Loophole lets corporations fund political conventions

"I look forward to the day, by 2008, when Americans can turn on their TVs and watch the Nokia Democratic Convention, or the AT&T Republican National Convention," joked Bradley Smith, then a Republican member of the Federal Election Commission.

That day has pretty much arrived.

The Democratic and Republican conclaves this summer in Denver and St. Paul, Minn., will be financed overwhelmingly by private money from some of the nation's largest corporations, says a report released Wednesday by the Campaign Finance Institute, a nonpartisan study group. From AT&T to Xcel Energy, companies have lined up to pay for the two events in exchange for the promise of access to the nation's most powerful politicians, the report says. The group estimates private funds likely will amount to 80 percent of the meetings' $112 million combined pricetag.

Talking points prepared for Minnesota's Republican Gov. Tim Pawlenty, which the institute obtained under an open-records request, asked corporations to give generously for the chance to "connect with influential government officials (Cabinet, President, next President)." Colorado Democrats also are offering donors invitations to private events attended by prominent politicians.

Since 2002, federal law has barred the political parties from accepting unlimited corporate contributions known as "soft money," a ban enacted to get rid of the donations' corrupting influence. But the FEC has continued to allow big bucks to flow from corporations to local committees set up to host the conventions, reasoning that they're more focused on promoting their cities than on politics.

A closer look at the groups' fundraising, however, blows away that rationale, says the institute's Steve Weissman. "Only Democrats are fundraising in Denver, period," he says, and Republicans in St. Paul. "Contrary to the FEC's conclusion, political considerations have a lot to do with host committee fundraising activity," the report concludes. Further evidence of that, it says, is that about half the private money for this year's conventions is to come from out-of-state companies.

Denver fundraising has been led by Steve Farber, an attorney and longtime Democratic donor. He has been aided by Gov. Bill Ritter, Sen. Ken Salazar, Mayor John Hickenlooper and Rep. Diana DeGette--all Democrats. Their fundraising has taken them far beyond Colorado; they met with sponsor Lockheed Martin in Philadelphia, casino interests in Las Vegas and Wall Street executives in New York. Ritter wrote a thank-you note to Chicago Democratic donor Fred Eychaner for his $250,000 contribution, and got Safeway and Amgen on board in a trip to Washington.

Pawlenty and GOP Sen. Norm Coleman "overwhelmingly shaped" the fundraising for the St. Paul convention, the report says, noting that Pawlenty has been a co-chair of the campaign of GOP nominee-in-waiting Sen. John McCain.

Each of this year's conventions will be subsidized with $16.4 million in taxpayer dollars, money that comes from a voluntary checkoff on individual income tax returns. But that's not the only taxpayer subsidy--corporate contributions to the host committees are deductible for the donors.