California initiative would limit corporate spending;

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Corporate contribution limits called ploy, fair

Sacramento Bee (California)

Dollar limits on free speech?


A fiercely contested measure on the Nov. 7 ballot would make California the first state to restrict corporate spending on ballot measures, a practice that has been treated as free political speech for decades.

Proposition 89 would ban corporations from spending more than $10,000 to support or oppose California ballot measures.

A key legal question is whether corporate profits are fair game for such curbs because they stem from consumers who paid for a product or service, not a political cause.

Opponents call Proposition 89 a blatant ploy by its sponsor, the California Nurses Association, to stack the political deck in hopes of overhauling the health care system in coming years.

Proposition 89 is a power grab by a single special interest to dominate elections under the guise of campaign reform,” reads a ballot argument in the state’s voter information guide.

CNA, unlike corporations, would not be affected by the ballot-measure restriction, nor would tribal governments, wealthy individuals, some unions or nonprofit groups, and trial lawyers or other limited liability partnerships.

“When you try to gerrymander the battlefield so your opposition is no longer allowed to participate, I think that’s almost un-American,” said Rex Hime, president of the California Business Properties Association.

But Chuck Idelson, of CNA, said the political playing field already is tilted — toward corporations, which dominate the political process by vastly outspending opponents.

Proponents argue that unlike unions, whose members can veto use of their dues for political causes, corporations can donate unlimited funds gleaned from consumers who are not informed about and cannot stop such spending.

“When Wal-Mart makes a lot of money, it’s because I’m buying a lot of their product, not because I’m supporting their political views,” said attorney Fred Woocher, who helped craft Proposition 89.

Idelson said corporations’ wealth has created undue influence.

“They’ve bought and sold our Legislature, which is unwilling or unable to confront (key issues) for fear of offending their big donors,” he said. “They like the system. They want to keep it.”

Under Proposition 89, corporations could continue spending unlimited amounts on ballot measures only if the money came directly from the pockets of officers, shareholders or employees through political action committees (PACs).

Examples of massive corporate spending on ballot measures abound.

The pharmaceutical industry, for example, spent more than $80 million last year to kill a proposal that would have punished drug makers who didn’t cut prices for the uninsured.

A recent study by the Foundation for Taxpayer Rights, which supports Proposition 89, said the state’s 10 top corporate donors had contributed half of the money raised for measures on the Nov. 7 ballot — $132 million of $255 million, through Oct. 17.

But opponents of Proposition 89 note that labor unions and other interests can raise formidable sums, too.

Public employee unions spent more than $40 million last year to defeat Proposition 75, which would have required written consent of their members to spend dues money for political activity.

The CNA, which crafted Proposition 89, has spent nearly $5 million to qualify and support it. The group says its goal is to make the state’s political system fairer, not gain any advantage.

Opponents have raised more than $4 million, primarily from insurance, oil, health care and other business interests.

Proposition 89 has a second key component, calling for public financing of campaigns for state office. But the corporate ballot-measure restriction has sparked the most heated debate.

“I don’t think there’s anything more unfair in our democratic institution than to deny the ability for people to be able to speak their voice, to communicate with the voters,” said Allan Zaremberg, president of the California
Chamber of Commerce.

Countered Jamie Court of the Foundation for Taxpayer and Consumer Rights, “Anyone who believes that an initiative can tilt the playing field against big oil companies and tobacco companies and HMOs doesn’t understand politics as we know it.”

Laws traditionally have allowed some limits on contributions to candidates, but not to ballot measures, under the reasoning that a human can be corrupted by money while an inanimate object cannot.

Proponents of Proposition 89 concede that limiting the money spent on ballot measures is dicey, but they say a narrow restriction — targeting only corporate treasuries — is justifiable because of the massive sums donated, public privileges received, and the unique way the money is generated, from consumers, not political supporters.

“If we felt we could have limited unions and everyone else, we would have done so,” Idelson said.

Proposition 89 simply requires corporations to do what unions do now, bankroll ballot measures from contributions by individuals rather than from commercial profits, he said.

Opponents counter that corporations, unlike unions, have no ability to assess monthly dues on thousands of members.

The U.S. Supreme Court ruled in 1978 that corporations have a free-speech right to make political contributions, but proponents say two more recent rulings give them hope Proposition 89 could survive legal challenge.

“We acknowledge that there’s some uncertainty,” said attorney Richard L. Hasen, who helped write Proposition 89.

Labor groups are split on the measure.

Even unions that could continue to spend unlimited sums on ballot measures could lose political influence under Proposition 89 because of its public financing of candidates, and its tighter limits on donations to independent expenditure committees and to privately financed candidates.

Some unions also could be subject to the corporate ballot-measure spending restrictions, because those provisions apply to groups that accept donations from businesses, are affiliated with businesses, or whose members engage in business activities.

The powerful California Teachers Association fears its status could be jeopardized and its ability to fight harmful initiatives could be compromised because some teachers supplement their income through tutoring, coaching or other private work.

“It’s not clear — and we can’t take that chance,” said Barbara Kerr, CTA president.

But CTA’s largest local chapter, United Teachers of Los Angeles, supports Proposition 89, saying teachers will be hard-pressed to compete with corporations in increasingly expensive, multimillion-dollar ballot measure fights.

“The money eventually will be impossible to match,” said Paul Huebner, UTLA spokesman. “So we need to do something differently.”
The Bee’s Jim Sanders can be reached at (916) 326-5538 or [email protected]

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