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Special interest conventions

John McCain and Barack Obama have sworn off special interest money, but both parties' conventions have become vehicles for soft-money fundraising.
/ Source: National Journal

In a campaign filled with contrasts, John McCain and Barack Obama do agree on one thing: Both have promised to rid the White House of special interests by limiting corporate ties and lobbyists' influence. Obama has even banned those lobby-clogging rascals from donating to the cash-strapped Democratic National Committee.

But at the same time, both political parties, eager to raise boatloads of cash for their conventions, have opened their doors to special-interest money in exchange for generous goodie bags that offer coveted access to key power players.

National parties can't take or spend soft money, of course, but both parties this year are taking advantage of a big loophole that lets them use unlimited donations from corporations and unions to organize and run their conventions. But wait, there's more: These donations are fully tax-deductible as a "business expense." And a new analysis conducted by the Campaign Finance Institute found that both Democrats and Republicans are using local "host committees" in Denver and Minneapolis as vehicles to raise unlimited soft-money contributions to their respective confabs.

Does any of this matter? Jennifer Sykes, a CFI research analyst who helped conduct the study, thinks so. "It's an example of how corporate money is pushing itself into politics," she said. "The idea behind having a host committee is that you're promoting the city that's hosting the convention. Instead, we're seeing promises being made for political access and money coming from out-of-state sources."

The Federal Election Commission and Internal Revenue Service have permitted a vast expansion of host committee fundraising, arguing that since these organizations are nonpartisan "charities" or "business leagues," contributing to them does not present an issue of potential corruption or appearance of corruption. But CFI's investigation claims that federal and other elected officials, their financiers and party operatives are seeking largely corporate money to fund the conventions.

"The realty of fundraising for the Denver and Minneapolis-St. Paul conventions is that the party holding the convention and its local host committee look very much alike," the report says. "And with regard to spending, the party convention committee and the host committee simply meld into each other."

Although complete information is lacking on the amounts of pledges or contributions to host committees, a number of companies have publicly noted their commitments.

According to CFI, the largest ones are: Qwest Communications ($6 million for both conventions), Comcast ($5 million for Democrats), Xcel Energy ($2.25 million for Democrats and $1.2 million for Republicans), United Health Group ($1.5 million for Republicans), Union Pacific ($1 million for Democrats), Brownstein Hyatt Farber Schreck (more than $1 million for Democrats), Molson Coors Brewing ($1 million for Democrats), and St. Jude Medical ($1 million for Republicans).

Leaders of both parties are complicit, said Stephen Weissman, CFI's associate director for policy, and elected officials are not entirely clean, either.

Take Minnesota's two top Republicans, Sen. Norm Coleman and Gov. Tim Pawlenty -- a McCain supporter and campaign co-chairman (and possible running mate) who is also a co-host of the Republican convention. Pawlenty and Coleman have been seeking funds from corporations on behalf of the convention organizers, offering golf outings and private dinners with GOP leaders. Republicans hope to raise about $58 million, and they say they're likely to meet that goal.

Meanwhile, facing a possible $15 million shortfall of their $41 million fundraising goal, Democrats are frantically trying to solicit cash. The host committee has already had to cancel 24 receptions and postpone a media walkthrough of the convention site.

The New York Times first reported that the Denver host committee sent out brochures offering companies access to 232 representatives, 51 senators and 28 governors in a "once in a lifetime" opportunity. And the higher the donation, the sweeter the benefits, including passes to hospitality suites and private functions hosted by Sen. Ken Salazar, Gov. Bill Ritter, Colorado congressmen and other top Democrats.

"The 2008 Democratic National Convention will bring together a unique group of business leaders, high-level lawmakers, members of the national and international media and prominent academics," the brochure says. "This is a rare opportunity to play a leadership role in a substantive discussion on timely issues affecting your industry with company executives, scholars, elected officials and members of the media."

As Denver political analyst Floyd Ciruli told the Wall Street Journal recently, "This is beginning to be a political embarrassment."