Jun. 11, 2001
Follow the Money
By J. Barlow Herget
RALEIGH - Former Sen. Robert Morgan went to his druggist not long ago to buy a prescription for a common allergy medicine. He was unhappily surprised to learn that one pill cost $3.50.
Not long afterwards, he read that the manufacturer of the drug was about to lose its patent after which generic replicas of the medicine could be produced and sold. These generic pills surely would be cheaper, too.
Then, Morgan reports, the pharmaceutical donated $50,000 to a national party -- entirely legal -- and in the same week, Congress approved legislation that extended the patent for the profitable drug.
Without arguing the merits over the high cost of drug research and the pricing of such medicines, one can see that Morgan’s story explains why there is such public cynicism about American politics today. Sadly, his anecdote joins a long line of suspect, pay-for-power legislation and rule making. They all illustrate how something as boring and dry as campaign finance reform really does touch our everyday lives.
Unfolding in Washington today, for example, is President Bush’s new energy policy that was introduced in mid-May. Central to his plan is his call to aggressively expand supplies of oil, natural gas, and coal and to build more nuclear energy plants. The country, in fact, may need to drill for and build more energy sources. This promises to be a lively debate, but given today’s campaign finance laws, many citizens will wonder if it will be a fair debate.
The issue for North Carolinians is not some distant argument about how to save Californians from blackouts. Energy policy affects the very quality of the air we breathe which is no longer the fresh stuff sniffed by Sir Walter Raleigh.
On May 1, the American Lung Association in its annual State of the Air Report published a list of United States cities and their respective rank in regard to ozone air pollution. Two popular North Carolina urban areas, Charlotte-Mecklenburg and the Raleigh-Durham-Chapel Hill Triangle rated 8th and 11th respectively.
Much of this pollution is caused by burning fossil fuels -- coal, oil and gasoline -- in power plants and automobiles. The public justifiably has adopted regulations that require power companies and auto manufacturers to clean up the exhaust fumes of their plants and vehicles.
Not surprising, these companies resist regulations they view as costly and wasteful, and to ensure that their arguments are heard, they give generously to political campaigns and politicians.
One study of contributions between 1989-98 in North Carolina’s state elections reported that the state’s two largest energy utilities, Duke Power and Progress Energy (CP&L), gave over $1.58 million. Executives at these companies gave an additional $500,000 in personal contributions. All legal.
Also this year, there is an estimated $850 million deficit in the state’s budget, and some leaders want to close tax loopholes to reduce the shortfall. One such loophole exempts the states’ banks from paying income tax on certain federal securities but also allows the banks to deduct the business expenses associated with those investments. The deduction is special to the banks and unavailable to other businesses.
To end the practice would mean that banks would pay between $30 million to $60 million more in taxes. Like the energy utilities, banks want legislators and government leaders to listen to their side of the debate, and their Political Action Committees put their money where their mouth is. Bank of America, the state’s largest bank, for instance, gave $644,500 and First Union, $522,500, to political candidates during the period 1989-98. They will be heard, and it’s all legal.
Most municipalities in North Carolina will hold elections this year, and the local officials who are elected will make decisions that affect how long it takes you to drive to work as well as who might live next door to you.
At one time, you could run for a local office out of your back pocket. No longer.
U.S. Sen. John McCain developed a clever tactic in last year’s presidential election. When he was asked about an issue in a debate, he would answer by talking about campaign finance reform. It probably drove the political reporters nuts to hear the same answer over and over, but he wanted his audiences to know how every issue facing a future president was touched and shaped by campaign finances.
What was his health care plan for prescription drugs? He would reply by describing how difficult it would be to adopt any plan because special interests from insurance to drug companies -- all large contributors -- would use their access to elected officials to shape or kill legislation. Follow the money.
Americans like to think they play fair. Today’s campaign finance system shows on issue after issue that those with the most money win the debate most of the time. It’s legal, but it’s not fair.
Barlow Herget is a businessman and former member of the Raleigh City Council.
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