A shift in the balance of power
Unions are beating business at giving money under new campaign-finance law
In recent elections, cigarette giant Philip Morris hasn't been shy about opening its wallet. It has been among the top givers of "soft money" --the huge checks, sometimes as large as seven figures, that unions, companies, and others made payable to the political parties. In the 1998 election, Philip Morris's $2.4 million topped the list of such donations.
But this time around, the company is on the electoral sidelines. The money-and-politics reform law known as McCain-Feingold outlawed those big contributions. If donors want to keep up their rivers of cash, they give not to the national parties but to outside groups, like the Democrat-supporting Media Fund, which spend the money on such things as advertisements or voter drives.
Philip Morris, though, doesn't like this new way of doing business, says John Scruggs, government affairs vice president for corporate parent Altria Group. The outside groups have been shrouded in legal uncertainty, he says, and there's unease about how they might conduct themselves. "There are a lot of these entities out there, on both sides of the aisle," Scruggs says. "We want to bide our time and see how they operate before we stick our toe in the water. Until things sort themselves out, we don't feel comfortable contributing to these folks."
As a result, compared with its giving before the new law, Philip Morris's contributions are off by $2 million, according to figures compiled by the Center for Responsive Politics, a nonpartisan group in Washington, D.C., that tracks campaign cash.
The McCain-Feingold law, enacted in 2002, was supposed to shake things up. And judging from the hubbub over the Swift Boat Veterans for Truth anti-Kerry ads, and the candidates' scurries to swell their number of small contributors, it certainly has. But as Philip Morris's case shows, there's also been a little-noticed tip in the balance of political power between management and workers: Organized labor has gained an edge over corporate America as unions try to push George W. Bush from the White House.
McCain-Feingold was the latest in a quixotic American quest to wring the influence of campaign cash out of politics. Among its provisions, it outlawed soft money, which critics saw as a not-so-veiled attempt at influence peddling, and which even had some donors grumbling that they feared the fallout of not ponying up.
Issue advocates. Squeeze the balloon in one place, however, and it bulges elsewhere. Roughly taking the place of soft money in the new world of political money, at least for now, are so-called 527 organizations. Named for the section of the Internal Revenue Code governing them, these are tax-exempt groups apart from the candidates and political parties that raise money for things like voter mobilization and issue advocacy. While they can't expressly support or oppose a candidate, it's usually pretty clear where they stand.
It is here that the potential shift of power between corporate and labor influence arises. As the political landscape has developed, some of the big soft-money givers of the bygone era have replaced their donations with significant contributions to 527 groups, while others have not filled the gap. In particular, groups that have stepped up giving to 527s are dominated by unions. Those that haven't are headlined by large corporations, such as Philip Morris.