Now that the corporate sponsors of the Republican convention have packed up their trade show and are moving it over to the Democratic convention in Los Angeles, it is a good time to pause and ask: what do these big political donors get in return for being so generous? Looking back to the not-so-distant past, what ever became of the donors who ponied up for the Republican and Democratic conventions back in 1996?
These donor alumni are doing quite well, thank you.
Consider the story of just one of them -- Fruit of the Loom. In 1996, the textile company gave the Democratic Host Committee $100,000 for their Chicago convention, while its CEO, William Farley, served as co-chair for Republican Bob Dole’s presidential campaign. The company’s PAC and its executives have given more than $830,000 to candidates and parties since 1995, 86 percent to Republicans, according to the Center for Responsive Politics. It turns out that this has been a good investment for the troubled company’s finances.
In 1997, Fruit of the Loom started laying off workers, slashing 7,700 U.S. sewing jobs, more than a third of the company’s entire U.S. workforce, according to Public Citizen’s Global Trade Watch. The jobs went to workers in Honduras, who made 60 cents per hour, compared to U.S. workers, who made $12.
The strategy did not work, however. By December 1999, the company declared bankruptcy. In court filings, Fruit of the Loom stated that its overseas shift had "proceeded too aggressively," describing how once it fired staff it lacked trained workers, and then had to hire expensive contract workers, pay overtime, and costly shipping expenses.
The ailing company’s finances also hurt shareholders, who filed a class action lawsuit in 1998 accusing the company of giving top executives $20 million in bonuses and $12 million in stock at guaranteed prices at the same time it bled losses of some $715 million. CEO Farley was one of the beneficiaries; he got $11.1 million in stock, cash and benefits in 1996, and another $7.5 million in stock options.
Fruit of the Loom had hardly built a record of good corporate citizenship. Yet, somehow, the company managed to convince Congress and President Bill Clinton to pass a new law in May 2000 establishing a trade agreement in the Caribbean and Central America. In the House, 183 Republicans and 126 Democrats voted for the new agreement, which is expected to save Fruit of the Loom some $25 million in taxes. That’s enough money to pay the full-time salaries of 2,333 minimum wage workers for a year.
Fruit of the Loom, of course, is not the only ’96 donor that has made out well in Washington, DC. Anheuser Busch donated at least $100,000 to both the Democrat and Republican conventions in 1996. Two years later, the alcohol lobby fended off a proposal in Congress that would require states to adopt a stricter standard for drunk driving in order to qualify for federal highway funding. AT&T was another double donor in 1996, giving at least $100,000 to both the Democratic and the Republican conventions. The telephone giant recently won federal approval for its merger with MediaOne. The merger, according to Consumers Union, gives the company the option to control more than 40 percent of the nation’s cable market, and a potential monopoly over broadband Internet service as well.
So as the tales start to flow from Los Angeles, of wining and dining and revelry, remember that more is exchanging hands than leather tote bags and special edition Convention Barbie dolls. Generous contributions now often mean tens of millions of tax breaks and other special favors later.
