BUSINESSWEEK ONLINE : NOVEMBER 13, 2000 ISSUE
GOVERNMENT

Who's Giving All That Soft Money
Microsoft, telecoms, and financial firms top the lists

No doubt about it, Corporate America is not stingy when it comes to financing political contests. In the first 21 months of this election cycle, the top 1,000 companies by stock market value gave a record $187 million to federal candidates, at least 12% more than in the previous Presidential election.

That's an enormous amount of cash, and the total is likely to grow significantly when the last three months are tallied. But the amount is hardly surprising in an election cycle that saw many campaign fund-raising records smashed. Former Goldman Sachs CEO Jon S. Corzine is expected to spend some $60 million of his own money--the most ever by a Senate candidate--before his effort to win New Jersey's open U.S. Senate seat is over. A total of $55 million has been spent in the New York Senate race between First Lady Hillary Rodham Clinton and Republican Representative Rick A. Lazio. Whoever wins will hold the most expensive Senate seat in history.

In California, the bitter struggle between GOP incumbent James E. Rogan, the House impeachment manager, and Democratic state senator Adam B. Schiff to represent the Los Angeles suburbs of Pasadena and Burbank has cost $10 million so far--another dubious record and an unheard-of amount for a House seat. And at a June 5 fund-raiser, a Service Employees International Union local forked over a $1 million check to the House Democrats for the largest-ever single contribution.

Corporate largesse has surely been influenced by the still vibrant economy and the tightness of this year's Presidential race. But data supplied by the New York-based Campaign Reform Project, a nonpartisan group that favors a ban on soft money, shows that the campaign-finance activities of the 1,000 largest U.S. companies by market cap ratcheted up markedly during this election cycle.

NUMERO UNO. Microsoft Corp. ( MSFT), for example, is now No. 1 among the Top 10 corporate givers, having written checks totaling $3.7 million, compared with $237,000 in 1996. Although Microsoft is a political newcomer, it has quickly become one of the leading corporate players in Washington as it fights to keep the Justice Dept. from breaking it into multiple parts.

The Top 10 list also includes AT&T ( T) and three of the four remaining Baby Bells. Among other things, AT&T, a close second behind Microsoft with $3.6 million in campaign giving, wants Congress to instruct the Federal Communications Commission to relax rules that limit one company from owning more than 30% of the pay-TV market. That way, AT&T won't have to divest cable properties acquired in its $58 billion merger with MediaOne Group ( UMG). The Baby Bells, on the other hand, want Congress to reduce the amount of money they must pay other carriers for completing Bell customers' phone calls.

Overall, the 1,000 major corporations gave $78 million in soft money--unlimited checks that go to political parties rather than individual candidates. That figure represents 42% of corporate giving, demonstrating that soft money--a phenomenon that didn't really take hold until the '96 elections--soon will overtake all other forms of giving. Through Sept. 30, the total amount of soft money donated in this election cycle was $357 million, and corporations accounted for about 22% of that.

Corporate execs insist that they give soft money because they want to participate in the political process. But campaign-finance reformers are dubious. ''By writing these checks, their motivation is to get help with specific problems,'' says Larry Makinson, executive director of the Center for Responsive Politics, a nonpartisan watchdog group. A small list of companies is choosing to give no soft money at all, though their execs may continue to make soft donations. The list includes prominent high-tech companies such as IBM ( IBM), Cisco Systems ( CSCO), Dell Computer ( DELL), eBay ( EBAY), EMC ( EMC), Intel ( INTC), and RealNetworks ( RNWK).

As hard-money donations fall out of favor, political action committees are also waning. While the number of corporate PACs continues to grow--1,548 at last count--the amount they give is declining as a percent of total giving. The 1,000 major corporations gave $53 million this cycle, vs. $55 million in '96. Still, the companies with the biggest PACs include many of the same telecoms that dominate the Top 10 list of soft-money, hard-money, and individual givers: SBC Communications ( SBC), BellSouth ( BLS), and Verizon ( VZ).

So who was the biggest beneficiary of Corporate America's money blizzard? The Republican Party, by far. Despite numerous fund-raising successes by Democrats--especially the House Dems' campaign committee--the corporate crowd continues to favor the GOP, giving the Dems only 33% of the total. But no matter which party is getting the most spoils, the Washington equation in which money equals access to power has never been on such blatant display.

By Paula Dwyer and Nicole St. Pierre, with Richard S. Dunham, in Washington

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