Craig McDonald Interview, Part 2 of 3

DT: When we cut off on the, the last tape, we were talking about how you came to Texas in 1997 to form Texas Republic Justice and the niche,

the gap that you saw in the efforts to disclose, document, the role of money in politics in the state.

And I was hoping that you could go on from here to talk about some, some examples of, about how money does work in the political system in the state.

CM: Well that was an interesting time and we saw among the public interest community, I think there was a shortcoming in documenting the role of how power works,

particularly how money and politics works in the state.

Smitty and the Grey Panthers and Consumers Union and Common Cause office here, which was pretty strong at that time,

always had a solid reform agenda and they were never making much progress.

One thing we didn't think they had was or they could've used more of was factual documentation about where the money comes from in the state, who it flows to.

You have to really document the problem before you can make much effort in passing reforms and so we thought we'd take on that role.

Now that's not all we do but we do do that and we think we do it very well.

So what we decided to do, I think the first, the first group we looked at, the first exposé report on money in politics we did was to document Texans for Lawsuit Reform,

which is a coalition, a, a, it's a political action committee, I guess, and a coalition that supports what we believe were pretty draconian tort reforms.

The members of Texans for Lawsuit Reform had pitched in a lot of money into their political action committee

and many say they were responsible for George Bush's victory in 94 over Governor Richards.

It was the first year their PAC was formed.

It was formed, we believe, at the suggestion of Karl Rove who wanted to use Tort Reform as a bankable issue, if you will.

Bush ran; he had very good discipline message during that campaign.

And one of the messages he used extremely effectively was that the civil justice system in the Texas courts were out of control and were a laughing stock

and that he would do something about it and enact Tort Reform.

Doesn't sound like a very sexy issue or a very popular issue, but it became popular and it had a huge huge amount of money behind it.

The Texans for Lawsuit Reform PAC, we documented, though they claim membership of hundreds and hundreds of business people and average Texans, and indeed, they may have that among their membership.

But the money that funded their effort came from a small cadre of tycoons, if you will, around Texas,

who were almost all exclusively engaged in businesses and industries that carried lots of liability with them.

They were homebuilders, they came from, they were construction magnates, one of them ran a whole string of liquor stores, very litigious industries.

Industries that were responsible for lots of injuries and lots of pollution, many from the chemical industry, Sterling Chemicals was a member.

These tycoons had pitched in a lot of money to this political action committee to support candidates,

they knew who their candidate was going to be, George W. Bush, to run on an agenda of strong Tort Reform.

So we documented, this was after the fact, George Bush did, they did raise the money, George Bush ran and won.

Actually, his first act as governor when he took over in 95 was to declare the need for Tort Reform in Texas a legislative emergency,

which gave the Tort Reform funders, brought them much joy and actually changed the rules of how legislation moves through legislature.

It really greased the way for some very draconian Tort Reform.

So Bush delivered to that business community, that small group of tycoons on their wish list, rolled back the ability for consumers to get into the, to get into the courtroom.

It really was the first wedge that undermined the civil justice system here and undermining that's gone on ever since because Texans for Lawsuit Reform,

even though we've been documenting their financial and political power, we haven't diminished their ability to raise money, to deliver money and to win victories.

But that first report did. It documented and, and I think it, it had some very positive impact, who is this Texas for Lawsuit Reform,

do they have an economic interest in this policy, are they just promoting good government or is this something that benefits their members?

And of course we found, as happens often in politics, is that the agenda they were pushing was a self-interested agenda which would limit their liability,

take away the threat of lawsuits for when they harmed, maimed, injured, polluted the environment.

It was a self-interest agenda, self-interested agenda that promoted their, that that would help the bottom-line of their pockets and their businesses.

So that's when we started documenting the, doc, documentin, documenting the money. We have gone on to do, I guess what we call our reference studies.

We do every two years, after every election cycle, we in our databases now have have millions of campaign contributions

and we have every lobby contract ever undertaken in Texas going back for fifteen or twenty years.

And every two years at the end of every legislative year, we document through a study we we call Austin's Oldest Profession,

we document who are the big lobbyists, how much money is spent on lobbying, who's hiring those lobbyists, what issues are they working on.

And we we analyze that and throw it out there as a reference for the media and the public and activists.

We do the same on all the campaign fin, all, all the campaign money,

though we periodically do a report on a particular industry or around a particular issue such as the coal plant fight, we can get into that in a little bit.

But we do a reference report called Money in Politics and it, that's at the end of every two year election cycle here.

And it documents every campaign dollar given by everyone in Texas, we, where, where it came from, what industries those donors care about, what industries their background is, who it goes to and what sizes.

A reference work, if you will, that can tell you almost everything you need to know about the campaign finance system in Texas and how it works and how it's skewed, how it's tilted.

So we document the problems and one thing that allows us to do, it gives us a voice.

We, we, we are nonpartisan, we don't endorse candidates from any party, we don't work on campaigns.

But that's not to say that a public interest groups like ours can't have a point of view.

We have a very strong point of view and I assume most people say it's a very liberal point of view and they accuse us of being Democrats and partisans, but we're not.

