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New Super-PAC Threatens to Destroy Candidates Who Side With the People Over Wall Street

Banks are pioneering a more cost-effective method of dealing with legislators who stand in their way.
 
 
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A new super-PAC with the purpose of destroying elected officials who oppose the interests of the super-PAC’s founders rather than focusing on electing candidates who favor their interests demonstrates how the movement conservatives on the Supreme Court have fundamentally altered our system.

super-PAC is a political action committee with no limits on personal or corporate contributions and no limits on the amounts it spends. This system of unlimited corporate –and billionaire – spending for and against candidates was enabled by the recent Supreme Court ruling in Citizens United that said corporations are “people” and the use of corporate money to influence elections is “speech.”

The extended Republican presidential primaries this year show us the power of this unlimited contribution/spending system. In previous primary campaigns candidates who were not gaining traction with the public would be forced to drop out of the race because they could not raise the funds needed to travel and advertise. Michelle Bachmann’s campaign is an example of this.

But some of the candidates in this primary season were able to continue to campaign because of backing by extremely wealthy people. Newt Gingrich and Rick Santorum had the backing of wealthy individuals contributing very large amounts, and have stayed in the race much longer than they otherwise would be able to. 

The super-PAC system is also bringing changes to the way corporations influence lawmakers. 

Buying Legislators Can Be Expensive

Today’s system of buying legislators is effective but somewhat expensive. This system involves investing in the purchase of numerous legislators through campaign contributions and/or offers of lucrative post-government-service jobs to legislators and staffers. This system generates tremendous returns—a few million spread around can yield billions. 

The poster-child of this old system, of course, remains Representative Billy Tauzin (R-LA), who was chairman of the committee in the House that regulates the pharmaceutical industry. Tauzin ushered through the Medicare prescription drug program that was so beneficial to the pharmaceutical industry. He retired very soon after it passed to take a job as head of the pharmaceutical lobbying group, the Pharmaceutical Research and Manufacturers of America. According to Bloomberg News Tauzin received lobbying income of $11.6 million in 2010.

But this model of spreading millions around to gain influence still requires spreading the millions around. A million here, a million there, after a while it can add up.

(By the way, if you think – as our Supreme Court does – that this is not bribery, ask yourself why else would a corporation do this, if not expecting to profit? After all, if a corporation is not engaging in purchasing legislators for the company’s profit, it is violating its fiduciary responsibility. )

Threatening Legislators with Destruction Is Much More Cost-Effective

A new banker super-PAC is pioneering a more cost-effective method of dealing with legislators who stand in their way. Instead of long-term investment in the purchase of a lawmaker, this new method is much more direct and immediate. The super-PAC lets it be known that it has gathered a large sum of money. If a lawmaker dares to side with the public (the 99%) against the banks (the 1%), the super-PAC can threaten to unleash unlimited funds to destroy that candidate, run millions of dollars of smear ads on local TV stations, spread rumors on right-wing internet sites, sic Rush Limbaugh or Glenn Beck on them, etc.

The key to the cost-effectiveness of this approach is that they will rarely have to actually follow through on the threat, and spend the money. Just the threat is sufficient. Few elected officials will be able to stand up to a threat of unlimited millions spent destroying him or her. If anyone actually does resist, making an example by publicly destroying that lawmaker will serve as sufficient warning to the rest.

A person well-familiar with the workings of Congress explains, "Well, if you crush one, most of the rest will live in terrified fear with little additional effort from you."

This destruction-threat method is so much less expensive than investing in a portfolio of lawmakers and their staff, a now-outdated system that requires the industry to follow through with lucrative jobs, speaking fees and other post-government inducements. After one public example, the super-PAC’s remaining accumulated sum need not actually be spent at all. Instead of spreading millions around to purchase influence through campaign contributions and post-government-service jobs, the bankers only need make an example by aggressively destroying one, maybe two elected officials and Bob’s your uncle.

