The conventions are a target-rich environment for corporations and special interests, despite new rules against gifts
Outside the Beta nightclub in Denver near midnight on Aug. 25, a three-foot placard declared one entrance for "Elected Officials" only. An imposing security guard nearby made clear that it was in earnest.
Inside, to the pulsing beat of the Black Eyed Peas' My Humps, Democratic National Convention attendees who could find their way past a bouncer at another entrance could join the lawmakers and help themselves to free cigars on the patio and hors d'oeuvres inside, plus drinks from a half-dozen bars, including a selection of whiskeys and other liquors offered by the Distilled Spirits Council. Near the exit, a card table of literature opposing teenage drinking went largely unnoticed.
Welcome to the other convention. Last year's much-celebrated overhaul of ethics laws notwithstanding, Denver is full of corporate lobbyists in town for the Democratic National Convention this week, and their parties are some of the hottest tickets in the Mile High City. Starting on Aug. 30 the scene will migrate to St. Paul and Minneapolis to greet the Republicans at their convention. But despite the festive atmosphere, convention shindigs aren't all fun and games.
Behind Closed Doors
National party conventions long ago ceased being about picking a Presidential candidate and shaping party platforms in smoke-filled rooms, yet plenty of business still goes on behind closed doors. Lawmakers, lobbyists, and state and federal politicos mingle at hundreds of brunches, receptions, and parties, many sponsored by corporations and trade associations pushing their favorite causes.
At the Spirits of Denver bash at Beta on Monday night, the Distilled Spirits Council was joined by co-sponsors Daimler (DAI) and The Hill, a Washington news organization. Across town, on the 38th floor of a downtown tower, AT&T (ATT) gave Connecticut delegates a coffee bar and late-night breakfast—eggs, sausage, potatoes—to accompany the expansive view of the night skyline. On the other side of the lobby, the telecom giant wooed California delegates with finger food, an open bar, and live R&B by local band Jakarta. Departing guests could take a small drawstring bag emblazoned with AT&T's logo containing a plush toy Denver steer and a visored cap.
A sign cautioned that state or federal rules might prohibit some lawmakers from taking one of the goodie bags, but no one seemed to be watching. Down a short flight of stairs, a showcase for the company's latest technology drew few partiers.
Tighter Gift Rules
The 2008 conventions were supposed to be different, thanks to last year's congressional ethics bill. To hear the legislative backers, convention parties were squarely in the law's crosshairs. But since then, critics say, House and Senate interpretations have weakened the rules considerably. The end result amounts to a fairly narrow ban on parties feting individual lawmakers, and a tightening of gift rules. At least in the House, parties for groups like the fiscally conservative Blue Dog Democrats are fine, and parties the weekend before and after the conventions themselves aren't affected. In the Senate, meals are forbidden but snacks and food on toothpicks are fine if they amount to less than a meal.
In a statement, the Barack Obama campaign said the candidate "expressed a desire to significantly change the way conventions are funded in the future should he be elected," but couldn't this time around because the Democratic primary ended late.
Many companies, including AT&T, decline to discuss their convention activities. Those that do talk tend to describe their business at the convention as a combination of corporate citizenship, marketing, and even sales opportunities, with some low-key relationship-building on the side. "Part of it is civic duty, civic responsibility," says Frank Coleman, a spokesman for the Distilled Spirits Council. But for an industry regulated by the states, the opportunity to meet state and local lawmakers is helpful, Coleman adds. Still, "I don't think anybody's doing any heavy-duty lobbying in these events."
Qwest Contributes Phone Services
Qwest Communications International (Q), the Denver-based telecom company, is contributing as much as $6 million to the Denver convention, much of it in the form of phone service for the convention committee. But Chuck Ward, president of the company's Colorado operations, says that when he sat down with then-CEO Dick Notebaert to decide whether to chip in, "that was a business opportunity discussion. It wasn't a political discussion."
