Vote buying in Chicago, 21st Century style... Rahm Emanuel's millions, the 'New Chicago Committee' (PAC), and the corporate millionaires and billionaires behind them
[Editor's Note: The story of the millionaires and billionaires behind Rahm Emanuel has been told, but never with the intensity and thoroughness it's being told as 2011 ends and the first full year of Rahm looms. In addition to the Reader (below), the stories of how Rahm made his own millions ("relationship banking") and related "one percent" attacks on democracy in Chicago are worth sharing as the holidays approach and Chicago's mayor takes his family on a vacation (to spend some time with Paul Vallas, reforming schools) in Chile].
Money talks, twice . Mayor Emanuel's political action committee gives the rich a second chance to please him. By Steve Bogira (Reader)
A year ago, Miguel del Valle was running for mayor. His resume was outstanding. He'd risen from blue-collar roots on Chicago's near-northwest side to the state senate, where he was a leading liberal voice for 20 years. Five years as city clerk after that had schooled him on the workings of Chicago government. He was widely regarded as smart, industrious, and honest. His chances of winning were zero.
Although del Valle had built an impressive reputation, he'd neglected to cultivate a prerequisite for higher office: connections to money.
Rahm Emanuel made no such error. While raising money for the Democratic Congressional Campaign Committee in the 1980s, and for Richard M. Daley when he ran for mayor in 1989, and for Bill Clinton when he first ran for president in 1992, Emanuel developed copious links to people who were not only rich, but inclined to invest in politicians. He had family ties to money as well: one brother was a top Hollywood agent, another a prominent bioethicist. Two and a half years as an investment banker brought Emanuel personal wealth—$18 million—and still more connections with people who were ideal friends for a person with political ambitions. In the mayor's race, Emanuel had to overcome a court challenge about his residency, and charges that when he first ran for office—for Congress, in 2002—patronage workers supplied by corrupt city officials had helped him win. But whatever challenges Emanuel faced on the campaign trail, access to money hasn't been one of them.
Del Valle raised $314,000 in his quest for mayor. Candidates talk of "war chests," but 314 grand wasn't enough to mount a fistfight with Emanuel. Emanuel got more than that just from Hollywood and Beverly Hills. Haim Saban, CEO of Fox Family Network, initially gave "Chicago for Rahm Emanuel" $300,000. The committee returned the contribution, telling Saban that Emanuel's campaign was voluntarily limiting contributions to $100,000. Saban promptly wrote a check for that amount, and his wife sent in $100,000 as well. Several other Hollywood producers and agents also gave the max. Steven Spielberg cheaped out at $75,000.
The who's who of big donors to Emanuel also included Steve Jobs and his wife ($50,000 each), and Donald Trump ($50,000). Emanuel got 65 contributions of $50,000 or more. (Del Valle got none that large.) In Chicago, the big gifts to Emanuel came from the usual suspects: money managers, lawyers, and real estate and construction companies, some who had business with the city. His campaign raised more than $14 million in all—44 times what del Valle took in.
On February 22, Emanuel got 326,331 votes, or 55 percent of those cast. Gery Chico, who finished second in fund-raising with $4.15 million, also finished second in votes, with 24 percent. Del Valle was a distant third, with 9 percent.
Now that Emanuel's in office he's still fund-raising — though not for re-election in 2015. A political action committee has been pulling in money to help him extend his power in the mayor's office. This should build solidarity for his agenda, but it also could make him even more beholden to donors whose interests in supporting him are unclear. The mayor didn't respond to my request for comment for this story.
n March, Emanuel's "New Chicago Committee" was created with the stated purpose of supporting "candidates for public office who share the goals of the political committee." (PACs can aid multiple candidates.) Though Emanuel wasn't named in the organization papers, the committee's executive director, Tom Bowen, made it clear to reporters that it's Emanuel's PAC: it's the mayor who decides which candidates "share the goals of the political committee."
The runoffs for the last 14 seats on the City Council were less than a month away when NCC was formed. NCC quickly raised $390,000 from contributors, which it spent mainly to help nine of the runoff candidates Emanuel favored. Seven of them won.
