Extortion: How Politicians Extract Your Money, Buy Votes, and Line Their Own Pockets

by Schweizer, Peter

  Two other scholars looked at a large amount of academic data on campaign contributions and congressional voting and concluded that, with the preexisting views of politicians factored in, there is very little evidence that campaign contributions directly influence voting.13 So why give money? If you are a CEO and you are spending millions of dollars on lobbying, without any statistically significant result, you are letting down your shareholders. Why do it?

  Because you think you have no choice. Campaign contributions are not about buying votes, they are often about extortion. Legislators have the bargaining power, and they largely initiate solicitations of money. It isn’t a bribe. In white-collar crime, the distinction between bribery and extortion is often based on the determination of “which party initiates the exchange.”14 This also explains why many corporate executives and PACs largely give to incumbents regardless of party. A challenger can’t do very much to them. But if they fund only the losing candidate, there might be hell to pay from the winner. If it’s a close election, execs might hedge their bets and give to both candidates to secure protection from both sides.15 Of course, once an election is over, there is only one extortionist left. Corporate PACs send money “disproportionately to incumbents, majority party members, and those serving in leadership positions, especially those on the most powerful committees.”16

  Committee chairs and ranking party officers (leader, whip, etc.) face their own pressure to extort. The underground money economy of the Permanent Political Class works in hidden ways. When newly elected members of Congress come to Washington, D.C., they often find that they—much to their surprise—are already in debt. And we aren’t talking about the national debt.

  Both Democrats and Republicans in the House of Representatives have created a largely hidden system of “party dues” that requires members to extract money beyond their own campaign donations to fund their respective parties.

  These party dues are not voluntary. Members are not asked to pay—they are required to pay. And paying those dues greatly influences which committee or subcommittee assignment they get.

  We want to believe that committee assignments are based on knowledge, expertise, and background. But a member of Congress will end up on a powerful committee like the House Ways and Means Committee or Financial Services Committee only if he or she can raise money. The more powerful their committee assignments, the more money members are expected to extract from the industries they have oversight over or regulate. For a newly elected member of Congress on a weak committee—for example, the Ethics Committee, which is considered the least attractive committee for a variety of reasons—the annual party dues can run around $150,000. And for those on a powerful committee? The sky is the limit. Those in leadership positions or on powerful committees can be expected to raise $600,000 or more as part of the system.

  The Democratic and Republican Parties both have internal party dues lists in the House of Representatives that make it very clear that leadership positions and committee assignments come with a price tag.

  For the Democrats, being the ranking member on an exclusive committee like Ways and Means or House Financial Services will run you $500,000 in the 2013–2014 election cycle, according to internal party documents. Being the ranking member of a less powerful committee means giving the party $250,000. If you’re happy being a rank-and-file member, you only need to raise $125,000.17

  The Republicans have a similar system. At the National Republican Congressional Committee, they actually post the price list for each Republican member of Congress on the wall. If you are behind in what you need to pay, it is marked in red for everyone to see. The list is broken down into sixths for any calendar year. So Congressman Fred Upton, chairman of the powerful Energy and Commerce Committee, is required to raise $990,000 for this election cycle for the party.18 Congressman David Camp, chairman of the powerful Ways and Means Committee, is expected to do the same.19 Congressman Lamar Smith, chairman of the less prestigious House Judiciary Committee, is expected to kick in $405,000, according to party documents.20

  Democrats have a “members points system” that rewards congresspersons for collecting cash and attending party fund-raisers. The amount of money raised is extraordinary and separate from the fund-raising they do for their own campaign committees. Congresswoman Nancy Pelosi, according to internal Democratic Congressional Campaign Committee (DCCC) documents, raised a stunning $52.9 million for the party in 2011–2012. Speaker of the House John Boehner raised even more.