We document money from Democrats to Democrats, from Republicans to Republicans. But that documentation brings us a lot of press attention.

The press don't have the, they don't have the resources, the media doesn't have the resources to do what we do, nor do they have the expertise.

When we do these reports and someone in the media needs a number, for instance, how much did TXU or the coal plants give to the chairman of the Environmental Regulatory Committee, we can provide them the answer.

And us having the answer also gives us the ability to give our spin.

We can promote our point of view on what's wrong with the system, on how it favors the special interest, if you, that's what you want to call it, the rich and powerful business class and what should be done about it.

So just documenting the problem gives us a voice, a voice for reform and advocacy voice in the problem.

You know what we found is, Texas is, we got the wild west in money in politics. You know, we say down here that in Texas you can get as much political representation as you can afford.

And that's really true; we have no limits on campaign contributions.

It's the only state of its size and it's only one of four states that don't have any limitations, the rest are small in backwaters like Mississippi and a couple of others.

But no limitations and that system has resulted in too much power in the hands of two few people in Texas.

The most recent study we did of campaign money in the most recent election cycle, the 2006 election cycle, revealed that a hundred and forty-three Texans out of twenty-two million of us, is there twenty-three million now,

a hundred and forty-three Texans gave a hundred thousand dollars or more to political candidates in this state and that money totaled fifty-one million dollars.

Twenty-five percent of all the money that flows to politicians and to political parties and to PACs here comes from a very, very small handful of elite wealthy donors and that skews how politics are run.

We have one donor from Houston who has been the leader ever since we've been tracking money, a homebuilder, Bob Perry, who gave seven million dollars in the last campaign cycle.

We have people out here who are, because we have no limitations on campaign money, there are some wealthy individuals who play the role of political party.

James Leininger, a huge wealthy donor from San Antonio, a medical doctor who made his fortune in the medical bed industry.

He's been a strong supporter of Texans for Lawsuit Reform and the Tort Reform agenda because he's in a business that saw lots of litigation, lawsuits filed against him.

But he literally funded a slate of Republican candidates because he cares strongly about an education issue.

So he single-handedly funded five Republicans because we have no limits, he funded five Republican challengers in Republican primaries in 96.

These are the politicians who run on this money and win on this money become beholden to one person out of the twenty-two million Texans, become beholden to their funder.

As we say, these these are not public servants, they're private representatives who, whose votes are in the hands of their campaign funders.

Bob Perry has become, in 2006, he's the largest political donor in America, he gave a total of seventeen million dollars in the last, in the 2006 Congressional and state elections combined.

This is unheard of.

On the federal level, which needs reform and needs public financing, you know, once you give a hundred thousand dollars, you're out,

you can choose, Mr. Perry could give a hundred thousand dollars to a combination, any of the eight hundred and seventy candidates for Congress, the how many hundred or so candidates for the senate, the presidential candidates.

Once he gives a hundred thousand dollars in a campaign cycle, he's done because we have laws that say everyone should at least have some sense of equality of clout in the political system.

Well that's not true in Texas, as we say, you get as much clout as you can afford.

We allow these rich donors to absolutely dominate the system.

So we track that, we track how the system is skewed towards the wealthy, how they dominate it,

how virtually small contributions and it depends what you call contributions of a hundred dollars or less are almost nonexistent in this state.

Politicians don't go after them, there's no efficiency in it.

When you can say you'll please Bob Perry and get a twenty thousand dollar check from him instantaneously,

why do you need to go out and get a hundred bucks from two hundred people and constituents in your own, in your own community.

You don't have to.

You know, we've done analysis of where the campaign money comes to the House and in some years

we have, I forget the exact amount off the top of my head, but overall, it's certainly less than half the money comes from people who can vote for you.

We have several Representatives who get five percent of their money or less from the voters back home.

And we've had instances where we've had several Representatives that got not one dollar from back in their communities.

All the money comes from the lobby, it's centrally organized here. That' what has the grip on the Texas system, you only hear people talk about the lobby.

Who is the lobby? The lobby is primarily those paid lobbyists who are here day in and out.

There's sixteen hundred of them, any given session, sixteen hundred paid lobbyists billing their clients three quarters of a billion dollars a year, billion, three quarters of a billion dollars.

Out of those sixteen hundred lobbyists, there are fifteen that work for consumer groups.

We have documented in the last report we did that thirty-three worked for environmental or conservation groups.

So in the sixteen hundred, I mean, you're, you're just physically outnumbered, absolutely outnumbered over there.

But more pernicious than just being outnumbered is the fact that there's a sense over there that unless you're a Lon Burnam,

someone who has a lot of courage in an extremely safe district that you can't go against the lobby,

that the lobby moves as a whole when it comes to figuring out who they're going to fund.

Once you win a seat in the Texas legislature and you have shown that you will not jeopardize the fundamental interests of the corporate community in this state, you're good to go.

They will provide you with as much money as you need to scare off challengers and to win re-election.

And very, this happens in almost every instance, in very rare instances does someone who doesn't, who goes along with the lobby, gets funded, gets defeated, it's very rare.

