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PACs Move to the Right

March 7th 2011

Politics - John Boehner smiling

Roy DeLoach, CEO of the National Association of Mortgage Brokers, tried to keep an even hand as the group’s political action committee distributed campaign contributions. But the Texas-based organization’s supporters grew increasingly restive about the Democrats’ legislative agenda in 2009 and 2010.

As the last Congress approved landmark financial sector and health care reform bills that they felt hurt their industry, many small business owners in NAMB questioned why they should continue to give money to Democrats, DeLoach said.

“The leadership at the association’s tone was, ‘Roy, why would we want to give to someone that’s killing small business off?’” when Democratic fundraising requests came in, DeLoach recalled in an interview. “‘Are we out of our mind to give to someone that’s trying to put us out of business?’”

So, like many other political action committees, NAMB’s PAC shifted its giving from Democrats to Republicans over the 2010 campaign cycle. By July, it gave only to Republicans. Democrats were shut out.

The cost was noteworthy. The sole national trade association for the mortgage broker industry distributed about $200,000 to 75 federal candidates over four years. Its donations were split fairly evenly in the 2008 election cycle, with a small advantage to Republicans. Last year, 88 percent rolled out to GOP candidates.

NAMB was in good company. As the polls showed that 2010 was shaping up to be a strong year for the GOP, scores of PACs increased their giving to the ascendant Republicans. The Center for Public Integrity examined the 1,300 PACs that gave at least $100,000 over the 2008 and 2010 election cycles and identified the 50 committees whose partisan giving percentage shifted dramatically from Democrats to Republicans. Half of that Top 50 consisted of PACs for either the financial services or health care sectors, reflecting those industries’ growing frustration with the governing Democrats as they enacted groundbreaking health insurance, financial services, and credit card reform legislation in the 111th Congress. Other sectors in the Top 50 included real estate and construction, motor vehicles, and energy.

Despite the rightward move by these 50 PACs—and the nation’s electorate as a whole—there is little indication that PACs as a rule moved from blue to red. The roughly 5,500 PACs active in either one or both of the 2008 and 2010 election cycles gave about 58 percent of their donations to Democrats and about 42 percent to Republicans.

If the Top 50 are any indication, Democrats have some fence-mending to do with their banking and health care friends before the 2012 elections.

G. Calvin Mackenzie, a professor of American government at Colby College and author of several books about U.S. politics, said that given PACs’ preference for the party in power, the only way the Democrats are likely to win them over is to take back the House majority.

Mackenzie said the PACs likely followed their own best interests. “Financial services didn’t like the financial regulation bill; the health care industry didn’t like Obamacare. So having failed to buy the kind of influence they wanted with the Democrats in Congress, they took their money to the Republicans, hoping the GOP would get control of Congress in 2010,” he said.

Looking ahead to the next elections, Mackenzie added, “So long as the bulk of incumbents are Republicans and they control all the relevant committees, we should expect them to get a disproportionate share of financial services and health care contributions.”

Jesse Ferguson, a spokesman for the Democratic Congressional Campaign Committee, said the Republicans are already pursuing the agendas of the health care and financial services sectors that switched over the past two cycles.

“From repealing health insurance reform for the insurance companies to repealing Wall Street reform for the big banks, it’s plain as day that the House Republican majority is a dream come true for the same-old corporate special interests, but it’s a nightmare for the middle class,” he said.

Financial Services PACs React to Wall Street Reform

Thirteen out of the Top 50 biggest switchers were financial sector committees, including JPMorgan Chase & Co., the American Financial Services Association, Goldman Sachs Group Inc., and Bank of America Corp. The sector gave 44 percent of its funds to Republicans in the 2008 cycle, and generally favored the Democratic majority early in 2009. After the December 2009 passage of H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act in the House, Republican contributions from these committees started to spike. A second, larger spike occurred following final passage by the Senate in late June and President Obama’s signing the bill into law. By the end of the 2010 cycle, pro-GOP contributions by these 13 PACs had soared to about 65 percent of their giving.

NAMB, representing the mortgage brokers, followed the pattern. In the 2008 cycle, the NAMB PAC distributed about 57 percent of its money to Republicans with most of the rest going to Democrats. As the Democratic majority began preparing financial reform legislation, the PAC focused its efforts mainly on Republicans but still gave contributions to three Democrats.

