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The Koch Brothers, Unions, and the Democratic Party's Campaign Finance Delusions

2:44 PM, Mar 25, 2014 • By MARK HEMINGWAY
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At Slate, Dave Weigel recently reported that the Democrats have been so successful at demonizing the Koch brothers that party fundraising emails mentioning the Kochs can raise three times as much as the emails that don't. However, attacking the Kochs may not be all that motivating to anyone outside the circle of hardcore Democratic activists. A poll out this morning shows that 52 percent of the public doesn't even know who they are, while 25 percent have a strong or somewhat negative view of the brothers and 13 percent have a strong or somewhat favorable view.

Democratic Donkey

It's becoming clear that one way to make their Koch attacks more resonant is by lying about them and exaggerating their influence. Yes, it's true, the Kochs have spent a lot of money on political causes and candidates. But increasingly Democrats are pretending that they are helpless and overwhelmed in the face of a tsunami of Koch cash. The reality is that the money spent by Democratic special interests -- particularly unions -- dwarfs what the Kochs are spending.

But Democrats are trying to claim otherwise. Former labor secretary Robert Reich first posted this on his Facebook page, and now it's making the rounds among Democrats:

I debated a Koch-apologist yesterday who claimed America's unions funneled more into politics than the Koch brothers. Baloney. Union money at least comes from large numbers of workers seeking higher pay and better working conditions; Koch money comes from two brothers seeking to entrench their power and privilege. And it's clear the Koch brothers are spending way more. In 2012, union spending (PAC, individual, outside) totaled less than $153.5 million, while Koch spending totaled $412.6 million.

Now Reich's original source for this information appears to be an article from something called Republic Report, which was authored by Lee Fang, a former Think Progress employee who has been obsessed with "exposing" the Kochs for years, and, notably, his reporting on Kochs has been profoundly wrong in the past. Fang's report on how the Kochs were allegedly manipulating energy markets using contango for energy futures was so thoroughly debunked it turned into a major embarrassment for Think Progress. So right off the bat, the credibility of this report is not promising.

In trying to understand where Fang is getting his numbers, we end up playing a game of telephone. Reich says, "Koch spending totaled $412.6 million," which he gets from Fang, who's ultimately citing the Washington Post. The problem is that the Post report cited by Fang says the Koch total is actually “a network of politically active nonprofit groups backed by the Kochs and fellow donors.” So not all that money is coming directly from the Kochs. It gets more complicated from there, and Mickey Kaus unravels it at the Daily Caller:

The $412 million may  overstate the Koch-group backing of these “Koch-backed” groups. The WaPo story (like most Koch stories) ultimately relies on work from the Center for Responsive Politics, which has tried to unravel the Koch network’s complicated, octopus-like structure. Let’s take one of the “politically active non-profit groups,” Americans for Prosperity. It’s clearly affiliated with the Koch network. The Koch’s main non-profit groups gave AFP “more than $44 million” according to Gold.  But, as I understand the Center for Responsive Politics’ methodology, the $412 million figure  includes, not just that $44 million, but all the $140 million raised by AFP, excluding amounts that identifiably came from non-Koch sources — which yields a number higher than $100 million .  How do we know that the all this $100+ million or so — i.e., not just the $44 million — comes from the Koch network? We don’t. Center for Responsive Politics could only easily trace contributions from non-profits, not from individuals or corporations. The CRP researchers just seem to have adopted a rule of thumb that the residual, untraced money is Koch money.

Interestingly, while Fang uncritically accepts this expansive dollar amount when talking about the Kochs, he goes out of his way to down play the amount of money unions spend. The Post article he gets his Koch total from from actually says that unions matched Koch spending and "plowed roughly $400 million into national, state and local elections in 2012." In fact, a single public employee union, AFSCME, likely spent over $100 million in 2012. The idea that all unions combined only spent $150 million is farcical, unless Fang is making a dishonest comparison.

Now Fang and other Koch critics like to point out that dark money, super PACs, and other non-disclosed money are being used to influence elections post-Citizens United. Now setting aside the First Amendment debate in campaign finance laws, a major reason why Democrats have railed against Citizens United is that it helped level the fundraising playing field. In fact, when Democrats tried (and failed) to pass legislation to rectify what they didn't like about the Citizens United Supreme Court decision, they actually had the chutzpah to exempt unions from new disclosure requirements they were proposing. For decades, Democrats have had a big fundraising advantage because huge amounts of union political spending don't have to be disclosed, and to the extent this spending has to be disclosed to the Department of Labor, Democrats don't even pretend to enforce it. Here's what I reported about union financial dislosure back in 2011:

The Bush administration was arguably the first to require unions to make meaningful financial disclosure, and their leaders to report conflicts of interest. The change had tangible effects. An unassuming Safeway bakery clerk was elected head of a powerful Denver grocers’ union in 2009 after she revealed that the union’s influential leader had put two relatives on salary for six figures and was using union dues to support a lavish lifestyle that included hefty bar tabs and NFL tickets. The corrupt union boss’s ouster was made possible because the Bush Labor Department for the first time had mandated itemized expenses and staff salaries on the LM-2 union financial disclosure form.

