California Future Fund for Free Markets: “Telephoto”

California Future Fund for Free Markets is breaking the irony barrier with an ad supporting Proposition 32, which purports to ban special interest money from state politics. The ad criticizes “deals cut in the shadows,” but CFFFM is funded entirely by a single $4 million donation from a similarly shadowy Iowa group that does not disclose donors but has ties to the Koch brothers. This hypocrisy has substantive implications as well: Prop 32 claims to end special interest spending in California politics, but leaves gaping loopholes for the billionaires who are funding the effort while cracking down much more tightly on union political spending.

Proposition 32 Places New Restrictions On Political Spending And Fundraising By Unions And Corporations

Ban On Payroll Deductions For Political Purposes, Direct Contributions From Corporations And Unions. From the Sacramento Bee‘s State Worker blog: “The measure bans unions and corporations from using payroll-deducted funds for political purposes. It also bans direct campaign contributions by either interest group.” [, 7/30/12]

Third Attempt At “Paycheck Protection” By California Conservatives. From the San Francisco Chronicle‘s Politics blog: “As expected, conservative Californians have qualified a measure for the November 2012 ballot that would prohibit unions from deducting dues from paychecks. Known as ‘paycheck protection’ by supporters, the initiative has long been expected. It’s not the first time union critics have tried: two efforts, in 1998 and 2005, failed at the ballot box.” [, 12/7/11]

“It Promises To Gut The Power Of Labor Unions.” From the Sacramento Bee: “Another provision forbids both sides from using money gathered from payroll deductions for political purposes. It promises to gut the power of labor unions because they raise nearly all of their money for political and other purposes via payroll-deducted dues from their members’ paychecks.” [Sacramento Bee, 6/10/12]

Deductions Ban Only Impacts Unions

Sacramento Bee: “Measure Would Eliminate Unions’ Fundraising Staple While Leaving Corporations Relatively Unscathed.” From the Sacramento Bee: “If enacted, the measure would eliminate unions’ fundraising staple while leaving corporations relatively unscathed, since they raise their money from executive contributions or by tapping company resources.” [Sacramento Bee, 9/15/12]

Business Interests Do Not Draw Their Political Funds From Payroll Deductions, But Unions Do. From a San Francisco Chronicle editorial announcing the paper’s opposition to Prop 32: “The measure would strip the unions of their ability to draw a steady stream of campaign cash from their membership. The measure does not attempt to put similar constraints on the ability of corporations and other interests to raise money. It does prevent corporations from using payroll deductions – but, in reality, that is rarely where they go for political money. Prop. 32 also would ban direct contributions to candidates from either corporations or labor unions. But in this case, the practical effect is seriously blunted by the U.S. Supreme Court’s 2010 Citizen’s United ruling that asserted the free-speech rights of corporations, labor unions and other organizations to spend unlimited amounts for or against candidates through independent campaigns.” [San Francisco Chronicle Editorial, 9/16/12]

California Legislative Analyst’s Office: “Relatively Few” Organizations Other Than Unions Use Payroll Deductions To Fund Political Activity, And Workers Can Opt Out. From California’s Legislative Analyst’s Office: “Many unions use some of the funds that they receive from payroll deductions to support activities not directly related to the collective bargaining process. These expenditures may include political contributions and independent expenditures—as well as spending to communicate political views to union members. Non-union members may opt out from having their fair share fees used to pay for this political spending and other spending not related to collective bargaining. Other than unions, relatively few organizations currently use payroll deductions to finance political spending in California.” [, 7/18/12]

Loopholes In Prop 32 Mean It Impacts Union Spending, But Does Nothing To Limit Business Special Interests…

Election Law Expert Hasen: “The Idea That This Is A Meaningful Restriction [On Corporations] Is Ridiculous.” From Los Angeles Times columnist Michael Hiltzik: “‘When corporations can just write a check from their general treasury, the idea that this is a meaningful restriction is ridiculous,’ says Richard L. Hasen, an election and campaign law expert at UC Irvine. The share of corporate political spending coming from employee payroll deductions ‘has got to be a drop in the bucket, and putting it in there is just a fig leaf.'”[Hiltzik Column, Los Angeles Times, 8/19/12]

Common Cause And League Of Women Voters: Prop 32 Will Expand Business Influence And ‘Harm Unions Disproportionately.’ From the Los Angeles Times‘ PolitiCal blog: “Two of California’s leading good-government groups joined with some of the state’s most powerful labor unions Monday to denounce Proposition 32, the November ballot measure that promises to eliminate special-interest money in politics. At a morning news conference, representatives of the League of Women Voters of California and Common Cause urged voters to oppose the initiative, calling it a deceptive measure that would disproportionately harm unions and expand the influence of businesses. ‘Prop. 32 is not what it seems, and it will hurt everyday Californians,’ said Trudy Schafer of the League of Women Voters of California. […] [Derek Cressman of Common Cause] charged that Proposition 32 backers are ‘trying to use our anger and mistrust to change the rules for their own benefit.'” [, 7/23/12]

