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Does Congressman Boehner Launder Campaign Money?

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Headlined to H2 5/18/09

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Registered lobbyists routinely serve as campaign committee treasurers and fundraisers for congressmen.  In addition, instances of lobbyists and their clients making personal campaign contributions to congressmen whom they lobby, or from whom they receive earmarks for their clients, are commonplace and expected.

 

I was unaware that congressmen make reverse contributions to the corporate PACs that give to the congressmen.  But when I began looking at the money flows into and out of congressional leadership PACs this is exactly what I discovered.

 

The focus of this brief study is upon the payments that Minority Leader John Boehner’s leadership PAC—Freedom Project—made to various corporate PACs during the last election cycle, as well as upon the contributions that the very same PACs made to Congressman Boehner’s own reelection committee, Friends of John Boehner.

 

Congressman Boehner began the 2007-2008 election cycle with just under $400,000 in his political reelection fund, Friends of John Boehner.  During the 2008 election cycle, according to the Center" target="_blank">click here for Responsive Politics (CRP), this fund had receipts of more than $5.1 million, spent over $5.3 million, and as of December 31, 2008 still had $201,844 in the kitty that may be used in the current election cycle.

 

In addition, total receipts into Congressman Boehner’s leadership PAC—Freedom Project—were $2,557,133. He spent $2,693,033 from that fund, leaving $119,660 on hand at the end of 2008. Again, all figures are taken from CRP’s" target="_blank">click here website.  The main purpose in establishing a leadership PAC is to assist other congressmen with their own campaign cash needs, and thereby build a base of goodwill and future support within the party. Rep. Boehner did provide support to other Republican candidates, to the tune of more than $1 million.  This left over $1.5 million from which a variety of overhead" target="_blank">click here expenses, dining, and golf outings were paid for. 

 

This extra money in his leadership fund could not be legally expended to support his own reelection.  In addition to making contributions to other candidates’ official campaign committees, leadership PAC funds can be contributed to other PACs, in amounts not exceeding $5,000 annually. Freedom Project engaged in such payments. Most of the contributions went to PACs associated with various corporations.  One exception, a non-corporate PAC receiving some of these monies, was that of the National Rifle Association.

 

A table listing the 43 mostly private, corporate PACs which received contributions from Freedom Project is presented below.  Altogether, $145,000 from Boehner’s leadership PAC was paid to these other PACs. Those PACs in turn sent $271,450 to Friends of John Boehner, his reelection fund, free of restrictions that would have prevented their use in his reelection effort. I will use the term “laundering” to describe these bilateral transactions.  Whatever the intent, the effect was to convert monies from a fund that could not be used to support reelection expenses to one that could incur such expenses.

 

Based on the data I obtained from CRP and my methodology, Rep. Boehner’s $145,000 represented the largest amount laundered by House and Senate members, although Rep. Mike Crapo (R-Idaho) wasn’t far behind at $115,500.  In total, I found that 25 Republicans sent $914,254 to primarily corporate PACs, and were rewarded in their reelection funds with $1,724,624 from those same PACs. 

   
Political Action Committees that Received Contributions from Congressman John Boehner's Leadership PAC which also Contributed to Boehner's Reelection Committee
(2007-2008 Election Cycle)
    
