How is 97 percent of Congress able to get re-elected each year even though only 17 percent of the American people believe our representatives are doing a good job?
It’s called an incumbent protection system. Taxpayers have a right to know how it works.
Recently, our auditors at OpenTheBooks.com, mashed up the federal checkbook with the congressional campaign donor database (source: OpenSecrets.org). We found powerful members of Congress soliciting campaign donations from federal contractors based in their districts.
We followed the money and found a culture of conflict-of-interest. The confluence of federal money, campaign cash, private employment, investments, prestigious committee appointments, political power, nepotism, and other conflicts are a fact pattern.
Furthermore, members of Congress own investment stock in, are employed by, and receive retirement pensions from federal contractors to whom they direct billions of taxpayer dollars.
Moreover, members sponsor legislation that affects these contractors. The contractor’s lobbyists then advocate for the legislation that helps the member and the contractor. Oftentimes, the contractor’s lobbyist also donates campaign cash to the member.
Here are five case examples detailing the conflict-of-interest among five powerful members of Congress:
Rep. John Larson (D-CT1): United Technologies (UT) executives, employees, political action committee, and affiliated lobbyists are the #1 campaign donor to Larson’s committee ($377,050). UT collected federal grants (subsidies) $83.8 million and federal contracts $16.1 billion (2014-2018). Mr. Larson owns UT stock 2012-2018 (last disclosure). Larsen is a ranking member on House Ways and Means.
Seven years ago, Larson’s wife got a state job from the wife of a campaign donor, who was also the state insurance commissioner. She beat out 199 other candidates and was the only one to fill out a job application. Since her hiring, she’s earned an estimated $600,000 in cash compensation.
Rep. Tom Cole (R-OK4): The Chickasaw Nation and affiliates are the #1 campaign donor to Cole’s committee ($258,461). The Nation received $700 million in federal grants and $434,000 in surplus military equipment from the Pentagon, including mine-resistant vehicles, night vision goggles, mine-detecting sets, and rifles that shoot .308 rounds. Cole is a ranking member on House Appropriations.
Since 2002, Cole’s campaign committee has hired Cole’s private political consulting partnership: Cole, Hargrave, and Snodgrass. Cole’s campaign has paid his firm a total of $224,000.
Since 2003, Mr. Cole has earned roughly $320,000 in “management fees” from his firm – while also serving in Congress. He’s also disclosed receiving $175,000 – $575,000 in “dividends/capital gains” and his “equity interest” in the firm is listed as between $250,000 – $500,000.
The Chickasaw Nation responded regarding their donations and any perceived conflict-of-interest issues with Rep. Tom Cole:
As an active participant in the political process working to enhance the quality of life of our citizens, we support candidates who have similar policy views.
The Chickasaw Nation spokesperson
Rep. Jim Cooper (D-TN5): Vanderbilt University’s executives and employees are the #1 all-time campaign donor to Cooper’s committee ($135,261) – including $21,500 from just-retired chancellor Nicholas Zeppos. Vanderbilt has received $2.6 billion in federal payments (2014-2018) including grants ($2.3 billion); direct payments ($31.2 million); and contracts ($187 million). Cooper is a ranking member of the Budget committee.
Mr. Cooper was employed by Vanderbilt during the period 2005 through 2017 and disclosed earnings of $250,500 in cash compensation. He made between $20,000 and $23,500 a year teaching a graduate level class in Vanderbilt’s HealthCare MBA program at the Owen Graduate School of Management as an adjunct professor.
Former Rep. – Current Governor Kristi Noem (R-South Dakota): Sanford Health’s executives, employees, and lobbyists are the #1 all-time campaign donor to Noem’s federal committee ($110,462). Top executives provided Noem campaign donations early in her career including $7,500 from CEO Kelby Krabbenhoft.
In 2019, Noem was sworn in as governor of South Dakota. She’s appointed two Sanford executives to head up state agencies. Noem’s transition chief was a Sanford lobbyist.
Governor Noem has proposed aiding the state’s nursing home industry by raising the rate of Medicaid payments and providing $5 million in grants to help innovate facilities. Sanford Health owns 32 nursing homes in South Dakota.
Does Sanford Health really need taxpayer aid? This “nonprofit” organization has annual revenues of $3.7 billion, assets of $2.8 billion, and paid it’s CEO $2.2 million last year.
Rep. Debbie Dingell (D-MI12): Although Dingell wasn’t elected to Congress until 2014, a member of the Dingell family has held MI-12 congressional seat for 86 years.
The executives and employees of the University of Michigan (U-M) are the #1 campaign donor to Dingell’s committee ($61,502). This is despite the fact that Dingell sits on two prominent U-M boards: the Ford School of Public Policy and the Depression Center. Trustees and university employees of those boards have donated to her campaign.
One of Dingell’s duties on the board of the Ford School is to help the school raise money and network.
Dingell is a ranking member of the House Energy and Commerce Committee. On March 21, 2019, she signed an earmark letter to the Department of Transportation (USDOT) in support of $7.5 million in grants to U-M and other partners regarding research on self-driving cars. In a press release, Dingell took credit that USDOT authorized the grant in August 2019.
The University of Michigan responded regarding their donations and any perceived conflict-of-interest issues with Rep. Debbie Dingell:
Our employees are free to make personal campaign contributions to any elected official they may wish to support.
University of Michigan spokesperson
Nothing we discovered is illegal. At arms-length, all of the transactions are legal. And that’s the problem.
We polled our subscribers and 1,900 people responded: 96 percent thought it was unethical for a member of Congress to solicit campaign donations from federal contractors based in their districts. Furthermore, 92 percent said it was an important or very important issue.
The American people get it. Members should refuse to accept campaign donations from federal contractors and their affiliates.
Note: A request for comment was sent to all members and contractors mentioned in this piece. No members of Congress responded to our comment requests. Contractor respondents included: The University of Michigan, full comment, here; The Chickasaw Nation, full comment, here. Sanford Health didn’t respond to this request, however, they issued this comment earlier, here.
Disclosure: The federal contractors themselves did not donate, rather the money came from the organizations PACs, their members, executives, employees, and lobbyists. However, The Chickasaw Nation did donate directly, here.
For more details, please download our full report, The Congressional Favor Factory.