Members of the United States Capitol Police try to repel a crowd of supporters of US President Donald Trump as one tries to use a flag as a spear as supporters storm the Capitol of the United States in Washington, January 6, 2021.
Lea Millis | Reuters
Companies in major market sectors are reassessing political donations in response to the storming of the United States Capitol last week, but it is too early to know if this is causing fundamental changes in the way money flows between politics and business.
For decades, Political Action Committees have served as a mechanism for corporations and trade groups to maintain their grip in Washington, DC. But many companies also contribute to applicants and causes by using 527 groups and super PACs, among other contribution methods, which can raise unlimited funds from individuals and corporations.
According to data from the Center for Responsive Politics, corporate PACs represented about 5% of the money accumulated for the 2020 election. The rise of small donors as well as political action committees allowing unlimited giving have reduced the role of specific political giving from companies directly to candidates over time.
Even though the 2020 election set a donation record, the Center for Responsive Politics notes that “traditional PACs, often used by companies to gain the favor of legislators, lose relative influence. … This is because the PAC contribution limit of $ 5,000 did not increase for decades, and corporate PACs have become toxic to some Democrats. against 15% of funds raised during the 2016 elections.
Many of the political donation freezes to candidates advertised by companies do not include political action committees not associated with specific candidates, meaning the movements could end up being more symbolic than consequent in defining the future scope of political donations. It is also an opportune time to freeze political spending with consequences as a major electoral cycle has just ended.
“It’s a very difficult time for business leaders. No one gave money to a candidate or a cause thinking they would end up voting against the certification of the next president. They make contributions based on how they think the individual will affect their business and their industry. “Mark Weinberger, former CEO of EY and former Assistant Secretary of the Treasury in the George W. Bush administration, said Wednesday on CNBC’s Squawk Box.
“You have to separate the timing from the overall election finance system these days,” he said. “People stop because they want to show immediate responsibility and they don’t know what to do yet.… No one has given money to fund sedition.”
American Express was among the companies that said they stop supporting candidates who tried to “disrupt the peaceful transition of power”. The credit card company said it had contributed to 22 of 139 House members who opposed the Electoral College’s results.
Weinberger said that while some politicians who have backed President Trump’s efforts to overturn election results might find it difficult to fundraise in the future from businesses, he thinks it’s harder to see how businesses unilaterally withdraw from the system of political influence.
“I think it is difficult for companies on their own to decide that they will no longer participate in the system,” he said. “You have environmental groups and task forces that all contribute to CAMPs. It’s reasonable to look at the whole system, but to say that individual companies should just shut down on their own is like unilateral disarmament. . “
Charles Schwab said earlier this week that he stop contributions for the rest of the year, but announced on Wednesday that it was stopping his company PAC, becoming one of the first companies to make the move permanent.
Campaign giving experts remain skeptical of the likelihood of PACs dissipating as they represent useful transactional tools that help businesses access and meet individuals in Washington.
“Right now, the companies sponsoring these PACs are just trying to balance the need to win favor with elected officials and avoid public anger and boycott,” said Sheila Krumholz, executive director of the Center for Responsive Politics.
While stopping PAC donations is “a good first step,” companies will need to re-evaluate their approach to spending, including contributions using corporate funds and 527s, said Bruce Freed, president and co-founder from the Center for Political Accountability.
“It’s very easy at the moment to say we’re going to take a break, we’re going to stop, but what happens when we go in early fall, what happens when we let’s go early next year, ”Freed said.
There are other ways to balance the political interests of big business. Since its inception, IBM has long avoided political donations to candidates and does not operate a PAC, although contributions have been made by people affiliated with the company, according to Open Secrets data, and its CEO was among the first in the market to send a letter to President-elect Biden outlining political priorities.
Apple, the most successful company in the world today, does not operate a PAC, although it “occasionally contributes to voting measures and initiatives” for public schools in Cupertino.
“We carefully manage our engagement in the public policy process and have internal teams that coordinate these efforts,” the company public policy statement bed. “Strategic decisions regarding advocacy are made at the highest levels, including Apple’s management team and CEO Tim Cook.”
At least one of the most recent major political battles fought – and won – by corporations has been the California vote initiative funded by Uber and other odd-job companies to repeal a California law on classification of employees. This November ballot fundraising effort was seen as a major wake-up call about how businesses can use their money to influence voter decisions.
Big tech, Wall Street and the future of political giving
Tech giants like Microsoft and Facebook to Wall Street behemoths like Goldman Sachs, here’s a look at some of the big names joining the movement to at least temporarily halt donations to politicians as businesses reassess how their money intersects with politics in a nation polarized. Political discontent has also increased within companies, especially among employees of larger tech companies.
Earlier this month, some Microsoft employees spoke out against the company’s recent donations to senators that supported the overturning of the election results. This week, the company suspended its political contributions.
Amazon, which withdrew its support for web hosting from the social media site Speak, which has become a popular alternative for Conservatives, also suspended donations to lawmakers who voted against certification of election results. Google and Apple had already removed service from their app stores, although Apple said it could return to the App Store if it complies with the terms of service.
Facebook has suspended political spending for at least the current quarter, and Alphabet has said it is also freezing political donations as it revises its policies. Alphabet’s YouTube became the latest to suspend a social media account associated with President Trump on Tuesday night, echoing actions already taken by Twitter and Facebook.
On Wall Street, the big banks have all taken steps to reassess their political spending.
Morgan Stanley announced he would not donate to lawmakers opposed to electoral certification, going beyond some Wall Street peers in specifying members of the Republican Party who supported President Trump’s attempts to overturn the election.
Goldman Sachs and JPMorgan Chase have both said they will likely halt political donations for six months, while Citigroup announced a first quarter hiatus. A Bank of America spokesperson said it will factor recent events into contributions to the 2022 midterm election, while Wells Fargo will review the strategy of its Political Action Committee.
What other companies are doing
- Walmart has said it will indefinitely suspend contributions to members of Congress who voted against legal certification of state Electoral College votes and is reviewing its donation strategy.
- Marriott International has announced a suspension of its political contributions.
- Hilton will continue the suspension of political donations that began last March.
- Airbnb is suspending donations to “those who voted against the certification of presidential election results.”
- The Coca-Cola Company has announced that it will end all political donations.
- Hallmark is calling for a return of contributions from Senators Josh Hawley Missouri and Roger Marshall of Kansas. Both lawmakers supported the annulment of the election results.
- Verizon, AT&T and Comcast have said they are suspending donations to lawmakers who voted against certification of election results.
- Blue Cross Blue Shield announced a suspension of donations to Republican lawmakers who voted against certification of election results.
- Dow will suspend contributions to lawmakers who supported the overturning of election results for an electoral cycle – two years for members of the House and up to six years for senators.
- Ford Motor Company is pausing new contributions from its PAC employees.
- Other companies that have suspended all political donations: American Airlines, BlackRock, BP, Target, US Bank, Visa.
- Other companies that have suspended donations to candidates involved in disrupting the electoral process: Best Buy, Cigna, Commerce Bank, Disney, General Electric, Intel, State Street.
Disclosure: Comcast owns NBCUniversal, CNBC’s parent company.