Taxpayer-subsidized stealth lobbyists: Lobbyists who circumvent normal lobbying regulations and procedures to advance the corporate agenda in statehouses nationwide on the taxpayer dime.
If Washington DC is the new Versailles, run by corporate overlords and their lobbyist-hired guns, then the 50 statehouses are its paternal twins. That is, while they look different in form, they share the same genetic function as avenues for the fulfillment of the corporate agenda.
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The Center for Media and Democracy (CMD) has made this abundantly clear through its ongoing ALEC Exposed project, bringing sunshine to the tax-deductible, statehouse-level influence-peddling efforts made by corporations through the right-wing American Legislative Exchange Council (ALEC). ALEC has been described by CMD as a “corporate bill mill.” (Full disclosure: Steve Horn is a former reporter and researcher at CMD. He was on the team that broke ALEC Exposed in the summer of 2011.)
ALEC, though, is not the only “corporate bill mill” playing this game.
“Taxpayer-subsidized stealth lobbyists” have upped the ante and skillfully advanced their agendas through bipartisan “trade associations” for state government officials – in particular, the Council of State Governments (CSG) whose multimillion-dollar budget is mostly funded by taxpayers. Through CSG and Friends, lobbyists exploit a well-tethered network of nonprofits representing state-level officials to advance the agenda of their corporate clientele.
“In a climate of stalled federal initiatives, and what I think is really unprecedented partisan battling and bickering, these state legislatures are really shaping the national policy environment,” explained one such stealth lobbyist, Michael Behm, in an interview. “I really think they [states] are the real engines of government. And that’s why the private sector is interested, quite frankly.”
This, then, is part one of a four-party story about how the “real engines of government” work. First stop on the voyage: the CSG.
“That Other Bill Mill”: Council of State Governments (CSG)
ALEC is far and away the most well known of the consortium of 501(c)(3) organizations that allow corporate influence to seep into every facet of state-level government affairs. CSG, on the other hand, is not so well known.
Upon being sworn into office, all state-level legislators (there are about 7,500 of them total), as well as their respective legislative staffs, automatically become CSG members. The organization’s membership also includes representatives from the executive and judicial branches of state governments.
Between 2009 and 2011, CSG’s Internal Revenue Service (IRS) 990 forms indicate revenue between $29 and $34 million annually. While most of its sizable budget is covered by taxpayers, some 43 percent – or roughly between $12.5 and 14.6 million, according to its web site; another 29 percent – or almost $8.4 to $9.9 million of these funds – come from what it describes as “entrepreneurial efforts” which can be loosely interpreted to mean anything from publication sales to a sizable chunk from corporate patronage.
Some perspective is warranted: 990s filed by ALEC in 2010 placed its entire budget at just under $6 million.
“CSG has long believed private sector involvement in the American governance system is critical in formulating sound solutions to public policy challenges,” reads the web page for the organization’s private enterprise Associates Program. The page also explains a range of benefits special interest groups will receive for annual dues of $6,000.
The CSG “Dating Service”
ALEC has recently taken the hot seat for many of its model bills and for its lobbyist-politician “dating service” process. Yet the idea behind the ALEC model legislation process was, to be clear, originally conceived by CSG, which was founded in 1933. ALEC was born 40 years later, in 1973.
To date, CSG is responsible for publishing between 30-40 model bills annually, in a process called Suggested State Legislation (SSL). These bills are distributed to the states as templates of bipartisan “best practices” often promoting the agendas of multinational corporations.
Behm, the lobbyist, wrote the following about the SSL process:
Few other state officials meetings or forums capture the attention – and stimulate the heart rates – of government affairs professionals [lobbyists] as does the Council of State Governments’ Committee on Suggested State Legislation.We pour through the Committee Dockets the minute they are released searching for those bills, or that one law, that caused us so much heartburn earlier in the session season and hoping that it didn’t find its way onto the ‘Committee List.’ A flurry of emails begins, conference calls are scheduled and a full-court press of lobbying is launched on the Committee members.
