Debt Consolidation

Like Money in the Bank

Posted on: June 04, 2008
Written by: UWSA Staff
How a Few Wealthy Californians Exploited Their State's Campaign and Elections Laws to Lay the Groundwork for a Political Takeover.
by Deborah Lutterbeck, Common Cause Magazine

Like the prospectors of long ago who looked over the frontier and saw opportunities for fortune and power they stand before a landscape without boundaries. The law is on their side. The enemy is disarmed. Their bank rolls are worth more than their face value. The place is California and it has become an El Dorado for a handful of business executives who just three years ago pooled resources to form Allied Business PAC.

Allied is the largest political action committee or PAC in the nation's biggest state. It's the child of frustration and money. It's what happened when a few wealthy entrepreneurs decided that just giving money to the Republican Party was like "giving it to a black hole," says Danielle Madison Allied's executive director. "You don't know where it goes. You can't say 'Look this is what we just got in return.'" So the executives decided to form a PAC of their own.

In 1993 and '94 Allied's members contributed about $5 million to state races, more than such long-time major leaguers as the California Teachers Association, the California Medical Association and the California Trial Lawyers Association. With only a few financial backers, Allied has out-muscled special interest groups that claim hundreds of thousands of members. Despite Allied's large and growing influence in the state's politics, few California voters are aware of the group's activities or know what it stands for.

"Who are they representing?" asks Chris Soper, assistant professor of political science at Pepperdine University. "By virtue of their name it is not clear," he says, "(but) there have been accusations that they are the Christian right."

While Allied is not shy about extolling its founders' business know-how and family values, it puts less emphasis on its religious roots. "We are a conservative group; we are fiscally and socially conservative," Madison says.

Allied co-founder and largest backer Howard Ahmanson, for example, who inherited a multibillion-dollar savings-and-loan fortune, is also a top donor to the Christian "reconstructionist" movement, which wants to make biblical precepts the law of the land. "The Bible teaches that there should be the death penalty for homosexuals sodomites (and) adulterers because it is treason against the family," says reconstructionist leader Rev. R. J. Rushdoony. Allied co-founder Ed Atsinger, who made his fortune in Christian radio, and co-founders Robert Hurtt and Roland and Lila Hinz have also donated to religious right causes.

Allied's increasing influence in California politics has many observers worried; they believe the small but powerful PAC could be but the first of many wealthy groups to take advantage of the state's unique electoral and campaign financing laws. This is what can happen, they say, when terms for state officials are limited but campaign contributions to them are not. It is precisely that combination of unlimited money and a large number of open seats that has enabled Allied's handful of well-heeled backers to begin substantially reshaping the state's legislature in a very short time.

Such a system is particularly susceptible to manipulation by would-be political players with a strong ideological agenda and lots of money to put behind it, observers say. Because Allied's deep-pocketed principals support a pro-business, socially conservative and, some say, radical religious agenda, observers believe that policies governing the state's 31 million residents will reflect not the views of the majority but the values of the wealthy few.

In practical terms, Allied's influence is poised to reach the highest levels of state government in record time. Allied-backed candidates hold 25 of the Republicans' 39 seats in the Assembly, and eight of 17 Republican seats in the state Senate. Some in Sacramento even believe Allied co-founder and state Sen. Robert Hurtt -- elected to office only two years ago -- could become president of the Senate next year.

Observers say the Allied case offers a cautionary tale: Unlimited campaign contributions give small groups or industries disproportionate influence in government, and term limits --particularly when combined with unrestricted campaign financing-- can make things even worse.

The Wild Frontier

The stage for Allied's meteoric rise was set in 1990, when California voters limited terms in the state legislature's lower house, or Assembly, to six years and capped terms in the state Senate at eight years. California is one of 15 states that have some form of state-level term limits.

The term limits vote came at a time when a number of lawmakers, lobbyists and legislative aides had been convicted on corruption charges ranging from influence peddling to bribery. Calls for change abounded, ranging from former California Attorney General John Van de Kamp's plea to drain the swamp to the oft-heard cry for citizen legislators. Voters opted for a constitutional mechanism that would insure a regular turnover of state legislators. (The recent U.S. Supreme Court decision does not apply to term limits for state legislators.)