 Contributions fromContributions from 
 Boehner's Leader-Other PACs to  
 ship PAC toBoehner's Campaign 
Other Political Action CommitteesOther PACsFinance CommitteeDifference
 ($)($)($)
ALTRIA GROUP INC. POLITICAL ACTION2,50010,0007,500
AMERICAN ACADEMY OF FAMILY PHYSICI5,0005,0000
AMERICAN ACADEMY OF OTOLARYNGOLOGY2,5002,5000
AMERICAN ASSN OF ORTHOPAEDIC SURGEONS2,50010,0007,500
AMERICAN BEVERAGE ASSOCIATION POLI4,5002,500-2,000
AMERICAN COLLEGE OF RADIOLOGY ASSO1,50010,0008,500
AMERICAN EXPRESS COMPANY POLITICAL5,0005,0000
AMERICAN FINANCIAL SERVICES ASSOCI2,5007,5005,000
AMERICAN MEAT INSTITUTE POLITICAL2,5005,0002,500
AMGEN INC. POLITICAL ACTION COMMIT5,00010,0005,000
ASSOCIATED BUILDERS & CONTRACTORS5,00010,0005,000
BASF CORPORATION EMPLOYEES POLITIC2,5005,0002,500
BAXTER HEALTHCARE CORPORATION POLI1,5001,5000
BOEING POLITICAL ACTION COMMITTEE2,50010,0007,500
CISCO SYSTEMS E-PAC2,5002,5000
COUNCIL OF INSURANCE AGENTS & BROK4,0004,500500
CREDIT UNION LEGISLATIVE ACTION CO5,00010,0005,000
DAVITA INC POLITICAL ACTION COMMIT2,5005,0002,500
DELOITTE & TOUCHE FEDERAL POLITICA2,50010,0007,500
GENERAL ELECTRIC COMPANY POLITICAL2,5007,0004,500
GLAXOSMITHKLINE POLITICAL ACTION C5,00010,0005,000
HOME DEPOT INC. POLITICAL ACTION C2,5005,0002,500
HSBC NORTH AMERICA POLITICAL ACTIO5,0003,500-1,500
INTERNATIONAL DAIRY FOODS ASSN2,5002,5000
KOCH INDUSTRIES INC POLITICAL ACTI2,50010,0007,500
MEDCO HEALTH PAC2,5005,0002,500
MERCK & CO. INC. EMPLOYEES POLITIC2,50010,0007,500
MICROSOFT CORPORATION POLITICAL AC2,5003,5001,000
MWH AMERICAS INC. EMPLOYEE PAC5,0005,0000
NATIONAL RESTAURANT ASSOCIATION PA5,0007,5002,500
NEW YORK LIFE INSURANCE COMPANY PO2,50010,0007,500
NRA-POLITICAL VICTORY FUND5,0008,4503,450
PFIZER PAC5,00010,0005,000
QUALCOMM INCORPORATED POLITICAL AC2,5001,500-1,000
REAL ESTATE ROUNDTABLE POLITICAL A5,0006,0001,000
SAFEWAY INC. POLITICAL ACTION COMM2,5005,0002,500
T-MOBILE POLITICAL ACTION COMMITTE2,5002,5000
UBS AMERICAS FUND FOR BETTER GOVER5,00010,0005,000
UNITED SERVICES AUTOMOBILE ASSOCIA5,0005,0000
UNITED STATES STEEL CORPORATION PA1,0001,500500
VERIZON WIRELESS/VERIZON COMMUNICA2,5005,0002,500
VORYS, SATER, et al2,5004,5002,000
WALT DISNEY PRODUCTIONS EMPLOYEES5,0007,0002,000
    
       Totals145,000271,450126,450
    
Note:  All data taken from files supplied by the Center for Responsive Politics (www.opensecrets.org.)
         Only direct contributions (Type 24K) are included. All data pertain to the 2007-2008 election cycle.
         Some PAC names were truncated slightly.   
  

The 24 Democrats who engaged in laundering some of their leadership PAC money were not nearly as adroit in this as were their Republican counterparts, managing to convert just $173,500 through the same process.  However, the Democrats had a slightly better returns ratio.  Their $173,500 brought $393,500 into their reelection funds, better than a two-to-one ratio.

 

A numerical curiosity regarding the numbers in the above table is that the quarter—that is, a quarter of $10,000—seems to be the basic unit of currency.  Fully 88 percent of the payments from Freedom Project to other PACs were in the amounts of either $2,500 or $5,000.  Of the payments from the other PACs to Friends of John Boehner, 75 percent were in the amounts of $2,500, $5,000, $7,500, or $10,000.  The conclusion that an intelligent designer was behind these transactions is nearly inescapable.

 

Another observation from the table is that there are nine instances where the amount sent to the other PACs were exactly equal to the amounts those PACs sent to Friends of John Boehner.

 

A third observation is that there are only three instances where the amount sent from the other PACs to Congressman Boehner’s official reelection committee were less than the amounts Boehner’s leadership PAC sent to them. However those PACs, as the others, also sent money to Boehner’s leadership PAC that more than made up the differences.

