The American Conservative Union asked FedEx for a check for $2 million to $3 million in return for the group's endorsement in a bitter legislative dispute, then flipped and sided with UPS after FedEx refused to pay.
For the $2 million plus, ACU offered a range of services that included: "Producing op-eds and articles written by ACU's Chairman David Keene and/or other members of the ACU's board of directors. (Note that Mr. Keene writes a weekly column that appears in The Hill.)"
The conservative group's remarkable demand -- black-and-white proof of the longtime Washington practice known as "pay for play" -- was contained in a private letter to FedEx , which was provided to POLITICO.
The letter exposes the practice by some political interest groups of taking stands not for reasons of pure principle, as their members and supporters might assume, but also in part because a sponsor is paying big money.
In the three-page letter asking for money on June 30, the conservative group backed FedEx. After FedEx says it rejected the offer, Keene signed onto a two-page July 15 letter backing UPS. Keene did not return a message left on his cell phone.
« The Economics of Blogging | Main | Learning to (un)Love Leverage » Markets in Everything17 Jul 2009 10:48 am
According to Politico, the American Conservative Union is selling off endorsements to the highest bidder. Actually, that's too kind; this sounds more like an extortion racket:
I'm skeptical of this, not because I feel that political groups are above selling their services, but because I'd be shocked if one of them was actually stupid enough to put it in a letter. On the other hand, crazier things have happened. I expect this will be a fairly major ongoing story during the August doldrums. I can't wait to hear what the ACU has to say. Developing . . . Comments (19)Comments on this entry have been closed. |
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I'd hate to see any group follow in Jesse Jackson's footsteps, but at least they're accused of selling support rather than threatening attacks (a carrot rather than a stick).
It is probably a general mistake to assume people couldn't possibly be so stupid to do this or that, unless the ACU paid you some money to do so.
Why should congress be deciding winners and losers in the delivery service business?
If the letter is a fake, it is a good one. Of course, they were offering a service and the money was the charge for the service itself. Makes you wonder how much UPS paid.
I read the story and was equally skeptical. (I also liked how Yahoo news didn't even cover the WaPo version of this story but headlines the ACU).
I believe both right-and-left leaning groups are capable of this, but groups like the ACU tend to be above this sort of fray (IMHO) due to their size and relative stature.
IMHO, I wouldn't be surprised to find out this had happened by the ACU but the letter is rather extreme and some of the stuff sounds just crazy.
Why is the letter extreme? Just look at the Washington Post. They were caught selling access. if you put it in writing, you'll likely get outed eventually. Sounds like they didn't learn from Hyman Roth and Michael Corleone.
As Krugman says, it's not like it never happened. The news in this story, if it turns out to be true, is how blatant and stupid it is this time.
If it checks out, does this means CPAC will be underfunded next year? Aaww. Not fair. How will they ever going to afford the likes of Limbaugh and Coulter?
So I just did some b-ground research on this (it's amazing what 10 minutes of searches can do holy cow)....
I'm not considering myself an expert on this topic by any means, but I actually don't see a pay-for-play operation here, though I do see the ACU taking a curious stance.
First, ACU goes to fed-ex and offers a ~$2 million direct-mail/contact proposal to fire up activists and get motivated for/against something to put pressure on congress.
The interesting thing I'll say here is that I'm guessing
Fed-ex apparently turns them down and 16 days later the ACU is signed onto a letter campaign (which was an endorsement and who knows what they were paid for it since it has so many groups).
Now my only complaint is why did the ACU switch sides? And now they are sided with the unions? If I was a member, I'd be outraged by that....but I don't see it as pay to play.
Joe
What do you see it as? And why would they switch sides if it wasn't pay to play?
Let me explain it this way:
When I first read a few of these breathless articles, I interpreted them as "ACU told Fed-EX that for $2 million they'd back them in this fight".
Then I read the letter, and realized that it was (in my experience in providing a vendor service) quite literally a contract to provide services to FedEX including a massive amount of overhead costs (that contract probably had 1.2 million in direct costs to the ACU).
Now this all makes sense in that FedEX was fighting the unions and the ACU typically stands against the unions and can offer a mailing database to help build groundswell support. Nothing fishy here to me, and not pay for play.
It was, quite simply, a service offering. At that time.
What grabs me is the switch to UPS, not the original offer. We don't know what UPS paid or why there was a switch (to claim that the ACU was ready to jump on board because fed-ex used the term "bailout of UPS" is derogatory...to the ACU. It means they made a contract offer prior to researching it, or are covering their asses for switching sides.
Pay for play would indicate UPS provided the ACU witha large sum of money in return for their endorsement and possibly mailing list. Pay for play would indicate that the ACU has no ethical stake and just put their name on whomever paid them.
Now that might have been what happened, but I haven't seen anything that says "ACU offered Fed-Ex services for 2 million. Fed-ex turns them down. UPS offers ACU 1 million for similar services. ACU signs up."
Not saying it's not, just waiting for more information and as of right now there's not enough to claim pay for play.
Joe
That was a fair description based on what we have learned to date.