NCC has its sights set now on the Democratic primary next March. The PAC staged a fund-raiser in Lincoln Park last month, featuring cocktails and the mayor, and raised another $126,000. NCC currently has more than $168,000 on hand for the March elections, and could raise more before them. ("Our plans are fluid right now," Bowen says about the possibility of additional fund-raising.)
State legislators, county board members, ward bosses, and judges are up for nomination and election in March, and NCC might contribute to candidates in any of those races. "Nothing's off the table," Bowen says. "We monitor everything that's going on, and we'll keep all of our options open."
Emanuel's PAC is designed to help elect candidates with philosophies similar to the mayor's so he can achieve his aims, according to Bowen. "Politics and government are intertwined," he says. "The mayor understands that sometimes you have to take political stands. And this is the organization that will do it."
To the extent he backs winners, however, Emanuel also accrues IOUs with the stands he takes through NCC.
As a mayoral candidate, Miguel del Valle raised $314,000 to Rahm Emanuel's $14 million
"You establish a fund, distribute it to campaigns, and then those candidates are indebted to you," del Valle says. "The tendency for those elected officials is to back the source of those funds. They cannot do what they're supposed to do—represent the interests of their constituents 100 percent of the time, rather than the interests of the person who has made it possible for them to be elected."
Del Valle now chairs a statewide school council and serves on several other education boards and commissions, work he's enjoying. "I'm focusing on what I care most about—the quality of public education in Illinois."
But even with the mayor's race ten months behind him, he's no less disturbed about the role of money in elections. The problem, he says, is not just the lopsided playing field during campaigns. It's also the advantages the system gives contributors after the election.
"Money buys access," he says. "The little guy in a democracy should have as much access as the big-money guy, but it doesn't work that way. You have a system that strongly favors the corporations and the interest groups that represent big-money folks. I was pleased to see that one of the demands of Occupy Wall Street related to campaign finance reform."
In Emanuel's first day as mayor, May 16, he stood behind his desk on the fifth floor of City Hall and signed six executive orders strengthening ethics rules in city government. One of the orders prohibited lobbyists from making political contributions to the mayor, and another, created under Mayor Richard M. Daley and being reinstituted by Emanuel, banned contributions from contractors.
"These executive orders will help restore Chicagoans' confidence in their city government," Emanuel proclaimed to reporters. "My first official act as mayor sends a clear message that all operations of city government must be guided by a spirit of public service." The orders signaled "a new day, a change in political direction," he said, and in this new day he planned to "lead by example."
And just last week the mayor created an "Ethics Reform Task Force," charged with revamping the city's ethics law, and named four highly regarded reformers to it. Among other things, the ethics law regulates campaign contributions.
The executive orders and the task force are nice steps, but they don't get at the root of the problem: the sheer amount of money in politics, a problem to which Emanuel is a leading contributor. Two months before he signed the orders, he'd formed his PAC, which allows Emanuel to tap his wealthy donors a second time—giving the donors a second chance to let their money talk to the mayor.
PACs such as NCC can pay for polling with their funds, an opportunity Emanuel has taken advantage of. In August, the noted Washington opinion firm Greenberg Quinlan Rosner polled 900 Chicagoans on the mayor's work in his first 100 days. (The firm's founder, Stan Greenberg, is a close friend of the mayor's.) NCC paid $42,000 and Chicago for Rahm Emanuel another $15,000 for the poll. Soon after the poll was taken, Emanuel's donors got a letter citing the flattering results. "We are pleased to present you with research demonstrating the tremendous regard with which Chicago voters hold Mayor Emanuel," the letter said. "The Mayor's relentless focus on economic growth, repairing Chicago's budget, improving our schools, and making our streets safer have all had measurable impressions with the voters."
Respondents were also asked about various budget cuts Emanuel was considering. The results of that polling weren't disclosed, but they gave the mayor helpful intelligence as he shaped his budget, which ended up passing the council, 50-0.