One only has to look briefly at the most recent SSL dockets to see that the private sector is often successful in its lobbying endeavors.
Most recently, the 2013 SSL docket includes legislation written by and for the shale gas industry on hydraulic fracturing (fracking), as well as a corporate-backed, union-busting collective bargaining “reform” bill. Both of these policies have been, to date, associated exclusively with ALEC by critical observers.
Some other policy highlights of the past decade include, but are by no means limited to, these SSL templates, as well as policy position papers and what CSG calls its “Innovation Awards,” (templates for executive-level initiatives) in the following arenas:
- Biometric testing
- Union-busting through acts like the Puerto Rico Public/Private Partnership Act
- Cracking down on “illegal immigration” in a wide array of legislative packages
- Carbon sequestration and storage (alias “clean coal”)
- Nuclear energy promotion
- Teacher tenure “reform”
- Charter schools/virtual charter schools
CSG’s SSL record makes clear that corporations, above and beyond promoting models beneficial to big business, simultaneously block the passage of models that could harm their bottom line.
Exhibit A: the behavior of the international pharmaceutical company, Metabolife International, Inc.
Frustrated with consumer complaints about the adverse effects of Metabolife 356 (a dietary supplement containing the problematic epinephrine), during an October 8, 2002, Congressional testimony, David W. Brown, CEO of Metabolife, spoke in favor of his company’s 1998 CSG model. The SSL was designed to keep products containing epinephrine on the market by introducing a standardized regulation process.
Then, in 2003, Metabolife moved to crush other CSG model legislation that would have otherwise prohibited its dietary supplement from sale. The same docket included a model promoting the “use of epinephrine auto-injectors” to combat allergies and was included in the final volume.
Due to its $25,000, five-year CSG membership through the Twenty-First Century Foundation, Metabolife (like ALEC) was given a “voice and a vote” alongside politicians on the relevant task forces to recommend that the 2003 proposal be rejected from the SSL docket.
The CSG Badge of Approval
CSG SSL templates are widely distributed, explained Kelley Arnold, CSG’s director of membership, marketing and media in an interview. “Electronic copies of every SSL volume are available online at www.csg.org, hard copies are mailed to majority and minority leaders in the legislature and to the governor in each state,” she said. “Any state official may call and request a complimentary copy.”
But how does a bill get to CSG in the first place? Reached by email, Arnold wrote, “All legislation submitted for consideration MUST have been introduced in at least one state and the CSG Committee on Suggested State Legislation prefers to consider legislation that has been enacted into law by at least one state.”
These CSG bills, unlike ALEC bills – which at this point have a negative stigma in the public sphere – are viewed as having a “badge of approval” of sorts granted by politicians on both sides of the aisle.
“These Docket items can carry with them the imprimatur of a widely-respected state officials’ group,” Behm wrote in a blog post. He also cautioned that, “adverse legislation can get as widely distributed around the country as good legislation.”
Wisconsin Democratic Sen. Lena Taylor, famous for her role in the winter 2011 “Fab 14” (often also referred to as The Heroic Wisconsin 14) Democratic Party officials’ exodus from the state in protest of the then- proposed and now enacted anti-union legislation, said that the bipartisan nature of SSL makes it more respected than ALEC’s model bills, and, therefore, potentially more easily adopted.
“It’s known that Republicans and Democrats have worked together to create what you have,” Taylor explained. “There are experts that can help you to navigate the process of explaining it to individuals and helping to make sure its implementation happens appropriately, so to say, in your state.”
Virtual Charter Schools
As a 2007 graduate of CSG Midwest’s leadership training program, the Bowhay Institute for Legislative Leadership Development (BILLD), a corporate-financed training, which, amongst other things, promotes the charter school agenda, Taylor introduced a bill to the Wisconsin Senate in 2008 promoting, you guessed it, virtual charter schools. Later, the bill was adopted as a CSG model and has since passed in Indiana, Mississippi, North Carolina and other states.