The New Super-PAC

Friends Of Traditional Banking is a new super-PAC formed by “traditional” banks that can raise unlimited amounts, and can direct unlimited money to races without restrictions.

One banker calls this “a big stick” with which to punish lawmakers who vote with the public interest instead of the banking industry’s interest. Another banker says the purpose is to make lawmakers “afraid of bankers” instead of having them respond to the public. Another says, "… if you say the bankers are going to put in $100,000 or $500,000 or $1 million into your opponent's campaign, that starts to draw some attention.” Another makes it all clear, it is about raising “a lot of money” to “hammer” lawmakers who are in the way of bank profits.

The story from American Banker, Bankers Form SuperPac for 'Surgical' Strike at Industry's Enemiesexplains,

Frustrated by a lack of political power and fed up with blindly donating to politicians who consistently vote against the industry's interests, a handful of leaders are determined to shake things up.

They have formed the industry's first SuperPAC — dubbed Friends of Traditional Banking —  that is designed to target the industry's enemies and support its friends in Congress.

"It comes back to the old philosophy of walking softly and carrying a big stick," says Howard Headlee, the president and chief executive officer of the Utah Bankers Association. "But we've got no big stick. And we should. We have the capacity to have one, we just aren't organized."

… "Congress isn't afraid of bankers," adds Roger Beverage, the president and CEO of the Oklahoma Bankers Association. "They don't think we'll do anything to kick them out of office. We are trying to change that perception."

That bankers are the first to publicly announce this new legislator-threatening approach shows that the amazing “financial innovation” engine of Wall Street is still operating. 

Worst Fears Realized

This was the worst fear coming out of the Supreme Court’s Citizens United decision. The problem is that these decisions have handed large corporations and billionaires the ability to threaten elected officials before a vote, "Vote with us or we can put unlimited funds into defeating you." This is not about supporting people who agree with you to gain influence – bad enough – as it is about the ability to threaten those who try to regulate you with the use of unlimited funds to crush them. And this is no longer just a fear, this is exactly what this group says they will do now. And, of course, this will set the standard for the rest of the players in the influence game.

Note this applies not just to members of Congress, but state legislators, even county or city-level public officials.

  • A state legislator considers voting against a special tax break for a certain very large corporation – or perhaps a law taxing their competitors – which would bring the company a cool billion. The company lets that legislator know it is prepared to spend a measly $20 million on a challenger in the next election. How do you think that representative will vote -- and if they do the right thing how long do you expect them to keep their seat?
  • A huge oil company will certainly spend a measly $10 million to install a hand-picked board of county supervisors that will let it put a refinery in the middle of an organic farming or sensitive environmental region.

Survival of the Biggest

This is about the biggest corporations remaining dominant, using government power to channel tax dollars their way, while hampering competition -- especially from smaller, less powerful companies.

These Supreme Court decisions have unleashed executives who control the biggest companies to use their financial power to consolidate their control over our system, for their personal benefit. The result of unleashing unlimited money on our political system will not be greater freedom of speech, it will necessarily mean that the biggest, wealthiest and most ruthless corporations and individuals will gain ever-greater control over government. The most money will always win, when money is what decides.

This power to use unlimited amounts to influence public officials will not just be used to benefit the interests of those influencing our government, it will be to influence government power against competing companies and individuals. Smaller companies in the same industries, and startups with new technologies that threaten to compete with the giants (alternative energy, for example), won't stand a chance because the rules will now necessarily be bent against them.

The Supreme Court has altered our system in fundamental ways. Allowing money to drown out the voices of We, the People will not only threaten our democracy, it also threatens the market system in which companies compete through innovation, service and quality. The solution is to prohibit the use of corporate funds for any purpose beyond operating the company, and to strictly limit the use of money in political campaigns. Oh, and prohibit elected officials, their staff and other government workers from going to work in the private sector for significantly more than they were making while working for government.

 

Dave Johnson is a fellow at Campaign for America's Future and a senior fellow at Renew California.
 
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