US Politics: Obama's Battle with the Conservative Foundations (Haddigan)

Lee Haddigan writes for EA:

Within the large mansion called "The History of the United States" there resides a little-known band of historians: those who study the "Public Authority of Private Institutions". To the uninitiated, that is the influence of philanthropic foundations and their related think-tanks upon the government.

If you doubt the importance of this scrutiny, consider that these historians make a solid case that America’s strategic philanthropy (the funding of studies to directly shape public policy on a certain issue) is the most compelling evidence for the contention that the US is an "exceptional" nation. No other country, they maintain, approaches the money spent by American private institutions to promote a political agenda.

It is not only the amount of money spent that interests scholars, it is also the results achieved by some of the organizations. The Heritage Foundation is the most important conservative think-tank in America, a reputation built largely on its contribution to the Presidential agenda of Ronald Reagan. Heritage helped to shape Reagan's successful 1980 campaign and provided the blueprint for many of the policies pursued by his administration. At the first meeting of his Cabinet, Reagan gave every member a copy of Heritage's Mandate for Leadership: Policy Management in a Conservative Administration. This 1,093-page document contained 2,000 policy recommendations, of which nearly two-thirds were implemented while Reagan was in office.

The measures included the across-the-board income tax cuts which, according to Heritage, “wiped out America's economic ‘malaise', producing the biggest economic boom in U.S. history". In 1982, Heritage produced a study that suggested the use of a missile defense system to protect the United States from nuclear attack. Six months later Reagan made the speech that advocated the establishment of the Strategic Defense Initiative (SDI), and "Star Wars" was born.

Although the Heritage Foundation has not regained the influence it wielded in the Reagan years, it is still the most prominent think tank on the right-wing. On 17 August, it released Solutions for America, a statement of 128 recommendations for Congress covering 23 policy areas.

This includes a proposal to limit the growth in welfare spending by requiring “able-bodied adults to treat a portion of certain welfare benefits as loans to be repaid rather than as an open-ended grant from taxpayers”. It is an idea that will receive little support from conservative candidates in the mid-term election, as they eschew contentious ideological policies in favor of more immediate and practical concerns. Butif the recent past is a reliable indicator, Heritage’s proposal will receive serious consideration in the Republican presidential primaries.

President Obama has recently made the issue of the corporate financing of political organizations, and the related failure of Congress to pass the DISCLOSE Act, a major part of his efforts to establish an ideological difference between Democrats and Republicans in November. And he is not alone. While the president was attacking the "harmless-sounding" Americans for Prosperity (AFP) for launching an attack ad campaign against Democrat candidates, The New Yorker published the article "Covert Operations", a negative report by Jane Mayer on the funding of conservative causes --- including AFP --- by the two brothers who have made a fortune from the family-run Koch Industries.

On 27 August, the Democratic Congressional Campaign Committee submitted a request to the Internal Revenue Service to investigate the tax-exempt status of the foundation which funds the AFP. The thrust of the DCCC’s complaint is that Charles and David Koch are donating money to the Americans for Prosperity Foundation, who then funnel the money into campaign ads provided by the conservative political action group Americans for Prosperity.

Liberal concerns with the use of private money to sway political opinion are nothing new. Charitable foundations were granted tax-exempt status by Congress in 1913 as part of the introduction of income tax, and progressives immediately questioned, through a Commission on Industrial Relations, the "economic power" this action gave organizations, most notably the Carnegie and Rockefeller Foundations, to influence politics. Ironically, the Cox and Reece Committees of the early 1950s applied the same rationale to attack the subversive aims of tax-exempt foundations in promoting Communist propaganda, but the biggest change in regulating foundations came as a result of liberal frustrations with the impact of conservative organizations in the early Kennedy years.

In autumn 1961, labour leaders Walter and Victor Reuther (leading labor leaders) produced a secret memorandum for Attorney General Robert Kennedy on measures the administration could use to muzzle the Radical Right. One of the five proposals was that the IRS investigate tax-exempt conservative organizations and find reasons for revoking their status. As a result, the tax-exempt status of the Christian Echoes Ministry of Billy James Hargis, who gained national notoriety in the mid-1950s for attaching bibles to balloons and sending them over the Iron Curtain, was revoked in 1964 as punishment for its support of the campaign of Barry Goldwater.

After several years of Congressional investigation, the Tax Reform Act of 1969 was passed. This radically altered the rules, which still pertain today, regulating the ability of private foundations to influence political campaigns.

The criticism in recent weeks of corporate and wealthy individuals’ funding of conservative political organizations strikes a sour note with Republicans in what is becoming an increasingly bitter campaign. Historically, at least since the New Dealof the 1930s, Democrats have been able to use union support to outspend Republicans in election years. Allied with the recent addition of the millions spent by George Soros to finance liberal causes, and the recent tendency of Big Business to financially support the Democrats, conservatives are becoming somewhat bemused at President Obama’s emphasis on the influence of corporations on democratic politics.

Quite where the Democrats are going with the attention they are paying to organizations like the Americans for Prosperity, and individuals like the Koch brothers, is as yet unclear. They may drop the issue next week if it is seen as a failure, or they might parlay any success into an attempt to change the tax codes and further restrain the influence of foundations. Perhaps  President Obama has an agenda equivalent to the "Reuther Memorandum" guiding the Democrats’ latest attempts to nullify the political impact of the Radical Right/Tea Party.

Whatever happens, the significance of private institutions for public authority will continue to define America as an "exceptional" nation.