, their in-house lobbyist) and asked why the company was supporting the policies advocated by ALEC. Consumer-oriented companies in particular don’t want controversy and tend to avoid getting involved with issues that don’t affect the company directly—even if the executives are conservative and might personally favor policies that would help conservatives gain power, such as voter ID laws.

But if the companies didn’t want to publicly support ALEC’s preferred policies, why were they supporting ALEC in the first place? That question brings to mind something that I heard from a friend who was involved in one of the many failed attempts to organize a liberal counter-ALEC about six years ago: “People think ALEC is primarily a network of state legislators,” he said. “It’s really a network of lobbyists.”

A look at the pitch for contributions on ALEC’s web site makes clear what it’s offering its corporate donors – mostly, the opportunity to lobby state legislators: “One of ALEC’s greatest strengths is the public-private partnership. ALEC provides the private sector with an unparalleled opportunity to have its voice heard, and its perspective appreciated, by the legislative members.” Describing the task forces through which ALEC does most of its policy work, the organization boasts that “Legislators welcome their private sector counterparts to the table as equals, working in unison to solve the challenges facing the nation.” Equality comes at a price, of course: $25,000 to join the “Jefferson Circle,” and an undisclosed amount, presumably much higher, to join the elite “Private Enterprise Board.”

A number of those donors seem to have decided that, faced with even modest amounts of negative publicity, the access provided by ALEC wasn’t worth the price of being associated with political positions they didn’t want to publicly endorse. Far from “intimidation,” what the boycott threat did was force the companies to make a more careful, deliberate choice about what kind of political speech it actually wanted to support and put its reputation behind.

Understanding the actual psychology of corporate decision-making about political activity is essential to devising any way of balancing the potential power of corporations in the less-restricted world after the Citizens United and even more important SpeechNow.orgcases. Yet very little journalism or research looks closely at those decisions. A recent exception was Steve Coll’s superb article on Exxon-Mobil in the April 9 New Yorker, which showed how distinctive that oil company is in becoming “a finance arm of the Republican Party.” Most large shareholder-owned corporations, Coll reported, based on data from the Center for Responsive Politics, more or less split their Political Action Committee contributions between the parties. A look at the CRP’s “Heavy Hitters”database makes clear that Coll is right—most major corporations stay within about a 60-40 range in the partisan split of their PAC contributions, with some swings in the direction of the winners after recent elections. Besides Exxon-Mobil, the exceptions among corporate PACs are privately held companies like Koch Industries.

What this suggests is that corporate political giving is not typically about political speech, or trying to change the actual outcome of elections. It’s about access to the elected officials, whoever they are. What organizations like ALEC do is sell access, which they in turn use to promote a broader range of conservative causes. Boycotts and shareholder activism can break that pattern—not by intimidation, as conservatives suggest, but by forcing the decision out of the hands of the lobbyists alone and into higher levels of the company. A similar tactic was developed by The Center for Political Accountability, which uses shareholder resolutions to encourage companies to disclose their political giving. More than 100 companies have agreed to disclosure, but much of the value comes not just from disclosure, but from forcing companies to consider at a high level whether the organizations they are supporting really reflect the values the company wants to express.

It’s not always that easy, though. Not surprisingly, the companies that moved most quickly to divest from ALEC were, like Wendy’s and Coca-Cola, well-known consumer companies whose name is their brand. Koch Industries not only has no public shareholders, it also has no customers, in that you’ll never see a product on the shelf with the Koch Industries brand. (They make Dixie Cups and Brawny paper towels, if you’re curious.) Consumer companies have some stake in state-level decisions, such as about minimum wage laws, but not nearly as much as, say, the big utility companies, communications companies and insurers that make up the rest of ALEC’s Private Enterprise Board. And the ALEC donor that has probably gained the most from its involvement in ALEC, the private-prison giant Corrections Corporation of America, has no reason at all to be concerned about its reputation with its involuntary customers.

So ALEC will survive, with fewer donors and perhaps less of the sheen of a mainstream organization. The last two years have been a sharp reminder of the centrality of state laws and state legislators in shaping political possibilities, and the swiftness with which far-right governors were able to push through game-changing voter ID laws and changes to collective bargaining revealed that the agenda had been strategically designed well in advance, through ALEC and other groups. There’s still a need for a non-conservative counterpart organization, not just for self-described “progressive” legislators but also those who don’t think of themselves in strongly ideological terms. But, in the meantime, the apparent success of the ALEC boycott has revealed an untapped path toward rebalancing the power of money in American politics.

Mark Schmitt is a senior fellow at the Roosevelt Institute and former editor of The American Prospect.