SHAKEDOWN IN BOARDROOM

...According to Mike McCarville, director of the National Association of Business PACs, employees are excited at the chance to “become involved in the political system without spending a whole lot of personal time at it...

...But take a closer look at how successful PAC fund-raising efforts are and you’ll begin to suspect that something more than irresponsible generosity is involved...

...The unions weren’t pleased, but it wasn’t exactly unfair...

...You knew what the point was;' remarked one of the solicited employees later to Washington Post reporter Morton Mintz...

...In a period of growing antiunion sentiment, labor’s rising political power was not viewed favorably by the conservative 80th Congress, though many liberals rationalized the system as a way to counteract what they viewed as the disproportionate power of their political foes...

...Other firms use variations on the same theme...

...Nicholas Goldberg is a New York writer...

...The Supreme Court was hearing arguments on Pbefitters Local 562 vs...

...But that much difference...

...But is that surprising...

...Then came the bad news: the boss suggested that each make a contribution to the company's political action committee to help Winn-Dixie increase its political clout in Washington...

...At the Eton Corporation, the message is subtle yet unmistakable: executives are asked to contribute to their PAC “to protect the future, of your company and your family...

...Of course individuals haven’t come forward,” says Jim Turner, Silard’s partner on the case...

...The power of PACs," a Time magazine cover story proclaimed recently, "threatens to undermine America's system of representative democracy...

...At labor’s urging, an amendment was introduced to preempt an adverse decision by the Court that gave statutory legitimacy once and for all to the system that had developed...

...So the unions took their case to Congress, which was then working out the details of what was to become the Federal Election Campaign Act of 1971...

...Dart’s techniques have proved even more effective than those of Winn-Dixie...

...Court of Appeals judgment against the IAM in which the court found proof of corporate coercion falling “woefully short...

...The irony is striking: unions, in pursuing their immediate political objective of maintaining statutory legitimacy for a system they’d created from a loophole, set in motion forces that led to an overwhelming explosion of wealthy corporate PACs...

...Sure...

...I had the feeling it would be a plus if I did:' Mintz's story appeared in 1980 and was quickly forgotten...

...Most got the good news they had been hoping for: WinnDixie was giving each of them a juicy bonus of $2,000 to $2,500 for a job well done...

...At the Eton Corporation, executives are asked to contribute “to the legal and financial limits to protect the future of your company and your family...

...Almost everyone now recognizes that the current system of financing campaigns, supposedly revamped after Watergate, is as corrupt and unfair as ever...

...But Congress succumbed to lobbying from the Chamber of Commerce and other business groups and adopted yet another compromise in 1976...

...Many companies computerize data on employee contributing and some collect for their PACs the same way the government collects its taxes-by withholding from paychecks...

...The problem is, the employee who turns over $1,000 to his corporate PAC has no control over the purposes to which it is put, and some of those purposes may be directly contrary to his beliefs...

...Brown claimed that the local systematically forced new members to contribute to the PAC, over which they had no effective influence...

...DARTPAC received a very different response, however, when soliciting stockholders, who presumably should share the same commitment of executives to ensuring that the company’s interests were protected in Washington...

...For other elections the PAC could spend the dues of union members as it saw fit...

...But what about the potential corruption in the system by which PACs get the money in the first place...

...But the suit actually is only the latest battle in a long struggle for political clout between organized labor and big business...

...The committee found no “clear-cut violation” of election laws, but noted that “the scale of operations of some of these [labor] organizations is impressive...

...That changed dramatically in 1971...

...DARTPAC’s statement of principles pulls no punches: “AS employees of a company...

...Basically, it’s a kickback request,” alleges John Silard, an attorney for the IAM...

...Yet among Winn-Dixie’s corporate executives, the contribution rate was about 74 percent, and the average contribution in 1980 was $1,526...

...The employees quoted in Mintz’s story refused to talk unless they were guaranteed anonymity...

...In the late 1940s, the Senate set up a Special Committee on Campaign Expenditures, which investigated the role of the CIO’s political action committee in the 1944 and 1946 elections...

...Today, there are 379 labor PACsand 1,512 corporate PACs...