K12 Inc., the nation’s largest supplier of online K-12 educational platforms, has opened a school in Wisconsin as a direct result of the passage of Taylor’s bill. CMD has linked a similar ALEC model bill to K12 Inc.
Until now, the virtual charter school agenda has been linked exclusively to ALEC, though this is far from the case. It is common to see corporations and special interests groups use both CSG and ALEC to promote their agenda – a two-pronged attack, if you will.
The National Rifle Association (NRA), the most powerful lobbying force in the United Statess, is now notorious for its role in the promotion of ALEC’s Castle Doctrine bill, which codified the conditions that helped lead to the murder of Trayvon Martin in February 2012. A little-known fact is that the NRA also played a role in promoting a slightly tamer – and much less controversial – pro-gun model through CSG.
According to a 2010 Associated Press report, the NRA-endorsed CSG model, titled “Preserving Right to Keep and Bear Arms in Motor Vehicles,” includes a measure based on a 2008 Florida law that says employers shall not prohibit workers from storing guns in cars parked in company lots. “The law has also been also been enacted in Arizona, Louisiana and Utah, according to the AP.
CSG and ALEC have also broken bread over the so-called “tort reform” agenda.
A compilation report by Media Matters for America, as a case in point, shows that Crown Holdings, Inc., a Fortune 500 corporation, is using models promoted through both CSG and ALEC to avoid compensating cancer and mesothelioma victims who were exposed to asbestos by a company it purchased.
The company has already spent more than $700 million on asbestos-related claims and expenses. Supporters claim that the passage of the ALEC/CSG model legislation around the country is “essential as a matter of fundamental business fairness” and job creation. Most recently the model was considered in the Michigan House of Representatives.
CSG and its corporate patrons obviously wield much influence in statehouses nationwide. But CSG is not the only Other ALEC.
The National Conference of State Legislatures (NCSL) has been the basis of juxtaposition to ALEC for some, and has been written off as being a different breed than ALEC, an organization that dances to a different tune.
But is it really?
National Conference of State Legislatures: Corporate-Sponsored “Schmoozapalooza”
The NCSL, considered an “instrumentality of the states” by the IRS, has served a “forum for America’s Ideas since 1975.” NCSL plays host to a series of educational conferences and task force meetings, and like its cousin, CSG, it boasts a membership that includes every state-level elected official in the United States.
One article comparing NCSL and ALEC reads, “ALEC may appear on the surface to mimic the bipartisan educational archetype of … NCSL, but ALEC’s corporate governance structure, near total reliance on corporate funding, and strong ties to legislators from predominantly one political party make it distinctly different.”
Yet, the situation is not so cut-and-dry. Yes, NCSL is different from ALEC, but it still a key tool for corporations.
“Schmoozapalooza” in Action
The Seattle Times quoted one lobbyist who described the 2005 NCSL National Summit in Seattle as a “schmoozapalooza,” reporting that there were over twice as many lobbyists as legislators at the event. Over six thousand people signed up for the event, yet only 1,300 of them were politicians, the rest being “lobbyists or people representing businesses, labor unions and other interest groups,” according to The Times.
Corporations spent a lump sum of $1.3 million on the 2005 summit, including paying for politicians and lobbyists to attend “a (Seattle) Mariners game (a $142,000 expense, with the wine alone costing $12,000 for the day) and a fully catered Washington Extravaganza at Seattle Center (a $402,800 expense).” Boeing, Microsoft and the Gates Foundation chipped in $100,000 apiece to take part in the fun.
Summit speakers included Bill Gates and 2004 Democratic Party presidential candidate, US Sen. John Kerry (D-Massachusetts).
The Washington legislature went so far as to eviscerate its state ethics laws in preparation for the “schmoozapalooza.”
