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Big money pours into Democratic and Republican conventions, thanks to finance-law loopholes.
July 26, 2004: 7:43 PM EDT
By Mark Gongloff, CNN/Money senior writer

NEW YORK (CNN/Money) - The 2004 Democratic National Convention that begins on Monday, as well as the Republican National Convention in August, will be brought to you by the following corporate sponsors...

Actually, scratch that -- there are too many to list here.

More than 125 companies, unions and private foundations, including some 50 members of the Fortune 500, will pump at least $103.5 million into the conventions of both major U.S. political parties this year, thanks to new election rules that help big donors skirt campaign finance limits.

That amount of money, which does not include the cost of various soirees thrown for politicians and delegates of both parties, will dwarf the amount spent in, say, 1980, when both conventions enjoyed private donations of a mere $1.1 million, according to a study by the Campaign Finance Institute, a non-partisan, non-profit research institute affiliated with George Washington University.

In 1980, private contributions made up just 4 percent of the DNC's convention costs and 10 percent of the RNC's costs, according to the CFI study. In contrast, private donations will fund more than 60 percent of the expenses of this year's conventions, according to the CFI.

Companies including General Motors (GM: Research, Estimates), General Electric (GE: Research, Estimates), Citigroup (C: Research, Estimates), IBM (IBM: Research, Estimates), American International Group (AIG: Research, Estimates), Altria (MO: Research, Estimates) and CNN/Money parent Time Warner (TWX: Research, Estimates) will pay some $39.5 million for the DNC in Boston and some $64 million for the RNC in New York, which begins on Aug. 30.

Still more money will flow from companies to various shindigs in both cities. In Boston, the list of parties includes a massive fete for Sen. Ted Kennedy, D-Mass., involving the Boston Pops and cellist Yo Yo Ma, which will cost about half a million dollars, according to the Boston Globe, and is hosted in part by Bristol-Myers Squibb (BMY: Research, Estimates) and Raytheon (RTN: Research, Estimates). Time Warner threw a bash for delegates Sunday night at the waterfront restaurant Tia's, and Fox News is hosting a concert for lawmakers at Fenway Park.

The parties are a relatively old feature of the political landscape; though congressional ethics rules have long prevented lawmakers from accepting gifts or favors above a certain amount, a loophole lets them accept expensive parties in their honor.

But the amount of direct donations to the conventions' host cities is the highest ever, thanks to a steady stream of Federal Election Committee decisions between 1994 and 2003.

In the 1970s, after the Watergate scandal, campaign finance laws allowed private convention donations, but only from local businesses and interest groups, with the intention of helping out the host city.

Gradually, however, the FEC eroded restrictions on private convention donations, until, last year, convention host committees were declared exempt from finance laws prohibiting the acceptance of soft-money donations. The result has been a cash bonanza.

"Thanks to a loophole in the Congressional ethics rules and to a feckless FEC misinterpreting the law, the American people will be treated to two influence-money spectacles at the national conventions," Fred Wertheimer, president of Democracy 21, a private watchdog group, said in a recent press release.

The companies involved could argue that they are simply taking part in the democratic process.

"General Motors is the nation's largest manufacturer; some 1.2 million Americans get health care from GM, and we are one of the single biggest producers of gross domestic product in the United States," said Christopher Preuss, spokesman for GM. "What happens to GM has an impact on everyone."

GM is the official vehicle provider for both conventions, and it will throw parties at both conventions, including big-ticket events for Rep. Dick Gephardt, D-Mo., in Boston on Monday and Rep. Dennis Hastert, R-Ill., in New York.

"To us, there's a great opportunity to communicate our activities and issues at these conventions," Preuss added. "That's part of the political process, and we have good reason to participate in that process, so we take advantage of these opportunities when we have them."

IBM, which has contributed about $2 million worth of computing equipment to both conventions, says the gear will be donated to local schools after the conventions. IBM says its donations are more a part of its civic duty than some effort to curry political favor.

"This was more of community-minded effort; IBM has never given to a convention before," said IBM spokesman Clint Roswell. "The rationale for [our involvement in these conventions] was as an extension of the philanthropic effort we've been doing with communities where we had a strong employee presence."

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The Democratic host committee did not return calls seeking comment. The Republican convention host committee said it was operating within the limits of existing campaign finance laws and would not address questions about the appropriateness of the private donations.

"For those who attempt to cast doubt or aspersions, the New York City host committee is within the spirit and the letter of the law as it relates to contributors and their contributions," said Paul Elliott, spokesman for the New York host committee.

Elliott would not provide a list of private contributors, but said the committee would release such a list, along with the amounts contributed, on Oct. 13, as required by campaign finance law.

Private watchdog groups, however, have said they are circumventing the democratic process, buying influence that ordinary citizens don't have, and that current rules are inconsistent with the spirit of the McCain-Feingold law banning soft-money donations.

"Members of Congress get to play King or Queen for a day. Special interest groups get to spend large undisclosed amounts of money to benefit members critical to their interests," said Wertheimer of Democracy 21. "Citizens get the short end of the stick."  Top of page




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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.