An Inside-The-Beltway View On The Inside Of The Wallet

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As the cartoon above illustrates, apparently we have become a nation of two peoples: red and blue states. Unfortunately, many people have come to believe that lost in the focus on the red vs. blue is what our democracy has really evolved into, and that is various shades of green states.

President Bush (and before him, President Clinton) frequently parks Air Force One here in Palm Beach County, Florida, and it isn't just to help us figure out how to vote. There are deep pockets here, and the cash-eating machines that are election campaigns need to eat. Swing state? We're more of a make-the-cash-register-sing state.

It was more difficult than ever during the recent political season not to believe that in government the power of principles has given way to the power of principal, plus any interest it might earn. Election campaigns are handicapped not by the ideas one proffers, but by the dough in the coffers. Regardless of whether you're a red or blue, were a few of you not also struck by how Bush/Cheney and Kerry/Edwards were always referencing the middle class, yet all four are multi-millionaires many times over?

So you would think that a couple of Washington-insiders who are even closer to the sausage factory than I would also be holding their noses. And yet two credit union lobbyists don't believe money is as influential in Washington as many paint it to be, even though credit union gatherings now spend as much time talking about the three letters P A C as they do CMOs, STRs, and MSRs.

"I think as far as credit unions are concerned the old adage that votes trump dollars every time is true," observed NAFCU's Bill Donovan.

Added CUNA's John McKechnie, "In a free society money is going to flow into politics, and I think that is a good thing."

But isn't it all just about the money now?

"My quibble would be with the word 'now,' " responded McKechnie. "With campaign finance reform what we now are getting to see is who is getting what money and where did it come from, and I think that is an extraordinarily good thing. Before we didn't see it."

McKechnie's reference was to the campaign finance reform of the 1970s that pulled up the window shades on many smokey, dark, backrooms. Caps were placed on how much one could donate, and laws creating political action committees were passed. (A Google search of PACs last week, incidentally, brought 2.2 million hits.) "Prior to the 1970s there was enormous money being given to campaigns, probably more in relative dollars, and it really distorted the process," McKechnie added.

According to the Federal Election Commission, this year a total of $1.1 billion was raised in Congressional races, up from $964 million in the 2002 cycle. In addition, another half-billion-dollars was raised by the two presidential campaigns. Credit unions talk about their white hat, but doesn't it all come back again to the green in order to be heard in Washington?

"I don't think that's true," answered Donovan. "One of the greatest attributes credit unions enjoy in Washington is because of our constituency and who we represent; we do have access that is separate and apart from the fundraising and political largesse."

McKechnie agreed. "Having the white hat and the merits on our side is the primary reason we have the access we do. But I also think that when lawmakers go out on a limb for you, you have to be there to help them."

But don't members of Congress (or at least their staff) keep a little black book to be referenced before helping a particular constituent?

"I don't believe there is any thing near that overt," responded McKechnie. "In 21 years in Washington I have never had a sense of a quid pro quo. Lawmakers do tend to help people who agree with them, but then people who agree with the lawmaker tend to help them. So it's more a matter of the chicken vs. the egg."

Said Donovan, "It's correct that some members of Congress know who their friends and supporters are. But I can also tell you in my 25 years of experience that with most members of Congress financial support is not the controlling factor on being heard."

Both Donovan and McKechnie also were in unison that credit unions' ability to do more than raise funds is critical. "Credit unions can be pleased that we are well positioned," explained Donovan. "We have the financial resources to help candidates with campaigns and we also have the volunteers and the shoe leather to help candidates with campaigns. And we've seen that all over the country. The politics of Congress are based on relationships. They can be rooted here in Washington by people such as myself, or back in the districts by people like (Coastal FCU CEO) Larry Wilson in North Carolina or (The SUMMIT FCU CEO) Mike Vadala in New York, who have gotten involved in campaigns, or (Nationwide FCU CEO) Paula Edwards in Ohio, who traveled with (Rep.) Mike Oxley."

Similarly, McKechnie said being able to produce people to make phone calls, put up signs and volunteer-which credit unions have done in scores of races-counts as much as the dollars.

But hasn't it all just gotten too expensive?

"Like any other citizen I feel as though political races have become terribly expensive," said Donovan. "But then the salaries of professional athletes and the cost of real estate here in Washington have risen to levels I thought I would never see."

"I don't pretend to know what the right amount of money is, but I do believe that if a law is passed that caps the amount we will be less free," said McKechnie. "One issue I will editorialize on is McCain/Feingold (campaign finance reform). It was supposed to reduce costs and diminish the role of special interests, but it has done just the opposite. The fact there has been a proliferation of 537 groups has buttressed that point."

And then there is the greater perspective. McKechnie noted that in 2004 Americans will still spend more on dog food than on the federal elections. We'll leave it up to you as to which is the better value.

Frank J. Diekmann is Editor of The Credit Union Journal.

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