Katz Calls for Elimination of Dark Money from Corporations

Alyssa Katz is a journalist with a long history of investigating institutions and policies on a local level in New York City, and on a national level. Katz is a member of the New York Daily News editorial board, and lives in Brooklyn, New York. Her work has appeared in many publications including Mother Jones, The American Prospect, The Village Voice, and The Nation. Her first book, Our Lot: How Real Estate Came to Own Us, methodically detailed the origins of the mortgage crisis.

In her second book, The Influence Machine: The U.S. Chamber of Commerce and the Corporate Capture of American Life, Katz details the different ways secret spending by corporations occurs through the U.S. Chamber of Commerce. Katz lays out a history of the Chamber and the growth of secret spending, or “dark money.” The dark money model ultimately prevents the public from knowing which businesses are political influencers. Released two weeks ago, this book has been lauded by the Los Angeles Times as "a valuable and a sobering contribution to the study of power in American society.”

POGO: What role has anonymity played in the work of the U.S. Chamber of Commerce?

Katz: Transparency lies at the heart of the U.S. campaign finance system, as Supreme Court Justice Anthony Kennedy stressed in the majority opinion in Citizens United, even as the Court allowed unlimited money in American political races. Major corporations have free rein to participate. But many do not want to have their brand names associated with partisan political activity or with attack ads that can be successful in winning races but take controversial positions on issues such as climate change or healthcare. That's where the Chamber steps in, using its status as an IRS-sanctioned trade association to collect contributions from companies that seek to alter the outcome of political races but without inserting their brand names into the picture.

The Chamber led the way in developing this dark-money model. Now other groups have replicated it, including the Koch brothers (who have set up their own "Chamber of Commerce," called Freedom Partners) and Karl Rove's Crossroads organizations.

POGO: How did the agenda of the U.S. Chamber of Commerce change since its inception?

Katz: Broadly, the agenda of the U.S. Chamber has always been consistent: to promote the interests of American business, especially in the halls of government. What has changed significantly are the strategies used to achieve those aims. The organization and affiliates have combined lobbying, litigation, regulatory action, and campaign-related spending with unprecedented scale and sophistication, often focused on blocking or undermining regulation that seeks to lay down ground rules on business in order to advance social or environmental goals.

As a result, the Chamber has found itself a player in some of the biggest showdowns over the Obama administration's agenda, including over climate change action, financial and healthcare reform, labor relations, highway safety, and foreign trade.

POGO: The first part of the book is focused on the growth of the U.S. Chamber of Commerce, the "making of the machine." What are some of the most pivotal points in its history?

Katz: The most pivotal moment in my accounting is the arrival of Thomas J. Donohue as the Chamber's CEO in 1997. He utterly turned around the organization, and with it American politics. Just as crucial is the paralysis we see in the previous decades, even as the consumer, labor, and environmental advocates win historic laws and regulations. Business and the Chamber as their representative did not muster nearly the counterforce needed to derail these actions, or even agree that they needed to fight back. In fact, one Chamber president in the 1970s championed consumer advocate Ralph Nader as good for business.

Not long after that, the Chamber launched a group called Citizen's Choice as a kind of competitor to popular grassroots consumer organizations like Common Cause, which signed up members of the public, rallied letter-writing and other support, and provided grassroots support encouraging members of Congress and others in Washington to pursue a regulatory revolution.

POGO: You write that the Chamber "holds members of Congress in vulnerable seats hostage." What steps would be needed for politicians to free themselves of that influence? Is this presently feasible?

Katz: There's not much individual members of Congress can do, since they cannot risk being the subject of attack ads that help take them out of office. But eliminating secret spending, aka "dark money," from the political campaign arsenal at least makes it more difficult for entire industries to combine their resources into a pot of money to effectively buy the loyalty of a candidate. Companies could still attack that incumbent via a Super PAC, but doing so requires them to disclose the activity, and to engage in political warfare openly, then forces the companies to be associated with the candidate even if his or her agenda conflicts with a company's publicly stated values. In the book, I give the example of Target getting threatened with a boycott by LGBT activists because it gave to a Super PAC who happened to have anti-gay positions. Companies don't want that kind of PR.

So the most important measure that can be taken to free individual members of this influence is to eliminate dark money, which is what the Obama administration is expected to try to do by requiring disclosure of political spending by federal contractors. Investors have asked the Securities and Exchange Commission to require publicly traded companies to share such information. Two Democratic Federal Election Commission members are asking their own commission to expand such disclosure. And last but not least, the Internal Revenue Service is preparing new rules that would more clearly define permissible political activity and is expected to restrict mega campaign spending. All of these efforts can make a big difference.

POGO: Which companies have the biggest stake currently in what the U.S. Chamber of Commerce does?

Katz: Because the Chamber's contributors are secret it can be difficult to identify which companies are behind which actions or priorities. But a look at the membership of the Chamber's board of directors at any given moment gives a good sense of some of the companies that are the biggest stakeholders. Currently, the board includes executives from insurers (Allstate, State Farm), energy (ConocoPhillips, Southern Company, CONSOL Energy), mining and materials (Dow Chemical, 3M), pharmaceuticals (Pfizer), AT&T, shipping (FedEx, UPS, Union Pacific), mechanical equipment (Caterpillar, Deere & Company), and tobacco (Altria).

POGO's upcoming Summer 2015 Reading List features The Influence Machine and many other excellent books on government accountability—stay tuned for the list coming next week!