UNLIMITED, UNACCOUNTABLE CAMPAIGN SPENDING EXPLODES

Traditionally, campaign spending has been done by a committee set up and overseen by a candidate running for election. A candidate’s campaign committee is governed by state or federal laws depending on the office for which the candidate is running. These committees are required to publicly report donors and the size of contributions is limited. Currently, at the federal level, contributions to candidates’ committees are capped at $2,700 per person per election.

This all began to change 25 years ago when groups and sometimes individuals other than a candidate’s campaign committee started spending money to influence the outcomes of elections. This spending is referred to as “outside spending” or “soft” money because it occurs outside of the candidate’s official campaign committee. It is supposed to be independent of the candidate’s committee and its efforts are not supposed to be coordinated with those of the candidate’s campaign. However, this independence is very questionable in many, if not most, cases. The regulations defining the standard for independence and the enforcement of them have been weak at best. The Federal Election Commission (FEC), the primary regulator of campaign spending, is hamstrung by the intense partisanship in Washington.

The lack of accountability for outside spending has been a major contributor to the growth of negative campaigning. Outside spending is typically used to attack an opponent rather than to support a candidate. The attacks can be nasty and stretch the truth or worse. Because outside spending is technically independent of the candidate, he or she can plausibly claim that it is out of his or her control. Therefore, no one can be effectively held accountable for the content of ads or other material.

Outside spending had been growing relatively modestly until the Supreme Court’s 2010 Citizens United decision that ruled that wealthy individuals, corporations, and other organizations could engage in unlimited outside spending. The five Supreme Court justices who supported this ruling felt that such spending was part of free speech. They believed that the independence of the spending and the disclosure of its sources would prevent the corruption of elected officials who benefited from it. However, there is now significant evidence of collaboration between outside spenders and candidates, as well as evidence of corruption. (See my previous posts on illegal coordination and the corrupting effects of unlimited spending.)

Outside spending has already hit $1 billion in the 2016 federal elections – up from $225 million at this point in the pre-Citizens United 2010 elections. There’s been $621 million in outside money spent on the presidential race, $426 million spent on Senate races, and $187 million spent on House races. [1]

Outside spending now exceeds the spending by candidates’ committees in many of the high profile, tightly contested Congressional races. [2] Outside spending is spreading to state-level elections, which I’ll discuss in a future post.

Super political action committees (super PACs) are the primary vehicle for outside spending. Super PACs have spent $847 million to-date in the 2016 federal elections and they will spend hundreds of millions more by Election Day. There are no limits on the size of contributions they can receive, but they are required to disclose their contributors.

In addition to super PACs, two types of non-profit organizations are used for outside spending because they are not required to disclose their donors. (I’ll discuss donor secrecy in my next post.) One type is business associations like the US Chamber of Commerce, the American Medical Association, and the Pharmaceutical Research and Manufacturers of America. These groups are referred to as 501(c)(6) organizations because that is the section of the IRS rules that governs them. They may engage in political activities, as long as these activities are not their primary purpose. However, the IRS has not defined “political activity” nor “primary” so some of these organizations easily skirt this limitation. [3]

So far in the 2016 elections, 6 of these business associations have reported $26 million in political spending to the Federal Election Commission (FEC), including almost $25 million spent by the US Chamber of Commerce. The FEC reporting does not represent all the political spending by these groups because only certain kinds of activity are required to be reported, most notably activity, usually ads, that explicitly encourages the election or defeat of a specific candidate.

The second type of non-profit organization that is widely used for political purposes is commonly referred to as a social welfare organization. Examples include the National Rifle Association (NRA), Planned Parenthood, and the Sierra Club. These groups are referred to as 501(c)(4) organizations because that is the section of the IRS rules that governs them. Their primary purpose is supposed to be promoting the social welfare of our society. However, as with business associations, they may engage in political activities, as long as these activities are not their primary purpose. Again, because of the lack of clear regulations, some of these organizations easily skirt this limitation.