It's a system here where incumbents have all the power and the incumbents understand that you can't be pro-consumer, you can't be pro, you can't be too green, you can't be too pro-consumer, you can't be too worker safety or the lobby will turn its back on you.

And when the lobby turns its back on you, it's not just maybe the one company or the one industry that you pissed off. They move in a, you know, like a giant ship.

And so, the reason that progressive agenda fairs so poorly here is that almost everyone in the legislature with very few exceptions and courageous exceptions and there are some, but almost everyone understands how the game is played.

A lot of them are more thoughtful about it than others. I mean, some people get elected here and they're just, you know, wood on the bench and they go along and they get reelected time and time again.

Others are more thoughtful and have a, have a, it bothers their conscience not to do the right thing so many times. But most of them end up doing the right thing as far as the lobby goes so that they're not discarded, if you will, by the lobby.

Lets take TX... (misc.)

DT: You've given the, the sort of general outline of how campaign finance works both from the perspective of, of donors and lobbyists and, and the officials themselves.

Maybe you can show how this process functions through the lens of looking at some issues that have, I think that you've examined.

One would be the efforts to keep the grandfathered exemptions for old plants and facilities. I think this happened back in 98-

CM: Yeah, seems it's a- (misc.)

CM: Yeah, boy, that was a long time ago, 1998, I think that was our first environmental report.

Again, we're not strictly environmental advocates but we do care about the environment, many of our colleagues are in the environmental community.

They had been trying for years to get some legislation through to cap the grandfathered air pollution that was coming from the major station air polluting sources around the state.

We did a study called Dirty Air, Dirty Money because the environmental community, I believe, you know, came to us as sometimes communities do,

to say we feel, we know there's a connection between the money that comes from these polluters and our inability to get reforms through the committee.

Could you use your databases, could you use your resources and your expertise to document that because that will help us in our fight. So that's the role we play.

So I believe that study we did in 98 called Dirty Air, Dirty Money took a look at the largest grandfathered facilities and the owners of those facilities around the state

and then tracked how much they had given in campaign contributions to members of the legislature.

And lo and behold and not surprising, if I remember the results of that study, the chairperson of the Regulated Industries Committee, which oversees this particular legislation, received the most money from the polluting industry.

And it happens time and time again, case by case, the people in power to regulate an industry or to do some consumer protection that would affect an industry, the industries and the lobbyists are not naïve.

They know that those are the people to give their money to and that money seems to, well, it does, it promotes their agenda at the expense of those on the other side who don't have the money, the resources or, you know, the, the economic self-interest to give money.

In this instance, there's the breathers, the breez-breathers of the state weren't organized into a very effective PAC.

Now, yeah, they were members of the Sierra Club and the Sierra Club did all it could, but again, I take you back to that statistic where, you know, sixteen hundred paid lobbyists and thirty-three of them work for the environmentalists.

And when it comes to campaign contributions, the environmental community, the labor community, the consumer community isn't even a blip.

So we would docu-so we did, as we did in that study, we would document that the largest emitters of grandfathered air pollution provided, I forget the number, X millions of dollars to the legislature.

And we used that report, as the environmentalists took that report and used it with the media to make their case on why nothing is getting done about grandfathered air pollution.

You know, the, the major polluters, which are probably made up of the utility companies in this state, were also huge donors to Governor Bush.

Governor Bush, as you might recall, had his clean air program that he announced to take care of grandfathered pollution.

And lo and behold, who did it benefit? It was called the CARE Program, it was an acronym for something, but the secret to it and the beauty of it was that he said he was doing something but it was beautiful to his donors too

because absolutely voluntary program that took not one gram of CO2 or grandfathered pollution out of the skies, absolutely voluntary.

And why is that, because Bush is beholden to the business interests in Texas, as most Texas politicians are. It's not a partisan thing.

The Democrats were, to a large extent, beholden to the business interests as well.

But in that report, Dirty Air, Dirty Money, we tried to make the direct connections between the polluting industries who had been grandfathered

and the politicians who received the money and what those politicians, their role in making sure that the industries were not adversely regulated, if you will. (misc.)

DT: Craig, I was hoping that you could explain exactly where the money is coming from, from these corporate interests. It's not exactly the corporations as I understand it.

CM: That's correct. Texas actually has one very strong piece of campaign reform law, if you will, that we passed in 1903 and that is a prohibition on corporate contributions.

We passed that prohibition long before Teddy Roosevelt pushed it and passed it for Congressional elections in 1917, so the corporations themselves do not give directly out of their treasuries.

But the corporations have the ability to create political action committees. They create what we call a PAC, which is a separate entity on paper, with a separate bank account.

Those corporations then have the ability to spend the corporate money, the corporate treasury money, the stockholder money to solicit its privileged class, to solicit that privileged class for donations into its PAC.

That privileged class is all the employees, all the employees families, all the stockholders and their families. And that's where corporations feed their political action committees.

So they can solicit that group of people for unlimited contributions into the political action committee.

