Proposition 32: A fraud to end all frauds

Michael Hiltzik
LA Times
Aug 19, 2012

It was Lyndon Johnson who best understood that the key to political empowerment for the disenfranchised was to give them access to the electoral process. That's why he made passage of the Voting Rights Act of 1965 his top priority.

But it's doubtful he would think too kindly of a measure we might call the Rich Persons and Corporations Empowerment Act of 2012. During this election season, Californians undoubtedly will be hearing about it on TV and radio until their eardrums bleed. That's because it will be on the November ballot as Proposition 32, a wolf in sheep's clothing dressed up as the "Stop Special Interest Money Now Act."

In this state, we've come to expect ballot initiatives sponsored by business interests to be, essentially, frauds. But it's hard to conceive how one could be more fraudulent than Proposition 32. If there was any doubt left that the initiative process has been totally corrupted by big business and the wealthy, this should put it to rest for all time.

Proposition 32 is nothing but an attack by Republicans and conservatives on unions and their members. Two previous attempts by the same gang failed at the ballot box, in 1998 and 2005. What's new about this effort is that it's dressed up as a broad reform aimed at "special interests," and it's even more union-unfriendly than its predecessors.

We'll start by examining what Proposition 32 purports to do.

On the grounds that "special interests have too much power over government," the measure bans direct contributions to California candidates by corporations and labor unions. It prohibits the collection of "political funds" from corporate employees and union members via payroll deduction, even if the employee or member voluntarily approves. (That's more stringent than the previous versions, which merely required that union members give written permission for political expenditures once a year.) Political funds include money spent for or against a candidate or ballot measure or for a party or political action committee, or PAC.

Sounds pretty good so far, doesn't it? "It looks temptingly like reform," says Trudy Schafer, program director for the League of Women Voters of California. "But it's not."

That's because Proposition 32 bristles with enormous loopholes tailor-made for businesses and their wealthy backers. To begin with, it exempts such common business structures as LLCs, partnerships and real estate trusts. If you're a venture investor, land developer or law firm, Proposition 32 doesn't lay a finger on you.

The drafters, who include conservative attorneys Thomas Hiltachk and Michael Capaldi, know full well that payroll deductions are how unions get almost all of their funds, and businesses get almost none of theirs.

The infusion of big money into politics has become a more important issue since the Supreme Court's infamous 2010 Citizens United decision awarding free speech rights to corporations, as though they are people. The decision liberated corporations to contribute to electoral campaigns virtually without limitation. That has turbocharged fundraising by so-called super PACs such as Karl Rove's conservative American Crossroads, the Mitt Romney-supporting Restore Our Future, and the President Obama-supporting Priorities USA.

The Proposition 32 campaign says the measure is carefully crafted to comply with Citizens United, but if that's so, it's just another sign of how flawed and deplorable the Supreme Court ruling was. At the moment, according to the nonprofit Center for Responsive Politics, business outspends organized labor 15 to 1.

Today, no big business needs to mulct its employees for piddling weekly deductions for its PAC, when it can shovel out by the trainload any money it has collected via the sale of goods and services. Some corporations do take PAC contributions from employees by payroll deductions, but it's typically a tiny proportion, mostly concentrated among careerist midlevel executives and above.

"When corporations can just write a check from their general treasury, the idea that this is a meaningful restriction is ridiculous," says Richard L. Hasen, an election and campaign law expert at UC Irvine. The share of corporate political spending coming from employee payroll deductions "has got to be a drop in the bucket, and putting it in there is just a fig leaf."

What about the Proposition 32 campaign's claim that the measure is all about, and only about, reducing the power of "special interests"? In the interest of being fair and objective, we should be very careful about the word we select to describe this assertion. So let's keep things simple: It's a lie.

How can we know? We can start by examining the campaign's contributors. As it turns out, the claim that you need a big-money ballot campaign to wipe out the influence of special interests carries its own contradiction, in the same way a skunk packs its own stench.