So far in the 2016 elections, 95 of these groups have reported $93 million in political spending to the Federal Election Commission (FEC), including $25 million spent by the NRA, the biggest spender among them by far. As with business associations, the FEC reporting does not represent all the political spending by these groups because only certain kinds of activity are required to be reported.

In addition to the significant potential for corruption, outside money is problematic because the unlimited spending it allows gives a megaphone to wealthy corporations and individuals that can drown out other voices that provide important information for voters. For our democracy to function as the founders envisioned it, citizens must vote and be well-informed. Unlimited election spending by a tiny slice of our society means that voters will receive skewed information and may be discouraged from voting because they feel their voices and votes are meaningless.

As a result, a democracy built on the principle of one person, one vote, is fundamentally undermined. All voices should be heard in a relatively balanced manner during election campaigns. Given the constraints of the Supreme Court’s campaign finance decisions, the value and impact of small campaign contributions must be enhanced by matching them with public funds. Ultimately, the Supreme Court’s campaign finance decisions must be overturned and limits established on contributions and spending in our elections.

[1] OpenSecrets.org, retrieved 10/22/16, “2016 outside spending, by race,” Center for Responsive Politics (https://www.opensecrets.org/outsidespending/summ.php?disp=R)

[2] OpenSecrets.org, retrieved 10/22/16, “Races in which outside spending exceeds candidate spending,” Center for Responsive Politics (https://www.opensecrets.org/outsidespending/outvscand.php?cycle=2016)

[3] OpenSecrets.org, retrieved 10/22/16, “Dark money basics,” Center for Responsive Politics (https://www.opensecrets.org/dark-money/basics)

CAMPAIGN SPENDING GROWING BIGGER AND DARKER

Campaign spending on the 2016 presidential and Congressional elections will exceed $7 billion, beating the previous record from 2014 by about $1 billion. This will continue the trend of ever increasing campaign spending.

Unfortunately, the three forums (or “debates”) for the presidential candidates included no meaningful discussion of campaign financing, despite strong and broad-based concern about this issue among the public. For example, across party lines, 78% of the public believes the Supreme Court’s 2010 Citizen United decision should be overturned because it has allowed unlimited spending on our elections by wealthy individuals, corporations, and other entities. [1]

The big growth in campaign spending is coming from outside groups that are (supposedly) independent of candidates’ campaigns. By the end of August, super PACs had already collected more than $1 billion, which exceeds the $853 million they raised through the whole 2012 election. And additional mountains of money will be contributed before Election Day.

This record amount of campaign funding is increasingly coming from a small number of extremely wealthy individuals and is increasingly being funneled through a small number of super PACs and non-profit groups. It is driven by huge contributions from a handful of donors. Just 10 individuals or couples, who have each contributed between $38 million and $14 million, have contributed a combined total of $200 million. [2]

The top 100 donors have already contributed $558 million for the 2016 elections. The growth in the amount contributed by the top 100 donors in the 6 years since the Citizens United decision (which allowed them to make unlimited contributions) is astounding: from $70 million in 2010 to $380 million in 2012 to $558 already in 2016. [3] In other words, the average contribution of each of the 100 largest donors has grown from $700,000 in 2010 to $5.6 million so far in 2016 with many more dollars expected before Election Day.

Furthermore, a growing portion of this outside money is “dark” money, meaning that the true donors of the funds are kept secret. Hundreds of millions of dollars have been contributed to politically active non-profit organizations that keep their donors’ names secret. (More on this in my next post.)

Huge donations by wealthy donors, which are dominating our elections, are a major contributing factor to voters’ belief that our elections, political system, and policies are rigged in favor of wealthy individuals and corporations.

My next posts will examine the growth of “dark” money where donors’ identities are concealed, efforts to block increased donor disclosure, and the presence of unlimited contributions and dark money in state-level elections.

