American Politics
Lecture 9/12/90



INSIDERS' STRATEGY


1. POLITICAL ACTION COMMITTEES.
2. ISSUE ADS
3. SOFT MONEY
4. LOBBYISTS

a. PAC CONTRIBUTIONS FROM A GIVEN INDUSTRY GREATLY INCREASE DURING TIMES WHEN CONGRESS IS CONSIDERING MAJOR LEGISLATION:

S&L CRISIS. CONTRIBUTIONS ROSE 42%
FROM 1987 TO 1988.

EVERY MEMBER OF THE HOUSE WHO RECEIVED $415,000 OR MORE FROM SUGAR INTERESTS VOTED TO MAINTAIN THE SUGAR SUBSIDY.



b. THE INFLUENCE OF PAC MONEY IS GREATEST FOR THE LEAST PUBLICIZED ISSUES:

MATHIAS- P. 413.


IT IS PROBABLY HAS THE LEAST IMPACT ON THOSE ISSUES FOR WHICH MANY SIDES ARE HEARD FROM:

(AS SUGGESTED BY FEDERALIST #10):

54 OUT OF 208 MEMBERS OF CONGRESS WHO TOOK NRA MONEY VOTED AGAINST THE NRA IN 1991.




INSIDER INTEREST GROUPS AND THE CLINTON HEALTH PLAN:

National Federation of Independent Business PAC:

$231,000 in 1991-92

to more than $1 million in 1995-96.

Sierra Club ran ads praising Conn. Congressman Jim Maloney for his votes in favor of clean air legislation, and telling voters to call JimMaloney and tell him to keep up the good work. Jim Maloney's campaign manager said, "It causes all kinds of problems. You have a message you're working on, and an independent group comes in and their message is the message. We'd be better off if they were not allowed to do it."

Business Roundtable, CEOs of nation's largest corps. Will pay for $29 million.

Biggest use of issue ads was by AFL-CIO in 1996, when they targeted freshmen Republicans who had come to office in 1994.

41% of issue ads are attack ads.

LIMITS ON INDIVIDUAL DONATIONS TO CANDIDATES: $1,000


LIMITS ON INDIVIDUAL DONATIONS TO PARTY ELECTION COMMITTEES: $20,000


LIMITS ON INDIVIDUAL DONATIONS FOR THE PURPOSE OF "STRENGTHENING PARTY ORGANIZATION" (SOFT MONEY):

UNLIMITED!

	1994	1998
NRSC	$2.5	$14.5
DSCC	$0.4	$7.8
NRCC	$2.2	$14.3
DCCC	$3.1	$6.2

Last April, Senator Daniel Coats, Republican Indiana, thought he would do something good for underprivileged children. He sponsored an amendment that would contribute $1 billion worth of tax breaks for U.S. taxpayers who would contribute to scholarships for underprivileged children to attend the private schools of their choice. He felt it was essential to show how this $1 billion would be paid for, and he had an interesting idea about how to pay for it: to make up for the $1 billion in lost tax revenue, he would eliminte a tax break for gamblers.

Right now, if you go to a casino and lose money, you can write it off on your income taxes. That amounts to about $1 billion in lost tax revenues. It is also a big incentive for people to got to casinossince wealthy people can tell themselves that, when they lose $1000 to the casinos, Uncle Sam is contributing about $350 of that amount and they have in fact only lost $650.

Almost everyone thought the Coats amendment was a good idea, except for the casino owners, including Mirage Resorts, Inc. and Circus Circus Enterprises, both of which own a number of casinos; both thought the Coats Amendment would be bad for business.


As it happens Mirage Resorts was the single biggest contributor to the National Republican Senatorial Committee. The NRSC is an electioneering campaign dedicated to electing Republican Senators. Mirage Resorts contributed $251,000 just 5 days before the Coats amendment was formally introduced to the Senate.


Mitch McConnell, who is close to the casinos, let Coats know that he would fight to stop the Coats proposal if it came to the floor.

Most importantly, Republican Majority Leader Trent Lott told the Senate Finance Committee to fund the tax breaks for scholarships from some other source.

A Republican aide said, "Lott did not want us to get down there on the floor and debate it, because it was very difficult to defend."

In the end, Lott succeeded in getting the Finance Committee to work with the Treasury Department to find other ways to subsidize tax breaks for people who contribute to scholarships.

NRSC		DSCC
Mirage Resorts	25l	Connell Rice & Sugar	$200
Freddie Mac	200	Oracle (software)	$194
American Fin. (ins)	195	Buttenwieser	$160
Phillip Morris	175	Philip Morris	$155
RJ Reynolds	120	AT&T	$130
CSX (rail)	110	Loral Space & Co.	$110
Travelers (ins)	110	Yucaipa (retail)	$105
Microsoft	109	Northern Telecomm	$100
Blue Cross	106	MCI Telecomm.	$78
RD Hubbard (race)	105	Rhone-Pounec (ag&drug)	$78
Tobacco Institute	100	Anheuser-Busch	$72
Circus Circus	$100	Tobacco Institute	$70

For those of you in the Hewlett Program, here is another example of soft money in use.
Environmentalists have long been critical of lumber companies for bulldozing logging roads through the national forests. Environmental interst groups like the eArthjustice Legal Defense Fund have argued that lumbering companies should be restrained from building all the logging roads that they want. Logging companies, however, argue that logging roads are important for fire protection and access to wilderness areas, and that they should be rewarded for building logging roads. Congress has bought this argument, and given logging companies tax credits for the miles of logging roads that they build.

Last year, Congressman John Porter, Rep. Ill, tried to end the logging road credit, in response to environmental concerns and budget concerns. He not only lost, but in response to a proposal from a Republican from Washington, tax credits to logging companies were expanded by $50 million a year. Louisiana-Pacific, one of the companies that has benefited the most from the road credit program, has contributed $135,000 since 1991. The timber industry as a whole has given$1.6 million in the previous election cycle, and $675,00 so far in this election cycle.


4. LOBBYISTS

LOBBYIST FOR THE DUTKO GROUP

PH.D. IN PUBLIC POLICY FROM THE UNIVERSITY OF ILLINOIS.

SPECIAL EXPERTISE IN TAX POLICY.

CLIENTS:

FEDERAL EXPRESS

SOUTHWESTERN BELL TELEPHONE

PRUDENTIAL SECURITIES


UNION PACIFIC.

ANDRES HAS PERSONALLY RAISED $250,000 PER YEAR.

CHAIRED FUNDRAISING DINNER COMMITTEES FOR

NRCC SINCE 1995.


THE UNICEF GAME

A $200 contribution to UNICEF will transform a sickly 2 year old into a healthy 6 year oldprobably save its life.


In discussion sections this week,
you will have a chance to make a donation (say $1.00).

If less than $100 is raised, I will send it on to UNICEF.

If more than $100 is raised, I will send it on and add $200.



Discussion points for UNICEF GAME.

-The extra $200 is in the nature of a public good.

OTHERS' DONATIONS

more than $100 less than $100


contribute $1 B-$1 -$1

YOU

free-ride B 0


n Free-riding is "almost" a dominant strategybecause other could donate between $99 and $100then your contribution makes a difference. The larger the group, the less likely the individual's contribution will make a difference to the provision of the public good.

--What political activities is this like? Votingsmall chance your vote will make a difference to the success of the candidate.
Collective action in large groups.

--Would selective incentives work in UNICEF game? What incentives? Would they be appropriate?

--Do different people have different evaluation of the public good (Gary's $200)? What difference does that make to successful political action?