[This article is in two parts; the first part deals specifically with an email from "Charlotte in 2012," regarding the Democratic National Convention. The second deals with the more boring topic of tax-exempt corporate structuring, but reveals a very serious hypocrisy.]
Michelle Obama thinks you're stupid.
Maybe she's right, I don't know. Chances are if you're on her mailing list you're part of the Democratic Party -- or at least incline that way -- and the probability of the null hypothesis being disproven in that scenario might decrease.
I am on her mailing list, because, as the great philosopher and scholar Jeeves once said, "It is as well to know exactly what tune the devil is playing." Also, she wants "to see me at the Convention." At least that's how she put it.
The Democrats' claim to fame for their convention in Charlotte is that -- "for the first time in modern history – [it] is not being funded by corporations, lobbyists, and PACs. Instead, [they're] counting on people like you." Unless you're part of a corporation, a PAC, or are a lobbyist, I guess.
Two problems: It's not true, and it's not true.
The Wall Street Journal reported that the Obamas and the Democrats had indeed planned to host the entire convention with small-donor funds, but has backed off that promise allowing corporations like Wells Fargo, Bank of America (where DNC funds are deposited), and Duke Energy -- you know, Wall Street Fat Cats and Big Oil -- to donate millions of dollars to fund events surrounding the convention. (Presumably this is because the Democrats are having trouble raising the necessary money to host the convention.)
Now the Democrats' promise is that "no corporate money will be spent on activities related to nominating the president or other events directly connected to the formal nominating process," but it will be used to pay for "entertainment for the delegates." (Feel free to provide your own joke about how Obama's nomination will not be entertaining.)
Even if this were true -- or possible to distinguish fairly -- it's an absurd statement. It's like saying Planned Parenthood doesn't use federal funds to pay for abortion, they use donations to pay for abortions and federal funds to help kittens or whatever…
Money is fungible! It's like saying you will only use your tax return to buy food, and you'll use only your wages to finance [insert your own vice here].
So, the Democrats will accept millions of dollars from banks [they bailed out] and other corporations, and get millions of dollars from small donors. Does anyone really care that the money is interchangeable? I guess Democrats do. But do they really believe people won't realize corporate donations can be easily washed to finance the same thing as small donors? I guess so.
It's a quintessential Obama tactic: As long as a lie makes people feel good they will believe it.
Oh. One other thing: The group in charge of sending out Michelle Obama's plea to small donors and to claim that no corporations will be funding the convention?
New American City. Oops. Sorry. The official name is New American City, Inc.
That's right. A corporation is financing the fundraising pitch saying no corporate funds will be used. Wrap your head around that one.
// End Part 1. Venture on, if you dare. //
Deeper into the Weeds.
Oh yeah. New American City, Inc., is also a 501(c)(6) corporation, which means it doesn't pay its fair share any taxes. It also means it is NOT a non-profit organization (contrary to claims on the official website). According to the IRS, being a 501(c)(6) organization "does not mean [it] cannot have net earnings in the form of an excess of income over expenses. Instead, the requirement prohibits an IRC 501(c)(6) organization from issuing shares of stock that carry the right to dividends." It is also associated with "Committee for Charlotte/Charlotte DNC Host Committee," which is affiliated with the "2012 Democratic National Convention Committee, Inc.," which is an associate to the "Democratic National Committee Services Corporation," also known as the Democratic National Committee.
How New American City, Inc . got approved as a 501(c)(6) is beyond me, since they are neither "Business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues." [Please don't ask why professional football leagues (yes, including the NFL) are tax-exempt.]
But they needn't worry about their tax-exempt status interfering with a political agenda: The IRS says 501(c)(6) corporations "may engage in an unlimited amount of lobbying, provided that the lobbying is related to the organization's exempt purpose," and that they "may engage in political campaigns on behalf of or in opposition to candidates for public office provided that such intervention does not constitute the organization's primary activity."
Now, it would seem the purpose -- the "primary activity" -- of the Democratic National Convention Committee, Inc., and especially the committee paying for all the nomination activities, is to nominate a candidate for the presidency.
