When money is free speech

http://crooksandliars.com/karoli/senator-ron-johnson-may-be-hot-water


June 25, 2011 04:30 PM

Senator Ron Johnson May Be In Hot Water


Before Ron Johnson bought ,er, ran for Russ Feingold's Senate Seat and won, he was CEO of a small plastics company called Pacur. Johnson spent over $9 million running for the Senate, ostensibly out of his own pocket.
And like a miracle, $10 million showed up after his election in the form of a deferred compensation payment. Imagine that...just enough money to cover the cost of buying his election,er, running for the Senate and winning.

Johnson's plastics company paid him $10 million in deferred compensation shortly before he was sworn in as Wisconsin's junior senator, according to his latest financial disclosure report.

The first-term Republican declined to say how his Oshkosh firm, Pacur, came up with a figure that so closely mirrored the amount he personally put into his campaign fund.

"You take a look in terms of what would be a reasonable compensation package, OK?" Johnson said this week. "It's a private business. I've complied with all the disclosure laws, and I don't have to explain it any further to someone like you."

Attitude notwithstanding, he certainly should have to explain it to "someone like me," especially when this magical deferred compensation package was not an agreed-upon annual set-aside as most corporate deferred compensation packages are.

In fact, the person who set the amount of the payment was one guy - Ron Johnson.

In an interview this week, Johnson emphasized that he has not taken a salary from the plastics manufacturing company since he bought it in 1997.

Records show the Oshkosh businessman still had income of $1.3 million and $2.3 million annually from 2005 to '08 from capital gains, corporate earnings and real estate. In the first half of 2010, he received $650,000 in what he called "pass-through income" from a limited liability company that owned Pacur.

After the election, in which he defeated Democratic U.S. Sen. Russ Feingold, Johnson said he dialed down his active involvement with Pacur and received the deferred compensation package for serving as its CEO over the previous 13 years.

Unlike most deferred package deals, however, it appears that the company had not set aside a specified amount annually that would be paid out when he left the firm. Instead, Johnson said the $10 million payment was "an agreed-upon amount" that was determined at the end of his tenure with the company.

Agreed upon with whom?

"That would be me," he said.

About that claim that he hasn't taken a salary? Well, yes, and no. What he did is what a lot of small business owners do to defer taxes. He converted the corporation to a "pass-thru entity", then loaned himself $650,000 per year. Because payments to him were characterized as loans, he paid no federal or state income tax on them. But clearly, he was paid a handsome salary..er...loaned a handsome salary.

The interesting part comes when you look at his financial disclosures. He disclosed his ownership interest in Pacur, LLC as being worth $1-$5 million. Yet his ultimate deferred compensation payment was $10 million -- just enough to cover his campaign costs.

Of course, any other candidate (including Russ Feingold), would not be allowed to finance their campaign with corporate funds. Yet it appears that Ron Johnson has done just that, while availing himself of the lowered Wisconsin tax rate on wealthy citizens and corporations to maximize his tax savings.

To be clear, while it appears to get around the rules about corporate campaign financing, it doesn't mean anything illegal has occurred. At least, not overtly. The IRS could, if they wanted, challenge the $10 million payment as unreasonable compensation. They could decide that the loans to Johnson were really a way to dodge taxes rather than given as legitimate corporate loans to an officer. They could, but it's unlikely.

But it raises a larger issue. Any discussion and/or vote on tax reform in the Senate that Johnson participates in opens a huge conflict of interest. How can he possibly represent all of the citizens of Wisconsin when he clearly benefitted from corporate loopholes to finance his run for the Senate and to dodge income taxes on Pacur income for all of those years? It's hardly likely that this Senator who just managed to avoid paying taxes on $650,000 per year in income would vote to close loopholes on the wealthy or tighten corporate rules with regard to executive compensation, after all.

Oligarchy, much?

 

http://www.nytimes.com/2011/06/28/us/politics/28campaign.html?_r=1


Justices Strike Down Arizona Campaign Finance Law
By ADAM LIPTAK
Published: June 27, 2011

WASHINGTON — In its first campaign-finance decision since its 5-to-4 ruling in the Citizens United case last year, the Supreme Court on Monday struck down an Arizona law that provided escalating matching funds to candidates who accept public financing.

“Laws like Arizona’s matching funds provision that inhibit robust and wide-open political debate without sufficient justification cannot stand,” Chief Justice John G. Roberts Jr. wrote for the majority. Justice Antonin Scalia, Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito Jr. joined the majority opinion.

In a dissent summarized from the bench, Justice Elena Kagan said the Arizona law advanced First Amendment values.

“The system discriminated against no ideas and prevented no speech,” Justice Kagan wrote. The upshot of the Arizona law, she said, was “less corruption” and “more speech.” Justices Ruth Bader Ginsburg, Stephen G. Breyer and Sonia Sotomayor joined the dissent.

The decision concerned only public financing schemes that use matching funds as opposed to lump-sum grants.

