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Corporate Capture Threatens Democratic Government

Americans have always fought to expand democratic freedoms and protect democratic society from being corrupted through unchecked private greed and undermined through grotesque inequality.

The Capitol Dome is seen in a morning fog in Washington, September 2011. (AP/Jacquelyn Martin)
The Capitol Dome is seen in a morning fog in Washington, September 2011. (AP/Jacquelyn Martin)

America faces a crisis of corporate capture of democratic government, where the economic power of corporations has been translated into political power with disastrous effects for people’s lives. In his new book, Captured: The Corporate Infiltration of American Democracy, Sen. Sheldon Whitehouse (D-RI) warns that “corporations of vast wealth and remorseless staying power have moved into our politics to seize for themselves advantages that can be seized only by control over government.” The book illustrates what he calls, the “immense pressure deployed by the corporate sector in our government.” We must rebalance our democracy by changing the rules to limit the power of money over government and empower people to engage politically as a countervailing force.

Currently, the domination of big money over our public institutions prevents government from being responsive to Americans. This certainly is not a new phenomenon—but it is growing. Even in 2009, before the Citizens United v. FEC ruling removed constraints on corporate political spending, 80 percent of Americans agreed with the following statement:

I am worried that large political contributions will prevent Congress from tackling the important issues facing American today, like the economic crisis, rising energy costs, reforming health care, and global warming.

In the first presidential contest after the Citizens United decision, 84 percent of Americans agreed that corporate political spending drowns out the voices of average Americans, and 83 percent believed that corporations and corporate CEOs have too much political power and influence. This aligns with more recent research showing that 84 percent of people think government is benefitting special interests, and 83 percent think government is benefitting big corporations and the wealthy.

As already noted, the undue influence of corporate interests on the functions of government is not new, and Sen. Whitehouse’s book explains how Americans have faced and overcome this threat before. America’s founders recognized the danger of corporate capture: In 1816, Thomas Jefferson warned the new republic to “crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength, and bid defiance to the laws of their country.” Almost a century later, President Theodore Roosevelt, in his annual address to Congress in 1907, said:

The fortunes amassed through corporate organization are now so large, and vest such power in those that wield them, as to make it a matter of necessity to give to the sovereign—that is, to the Government, which represents the people as a whole—some effective power of supervision over their corporate use.

President Roosevelt was responsible for the first federal ban on corporate political contributions. But now America’s rules for using money in politics are out of date, and our system of government is out of balance. The Supreme Court’s conservative majority has turned its back on reasonable limits for how concentrated wealth can be used to shape government and public choices. In 2010, Citizens United allowed corporate money to be used to support or attack candidates and influence American elections. Previously, in a case overruled by Citizens United, the Court upheld corporate political spending rules, decrying “the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideas.” In his book, Sen. Whitehouse calls out the Supreme Court’s conservative majority, which has “obediently repaid the corporate powers by changing the basic operating systems of our democracy in ways that consistently give big corporate powers even more power in our process of government, rewiring our democracy to corporate advantage.”

Corporate interests can vastly outspend labor or public interest groups on elections. For example, in 2014, business interests spent $1.1 billion on state candidates and committees compared to the $215 million that labor groups spent. That same year, business political action committees, or PACs, spent nearly $380 million in federal elections, while labor union PACs gave close to $60 million. In 2016, it is estimated that $1 out of every $8 that went to super PACs came from corporate sources. Super PACs—which didn’t exist before 2010—raised almost $1.8 billion for the 2016 elections. Recently developed dark money channels have exploded, and more than $800 million dollars of political spending with no disclosure of donors has occurred since 2010. This denies voters information and blocks accountability by hiding the identity of political spenders who want to push their agendas and points of view without leaving fingerprints. Dark money has led to an increase in negative campaigning and deceptive statements in political advertisements, feeding the politics of destruction.

