Drowning Democracy

In Columns by Hal PetersonLeave a Comment

Last December, New York State Senator Daniel Squadron, a Democrat representing lower Manhattan and parts of Brooklyn released a report explaining how some 11,000 Limited Liability Companies (LLCs) have transformed into personal piggy banks contributing near-unlimited sums of money to political candidates of their choice, often anonymously.

His report has one clear message. In doing so, they routinely violate the spirit of New York’s Campaign Finance Laws. He argues, reversing the 1996 New York Board of Elections decision that categorized LLCs individuals, is absolutely essential, least Democracy drown.

A very important sidebar issue also exists. It concerns a 2010 U.S. Supreme Court decision that ruled “spending by political action committees, and in particular Citizen’s United (a 5014 non-profit organization) is protected as free-speech under the Constitution, and that government cannot stop corporations and unions from creating deep-pocketed independent groups to support or oppose a candidate.” To exasperate things further, such donations (also) do not require disclosure.

The bottom line of both happenings, changes in regulations and court decisions meets and exceeds the often muttered expression “Power tends to corrupt; absolute power corrupts absolutely.” Money is just one aspect of power. Need proof, consider the following.

As highlighted in the Senators report, New York Staten LLCs contributed over $20 million to political candidates and committees in 2014. In many cases, multiple LLCs could be traced to a single address, with little information provided as to the actual source of the contribution. Money on steroids.

The torrent of money that flows into New York politics was a central concern for the Moreland Commission, with LLC loopholes cited as one of the most glaring weaknesses in our campaign-finance system. Specific abuses are too numerous to cite. Suffice it to say the line between political donations and outright bribery remains murky.

In January, Governor Cuomo (who is a major beneficiary of LLC giving) made the closing the “LLC loophole” a key plank of his ethics reform package. Needless to say none of his plans, and/or sponsored legislative proposals ever materialized leaving the probability of reform very much an open concern.  As of last week, according to the New York Times, the governor stated (only the public) can close the loopholes thru a constitutional convention.

With regard to the Citizen’s United on August 30th a Federal Court judge in Albany ruled, in a case brought to the court by our state attorney general, that disclosure is required. Will this ruling stand? It should, but I doubt it will.


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