That might be the first and last union election, however, where financial transparency plays a decisive role. Since then, Obama’s labor secretary Hilda Solis has rolled back Bush administration LM-2 transparency requirements and stopped enforcing the requirement that union bosses disclose on form LM-30 whether they’re being paid on the side by companies doing business with the union. (In 2004, unions filed 96 LM-30 forms. In 2005, that number was 13,326, thanks to the Bush administration’s enforcement efforts.) The Obama administration has also stopped requiring financial disclosure for oft-abused union trusts or strike funds.

But because the Bush administration did briefly enforce these financial disclosures, the Wall Street Journal did something interesting. They looked at the surfeit of LM-2 data and calculated that, in addition to the $1.1 billion in union political spending disclosed to the FEC between 2005 and 2011, they spent another $3.3 billion on politics over that same time period. Union spending exceeds all direct political donations combined. Unions and allied interests protest that this analysis is unfair, because much of the activity described as political is inimical to union organizing:

That’s why it’s important to understand that much of the “political” spending included in this analysis is for things like preventing Ohio’s anti-union Senate Bill 5 from becoming law, or preventing anti-union legislation, successfully or not, in states like New Hampshire and Indiana. In these cases, political spending is basically a precondition for organizing any workers.

But how are lobbying efforts "preventing anti-union legislation" any different than Exxon lobbying to prevent "anti-energy exploration legislation" that would be harmful and disruptive to that company's reason for being? Not that I'm defending the lobbying efforts of either Exxon or unions, but I fail to see how the disclosure standards for unions should be different than any other special interest.

Of course, the problem here is that Democrats fail to see unions as a special interest, but that's exactly what they are. There are 14.3 million union members -- about 11.3 percent of the workforce. And the majority of union members now belong to public sector unions. In living memory, radical conservatives such as FDR and the head of the AFL-CIO were opposed to public sector unions because they saw that collective bargaining with the taxpayer was an inherently corrupting process. So what's good for unions has now become bad for the vast majority of the American people, who now have to foot the bill for the overly generous benefits enjoyed by public sector unions -- benefits that were lobbied for using taxpayer-funded salaries. And private sector unions haven't shown much less contempt for the taxpayer. Not that long ago, they were lobbying for $160 billion bailout of bankrupt union pension plans.

But liberals like Reich argue that "union money at least comes from large numbers of workers seeking higher pay and better working conditions." Jonathan Cohn at the New Republic echoes this argument that union political spending is somehow more legitimate and democratic because it comes from a large number of people:

There are 14.5 million people in the labor movement, according to the latest government statistics. There are exactly two people in the Koch brotherhood—Charles and David Koch—plus another 350 or so self-identified Koch employees who, over that same time period, made direct campaign contributions. Extrapolate from that math, and you’ll see that the donation per Koch Industries affiliate positively dwarfs the donation per union member—by a factor of around 1,000, give or take.

This is a ludicrous argument, because union dues are collected via coercive means. Of the 14.3 million union members, how many would rather not spend their dues on national politics (or pay dues at all)? We could test this proposition by making union dues and political spending completely voluntary, but unions will never go for it. There's ample evidence showing that union political coffers and membership would decline precipitously if that were allowed. After Scott Walker's collective bargaining reforms in Wisconsin, union membership in Wisconsin dropped dramatically. George Will notes that Wisconsin is hardly unique

After Colorado in 2001 required public employees unions to have annual votes reauthorizing collection of dues, membership in the Colorado Association of Public Employees declined 70 percent. In 2005, Indiana stopped collecting dues from unionized public employees; in 2011, there are 90 percent fewer dues-paying members. In Utah, the end of automatic dues deductions for political activities in 2001 caused teachers’ payments to fall 90 percent.

And in the few instances where union members were asked specifically to approve their dues going to politics, the results are damning. After a 1992 law passed in Washington, the state teachers union -- an NEA affiliate -- was required to get written approval from every teacher to get donations for the union's political action committee. The result? "Enrollment in the PAC plunged from 49,000 to 11,000 in just a year. Its annual receipts fell from roughly $588,000 to $132,000." It's also worth mentioning that the NRA has 4.5 million members -- all of whom pay dues voluntarily! And yet, no Democrats, as far as I can tell, are saying criticism of the group's political spending is illegitimate because the organization is so large as to confer a degree of representative legitimacy.

Believing that the Democrats have far fewer corrupting influences is central to the party's self-image, and, ironically, their fundraising efforts. But the party of unions, trial lawyers, and Wall Street is living in delusion. The constant untruths and exaggerations about the Koch brothers' influence is about maintaining that fiction so Democrats can feel good about their rank hypocrisy, their self-righteous attacks, and coercive methods of financing elections. It has very little to do with genuine concern about rich people buying elections.

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