Alphabet : Pause in Corporate PAC Spending Triggers Political Pushback

By Brody Mullins, Emily Glazer and Chad Day

Lawmakers from both parties are pushing back against companies that have suspended campaign donations, saying the freeze is unfairly punishing everyone and could undermine corporate interests in Washington.

Democrats friendly with business have complained to companies, including Alphabet Inc.'s Google, Citigroup Inc. and Lockheed Martin Corp., that they are being penalized for actions taken by Republicans challenging the results of the Nov. 3 election, people familiar with the discussions said.

Democrats have also told companies that pausing donations from their political-action committees could weaken them politically, ultimately jeopardizing business priorities in Congress, some of the people said.

Separately, Republicans who voted with Democrats to uphold President Biden's win have told companies that cutting off their funding could hurt their election prospects and hinder them if they are challenged in a GOP primary by those who supported former President Donald Trump's unfounded claim that he won re-election, some of the people said.

Republicans who voted to challenge the election are responding as well, warning that companies are denigrating politicians whom they have come to rely on for advancing favorable legislation, according to congressional aides and fundraising consultants.

The assault on the Capitol on Jan. 6, fueled by claims of election fraud by Mr. Trump and his GOP allies, led many companies to suspend PAC contributions while they re-evaluate their political gift-giving.

IBM Corp., which doesn't have a corporate PAC, received calls from two Fortune 100 companies considering curtailing their corporate PACs, said Chris Padilla, vice president of government and regulatory affairs at IBM. He said the companies asked how IBM conducts government relations without a PAC.

"We've never needed PAC checks to start productive relationships with policy makers," Mr. Padilla said.

Google's PAC initially suspended donations to all lawmakers following the violence at the Capitol. More recently, Google said, following an internal review and feedback -- though it didn't specify from where -- it would only suspend donations to Republican lawmakers who didn't certify Mr. Biden's win.

Microsoft Corp. suspended all donations from its PAC after the Capitol riot, pending further review and discussions with employees. The company recently said that 20% of its PAC donations over the past four years went to politicians who objected to Mr. Biden's win, and that it would announce by Feb. 15 whether to halt future donations to their campaigns.

The tech giant is also considering how long any suspension will last and whether it should take additional steps affecting lawmakers who led the objections, according to a transcript of internal executive remarks Microsoft released publicly.

At Raytheon Technologies Corp., dozens of employees have suspended their individual contributions to the company's PAC, according to people familiar with the matter. Some of those employees said they don't want to finance Republicans who contested Mr. Biden's win, one of the people said, while others told the company they would stop contributing because they are upset the company paused all corporate PAC donations.

Companies including Bank of America Corp., Boston Scientific Corp., Deloitte and Microsoft have also heard from Democratic lawmakers or their aides in recent weeks asking questions including the rationale for suspending PAC donations to lawmakers who didn't challenge the election, people familiar with the discussions said.

Corporate PACs account for roughly $3 of every $100 in federal political donations overall, according to an analysis of data compiled by the nonpartisan Center for Responsive Politics, but some lawmakers -- especially House members who stand for re-election every two years -- are heavily dependent on these funds.

More than 100 House lawmakers relied on corporate and industry PACs for 40% or more of their funding in the 2020 election, according to an analysis by The Wall Street Journal. Of those, 55 were Democrats and 47 were Republicans.

A total of 38 House members each raised more than $1 million from corporate and industry PACs in the 2020 election.

While many companies have cut off lawmakers from both parties, the tension is especially notable among Republicans, given that the party has historically championed a pro-business agenda.

Rep. Blaine Luetkemeyer (R., Mo.) is a senior member of the House Financial Services Committee and is in line to be chairman of the committee if Republicans retake the House in 2022, which would give him broad influence over banks and Wall Street firms.

Mr. Luetkemeyer voted in January to challenge the presidential election results in Pennsylvania, joining a majority of his Republican colleagues in the House.

The decision by PACs to stop contributing to those Republicans has threatened the primary source of Mr. Luetkemeyer's election funds.

