Loading…
Sunday, April 20, 2014
Current Weather
Loading Current Weather....
Published: 12/18/2005

Bush fund-raisers cash in by giving then receiving

BY JIM TANKERSLEY,
JOSHUA BOAK, AND
CHRISTOPHER D. KIRKPATRICK
BLADE STAFF WRITERS

First of three parts

President Bush's corporate champions see the spoils of his administration in coal. And timber. And credit-card payments, Afghan electric lines, Japanese bank transfers, and fake crab.

America's business leaders supplied more than $75 million to return Mr. Bush to the White House last year - and he has paid dividends.

Bush Administration policies, grand and obscure, have financially benefited companies or lobbying clients tied to at least 200 of the President's largest campaign fund-raisers, a Blade investigation has found. Dozens more stand to gain from Bush-backed initiatives that recently passed or await congressional approval.

The investigation examined targeted tax breaks, regulatory changes, pro-business legislation, high-profile salaried appointments, and federal contracts.

Mr. Bush's policies often followed specific requests from his 548 "Pioneers" and "Rangers," who each raised at least $100,000 or $200,000 for his 2004 re-election. The help to business fund-raisers sometimes came at the expense of consumers or public health concerns.

The beneficiaries span industries and the nation. Examples include:

  • Timber barons who pay lower tax rates on logging sales and face fewer barriers to harvesting trees in national forests because of administrative changes and laws Mr. Bush signed.

  • Energy producers who dodged potential legal fees and cleanup costs after federal officials revised clean-air standards.

  • Heads of stock brokerages and other multinational firms, which, under a special tax incentive in the American Jobs Creation Act of 2004, are bringing hundreds of millions of dollars they earned or stored abroad back into the United States this year at reduced rates.

  • Executives of defense contractors United Technologies and the Washington Group, which won contracts potentially totaling more than $6 billion to supply American troops in Afghanistan and Iraq and rebuild both countries' infrastructure. The same contractors won far less government work under President Bill Clinton.

  • Mining executives who tapped new veins of coal, thanks to administrative rule changes that opened swaths of hills and forests to their backhoes and left once-protected streams vulnerable to pollution.

    With rare exception - such as a California Pioneer recently implicated in a congressional bribery scandal - the Bush supporters' benefits appear to come through legal channels of lobbying, rule-making, and legislation.

    But a federal investigation of Ohio Pioneer Tom Noe, indicted in October on charges he laundered money into the President's campaign, has focused attention on Mr. Bush's network of elite fund-raisers, who accounted for at least 28 percent of Mr. Bush's $271.8 million in individual contributions for the 2004 campaign.

    A Blade investigation beginning in April led to accusations by state officials that Mr. Noe stole millions of dollars the state invested in his rare-coin funds. The probe also brought the money-laundering allegations against Mr. Noe to light.

    A Blade report in October showed Ohio's 30 Pioneers and Rangers have secured more than $1.2 billion from taxpayers since 2001 for their companies and lobbying clients.

    All of the Pioneers and Rangers who agreed to talk to the Blade for this series said they supported Mr. Bush's ideology and style of governance and said they expected no reward but his victory.

    "I was pleased he was a candidate. I liked what his father had done," said Herbert Boeckmann, a California Bush Pioneer who owns the world's largest Ford dealership. "He was a little bit of a maverick, but he recognized the key was to get the job done."

    A spokesman for the Republican National Committee said Mr. Bush has helped the country add 4.4 million jobs since May, 2003.

    "The President's pro-growth economic policies have helped small business, families, and first-time home buyers," said the spokesman, Aaron McLear.

    Some experts agree. Martin Regalia, chief economist for the U.S. Chamber of Commerce, said Mr. Bush embraces traditional pro-business policies, such as lowering taxes and lessening government regulations.

    "When you look at the overall economy, it's doing very well with solid GDP growth and low core rates of inflation," Mr. Regalia said. "Part of the reason, certainly, is his policies."

    Mr. Bush is hardly the first president to help supporters financially.

    William McKinley doled government jobs to his backers after winning the 1896 presidential election. Mr. Clinton raised tariffs on soap and batteries imported from Europe as retaliation for tariffs that continent levied against the South American bananas of a Clinton supporter, Cincinnati's Carl Lindner, who later became a Bush Ranger.

    In his 2004 presidential bid, Sen. John Kerry called for a 36 percent hike in the federal minimum wage, a policy supported by the AFL-CIO, a labor union whose members contributed heavily to the Democrat's failed presidential campaign.

    Campaign-finance analysts question whether Mr. Bush's system of recognizing top fund-raisers - as opposed to donors who cannot give more than $2,000 per election cycle to a presidential candidate - provides corporate leaders with special treatment.

