Republican Candidates Increase Share of Business PAC Donations

By Jonathan D. Salant and Laura Litvan

Aug. 8 (Bloomberg) -- Businesses are wagering on continued Republican control of Congress rather than hedging their bets with Democrats in the November elections.

A majority of the 50 largest corporate political action committees -- including those of AT&T Inc. and Pfizer Inc. -- have given a larger share of their campaign donations to the Republicans in the 2005-06 election cycle than in the previous one, according to PoliticalMoneyLine, a Washington group that tracks political donations.

Lobbyists say businesses fear a Democratic takeover of one or both chambers of Congress, given the party's election-year agenda of increasing the minimum wage, letting Medicare negotiate with drug companies for lower prices, rolling back tax cuts for wealthy wage earners and opposing new free-trade deals.

``They are under great pressure to help save the Republican majority and in some cases fear what a Democratic majority might mean for them,'' said Vic Fazio, a former Democratic representative from California who is now a lobbyist with Akin Gump Strauss Hauer & Feld LLP in Washington. His clients include Burger King Corp. and accounting firm PricewaterhouseCoopers LLP.

Democrats need a net gain of 15 seats to take control of the 435-member House and six to win the 100-member Senate. Voters are open to a switch in party control, according to a Bloomberg-Los Angeles Times poll taken from July 31 to Aug. 1. By 48 to 37 percent, respondents said they wanted the Democratic congressional candidate to win. The poll's margin of error was plus or minus 3 percentage points.

71 Percent to Republicans

San Antonio-based AT&T has given 71 percent of its PAC money to Republicans so far in 2005-06, compared with the 65 percent SBC Communications Inc. gave two years ago before buying the former AT&T Corp. and taking its name. AT&T, the largest U.S. telephone-service provider, is the second-largest corporate PAC.

New York-based Pfizer, the world's largest drugmaker, has given 75 percent of its PAC money to Republicans for this year's election compared with 68 percent for 2004. Lockheed Martin Corp., the world's largest defense company, based in Bethesda, Maryland, raised its margin of support for Republicans to 64 percent, up from 59 percent two years ago. Atlanta-based Home Depot Inc., the world's largest home-improvement retailer, has boosted its support for Republicans to 73 percent from 70 percent.

Altogether, 27 of the 50 largest corporate PACs are giving a greater share of their campaign contributions to Republicans in the current cycle than they did in the previous one, according to PoliticalMoneyLine. Three are giving the same proportion, and 20 are giving a smaller share to the ruling party; yet many of these PACS still give the bulk of their money to the Republicans.

UPS and Republicans

For example, United Parcel Service Inc.'s PAC has given 70 percent of its money to Republican candidates in the current cycle compared with 72 percent in 2003-2004. Atlanta-based UPS is the largest package-shipping company in the U.S. and runs the largest corporate PAC.

In 1994, the last year the Democrats controlled both houses of Congress, business PACs gave 51 percent of their money to Democrats and 49 percent to Republicans, according to the Center for Responsive Politics, a nonpartisan Washington research group. Republicans won control of Congress that year, and their share of business contributions rose to 70 percent in 1995-96.

One reason for increased business support of Republicans in the current cycle is that more of their incumbents are at risk, and PACs tend to support those in office. Forty-four House Republicans are in competitive races, compared with 16 Democrats, according to Washington-based political analyst Charles Cook.

Linda Fowler, a government professor at Dartmouth College in Hanover, New Hampshire, also cited former House Majority Leader Tom DeLay's ``K Street project,'' which beginning a decade ago pressured lobbying firms in Washington to hire more Republicans.

Stronger Signals Needed

``Given the lack of bipartisanship on the lobbying staff, it will take stronger signals than we now have for business groups to start'' giving more to Democrats, Fowler said.

Some Democratic fund-raisers say they have seen a slowing of business support. One, Simon Rosenberg, formed the New Democrat Network PAC a decade ago mainly for the purpose of raising business money and took in $4.5 million for the 2002 elections. He closed the Washington-based PAC this year, in part because business donations were drying up.

``There's much less money for Democrats from the business community than there used to be,'' Rosenberg said.

Dirk Van Dongen, president of the Washington-based National Association of Wholesaler-Distributors, said many Democrats in Congress have moved away from former President Bill Clinton's support for business issues such as free trade, and now almost reflexively oppose pro-business legislation.

Free Trade Shift

While 102 House Democrats joined Clinton to support the North American Free Trade Agreement in 1993, just 15 Democrats voted last year for an accord expanding free trade in Central America. House Democratic Leader Nancy Pelosi of California threatened to remove Representative Edolphus Towns, a New York Democrat, from the Energy and Commerce Committee because he voted for the pact, although in the end she relented.

``The polarization has become more extreme, and you find very little overlap these days,'' Van Dongen said. His organization represents about 40,000 companies that distribute products such as food, machine tools and groceries.

Some Democratic leaders are perceived as less friendly to business than Republicans. Pelosi supported the positions of the U.S. Chamber of Commerce 36 percent of the time in 2005. The man she would replace as speaker if Democrats win control, Illinois Republican Dennis Hastert, had a 90 percent voting record, according to the chamber.

$10 Million

``All of those things would be reasons for people not to hedge their bets,'' said Bill Miller, political director of the Washington-based chamber, the nation's largest business lobby, which is spending $10 million on ads and other activities in support of pro-business lawmakers, mostly Republicans.

House Minority Whip Steny Hoyer of Maryland said a Democratic-led Congress would work with business. ``Business concerns will be at the table and ought to be,'' he said.

Businesses say they aren't giving money to political candidates based on their party affiliation.

Home Depot's PAC gives money based on a candidate's voting record, committee assignment and leadership position, said company spokesman Jerry Shields. Lockheed Martin generally gives to lawmakers representing districts where the company has operations, and those are mostly Republican right now, said spokesman Tom Jurkowsky.

Pfizer's PAC ``provides support to candidates on a bipartisan basis'' by backing leaders in health-care issues, spokeswoman Darlene Taylor said. AT&T spokeswoman Claudia Jones said her company's PAC approached its donations ``in a bipartisan manner'' to further a ``pro-competition, deregulatory legislative agenda.'' UPS spokesman David Bolger declined to comment.

Some Democrats who side with business on trade and tax matters say they're still seeing plenty of support from corporations. The PAC for the Blue Dog Coalition, an organization of such Democrats in the House, raised almost $959,000 through June 30, more than its total fund-raising for the 2004 elections.

To contact the reporters on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net ; Laura Litvan in Washington at llitvan@bloomberg.net .

Last Updated: August 8, 2006 00:07 EDT

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