  Raising money is what helps an ambitious member of the House rise in the ranks far more than ideas or competence. For example, according to DCCC documents for the 2011–2012 election cycle, Congressman Joe Crowley of New York was a vice chairman of the DCCC in that election cycle and raised over $8 million. As a result, he is now the Democratic Caucus vice chairman.21 Congresswoman Alyson Schwartz also raised millions and in early 2013 was reappointed to the powerful House Ways and Means Committee, after being removed the cycle before.22 On the other hand, the failure to raise funds means the possibility of being cut loose. Congressman Gary Miller of California, according to internal Republican Party documents, was more than $359,000 behind in his 2012 dues and was not going to receive support through the party’s “Patriot Program,” a “goal-oriented program” that offers extensive support and assistance for those seeking reelection, even though Miller is in what some analysts have said is the most vulnerable district in the country.23 (Internal party dues documents from both parties are reprinted in Appendix 1.)

  But you get what you pay for. Built into these valuations is the implicit extortion value of the seat. Sitting on the House Financial Services Committee means you can extract lots of money from wealthy financial institutions. But a slot on the Ethics Committee gives you little opportunity for extortion—except perhaps from your fellow members of Congress who are facing ethics investigations. Members of the Ethics Committee can and do receive donations from their colleagues and party leadership! The modern congressional-assignment pricing system is very much like the old Tammany Hall machine in New York City. At its height, Tammany could charge a candidate a fee to allow him to run for office (which meant winning that office, since New York City was a one-party town). If you wanted to be a senator, you paid. Once you were in office, you could earn back your investment through graft.

  Today’s Congress is similar. It’s a largely pay-to-play system. Politicians who get on a powerful committee but refuse to pay their dues will get yanked from the committee no matter how knowledgeable they might be on the relevant issues. House Minority Whip Steny Hoyer suggested such a thing might happen when several members on powerful committees weren’t raising enough money. He threatened them with a “separate vote on their panel [committee] assignments if they fail to pay their party dues,” reported the National Journal Daily. One of Hoyer’s top aides told the magazine, “You sit on an exclusive committee and you have a responsibility to do more.” It was a thinly veiled reference to extracting more money.24

  What this system does, of course, is encourage members of Congress from both parties to amass more power for their committees. If you have more industries and companies under your purview, it will be easier for you to pay your party dues, not to mention easier to raise your campaign funds. Reducing the power of committees makes both tasks more difficult.

  Current members of Congress acknowledge the existence of these “dues” in private conversations but don’t want to talk about them publicly, for fear of retribution from party and congressional leaders uneager to see the pay-to-play system exposed. Those who have recently left Congress are more willing to speak openly. Former Democratic congressman Jim Cooper of Tennessee has spoken about the clear link between paying your dues and getting on key party committees.25 Former Republican congressman Thaddeus McCotter from Michigan denounced the practice while in leadership as akin to a “pay-to-play.”26

  Lawmakers who have trouble raising money to pay off their yearly debt can wipe out port
ions of it by performing certain tasks. The National Republican Congressional Committee will give members of Congress “credits,” such as $5,000 for attending a congressional fund-raising dinner or making a certain number of fund-raising calls.

  Apart from the hidden dues system, there is another major—but also hidden—source of politicians’ funds: each other. Federal laws are very clear: a politician can’t solicit or receive campaign contributions in congressional buildings or in the U.S. Capitol. But there is a little-talked-about exemption to that rule. It’s an exemption that doesn’t get talked about, but is a major tributary in the flow of money into the hands of the Permanent Political Class. The exemption states that “the rules and standards of conduct enforced by the Standards Committee do not prohibit Members from soliciting (or receiving) campaign or political contributions from other Members in the House buildings” (emphasis in the original). It’s a huge loophole that makes it possible for members to link their votes to cash.27 This can involve large sums of money. Members of Congress receiving these funds can even convert them into personal cash in their own pockets!