“To help cover the convention’s entertainment costs, the legislature two years ago approved an exemption in the state ethics law allowing lawmakers to solicit unlimited contributions from businesses and special interests,” explained The Times.
NCSL – due to ABC’s reporting – was the inspiration for a broader US Department of Justice (DOJ) investigation on corruption in state politics. “Nightline” went so far as to describe state governments as the new “ground zero of influence peddling” for corporate lobbyists, using NCSL as a case in point.
Some of the investigative highlights of the “Nightline” report:
- Golfing: One legislator, Alabama Democrat Rep. Artis J. McCampbell, out on the golf links with lobbyists from the gaming industry and, ironically, skipping an NCSL ethics class, threatened to beat the journalist covering the outing with one of his golf clubs. “Look,” he told the journalist, “if you don’t want me to take this to you, then leave, leave, leave, leave.” Other politicians on the scene included Alabama Democrat Sen. Bobby Singleton, and Alabama Democrat Rep. Oliver Robinson and Republican Rep. Harry Shriver, according to The Huntsville Times.
- Groping: At one of the many parties hosted by the conference, Puerto Rico lawmaker Jorge Navarro Suarez attempted to “grope and kiss” a “Nightline”journalist on the job.
- Dancing, drinking and horse-race extravaganzas: “Nightline” describes the scene best: “Corporate sponsors and lobbyists helped foot the bill for an extravagant river-front party featuring Kentucky barbecue, private dancing on the deck of the steamer Belle of Louisville, and live music … all invitation only.
It continued, “Later in the week, lawmakers were invited to Churchill Downs, where they were treated to private thoroughbred races, barrels of free bourbon, platters of tenderloin and prime rib, and the chance to win free access to a 2011 Kentucky Derby box.”
“There’s one thing you can say about Louisville, Kentucky,” said Kentucky House Speaker, Democratic Rep. Gregory D. Stumbo of the scene. “They know how to party.”
Bankrolled by Corporate Largesse
Though NCSL is primarily supported by public dollars through state dues payments – over $10 million in taxpayer money went toward NCSL in fiscal year 2011 – it also maintains a corporate-funded foundation, with sponsorship levels ranging from $7,500-$25,000.
NCSL Foundation had enjoyed a budget of $1.7 to $1.9 million for the past three years, according to its IRS 990 forms. A quick glance at the sponsorship list shows many of the largest multinational corporations in the world. By way of this tax-deductible route, corporate sponsors gain access to the conferences and task forces while funneling money into select NCSL programs, as well.
In 2011, upon his fifth re-election to the NCSL Foundation’s board of directors, corporate stealth lobbyist Behm was recognized for actively promoting “public-private interaction and discussion of major state issues” and bolstering private sector “fundraising efforts.”
“[The Foundation is] more important than ever during this day and age of cutbacks because, I’m just telling you, when the states have to cut back on their budgets, NCSL feels definitely feels the pain,” Behm said in an interview.
The private sector has a vested interest in NCSL, which adopts policy position papers used to lobby the federal government on behalf of the states. In general, these policies promote states’ “flexibility” (translated: cuts and privatization) in spending in areas like public higher education, as well as other spheres.
The NCSL Higher-Education Privatization Agenda
A prime example of the push for so-called flexibility ensued in June 2011, when NCSL promoted the privatization efforts of public universities. “There is an important new conversation brewing,” wrote NCSL in an article titled, “Taking the ‘State’ Out of State Universities.”
“Can states continue to afford higher education? How important is it to maintain a public system? Why can’t higher education be run more like a private business?”
NCSL has received over $1 million since 2007 from the Lumina Foundation to push the higher education privatization effort in the states. By contrast, ALEC has received $595,000 since 2008 from Lumina, all according to Lumina’s web site’s section on grants.