 

The Federal Election Commission Campaign Guide (Chapter" target="_blank">http://www.fec.gov/pdf/nongui.pdf">Chapter 5, p. 25) warns that there are three circumstances under which “A contribution to a committee that is not a candidate’s authorized committee may nevertheless count against the contributor’s limit with respect to that candidate…”  One of those conditions is the following:

·        The contributor knows that a substantial portion of its contribution will be given to or spent on behalf of a particular candidate;

  

The critical word in the just-quoted condition is “knows.” That is, Congressman Boehner would have to “know”, presumably with certainty, that if payments were made to other PACs from his own leadership PAC that the receiving PAC would in turn make payment to his official reelection campaign fund for this condition to apply. 

 

There is more to this story than has yet been told.  The suggestion that Congressman Boehner engaged in money laundering, supported by the figures in the above table, may not be correct. What if the payments from the other PACs to Boehner’s principal reelection fund were not dependent upon the amounts transferred from his leadership PAC?  The correlation coefficient between the two columns of numbers is just 0.257 and is not statistically significant at the 0.05 level. But this merely begs the question,  “Why did Freedom Project send money to those corporate PACs?”

 

Another interpretation is that such transactions merely reflect the close, personal, and symbiotic relationships between congressional incumbents and the corporations affected by the laws the congressmen enact. Such bilateral payments, under this argument, are as innocuous as the exchange of inexpensive Christmas gifts among friends, little fortune cookies that happen to be stuffed with $100 bills.

 

Payments from lobbyists to members of congress are often defended by the argument that such payments do not actually purchase specific favors or votes, but merely help those with grievances  gain access to make their case, to present their side of the argument, to inform Congress.  But it would be a stretch to make that argument to justify a congressman’s payment to lobbyists or their associated corporate PACs.  Congressmen must pay corporate PACs to make their case to the corporation?  That is obviously ludicrous, suggesting that the first argument may be false also.

 

It might also be argued that the $145,000 additional amount identified that became available to Congressman Boehner’s campaign fund was a very small percentage (2.8%) of the total amount receipted into that fund, essentially insignificant and no reason for concern.  But according to CRP the average amount raised by House" target="_blank">http://www.opensecrets.org/overview/incumbs.php">House challengers in 2007-2008 was $335,249.  The $145,000 was  perhaps insignificant to Boehner,  but represents  43 percent of the amount the typical House challenger had to work with. It just goes to show the advantage of being an incumbent, and why the House reelection rate was 94 percent (2006). And if the amount was insignificant the question remains,  “Why were the transfers made?”

 

No matter what the reasons why congressmen send money to corporate PACs, their constituents are entitled to know of the extence such payments and are also entitled to an explanation of why they occur.

 

Congressman Boehner doesn’t do earmarks.  That is admirable.  But why does he launder so much money or otherwise engage in the exchange of financial chits with corporate PACs?  To make amends perhaps he would consider sponsoring a bill to provide for the public financing of federal elections.  Wouldn’t that be nice?

 

Comment on data:  Most if not all of the data that appear in the above table can be verified at www.opensecrets.org, although the work developing the table utilized the raw data that opensecrets.org parent organization, The Center for Responsive Politics, recently made available for downloading. A description of this data, and instructions for downloading it, can be found here. " target="_blank">click here The figures in the first column of numbers in the table—Contributions from Boehner’s Leadership PAC to Other PACs—can be verified here. " target="_blank">click here Those in the second column—Contributions from Other PACs to Boehner’s Campaign Finance Committee—must be verified from the web page corresponding to each of the PACs.  For example, the $10,000 that the Boeing PAC gave to Friends of John Boehner can be verified here." target="_blank">click here The bulk data that CRP has made available, together with their superb website, are invaluable in helping to document and understand the flows of money and influence that permeate and corrupt the U.S. political system today.

 

Laurence A.Toenjes is retired from the University of Houston ?s Department of Sociology where he was a researcher with The Sociology of Education Research Group. Toenjes received his doctorate in economics from Southern Illinois University.
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You can call it whatever you want and somehow I ju... by Roger on Monday, May 18, 2009 at 4:18:08 PM
What?  A Congressman laundering money?  ... by Sister Begonia on Tuesday, May 19, 2009 at 11:33:38 AM
In adding together the amounts for  all ... by Laurence A. Toenjes on Thursday, May 21, 2009 at 4:20:52 PM