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June 7, 2012

Party Conventions Tarred by Special Interest Money, Not Public Funds

Coburn Bill to Ban Public Financing Attacks the Solution

WASHINGTON, D.C. – A proposal to ban public financing of political parties conventions should be defeated because it would make presidential nominees and party bosses even more dependent on potentially corrupting corporate money to pay for their nominating conventions.

The measure was introduced Tuesday by U.S. Sen. Tom Coburn (R-Okla.).

“Coburn is ignoring the history of corruption that has plagued the party conventions by attacking the solution rather than the problem,” said Craig Holman, government affairs lobbyist for Public Citizen. “A good legislative fix would ban corporate financing of the conventions – now that would fundamentally change the nature of these events away from influence-peddling soirees and back to nominating conventions focused on meaningful debate.”

Public financing of conventions came about after a scandal in the 1970s. In May 1971, the giant International Telephone and Telegraph Corporation (IT&T) pledged $400,000 to attract the 1972 Republican National Convention to San Diego. The company was facing several anti-trust suits under the Nixon administration. Eight days after the selection of San Diego for the convention, the Nixon administration reached an out-of-court settlement very favorable to the company. (A detailed history is provided in Public Citizen’s 2008 report, “Party Conventions Are Free-for-All for Influence Peddling.”)

The scandal prompted Congress to approve new legislation providing public financing of the conventions under the Federal Election Campaign Act (FECA). This system gave the parties a reasonable grant to pay for nearly all expenses of the conventions, largely removing corporate funding and keeping a lid on excessive convention spending.

But this clean government reform began to fall apart in the 1990s following a loophole poked into the law by the Federal Election Commission (FEC) allowing wealthy individuals and corporations to fund “host committees” for the conventions – presumably private groups set up to support the conventions outside the party committees. With this FEC loophole, corporate financing of the conventions has soared, and it now far eclipses public funding. For the 2012 conventions, for example, each major party will receive $18.3 million in public funds, but corporate and special-interest money is expected to total around $37 million for the Democratic convention and $50 million for the Republican convention.

“In return for sizeable donations, host committees offer corporate executives and lobbyists exclusive access to elected officials at the conventions – the greater the donation, the greater the access to advertising opportunities and influential convention attendees,” said Lisa Gilbert, acting director of Public Citizen’s Congress Watch division. “Sadly, corporate donations to the host committee are tax-deductible, meaning that, ultimately, it is taxpayers who subsidize corporate privilege at the conventions – all while undercutting the clean government that comes with direct public financing.”

In an effort to rein in some of the influence-peddling at today’s privately financed conventions, ethics rules were enacted in 2007 prohibiting members of Congress from attending events honoring them at the conventions if the events are hosted by lobbyists or lobbying entities. Public Citizen is planning on joining others in the reform community in watchdogging the 2012 conventions to enforce this ethics rule.

“In the meantime, Congress should both consider serious legislation to ban corporate financing of the conventions and send Coburn’s regressive bill back into the dustbin of history,” Holman said.


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