Party Conventions Feature Lobbyist Influence-Peddling
Money Loophole Means Lots of Partying, Schmoozing by Lobbyists in Tampa and
The Democratic and Republican national conventions — which
are supposed to be publicly financed electoral events with reasonable ethics
restrictions on influence-peddling by lobbyists – have turned into mostly
privately financed soirees funded by corporations and lobbying firms that seek
favors from the federal government. Today, less happens at the presidential
nominating conventions, because the presumptive nominees are chosen in advance.
Fewer people care about the conventions, as declining viewership shows. Yet
more money is raised and spent at the conventions than when the conventions
were major political events.
Two separate codes were intended, but largely
have failed, to make the nominating conventions more respectable political events. The first is the decades-old ban imposed
by the Federal Election Campaign Act (FECA) on
the use of “soft money” — funds from corporate or union
or large individual contributions
in excess of the
legal limits — to
pay for conventions. The second is the 2007
congressional ethics rules that restrict the manner in which lobbyists and lobbying organizations may host parties and offer gifts to members of Congress.
A. FECA and the $100 Million Soft Money
The presidential public financing
system was created to replace potentially corrupting “soft money” with public money
in the selection of the president, largely in response to a soft money slush
fund scandal at the 1972 Republican National Convention. In May 1971, the giant International Telephone and Telegraph Corporation (IT&T) pledged up to $400,000 to attract the 1972 Republican
National Convention to San Diego. The company
facing several anti-trust lawsuits under the
Nixon administration. Just eight days after the selection of San Diego for the Republican convention, Attorney General Richard Kleindienst agreed to an out-of-court anti-trust settlement with IT&T that the company considered very favorable. In
the wake of this scandal, Congress approved a system of public financing for
presidential elections, which included full public financing of the
conventions, removing the potentially corrupting corporate money from the
Law Regarding Convention Financing
public financing program for the presidential nominating conventions created a
system in which the parties, in exchange for accepting reasonable spending
ceilings on their conventions, would receive a block grant from the federal
government to pay for nearly all convention expenses. Originally, the spending
ceiling and block grant was set at $2 million, to be adjusted for inflation.
FECA was soon amended to increase the spending ceiling and block grant to $4
began to unravel after a series of controversial Federal Election Commission (FEC)
advisory opinions and regulations issued in the 1980s. The FEC decided to allow
corporate and union soft money to help pay for the conventions through “host
committees.” Originally, the FEC limited the soft money loophole for host
committees and municipal funds to corporations and unions with a “local tie” to
the community hosting the convention. In 2003, the FEC dismissed the
requirement of a “local tie” for corporate contributions to host committees and
municipal funds altogether. 
Commissioner Thomas Harris back in the early 1980s saw the danger of these
exemptions getting out of control. He wrote in a dissenting opinion: “By
permitting corporations and unions to donate unlimited amounts of money to fund
political conventions, the Commission is ignoring one of the clear concerns of
2 U.S.C. 441(b) and its predecessor statutes – that is, the fear of the
influence of aggregated wealth on the political process.” 
Flood of Soft Money into the Conventions
Harris’ prediction that the host committee exception could become a gaping soft
money loophole has come true with a vengeance. In 1976, both parties paid for
their conventions almost exclusively with public funds, about $2 million each.
In 1980 and 1984, the parties still relied mostly on public money to pay for
their conventions, at slightly more than $4 million in 1980 and somewhat more
than $7 million in 1984. Soft money had only begun to creep into the picture.
1996, the use of privately financed “host committees” by the parties
overwhelmed the public financing program. Both conventions received private
funds amounting to nearly double the public grant.
Today, public funds make up only a modest share of the total (inflated) cost of the
conventions. In 2000, for example, each party was awarded about $13.5 million to pay for its nominating convention. In reality, private sources chipped in an additional $52 million
for the Democratic convention
Los Angeles and
for the Republican
convention in Philadelphia. In the 2004 election, the Republicans spent $101 million
on their convention and the Democrats spent $72 million, all while the official public
funding grant intended to pay for the conventions was $15 million. In 2008, each party
awarded $16.4 million
in public grants to pay for
conventions, but total
expenditures through the host committees amounted
to more than $55 million for the Democratic convention and $57 million for the Republican convention. This year, each
has been given a public grant of $18.3
million, but private sources are expected
another $37 million for the Democratic convention and $55 million for the Republican
The partisan disparity for the 2012 conventions is the result of the Democratic Party’s new policy of
reining in out-of-control financing of its convention. As part of the agreement
between the Democratic Party and the convention host committee, direct corporate contributions to
are banned, lobbyist contributions
prohibited and all other contributions
are capped at $100,000. At the time of the announcement, U.S. Rep. Debbie Wasserman-Schultz (D-Fla.), chairwoman of the Democratic National Committee, said, “We will make this the
first convention in history that does
lobbyists, corporations or political action committees. This will be the first modern political convention funded
by the grassroots, funded by the people.”