  The Federal Election Campaign Act of 1971 allows for the transfer of unlimited campaign funds from campaign committees to any national, state, or local committee of any party.28 Politicians can also transfer money to another candidate, with certain limitations. Leadership PACs are not just about electing fellow party members to office. They also play a key role in determining how much time you get on the House floor or whether your bills get voted on. One academic study found that politicians who transfer funds to their colleagues “enjoy more success in getting their bills scheduled for legislative action.”29

  Raising money is far easier for a powerful member of Congress than for a junior member. If you are the Speaker of the House, you have maximum power to move or halt bills. So you can amass large sums of money and then transfer those funds to junior colleagues in exchange for favors and votes. Suppose you are the Speaker of the House and in your leadership PAC you currently have $2 million. You are trying to push some recalcitrant members from your party to join you on a vote for something. It is perfectly legal for you to meet with those members in your office and offer to transfer cash from your PAC to their campaign funds.

  Both parties use donations to buy votes. In 2009, when the American Clean Energy and Security Act was up for a vote, the outcome was in doubt. During the week of June 23, 2009, right before the vote, four Democratic leadership PACs gave out $130,000 in donations to forty-one Democrats who were on the fence. Congressman Jim Clyburn’s Friends of Jim Clyburn PAC handed out $60,000 to undecided members two days before the vote.30 The bill did pass the House, by a scarce seven votes.31

  It’s mind-boggling to look at all the tributaries of cash that flow underground and aboveground in Washington. Consider the 2012 elections and Speaker of the House John Boehner’s fund-raising machine. Boehner has a personal campaign committee, a leadership PAC, and a so-called joint fund-raising committee. He can tap wealthy donors for all three committees, and indeed, he often does. Boehner’s campaign committees transferred $22.4 million to the National Republican Congressional Committee for the 2012 election, according to FEC records. Over $11 million of that came from his campaign committee, Friends of John Boehner, and more than $10 million came from his joint fund-raising committee. Meanwhile, his leadership PAC, the Freedom Project, together with his campaign account, gave a total of $2.4 million directly to 2012 congressional candidates.32

  With a so-called leadership PAC, Boehner can transfer money to his colleagues’ campaign committees ($10,000 a year per colleague) and donate another $10,000 to the same colleagues’ own PACs. He can also transfer unlimited amounts of money to the National Republican Congressional Committee, which can then turn around and spend unlimited funds supporting those candidates’ reelection bids. Alabama recently barred transfers of money between political action committees in the wake of a fund-raising scandal in that state. But even though it’s illegal in Alabama, it’s perfectly legal in Washington.

  Leadership PACs are often larded with donations from corporate and/or labor union PACs, as well as from PACs controlled by lobbyists. House Minority Leader Nancy Pelosi’s leadership PAC, PAC to the Future, took in $457,895 in 2012 from individuals as well as $645,000 from other PACs. She transferred $854,500 to other Democrats running for office, many of them incumbents.33 Leadership PACs can raise money more quickly than regular campaign committees because while individual donations to campaigns are limited to $2,600, leadership PAC donations are capped at $5,000 (as of 2013). Pelosi and Boehner run their PACs in a similar manner. In 2012 Pelosi moved $187,700 from the Nancy Pelosi Victory Fund (a so-called affiliated committee) to her leadership PAC. “The reason you form a leadership PAC is you want to help your colleagues, because the more you help your colleagues, the more influence you have,” Congressman Rob Andrews of New Jersey told the Office of Congressional Ethics Board. “The more influence you have, the more you can get done.”34

  Boehner and Pelosi can give money to candidates to help them win, but they can also give donations in exchange for votes or in exchange for support when they seek a leadership position. In 2009, for example, FEC records show that Pelosi’s leadership PAC made a series of donations to so-called Blue Dog Democrats. These were centrists who were concerned about some aspects of the health care reform bill. They ended up voting for the bill. How crucial were Pelosi’s donations to getting their support? They will never answer this question. FEC records indicate that Speaker of the House John Boehner, facing a challenge for his position in early 2013, likewise used the transfer of campaign donations to certain members of Congress to shore up support from those who might be inclined to vote against him. Perhaps we should take some vicarious pleasure in the fact that our politicians are willing to extort one another, not just us.

