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Where Do “Black Friday” Revenues Go? Corporate Campaign Spending After Citizens United v. Federal Election Commission

This is a post from Public Citizen’s Democracy is For People Campaign, get involved here and follow @RuleByUs for more information.

Another “Black Friday” blitz of sales and shopping, some of it sadly of the violently “competitive” variety, has passed us by. Consumer spending for the “holiday” was at record levels, with online sales by major retailers leading the way and expected to continue with today’s “Cyber Monday” discounts.

Consumers camped out in front of a Best Buy in Bakersfield, CA on Thanksgiving Day 2010. Flickr image from Bill Ward's Brickpile.

This is ostensibly good for the economy, but a number of voices have been questioning the creeping commercialization of Thanksgiving. From employees of “big box” stores forced to give up their family holiday plans in order to open at midnight or earlier, to activists and business leaders who doubt the long-term sustainability of our present consumer culture, some important critiques have been leveled.

In terms of both the broader public good and big-picture economics, however, an important piece has been missing: the fact that an increasing share of some major corporations’ profits from consumer events like “Black Friday” aren’t going toward job creation or investing, but to attempts to influence and distort our democratic politics.

As Charles Kolb, President of the Committee for Economic Development (CED), an esteemed non-partisan organization of business leaders, recently told Dylan Ratigan, this political spending is basically a form of “rent-seeking” that isn’t good for business or for our democracy. Rather than competing in the marketplace or investing in economic growth, corporations seek a narrow advantage by garnering favored access to politicians and obtaining favorable policy outcomes—often at the expense of investing in long-term national priorities like education and infrastructure.

A landmark study of corporate governance released this month by the Investor Responsibility Research Center highlighted deeply problematic trends in this regard. The study, which looked at campaign-related spending and investor transparency among the S&P 500 companies, is fairly long and detailed, but some key findings highlighted at the report release (which I attended) are illuminating.

Corporate accountability and disclosure are, fortunately, on the upswing. However, this comes from a fairly low baseline: the boards of just 31 percent of S&P 500 companies now explicitly oversee political expenditures, up from 23 percent in 2010. And overall corporate spending on campaigns continues to balloon upwards, something that holds true even where greater transparency and oversight has been put in place. Corporations with board oversight of political spending actually spent 30 percent more in 2010 compared to those without explicit policies.

Even more glaring is the revelation that where there seems to be growing transparency, or even an express corporate policy that bans political spending, the reality is often quite different. While 57 members of the S&P 500 have apparent spending bans, only 23 actually did not spend on elections, owing to critical gaps in their definition of “political.” Evidently, some corporations have decided that such pursuits as spending related to ballot initiatives and sponsorship of political party conventions are not “political” spending. The report’s authors also found significant gaps between company reports issued in the name of transparency and board oversight, and actual public records of their expenditures.

In sum, while public pressure and calls for shareholder transparency have had some real impact, it only goes so far. The “arms race” of corporate political spending that was only enhanced by Citizens United (and the ensuing growth of secretive “SuperPACs”) continues to develop.

And just like the other kind of arms race, this one is a self-sustaining beast, creating pressure to go along with a “pay for play” mentality. As CED points out, members of the business community essentially face “shake-downs,” whether thinly-veiled or in the form of general pressure to compete, for political contributions.

This is no way to run a democracy, or to make sure we invest in the priorities that will create a foundation for sustainable short-term and long-term economic growth.  At a time when so many politicians and business leaders are talking about the need for a laser-like focus on the economy, a Wild West atmosphere for corporate spending on elections is a big part of the problem.

Increased and more complete transparency and disclosure to shareholders– if corporations are going to spend on electoral politics at all — is a vital and necessary step forward. The longer-term solution, however, is the one that people across America are increasingly mobilizing toward: a constitutional amendment that overturns Citizens United and makes it clear that corporations do not have the constitutional right to buy influence and warp our government’s priorities.

A record-breaking “Black Friday” may well inject a needed short-term boost into the economy. But to the extent it helps fuel efforts to focus policy-makers on narrow interests, instead of the needs and wants of We the People, the long-term prognosis is not a great one.

Sean Siperstein is a Legal Fellow with Public Citizen’s Democracy is For People campaign. Follow the campaign on Twitter @RuleByUs for the latest on the money and politics and the campaign for a constitutional amendment!