[1] Editorial, 10/15/16, “The other campaign madness: Mega-donors,” The New York Times

[2] Gold, M. & Narayanswamy, A., 10/5/16, “How 10 mega-donors already helped pour a record $1.1 billion into super PACs,” The Washington Post

[3] Kim, S.R., 10/13/16, “Liberal big money is pouring into elections,” Center for Responsive Politics (https://www.opensecrets.org/news/2016/10/liberal-big-money-is-pouring-into-elections/)

DRUG PRICE GOUGING CONTINUES

Valeant Pharmaceuticals is price gouging again. Having acquired the rights to the drug used to treat severe lead poisoning in 2013, it has increased the price from $950 to $27,000. There is no reason other than greed for this huge price increase on a decades-old drug. The cost is limiting availability of the drug to children with lead poisoning, including those from Flint, Michigan. [1] Lead poisoning can be life-threatening, but more often causes problems with growth and development, including anemia, neurological damage, and cognitive impairments.

Valeant is the corporation that acquired two heart drugs in 2014 and more than doubled the price of one and quintupled the price of the other. This was on top of a quintupling of their prices in 2013 by the previous owner (who had recently purchased the rights to the drugs). So, overall their prices have jumped to 10 and 25 times what they were in 2013.

Valeant has been one of the poster children for pharmaceutical greed. It has repeatedly purchased drug companies and then dramatically boosted the prices of their medicines. [2]

My previous post, Drug Prices: A Big Problem in Our Privatized Health Care System, provides more information on the problem of unrestrained drug price increases. It also gives 8 more examples of dramatic drug price increases where the only explanation is greed coupled with a lack of regulation.

Drug prices in the U.S. are not regulated or routinely negotiated as they are in other countries. Therefore, the pharmaceutical corporations, which often have monopolistic power, can increase drug prices more or less at will.

In September 2015, Senator Bernie Sanders filed a bill in the U.S. Senate to address price gouging by pharmaceutical corporations. The Prescription Drug Affordability Act would allow the Medicare prescription drug program to negotiate prices with drug companies, a practice that is currently banned by a 2003 law. It would also require the pharmaceutical corporations to report information about the factors affecting their drug pricing, such as research and development costs.

I encourage you to contact your U.S. Senators and Representative to urge them to support the Prescription Drug Affordability Act and efforts to control drug prices in general.

[1] Prupis, N., 10/14/16, “As Flint suffers, big pharma slammed for lead poisoning drug price hike of 2,700%,” Common Dreams (http://www.commondreams.org/news/2016/10/14/flint-suffers-big-pharma-slammed-lead-poison-drug-price-hike-2700)

[2] Silverman, E., 10/11/16, “Huge Valeant price hike on lead poisoning drug sparks anger,” Stat (https://www.statnews.com/pharmalot/2016/10/11/valeant-drug-prices-lead-poisoning/)

PROBLEMS WITH PRIVATIZED PRISONS

The problems with privatized prisons have come to public attention largely due to the investigative journalism of The Nation and Mother Jones. Their reporting underscores the importance and challenges of investigative journalism. It has become relatively routine for targets of investigative journalism to sue (or at least threaten to sue) the journalists and their publishers. Both corporate and government entities have built an ever stronger set of legal protections including employee non-disclosure agreements and other employer protection laws and legal precedents. The mainstream, corporate media have largely abandoned investigative journalism at least in part due to the threat of litigation and because news and reporting budgets have been slashed to increase profits.

When Mother Jones published its report based on a guard’s experiences at a private prison run by the Corrections Corporation of America (CCA, see overview and link below), it received a threatening letter from a law firm on behalf of CCA. It was the law firm that had represented a billionaire and large political campaign donor who had spent 3 years suing Mother Jones over its reporting of his anti-LGBT activities. Although the billionaire lost his case, the legal costs Mother Jones incurred in defending itself were a very serious financial burden. Furthermore, he pledged $1 million to support others who might want to sue Mother Jones over its reporting. [1] Needless to say, this type of aggressive behavior by the subjects of investigative reporting puts a chill on this valuable kind of journalism.

