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No Limit To State Parties’ Money Laundering

By Tom Elias

Just in case anyone wonders what the real issue was in the very close race between Eric Bauman and Kimberly Ellis over who would become the next chairperson of the California Democratic Party, it was money.

No, not salary or other personal emoluments, although Bauman – the party’s longtime Los Angeles County leader – has received his share of payments from ballot initiative campaigns. This was really about who would control the purse strings of the nation’s most successful state party and thus decide who gets its many millions of laundered dollars in each election cycle.

It’s all because the year-2000 Proposition 34 made party heads in California the state’s most powerful unpublicized political kingmakers, allowing huge contributions to party committees which then parcel funds out where they like. It’s a way for donors to circumvent campaign donation limits with identities partially concealed. This is money laundering, plain, simple and also legal.

The current dicey system is now sure to continue at least another two years, too, as state legislators (about two-thirds of them Democrats) the other day killed a bill making gifts to political parties subject to the same limits imposed on donations to candidates.

In 2014, for example, the state Democratic Party passed out $10.4 million, while also influencing where the party’s many county central committees funneled their millions. Republicans, meanwhile, doled out just a little more than half as much as Democrats, as billionaires, big unions and big business donors realize the GOP has little chance to retake control of state government anytime soon.

The biggest recipients of party money that year included Democrat Luis Chavez, ranked No. 1 with $2.35 million in party money, who lost a tight Hanford/Fresno-area state Senate race to Republican Andy Vidak, the No. 5-ranked recipient of party money with $2.1 million. Over the years, the bigger-money recipients in close races have usually won.

Yes, ideology also had a lot to do with the extremely close Bauman-Ellis contest, where establishment candidate Bauman eked out a 60-vote win over Richmond political organizer Ellis. (It’s sign of California’s times that Bauman, an openly gay man favoring gun controls, easy access to abortions and strong environmental protections, was considered the more conservative candidate.)

This was essentially a re-run of last year’s Hillary Clinton-Bernard Sanders primary election contest, where the liberal feminist Clinton was not liberal enough for many Democrats. Ellis, a Sanders supporter, benefited from that faction’s strong turnouts at district meetings where many party convention delegates are chosen. Weeks after the state party convention, she still had not conceded the outcome of the convention vote.

Bauman’s apparent win probably will see many more moderate Democrats get party backing and money than if Ellis had won. It means Sanders backers will at least have to bide their time before making another try at taking over the state party and being able to funnel party cash to ultra-liberals.

But the Legislature’s refusal to clean up the current system is what really cries out for change. On the Republican side, for example, billionaire Charles Munger in 2014 gave $3.3 million to the party, with the ability to request privately where it would end up. This means there is no public record of who benefited from his largesse, while there would be if he’d given directly to candidates. Essentially, Munger and other big donors like the Service Employees International Union ($2.3 million), California Teachers Assn. ($676,000), Philip Morris USA and affiliates ($650,000) and PG&E Corp. ($526,000) can give to whoever they like without anyone holding the eventual winners’ feet to the fire over where they’re getting their funds and whether they later vote to benefit their benefactors.

Among last year’s biggest donors were Indian casinos, utilities and healthcare companies, each interest having a huge stake in the makeup of the Legislature. As in 2014, there was no public accounting last year of where their money went.

This disgraceful system is a major legacy of former Democratic Gov. Gray Davis, recalled in 2003 partly because of his own political fund-raising practices. Since Prop. 34 passed, one tally shows, the state Democratic Party has spent fully $401 million on candidates and campaigns.

With that kind of money and commensurate influence at stake, it’s no wonder this spring’s contest to head that party was so hotly contested.

Thomas B. Elias, Columnist

in Opinion
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