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Big Money Talks in California Politics

By David Crane

Everyone knows about the pharmaceutical companies, defense contractors and other financial interests that dominate political spending in Washington, D.C. Because federal spending provides a big share of those businesses’ revenues, it’s not surprising they spend heavily for a Congress sympathetic to their interests. But fewer know about the financial interests that dominate political spending in Sacramento, and fewer still know the identity of the biggest spender. (Hint: it’s not a corporation.) Before I clue you in, however, you need an understanding of our campaign finance rules.

A fact not well understood by many is that the Citizens United decision issued by the U.S. Supreme Court in 2010, which removed legal restrictions on political spending by organizations, changed nothing in California. That’s because California already had Citizen United rules in effect. Business and financial interests have long been the biggest donors to California elections. See for yourself in a report issued by the California Fair Political Practices Commission entitled “Big Money Talks.” There you’ll see those interests spent over $1 billion on California elections during the decade before Citizens United was decided.

While you’re there, you’ll also learn that the biggest spenders were associations of government employees, who laid out more than $300 million. No other financial interest came close. Next in line were pharmaceutical companies, at $100 million. Other big spenders included utilities, telecommunications, tobacco and oil and gas companies, Native American tribes and associations of doctors and realtors.

It makes business sense for government employees to spend so much money on state and local politics. They get 100 percent of their revenues from those governments, those revenues are huge (this year they’ll garner nearly $100 billion), and they are 100 percent dependent upon legislators and governors who will do their bidding. And do their bidding those elected officials do!

As former Assembly Speaker and San Francisco Mayor Willie Brown has pointed out, 80 percent of state and local government spending goes to employee compensation and benefits. No business is more successful at feeding at government troughs and influencing the elections that fill and allocate those troughs.

Likewise, no one gets a better return on political spending. In 2012, government employees spent $40 million to convince California voters to pass a 30 percent temporary tax increase expected to generate an extra $50 billion in revenues over seven years. What voters didn’t understand was that compensation and benefits for government employees would capture the lion’s share of that increase. In one department that is constitutionally guaranteed 40 percent of that tax increase, 82.5 percent of spending goes to employee compensation and benefits. That translates into more than $16 billion. Not a bad return on $40 million of investment.

Government employees and pharmaceutical companies are not out to hurt anyone. They’re out to improve their interests. However, their political objectives rarely align with those of working people, students and other citizens.

Because of their political influence, state spending on most programs of benefit to citizens is lower now than before the Great Recession despite record tax rates and receipts. That’s because spending on government employee compensation and benefits, drugs and health care is much higher and still growing much faster than revenues.

Even public pension funds get into the act, joining with activist Wall Street firms to reduce private sector employment in order to boost stock prices to help cover huge pension deficits. And public pension funds also own lots of stock in pharmaceutical and other companies that benefit from more state spending on their products, crowding out funding for citizen services.

But don’t blame government employee associations or pharmaceutical companies. So long as the law permits political spending by organizations, they are going to do it.

The good news is that we citizens greatly outnumber those special interests and can beat them by supporting legislators who govern in the general interest. Those legislators and candidates are out there – they just need your support. If we don’t provide it, then we have only ourselves to blame.