The Nation’s investigative reporting was based on reviewing a large number of documents from the Bureau of Prisons (BOP) in the US Department of Justice. The documents were obtained only after a lengthy and costly process using the Freedom of Information Act to gain access to these public records.

The records showed that the Bureau of Prisons’ monitors had documented, between January 2007 and June 2015, the deaths of 34 inmates who were provided substandard medical care in the BOP’s private prisons. Fourteen of these deaths occurred in prisons run by the Corrections Corporation of America, while fifteen were in prisons operated by the GEO Group. These two corporations are the largest operators of for-profit prisons. [2]

Despite this and other documentation of serious problems at the for-profit prisons, top BOP officials repeatedly failed to enforce the remediation of dangerous deficiencies and routinely extended contracts for the prisons. This was due, at least in part, to a cozy relationship between BOP leadership and the private-prison operators because of the revolving door of personnel between the BOP and the private providers. In 2011, for example, Harley Lappin, who had served as the Director of the BOP for eight years, left to join CCA as executive vice president. There he earned more than $1.6 million in one year; roughly 10 times his salary at BOP. Two previous BOP Directors, J. Michael Quinlan and Norman Carlson, had gone to work for CCA and the GEO Group, respectively. Five BOP employees recalled the former BOP Directors participating in meetings between the BOP and the contractor for whom they worked. The BOP employees felt this influenced decisions that were made and made taking disciplinary action against the contractors difficult.

Mother Jones magazine’s investigative reporting was done by Shane Bauer, a reporter who spent 4 months as a guard at one of CCA’s private prisons in Louisiana. [3] He found that cost cutting was a focus of both the state and CCA. Employee costs made up 59% of CCA’s operating expenses and therefore were a key target for cost-cutting. Starting guards at Bauer’s CCA facility made only $9 per hour while those at public prisons in the state made $12.50. To further save money and increase profits, the CCA facility was typically under-staffed. The facility’s guard towers were unmanned on a regular basis and staffing inside the facility was typically 10% – 20% below standard. Lockdowns, where prisoners can’t leave their wing of the prison, were supposed to be punishments for major disturbances, but they also occurred over holidays and other times when there simply weren’t enough guards to run the prison. Security checks on prisoners were logged as being done even when they weren’t because of understaffing. However, when the state’s Department of Correction was coming for an inspection, guards were required to work overtime so the facility was fully staffed.

As a result of under-staffing and perhaps under-training (another cost-cutting strategy), the use of force or chemical agents, typically pepper spray, occurred more often at the CCA prison than at comparable facilities: twice as often for force and 7 times as often for chemical agents. With 1,500 inmates, 546 sexual offenses were reported at Bauer’s prison in 2014, 69% higher than at a comparable government-run facility. Between 2010 and 2015, CCA was sued more than 1,000 times nationwide, with approximately 3% of the cases involving a death, 6% sexual harassment or assault, 10% physical violence, 15% injuries, 15% medical care issues, and 16% prison conditions and treatment.

Louisiana’s efforts to cut costs and use contractors to run cheap prisons was reflected in the $34 per inmate per day that it paid CCA, while funding for state-run prisons was about $52. In addition, the inflation-adjusted cost per prisoner at the CCA facility Bauer worked at had dropped by 20% between the late 1990s and 2014.

CCA has an incentive to keep prisoners in its prisons in order to maximize revenue. An inmate can be charged with an infraction of the rules and lose credit for good behavior. This can mean that an inmate stays in prison an extra 30 days and that CCA gets paid an additional $1,000.

In Louisiana, the state also had an incentive to keep the prison full because CCA’s contract with the state required that CCA get paid for a minimum of 96% of full occupancy. Occupancy guarantees are common in private prison contracts and are one aspect of privatization that leads to perverse incentives for the state. The state’s incentive to keep the prison full may mean that prisoners who could be released are kept in prison or that the criminal justice system is pressured to arrest and sentence enough people to ensure that the prison is full.