Prop 32 “Looks Temptingly Like Reform” But Includes Loopholes To Allow Business Interests To Continue Spending To Influence Politics. From Los Angeles Times columnist Michael Hiltzik: “‘It looks temptingly like reform,’ says Trudy Schafer, program director for the League of Women Voters of California. ‘But it’s not.’ That’s because Proposition 32 bristles with enormous loopholes tailor-made for businesses and their wealthy backers. To begin with, it exempts such common business structures as LLCs, partnerships and real estate trusts. If you’re a venture investor, land developer or law firm, Proposition 32 doesn’t lay a finger on you. The drafters, who include conservative attorneys Thomas Hiltachk and Michael Capaldi, know full well that payroll deductions are how unions get almost all of their funds, and businesses get almost none of theirs.” [Hiltzik Column, Los Angeles Times, 8/19/12]

Prop 32 Backer Concedes That Some LLCs “Might Fall Outside The Definition Of A Corporation.” From Sacramento’s KABC: “‘Each of these reforms applies to unions. It applies to corporations and it makes no exceptions,’ said Jake Suski of Yes on Proposition 32. Pressed further, though, Suski acknowledged that some LLCs might fall outside the definition of a corporation. ‘Whether an LLC is or isn’t a corporation is up to the courts to decide, but Prop. 32 defines it very clearly as any corporation under state or federal law,’ Suski said.” [KABC, 7/23/12]

San Jose Mercury News Fact Checker: Opponents Correct About Loopholes For LLCs, Oil Companies, Investors. From the San Jose Mercury News‘s Reality Check: “What’s the charge? ‘It’s really a deceptive proposition stuffed with special exemptions for the oil companies, Wall Street and those secret campaign super PACs who want to rig the system.’ The ad concludes: ‘It’s not what it seems.’ Is it true? The charge is true. The proponents of Proposition 32 call it a campaign-finance reform measure that will have an equal effect on labor and business. It does prohibit both from contributing directly to campaigns, but in fact it’s aimed at reducing the power of labor unions by preventing them from collecting dues for political purposes. A loophole in the initiative allows a broad swath of limited liability companies (including oil firms) and wealthy investors to continue to spend unlimited sums of money campaigns.” [San Jose Mercury News, 9/1/12]

…And It’s Those Billionaire Business Interests Who Are Backing Prop 32

Billionaires Who Rank Among Top Special Interest Donors In California Are Backing Prop 32, Which Wouldn’t Mitigate Their Own Political Influence. From Los Angeles Times columnist Michael Hiltzik: “Among the very top contributors to the campaign, according to public filings, are A. Jerrold Perenchio ($250,000), Thomas Siebel ($500,000), B. Wayne Hughes ($200,000) and Charles Munger Jr. ($992,000). […] Whatever you might think about these individuals’ political viewpoints, some things are crystal-clear: They’re the special interests. They’re the fount of the cash that, according to the Prop. 32 pitch, constitutes ‘the most corrupting influence in politics.’ And most important of all: They’re conveniently exempt from Proposition 32. It doesn’t matter that their wealth comes from corporations that would be barred from funneling money directly to candidates — Hughes from Public Storage, Siebel from Siebel Systems and Oracle, Perenchio from Univision. Their individual bank accounts remain unfettered.” [Hiltzik Column via Los Angeles Times, 8/19/12]

  • Jerry Perenchio: Gave $250,000 To Support Prop 32, Second-Largest Single Donor In Past Decade Of CA Politics, $37 Million Nationally Since 2001. From Los Angeles Times columnist Michael Hiltzik: “Perenchio, a billionaire Hollywood mogul, was the second-largest individual political donor in California from 2001 to 2011, with $16.9 million in contributions mostly to Republican and conservative interests, according to a compilation by the nonprofit Center for Investigative Reporting. He’s contributed $2 million to American Crossroads and $500,000 to Restore Our Future.” The Bridge Project’s Conservative Transparency database shows $36,999,497 in Perenchio contributions since 2001. [Hiltzik Column via Los Angeles Times, 8/19/12; Conservative Transparency, accessed 9/19/12]
  • Thomas Siebel: $500,000 To Prop 32, Quarter-Million To Crossroads, “Silicon Valley Billionaire.” From Los Angeles Times columnist Michael Hiltzik: “Siebel is a Silicon Valley billionaire perhaps best known in California political circles for his introduction of Sarah Palin, then the newly minted GOP vice presidential candidate, at a 2008 rally as ‘the embodiment of pure, unadulterated good,’ the San Francisco Chronicle reported. In 2010 he donated $250,000 to American Crossroads.” [Hiltzik Column via Los Angeles Times, 8/19/12]
  • Wayne Hughes: Kentucky Businessman Has Spent $2.3 Million Influencing California Politics Since 2001, And $200,000 To Prop 32. From Los Angeles Times columnist Michael Hiltzik: “The Kentucky-based Hughes is the patriarch of the Public Storage empire. His donations to American Crossroads: $3.5 million, making him one of its top donors in 2010. He’s given nearly $2.3 million to California political entities in the 2001-11 period, exclusively Republican.” [Hiltzik Column via Los Angeles Times, 8/19/12]
  • Charles Munger Jr.: Third-Largest CA Donor In Past Decade, Nearly $1 Million To Prop 32. From Los Angeles Times columnist Michael Hiltzik: “Munger is a physicist who was the third-largest individual political contributor in California in 2001-11, with $14.1 million in contributions, mostly to GOP interests. His father, Charles Sr., has long been Warren Buffett’s investment partner.” [Hiltzik Column via Los Angeles Times, 8/19/12]

