Secret powers of campaign investments
By The Editorial Board | Friday, June 13, 2008
The Texas Ethics Commission was right this week to take a small but welcome measure to protect openness by requiring political candidates to report the value of their investments of campaign cash.
Now, some Texans might reasonably wonder, “Investments? With campaign donations? Thought that was money for spending on, you know, political campaigns - television and newspaper ads, bumper stickers, phone banks, consultants, gas money, an office and that sort of thing. But stocks and bonds? Mutual funds? Huh?”
In fact, some state officeholders are left with lots of cash after a winning campaign, and most never stop raising money even if they will not face election again for two or four years - and even if then they have no opponent.
Officeholders want to be well financed not only for their next campaign, but also just having a lot of money on hand can deter would-be challengers.
As a result, American-Statesman staff writer Laylan Copelin reported this week, state officeholders had almost $100 million in hand as of the end of 2007. Spokespeople for some of the biggest holders of campaign cash, including Gov. Rick Perry and Attorney General Greg Abbott, told Copelin that they invest in nothing more than interest-bearing accounts. But a commission official also said that the gains from campaign investments “can sometimes be hundreds of thousands of dollars.”
The Ethics Commission ruled on what might seem a pretty arcane point: It said that in filing their periodic campaign finance reports, officeholders must include the value of any investments with campaign cash as part of their total amount of cash on hand. That gives the public (and rivals) a truer picture of just how much campaign money they have.
But requiring even that much disclosure drew objection from one of the Capitol’s most influential lobbyists, Mike Toomey, a former chief of staff to Perry. Toomey argued that the law requires disclosure only of how much campaign money a candidate actually has deposited in an account, not the additional value of any investments.
Sen. Rodney Ellis, D-Houston, who wrote the bill requiring officeholders to disclose how much cash on hand they have, said he intended to include the value of investments.
But while the commission decided to require disclosure of the value of investments, it did not try to require officeholders to report how the money was invested. Even Craig McDonald, director of Texans for Public Justice, a nonprofit group that analyzes campaign spending, says it is doubtful the commission has the authority to require such detailed disclosure.
However, the Legislature should require state officeholders - its own members included - to report exactly where their campaign cash is invested. The officeholder who invests $100,000 in a liquor company, for instance, may not be entirely detached when it is time to vote on liquor regulation.
Citizens have a right to know about such conflicts of interest so they can pass their own judgments on whether they are significant. Or the Legislature could just ban such investments in other than interest-bearing accounts altogether.