CCA has been very active politically through lobbying and campaign contributions. Since 1998, CCA has spent $23 million on lobbying the federal government. Since 1990, it and its employees have contributed more than $6 million to candidates and other political activity. It has lobbied for high levels of incarceration. It co-chaired the criminal justice task force of the American Legislative Exchange Council (ALEC), a corporate and conservative think tank that drafts and promotes state-level legislation. Among the pieces of legislation it has promoted are mandatory sentencing laws, punitive immigration reform, and truth-in-sentencing laws, all of which helped fuel the growing prison population of the 1990s.

CCA and other for-profit prison corporations aggressively lobbied Congress in 2009 for a minimum number of undocumented immigrants to be in private detention centers. They succeeded; US taxpayers are required by law to pay for a daily minimum of 34,000 beds in private detention centers. [4] These corporations have also lobbied against bills in Congress that would require private prisons to be subject to public information laws, such as the Freedom of Information Act. Such bills have been introduced at least 8 times in Congress, but have failed to pass each time.

These are examples of the problems and issues with private prisons, and with privatization in general. The problems with the private prisons were severe and intractable enough that the BOP concluded that it had to terminate its use of them. The BOP’s experiences and decision to end privatization should be kept in mind as other privatization efforts are reviewed or proposed.

[1] Jeffery, C., July/August 2016, “Why we sent a reporter to work as a private prison guard,” Mother Jones (http://www.motherjones.com/politics/2016/06/cca-private-prisons-investigative-journalism-editors-note)

[2] Wessler, S.F., 6/15/16, “Federal officials ignored years of internal warnings about deaths at private prisons,” The Nation (https://www.thenation.com/article/federal-officials-ignored-years-of-internal-warnings-about-deaths-at-private-prisons/)

[3] Bauer, S., July / August 2016, “My four months as a private prison guard,” Mother Jones (http://www.motherjones.com/politics/2016/06/cca-private-prisons-corrections-corporation-inmates-investigation-bauer)

[4] Editorial, 8/27/16, “Dump private prisons – all of them,” The Boston Globe

PRISON PRIVATIZATION: A FAILED EXPERIMENT

The risks of privatizing government services have been highlighted by the recent bad experience with private prisons. The Bureau of Prisons (BOP) in the federal Department of Justice (DOJ) recently announced that it will end its 20 years of using privately-run, for-profit prisons due to significant, clear cut problems.

A DOJ Inspector General’s report in August 2016 found that private prisons were less safe, less secure, and more costly than the BOP’s own government-run prisons. Among other problems, dozens of deaths linked to substandard medical care were documented. [1] Private prisons also had higher rates of assaults and 9 times more lockdowns (used to quell disturbances and punish prisoners) than government-run facilities.

Earlier reports on the BOP’s privatized prisons had found that any cost savings were negated by the costs of oversight and that the quality of services was lacking. These are common problems with privatization. Frequently, the cost of oversight is not factored into the cost-benefit analysis of privatization. Therefore, privatization may appear to save money when in actuality it doesn’t. Furthermore, the oversight that occurs is often unsuccessful in ensuring efficient and high quality performance by the private provider, as occurred with the BOP’s private prisons.

Despite these earlier findings, the use of private prisons grew and by fiscal year 2015 the BOP was paying private prison contractors $1.05 billion a year. [2] Today, the BOP houses about 22,000 of its prisoners in 13 private prisons out of a total of roughly 175,000 prisoners under its jurisdiction. Its announcement stated that it will phase out the use of these private prisons as their contracts expire over the next few years.

The US Department of Homeland Security, on the other hand, has said nothing about its future use of private detention facilities, which house about 25,000 immigrants. These detention centers have also been found to provide substandard medical care linked to deaths. They also have experienced high suicide rates. [3]

Turning over a public service to a private, for-profit corporation often creates perverse and counterproductive incentives. Privatization at the BOP, as in most cases, was focused on reducing public sector costs. The goals of minimizing cost and maximizing profit often conflict with the social mission of a public service. In the case of privatized prisons, the goals of humane treatment and rehabilitation are undermined.

