Loopholes A Jet Can Fly Through
Federal law couldn't be clearer: Corporations are prohibited from donating to federal political campaigns. Case closed? Not quite. As is often the case in Washington, there are the rules and then there are the loopholes.
Corporations and their political action committees can curry favor in various ways without violating the letter of the law. Some are well-known: underwriting lavish Presidential nominating conventions and making large gifts to politicians' favorite charities or personal "leadership" committees. But more obscure loopholes exist that you probably haven't heard of, such as the one companies use to fly Senator Trent Lott (R-Miss.) and other lawmakers in style and comfort.
Then there's the quirk that allows would-be Presidential candidates to receive unlimited corporate cash -- as long as it's given to committees set up in the state of Virginia. And members of Congress with White House aspirations can take advantage of a perfectly legal end run that benefits Presidential contenders who already hold federal office.
As candidates and their financial backers rev up for the 2006 midterm races and the 2008 Presidential contest, they can be counted on to employ all of these election law maneuvers.
Companies have been banned since 1974 from giving cash to federal candidates and must be reimbursed at "fair market value" for any services rendered. But corporations have discovered a loophole in Federal Election Commission regulations through which they can fly politicians on sleek executive jets. Pols ferried in this fashion may reimburse their hosts at the rate of a first-class commercial airline ticket to the destination. As a result, members of Congress and Presidential candidates can fly in luxury at a savings of up to 90% on the cost of chartering a private plane. Companies, in turn, earn the gratitude of powerful people and the opportunity for some exclusive in-flight lobbying.
LETTER OF THE LAW
Since 2001, 192 candidates have made about 2,300 flights aboard corporate aircraft, according to PoliticalMoneyLine, a nonpartisan campaign finance data collector. Among current legislators, Senator Lott has logged the most flights: at least 116. His political committees have reimbursed 27 companies and one law firm a total of $165,724, a small fraction of what he would have paid to rent private jets. On average, he has used a corporate plane about once every two weeks. Among his favorite benefactors are UST Inc. (UST ) and R.J. Reynolds Tobacco Co. (RAI )Lott and the companies did not respond to requests for comment.
Other politicians and their aides say corporate flights provide convenient transportation to campaign events in home districts and other locales not easily reached by commercial flights. "It would be all but impossible to do these campaign-related trips unless members sometimes have access to corporate jets," says Jim Manley, spokesman for Senate Minority Leader Harry Reid (D-Nev.), who ranks second among senators in using company planes. "We follow all necessary laws," Manley adds.
Not all of the trips are political, however. Destinations include resorts, golf courses, and even the Super Bowl. In one unusual case, R.J. Reynolds flew then-House Majority Leader Tom DeLay (R-Tex.) home for his criminal arraignment last October on charges of laundering political contributions. DeLay, who announced his resignation in April, says he couldn't fit a commercial flight into his busy schedule and that Reynolds had a plane available.
David Bolger, a Washington lobbyist for United Parcel Service Inc. (UPS ), says he occasionally receives calls on a Thursday or Friday from lawmakers in a hurry to find a corporate plane. He apologetically informs them that UPS doesn't have an executive fleet: "We tell them, 'We have a number of jets, but they don't have any seats."' UPS's primary competitor, FedEx Corp. (FDX ), is the second-ranking corporate flier. A spokesperson says FedEx is open to requests for flights and "complies fully with the law."
Companies say the benefits of flying legislators are well worth the costs. "This certainly gives us an opportunity to talk to the elected officials about legislation that's important to our customers and their voters," says Joe Chandler, spokesman for BellSouth Corp. (BLS ), the fourth-ranking corporate flier. Carol A. Cox, vice-president at Barr Pharmaceuticals Inc. (BRL ), explains that a flight "presents the company with an opportunity to discuss the complex issues related to health care...in an environment where the complexities of these issues can be more fully addressed in a longer and uninterrupted dialogue." Without a corporate fleet, UPS's Bolger says his company gets by "lobbying the old-fashioned way: shoe leather and a presence in every congressional district."
Critics say the discounted flights, while legal, are unethical. They provide "members of Congress with their own private Air Force, courtesy of companies that are clearly doing it to curry favor with them," says Fred Wertheimer, CEO of Democracy 21, a campaign reform advocacy group.
Some lawmakers are starting to think twice about the practice. The political odd couple of liberal Senator Barack Obama (D-Ill.) and conservative Rick Santorum (R-Pa.) unsuccessfully pushed a proposal earlier this year to ban discounted air travel. "If we want to be serious about showing our constituents that we're fighting for them, and not just the wealthy and powerful," says Obama, "we can't allow a small number of special interests to be subsidizing our travel."
Even Obama hasn't been able to resist the lure of corporate flights, however. The first-term senator acknowledges taking 23 last year. Chastened, he now says he'll pay full freight or go commercial.
By Richard S. Dunham