When the corporation gives, not technically gives, because it can't give out of its treasury,

but when, for instance, Texas Utilities gives money, it does so out of its PAC, which had these unlimited contributions from its executive and employees.

But it also encourages its executives to give.

So many of the employees who do give to the PAC on many occasions, also give direct contributions to, within the political system.

One thing we have done to add value to data that is publicly disclosed in Texas, is to figure out that Joe, for instance, is a vice-president of a particular company

and that when we get a campaign contribution and see it came from Joe, we can trace that back to what company Joe works for, what interest he may represent. And so we draw the lines.

When we do a study claiming that the owners of the grandfathered plants, for instance, gave X millions of dollars to the legislature, we're really tracking what its employees gave personally

and what it's poli-, and what its political action committee is getting because the corporations themselves are prohibited from giving.

And we've seen, we've seen only one dramatic example in recent history where the corporations broke that rule and that's with Tom Delay's Texans for Republican Majority.

Otherwise, that rule is pretty strictly followed, we believe.

DT: I'd like to return to this, the issue of TRMPAC, Tom Delay's effort.

But while were talking about polluters and campaign finance, perhaps you could talk about a study you did in, I think it was 2000, about the Texas Chemical Council and its gifts and its influence.

CM: Yeah, you know, again, I think we did that in conjunction with the Public Interest Group, which was working on legislation to try to make sure we at least documented the toxic releases of chemical polluters.

And, and they had discovered that one of their most effective legislative opponents was the Texas Chemical Council.

A powerful group, a trade association, if you will, a powerful group of many of the biggest Texas-based manufacturing corporations.

And so we worked with them to identify who the members of the Texas Chemical Council were and again, to document their amount of giving in a political system,

which companies it was coming from as member organizations and where it was going.

And again, I'm sure, again, I don't remember the exact findings of that report but clearly, there's no doubt in my mind that we documented that most of the chemical companies was going to

what we would call environmental obstacles in the legislature, the chair people of the committee who oversaw regulation of toxics.

And that, not surprising to the environmentalists who we worked on the report with, not, it was not surprising to them why their agenda was getting short shrift, if you will,

because much of the campaign money was directed at the people who could stop pro-environmental legislation.

DT: And was most of the giving directed at legislation or was there also pressure on the agencies and rule makings and permitting, was there any sort of influence there that you were able to identify?

CM: You know, not really, we don't, there's no, there's not a lot of money that flows to the rule making process. That money generally flows to the top of the ticket.

As an example, current Governor Rick Perry received over four hundred thousand dollars from Texas Utility Corporation since he's been governor.

He actually changed the rule-making for the coal plants; he fast tracked the coal plants. So when ru-when rule making is influenced, it's often influenced from the top.

The money doesn't flow to the rule makers themselves, certainly not to the Public Utility Commission nor the TCEQ, the regulatory bodies, but it flows to the top.

And the top can send subtle or direct messages as the direct message in the coal plant from Perry to fast track the permitting process.

So, the money has an impact but most of the money goes to elected officials and very little have we ever seen flows to non-elected officials.

The non-elected officials are often lobbied and often lobbied by legislators.

We exposed the fact that the interest behind Metabolife, the food supplement, had hired several legislators to lobby the Texas Department of Health to stop some warning labels on Metabolife.

We exposed that and ended up, that exposure of their lobbying, behind the scenes lobbying, actually resulted in pretty strong protections where members of the Texas legislature can no longer hire themselves out to lobby state agencies.

It use, so, so the, the way the state agencies and the regulators got lobbied was the Chemical Council or another special interest would give campaign contributions or dole out money to members of the legislature who they would then hire as their paid professional lobbyist advocates at the regulatory agencies.

It's an absolute system of, of, filled with conflicts of interest.

And so I think our exposure during what we call the Metabolife scandal actually resulted in a pretty strong reform getting through the next legislature which prohibits the practice.

DT: Well you've told us a little bit about where the money ends up, maybe we can return to where the money comes from and, and you, I think it was in, from 2001 through about 2005,

Tom Delay and some of his associates were involved in a effort to move money from the federal to the state level through a group called TRMPAC, Texans for a Republican Majority.

CM: Majority, hmm umm, that's right.

DT: Can you explain that whole process and how you, you exposed it?

CM: Well, you know, it's a, it was a certainly a, a transitionary period in Texas politics.

The House was controlled by the Democrats, Pete Laney was still Speaker, the election of 2002, everyone knew was going to be a pivotal election.

In 2001, the Texas state government redistricted all our Congressional districts as you are supposed to do every ten years and we usually do it 2001.

The plan that, because of the Democrats controlled the House in 2001, the redistricting plan which was adopted by the courts in Texas, was a plan that was pretty fair.

It kept the balance between Republicans and Democrats in the U.S. Congress pretty even.

The Republicans understood that they were on the verge of taking over the House, it's just the natural transition that's been going on for fifteen or twenty years here, the demographic shift between Democratic majorities to Republican majorities.