The self-imposed Democratic constraints on special-interest funding are
expected to significantly reduce private funding for the Democratic convention — even given some of
the loopholes in the policy. For example, while corporations cannot make direct contributions to the Democratic
convention, they can provide in-kind products and services to the host committee to help finance the convention, which likely will be worth a substantial
amount. Furthermore, with the host committee struggling to
make its contractual obligation of
arranging $37 million
in additional private funds for the convention, the host committee has incorporated New American City Inc., a non-profit entity run by the convention host
committee. New American City reportedly received funds from Bank of America, Wells
Fargo and Duke Energy, calling into question the value of the pledge against accepting direct
contributions with this backdoor avenue in place.
Meanwhile, the Republicans have not imposed any such limits on the sources and amounts of special
interest money to finance their convention.
Do They Get for Their Money?
of the private donors to the convention host committees have business pending
before Congress or the White House and have made substantial campaign
contributions and lobbying expenditures to press their causes. With the 2008
convention, for example, 173 organizational donors to the host committees have
been identified, and all but two are corporations. These donors made more than
$100 million in direct campaign contributions to federal candidates and party
committees, and about $1.5 billion in lobbying expenditures between 2005 and
2008. Clearly, most companies that donate to the
conventions want something from the federal government — and they are willing
and their lobbyists also purchase a great deal of one-on-one time with
lawmakers at the conventions. In return for their donations to the convention
host committees, corporate sponsors to the conventions are promised a variety
of benefits, ranging from advertising opportunities to VIP tickets to the
convention centers. Each host committee advertises numerous levels of
sponsorship — the greater the contribution, the greater the access to
advertising opportunities and elected officials. Additionally, the sponsorship
packet offers contributors the chance to buy access to party luminaries by
hosting or sponsoring events such as state delegation receptions.
So far, no
data on contributions to the 2012 conventions are available. Unlike the 2008
conventions, in which the governors and mayors of the convention sites (as
members of the host committees) provided early data on donors in response to
Freedom of Information Act (FOIA) requests by the Campaign Finance Institute,
the governor’s office of Florida and local offices of the cities of Tampa and
Charlotte provided no similar information on donors in response to FOIA
requests by Public Citizen. Each of the offices this year claimed that the host
committees are private entities not under their control or jurisdiction. The governor’s
office of North Carolina did not respond to our inquiry.
committees and municipal committees are required to file their financial
disclosure reports with the FEC either 60 days following the convention or 20
days prior to the general election (Oct.15), whichever is first.
B. Party Time on the Lobbyists’ Dime? Not
One way of
buying influence with lawmakers is to make soft money contributions to the
convention host committees. Another is to pay for a lavish reception or party
at the convention for lawmakers and party leaders. Many of the corporate
donors, like AT&T, make extensive use of both tactics.
ago, the parties at the national conventions were more numerous and more
pointedly set up for influence-peddling by their corporate sponsors. The
Consumer Electronics Association, for example, a lobbying organization with
business pending before the House Energy and Commerce Committee, hosted a
luncheon at the 2004 Republican convention to honor committee members. Media
companies, seeking specific legislation from Congress, hosted a $300,000
“Caribbean Beach Bash” at the 2004 Democratic convention in honor of U.S. Sen.
John Breaux, a leading advocate of media interests over the years. Individual
partygoers could pony up an additional $20,000 for some one-on-one time with
the honoree. Though Breaux was retiring, the media lobbyists sent a clear
message to his colleagues who remain: We support our friends.
congressional ethics rules adopted in 2007 placed constraints on this type of
influence-peddling at the conventions by lobbyists and lobbying organizations.
The “Honest Leadership and Open Government Act” contains a sweeping set of
lobbying laws and ethics rules enhancing disclosure of lobbying activity and
regulating the behavior of lobbyists, lobbying organizations, members of
Congress and their staffs. (For a detailed summary of the lobbying law, click here.)
The new rules ban any congressional lawmaker
from participating in an event at the convention honoring that lawmaker if the
event is hosted by a lobbyist or lobbying organization.
expressly prohibits members of Congress from attending any convention party
thrown by a lobbyist or lobbying organization where a specific member or
members are identified by name and title as the honoree (including as a
“special guest”), as well as events honoring a group composed solely of
members, such as a congressional committee or congressional caucus. Member
participation also is prohibited if the member is to receive a special benefit
or opportunity that would not be available to some or all of the other participants,
such as if the sponsor were to offer the member an exclusive speaking role or a
very prominent ceremonial role.
precisely how the Senate ethics committee has interpreted the rule, issuing
guidelines to that effect. The House ethics committee, however, has issued
partly erroneous guidelines on this matter, which is likely to cause confusion
and possibly violations of the rule at the upcoming conventions. In describing
the nature of the rule, the House ethics committee has interpreted the ban on
parties honoring a member as not applying to parties that honor groups of
members in which no specific member is identified, such as congressional
committees or caucuses.