Moreover, the anti-democratic influence of money in politics doesn’t end on election day. The dominance of corporations and business interests exists not just in election spending but also in lobbying elected officials and decision-makers. In 2012, an important study of political influence, Unheavenly Chorus, looked at organized-interest activity aimed at influencing policymaking in Washington, D.C.. According to the study, social welfare and labor organization made up just 2 percent of all organized-interest activity—corporations, trade associations, and business groups accounted for 48 percent. Corporations and business groups spend much more on lobbying than organizations that represent large constituencies of Americans. For example, between 1998 and 2016, reports that the U.S. Chamber of Commerce—just one of many groups advocating for the interests of big business—spent $1.3 billion on lobbying the federal government compared to $720 million spent by all labor unions.

Corporate influence over government does not end with the passing of a law. Corporate entities with no natural limits and endless resources can wage a long-term, sustained attack across policymaking pressure points. For example, if a law is passed that corporate interests oppose, relentless industry pressure can be brought to bear on the agencies charged with enforcing that legislation. Again, in his book, Sen. Whitehouse describes “heavy lawyering of the rulemaking and enforcement processes, often as simple brute pressure to cause delay and cost” on the part of corporate interests. Furthermore, any final rule may be challenged in courts that are increasingly friendly to corporate forces at the expense of people.

In the short time that President Donald Trump has been in office, the revolving door between industry and the federal agencies regulating them is back in full swing thanks to the administration loosening restrictions on lobbyists taking posts at agencies they previously sought to influence on behalf corporate clients. The independent nonprofit newsroom ProPublica discovered dozens of federally registered lobbyists who were among the first Trump appointees to take positions in federal agencies. For example, lobbyists for the pharmaceutical industry and health insurance companies are now in key posts at the U.S. Department of Health and Human Services; a lobbyist for the construction industry who fought wage and worker safety standards now works for the U.S. Department of Labor; a lobbyist for the extractive resources industry is now at the U.S. Department of Energy; and a for-profit college lobbyist who sought to weaken protections for students worked at the U.S. Department of Education.

In the Trump administration, as noted by Eric Lipton at The New York Times, we continue to see “the merging of private business interest with government affairs.” In just one example, billionaire investor Carl Icahn has been named “special adviser to the president,” but because he is not officially a government employee, he is not subject to the same conflict of interest divestment requirements. As a consequence, Icahn maintains his majority holdings in an oil refinery while zealously advocating for a rule change that would have saved his refinery more than $200 million the previous year. We have reached an apotheosis of concentrated wealth running government for their interests—Trump’s cabinet has more wealth than one-third of American households, and Icahn is wealthier than all of them combined.

Captured: The Corporate Infiltration of American Democracy tells hard truths about the central threat posed by the rule of the rich—plutocracy—and how it is overwhelming American democracy. Sen. Whitehouse writes, “Corporate money is calling the tune in Congress; Congress is unwilling or unable to stand up to corporate power (indeed, Congress is often its agent).” These are truths that must be faced to be fixed.

Our democratic society must demonstrate its resilience and return to core American principles and values of government that serve the people. We have the power to demand that Congress break the nexus between Wall Street and Washington that keeps the rules of our economy rigged to benefit the wealthiest few at the expense of the many. Americans can resist the slide to secret political spending and require disclosure for the big money interests behind our toxic politics of personal destruction. We can demand that lobbyists be prohibited from acting as fundraisers. And, amidst the shocking scandal of Russian interference in America’s democracy, we can insist that Congress ban foreign corporate money in elections.

Let us harbor no illusions—this battle won’t be easy, but that doesn’t mean it is impossible. Ever since our founding as a republic, Americans have fought to expand democratic freedoms and protect democratic society from being corrupted through unchecked private greed and undermined through grotesque inequality. One can clearly see the result of corporate power over policy in the present levels of wealth inequality—unmatched since the Great Depression—where all the economic gains in the past several years accrued to the wealthiest 1 percent. But as Economist Thomas Piketty concluded his study of economic inequality in Capital in the Twenty-First Century by writing, “If we are to regain control of capitalism, we must bet everything on democracy.”

For democracy to work, the rules must be rewritten to prevent corporate capture of government and to create a system that supports fair representation for all Americans. Whether we fight to preserve our free system of self-government for ourselves and posterity is not a choice—it is a moral obligation.

Liz Kennedy is Director of Democracy and Government Reform at the Center for American Progress

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Liz Kennedy

Senior Fellow