the contrarian - Obama, McCain and Money

If there has been one consistent theme in the contrarian articles it relates to the insidious influence of the massive amounts of money that have overwhelmed the political process. It has been argued, time and again, that this has caused the decisions of our nation's leadership to be influenced by the goals of the moneyed powers, which are, more often than not, in conflict with the interests of the public at large.

It has been alleged that virtually all of the nation's major problems can be traced to this "cancer" that has invaded our society. Its destructive reach has extended from our stumbling, bumbling foreign policy, to our expensive and inefficient health care system, to the unregulated factors that are causing our current economic headaches, described by Alan Greenspan the other day as a "once-in-a-hundred-years crisis." It takes very little research to unveil the money trail that has either caused or greatly magnified these and nearly every other troubled category of our government‘s operations.

The futility of efforts to control the situation have been underscored by two simple facts. First, it is only the politicians themselves who can effect any significant change, and they are clearly in the very eye of the storm. To date they have, perhaps understandably, shown little interest in cutting down their precious money trees.

And second, the judicial approach under the present makeup of the Supreme Court virtually eliminates any hope for relief from that quarter. In fact, a majority of the justices seem to have taken the unique approach that what truly amounts to the bribing of our politicians to curry favor and influence is nothing more than a matter of free speech, guaranteed by the constitution.

Now don't get me wrong. Capitalism is fine and dandy and is very possibly the best basis available for a society in today's world. However, this is absolutely not true once that system has taken control of the political and judicial processes in any nation within which it functions.

So, the question arises, how do our current presidential candidates stack up on this matter?  Arguably, this is one of the most significant issues that can be examined in the current election cycle.

In this respect, both from an overall standpoint and from the number of reported apparent conflicts of interest, Obama holds a significant edge.

Having said that, however, I should emphasize that this is not intended to be a whitewash. If you feel that this article is unfairly slanted, please so indicate with specific information. I do not hold to the opinion that the cancer being discussed here is related to any one party or just to one administration. Every politician is part of the problem, but some more than others - much more.

McCain's history shows that at one time he was a champion of the people, so to speak. As co-sponsor of the McCain/Feingold legislation, which attempted to place a degree of control on certain aspects of the campaign finance problem, it appeared that he was solidly among the reformists.

Today, however, as the Supreme Court seems to be in the process of tearing down McCain/Feingold, McCain himself appears to be rapidly deserting his image as a reformer.

But getting on to a comparison of the candidates, from an overall standpoint, it has been widely reported that people giving less than $200 have accounted for 47% of Obama's donations but only 26% of McCain's.  These are very telling statistics.

Yet there is still plenty of room for abuses on both sides.  As of three weeks ago, the Center for Responsive Politics reported that Obama's campaign had raised a total of $287 million, while the McCain camp had come up with a total of $120 million. If the donations to the parties' national committees are also taken into account, the Republicans have been reported to be slightly ahead on a combined basis.

Nevertheless, individual, controversial situations reported seem to be concentrated in the conduct of the McCain organization.

Perhaps one of the reasons for this may lie in the makeup of McCain‘s staff. The New York Times reported that "the prominent role of lobbyists in Mr. McCain's inner circle might undercut the heart of his general election message: that he is a reformer taking on special interests in Washington."

In May, Matthew Yglesias resigned as McCain's national co-chair because he didn't want to step down from his lucrative lobbying gigs. Other lobbyists on the staff include McCain's current campaign manager, Rick Davis, who is on temporary leave from his principle job.

It's difficult to understand why the temporary departure from their full time jobs should be considered as removing any conflicts of interest from this cadre of lobbyists, but that is McCain‘s requirement and evidently his way of putting the problem to bed.

But the problem hardly seems to be snuggled up under the covers. Earlier this week, the L.A. Times carried the story that John B. Hess, a top oil executive in the company that bears his family name, delivered $285,000 to McCain on June 10, representing the maximum donations from himself and nine other people. The article reported that "a week later, McCain traveled to Texas and announced his support for offshore oil drilling."

The McCain camp said there was no link between the two events. It's interesting to note, however, that Campaign Money Watch questioned how an office manager and her husband, an Amtrak foreman, could afford to donate $57,000 as two of the ten donors.

The residents of nine counties in southeastern Ohio are also getting a tough lesson on the dangers of money in politics. Today's L.A. Times carried the story of how a deal engineered by a lobbyist, now a McCain campaign aide, went sour and now threatens to impose staggering job losses on the area, a situation that, if it goes through, is predicted to "eviscerate the economy and the social fabric" of all nine counties.

The problem revolves around the foreign ownership of Airborne Express' cargo service, an acquisition that was backed by McCain in 2003, as chairman of the Senate Commerce Committee. The objections in the Senate to this foreign takeover were largely quelled by the well-paid efforts of lobbyist Rick Davis, the same Rick Davis who is now described as McCain's campaign manager.

Yesterday, a tearful resident of the area, Mary Houghtaling, confronted McCain over the fact that the foreign company now wants to shut down the massive hub it operates there, a move that will throw an estimated 30,000 people out of work.

For his part, the embarrassed candidate said he would take several steps to try to relieve the situation, including calling for a congressional hearing "as quickly as possible," but the damage to McCain's reputation as a reformer has taken another hit, and in a state he considers critical to his election.

In yet an additional messy situation that hit the news media today, the suspicious nature of some $500,000 in donations to McCain, arranged by Harry Sergeant III, a prominent Florida Republican, is causing further embarrassment to the presumed Republican nominee. Sergeant's partner in the endeavor, incidentally, was reported to be Mustafa Abu-Naba'a, who is believed to be a citizen of Jordan and the Dominican Republic.

The Washington Post was the first to point out several controversial aspects of the donation. Investigating California contributors in particular who were involved in providing the $500,000, the paper questioned how people who lived so modestly could donate as much as $4,600 each.

For example, Abdullah and Bahera Makhlouf, who live in a single story, stucco house in the blue-collar city of Downey, each donated $4,600 to McCain.  But, when a representative of the media went to the door of the home, a woman said "I'm sorry. No English."

As a result of this and other questionable examples, the McCain camp announced it would return the $50,000 in donations that came from California contributors, and with that move, it likely hopes the problem will go away.

Concern for the overall question of money in politics should never go away, however. Undoubtedly Obama has also made commitments we don't know about in raising his huge stash. Significantly, though, he has managed to stay largely out of the news in this respect, and it should not be overlooked that he has received a much larger share of smaller donations.  Also his promise that there will be no lobbyists in the White House seems to be drawing a distinction between himself and his opponent.

At this point, therefore, for those who may consider political campaign finance irregularities to be a vital issue, the checkmark of approval should clearly go in Obama's column.

Dave McGill, News Correspondent

Dave's column, "The Contrarian," generally published every Friday, to Gather Essentials: News will sometimes present a contrary view to various aspects of the news, or an alternate take on the conventional wisdom of the day, and will occasionally appear on another day of the week

Dave has been a senior officer of an eastern insurance company, involved in economic projections and investment strategy, president of a Midwestern mortgage banking company, and a financial consultant in Southern California, serving clients in the field of commercial real estate development.

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