Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

9 - 2 The Abramoff Scandals Opening Case  Rep. Tom DeLay (R-Texas) pressured lobbyists to support his candidates and causes and rewarded the lobbyist through the use of Congressional earmarks.  Jack Abramoff was a lobbyist whose style was to lavish attention and favors on lawmakers.  Bob Ney (R-Ohio) accepted gifts and trips and then did legislative favors at Abramoff’s request.  Randy “Duke” Cunningham (R-California) was corrupt to an unprecedented degree. He even had a “bribe menu.” Corporations dominate the political area with huge expenditures for lobbying and campaign donations. The recent spate of Washington scandals teach that the area in which business must pursue its political goals can be highly compromising.

9 - 3 The Structure of American Government  Several basic features of the Constitution shape the political system:  Sets up a federal system, or a government in which powers are divided between a national government and 50 state governments.  Establishes a system of separation of powers.  Provides for judicial review.  The First Amendment protects the right of a business to organize and press its agenda on government.

9 - 4 Laying the Groundwork  The economy was 90 percent agricultural, so farmers and planters were a major part of the political elite.  Under the leadership of Secretary of the Treasury Alexander Hamilton the new government was soon turned toward the promotion of industry.  As the young nation’s economy expanded, so also did the political power of business.

9 - 5 Postwar Politics and Winds of Change  In the 1940s, industries’ patriotic World War II production record and the subsequent postwar prosperity quieted lingering public restiveness about corporate political activity.  During the 1950s, corporations once again predominated in a very hospitable political environment.  During the 1960s and 1970s, national politics became dominated by a liberal reform agenda.

9 - 6 The Rise of Antagonistic Groups  During the 1960s, the climate of pressure politics changed with the rise of new groups focused on consumer, environmental, taxpayer, civil rights, and other issues, changing the political arena for business.  The rise of groups hostile to business is part of a broader trend in which new groups of all kinds, including business groups, have been stimulated by growth of government.  In the 1990s there were an estimated 23,000 organized interest groups, roughly 400 percent more than in the 1950s.

9 - 7 Diffusion of Power in Government  A second change in the climate of politics, besides new groups, has been the diffusion and decentralization of power in Washington, D.C. caused by:  Reforms in Congress  The decline of political parties  Increased complexity in government

9 - 8 Lobbying Methods  Major lobbying efforts now resemble political campaigns in the way they combine a broad range of methods including:  Direct contact  Background lobbying  Public relations  Legal support  Polling  Policy analysis  Grassroots work Grassroots lobbying The technique of generating an expression of public, or “grassroots,” support for the position of a company or lobbyist.

9 - 9 Paths of Pressure

Efforts to Limit Corporate Influence  An effort at reform came after the election of 1904, when Republican Theodore Roosevelt, who campaigned as a reformer, was embarrassed by his opponent, Democrat Alton B. Parker, for taking large cash contributions from corporations.  In 1907 progressive reformers pass the Tillman Act, making it a crime for banks and corporations to directly contribute to candidates in federal elections, and this is still the law today.  After 1907 the spirit of the Tillman Act was quickly and continuously violated.  Since the Tillman Act did not limit individual contributions, wealthy donors stepped in.

Reform Legislation in 2002  Senators John McCain (R-Arizona) and Russell Feingold (D-Wisconsin) pushed through a bill that was enacted as the Bipartisan Campaign Reform Act of 2002 (BCRA).  National parties are prohibited from raising or spending soft money.  Corporations can give unlimited amounts of soft money to advocacy groups for electioneering activity, with restrictions during blackout periods.  Contribution limits for individuals are raised.  The main purpose of the new law is to end the use of corporate soft money for issue ads run just before elections.

Testing the New Law  The 2004 election cycle was the first under BCRA rules. The new law did not stop the rise in overall spending.  Hard money contributions went way up.  New advocacy groups formed to take in the soft money that corporations, unions, and individuals could no longer give to parties.  Independent expenditures for and against candidates increased.  So far, the new restrictions of the BCRA have worked to cut the flow of unregulated soft money into federal elections, but overall growth of campaign giving and spending has not been slowed.

Tension Over Corporate Political Expression  Tensions exists between two strong values in the American political system, freedom of speech and political equality.  Regulation to silence speech, including corporate speech, goes against the grain of the First Amendment.  Restraints on corporate giving have been permitted to ensure political equality in elections and the implied duty to maintain elections free of corruption and the appearance of corruption.  Dissenters have argued that corporations have the right to unlimited speech.