Among the very top contributors to the campaign, according to public filings, are A. Jerrold Perenchio ($250,000), Thomas Siebel ($500,000), B. Wayne Hughes ($200,000) and Charles Munger Jr. ($992,000).

Perenchio, a billionaire Hollywood mogul, was the second-largest individual political donor in California from 2001 to 2011, with $16.9 million in contributions mostly to Republican and conservative interests, according to a compilation by the nonprofit Center for Investigative Reporting. He's contributed $2 million to American Crossroads and $500,000 to Restore Our Future.

Siebel is a Silicon Valley billionaire perhaps best known in California political circles for his introduction of Sarah Palin, then the newly minted GOP vice presidential candidate, at a 2008 rally as "the embodiment of pure, unadulterated good," the San Francisco Chronicle reported. In 2010 he donated $250,000 to American Crossroads.

The Kentucky-based Hughes is the patriarch of the Public Storage empire. His donations to American Crossroads: $3.5 million, making him one of its top donors in 2010. He's given nearly $2.3 million to California political entities in the 2001-11 period, exclusively Republican.

Munger is a physicist who was the third-largest individual political contributor in California in 2001-11, with $14.1 million in contributions, mostly to GOP interests. His father, Charles Sr., has long been Warren Buffett's investment partner.

Whatever you might think about these individuals' political viewpoints, some things are crystal-clear: They're the special interests. They're the fount of the cash that, according to the Prop. 32 pitch, constitutes "the most corrupting influence in politics."

And most important of all: They're conveniently exempt from Proposition 32.

It doesn't matter that their wealth comes from corporations that would be barred from funneling money directly to candidates — Hughes from Public Storage, Siebel from Siebel Systems and Oracle, Perenchio from Univision. Their individual bank accounts remain unfettered.

If you've been wondering why people whose fortunes come from business would invest so much money to enact a measure that purports to limit the political influence of business, now you know.

Proposition 32 isn't designed to stop the flow of cash into California politics; it's designed to cede California politics totally to characters like this. Any of them could get anything he wants from Sacramento. Could you?

Another fact the Prop. 32 cabal doesn't want you to know is that donations to candidates and parties — the contributions most directly covered by the measure — constitute a tiny portion of corporate political spending in California. Power really resides in the initiative process, and that's where businesses put the big bucks.

Over the last two years, for example, the tobacco company Altria (formerly Philip Morris) has donated $33.5 million to California political campaigns. Less than $700,000 went to candidates or parties. Much of the spending went to defeat Proposition 29, this spring's tobacco tax initiative.

Then there's Pacific Gas & Electric Co. In 2009-10, PG&E spent $53.5 million on politics in California. Less than $600,000 went to candidates. Most of the rest financed the utility's majestically dishonest ballot initiative to kill public power programs.

Because under Proposition 32 such spending could be financed out of money that business and wealthy individuals — but not unions — can access, the measure would tilt the initiative playground even further in business' favor.

The treatment of unions and corporations as though they're equivalent political players is an ideological fantasy. Unions are organizations whose members have democratic rights to vote on their leaders and their policies, political or otherwise. (Nonmembers represented by unions in collective bargaining already have the right to withhold dues attributable to strictly political activities.) Corporation owners, or shareholders, don't have democratic rights unless they hold controlling stakes.

When a union engages in politics, you know it's generally reflecting the interest of its members. When a corporation does, whose interest is it reflecting? Could be a few dozen people, one huge shareholder, or a CEO and his cronies on the board.

Moreover, as the labor expert Joseph Rauh observed decades ago, giving a political voice to an increasingly disenfranchised working class is fundamental to the role of organized labor. The fate of bills "affecting working men and their unions," he wrote, "may be of as great importance to union members as the collective bargaining process itself."

The message the perpetrators of Proposition 32 are sending to you, the California voter, is that they think you're stupid. Really, really stupid.

When you go to the voting booth or fill out your mail ballot this November, stop for a moment and ponder this question: Should I hand over my vote to people who think of me that way?