“We do not today call into question the wisdom of public financing as a means of funding political candidacy,” Chief Justice Roberts wrote.

But supporters of campaign finance regulation worried that the decision represented a first step in a broader legal assault on public financing.

States and municipalities are now blocked from using a method of public financing that is simultaneously likely to attract candidates fearful that they will be vastly outspent and sensitive to the avoidance of needless government expense.

The decision concerned two consolidated cases, Arizona Free Enterprise Club v. Bennett, No. 10-238, and McComish v. Bennett, No. 10-239. It was the fifth ruling from the Roberts court cutting back on the government’s ability to regulate campaign finance.

A theme than ran through some of those cases was present on Monday, too: the government, the majority said, has no business leveling the playing field where speech is involved.

“ ‘Leveling the playing field,’ ” Chief Justice Roberts wrote, “can sound like a good thing. But in a democracy, campaigning for office is not a game.”

 

Crossroads GPS to go up with big ad buy hitting Obama on economy
By Mark Murray


Crossroads GPS, one of the two Karl Rove-founded GOP outside groups that played such a big role in last year's midterm elections, is back on the air.
This time, it's running a $5 million ad buy -- as part of a $20 million initiative -- hitting President Obama on the economy. The two-week ad campaign begins airing on Monday, and it will appear in battleground states like Colorado, Florida, Iowa, Missouri, North Carolina, New Mexico, Nevada, and Virginia. It also will air in Nebraska and Montana, which hold key Senate contests in 2012.
"Fourteen million out of work.America drowning in debt," the ad concludes. "It’s time to take away Obama’s blank check."

http://firstread.msnbc.msn.com/_new...o-up-with-big-ad-buy-hitting-obama-on-economy

 

Supreme Court Strikes Down Arizona Law But Leaves Public Financing Intact

read or don't, it's arcane

But.....


Justice Elena Kagan on Monday began her blistering minority dissent with a morality play comparing two states. One of them limits itself to what is essentially current federal campaign finance law -- and "remains afflicted with corruption." The other tries to create a robust public-financing regime -- and rids itself of corruption. The majority, Kagan writes, has taken the side of corruption.

Here is the beginning of her dissent:

Imagine two States, each plagued by a corrupt political system. In both States, candidates for public office accept large campaign contributions in exchange for the promise that, after assuming office, they will rank the donors' interests ahead of all others. As a result of these bargains, politicians ignore the public interest, sound public policy languishes, and the citizens lose confidence in their government.

Recognizing the cancerous effect of this corruption, voters of the first State, acting through referendum, enact several campaign finance measures previously approved by this Court. They cap campaign contributions; require disclosure of substantial donations; and create an optional public financing program that gives candidates a fixed public subsidy if they refrain from private fundraising. But these measures do not work. Individuals who "bundle" campaign contributions become indispensable to candidates in need of money. Simple disclosure fails to prevent shady dealing. And candidates choose not to participate in the public financing system because the sums provided do not make them competitive with their privately financed opponents. So the State remains afflicted with corruption.
Voters of the second State, having witnessed this failure, take an ever-so-slightly different tack to cleaning up their political system. They too enact contribution limits and disclosure requirements. But they believe that the greatest hope of eliminating corruption lies in creating an effective public financing program, which will break candidates' dependence on large donors and bundlers. These voters realize, based on the first State’s experience, that such a program will not work unless candidates agree to participate in it. And candidates will participate only if they know that they will receive sufficient funding to run competitive races. So the voters enact a program that carefully adjusts the money given to would-be officeholders, through the use of a matching funds mechanism, in order to provide this assurance. The program does not discriminate against any candidate or point of view, and it does not restrict any person's ability to speak. In fact, by providing resources to many candidates, the program creates more speech and thereby broadens public debate. And just as the voters had hoped, the program accomplishes its mission of restoring integrity to the political system. The second State rids itself of corruption.

A person familiar with our country's core values -- our devotion to democratic self-governance, as well as to "uninhibited, robust, and wide-open" debate, New York Times Co. v. Sullivan, 376 U. S. 254, 270 (1964) -- might expect this Court to celebrate, or at least not to interfere with, the second State's success. But today, the majority holds that the second State's system -- the system that produces honest government, working on behalf of all the people -- clashes with our Constitution. The First Amendment, the majority insists, requires us all to rely on the measures employed in the first State, even when they have failed to break the stranglehold of special interests on elected officials.

I disagree. The First Amendment's core purpose is to foster a healthy, vibrant political system full of robust discussion and debate. Nothing in Arizona's anticorruption statute, the Arizona Citizens Clean Elections Act, violates this constitutional protection. To the contrary, the Act promotes the values underlying both the First Amendment and our entire Constitution by enhancing the "opportunity for free political discussion to the end that government may be responsive to the will of the people." I therefore respectfully dissent.

(Sam, can you dumb that down for me?)