Ad Sponsor (California Future Fund For Free Markets) Received $4 Million From Koch-Connected Iowa-Based American Future Fund. From the Sacramento Bee: “With a single donation, a conservative group with ties to the Koch brothers has doubled the money backing a ballot measure that would hamper unions’ political fundraising. The Des Moines, Iowa-based American Future Fund gave $4 million to a new committee backing Proposition 32, the California Future Fund for Free Markets. The American Future Fund is an organization affiliated with the Center to Protect Patient Rights, which in turn has reported ties to billionaires Charles and David Koch.” [Sacramento Bee, 9/15/12]

  • AFF’s $4 Million Contribution Is The Sole Funding Source Of The California Group. According to the California Secretary of State’s campaign finance records, American Future Fund’s donation is the only donation received by the California Future Fund for Free Markets. [, accessed 9/19/12]

Pro-Prop 32 Spokesman Acknowledged In Email That Prop 32 Would Not Mitigate Donations Of The Type Financing The California Future Fund Ad. From the Sacramento Bee: “The measure has several provisions, none of which would prevent American Future Fund-style donations. [Yes on 32 spokesman Jake] Suski noted that labor unions have given more than $35 million to defeat the measure, and that such donations are considered free speech. ‘Prop. 32 goes as far as the law permits,’ he said.” [Sacramento Bee, 9/15/12]

Deductions Are Voluntary, But Prop 32 Would Ban Them Rather Than Mandate Annual Reauthorization

Union Political Giving To Candidates And Campaign Organizations Is Funded Through Voluntary Contributions. From the Wall Street Journal: “Members’ dues underwrite much of the unions’ ‘political activities,’ but not donations to candidates, parties and PACs. Those are funded by voluntary contributions.” [Wall Street Journal, 7/12/12]

California Teachers Association Political Contributions Are Voluntary, Members Can Opt Out. From CTA’s webpage describing its political advocacy fund: “A voluntary member contribution of $20 a year has been established to help fight attacks on public education and to create a CTA foundation to provide more scholarships to members and support teachers’ ideas to improve public schools.  The dues contribution is voluntary and flexible. Members are automatically enrolled in the default allocation of $15 to support CTA advocacy efforts and $5 to the Foundation for Teaching and Learning. […] Existing CTA members:  The window to reallocate your contribution or opt out is August 1, 2012 to November 1, 2012. […] New CTA members:  You have 30 days from the date of enrollment to reallocate your contribution or opt out.” [, accessed 9/19/12]

  • Proposition 32 Text Calls Payroll Deduction Of Voluntary Political Contributions An “Inherently Coercive” Method. From Section 1.E.3 of Proposition 32: “Prohibit corporations and labor unions from collecting political funds from employees and union members using the inherently coercive means of payroll deduction.” [Proposition 32 via, 4/1/11]
  • Proposition 32 Does Not Prohibit Voluntary Political Giving By Any Means Other Than Payroll Deduction. From Section 2 of Proposition 32:

§85151 (a) Notwithstanding any other provision of law and this Title, no corporation, labor union, public employee labor union, government contractor, or government employer shall deduct from an employee’s wages, earnings, or compensation any amount of money to be used for political purposes.

(b) This section shall not prohibit an employee from making voluntary contributions to a sponsored committee of his or her employer, labor union, or public employee labor union in any manner, other than that which is prohibited by subdivision (a), so long as all such contributions are given with that employee’s written consent, and that consent shall be effective for no more than one (1) year. [Proposition 32 via, 4/1/11]

Where Previous Initiatives Required Annual Re-Authorization From Members For Automatic Deductions For Political Fund Contributions, Prop 32 Bans Those Deductions Outright. From Los Angeles Times columnist Michael Hiltzik: “On the grounds that ‘special interests have too much power over government,’ the measure bans direct contributions to California candidates by corporations and labor unions. It prohibits the collection of ‘political funds’ from corporate employees and union members via payroll deduction, even if the employee or member voluntarily approves. (That’s more stringent than the previous versions, which merely required that union members give written permission for political expenditures once a year.) Political funds include money spent for or against a candidate or ballot measure or for a party or political action committee, or PAC.” [Hiltzik Column, Los Angeles Times, 8/19/12]

[NARRATOR:] If you had a telephoto lens, maybe you’d see it: deals cut in shadows and back rooms. With contributions, big corporations and government unions control politicians. It’s killing California. Eleven percent unemployment. High taxes. Lavish pensions. Billions in waste. $50 billion a year on education, but among the worst-performing schools. Cut the money tie between special interest lobbyists and career politicians. Put people back in charge. Yes on Prop 32. [California Future Fund for Free Markets via, 9/18/12]