The House ethics committee has also limited application of the rule to the
formal dates of the convention itself, rather than the heavy party weekends
immediately before and after the convention.
by the House ethics committee are inappropriate and fail to honor the letter
and spirit of the rule. The clear intent of the rule is to prohibit lobbyists
from hosting parties honoring one, two or even 100 members, either specifically
or by committee or caucus name.
gift rules also prohibit members and staff from accepting gifts from lobbyists
or lobbying organizations at the conventions, except under the following
- Reception – Members and staff may attend a reception hosted by a lobbying organization, including food and refreshment of nominal value offered other than as part of a meal, known as the “toothpick rule.”
- Widely attended event – Members and staff may accept dinner, refreshments and entertainment at a widely attended event. An event is considered widely attended when at least 25 people from outside Congress are expected to attend and the member’s attendance should be related to official duties. Free attendance does not include entertainment collateral to the event, such as a concert.
- Charity event – Members and staff may accept free attendance at a charity event, provided the primary purpose of the event is to raise funds for a legitimate charitable organization.
- Campaign fundraiser – Members and staff may accept free food, refreshments and entertainment in connection with any fundraising events sponsored by party organizations, campaign committees and other political organizations. Such fundraising events must comply with federal or state campaign finance limits and disclosure requirements.
- Convention event – Members and staff may accept food, refreshments, entertainment or other gifts offered by the convention committees, party organizations and federal, state and local governments.
Public Citizen and seven other
reform organizations sent a letter to Congress last month urging all members to
abide by the new ethics rules. The letter is
available at http://www.citizen.org/documents/convention-letter-2012-house.pdf.
The House Ethics Committee
guidance on the conventions is available at http://www.citizen.org/documents/house-convention-guidance-2012.pdf.
The Senate Ethics Committee
guidance is available at http://www.citizen.org/documents/senate-convention-guidance-2012.pdf.
C. Conclusion: Lobbyists Gone Wild
and their lobbyists see the national nominating conventions as an ideal
opportunity to buy access and influence with the presidential campaigns,
lawmakers and party leaders. The conventions constitute a campaign media blitz
for the campaigns and provide a golden opportunity for lobbyists to extend
their lobbying activity off Capitol Hill.
money loophole created by the FEC has derailed part of the original intent of
the presidential public financing program: to remove the potentially corrupting
corporate money (such as from IT&T) from the convention proceedings. The
FEC should reverse its previous rulings on corporate sponsorship of host
committees and municipal funds. If the FEC will not step up to the plate – and
there is no indication that it will do so — then Congress must revisit this
issue when it considers strengthening the presidential public financing system.
corporate lobbyists will be partying, schmoozing and lobbying at the national
conventions. Though new ethics rules are forcing significant adjustments in the
behavior of lobbyists and lobbying organizations at the conventions, there is
still confusion that could lead lawmakers to disregard the rules.
imperative that members of Congress and their staffs are clear on the ethics
rules and approach the party scene prudently. The House ethics committee needs
to revisit its guidance so as not to contribute to the confusion. And the
public and press must do their best to monitor the convention festivities to
ensure compliance with the rules. No one else will.
Public Citizen and the Sunlight
Foundation set up a bird-dogging campaign for the 2008 conventions to crash the
soirees and identify which are in violation of the ethics rules. We were able to shut down only
one party sponsored by a lobbying organization out of
the hundreds that took place
Public Citizen and the Sunlight Foundation will be repeating this bird-dogging campaign for the 2012 conventions.
 11 CFR 9008.52.
 Commissioner Thomas Harris, Advisory Opinion 1982-27A.
 Presidential Campaign Receipts,” Federal Election Commission Web site (July 2012).
 Democratic Convention Benefits from Corporate Cash,” Associated Press (July 21, 2012).
 CampaignFinance Institute and Center for Responsive Politics, Donors to Party Conventions Have Spent Over $1 Billion on Federal Lobbying Since 2005, reported in Politico (Aug. 19, 2008); and Campaign Finance Institute, “Donors to Party Conventions Have Spent Over $800 Million on Federal Campaign Contributions and Lobbying Since 2005” (June 18, 2008).
 11 CFR 9008.51.
 Bill McConnell, “Party Animals,” AllBusiness (June 21, 2004).
 House Rule XXV(8); Senate Rule XXXV(5).
 House Ethics Manual, p. 78.