In the final weeks leading to the bill’s passage, NAMB issued an online action alert encouraging its membership to contact Congress and tell their senators and representatives that “I fear you will force small businesses in the mortgage industry, like myself, out of the market and ultimately cause further harm to consumers by eliminating competition.”

CEO DeLoach told the Center he saw the bill as “a mosaic of little, bitty regulations that puts mortgage brokers at a disadvantage each step of the way.” DeLoach said some Democrats, such as Reps. Barney Frank and Paul Kanjorski, were sympathetic to NAMB’s concerns, but in the end Congress acted out of “haste and anger.”

After President Obama signed Dodd-Frank into law in July 2010, the PAC gave only to Republicans. NAMB’s pro-GOP giving jumped from 57 percent in the 2008 cycle to 81 percent in 2009. In 2010, it rose to over 88 percent.

DeLoach said he hopes the new Congress will return to the Wall Street reform legislation and “fix the things that don’t make sense.”

NAMB was not alone in its view that the GOP might be more sympathetic to its interests. Among others:

  • The Financial Services Institute’s PAC went from about 54 percent in 2008 to 71 percent in 2010. The group opposed Dodd-Frank, saying it would “result in more cost and increased regulatory complexity.” Dale Brown, the institute’s CEO told the Center. “It’s no surprise, given our agenda of easing the burden of regulations on our members, that we’ve supported Republicans recently.”
  • Bank of America Corp.‘s PAC gave about 48 percent of its donations to the GOP in 2008 and more than 67 percent in 2010. The company’s stock took a hit last summer when it became apparent that debit card fee provisions in the Wall Street reform legislation would cost the company significantly.

Health Care Reform

Eleven more Top 50 switchers came from the health care sector. These included WellMed Medical Group, three Blue Cross Blue Shield insurance groups, and the American Society of Plastic Surgeons. The sector gave 45 percent of its funds to Republicans in the 2008 cycle. The health care committees’ 2009 donations generally went to the majority Democrats until the last two months of the year. An initial pro-GOP spike was detectable around the time of the November 2009 House passage of H.R. 3962, the Affordable Health Care for America Act. Once health care reform became law in March 2010, these PACs significantly moved from the party that provided every vote for its passage to the party that vocally demanded its repeal. Giving by these 11 PACs soared so highly toward GOP candidates that almost 68 percent of their overall 2010 donations went to Republicans.

WellMed Medical Group of San Antonio provides health insurance plans to more than 87,000 people—mostly Medicare-eligible seniors in Arkansas, Florida, New Mexico, and Texas. The company’s PAC dipped its feet in the political waters for the first time in the 2007-2008 campaign, distributing $3,000 to federal candidates—two-thirds went to a Democrat and one third to a Republican. In 2009, the company’s founder and CEO publicly opposed efforts in the health care reform proposals to cut Medicare Advantage spending. Medicare Advantage allows seniors to get managed care benefits through private insurance companies, including WellMed. The health care reform law included provisions freezing the rates of reimbursement for Medicare Advantage providers and reducing them for subsequent years, much to the dismay of WellMed and others.

Throughout 2009, WellMed’s PAC gave mostly to Democrats—12 of its 15 contributions went to the majority party including $2,400 to House Speaker Nancy Pelosi and $2,400 to Senate Democratic Conference Vice Chair Charles Schumer. Seventy-six percent of its approximately $24,000 in 2009 donations went to Democrats.

After the December passage of the Senate version of the bill, WellMed virtually gave up on Democrats: only two of its 31 contributions in 2010 went to Democrats. That pair of donations amounted to just 1 percent of the PAC’s $134,000 total for the year. From 67 percent in the 2008 cycle, the Democrats received just about 13 percent of the PAC’s donations in the 2010 cycle.

Other health care examples:

  • The American Society of Plastic Surgeons, through its PLASTYPAC, went from giving 41 percent of its donations to Republican candidates in 2007-2008 to more than 69 percent in 2009-2010. The trade group objected to provisions included in early versions of the health care reform bill that would have imposed a cosmetic surgery tax, though that provision did not end up in the final bill.
  • The American Society of Cataract and Refractive Surgery’s eyePAC gave about 44 percent to Republicans in the 2008 cycle and more than 65 percent to Republicans for the 2010 campaign. The group also opposed the health care reform legislation.

WellMed and the other PACs mentioned did not respond to a request for comment.

Josh Israel, Aaron Mehta, and Elizabeth Lucas write for the Center for Public Integrity, from where this article is reprinted. Reporting Fellow Laurel Adams contributed to this report.


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