    Steve Weisman, associate director for policy at the Campaign Finance Institute in Washington, said election law does not require candidates to reveal any details about their fund-raising networks.

    "Right now, what we know is what the campaigns tell us," he said. "Shouldn't we disclose the people who get credit for arranging for these donations? Isn't there a problem that they might have some undue influence on the recipient?"

    Many Pioneers and Rangers joined Mr. Bush before the 2000 election, when he was governor of Texas. They saw him as a powerful advocate for business, and they made no secret what they hoped to get from his administration.

    Credit-card giant MBNA wanted to collect more of its customers' debts.

    The Delaware-based company has supplied 54 million Americans with novelty credit cards displaying Elvis Presley, a charging Florida State University Seminole on horseback, or an Icelandair flight cruising above the Atlantic Ocean.

    The seduction by plastic includes bonus points, "Love Me Tender" teddy bears, and occasionally personal bankruptcy.

    When MBNA's customers filed Chapter 7 bankruptcy, courts wiped their credit balances away. MBNA wrote off $4.1 billion in unpaid credit-card bills last year.

    To stem the losses, the company worked to change the rules. It spent nearly $20 million from 1998 to 2004 to lobby Congress on issues including bankruptcy reform. Even before Mr. Clinton killed a reform bill late in his second term, MBNA had turned to George W. Bush.

    MBNA employees gave the Bush campaign more than $200,000 in 2000, the most of any company, and allowed the campaign to use an MBNA corporate jet. The new president pushed bankruptcy reform in his first term, but an unrelated congressional dispute scuttled it.

    The company worked hard for Mr. Bush again last year. Former MBNA CEO Charles Cawley and Vice Chairman Lance Loring Weaver both qualified as Rangers, each raising at least $200,000 for the President's re-election.

    MBNA surpassed Enron last year to become the largest corporate patron of Mr. Bush's career, according to the Center for Responsive Politics in Washington.

    The eight-year struggle for bankruptcy reform ended within 90 days of Mr. Bush's second inaugural address. The 500-page law, initially crafted by a financial services lobbyist, mandates credit counseling for prospective filers and makes it harder to escape credit-card debt.

    "The legislation in effect deputizes the bankruptcy courts as collection agents for the credit-card companies," said Mark Sargent, dean of Villanova University's law school, a bankruptcy expert, and critic of the bill. "The great irony of this is that it's having your cake and eating it too. They push credit to anyone with a pulse."

    Americans received 5.23 billion credit-card mailings - 18 offers for each man, woman, and child - in 2004, according to Vertis, a marketing consultant. About 1.6 million households filed for bankruptcy last year, according to the American Bankruptcy Institute, up from 287,570 in 1980.

    The reform law's implementation in October caused a temporary spike in bankruptcy filings that will hurt MBNA's short-term profits but should reduce future bankruptcy filings, the company said in its quarterly filing with the Securities and Exchange Commission.

    Todd Zywicki, a George Mason University law professor who favors the law, testified to a Senate committee that credit-card companies would receive an additional $3 billion each year with its passage.

    Based on the market share figures compiled by the industry analyst Web site cardweb.com, the law will give MBNA about $380 million more annually. That figure would feed the company's yearly profit of $2.6 billion.

    In June, after the law passed, Bank of America agreed to purchase MBNA for $35 billion, 31 percent above the company's market value at the time. An analyst called the sale price "rich."

    MBNA representatives declined to comment. However, Philip Corwin, an attorney for the American Bankers Association, said the legislation was approved to curb abuses of the bankruptcy system rather than boost the revenues of credit-card companies.

    "This is not a windfall," he said.

    Frank Dulcich netted more subtle help from the Bush Administration.

    For years, the fish baron and his family-owned string of seafood processors, the Pacific Seafood Group, fought a steady current of government fishing restrictions.

    Some schools of rockfish, once a staple of West Coast fishing, had dwindled. Pacific's Oregon-based executives and lobbyists complained that federal scientists couldn't fully explain why and that regulators responded to the shortage by limiting catches too severely. In 2000, Mr. Dulcich penned an op-ed article titled, "Seafood community set adrift by Congress."

    A lobbyist for Mr. Dulcich and other processors told a federal commission in 2002 that the government's caution in protecting ocean life was "like the difference between birth-control pills and abstinence: You have a 95 percent chance of preventing pregnancy with the former and a 100 percent chance with the latter, but abstinence is nowhere near as rewarding."

    The same year, federal officials restricted fishing of whiting, which processors use to make imitation crab and frozen fish sticks. Commercial fishermen catch more whiting off the Pacific Coast than any other fish. Pacific Seafood says it handles more of it than any land-based processor.