...That year, the United Mine Workers was the largest contributor to the Democratic National Committee...

...The average contribution to a presidential campaign was $49.50...

...Corporations could now solicit PAC contributions not just from shareholders, but from “executive and administrative personnel:’ whenever and however they wanted...

...The $30 million corporate P ACs contributed in the 1982 elections came almost entirely from another source-"contributions" from managerial employees...

...US., a case charging the Pipefitters union with maintaining a fund in violation of the 1947 ban...

...1’ On the recommendation of the special committee, the Taft-Hartley Act of 1947 included a section banning labor from making campaign contributions, including contributions for primaries...

...PACs were not yet cover-story material...

...There’s nothing like a veiled reference to being transferred to Minot, North Dakota, to suddenly kindle the spirit of philanthropy...

...Employees who don’t pay up are resolicited in a letter expressing management’s “disappointment” in them...

...The growth of organized labor in the first part of the century, and the increased importance in electoral politics of labor unions in the New Deal years, soon showed that corporations were not alone in being able to rally vast sums of money to further their political interests...

...Instead of striking a balance between organizational rights and the rights of those individuals who disagree with the majority’s political views, the system encourages big institutions to manipulate dissenters...

...by Nicholas Goldberg In June 1978 the head of the Atlanta division of Winn-Dixie Stores, Inc., one of the largest grocery chains in America, summoned each of his upper- and mid-level subordinates to his office one at a time...

...But the basic idea is the same-to get along, you gotta go along...

...Congressional leaders were infuriated at what they considered a gross misinterpretation of the 1971 law...

...In 1894 Elihu Root warned the Constitutional Convention of the State of New York of the need to prevent “the great railroad companies, the great insurance companies, the great telephone companies, the great aggregations of wealth, from using their corporate funds, directly or indirectly, to send members of the legislature to these halls in order to vote for their protection and the advancement of their interests as against those of the public!’ In response to such fear, in 1907, Congress passed the Tillman Act, which forbade corporations from using their earnings to influence federal campaigns...

...The political action committee system is often a denial of the individual’s basic right to free political expression...

...Then, in 1961, the American Medical Association set up AMPAC to solicit contributions from doctors to fight such proposals as Medicare...

...Very few corporate executives, the court had noted, had come forward to complain about their employer’s fund-raising methods...

...it has been illegal, since 1907, for corporations to make political contributions...

...Lest any of them take the suggestion too lightly, included in the envelope with each bonus check was a solicitation signed by the division manager...

...A noble sentiment to be sure...

...The business community quickly realized it could do the same, and in 1963, Business-Industry PAC was set up by officials of the National Association of Manufacturers...

...Meanwhile, corporations can now do indirectly, and cheaply, exactly what they were prohibited from doing directly nearly 80 years ago...

...This state of affairs should not, however, be viewed in the narrow context of the long-standing battle between capital and labor for influence in American politics...

...In 1947 the American Federation of Labor followed the CIO’s lead, establishing Labor’s League for Political Education, which operated on the same principles...

...Friendly persuasion Those jaded souls who are constantly wary of the best intentions of government will doubtless be unsurprised to learn that this situation arose largely thanks to the election law reforms enacted in the wake of Watergate...

...we have an individual responsibility to actively engage in the political process for the purpose of preserving the free enterprise system...

...Tillman tiptoe There obviously are differences between how the PACS of unions and corporations operate...

...Approximately 83 percent of Dart’s executives contributed to its PAC in 1978-an off-election year-and in 1980 the average contribution was $1,030...

...Among the Tillman Act’s most vocal supporters was Samuel Gompers, president of the American Federation of Labor, who argued that huge campaign contributions were “endangering the endurance of our Republic in its purity and its essence!’ But Gompers’s comments were a bit disingenuous...

...So today, in terms of financial leverage, unions are probably no more influential, and perhaps even less so, than corporations were before either could contribute...

...Corporations, for example, have far more leverage over their employees by nature of being able to fire them...

...Often the individual has no choice but to give, no choice as to how much he will give, and no voice in who shall receive his financial support for a political campaign...