Well, suppose the ACU hadn't backed anybody. Don't you think selling a service that includes op-eds is morally bankrupt? I would guess readers of The Hill expect the opinions they read not to be bought.
Two things:
1. I think it puts into question the arrangement Keene has with "The Hill" in that he's using his position as a columnist there to sell a ACU service. If that's ok per their agreement, I see no problem with advertising that he has the ability to write about it.
2. He didn't specifically say an op-ed would go into the hill. It was kinda sneaky honestly, as he simply said they'd write op-eds and articles on this plight, and oh by the way Keene is a columnist in The Hill. Sneaky.
3. I don't see something morally bankrupt with writing an op-ed for publication and including that op-ed as a service offering in a contract, as long as all parties agree to that sort of arrangement. AND as long as you believe in what you are writing. An opinion editorial is different from an advertisement. If the author is writing it simply as a form of advertising, it's wrong. And again, this is a fine line. If Fed-Ex got to review/modify the piece, it's no longer an op-ed. If they didn't, then it probably is....
Don't get me wrong, it's not the highest standards of publication. But nor is it morally bankrupt, depending upon the guidelines on which it is performed.
Also, though I'm not an op-ed columnist, I imagine I'd have about 5-10 topics I could write on every week. If the guidelines were set forth to allow to do this, I could see saying to a client that I would write a column on their plight as part of the service offering since I believe in their cause and have an outlet for it.
It really comes down to whether or not this was a pure business offering or if the ACU WANTS one side to win (which would make sense based upon their initial offering to Fed-Ex, but does not make sense under the current vision of their flip to UPS without explanation).
Nonetheless, I suspect Keene won't last another 12 months unless alot of exculpation comes out soon.
Joe
I would guess that most people who pay a small bit of attention to politics would thing this is just lobbying, K Street, and business as usual; that in some ways, it's been pay-to-play for some time, else there wouldn't be multi-million dollar deals offered. That the offer for a say in the legal process is standard if you're willing to pay the price. The return will potentially be many times the value of the investment.
the nasty thing is just the reassurance of what you think you already know.
But what's striking here is that we've got two huge companies with competition from a self-funded federal agency. The United States Postal Service.
Saw some of their flat-rate box ads last night while I worked at my knitting. They're competing, and helping a lot of businesses be successful with their service at the same time.
Might be a good role model for health care.
This sort of thing should call into question their tax-exempt status. If they are offering "services" that amount to PR campaigns for "donations," well, that is starting to sound like a for-profit business.
The USPS/health care example is actually fairly interesting. There are plenty of things the USPS does that FedEx and UPS don't do, don't want to do, and could not do efficiently. Like deliver ordinary mail for pennies, even to remote locations. Just the same way that there are plenty of things that private insurers don't want to do. Like insure sick people.
In reality, USPS doesn't teach us much about health care because the markets are so different. But if it does teach us something, it's that private businesses don't always provide all the service that society needs.
But what's striking here is that we've got two huge companies with competition from a self-funded federal agency. The United States Postal Service.
The USPS survives because it has a government-granted monopoly on regular mail delivery. Nobody in their right mind sends packages or express deliveries via USPS, unless they neither care if the package gets there nor want to know where it DID get to.
USPS also functions, to the best of my knowledge, with the requirement to generate profit in their activities....they can't operate in a deficit as far as I know.
It's one of the only government run nationalized businesses that makes me very proud.
USPS also functions, to the best of my knowledge, with the requirement to generate profit in their activities....they can't operate in a deficit as far as I know.
"Requiring" a monopoly to generate a profit is not much of a stretch. What's amazing is that the USPS, despite that "requirement", has been deep in the red for a few years now. Their operating margin was around -4% last year and -7% the year before that. They'd have done so even more often were it not for the government assistance they receive.
USPS tried to blame this on the economy. Yet somehow FedEx and UPS not only turned profits during those years, but returned larger profit margins than USPS has ever achieved.
I think the ACU's own claims about the situation should be posted. I'm not endorsing them or saying that they are correct, I'm just putting out there what the ACU says
-----
ACU on POLITICO Smear
ALEXANDRIA, VA - Last Friday Politico carried a story alleging that I had on behalf of ACU made a “pay for play” proposal seeking funding from Federal Express as the “price” of ACU support in a legislative battle raging in Congress.
The allegation is totally false. ACU continues to oppose a Congressional action that would extend NLRA jurisdiction to Federal Express and deliver the company and its employees into the hands of the Teamsters.
ACU’s opposition to doing this predated a funding proposal sent to Federal Express by ACU staff.
Neither ACU nor I have heard from Federal Express on the status of that proposal and we have neither asked for nor received any funds from UPS.
My position and ACU’s on the NLRA issue has not and will not change. Our opposition to what amounts to forced unionization is based on principle not personal, professional or financial considerations.
ACU’s positions on issues affecting this country have never been for sale and never will be.
David A. Keene
Chairman
American Conservative Union
http://www.conservative.org/pressroom/2008/ACUonPOLITICOSmear.asp