    Mr. Dulcich, who previously had donated to Democratic and Republican congressmen in the Pacific Northwest, upped his political activity in 2002. He hired the Gallatin Group, a lobbying firm that boasted two Bush Pioneers.

    Soon Mr. Dulcich scored a meeting with the U.S. commerce secretary, escorted a top federal fisheries regulator along the Oregon coast, and joined the ranks of Bush Pioneers.

    Mr. Bush signed a bill early in 2004 directing $950,000 from the federal treasury that helped Pacific Seafood treat wastewater on the Oregon coast.

    Citing a new study, the Bush Administration pulled whiting from the "overfished" list, increasing catch limits nearly 70 percent and sending more fish to processors. A spokesman for the National Oceanic and Atmospheric Administration, which sets fishing levels, said whiting populations rebounded strongly following the decision. Another official said it appears to have been a mistake to restrict the fish in the first place.

    "When we make decisions about taking things off the overfished list," said NOAA spokesman Susan Buchanan, "it has nothing to do with politicians and everything to do with science."

    Mr. Dulcich and Gallatin lobbyists did not return phone calls seeking comment.

    Much of the West Coast fishing industry is gasping for air, as trawlers sit unused in docks and some fishermen look for new jobs. But Pacific Seafood reeled in an estimated $700 million in revenue last year, according to the trade magazine Seafood Business, which ranks the company third among American seafood suppliers.

    Fishermen who have battled Mr. Dulcich over crab and fish prices dub his company "the Wal-Mart of the Seas."

    Several pending laws, many supported by Mr. Bush, could help Pacific Seafood grow even faster. One would guarantee Pacific and other processors a chunk of the whiting catch each year. Mr. Bush publicly opposes such quotas, but he signed a similar measure for Alaskan crab last year. Federal officials added a seat for Mr. Dulcich on a committee studying quotas last year.

    Another plan would allow decommissioned off-shore oil rigs to transform into floating fish farms, guaranteeing seafood processors a steady fish supply, sparing oil companies millions in cleanup costs, and raising concerns about farmed fish spreading disease to wild stocks.

    Mr. Bush recently proposed an overhaul of the nation's signature fisheries management law, including changes that conservation groups say would weaken restrictions on overfishing. Some paragraphs of the plan match a proposal drafted by seafood processors nearly word for word.

    "Frank is a smart, very personable guy," said Peter Huhtala, senior policy director for the Pacific Marine Conservation Council, which works on fisheries issues. "But in order to keep growing ... and adding to his wealth, I think you're seeing some politics at play too."

    Other Pioneers and Rangers hope Mr. Bush's policies will add to their wealth soon.

    They include Wall Street traders banking on a 2003 dividend tax cut to boost stock prices, doctors seeking caps on their lawsuit liability, pharmaceutical executives waiting for a new federal prescription drug plan to kick millions of dollars their way, and the wife of the chairman of the Hallmark greeting-card company, which is lobbying to slow the increase in postage rates.

    In some cases, though, the wish lists of Bush supporters clash. For example, the automotive industry - with all of its moving parts.

    Among Mr. Bush's top fund-raisers is Nicholas Taubman, former CEO of Advance Auto Parts Inc. and the recently appointed U.S. ambassador to Romania.

    Mr. Taubman, who did not return a call to The Blade, supports controversial legislation - the "Right to Repair Act" - that would bolster his $4.65 billion company. It would force automakers to share information on car parts and technology.

    The knowledge would help independent mechanics work more effectively on newer cars and promote healthy competition for repair business, said U.S. Rep. Joe Barton (R., Texas), who is sponsoring the bill. Those mechanics need parts from affordable sources, such as Mr. Taubman's company and competitor AutoZone.

    Automakers and dealers are fighting the bill, claiming Advanced Auto Parts and others are less interested in promoting the free market and more interested in making money off of cheaper replacement parts.

    Connected dealership magnates who oppose the bill, such as Bob Tuttle and John Click, are also Pioneers and Rangers. So are Kenneth Zangara, a large-scale Dodge dealer in Albuquerque, N.M., and Mr. Boeckmann, the Los Angeles owner of Galpin Motors.

    Mr. Barton has delayed the legislation for years, hoping the sides could settle amicably. But talks have always broken down, said Barton spokesman Karen Modlin.

    The President has not yet weighed in.

    Blade staff writers Mike Wilkinson, Steve Eder, and James Drew contributed to this report.

    Contact Jim Tankersley at: jtankersley@theblade.com or 419-724-6134.



  • Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. If a comment violates these standards or our privacy statement or visitor's agreement, click the "X" in the upper right corner of the comment box to report abuse. To post comments, you must be a Facebook member. To find out more, please visit the FAQ.