WASHINGTON — Wal-Mart, the world’s biggest retailer, has increased its political contributions to $2.1 million so far this presidential election cycle from $667,805 for the entire 2000 race, Federal Election Commission records show.
The company’s 2003-2004 contributions make it the fifth largest donor to federal candidates, with 81 percent of its money going to Republicans, according to the Center for Responsive Politics, a watchdog group. Wal-Mart’s direct contributions to political candidates — a number that does not include money given to other political action committees — came to $1.437 million.
The National Association of Realtors leads the list in PAC contributions to candidates, giving $2 million directly to presidential, House and Senate candidates so far in the 2003-2004 season. It is trailed by the International Brotherhood of Electrical Workers, which has given $1.5 million; the Association of Trial Lawyers, $1.5 million, and National Association of Home Builders, $1.445 million.
Wal-Mart’s net investment in politics is part of a strategy launched six years ago to boost the company’s influence over how legislation and regulations affecting business are shaped in the nation’s capital and in state and local governments. The $2.1 million figure is a measure of the growth of Wal-Mart’s contributions since the 1998 congressional elections, when the total was $226,294.
Now considered a business necessity by the company, Wal-Mart’s political awakening was slow in comparison with other large companies, political consultants said. Wal-Mart executives had preferred to follow the lead of founder Sam Walton, who died in 1992. Walton wrote in his autobiography that he had “tried to stay fairly neutral publicly on controversial political issues.’’
The retailer, which is being challenged in its efforts to expand in urban areas and is facing the largest gender discrimination lawsuit in U.S. history, is trying to shape government policies on issues such as employment, international trade and zoning, among others.
Making political donations is a long-standing practice, particularly for business and organized labor. Wal-Mart’s competitors, including J.C. Penney Co., Target Stores Corp., The Limited Inc., Gap Inc., Sears Roebuck & Co. and May Department Stores Co., are longtime contributors. But their involvement, like the size of their businesses, pales in comparison with Wal-Mart, which has 1.2 million U.S. and 330,000 foreign employees at 3,580 domestic and 1,490 foreign stores. The chain had $256 billion in global revenue in 2003.
This story first appeared in the August 2, 2004 issue of WWD. Subscribe Today.
So far in this two-year election cycle, which started Jan. 1, 2003, the Limited has donated $120,084 to federal campaigns and parties; Target, $235,286; Sears, $198,221; May, $114,097, Penney, $71,858; Gap, $34,095, and Federated Department Stores, $3,000, FEC records show.
“Campaigns are so expensive today that it makes sense parties have become increasingly reliant on business interests,” said Matthew C. Fellowes, a senior research analyst at the Brookings Institution think tank and co-author of a study published last month in Political Research Quarterly on the connection between corporate contributions and legislation benefiting businesses.
Fellowes said Wal-Mart was “a great candidate for Congressional influence” because of the company’s size and its increasing investment in politicians.
“If you’re looking to influence regulations or taxes and your business funds a PAC, you are going to gain influence,” he said.
Like its business, Wal-Mart’s interests in politics are wide-ranging. The company has pressed lawmakers in Congress not to repeal millions of dollars in tax breaks enjoyed by multinationals like itself. Earlier this year, the retailer joined other companies to defeat Democratic attempts on Capitol Hill to kill new Bush administration rules changing when workers qualify for overtime pay. Opponents of the guidelines said the reclassification of managerial duties and salary thresholds would cause millions of workers to lose the extra pay.
Almost any legislation or administration plan to lower tariffs and quotas on imports gets Wal-Mart’s attention. Company banners, shopping carts and products have been used as a backdrop by Bush administration officials to tout how low-cost imports benefit consumers. These props were used two years ago when U.S. Trade Representative Robert Zoellick unveiled a U.S. challenge at the World Trade Organization to eliminate global tariffs for manufactured goods.
The mathematical models used by Fellowes in his political contribution study found it difficult to draw a connection between lawmakers and their votes on legislation that directly benefits individual companies. Fellowes said he found a clearer link between political donations and votes that help groups of companies.
Jay Allen, who as Wal-Mart’s senior vice president for corporate affairs steers the company’s public relations, lobbying strategies and political donations, said campaign contributions are “a ticket to the dance.”
A PAC “allows you to establish relationships, to give you the currency to get in a room and to educate” politicians about how issues affect Wal-Mart, Allen said.
The FEC limits the PAC contributions of individuals to $5,000 for each primary and general election. PACs, in turn, may give as much as $2,000 to a candidate and $25,000 to political parties. FEC rules prohibit companies from soliciting PAC donations or preaching politics to their rank and file.
However, when it comes to exercising FEC-permitted solicitations of managers and executives, the retailer leverages its size and the single-mindedness of its corporate culture for results. Wal-Mart’s Allen declined to say how many managers and executives are in the company’s workforce.
The company’s PAC fund-raising generally occurs at manager meetings, during which senior executives detail the political landscape and where Wal-Mart is coming under fire, Allen said. Such was the case this spring during the Democratic presidential primaries when the campaigns, including that of presidential nominee John Kerry, derided Wal-Mart as a symbol of low wages, inadequate employee health care and a cause of manufacturing jobs being transferred to low-wage countries.