Not so. Democrats are as adept at finding loopholes in the tax code as those whom they perpetually castigate.
According to New American City, Inc., their primary purposes are to:
(a)Welcome Convention attendees to the Charlotte area by sponsoring information booths, receptions, tours and other similar events and facilities;
(b) Defray expenses incurred in facilitating commerce, such as providing Convention attendees with guides to the Charlotte area and distributing samples and promotional materials;
(c)Defray administrative expenses incurred by the Host Committee organizations themselves, such as salaries, rent, travel and insurance.
In other words, the corporation who is soliciting donations to pay for the nomination of the president, and who is collecting millions of dollars in corporate funds for a partisan event, does not consider facilitating the nomination of a presidential candidate or financing the Democratic Convention its primary purpose. (They also donated money to Obama's campaign.) Instead New American City, Inc., claims to be nothing more than the Convention's concierge. This is how they get away with calling themselves a "business league," I guess.
Furthermore, the Democratic National Convention is organized into a 501(c)(3) corporation, which is non-profit, and according to the tax code, may be (among other things) any group
"organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes … [in which] no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation … and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
Obviously, the Democratic National Convention is intervening on behalf of a candidate for public office, right?
Nope. Again, to avoid having to pay taxes, the "Committee for Charlotte," will act pursuant to 11 C.F.R. §9008.50(b), which states their principle purpose must be "the encouragement of commerce in the convention city, as well as the projection of a favorable image of the city to convention attendees."
How wonderful it must be for an organization to criticize corporations for "taking advantage of the tax code" while at the same time be a corporation who is taking advantage of the tax code.
According to the prominent law firm Skadden, Arps, Slate, Meagher & Flom, the Democratic National Convention's host committee has imposed restrictions upon itself, including the refusal to accept corporate monetary gifts, "in-kind" gifts from corporations who have not repaid TARP money, any kind of federal lobbyist gifts, and any monetary gifts from an individual in excess of $100,000. To emphasize this, they will be holding an "intimate lunch" fundraiser with Bill Clinton [again, insert whatever joke you want here], with a minimum $25,000 entrance fee, and for $100,000 you can have an intimate photo taken with the former president. The invitation states that "Committee for Charlotte" will not accept "contributions from corporations, currently registered federal lobbyists, registered foreign agents, political action committees, or minors under the age of 16."
However, Skadden also notes that New American City, Inc., "is accepting such gifts in order to pay for administrative expenses and expenses not legally required to be provided to the DNCC." New American City, Inc., is also the organization responsible for financing the fundraising event held by "Committee for Charlotte."
This means New American City, Inc., will gladly accept corporate monetary gifts, "in-kind" contributions from bailed-out companies who haven't repaid their debt, all kinds of federal lobbyist gifts, and all individual monetary gifts over $100,000. But again, they claim none of this will go toward the actual nomination of Barack Obama, which, as far as I can tell, can in a pinch for expedient funds be limited to the nominating motion, the seconding, the vote, and the acceptance speech.
Also, there is nothing in the Democrats' restrictions that says they must refuse "in-kind" contributions from corporations (who have repaid TARP money), which can include catering, decorations, and, yes, even gift cards.
Wal-Mart gave the Democratic National Convention $50,000 in gift cards earlier this year, which were "supposed to be used for office supplies."
The Democrats gave back these $50,000 -- not because they thought it unethical to accept corporate money that allowed the holder of that money to use it only at the corporation's store, but because unions pressured them to. (Wal-Mart is famously held in low regard by organized labor.)
So while Democrats will gladly accept corporate money in the non-fungible form of store credit, they will criticize accepting corporate money in the fungible form of currency as "special interest." All while allowing union "special-interests" to determine what corporate gifts may or may not be accepted. All while criticizing corporate spending and influence on elections. All while operating under a complex corporate structure that does accept unlimited corporate gifts. All while not paying any corporate taxes, operating under non-profit or not-for-profit status. All while overtly engaging in political activities that benefit a particular party or candidate.
So, you see, Democrats don't dislike corporations. They dislike profit.