And then Tom Delay had actually boasted during the 2000 election that he was going to spe-he was majority leader in Congress, very powerful member of Congress, former member of the Texas legislature,

boasted that he was going to help raise, I believe it was a million dollars or so, in the 2000 election to make sure that the Democrats lost the majority of members in the Texas House.

So that when redistricting came around in 2001, the Republicans would have the Senate, the governorship and the House and they could draw their plan.

Well Tom Delay was distracted, was busy, hired some bad people, fell down on the job, was actually personally, I think shamed and embarrassed.

They didn't raise hardly any money and they didn't wrest the House of Representatives from the Democrats in that 2000 election.

I think when it came to 2002, that Delay and his cronies, I think, thought they had to result to cheating to raise as much money as they can, to make sure what they failed to do in the 2000 election would happen in 2002.

They created a independent political action committee called Texans for a Republican Majority

and they raised a great deal of hard money, legal contributions from non-corporations, from individuals and from other PACs into that committee

to support Republican candidates in the 2002 general election so that they could win the House, the Texas House.

What we discovered through the hard work of Chris Feldman, our staff attorney here, who, after that election, poured over IRS filings from Texans for a Republican Majority.

We discovered a couple of funny transactions, that unlike the reports they filed with the Texas regulators, the Texas Ethics Commission, which showed no corporate money,

the reports that they filed with the IRS, Feldman found out, showed that there was some several hundred thousand dollars of direct corporate contributions that went into the TRMPAC treasury,

corporations which we've talked, corporate contributions which had been outlawed in Texas in 1903.

So we discovered it, we documented it, we also saw that some of that corporate money was instead of given directly to candidates, it was funneled up through the RNC, the Republican National Campaign Committee in Washington.

Feldman discovered that there were several transactions on one day with checks coming back from the RNC to a slate of candidates that Delay was supporting here.

Essentially, if you looked at the time pattern, you could see, a reasonable person could could see, that they had laundered this money.

They had raised corporate money; they'd sent it up to the Republican National Party Committee.

That committee had taken the same amounts, written checks directly to Republican candidates and sent the money back.

The original source of the money was corporate money, which was illegal.

And Feldman did a good job of discovering that and we, within a matter and, you know, on-once we saw the documents, it didn't take too long to document what had happened.

We wrote that up in a complaint to Ronny Earl, who's a Travis County District Attorney and Mr. Earl runs the Public Integrity Unit. He's responsible for enforcing all our anti-corruption laws.

And we took that information to Mr. Earl and it since, and in, you know, the Grand Jury has indicted Tom Delay and indicted three or four of his cronies.

There's been civil lawsuit against the treasurer of TRMPAC that was successfully carried out.

And that scandal, if you will, which was successful to the extent that the money was used to help the Republican slate and the Republicans won the Texas House of Representatives in 2002,

and Tom Craddick became Speaker, took the gavel away from the Democrats and it was successful in that Delay, in the short term, got what he wanted.

The Texas legislature for the first time ever readdressed the redistricting map, the map they had just passed two years earlier.

After the 2002 elections, they wrote a new map without waiting the customary ten years for a new census to do it

and that map absolutely favored Republicans, I believe the, the switch in seats was seven House seats, six or seven House seats, Republican gains over Democrats. That map became the law of the land and is currently the map.

The only justice in the story is that Ronny Earl did take up the prosecution, he investigated it, a Grand Jury indicted Delay and indicted several operatives of TRMPAC and they are still under criminal prosecution.

And Delay, of course, has been forced to give up his seat in Congress. First he had to give up his leadership post and then resign his seat, all as an outcome of this particular scandal.

So we were very proud, we, you know, all that boring watching of the campaign finance system sometimes pays off in high drama.

DT: One thing that I thought was interesting about the exposé of the, of of the Delay financing mechanism was that apparently it, it put some advantage, some disclosure laws that had passed just prior to Craddick coming as Speaker of the House.

And I was wondering if you could talk about some of these electronic disclosure laws and how that, that helped your case?

CM: Yeah, we we haven't been very successful in getting fundamental reforms through this legislature, by fundamental I mean, some real limits on how campaign money flows.

But we have been successful in improving the disclosure.

When we first started this work back in 97, we had to go through dusty file cabinets of documents and spend hours and hours with interns inputting paper records into computers so that we could database this stuff.

But over the years, I think in large part to our studies and some of the exposure we've given to the system, we've been able to shame the legislature, if you will, to enacting state-of-the-art disclosure.

Now, and it helped us in the TRMPAC case, because now we see virtually in real, real time, all campaign finance reports, contribution and expenditure reports are filed with the Texas Ethics Commission via electronic format.

There used to be in the first couple years some loopholes on how you could get out of it if you pledged that you didn't use a computer to do any of your fundraising.

And some of those pledges weren't on file, though we know it certainly wasn't true with most people, that everyone used computers and that the requirement now after a couple of reform laws which passed thanks to the hard work of Steve Wallens from Dallas.

All, we we see all the money almost instantly and we download it into our computers.

One thing we've not been successful in doing is requiring that, getting street addresses and, and getting some other information which we would think be helpful to determine the identity of a donor and the economic interest of a donor.

