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Corporate Contributions Shift to the Left
Published on Monday, June 19, 2006 by the Wall Street Journal
Corporate Contributions Shift to the Left
Some companies see Democrats having more sway in Washington after upcoming elections
by Brody Mullins
 

WASHINGTON - Some big companies are boosting their share of campaign contributions to Democrats this year, a sign that executives may be starting to hedge their political bets after a decade of supporting congressional Republicans.

The shift includes backers of the Republican Party in the insurance, pharmaceuticals and tobacco industries, such as American International Group Inc., Wyeth, and Reynolds American Inc., according to PoliticalMoneyLine, a nonpartisan tracker of campaign contributions.

Most companies say they give political donations to candidates who support their businesses, regardless of party affiliation. But corporations also tend to channel funds to politicians they think will hold power. So any shift in corporate campaign giving toward Democrats could signal that businesses believe Democrats will have more sway in Washington after the 2006 midterm elections or the 2008 presidential contest.

"The reality is beginning to set in here," says Greg Casey, the head of the Business-Industry Political Action Committee, an organization of businesses dedicated to electing pro-industry candidates. Even if Republicans maintain control of Congress after the November election, their majorities in both chambers are expected to shrink. "What you couldn't get done in 2006 will be much more difficult in 2007," Mr. Casey says.

Mr. Casey's PAC has given Democrats 41% of its $123,000 in donations since the beginning of the 2005-2006 cycle. That is up from 31% in the 2003-2004 cycle, and the highest share since Democrats controlled the White House and both houses of Congress in 1994.

Before the Republican takeover of Congress a dozen years ago, companies split their donations about evenly between the two parties. After Republicans gained control, and seemed to solidify it, the money balance swung sharply in their favor. Despite the party's latest woes, most companies give the bulk of their contributions to Republicans. While there is a change among some Fortune 500 companies, a Federal Election Commission review of all corporate PACs shows companies overall giving about a third of their funds to Democrats in this campaign, the same portion they have allocated for the past few campaigns.

While some companies may be looking to curry favor with ascendant Democrats, several business groups say they are responding to the Republicans' woes by stepping up support and working harder to beat back the Democratic tide. "I clearly see a very strong concern among the business community and a very strong willingness to help out" by supporting Republican candidates for Congress, said Bill Miller, political director for the U.S. Chamber of Commerce.

The change among some companies and trade groups is helping Democrats gain a more even footing with Republicans in the race for cash. The Democratic Senatorial Campaign Committee has, so far in this election cycle, raised more than its Republican counterpart for the first time since Democrats lost control of Congress in the 1994 election. In the House, Republicans have raised more money than the Democratic campaign arm, but the gap is narrower than in previous campaigns. "Democrats are realizing the importance of working closely with business leaders," says Sen. Charles Schumer of New York, the top fund-raiser for Senate Democrats.

In total, political action committees run by corporations are expected to contribute about $120 million to congressional candidates in this election, up from $91.6 million in the 2002 midterm election. In the 2005-06 campaign season so far, Wyeth, FedEx Corp., Verizon Communications Inc. and Intel Corp. are all giving Democrats their biggest proportion of campaign contributions since 1994. In that election, each of those corporations gave more than half their donations to Democrats, a level that fell in the 1996 campaign.

In total, political action committees run by corporations are expected to contribute about $120 million to congressional candidates in this election, up from $91.6 million in the 2002 midterm election. In the 2005-06 campaign season so far, Wyeth, FedEx Corp., Verizon Communications Inc. and Intel Corp. are all giving Democrats their biggest proportion of campaign contributions since 1994. In that election, each of those corporations gave more than half their donations to Democrats, a level that fell in the 1996 campaign.

Wyeth this year is giving 33.7% to Democrats, up from 26.9% in the 2003-2004 cycle. FedEx's Democratic share has jumped to 35.6% from 29.9% two years ago. Intel is giving 30.8%, up from 22.5% in the last cycle.

Those companies, as with others, rejected the notion they were consciously hedging their bets, or declined to discuss their giving strategy. A Wyeth spokesman said the "political party doesn't necessarily come into play" in contribution decisions. FedEx declined to give a public comment. An Intel spokesman said the partisan trend was a "coincidence."

From 1998 through 2004, two tobacco companies -- Lorillard Tobacco Co. and Reynolds American -- gave a steadily increasing share of their funds to Republicans. This campaign, for the first time since the Republican takeover, they are scaling back. Lorillard is giving Democrats 16% of its funds, up from just 7.3% in 2004. Reynolds has lifted its Democratic share to 14.9% from 13.3%.

"Our approach to our political contributions is that we support those who will support us or will give us an ear," said David Howard, a spokesman for Reynolds.

Lorillard didn't answer requests for comment.

A few companies are now giving more to Democrats than they are to Republicans, reversing their pattern of the last election cycle. MetLife Inc. has given Democrats a slim majority of its donations after giving Republicans 60% of the money in the 2004 campaign. AIG has given 57% of its donations to Democrats so far in the 2005-06 election cycle. In the last election cycle, the insurance company gave 53% of its campaign contributions to Republicans and its then-chairman, Maurice Greenberg, raised an extra $200,000 for President Bush.

A spokesman for MetLife said the company generally gives about 50% of its contributions to each party, with Republicans receiving a slight majority. "At the end of the day when the election cycle is done you will find that we will be pretty much again in that 50-50 range," said MetLife spokesman John Calagna.

A spokesman for AIG declined to comment.

The shift in donation patterns for some big businesses mirrors early signs that companies and corporate trade groups may now be increasing their hiring of lobbyists with Democratic ties, after a decade of largely shunning them. The Federalist Group is a corporate lobbying shop founded by Republicans soon after the party took over Congress in 1994. In its first eight years, the firm only hired Republicans, including former aides to onetime House Majority Leader Tom DeLay, former Senate Majority Leader Trent Lott, and President Bush.

Four lobbyists recently hired by the firm, beginning earlier this year, are Democrats, including a former House member from Louisiana and a health-care aide to liberal icon Edward Kennedy, the Democratic senator from Massachusetts.

Other firms and trade groups that hired Democrats recently include the Information Technology Industry Association and the National Beer Wholesalers Association. In April, a new trade group representing the food industry tapped former California Democratic Rep. Cal Dooley as its president.

At least part of the Democrats' new gains can be attributed to the decline of former House Majority Leader Tom DeLay of Texas and a Justice Department investigation into Republican lobbyists.

At the height of his power, Mr. DeLay pressured corporations to hire Republican lobbyists and increase their political donations to Republicans. "The grip of fear has been broken," said Paul Equale, a Democratic consultant.

"Companies understand that the government is run by Republicans, but the kind of draconian arm-twisting that you've had for the last five years is gone now," he said.

Copyright 2006 Dow Jones & Company, Inc.

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