Ward calls the convention a great marketing opportunity. Qwest is getting its name and services in front of "thought leaders" and potential customers inside and outside its 14-state service area, in part by supplying the lanyards many delegates use to carry their credentials. Ward says Qwest even hopes to recoup some of its costs by selling on-location phone services to media outlets during the convention. And rubbing shoulders with lawmakers at the event? "It's a nice collateral benefit, but it's not the main reason," Ward says. Compared with Qwest's year-round lobbying program, the incremental value of talking to powerful convention-goers "is really marginal."
But in private, others are blunter about their purpose. Two in-house lobbyists for a U.S. automaker, speaking on the condition that they and their company not be named, said they were in town to push hard to speed funding for and get an expansion of the $25 billion government-loan program Congress adopted last year to aid the industry. The vacation atmosphere helps: All of political Washington is in town, but "you're outside the Washington hustle-bustle," one of the lobbyists says. The other notes that, at the Capitol, lawmakers are surrounded by aides and thinking about the next vote. "Here, we're sitting in a nice venue, you can have a conversation," he says. They claim they have won over some skeptics.
Cerner in Action
Says Tom Epstein, a spokesman for Blue Shield of California, a nonprofit health insurer with 3.4 million members in California, "It's the place where there are more elected officials and policy leaders than any other event."
While the big galas get the attention and curbside policy chats go unnoticed, a company like Cerner (CERN) offers a glimpse into the process. The Kansas City (Mo.) company makes electronic medical-records software, and so has a stake in health-care reform proposals, particularly those that count on big savings from making the medical system more efficient. Cerner President Trace Devanny joined more than a dozen other health-care executives and policymakers in a panel discussion Monday morning, moderated by former Senator Tom Daschle, a key Obama adviser on health care. Among those invited to watch: senior congressional staff.
Later in the day, Cerner co-hosted a "VIP reception" at a city park with other companies involved in health-care IT, inviting senior staff for Obama and other key senators, including Hillary Clinton (D-N.Y.), Ted Kennedy (D-Mass.), and Dick Durbin (D-Ill.)—"definitely those people we consider to be the decision-makers when it comes to reform in health care," says Maggie Nelson, manager of the company's federal government and industry relations. "The best leaders will listen and take counsel from experts in any given field, and our given field of expertise happens to be health care," says Amanda Adkins, another Cerner executive. "We, among lots of different experts, have a role to play in the process."
Companies Defray Costs
The political parties depend on that, at least when it comes to paying for conventions on a modern scale. While the U.S. Treasury gives the Democrats and Republicans each $16.4 million for the convention proper—the remnant of Watergate-era reforms intended in part to diminish corporate influence in the political process—the two parties have said they plan to raise a combined $112 million from companies and other private donors, according to figures compiled by the Campaign Finance Institute.
Some observers expect it to clock in higher still. At least 173 companies have ponied up already, and a final tally won't be available until 60 days after the conventions end.
By contrast, the parties raised $56 million combined in 2000, and $142 million in 2004, when the conventions were in pricey Boston and New York. That's all on top of the campaign contributions from the same companies and their employees—$180 million since 2005—and lobbying expenditures of $1.3 billion in the same period.
Backpedaling on Reform
Washington's backpedaling on the ethics rules mirrors the history of campaign reforms and the conventions, says Stephen Weissman, associate director for policy at the Campaign Finance Institute in Washington. The 2002 McCain-Feingold campaign-finance reform bill banned candidates from taking corporate and union money. But the following year, the Federal Election Commission ruled that convention committees were exempt because donations amounted to support from local boosters, not attempts to influence the political process.
But this year, Weissman says, just a quarter of the 141 publicly disclosed contributors to the Denver convention are based in Colorado. A little over a third of publicly disclosed donors to the GOP's convention are based in Minneapolis. "It's politically naive to say the principle and only motivation of people donating to the host committees is to promote the local area," Weissman says.