We still have to provide that ourselves, so we go through these databases and we enhance the value of the data.

But the essential reporting requirements are pretty good in Texas. I think Texas gets probably, you know, a B or B+ or certainly a B when it's rated among other states on the efficiency of its filing system.

DT: Oh, you mentioned that this data in are, are filed with the Texas Ethics Commission, which I believe also has authority to investigate and, and enforce some of these violations.

I believe that when it came up for, for Sunset Review recently, they found that, that very little of that had been done.

Can, can you talk about the Commission and its, about its weaknesses?

CM: It's, it it it's a somewhat a captured Commission, because that Commission is dependant on the legislature itself for its funding. That creates a conflict of interest there.

What we have always said about the Texas Ethics Commission is it makes a pretty good library, lots of good information, it's doing a good job there but it's not a very good cop.

It doesn't enforce the law. So that's why many of our complaints, we sometimes have filed complaints with the Texas Ethics Commission, a fundraising gone wrong or improper filing.

But it's kind of like a dark hole, they haven't instigated any investigations on their own, they only reply, they only respond to complaints. It's a complaint driven system.

You have to be able to, you know, find the goods on someone, draft up a formal complaint and then you go through a process that is pretty much secret.

And you often don't see the outcome of that process.

And so you really don't know if your complaint was taken seriously, if someone was fined, what the outcome might have been.

Again, it's just not a tough regulator and we understand why. Its, its, doesn't want to bite the hand that feeds it.

The legislature, though it has passed some reforms and required electronic filing, it has also put requirements in there that the Texas Ethics Committee, Commission, not do some things, and that is to do the kind of analysis we do.

It doesn't want these contributions analyzed in any way, it just wants to be a repository, make people go get the facts themselves.

And it doesn't want it doing independent investigations.

So the only thing that the Texas Ethics Commission does on the cop side, the only violation it really checks for independently is whether you file the reports on time.

If you file a report on time and there's nothing but garbage in that report or bad information, they don't care about the quality of the information, they just, they only monitor whether the reports are in there.

It's up to advocates like us, citizens, campaign opponents, to go into those reports if there's something fishy or phony, to file up a formal complaint and then hope that the Commission deals with that complaint in a timely manner.

We don't have much faith in it because, again, it doesn't really want to bite the hand that feeds it.

It should be a good cop and the regulation, we think, should be handled outside the Ethics Commission, where there's no conflict of interest and that's the job of the District Attorneys.

And we think this District Attorney in central Texas has done a pretty good job on political corruption, the Travis County Attorney, Ronny Earl.

But we'll see, again, the enforcement from the District Attorney also was fraught with, you know, political problems here and there, depending on who it is an who's being investigated.

So, there's no perfect system but the Ethics Commission, again, it's a good library if it's not a good cop. (misc.)

DT: When we broke off just a moment ago, we were talking about Tom Delay and, and some of his efforts to move money around the political system.

I thought this might be a good time to, to maybe take a particular example and that's the relationship between Tom, Tom Delay's efforts with campaign finance and, and a particular issue, the MTBE gasoline additive-

CM: Which stands for, we don't-

DW: Methyl Tertiary Butyl Ether.

CM: Alright.

DT: Can you put together the pieces for us on that?

CM: Yeah, you, you know what, we've found a fascinating juncture of money in politics that transcended Texas when Tom Delay got involved. You know, Tom Delay wanted so badly to win a Republican majority down here.

And he went to the corporate community to raise what turned out to be illegal corporate funds for his TRMPAC down here.

We discovered that most of the corporations who gave to that didn't give two hoots about Texas. Most of them didn't have interests in Texas.

That most of the corporations that gave, it looked like, had a connection or wanted to make a connection with Tom Delay as his role House Majority Leader in Congress.

Those, Tom Delay had gone to bat for many, many industries.

One of the industries that he had gone to bat for was the refiners and others who had put this additive in the gasoline which had been polluting Texas groundwater and Texas ground.

Tom Delay strongly was pushing legislation to give them immunity, to pass Tort Reforms so that those MTBE manufacturers would not be responsible for the cleanup.

This was all part of him gathering money from those manufacturers.

They would give Tom Delay's TRMPAC money that would be spent in Texas because they wanted these kind of favors out of Tom Delay in Washington.

So we saw the majority of corporate givers to the TRMPAC operation which spent all his money on influencing the Texas state elections, really had no business in Texas.

Many of them had no offices in Texas.

The ones that did have business with Texas, had business with Texas's Tom Delay, they wanted favors such as immunity for the MTBE pollution that they had caused in the state. And they could get that immunity out of Tom Delay as a member of Congress.

DT: Le-let's move on, if we could, and talk about more connections between corporate interests, money, politics, and particular pollution issues.

One that comes to mind is TXU's interest in environmental regulation in general, politics in general, but also their proposal to build a number of coal plants came up in 2006 and 2007.

CM: Right, right, it was probably the hottest issue of the 2007 legislature was what was going to happen to the eleven proposed new coal plants that Texas Utilities was promoting.

As I mentioned before, they're a, they're a constant campaign giver. They are one of the biggest donors in the system. They're certainly the second largest lobby.

