Ro Khanna recently spoke at the Santa Clara County Democratic Club, the oldest Democratic club in the county, to make his case and win their endorsement. The thirty-minute speech about returning to the ideals of our founding fathers touched on some of the country’s current problems: stagnant wages, housing and education costs, and our dysfunctional Congress. Yet he barely mentioned solutions other than a few tax policies that would likely not pass the GOP controlled house.
He also spoke of the corrosive effect of money in politics, more than once using the term “corporate PACs and lobbyists” in reference to his opponent. Vowing not to take PAC money, Khanna led voters to believe he is not the candidate supported or influenced by big money. It’s a lie. Counting on an inattentive media and uninformed electorate, Khanna was able to flood the district with corporate and Wall Street money without a need for PACs. Keep in mind the last election cost 7 times the previous election, which does not include super PAC spending. Using last election’s Federal Election Commission’s (FEC) reports, we can see how this ploy works.
Some campaign finance basics.
Individual Donor to Candidate Limits For the 2016 election individual donations to candidates were limited to $2700 per election or $5400 for the primary and general elections.
PACs – Political Action Committees
Organizations create PACs as a way to pool money that can be used to support candidates or issues.
Non-connected PACs used by single-issue or advocacy groups such as the Sierra Club, Move On, or the NRA are allowed to take contributions from the general public, other PACs and candidates.
Who can contribute to connected PACs (corporations, unions and trade groups) is more restricted: only employees and shareholders for corporate PACs, only members for union PACs. Neither corporations nor unions can give to their PACs. Individual donations to PACs are limited to $5000 per year. PACs can give to candidates no more than $5000 per year.
Super PACs – Independent-Expenditure-Only political committees
The Citizen United decision allowed for a new type of PAC, the super PAC. Although unable to work directly with candidates or parties and not allowed to give to candidates or parties, they are unlimited on how much they can spend. Also unlimited is from who and how much each can contribute.
Like regular PACs, super PACs serve different purposes. Some are created to support or oppose specific candidates (Ready for Hillary PAC, Stop Hillary PAC); others are created to support or oppose specific issues or causes (Working For Us labor PAC, Club for Growth).
Pulling back the curtain
Looking at a candidate’s biggest donors, the industries which they are connected along with who endorses a candidate, gives clues into a candidate’s ideology and loyalties. While Khanna’s use of the term “corporate PACs” was an attempt to tie Rep. Mike Honda to big money interests, the figures below tell a different story.
Only 12% of Honda’s 4,412 contributions were from PACs or candidate committees. They included local industry groups such as: Cisco, Google, Lockheed-Martin and Yahoo, as well as money from unions and other advocacy groups such as The Sierra Club, Democracy for America, and Move On. Also included in the committee donations are other politicians: Barbara Lee, Elijah Cummings, Keith Ellison, Jackie Speier, and others.
Bypassing the hassle of even dealing with PACs, Khanna went straight to the millionaires and billionaires. Of Khanna’s 2,312 contributions, 36% were CEO’s, corporate officers or executives, venture capitalists or investors accounting for over half of all money raised by the campaign.
This worked well for Khanna, out raising Honda $3,366,790 to $3,071,608. The average donation to Khanna was $1,456 compared to $696 to Honda. Big money donations of $2000 and above accounted for only 9% of Honda’s donations but a whopping 42% of Khanna’s. Most of those were Khanna’s donors giving $2600 for both the primary and general elections ($5,200).
Not included above is the money raised by the super PAC created specifically to support Khanna. $930,000 from 43 donors averaging almost $19,000 each.
Honda’s PAC supporters like the Sierra Club, Move On, plumbers and electricians or even local businesses like Hewlett-Packard or Google are hardly comparable to the hundreds of corporate and investor millionaires lined up to dump $5200 each into Khanna’s campaign. Many of these corporate and investor millionaires have their own special interests that are in direct conflict with the values of the Democratic Party and the interests of district 17 voters.
Although early in the last campaign, a national labor super PAC, Working For Us, distributed flyers opposing Khanna, and later the state Democratic Party paid $100,000 to air one of Honda’s campaign ads, it does not compare to the $930,000 raised by Khanna's super PAC.
During the forum, Khanna implied he did not know by whom or why the super PAC was started, offering that maybe members of the “Indian community upset by the flyer” might have started it. Except when you look at the FEC file, the common link is not the local Indian community but venture capitalists and hedge fund millionaires and billionaires. Almost 38% of the super PAC's money, $350,000, came from just one donor and his wife, retired Enron hedge fund manager John Arnold of Texas.
In reply to one questioner, Khanna claimed to have never met with the super PAC donors, but in the days following the last election he bemoaned Arnold’s mistreatment by the media.
“I do know John Arnold, we had a long conversation about pension reform and his desire for new leadership in the Democratic Party,” Khanna said. “… He and his wife are an incredibly decent couple and I’m very proud of their support. I regret that they were attacked in the campaign, I think they’re good people.”
Josh Richman's Political Blotter
While Mr. Arnold and his wife might be decent people, it is actually the duty of the media to report massive spending in our elections and look into why a Texas billionaire would spend $350,000 in our local congressional race. It’s reasonable to ask what causes the donor supports and what are the connections.