Allen disputed these accusations and said they were fueled by organized labor and its alliances with Democrats angling to take back the White House and Congress. So angry were Wal-Mart executives about the company taking a beating from Democrats that Allen, in a January meeting of managers, played a videotape of Rep. Dick Gephardt of Missouri and former Vermont Gov. Howard Dean taking jabs at Wal-Mart.
The video was used “to make a point; we are being used as a political football and that we need to be more involved, and then we talked about the PAC,” Allen said.
Discussions with managers about the need for Wal-Mart to be politically active continue and contributions are voluntary, as required by the FEC, Allen said.
“We solicit virtually the entire Wal-Mart manager base,” said Allen, who is a Republican fund-raiser on his own time and has been awarded the Bush campaign’s Pioneer designation for raising $100,000 for the president’s reelection war chest.
Allen said Wal-Mart supports mainly Republicans because the GOP and Wal-Mart share views on issues such as tax cuts and free trade as economic engines. Businesses in general, including retailers, also have a Republican bent when it comes to corporate political contributions.
While 81 percent of Wal-Mart donations have gone to the GOP, Penney’s PAC favors Republicans 84 percent; May, 79 percent; Target, 71 percent; Sears, 66 percent, and Gap, 29 percent.
Wal-Mart executives on their own have been longtime contributors to Republican candidates. Allen said the company’s relationship with the president goes back to when Bush was an owner of the Texas Rangers baseball team and became friendly with Wal-Mart’s former chairman, David Glass, owner of the Kansas City Royals.
So it didn’t come as a surprise in April when Vice President Dick Cheney made a campaign stop at a Wal-Mart distribution center at its Bentonville, Ark., headquarters, where he gave a speech to about 800 workers. Cheney celebrated Wal-Mart as an “economic powerhouse,” while touting Bush’s economic program. He criticized Kerry for “trying to re-create himself as an entrepreneurial Democrat,” according to a transcript of his comments.
“Considering what has been said about Wal-Mart in the last year or so, it was nice to hear…from the vice president how respected the company is,” Allen said.
Under FEC rules, Wal-Mart would have to give equal time to Kerry running mate Sen. John Edwards or another campaign official if the Democrats ask for it. Calls for comment from the Kerry campaign on whether the candidate will seek a Wal-Mart audience were not returned.
It might seem a gamble for a company to ally itself with one party, particularly in the partisan climate in Washington. But Allen doesn’t seem concerned about political relations should Kerry defeat President Bush, or if Democrats win control of the House or Senate.
“To be fair, we don’t know Sen. Kerry that well and he doesn’t know us that well, and it’s something we’ll have to work on if he’s elected,” Allen said, noting the company has had good relations with Democrats, including Bill Clinton.
Wal-Mart’s growing donations have been accompanied by the retailer taking a more aggressive stance in deploying lobbyists in the capital, including opening its own office in 1998. That year, Wal-Mart spent less than $50,000 to begin establishing a lobbying foothold.
Lobbyists essentially act as political sales staff promoting clients’ positions on legislation and regulations in meetings with lawmakers, their staffs and administration officials.
“I call it education, not influence,” said Allen, rejecting a view that political contributions create a quid pro quo between how much money is donated and legislation or regulations. “We engage with a lot of people and we think it’s appropriate for elected officials and regulators to understand the real-world impact” of their decisions.
Previously, Wal-Mart relied primarily on lobbyists at associations where it is a member and that represent retailers, supermarkets and pharmacies, such as the Retail Industry Leaders Association, the Food Marketing Institute and the National Association of Chain Drug Stores.
Aside from its association memberships, Wal-Mart last year again increased its investment in lobbying by spending $1.7 million, including $1 million to run its own local office of three lobbyists, according to Congressional records. The remaining lobbying expenses went to law firms employing attorneys and former Capitol Hill and administration officials as lobbyists.
By comparison, on nonassociation lobbying last year The Limited spent $710,000; Target, $240,000; Sears, $940,000, and May, less than $30,000. Many retailers, such as Gap and Federated Department Stores, largely rely on the National Retail Federation for lobbying.
As Wal-Mart grew, Allen said it didn’t make sense to stay removed from politics, as Sam Walton preferred. Allen said he urged company officials to become more active, not just in Washington but also at the state, city and county levels.
“We have increased our investment gradually,” said Allen.
He declined to say how much money Wal-Mart is spending on lobbying outside of Washington, which includes mounting offensives against government and citizen campaigns to impede its expansion.
Wal-Mart received political advice from former Senate Majority Leader Trent Lott, the Mississippi Republican who urged the company to open a lobbying office. Lott said he made the case about six years ago to then–Wal-Mart chairman Glass.
“I met with chairman Glass and told him there was no such thing as not having a presence in Washington for a huge operation like theirs…where you have people watching what’s going on in the government,” Lott said. “Innocence could lead to a law that could be devastating to their company.”
Other lobbyists wonder what took Wal-Mart so long.
“A company the size of Wal-Mart can’t afford not to have friends in Washington,” said Kevin Burke, president of the American Apparel & Footwear Association. “They have the same right to have political influence as anybody else. It’s a free society and they can develop a PAC as large as they wish to elect people who share their views.”
John Motley, a lobbyist who is a senior vice president for FMI, said Wal-Mart’s political push reflects reality, particularly its increasing political contributions.
“People who are idealistic and believe the system…doesn’t require you to roll up your sleeves and help your friends are putting their heads in the sand,” Motley said. “You need to support your friends and you need to try and retire your enemies.”