Members of the U.S. Capitol Police attempt to fend off a crowd of U.S. President Donald Trump’s supporters while one of them tries to use a flag like a spear as the supporters storm the U.S. Capitol Building in Washington on Jan. 6, 2021.
Leah Millis | Reuters
Companies in all major market sectors are re-evaluating political contributions in response to last week’s storm on the US Capitol. However, it is still too early to know whether this will lead to fundamental changes in the flow of money between politics and business.
For decades, political action committees have served as a mechanism for corporations and trade groups to maintain control in Washington, DC. It’s a lot of money, but by no means the only way companies can move money in politics. But many companies also contribute to candidates and causes by using 527 Groups and Super PACs, among other things, that can be used to raise unlimited funds from individuals and companies.
According to the Center for Responsive Politics, corporate PACs made up about 5% of the money raised for the 2020 elections. The rise of small donors, as well as political action committees that allow unlimited donations, have diminished the role of specific corporate policy donations made directly to candidates over time.
Although the 2020 election set a record for donations, the Center for Responsive Politics notes that “traditional PACs, often used by corporations to promote legislative favor, have lost relative influence in decades. They haven’t increased in decades , and corporate PACs have become toxic to some Democrats. “They are bridging the gap in part with record donations from small donors, who made up 22% of the money raised in the 2020 cycle, a record 15% of the money raised by the 2016 elections was collected.
Many of the political donation freezes to candidates announced by companies do not involve political action committees unaffiliated with specific candidates, and this means that the measures may be symbolic rather than logical in shaping the future levels of political donation. It is also an opportune time to freeze political spending with ramifications as a major electoral cycle has just ended.
“It’s a very difficult time for leaders. Nobody has given any candidate money or thought they would ultimately vote against being certified as the next president. You make contributions based on how each individual affects their company and their industry,” Mark Weinberger, former EY CEO and former Deputy Treasury Secretary in the George W. Bush administration, said in CNBC’s Squawk Box on Wednesday.
“You have to separate the moment from the overall system of how elections are funded these days,” he said. “People stop because they want to be accountable right away and don’t know what to do yet. … Nobody gave money to fund rioting.”
American Express was among the companies that said they would be discontinuing support for candidates trying to “disrupt the peaceful transfer of power”. The credit card company said it contributed to 22 of the 139 House members who objected to the results of the electoral college.
Weinberger said while some politicians who have backed President Trump’s efforts to overturn the election results may find it difficult to raise money from companies in the future, he believes it is more difficult to see companies unilaterally pull themselves out of the system of political influence.
“I think it is difficult for companies to decide on their own that they will no longer participate in the system,” he said. “They have environmental groups and working groups that all contribute to PACs. It is reasonable to look at the whole system, but to say individual companies should just stop on their own is like unilateral disarmament.”
Campaign donation experts remain skeptical that PACs are likely to disintegrate as they are useful transactional tools that help businesses gain access to individuals in Washington.
“At the moment, the companies that sponsor these PACs are merely trying to offset the need to avoid curry favor with elected officials and avoid public anger and boycott,” said Sheila Krumholz, executive director of the Center for Responsive Politics.
While stopping PAC donations is “a good first step,” companies need to reassess their approach to spending, including corporate funded contributions and 527, said Bruce Freed, president and co-founder of the Center for Political Accountability.
“Right now it’s very easy to say that we’re going to pause, we’re going to stop, but what happens when we get into early fall, what happens when we’re early next year,” said Freed.
There are other ways to balance political interests for large corporations. Since its inception, IBM has long avoided political donations to candidates and does not operate a PAC, although, according to Open Secrets, contributions were made by people associated with the company and its CEO was among the first in the market to send a letter to the elected President Biden, in which the political priorities are set out.
Apple, currently the world’s most successful company, does not operate a PAC, although it “occasionally contributes to voting actions and initiatives” to support public schools in Cupertino.
“We carefully manage our engagement in the public order process and have in-house teams to coordinate these efforts,” the company’s public policy statement said. “Strategic advocacy decisions are made at the highest levels, including the Apple executive team and CEO Tim Cook.”
At least one of the recent major political battles fought and won by corporations has been the California election initiative funded by Uber and other gig economy companies to repeal a California worker classification law. November’s election funding effort was seen as a major wake-up call to how businesses can use their money to influence voter decisions.
Big Tech, Wall Street and the Future of Political Giving
From tech giants like Microsoft and Facebook to Wall Street giants like Goldman Sachs, here’s a rundown of some of the big names who have joined the movement to, at least temporarily, suspend donations to politicians while companies like you re-evaluate themselves Money intersects politics in a polarized nation. Political dissatisfaction has also increased within companies, especially among employees of the largest technology companies.
Earlier this month, some Microsoft employees spoke out against the company’s recent donations to senators that helped overturn election results. This week the company put its political contributions on hold.
Amazon, which has discontinued its web hosting support for the social media site Parler, which has become a popular alternative for conservatives, has also stopped donations to lawmakers who voted against confirming the election results. Google and Apple have already pulled the service from their app stores, although Apple has stated that it can return to the app store if it complies with the terms of service.
Facebook has halted its political spending for at least the current quarter, and Alphabet said it will also freeze political donations if it reviews its guidelines. Alphabet’s YouTube was the latest to suspend a social media account linked to President Trump on Tuesday night. This reflects the steps already taken by Twitter and Facebook.
On Wall Street, all the major banks have taken steps to reassess their policy spending.
Morgan Stanley announced that it would not donate to lawmakers who opposed the election certificate and went further than some colleagues on Wall Street to specify members of the Republican Party who supported President Trump’s attempts to overthrow the election.
Both Goldman Sachs and JPMorgan Chase said they would likely suspend political giving for six months, while Citigroup announced a hiatus in the first quarter. A Bank of America spokesman said it would include recent events in its medium-term 2022 election contributions while Wells Fargo will review its policy committee strategy.
What other companies are doing
- Walmart said it will indefinitely suspend contributions to Congressmen who voted against the lawful certification of the state electoral college’s votes and is reviewing its fundraising strategy.
- Charles Schwab will stop contributing for the remainder of the year.
- Marriott International announced a suspension of its political contributions.
- Hilton will continue the political donation suspension that began in March last year.
- Airbnb is suspending donations to “those who voted against the confirmation of the presidential election results”.
- The Coca-Cola Company announced that it would stop all political issues.
- Hallmark is asking Senators Josh Hawley Missouri and Roger Marshall of Kansas to return the dues. Both lawmakers supported the upset of the election results.
- Verizon, AT&T and Comcast said they are stopping donations to lawmakers who voted against confirming the election results.
- Blue Cross Blue Shield announced a suspension of donations to Republican lawmakers who voted against confirming the election results.
- Dow will pause contributions to lawmakers who supported the overturning of election results for an election cycle – two years for members of the House of Representatives and up to six years for senators.
- Ford Motor Company is taking a break from new contributions from their employee PAC.
- Other companies that have all suspended political donations: American Airlines, BlackRock, BP, Target, US Bank, Visa.
- Other companies that have suspended disclosure to candidates involved in disrupting the election process: Best Buy, Cigna, Handelsbank, Disney, General Electric, Intel, State Street.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.