The largest corporation that lobbies here in Texas and, in most states, has historically been the phone company.

When SBC ran the phone company, it was SBC with something like a hundred and forty paid lobbyists.

And AT, it is now ATT, they have the highest number of lobbyists.

But Texas Utilities has always been second on that list. So they have a great deal of lobby power and a great deal of campaign finance power.

They are undoubtedly in the top twenty PACs in Texas every year.

As I mentioned before, in Governor Perry's career as Governor, TXU PACs and executives have given over four hundred thousand dollars to his re-election fund.

That explains in the minds of many of why Perry, Governor Perry ordered an expedited review of the licensing process for these eleven coal plants.

Well the environmentalists community were trying to mount a campaign and trying to go to the legislature to, first of all, stop the fast tracking of the plants

and secondly, I think, if you ask Smitty or the other environmentalists, well I'm sure they were hopeful to get legislation that would actually disallow, un-permit, if you will, stop the eleven coal plants.

Well, what happened in the interim was there was a buyout offer with TXU, a group of investors, primarily in New York, to buy TXU as part of that buyout offer.

They agreed not to pursue, I believe it was eight of the eleven coal fired plants and still keep a couple of, couple of the plants on the books.

Well that kind of took some of the steam out of the environmentalists campaign but then there became an issue in the legislature not directly over the coal plants, but whether the legislature or Texas regulators should have some review over that buyout deal.

And whether it was going to be, whether the citizens of Texas as represented to the legislature, were represented to the Public Utility Commission, could have some say on the terms of that buyout, whether we were going to have any voice at all.

So the fight morphed inside the legislature from one, as to whether we would or would not pursue the coal plants, to whether the legislature should have any regulatory authority over, over the purchase of this huge public utility.

I'm sure it's the largest service provider, residential service provider, in the state, if not the second largest. So that's what the fight became about.

On the consumer side, there was also a fight over deregulation. We had in Texas at the best of Enron and Ken Lay and his money juggernaut.

We had deregulated wholesale energy prices, I believe that bill went through in 99, and in 2001, we deregulated residential electric prices for anyone who didn't live in a co-op area or area served by a municipal utility and that applied toto Texas Utilities.

So the fight in this legislature bec-morphed from one above, about coal plants, which I guess from the environmental perspective was good, since most of the coal plants were off the table,

to a fight over whether we should have any say over the buyout of TXU and whether we should think about re-regulating residential electric rates.

Again, I don't have the exact numbers, we certainly had them at the time, but Texas regu-residential electric rates have skyrocketed compared with the national average, since we deregulated electricity.

There are stories that in some communities in Dallas and in Houston, that rates have jumped two hundred percent.

So there was a little bit of a fight over, not only should we oversee the terms of the buyout, but should we maybe think about bringing this deregulation back under control and that's what the fight became about.

And TXU certainly mustered as many resources that it could. TXU's agenda was no oversight on the buyout and no rate reregulation.

And essentially, the short story is, they got exactly what they wanted through this legislature.

Now how did they do it, well they flexed their political muscle and they have a bunch of it.

We did two studies during the legislative session.

We did this series call Lobby Watch and it really takes a sharp focus, excuse me, sharp focus on a, you know, a single issue, perhaps, that's moving through the legislature or a single business. And we did two over the coal, coal plant fight.

We did a Lobby Watch that tracked all the campaign money that TXU had given to members of the legislature. Then we did a separate one that tracked their lobby clout over the coal plant fight.

And lo and behold, one reason why TXU gets its way almost consistently is that TXU, we found out in this report, had given campaign contributions to all but seven members of the Texas legislature.

So they're equal opportunity contributor, both sides of the aisle, of course the chairman on the key committees got more, the statewide officials got more.

But out of the hundred and eighty-one elected members of the legislature, all but seven were the beneficiaries of the TXU, Texas Utilities campaign contributions.

And those contributions, I think, I forget exactly what they totaled on that report, but I think during that cycle they had given some eight hundred thousand dollars, which is pretty big. If you give them a million dollars here, you're usually in the top five of all PACs in the state of Texas.

So it's a huge amount, and again, it goes to everybody and again, it's to buy, it's to buy them access but it's also to not rock the boat.

It goes back to how you maintain your seat as a member of the legislature, you don't do anything that, that the, that the lobby doesn't want you to do.

And TXU has sown the seeds for many years across the board, across the aisle.

It's very hard to take on TXU in this legislature when they are the provider of campaign contributions to virtually every member of the legislature.

So, there's no other voice here.

Our lobby report showed that they, indeed, spent a lot of money, you don't often see, and we haven't talked about it much, how much money is spent by corporate interests on public relations campaigns on behalf of their, on behalf of their political agenda.

That money is generally not reported.

TXU did report some of that, so we did get a glimpse on how much spending on their public relations campaign because one of the TXU lobbyists, they had eighty-six lobbyists that worked the legislature in 2007 on behalf of their issues.

It's the buyout team of some twenty-something lobbyists and TXU's staff of sixty-five hired gun lobbyists, totaled eighty-six.