One cause that Mr. Arnold has previously supported in California is public employee pension reform. He dumped $200,000 into San Jose’s ex-Mayor Chuck Reed’s failed effort to get a public pension reform initiative on the state ballot. Is this an effort to weaken teachers’ unions making way for charter schools, which he also supports, or an effort to make the huge public pension funds more accessible to the hedge fund managers of Wall Street? We can’t be sure, but either way, teachers and other public employees better watch their political backs.
Khanna has previously attacked public pensions and Honda’s hope of strengthening Social Security. One Khanna flyer even attacked Honda for his desire to repeal the Bush tax cuts, prompting Howard Dean to declare the CA17 race was a "battle for the future of the Democratic Party." Couple that with the endorsements or support of John Arnold, Chuck Reed, Mayor Sam Liccardo, County Assessor Larry Stone, the Silicon Valley Chamber of Commerce and the Mercury News - all were big supporters of Chuck Reed’s disastrous Measure B pension reform. We can only speculate how Khanna discusses these basic Democratic policies with his donors and endorsers behind closed doors.
The PAC pledge deception
Khanna mentioned his challenge made during the last election to reject PAC donations. As the analysis of the FEC reports above show, Khanna had already devised a plan to bypass PACs and reach directly into the pockets of his millionaire and billionaire supporters. Knowing the loss of financial support from local business and unions would make it even harder for Honda to keep up with the venture capitalist and corporate money overwhelming the election; it was a sucker’s bet. But despite that, the Honda campaign welcomed the idea of reducing the influence of money, challenging Khanna to limit all donations.
In the true spirit of keeping undue influence out of this election, we propose limiting contributions to all candidates in this race to an amount that puts millionaires on a level playing field with ordinary folks: $570. This is the same limit as local elections in the city of Fremont, in our district. Honda's Campaign Manager, Doug Greven
...Khanna’s campaign never replied.
Caught with his hand in the cookie jar
Despite outraising his opponent, near the end of the last election, the Khanna campaign was in danger of not having enough money to pay his staff. Hundreds of thousands poured into his super PAC, but he still struggled to pay his basic campaign expenses. Khanna likes to crow about his pledge to refuse PAC or lobbyist money, but FEC reports show otherwise.
On Election Day 2014, not reported until a couple months after the polls closed, earmarked money was funneled to Khanna’s campaign through a PAC, Democrats for Education Reform. DFER is a pro-charter and pro-voucher advocacy PAC - one of the many pro-charter groups that John Arnold has supported financially. The money was earmarked by Walton heir, Carrie Walton-Penner, wife of venture capitalist and Walmart chairman, Greg Penner. Here is a small sample of their previous political investments:
Carrie Walton-Penner Walton Penner has funded Republican candidates for state office in Wisconsin, a state she doesn’t live in. As the Wisconsin Center for Investigative Journalism reported in September 2011, Carrie Walton Penner was the second-largest individual contributor to winning state legislative candidates in the 2010 elections that put Republicans in control of the state government; six of the top ten donors were members of the Walton family. Under the first budget passed by Gov. Scott Walker and the Republican-majority legislature, funding for public schools was cut by $800 million over two years, while funding for programs that funnel public money to private schools increased by $17 million over two years. The Walmart 1%
Greg Penner In 2006, Greg Penner, who married Carrie Walton Penner (daughter of Walmart chairman Rob Walton and granddaughter of Walmart founder Sam Walton) and serves on Walmart’s board, spent $250,000 to oppose a statewide ballot initiative that would have created a universal preschool system to give California’s children a much-needed leg up in early education. It also would have created thousands of good jobs for preschool teachers. Moyers and company
Khanna dodges a bullet …almost.
When Khanna was questioned regarding a past news article about a donor, Khanna played the perfect politician. Because the questioner misstated the issue, Khanna was allowed to avoid giving a truly honest reply. Pleading unfamiliarity with the case - claiming not to know of any donors that may have broken any laws, he stated his campaign would return any such donations. He lied. The article referred to by the questioner covered Khanna donor and endorser, Guy Gecht of Electronics for Imaging, who was ordered by the Dept. of Labor to pay $40,000 dollars in back wages because he was caught bringing workers from India and only paying them $1.21 an hour. Unions called on Khanna to return the money when the story was reported. Although he removed Guy Gecht from his list of endorsers, Mr. Gecht’s money was never returned.
In Conclusion
Khanna commented that he thought it was silly for people to dig through a candidate’s contributors for a single bad apple to smear a candidate. And I don’t disagree. But, if certain sectors of donors or just a handful of contributors provide so much of a candidate’s funding, it is worth looking into. It can paint a picture and this is one local Democrats need to see. Corporate and Wall Street millionaires, Texas billionaires, charter schools and attacks on public employee unions. A picture no Democrat would want hanging on their wall. Endorsements by Democratic clubs are signals to the local Democratic Party, the direction they wish to see the party move. They also provide resources and credibility to candidates. Whether you support Rep. Honda or not, is this the direction you want our party to take? Does Ro Khanna represent the interests important to the voters of District 17? Or the Democratic Party?
All data was complied from Federal Election Commission reports publicly available at FEC.gov.
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