In private prisons, the corporate providers cut costs (and increase profits) by increasing the number of inmates in a facility (resulting in overcrowding); decreasing the services provided to them (including rehabilitation, education, job training, and medical care); providing cheap (and sometimes unhealthy) food; using substandard facilities; and decreasing the number, pay, and training of staff (including guards, supervisors, and medical staff). In addition, to generate revenue, they charge fees to inmates and their families (that are often unaffordable), and also sell inmate labor typically without paying the inmates for it. [4] Another frequent problem with privatization is that private providers bill government for services that were not needed or in some cases were not actually provided in order to increase revenue and profits.

Because the for-profit prison corporations are private entities, they are not subject to public information laws. This lack of transparency is another frequent problem with privatization. Not surprisingly, the for-profit prison corporations tend to be quite secretive, which makes public scrutiny of them and their service delivery difficult.

The private prison business began in the 1980s. The war on drugs was underway; tough on crime and strict sentencing laws were in their political heyday. Between 1980 and 1990, state spending on prisons quadrupled and still many prison were over-crowded. [5]

At the federal level, detention of undocumented immigrants exploded in the 1990s. Until then, border crossing was treated as a civil offense, punishable by deportation. But then, as part of the tough on crime and anti-immigrant politics, Congress changed that. By 1996, crossing the border was a federal crime. Prosecutions for illegal entry rose from fewer than 4,000 in 1992, to 31,000 in 2004 under President George W. Bush, to a high of 91,000 in 2013 under President Obama.

Privatization of public services was a hot topic in the 1980s as it was purported to be more efficient, to reduce costs, improve quality, and reduce government expenditures. It also provided opportunities for private profit.

Therefore, it wasn’t surprising that privatization of prisons blossomed as a way to meet a growing need and, supposedly, reduce governments’ costs. To handle the flood of undocumented immigrants into its prisons, the BOP turned to private corporations to operate a new type of facility: low-security prisons designed to hold only non-citizens. As of June 2015, these facilities — which are distinct from immigration detention centers, where people are held pending deportation — housed nearly 23,000 people. Three private corporations now run 11 immigrant-only prisons for BOP: five are run by the GEO Group, four by the Corrections Corporation of America, and two by the Management & Training Corporation. [6]

The Corrections Corporation of America (CCA) began operation in 1983 and grew from 5 facilities in 1986 to 60 today. It houses 66,000 inmates and in 2015 reported revenue of $1.9 billion with net income of $221 million. Its main competitor is GEO Group, which has 70,000 inmates in its private facilities.

The problems with private prisons have come to public attention largely due to investigative journalism by The Nation and Mother Jones. My next post will provide an overview of their reporting. The failures of the BOP’s 20-year experience with private prisons hold many lessons for efforts to privatize other government services including roads, bridges, and public transportation; schools; water and sewer systems; and trash collection.

[1] Wessler, S.F., 8/18/16, “The Justice Department will end all federal private prisons, following a ‘Nation’ investigation,” The Nation (https://www.thenation.com/article/justice-department-to-end-all-federal-private-prisons-following-nation-investigation/)

[3] Editorial, 8/27/16, “Dump private prisons – all of them,” The Boston Globe

[4] Vanden Heuvel, K., 8/23/16, “On private federal prisons, a victory for independent journalism,” The Washington Post

[5] Bauer, S., July / August 2016, “My four months as a private prison guard,” Mother Jones (http://www.motherjones.com/politics/2016/06/cca-private-prisons-corrections-corporation-inmates-investigation-bauer)

[6] Wessler, S.F., 1/28/16, “ ‘This man will almost certainly die’,” The Nation (https://www.thenation.com/article/privatized-immigrant-prison-deaths/)