...For example, a libertarian employee of Dart Industries (now Dart & Kraft) may be pleased to see that Justin Dart, who heads the company, likes to spend PAC money on promoters of the free market, but would be chagrined that Dart also is a blustery hawk on foreign affairs...

...By 1968, BIPAC was spending over $500,000 a year, all of it consisting of voluntary contributions from businessmen around the country...

...But after labor’s congressional allies introduced the amendment, House Republicans pressed for a quid pro quo: if unions could continue to solicit campaign contributions, corporations should explicitly be given the same right...

...Forced’ is often more correct...

...Toward the end of the 19th century, public concern increasingly focused on the concentration of wealth and its effect on American politics...

...And understanding this helps explain how an ostensible effort at election law reform ended up legitimizing the coercion of individuals by large institutions...

...It’s time the courts, the FEC, and the public recognize that this is true of the way PACs are financed as well...

...As former Representative Bud Brown, a Republican, once observed, “TO say that...

...What was unique about the PAC was that, in deference to the requirements of Che 1943 ban, all contributions to candidates in ieneral elections were financed solely from voluntary contributions, knowingly and freely made, by members of affiliated unions...

...contributions are ‘collected’ by these specialinterest groups is often the wrong characterization...

...Corporations put the heat on employees, and employees feel that their careers hang in the balance...

...The FEC noted, “Although by the union officials’ own admission there has been an almost 100 percent success rate of DRIVE commitments from those applying for membership at the union hall, it can be argued that the business agents were merely very persuasive...

...HOW can they when their jobs are on the line...

...Instead of protecting citizens from “effects of aggregated wealth on politics:’ the system now encourages wealth to play a big part...

...In other words, they’re eager to give away their money, but they don’t want to be bothered deciding who to give it to...

...When the CIO merged with the American Federation of Labor in 1955, they combined their organizations to form the Committee on Political Eduation (COPE) and between 1947 and 1971 hundreds of individual unions, including the Seafarers Union, the United Auto Workers, the Teamsters, the painters’ union, the pipefitters, and others, set up committees to solicit campaign contributions from members...

...In response to growing labor influence, Congress in 1943 extended the ban on campaign contributions to include labor unions, But there was a loophole: the law forbade only direct contributions to candidates in general elections...

...In response, the Congress of Industrial Organizations set the stage for today’s system by establishing the nation’s first PAC, named appropriately enough, the Political Action Committee...

...The harm goes far beyond that...

...So successful have corporate PACs been that some believe the very act of asking employees to contribute to a PAC is coercive...

...True, fund-raisers for corporate PACs employ gentler methods of persuasion...

...At the end of 1975, labor PACs outnumbered corporate PACs 226 to 139...

...After all the veiled threats to their employment future, the reminders that the boss is watching, the heart-to-hearters in the executive suite, the message to the employee is subtle yet unmistakable: PAC contributions aren’t just for those who want to get involved in politics but “donations” that employees should feel professionally obliged to supply...

...And what makes the IAM suit particularly interesting is that in making its case, the union relied on some of the same arguments that conservatives have traditionally used against labor’s PACs...

...In 1975, the FEC, at the urging of the Sun Oil Company, gave a radically new interpretation to the 1971 law...

...Archie Brown, a Texas trucker, alleged to the FEC that he had been denied membership in a new Teamsters local because he had refused to contribute to DRIVE, the Teamsters’s PAC...

...Congress ultimately enacted a compromise: unions could solicit their members and corporations could solicit a “roughly comparable group”-stockholders...

...The FEC investigated Brown’s charges, but after noting that Brown could not document the alleged coercion, it accepted the union’s argument that he’d been rejected for being delinquent in paying his dues...

...The final solicitation has been one-on-one, which most PAC managers agree is the most effective fund-raising technique...

...The Teamsters, of course, are well known for their methods of persuasion...

...corporations, after all, represent their stockholders’ interests just as unions represent the interests of their members...

...Instead of promoting personal responsibility and political accountability, the system coerces individuals to give money with no clear idea of where it is going or what they will get for it...

...It spent hundreds of thousands of dollars for the fourth-term reelection of Franklin D. Roosevelt and for the election of a “progressive” Congress...