Nearly two-thirds of the $2 million that Mr. Luetkemeyer raised for his most recent election came from corporate and industry PACs, including those of Bank of America, Citigroup and Goldman Sachs Group Inc., according to the Journal analysis.

Only two members of Congress are more dependent on corporate and trade group PAC donations.

Asked about the impact of the cutoff, a spokeswoman for Mr. Luetkemeyer said that "PAC contributors have every right to support whatever political candidates they choose, be they pro-growth Republicans like Congressman Luetkemeyer or others who have taken a different posture on policies impacting the economy."

The decision by corporations to cut off PAC donations could hurt industry's relationships with normally pro-business Republicans and Democrats on Capitol Hill. Progressive Democrats are readying an array of proposals to regulate or tax businesses this Congress, such as a new tax on financial transactions. Aides to Republican and Democratic lawmakers say they may be less willing to help undermine those proposals by speaking out against them in public, offering amendments to water them down in committee or lending their support to competing proposals.

The rift is the latest fissure between American corporations and normally pro-business lawmakers in both political parties.

Since the late 1970s, corporate lobbyists and their promise of PAC donations have been one of the strongest gravitational forces pulling Republican and Democratic lawmakers together to support pro-business legislation and policy.

But the firestorm created by the decision to pause donations could threaten the ability of companies to rally a majority of lawmakers in Congress to block efforts by Mr. Biden and congressional Democrats to increase corporate taxes, impose new regulations on business and raise the minimum wage. Congressional aides for lawmakers who have been banned from corporate PAC funds say it could affect the vigor with which they challenge some of the progressive agenda.

Meanwhile, several Democratic aides have contacted corporate executives and lobbyists to voice their displeasure, according to people familiar with the conversations. In a flurry of phone calls, they have delivered the message that halting corporate PAC donations hurts centrist Democrats in Congress who are helping companies fend off progressive attacks from the party's liberal wing, the people said.

"We find it offensive to be lumped in with the Republicans who voted to set aside the Electoral College results and who contributed to inciting this mob," said Rep. Sean Maloney (D., N.Y.), who recently took over the House Democrats' campaign arm for the 2022 election.

Democrats in the party's Blue Dog Coalition, who regularly split with other Democrats to support business priorities, are especially unhappy with the cutoff of corporate contributions.

"What's at issue here is not the support they're withholding; it's the message they're sending," said Rep. Stephanie Murphy (D., Fla.), the co-chair of the centrist Democratic group. By halting donations to Democrats as well as those who challenged the election, companies are "blunting the accountability that should be imposed on those who defiled our democracy."

It is unclear how long companies will uphold their pause on campaign donations. Many corporate lobbyists believe companies will resume giving to their Republican and Democratic allies as soon as lawmakers begin moving new tax and regulatory policies through Congress.

"D.C. can have a short memory," said Lyndon Boozer, a longtime Democratic lobbyist. "We'll see how long this lasts."

Aides to some Republicans lawmakers say they are considering punishing the companies that halted PAC donations by banning their lobbyists from coming to their offices to advocate on legislation.

"The way these PACs have tried to so quickly distance themselves is going to have a lasting impact on our relationship with corporate America," said one congressional aide who works for a lawmaker who voted to challenge the election.

In the Senate, some Republicans who voted with Democrats to certify the election could be made more vulnerable to re-election defeat by the PAC ban.

One is Sen. John Thune, a senior Republican from South Dakota. Even before Mr. Thune voted to confirm Mr. Biden's election, Mr. Trump called for a Republican to challenge Mr. Thune in a GOP primary.

Allies of Mr. Thune, who is the second-ranking Senate Republican and a reliable champion of business, worry that fending off a primary challenger will be more difficult without campaign funds from PACs.

Roughly 20% of the money raised by Mr. Thune since his last election in 2016 came from corporate and industry PACs.

--Chip Cutter contributed to this article.

Write to Brody Mullins at [e-mail], Emily Glazer at [e-mail] and Chad Day at [e-mail]

(END) Dow Jones Newswires

02-01-21 0544ET