  Politicians say that the purpose of a leadership PAC is to help elect their colleagues. But because politicians are able to discuss votes and transfer money between themselves, it is easy to see how the buying and selling of votes might very well be occurring more frequently than we think. Money often flows to incumbent members of Congress in safe seats, raising the question: why exactly is money going to incumbents virtually certain to get reelected, particularly on the eve or day of a critical vote?

  Because the political class has created this exemption for themselves, they take full advantage of the opportunity to leverage their position and extract donations from others. In short, they can’t legally sell their votes to us. But they can sell them to their colleagues.

  In recent years, big fights over the federal budget and the debt ceiling have erupted against a backdrop of money transfers between politicians. How are these transfers connected to those fights? And what about the cash transfers we don’t know about? Congressional leaders can direct money flows from party committees that don’t always show up right away on disclosures.

  Consider what happened in 2011, when Capitol Hill was in full gridlock mode over the federal budget. On September 20, Speaker of the House John Boehner scheduled a floor vote on a stopgap spending bill. It included spending for the victims of a series of recent natural disasters—most notably those who suffered massive hurricane damage in New Jersey and New York—but the bill also included spending increases in other areas. The bill went down to defeat, but in a very unexpected way. Fiscally conservative Republicans joined with an overwhelmingly large group of Democrats to oppose the bill. The two groups opposed it for different reasons, but together their opposition sent the bill crashing to defeat on a 230–195 vote.35

  It was a stinging rebuke to GOP Speaker John Boehner. As the New York Times put it, the vote “showed the Republican leadership’s continuing struggle to corral the most conservative members of the caucus, as more than 40 Republicans rejected the measure because they did not believe it cut spending enough.”36 For Democrats, it was a huge victory. Even though they were in the minority, they had managed to throw a wrench
into GOP plans. Republicans knew that they would need some Democrats to cross the aisle to make up for the Republican freshmen in revolt. However, only six Democrats supported the bill in the end. “The most important part of the vote was Democratic unity,” as one senior House Democratic aide told the National Journal.37

  When a contentious vote on another budget bill came up in December, events played out differently this time. An infusion of money helped. Under fire from Senate Republicans, the House leadership prepared for another critical vote to determine the fate of an important budget bill (H.R. 3630: Middle Class Tax Relief and Job Creation Act of 2012). The bill included the extension of a payroll tax cut and unemployment benefits. The night before the vote it was still open as to whether House Republicans had the votes. On December 20, John Boehner’s leadership PAC sent out a whopping $420,000 in contributions to his Republican colleagues.38 The bill was referred to the conference committee on a narrow vote of 229–193, the same day, a huge win for Boehner.39

  Many of these donations went to incumbent Republicans who were in safe seats. For example, $5,000 went to Congresswoman Diane Black, who would win reelection less than a year later by over fifty-three percentage points.40 Scores of other colleagues in safe seats who won reelection by twenty percentage points or more received contributions as well. These individuals ended up voting in favor of the bill, helping to quell what the New York Times called a “revolt” against Boehner.41 Likewise, Republican whip Kevin McCarthy used his leadership PAC to send donations around the same time to safe incumbents, including those in safe seats who won by margins of 20 percent or more.42 Why give campaign cash on the day of a vote or near a vote to incumbents in safe seats?

  Democrats do the same thing, particularly when they are in the majority. As we saw earlier, this happened during the 2009 vote over the Clean Energy Act. The vote came down to a handful of members. Democratic Majority Leader Steny Hoyer pumped cash to Congressmen Gregory Meeks, Ed Markey, and Jan Schakowsky, all of whom won reelection by more than thirty percentage points.43 And all voted in favor of the energy bill.44