California campaign spending provides glimpse of what's to come for nation

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By Shane Goldmacher

Reporting from Sacramento - The upcoming congressional elections offer the first opportunity for corporations to spend freely on federal campaigns since the U.S. Supreme Court rolled back key restrictions last month. California provides a glimpse of what's to come.

Corporations, trade groups and unions have long been allowed to influence state political races. California has permitted them to wage independent campaigns, paying for ads, mailers and get-out-the-vote operations -- the same apparatus now approved for federal contests.

California politicians have learned that if they crossed the wrong group they might be up against such a campaign.

One midsized software maker, for example, was able to tilt the playing field in a recent statewide race. An association of car dealerships spent big to oust one lawmaker who bested them with consumer protection legislation. Other corporations and special interests routinely use their money to influence campaigns -- while obscuring who is behind the spending.

"If someone ticks off a moneyed interest, that can be the end of their career," said Garry South, a top Democratic strategist in California.

Direct donations to California politicians are capped, as they are in federal races. But unlimited sums of money can flow through independent efforts, which cannot be coordinated with candidates. The Supreme Court’s decision protected such spending as free speech.

"It is the right decision for restoring our campaign system to what it was supposed to be," said Ron Nehring, chairman of the state Republican Party. "There is not an asterisk and footnote to the 1st Amendment."

Jessica Levinson, director of political reform at the Center for Governmental Studies in Los Angeles, disagreed, saying the Supreme Court has "given corporations and unions a very large megaphone."

Cindy Montanez learned the power of such spending in 2006, when she was an assemblywoman from Los Angeles. Two years earlier, the Democratic lawmaker had shepherded a Car Buyers' Bill of Rights through the Legislature over the objections of car dealerships.

The dealers, who eventually came to support a compromise that was signed into law in 2005, spent $100,000 to bury her 2006 bid for state Senate by backing her rival, Alex Padilla, who was then on the Los Angeles City Council. Montanez lost.

Brian Maas, director of government relations for the California New Car Dealers Assn., said the spending was unrelated to Montanez's legislation. "We supported Sen. Padilla because he was the best candidate in the race," Maas said.

That same year, Intuit, the maker of TurboTax software, spent $1 million trying to defeat Democrat John Chiang in his run for state controller with television ads supporting his opponent. The controller sits on California's tax board, which Intuit wanted to scrap a free state tax-preparation program for low-income residents.

Chiang won, buoyed by a union-led, $3.5-million independent campaign supporting him, and the free state tax program continues.

But its lobbyists twice tried to persuade lawmakers to eliminate it during all-night legislative sessions last year -- a visible reminder of Intuit's political spending power.

"It becomes a cudgel," said South, who has worked on dozens of independent campaigns. "Win or lose, when you throw a massive independent expenditure at somebody, the point is made."

All other candidates "would be thinking about that the next time they were up for election," he said.

Representatives of Inuit did not return calls from The Times.

The controller contest was one of more than a dozen in the last decade in which outside money -- the kind now allowed in federal races -- outstripped what the candidates spent.

More than $1 million in outside money supported or opposed candidates in five state Assembly races in the fall of 2008, and those five seats were the only ones to swap party control. Few legislative candidates can amass such war chests themselves.

In the spring of 2008, voters in the Los Angeles area saw radio, TV and newspaper ads hawking the state Senate candidacy of business-friendly Democrat Rod Wright and attacking his opponent. One group, the Alliance for California's Tomorrow, spent more than $1.15 million on them. The ads did not reveal to voters the corporate interests behind them -- the pharmaceutical, oil, tobacco and insurance industries, among others.

In a Bay Area state Senate race that spring, a campaign committee bankrolled mostly by Indian tribes called itself Education Leaders for High Standards. The group spent $160,000 on mailers opposing then-Assemblywoman Loni Hancock (D- Berkeley), who had fought a tribal effort to open a Las Vegas-style casino in her district. The mailers did not say the campaign was funded by tribes.

Fearing similar maneuverings in the nation's Capitol by business interests traditionally aligned with Republicans, Democrats in Congress are scrambling to blunt the effect of the Supreme Court ruling.

Among other moves, they're considering laws to limit political advertising by corporations that receive government funds and to force chief executive officers to disclose their involvement in broadcast ads, much as candidates are required to do, by making clear in the ads that they have approved them.

But Chris Lehane, a California strategist who has worked with top Democrats in Washington, said their trepidation is misplaced.

"The California model shows that the money, in and of itself, does not end democracy as we know it," Lehane said. "What it does show is . . . the more money you have . . . the louder you can speak."

shane.goldmacher@latimes.com

For more on California politics and government, go to www.latimes.com/californiapolitics.

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yet another Steven diatribe ....