Fund raising during trip raises concerns

The San Francisco Chronicle

Washington — Gov. Arnold Schwarzenegger has vowed to come to Washington as a “collectinator” for California, but what he collected Tuesday was mostly contributions for a possible re-election campaign.

The governor squeezed in brief meetings with President Bush, White House Deputy Chief of Staff Karl Rove and three Cabinet members. But he spent much of his one-day visit to the nation’s capital raising money from Washington lobbyists who represent drug companies, Wall Street investment firms and the entertainment industry.

While the donations will help boost his likely run for re-election in 2006, Schwarzenegger’s latest fund-raising binge has raised questions about whether he is giving too much access to corporate interests with major stakes in his decisions as governor.

For example, the fund-raising luncheon Tuesday at the St. Regis Hotel, two blocks from the White House, was hosted by several partners of the Republican lobbying firm the Navigators, which employs Schwarzenegger adviser Mike Murphy. One of the firm’s major clients is the Financial Services Coordinating Council, which has backed legislation in Congress to override California laws protecting consumers’ financial privacy.

Another host of the luncheon was Ron Kaufman, a senior partner at the Dutko Group, a lobbying shop that represents Pharmaceutical Research and Manufacturers of America, the major trade group for drug firms.

As governor, Schwarzenegger has vetoed several bills that would have eased the way for the importation of cheaper prescription drugs from Canada and backed an approach favored by industry to allow drug firms to offer voluntary discounts. Drug companies have donated more than $350,000 to Schwarzenegger’s various campaign committees.

The Dutko Group also represented makers of the now-banned dietary supplement ephedra and other nutritional supplements, which could pose a conflict for a governor who just pledged to hold a summit on the widespread abuse of steroids and other performance-enhancing drugs in sports.

“What big money does is buy access for a small set of people whose interests don’t align with the interests of most Californians,” said Jerry Flanagan of the Foundation for Taxpayer & Consumer Rights, a liberal group that has been tracking the governor’s fund raising.

Schwarzenegger’s aides insisted the primary mission of the trip was to lobby for California’s interests in Washington. The governor met with Education Secretary Margaret Spelling, whose agency announced an agreement with the state Tuesday that could help keep some California schools off the list of failing districts under the No Child Left Behind program.

Schwarzenegger also sat down with Health and Human Services Secretary Michael Leavitt to discuss Medicaid funding issues, and with Interior Secretary Gale Norton to talk about parks, water projects and Indian gaming.

Just after his afternoon fund-raiser, the governor snuck in an unannounced trip to the White House. Schwarzenegger had a private meeting with Rove and then a brief visit with the president, Margita Thompson, the governor’s spokeswoman, said.

“They talked about the governor’s reform proposals … and how we could work with the administration,” Thompson said. “It was a very substantive meeting.”

Schwarzenegger’s visit to Washington was part of a cross-country fund-raising trip that is expected to net millions of dollars for his re-election committee, Californians for Schwarzenegger ’06. Though the governor has not announced whether he will run again, his fund-raising guru, Marty Wilson, dubbed it “a little advance planning.”

The governor had raked in more than $500,000 at a single dinner at 21 Club in Manhattan on Monday night. Wilson would not say how much the D.C. fund-raising events raised, but contributors had to donate $5,000 to attend the luncheon and $22,300 — the maximum individual contribution to the re-election campaign — for a photo with Schwarzenegger and a seat at a
“business roundtable” with the governor after the lunch.

Major figures who hosted the lunch included Cesar Conda, a former top aide to Vice President Dick Cheney and a telecommunications lobbyist; Wayne Berman, a major GOP donor whose clients include the insurer American International Group; Mark Holman, a lobbyist who worked for former Homeland Security Secretary Tom Ridge; and Susan Nelson, a former finance director at
the Republican Governors Association.

One of the few Democrats at the event was Dan Glickman, the former agriculture secretary under President Bill Clinton who is now president of the Motion Picture Association of America. He called Schwarzenegger “a great face for our industry.”

But, as at other recent stops on his fund-raising tour, Schwarzenegger got an angry reception from union protesters. Before Tuesday’s luncheon, the governor had to scamper through a side door to avoid a crowd of about 100 nurses, firefighters and other union officials who chanted, “Schwarzenegger has got to go.”

The nurses and firefighters are upset about Schwarzenegger’s possible ballot measure that would convert their guaranteed pension plan into a 401(k)- style plan, which the unions claim would reduce retirement benefits. Beth Kean, who represents nurses at University of California facilities,
said Schwarzenegger’s plan would allow investment firms to earn huge fees managing state employees’ assets.

“He’s selling us out to Wall Street,” Kean complained.

The attacks are a role reversal for Schwarzenegger, who ran for governor pledging to free the state from special interests tied to Democratic Gov. Gray Davis. A Field Poll last month showed that the governor’s job approval had slid 10 percentage points — to 55 percent — with 40 percent of state voters saying he was catering to a few special interests.

The governor’s aides said he is raising big sums of money for his initiatives because the Democratic-controlled Legislature won’t pass his reforms.

“People understand that it takes money to compete,” said Rob Stutzman, the governor’s communications director. “What they see in the governor is that he is competing on their behalf, trying to push an agenda that is not popular with those here in Sacramento who have been running the government. So we’re going to raise money to do that.”

But critics point out that Schwarzenegger is also breaking state fund-raising records — having raised almost $40 million already — nearly twice as much in his first 15 months in office as Davis. He has a fund-raiser scheduled Monday for his ballot proposals at the Sacramento Sheraton, where top donors will give $100,000, and two more for his re-election committee in Southern California later next week.

“No one thought that anyone could raise more money from special interests than Gray Davis,” Flanagan said. “But Schwarzenegger has done what we thought was impossible.”