...Labor pains Yet by 1971, the number of business funds was still less than 50, and most of them were industrysponsored rather than company-run...

...At first glance, the IAM’s suit seems like a long-overdue move to defend the rights of unorganized citizens against the pressures of big institutions...

...In the six months following the SUNPAC decisions, 150 new corporate PACs were created, and by the end of 1976 they outnumbered labor PACs 433 to 224...

...In fact, many journalists often leave the distinct impression that the money contributed by corporate PACs-$30 million in 1982-is money that might be used for other corporate purposes...

...What accounts for most of the difference is a technique that your local Mafia foot soldier is intimately familiar with: it’s called the “shakedown...

...A number of corporations, particularly investment houses and aerospace firms, set up “good government funds:’ which operated on the same principles...

...Part of the difference can be explained by the executives’ higher salaries...

...Unfortunately, it didn’t stop there...

...While labor was taking advantage of the law’s loophole in the 1950s’ corporations were asleep on the job...

...If that failed, supervisors invited subordinates to solicitation meetings...

...But a loophole was still left open: the legislation did not specifically ban contributions from funds made up of voluntary contributions, like LLPE and PAC...

...And even though corporations are legally prohibited from using physical force, job discrimination, or other forms of coercion in raising money, the fact of the matter is, they don’t really have to...

...Still no response...

...Less than 0.6 percent of its shareholders contributed to the PAC in 1980...

...Those reforms, which were designed to reduce the influence of money in politics, have clearly backfired, leaving corporations with the best of both worlds: a powerful way of influencing the political process without having it affect the bottom line...

...The truth is that the likes of Exxon, Burger King, and Bechtel aren't spending a dime from their company's coffers...

...The union had lost in two lower courts, and labor leaders were worried that the case might serve as a precedent to undo the system of voluntary funds created in 1947...

...Why would an employee voluntarily give part of his paycheck back to his employer, relinquishing all control over how it is spent, rather than donate it himself to the candidate or cause of his choice...

...The subsequent rise in doctors’ incomes as a result of Medicare does suggest that PAC expenditures sometimes aren’t used in the best interests of their contributors...

...Still, both labor and management have resorted to similar strategies in their long struggle for electoral influence...

...Operating under the chairmanship of Sidney Hillman, president of the Amalgamated Clothing Workers of America, the PAC included a national office and 14 regional offices that advised and coordinated numerous state and local PACs...

...Consider a recent case brought before the Federal Election Commission by the Washington Legal Foundation, a self-described “pro-business law firm” out to undercut union influence in federal elections...

...Except for Mintz's article, the press has consistently neglected to explore the other side of the story: PAC fund-raising methods...

...So the union funds remained in business...

...The pressure to ignore or rationalize dubious fund-raising methods is enormous-particularly among the kind of ambitious people who find their way into management jobs in companies that are big and powerful enough to have PACs...

...The SUNPAC decision and the subsequent amendments by Congress spawned an explosion of corporate PACs...

...Today, of course, you can't pick up a magazine or sift through your daily barrage of direct mail solicitations without seeing dire warnings of how the $80 million that PACs spent for the 1982 elections is corrupting American politics...

...According to one estimate, labor unions spent more than $750,000 for Roosevelt in 1936-the equivalent of several million dollars today...

...Last spring, it upheld a U.S...

...Their average contribution was $27.45...

...In 1980 the contribution rate among adult Americans for all campaigns-federal, state, or local-was just 9 percent...

...The International Association of Machinists, in a recent court suit brought against the Federal Election Commission, alleged that the whole system was “inherently coercive” and infringed on the employees’ First Amendment right not to contribute...

...At Dart Industries, executives have been encouraged to think of PAC donations as “an investment in your future and that of your kids, rather than as a contribution...

...The Supreme Court, however, disagrees...

...According to the FEC, corporations could solicit not just stockholders, but all employees...

...Employees who chose not to invest in their kids’ future, or who invested in smaller amounts than those laid out in the DARTPAC “donation guidelines:’ have received follow-up letters reminding them that their contributions are being compared to their salaries...

...I gave in the interest of my career,' said another...