Many of those contributing to Emanuel's PAC had also contributed to his candidate committee (Chicago for Rahm Emanuel) when he was running for mayor. A campaign finance reform law that went into effect in January limits contributions to a candidate committee to $5,000 from an individual and $10,000 from a corporation during an election cycle. (Primaries and general elections are considered separate election cycles.) There were no limits before this year; the large gifts Emanuel got from Hollywood producers and others beat the deadline. PACs can accept $10,000 from individuals and $20,000 from corporations per calendar year, and the law allows contributors to give both to a candidate's committee and to the PAC associated with him, if there is one.
Why would a person or business give not only to help Emanuel win office, but also to help him decide who else gets elected? It's all about reform, Bowen says. NCC "supports candidates and organizations that believe in the reforms Mayor Emanuel promised during the campaign and is delivering on in office"—and contributors want to participate in that reform effort, he says.
Clayco Inc., a huge, Saint Louis-based building and design firm which has plans to greatly expand its Chicago business, had contributed $50,000 to Emanuel's mayoral campaign; it gave NCC another $20,000. Bruce W. White, CEO of White Lodging Services, an owner and developer of brand hotels, had given Emanuel $25,000 for his race for mayor; he and his wife each gave NCC another $10,000.
NCC's biggest contribution in the second quarter of this year came from Southern Wine & Spirits, a corporation with headquarters in Florida. It gave NCC $15,000. Southern Wine & Spirits is one of the leading distributors of alcoholic beverages in the nation, operating in 35 states, including Illinois; it has a big warehouse in Bolingbrook and a smaller one on the near-west side. The corporation is politically active and exceedingly bipartisan: in the last eight years it's contributed $2.5 million to political candidates nationwide—47 percent to Democrats and 47 percent to Republicans.
"There are a lot of groups who cover their flanks by contributing to both sides," del Valle says.
I wondered why Southern Wine & Spirits was keen on reforming Chicago, but my calls to the company's corporate office in Miami weren't returned. In 2008 the beverage distributor gave $20,000 to the governor committed to reforming Illinois, Rod Blagojevich.
In the third quarter of 2011, NCC wasn't doing much fund-raising, but it still received 11 contributions totaling $20,500. The largest gift, $10,000, was from David L. Cohen, executive vice president of the cable company Comcast, which is headquartered in Philadelphia. Ralph Roberts, founder and chairman emeritus of Comcast, gave $2,500. Bill Connors, president of Comcast's central division, gave $1,500. Richard Cotton, a New York attorney with NBC Universal—which Comcast bought in January—gave $1,000.
No employer was listed for the seven other contributors—but they're all connected with Comcast. Christine Angelakis, of Gladwyne, Pennsylvania, gave $2,500. She's the wife of Comcast's chief financial officer, Michael Angelakis. Lawrence Smith, of Collegeville, Pennsylvania, a retired Comcast CFO and executive vice president, gave $1,000. Timothy Gage, of Duluth, Georgia, a senior vice president of government and regulatory affairs, gave $500. Chris McDonald, of Fayetteville, Georgia, a vice president of government affairs, also gave $500. Michelle Singer, of Philadelphia, director of external affairs, kicked in $500. Michael Wall, of Marietta, Georgia, a senior director of state government affairs, gave $250. Richard Wolfe, also of Marietta, a senior director of regulatory affairs, gave $250. NCC received all of these contributions on August 23.
Comcast's business interests with Chicago are substantial. The company has 15-year franchises in all five cable areas of the city. Comcast shares 5 percent of its gross revenues with the city. In 2010, those gross revenues were $354 million. The contract expires in 2014 for four of the five areas, and in 2015 for the fifth area.
Since the donations to NCC from the Comcast crowd were "individual contributions," Bowen says, and not from Comcast itself, they don't violate the ban on contributions to the mayor from city contractors, or the $20,000 cap on contributions from corporations.
I called several of the Comcast contributors to ask why they were supporting reform in Chicago. My voice-mail messages to these "individual" contributors prompted a return call from a Comcast spokesperson, and, eventually, an official Comcast statement explaining the contributions: "These are personal contributions from Comcast employees who support efforts to improve the lives of Chicagoans."