The impact of term limits on California politics has been swift and sure. For the state's Democratic Party, the limits have meant the end of a dynasty. Long time Assembly Speaker, now "Speaker Emeritus" Willie Brown, for example, will be termed out of office next year. But old ways die hard, and it remains to be seen whether political power peters out or simply moves on to greener pastures. Despite the fact that Brown's days in the Assembly are numbered, for example, he collected more than $4 million in campaign contributions in the 1993-94 election cycle. And like the true power broker that he is, Brown doled out that money to Democratic candidates and causes. (In addition, Brown has begun campaigning for mayor of San Francisco while he still controls the Assembly.)

Such displays of power have helped fuel the national movement for term limits. "I am not just saying it is the speaker," says Allied's Madison. "Anyone who has been in power too long is corrupt; I think that is a normal rule of life."

Term limits created a new set of rules, and a new set of problems. By reducing the power of incumbency, term limits increased the power of the unelected. "Lobbyists or business people have more punch, more leverage, more influence than prior because new members are more dependent on them for information," says Herbert Alexander, an expert on campaign financing at the University of Southern California.

Term limits have also strengthened the hand of moneyed interests, thanks to the state's unrestricted campaign financing laws. In California, whether someone is running for office, has just been elected, is considering legislation, or has announced retirement, a sizable contribution is always in order. California's 120 state legislators took in almost $60 million in political contributions -- an average of $480,000 a seat -- in 1993 and '94.

California remains a campaign financier's paradise despite the fact that Congress and many states imposed contribution limits in the early 1970s. The Watergate scandal prompted Congress to provide for partial public financing of presidential campaigns, and contributions to federal candidates are limited to $1,000 from individuals and $5,000 from PACS for each election. Even California voters adopted wide-ranging state-level campaign reforms in 1974, but the amount individuals and PACs can give to state candidates remains unchecked.

Not that California voters haven't tried to control political money. In 1988 they passed two such measures, which were placed on the ballot simultaneously. Proposition 73, which would have limited contributions to state and local campaigns but prohibited public financing, passed with 58 percent of the vote. Proposition 68, which would have imposed contribution and spending limits but also provided for public financing, passed with 53 percent of the vote. But the state's Supreme Court ruled that only Proposition 73 would stand; a federal court ruled that it would apply only to special elections. Still, Allied and other groups have found ways to circumvent the measure.

Thus it is not surprising that Allied works only on the state level. "With the limits federally there is not much you can do," Madison says. "But there's no limit in California; that makes it a little easier to have an impact on these races."

How to Succeed in Big Politics

When Allied entered politics in 1992, its founders went out searching for a few good conservatives. They wanted business people who had created jobs, met payrolls and had the right kind of values.

Those values are anti-gay rights and pro-life. While Allied says it has no litmus test for its candidates, its position statements call on the government to "withstand all attempts by narrow interest groups to redefine the family in their own image," and "do whatever it can to discourage and restrict abortion and not subsidize it in any way."

With this as a template, Allied scoured California's 120 legislative districts and signed on in support of candidates who fit its positions or selected someone to run on its terms. This approach had its shortcomings, Madison says. In some cases the PAC wasted resources backing conservative candidates in liberal districts. "It was like trying to put a round peg in a square hole; we learned that real quick and lost a lot of money," she says.

Even so, in the 1992 Republican primaries, 28 of 34 Allied-backed candidates won their elections. In that year's general election, 17 of those 28 won election to the legislature. In 1993's special elections, four of six Allied-backed candidates-- including co-founder Hurtt -- made it to Sacramento. By last year Allied's record had improved still more; 29 of its 32 candidates won primary elections and 24 of those were elected to the legislature.

Allied also learned to take advantage of its financial flexibility. Writing its own checks was a lot easier than raising money from others.

