Lilly, Sunoco Give More to Democrats Than Republicans
Jonathan D. Salant and Scott Cendrowski
Mon Apr 23, 10:44 AM ET
April 23 (Bloomberg) — Companies with business before the U.S. Congress may be following their own version of the gangland motto: Keep your friends close and your enemies closer.
Since taking over in January, the new Democratic chairmen of the 19 House committees have received $1.7 million from business political-action committees, according to Federal Election Commission figures. That’s almost double the $898,567 their traditionally more business-friendly Republican predecessors got in the same period in 2005.
Even as the Democrats work on legislation that may curb corporate profits — such as cuts in Medicare reimbursements and limits on oil-drilling subsidies — they are benefiting from such potentially affected companies as Eli Lilly & Co. and Sunoco Inc. The impetus is coming from the lawmakers as well as the companies: The chairmen have been instructed by their party’s campaign committee to raise as much as $500,000 to help ensure Democrats retain control of Congress in the 2008 elections.
“It’s part of a political effort to raise money,” House Ways and Means Committee Chairman Charles Rangel (news, bio, voting record), 77, said in an interview. “I’ve acquired a whole lot of new friends since January.”
Eight Times Thomas
The New York Democrat brought in $455,169 from corporations and trade groups in the first three months of 2007, eight times more than Bill Thomas of California, his Republican predecessor as chairman of the tax-writing panel, received during the first quarter of 2005. Rangel’s list of donors includes the PACs of Lilly and UnitedHealth Group Inc., both of which would be affected by legislation his panel is considering.
Chairmen such as Rangel, Barney Frank (news, bio, voting record) of the Financial Services Committee and John Dingell (news, bio, voting record) of Energy and Commerce have held their seats for years and don’t need the money for their own campaigns. But there’s no legal limit on how much lawmakers can transfer from their campaign accounts to the political parties — making them powerful forces as the Democrats seek to expand their current 31-seat majority in the 435-member House in next year’s elections.
In the last campaign, House Democratic lawmakers transferred $33.4 million to the party, one-fourth of the Democratic Congressional Campaign Committee’s total haul. Representative Chris Van Hollen (news, bio, voting record) of Maryland, chairman of the DCCC, the House Democrats’ fund-raising arm, says the party wants to raise far more for the next cycle, and he has asked committee chairmen to contribute hundreds of thousands of dollars.
`The Larger Effort’
“It’s important that people make their contributions to the larger effort so we can make sure our most vulnerable members have the resources,” Van Hollen says.
Rangel says he is doing his part: He has already given about $300,000 to the DCCC and $75,000 more to the campaigns of individual lawmakers so far this year.
Rangel’s panel oversees the health industry, and he has raised $189,500, or 39 percent, of his PAC money from health and insurance companies, including $2,500 from Indianapolis-based Eli Lilly, the world’s largest maker of psychiatric medicines.
In January, the House passed legislation compelling Medicare, the program that provides health care to the elderly, to negotiate drug prices with companies — a measure opposed by the pharmaceutical industry. Last year, the $252 billion U.S. drug market counted on Medicare for a sixth of its growth, according to estimates from IMS Health, a Fairfield, Connecticut- based research firm.
Influence
Rangel has “influence over policy on trade and taxation,” Eli Lilly spokesman Ed Sagebiel says. “For those reasons, we provided our support to him.”
For the 2006 election, Eli Lilly’s PAC gave 70 percent of its donations to Republicans, according to figures from PoliticalMoneyLine, a Washington-based company that tracks money in politics. This year, almost 60 percent of its PAC donations are going to Democrats.
Rangel also received $2,000 from Minnetonka, Minnesota-based UnitedHealth, the biggest U.S. health-insurance company. “The company agrees with him on some issues and disagrees with him on some issues,” UnitedHealth spokesman Don Nathan says of Rangel. “It’s an important working relationship and a positive one.”
On March 29, UBS Investment Research downgraded shares of UnitedHealth, citing potential cuts in government payments under Medicare Advantage. The program pays companies to provide the same services as Medicare’s traditional fee-for-service coverage, and cost an average of 12 percent more. The six-company Standard & Poor’s 500 Managed Health Index fell 2.4 percent, the most in a month.
Stark’s Support
The downgrade followed a hearing by the Ways and Means health subcommittee during which the panel’s chairman, Representative Pete Stark of California, said he supported cuts in Medicare Advantage reimbursements. Stark raised $96,250 from PACs during the first three months of 2007, almost three times the $32,500 he took in during the same period two years earlier. Health PACs contributed $72,500.
Stark, 75, acknowledges the pressure on committee and subcommittee chairmen to raise money. “I’m just amazed at how much campaigns cost,” he says. “I’m trying to do my share.”
Industry PACs are also filling the campaign coffers of other committee chairs. Frank, 67, raised six times more money from companies in the first quarter than he did two years ago. Of the $100,650 in company contributions he brought in, $73,500 came from companies over which his committee has jurisdiction.
Helping Other Democrats
His predecessor, Republican Michael Oxley of Ohio, raised $15,000 from PACs for his campaign committee and $120,500 for his leadership committee in the first quarter of 2005. Frank says most of the money he raised will go to help other Democrats.
Frank has said he will propose legislation requiring hedge funds to keep records that could be used in lawsuits. He also is pushing a measure to protect mortgage borrowers from “predatory” lenders. The House passed a Frank-sponsored measure April 20 allowing shareholders to hold non-binding votes on executive pay.
“We don’t vote a certain way because they give us money,” Frank says. “They give us money because we vote a certain way.”
New York-based Bear Stearns Cos., which owns the subprime lender Encore Credit, gave $2,500 to Frank. The company, the fifth-largest securities firm, didn’t respond to requests for comment. Bear Stearns’s PAC gave 75 percent of its donations to Republicans for the last election. This year, it is giving more than half to Democrats, according to PoliticalMoneyLine.
`They Want to Give’
Dingell, whose committee oversees the energy industry, raised $269,562 from business political-action committees, almost three times the amount garnered two years ago by his predecessor, Texas Republican Joe Barton (news, bio, voting record). “I guess it’s because they want to give,” says Dingell, 80.
About $42,000 of that was from the energy industry, including $1,000 from Philadelphia-based Sunoco Inc., the largest refiner in the northeastern U.S., which gave 70 percent of its donations to Republicans for the 2006 election and this year is giving almost 80 percent to Democrats. In January, lawmakers voted to repeal $7.7 billion in oil-company tax breaks. Sunoco spokesman Jerry Davis didn’t respond to two phone calls requesting comment.
Companies have “got to demonstrate goodwill if they want tolerance exercised toward them,” says Celia Wexler, vice president for advocacy at Common Cause, a Washington-based group that supports stronger campaign-finance laws.
In some cases, the only way a company representative is going to be able to talk to a busy lawmaker is at a fund-raising event, says former Democratic congressional aide James Bonham, a partner in the law and lobbying firm Brown Rudnick Berlack Israels LLP.
“If a chairman is going to have a fund-raising event, everybody goes,” Bonham says. “That’s the opportunity to shake their hands, to say, `Congratulations, I look forward to working with you and your staff.”’