Since 2003, Comcast has made $8.4 million in political contributions nationally, and its employees have given an additional $657,000. The corporation has given 48 percent of its gifts to Democrats and 48 percent to Republicans. The cable company has contributed more in Illinois since 2003—almost $2 million—than in any other state. It gave Blagojevich $130,000.
When he was running for mayor, Emanuel also got $5,000 from Comcast executive VP Cohen, $4,000 from chairman emeritus Roberts, and $5,000 from Christine Angelakis (the wife of the company's CFO).
David Morrison, deputy director of the Illinois Campaign for Political Reform (ICPR)—a group that promotes campaign finance reform—says Comcast may simply be thinking ahead. "They want a long-term relationship with Mayor Emanuel so that whatever comes up down the road—it may be issues they don't even know about yet—they'll be able to bend the mayor's ear."
Del Valle says, "Groups will tell you, 'We want access. You may not vote with us, but at least we can get in the door and explain our position.'" Ultimately, though, many big-money contributors presume they'll get more than that, he says. "Groups have expectations, that's why they contribute. And those expectations go beyond just having access."
Chicago's previous mayors had no PAC like New Chicago Committee. But times have changed, and Emanuel may simply be responding to that.
Earlier mayors threw their weight around in local elections by supplying their chosen candidates with extra doorbell ringers. Thanks to consent decrees from a lawsuit attacking patronage, city workers no longer can be forced to work a precinct, so the bell ringers are in short supply—and money has become the main commodity a mayor can offer. In addition, the new limits on contributions in Illinois compel a mayor to be more creative if he wants to raise vast sums: Emanuel can't sit back, as Richard M. Daley could, and watch the giant checks roll in.
The law that limits contributions in Illinois also created a state task force to study the feasibility of public financing of elections. The task force must report its findings to the governor and the General Assembly by the end of this year.
At a public hearing of that task force in Springfield in November, the ICPR's Morrison noted that only a tiny percentage of Illinoisans contribute to candidates, which makes those who do give—and especially those who give lavishly—more influential. He described a system of small tax credits that could greatly increase the number of contributors, which in turn would "change the dynamic of how races are funded."
Such a system could cost the state $100 million, Morrison acknowledged. He told the task force he realized the state was facing a fiscal deficit, but added, "I hope you also recognize that the state faces a credibility deficit." Public financing, he said, "would be one way to assure the public that contributors have no special access or influence."
The task force is holding another public hearing on December 15 at 10:30 AM in the Thompson Center.
Public financing could improve the process, but it often favors incumbents and the major parties. And it doesn't prevent big-money donors from trying to buy access and sway. It's not the kind of radical reform that Occupy Wall Street protesters have been clamoring for.
A novel idea championed by a Yale law professor might bring more fundamental change.
For years, campaign finance reformers have pushed for transparency, reasoning that disclosure of who was giving what would in itself reduce the influence of the big givers. It hasn't worked that way, though. The volume of campaign finance information disclosed today makes it hard to track all of it. And it's hard to know whether an elected official's vote or action was indeed influenced by a contribution. The best case that can be made is usually circumstantial.
The law professor, Ian Ayres, thinks transparency is a problem, not a solution. Under the system he and Stanford economics professor Jeremy Bulow first suggested in a law review article in 1998, elected officials wouldn't be tempted to please big donors—because candidates would never know the source of the contributions they received. Campaign gifts would be filtered through a blind trust—a private "donation booth," as Ayres calls it.
Vote buying was common in the 19th century until voting became secret, Ayres says. He thinks secrecy could have a salutary impact on campaign finance as well. A paper published in September by the National Bureau of Economic Research lends support to his idea. Three economists concluded from their experimental study of Ayres's plan that candidates were "less likely to deviate from their ideal policies" when contributions were fully anonymous.
Ayres's strategy for keeping contributions secret is complex, and skeptics have expressed their doubts that secrecy could ever be achieved. Maybe the private donation booth is a pipe dream—but it's thought provoking. How much would corporations like Southern Wine & Spirits and Comcast give to Emanuel's PAC if they knew the mayor would never learn they'd given?
Jena Cutie contributed research to this story.