The funding stream behind Lumina’s existence speaks volumes about the higher education agenda it is pushing. “Lumina Foundation is a conversion foundation created in mid-2000 as USA Group, Inc., the nation’s largest private guarantor and administrator of education loans, sold most of its operating assets to Sallie Mae,” explains Lumina on its web site.
Sallie Mae, lo and behold, gave nearly $21 billion dollars in student loans in fiscal year 2009, feasting on skyrocketing student tuition fees, which are directly linked to the “flexibility” efforts the foundation Sallie Mae bankrolls is pushing through NCSL (and ALEC).
In the meantime, scores of students are defaulting on these student loans.
Corporate-Funded Tutelage Academy: State Legislative Leaders Foundation
Though not directly responsible for any policy positions, per se, the State Legislative Leaders Foundation (SLLF), with an annual budget in the $2.5 to $3 million range, can best be described as a corporate-funded tutelage academy for majority and minority state-level legislative leaders nationwide. The organization’s bipartisan board of directors consists of 32 legislators: 16 Democrats and 16 Republicans.
SLLF’s frequently-asked-questions section says that it is a “nonprofit, nonpartisan organization established in 1972 for the express purpose of providing our nation’s state legislative leaders with information on critical public policy issues and aspects of leadership.”
Further, it emphasizes that it does not accept public funding or members dues, and that all of its funding, without exception, comes from “contributions from the private sector, registration fees, and grants and contracts with governmental agencies and philanthropic foundations.”
The SLLF Advisory Council consists of scores of multinational corporations.
Tutelage Academy in Action
On an annual basis, SLLF hosts the Emerging Leaders Program (ELP), sponsored by companies like Altria, Comcast, GlaxoSmithKline and Walmart, among others.
ELP is described by SLLF as “designed for those men and women who are judged by their peers to be likely future leaders in their state. For three days, more than 50 of these potential leaders convene for a series of intense interactive and often provocative discussions led by a distinguished University of Virginia, Darden (Business) School faculty member.”
SLLF also hosts several other leadership forums on an annual basis. Like all of the Other ALECs highlighted in this article, the corporate-funded tutelage academy aspect is an often overlooked but vital part of these organizations’ missions.
The Big Picture
ALEC and its Republican Party-allied base are responsible for a plentitude of legislation that has passed in the 50 statehouses.
At this juncture, however, and contrary to the public narrative offered so far, ALEC’s hyperconservative agenda actually is beginning to diverge in some key ways from the corporate agenda. It has become, to use the words of The Washington Post, a “liability” for big business.
ALEC’s changing position was proven by the over a dozen corporations that withdrew their support from the group in recent weeks, citing its extreme agenda. “Our involvement with ALEC was focused on efforts to oppose discriminatory food and beverage taxes, not on issues that have no direct bearing on our business,” read Coca-Cola’s statement on the issue.
Other notables divesting from ALEC thus far include Kraft, Reed Elsevier, Intuit, McDonald’s and the Bill and Melinda Gates Foundation. Many of touted these corporate dumpings as a victory, yet the corporations that bankroll ALEC continue to engage in stealth lobbying through CSG, NCSL and SLLF (and ALEC in most cases, for that matter).
The citizen’s lobbying group Common Cause filed a lawsuit challenging ALEC’s tax-exempt status, saying that it is an organization that lobbies in direct violation of its 501(c)(3) legal status. Not mentioned in the suit are 501(c)(3)’s like CSG, NCSL and SLLF, which engage in many identical lobbying practices under the auspices of bipartisan neutrality.
The Glue That Binds “The Other ALECs” Together
The next installment of “The Other ALECs” will reveal the glue connecting all of them, namely, stealth lobbyists working at Washington DC-based firms. These firms wed corporate clients to state-level legislators nationwide.
Also highlighted will be a revolving door arrangement between dozens of politicians and lobbyists who also have leadership positions in a number of the Other ALECs.
The fun, as they say, has only just begun.