"There is no one else in the country that I know of that has that kind of organized machine going which can gather up $120,000 in 24 hours and also (put together) a mail piece," says a state legislative aide. "Allied's ability to make decisions, gather the resources and do things on the spur of the moment is unparalleled," he adds. As Allied's Hurtt told the Orange County Register in 1993, "The bottom line scenario is: I spend this much money I win; I spend this much money I lose."

On a practical basis that means that while one candidate is sending out direct mail pieces, placing advertisements and defining the issues, the other is still putting in appearances at blue-plate fund-raisers. No one knows this better than former State Rep. Bob Epple, who lost his Assembly reelection bid last year to Allied-backed candidate Phil Hawkins.

Epple had expected a close election. In 1992 he had won by only 1,300 votes out of 119,000 cast, leading the California Journal to call him an endangered species. "With that kind of experience behind you you don't take anything for granted," he says. Still, the last thing the conservative Democrat had expected after co-authoring the state's three-strikes-and-you're-out law was to be called soft on crime.

But that's what happened. With the help of a $70,389 contribution from Allied, Hawkins mailed out thousands of campaign pamphlets that included testimonials from crime victims who said Epple didn't care about their concerns.

"It was surprising to me that in an area where my credentials were impeccable they were able to convince such a large number of people that I was soft on crime," Epple says. But he couldn't do anything about it. "I need(ed) more money to get my message out. And at that time I did not have the money," he recalls. Epple's campaign never recovered, and Hawkins won the election handily.

For all its impact, Allied's money -- and its strategic politicking -- has drawn little attention. A last-minute $125,000 contribution to a moderate Republican from tobacco giant Philip Morris generated considerable controversy last year, but the pivotal role Allied's money has played in scores of elections has gone largely unnoticed. The group's low profile may be due in part to its innocuous sounding name, but some observers wonder if Allied's approach is part of a larger "stealth campaigning" philosophy of the religious right, a model that originated in San Diego.

In 1990 the Christian Coalition and conservative Christian activists backed some 90 candidates in San Diego for local offices ranging from schools boards to irrigation districts. While those candidates were backed by the coalition, they often did not identify themselves as such. Sixty of them were elected to office. "Stealth was a big factor in San Diego's success," Christian Coalition spokesperson Ralph Reed told the Los Angeles Times. "It's like guerrilla warfare. If you reveal your location all it does is allow your opponent to improve his artillery bearings."

Some observers wonder if Allied is trying something similar. "My impression is that they were willing to engage stealth candidates that wouldn't be quite as obviously right-wing as they privately are," says Democratic State Sen. and President Pro Tem Bill Lockyer. "They made a real effort to find people with no record, with no history, just blanks that (enabled them) to create some public persona that may or may not have anything to do with reality but was effective in an election." As for Allied's goals, Lockyer says, "People don't write checks for $5 million without some serious commitment to what they are doing."

Religious Right or Just Right?

Allied's largest benefactor, Home Savings of America heir Howard Ahmanson, has contributed $1.32 million to the PAC and made direct contributions to Allied-supported candidates. He has also given hundreds of thousands of dollars to conservative and religious organizations like Family PAC, an anti-gay rights group, and he provided about 85 percent of the 1992 budget of the California Pro-Life Council. He has also provided funds for abused children and orphans.

Ahmanson also serves as the trustee of the Chaceldon Foundation, an influential religious right think tank that is run by the father of the reconstructionist movement, Rev. R. J. Rushdoony. While Rushdoony says he has little interest in politics, he describes his faith as "Christian libertarianism." "When people change, politics will change," and that is a decision that will be made by God, he says. Reconstructionists advocate Christian schooling and home schooling. They are against gay rights; Rushdoony says homosexuals are "losers" that have offended even their "friends."

While Ahmanson apparently shares these views, he has shied away from the press since 1985, when he told a reporter, "My purpose is total integration of biblical law into our lives." He did not respond to requests for comment.