One of those lobbyists, actually they, they spent some of their PR campaign, their TV ads, through one of the lobbyists so that lobbyist was obligated to report what they had paid.

And what he reported was eleven million dollars in TV advertising, a substantial amount.

Usually we don't see the TV advertising. You see, on any big corporate campaign or push in the legislature, there is TV advertising, there's other promotional stuff that goes on behind the scenes that is not regulated and therefore not disclosed.

But in this instance, we saw that TXU had spent during that, oh, and the, what's the legislature, five months, five and a half months, seventeen million dollars, corporate money. This comes straight out of the corporate treasury.

It's not like the political money that comes out of peoples pockets or comes out of a PAC. This was seventeen million it had spent on lobbying.

So it spent a substantial amount, that's, that's a tough number to counteract if you're one of the thirty some environmentalists, or probably the smaller handful of five or six environmentalists who care about keeping electricity rates affordable.

DT: This brings up a, a question from me. The money that's coming straight out of the corporate treasury, not out of individuals who may be executives or, or mid-level labor force people in, in the company, but, but directly out of the corporate funds.

Is there a constituency that public interest has in shareholders, people's conscience that, that own stock in these companies who would be offended that their, their company's funds are being used to influence legislation this way? Do you, do you have any sort of reaction from those folks?

CM: Yeah, you know, there, there is a small community that tracks some of that and actually with respect to Tom Delay and the TRMPAC issue, we actually did a little of that ourselves.

We wrote to all the corporations who had given to TRMPAC and asked them to adopt a corporate poli-said, said that you at the board level are responsible for the cheating that went on in the 2002 elections.

You may not have been aware of it because it might've been your government affairs office or someone who decided to give Tom Delay fifty thousand dollars. It may not have been the board, but the board, the corporate board does have some responsibility in this.

And the corporate boards have to be held accountable.

So we called on all those corporations, the, I forget exactly how many there were, thirty-nine, some donors, corporate donors to TRMPAC and we didn't get very many responses.

But we asked them, it's an, it's an agenda developed by corporate reform groups in Washington, that a responsible corporation will make sure that the board of directors has at least knowledge, if not final say, over all political contributions, over all political gifts, that that ought to be a board level responsibility.

That the politics being carried on in a corporation in the stockholders names, the stockholders ought to be aware of that activity for the exact purpose of what if they don't like it. They'd had, they'd have the ability to criticize.

The stockholders of many of these corporations ha-probably had no clue that Tom Delay and the Republican redistricting agenda here was the recipient of their money.

So we, we had a positive response from only one corporation saying that they, indeed, they, they, they wouldn't adopt the specific policy we asked, but they indeed would make sure that at the board level,

at least their direct campaign contributions would be an issue brought up to the board and be published by the board and the board would become aware of that.

We think the corporations here in America do have that responsibility, they should be held accountable and responsible for the giving to the campaigns here.

Just as they argue that, pardon me, that, you know, unions ought to make sure that union membership knows where their political dues, money are going. That's the same as true on the other side of the equation,

that corporate stockholders ought to know where the corporations giving money. And now they don't.

DT: Let's return to some of the studies that you've done and, and we've got about five minutes left on this tape, so maybe you can just sort of introduce the topic and then we could talk about some specific examples on a third tape.

My understanding is that one of your recent research projects is something called Watch Your Assets.

Looking at the privatization of commonly held public resources, how did you decide to study those things and what are some of the goals that you have for your reports?

CM: Yeah, well, you know, in watching Texas politics for a long time and not just Texas but a national trend as well,

we saw what happens often is that the special interests are either looking to, in the last few years particularly, privatize a job that's been done, does-be-done best by government

or to usurp, if you will, something that is a public asset for private gain.

And we thought there was a thematic area for investigation here, that the public assets of Texans, that should be owned and shared by us all, that we all benefit from, should not be privatized or misused.

And so we decided to embark on a research project that would take one aspect of what we thought was misuse of the public commons by private interests facilitated by politicians usually.

That, that we would take and try to expose that, to critique it, if you will, and to just get it out there in the public domain that this is what's happening and is it, it may not be the clear, the best use of public resources.

And generally we're talking about tax subsidies.

Hardly anyone knows about them, hardly anyone knows where they flow; hardly anybody knows who controls tax subsidies and they're multi-million dollar giveaways.

Again, activities that the government was doing that they are privatizing to private interest, to private groups to profit over something that should be a government activity and held and controlled by the government of Texas, the citizens of Texas, if you will.

So, and the privatization of other public resources, not just government services, but other public resources, the privatization, the, were, were fastly going for privatization of water and, in Texas, and it's going to become a huge issue in the next few years.

So we thought these all fit on what we called the Public Assets Project to expose the misuse and abuse of the public commons and we've done, it's been going on about a year. I think we've done ten, looked at nine so far, nine different aspects of the misuse of public assets.

And we've written that into a monthly report and distributing that report to our members and to mem-, and, and to members of the press.

DT: Okay. Well, why don't we cut it here and then we can return- [End of Reel 2444]