Sunday, May 23, 2010

Corporate PACs betting on Republicans to regain control of Congress

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By T.W. Farnam and Carol D. Leonnig

Corporate America is gambling on the minority in its political giving this year, assuming that Republicans will win big in the November midterm elections, an analysis of campaign finance reports shows.

The pattern represents a distinct change from a year ago, when President Obama was sworn into office. Back then, corporate political action committees made a shift to the Democrats, giving 58 percent of their donations to the party. So far this year, 48 percent of the contributions from big business are going to the Democrats.

The shift in political giving represents a calculated gamble by lobbyists and executives overseeing corporate largesse that the Republican Party may regain control of Congress, say GOP fundraisers and political consultants.

Many other political winds have shifted behind Republicans in recent months, but the swing in money from corporate PACs is unusual. Corporations often give campaign contributions while seeking access and favor with incumbent lawmakers in position to shape legislation -- meaning they gravitate to the party in power.

The last time corporate PACs made such a dramatic shift to the Republicans was in 1995, after the GOP's rout of the Democrats in the 1994 midterms. This time, corporations have switched sides before the election.

The change comes as top Republican lawmakers appeal more directly to business leaders, putting them on notice that the GOP is keeping track of the corporate donations ledger and will remember who stood by the party.

As part of an effort dubbed "Sell the Fight," House Republican leaders have met privately with corporate executives and lobbyists to argue that their giving has tilted too far toward Democrats and that they need to steer more money to industry-friendly GOP candidates in key races in 2010.

"These corporate leaders and lobbyists have got interests and clients they need to look out for, and they are reading the tea leaves just like everyone else," said Rep. Greg Walden (Ore.), the deputy chair of the National Republican Congressional Committee, who has made several private pitches to corporate PAC leaders. "They see what's happening . . . and they don't want to get cut short."

The fundraising efforts of Republican lawmakers mirror those used after the party gained control of both houses of Congress in the 1994 Republican Revolution. Party leaders, especially then-House Majority Whip Tom DeLay (Tex.), used their new positions in power to pull in corporate checks. DeLay kept a list of lobbyists categorized as "friendly" and "unfriendly," based on campaign contributions.

Democrats have lost ground in several fundraising categories this year, after dominating in 2009. In key Senate and House races and among the political party committees, first-quarter results showed Republicans gaining steam. Corporate PACs represent a small piece of overall political fundraising but often the one most closely associated with special interests.

The money boost for the GOP follows a similar shift in enthusiasm among voters. A Wall Street Journal/NBC poll released May 13 found voters evenly split on which party they preferred to have running Congress. But among those who said they were very interested in the midterm elections, 56 percent said they supported Republicans, while 36 percent chose Democrats.

The health industry is the most striking example of the corporate shift to the GOP. Last year, the PACS of health and medical companies gave Democrats 61 percent of their $31.5 million in political contributions. But in the first quarter of this year, they gave $3.9 million to each party. This came just as the fate of health-care legislation appeared uncertain because of Republican opposition and the surprise loss of the Democrats' Massachusetts Senate seat. The law was approved March 21 in a dramatic House vote on a Senate bill.

During those three critical months of health-care debate, four of the top five House recipients of health-care corporate PAC money were Republicans. These corporations were the most generous to Rep. Dave Camp (R-Mich.), who is now the ranking minority member of the House Ways and Means Committee and could chair that panel in a GOP takeover. He collected $110,000, double the amount that he received from industry PACs in the previous quarter.

Surprisingly, drugmaker PACs also moved increasingly toward Republicans in the early part of this year, despite the industry's public support for the bill those Republicans were opposing. On average, the pharmaceutical PACs gave more to Republican House members who voted against the bill ($2,300 per member) than to House Democrats who voted for it ($1,800). Democrats voting against the bill got the most on average -- $2,600.

Health-care experts on congressional committees say drugmakers watch poll numbers and are preparing for the possibility of GOP wins and newfound power. The industry has a strong financial stake to protect: It plans to fight threatened government-negotiated controls on drug prices and other looming overhauls. Some specific company PACs made dramatic swings in giving. Pfizer Inc., a major drug manufacturer, gave $340,000 to Democrats in 2009, or about 55 percent of its total giving. In the first quarter of this year, as the health-care bill came up for final vote, the company shifted its giving to Republicans, giving them $114,000, or 62 percent of its total. Pfizer's PAC representative did not respond to requests for comment.

The Washington Post analysis used campaign finance data from the Federal Election Commission and an industry breakdown from the Center for Responsive Politics.

Under campaign finance law, corporations are not allowed to give directly to candidates, but they may create a fund to channel donations from their employees. The corporations' top executives and lobbyists control the direction of the money and often use it to attend fundraisers with lawmakers.

In March, Walden met with 80 corporate PAC leaders at the Capitol Hill Club to appeal for more money. In that pitch and others, Walden said that he makes no threats for failing to donate but candidly explains that "we're evaluating giving patterns." He said he showcases the GOP's industry-friendly candidates and urges PAC leaders to cut back on their giving to Democrats by spreading the wealth to GOP contenders.

"I tell them, 'I understand you have to give money to Democrats. But I want to be back in the majority,' " Walden said. " 'You don't have to give [this Democrat] $5,000. Give them $2,000. You can give $3,000 elsewhere. Now let me show you some open seats where you can make an investment in a Republican candidate you will like.' "

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