Founding Allied member Edward Atsinger is the principal owner of Salem Communications, a broadcasting company that owns 28 Christian radio stations in California. He has donated $319,000 to Allied directly and has also made contributions to Family PAC. Among the programs featured on his stations is Dr. James Dobson's "Focus on the Family." Dobson is working to put more Christians in public office and has established an elaborate media campaign against pornography and abortion rights.

Founding member Robert Hurtt derives his fortune from Container Supply Corp., a privately-held company that produces, among other things, the pink Almond Roca cans. Hurtt has contributed $836,646 to Allied, and he also provides financial support to the Traditional Values Coalition, which among other things lobbies against AIDS prevention programs.

Hurtt took on an advisory role at Allied after he was elected to the state Senate in 1993. He told reporters, "I thought I'd better come up here and watch them. I'm not sure whether these (Allied-supported legislators) are going to follow through with what they told me they were going to do." Sen. Hurtt, through as spokesperson, declined comment for this article.

Founders Roland and Lila Hinz, who publish Mountain Bike Action magazine, have contributed $352,000 to Allied and have also made contributions to the California Republican Party, Family PAC, the Christian Coalition and the Traditional Values Coalition. The Hinzes didn't respond to requests for comment; Madison says they are Democrats.

Last year, after losing the Republican gubernatorial primary to Pete Wilson, millionaire Ron Unz, a computer software entrepreneur, joined Allied with a $75,000 contribution. Businessman Richard Riddle, a cardboard box manufacturer, also joined the PAC, contributing $237,000 in '93 and '94.

In addition to providing funding through Allied Business PAC, Allied members contributed millions of dollars to related causes in the 1993-94 election cycle. They donated $772,000 to the state's Republican Party and loaned it some $250,000. Allied also contributed $501,322 to a school voucher initiative campaign and $600,000 to pro-life, Christian and conservative political causes.

"People call us the religious right ... because (Ahmanson)has been involved with the religious right," Madison explains. "He is a Christian. Ed Atsinger owns quite a few Christian radio stations, so people pretty much figure that the whole group Is. We have a Democrat in (the) group we have an orthodox Jew. It is pretty funny. We kind of laugh about that," she says. Others don't think it's so funny.

"These guys are ideologues, wealthy ideologues and they have decided to put their money where their mouth is," says Jerry Sloan, president of Project Tocsin, a group that monitors California's radical religious right groups. Sloan believes Allied is out to change the face of politics in California.

Hotel California

Republican state Rep. Steve Baldwin believes in witches, but not in hungry children.
At a March hearing of the Assembly's Education Committee, Baldwin said, "I have never been shown any research in the public or private sector demonstrating that there is a hunger problem for school children in America or California." This is the same man who, in his 1992 campaign for the Assembly, told an audience of fundamentalists that there were witches in the Air Force and that the state of Massachusetts even had one on its payroll. Such statements contributed to his defeat.

But those views didn't stop Allied from backing Baldwin in a'94 bid -- or keep Baldwin from defeating the Democratic incumbent, who had been charged by former staffers with sexual harassment. Baldwin is now just part of the Allied wave that is splintering the state's Republican party. The increased power of the party's conservatives has caused numerous logistical and political problems in the legislature -- and for Gov. Wilson, a moderate.

"(The Allied/right-wing Republican) philosophy represents a very radical break with the politics of moderation and respect that have characterized California for many many decades," says Democratic state Senate leader Lockyer. "They are an anti-choice, anti-minority, homophobic, anti-labor organization (a) mean-spirited expression of the religious right that wants to dictate its views to others. This is not consistent with the general consensus in California," he adds.

Yet there is nothing in California's campaign financing system to stop them, he says. "I hope the electorate gets sufficiently educated to realize what a threat this group presents before it is too late. It is harder to undo and pry someone away from the levers of power than to get them there in the first place," Lockyer adds.

Without such changes the only thing in Allied's way is competition. If a few executives can band together and begin remaking the shape of the California legislature in their own image -- another special interest may follow suit. And California could become the mother lode of another gold rush, this one political.

Copyright 1995 Common Cause. Used With Permission.