Campaign Finance Decision Could Cost Retailers Political Clout

Two weeks ago, the country was on pins and needles awaiting the SCOTUS decision on the Affordable Care Act, better known as Obamacare. The aftershocks of the decision are still reverberating throughout the country, particularly within the business community that is now poised to pick up the tab. But lost in the media fervor of that week was another SCOTUS decision that, in many ways, could be equally or more significant to the service-sector business community and its ability to affect future public policy outcomes.

The case, American Tradition Partnership Inc. v. Bullock, is better known as "the Montana case." The court was being asked to overturn a 5-2 decision of the Montana Supreme Court that ruled state elections in Montana are so fraught with the potential for corruption that strict campaign finance laws must be enforced. The Montana court ruled that the U.S. Supreme Court's 2010 decision in Citizens United v. FEC applies to federal elections only, not Montana elections. If you remember, the Citizens United decision held that corporations were, in effect, people and could contribute unlimited amounts to elections.

Late last month, the same week as the healthcare decision was released, the Supreme Court in a 5-4 vote decided to summarily reverse the Montana Supreme Court in a further endorsement of its previous ruling in Citizens United, giving corporations and unions a virtually unfettered ability to financially back their candidates of choice. By throwing out Montana's century-old law, the Court removed state-imposed limits on corporate campaign contributions.

The decision, which was made without any oral argument before the Court, goes beyond Presidential and Congressional politics. From the Governor's Mansion and the State Capitol to the thousands of local elected offices, the rules governing money in politics have been rewritten.

So, now the question becomes: Is this a good thing or a bad thing for retailers and other service-sector industries? I would argue that in most cases, and for most employers, it is a bad thing in that it just got a lot harder for average businesses and average corporations to compete in the political arena and be heard through the din of noise being created by unlimited spending. The price of being heard and the price of being a significant player in the process just got a lot more expensive. Just because you can now spend more money more easily doesn't mean you necessarily have it. In essence, the big and rich political players have the capacity to get bigger and the small guys are going to be left further behind.

For my money, if a company has a Political Action Committee (PAC) less than $500,000, they should be seriously discussing whether it really makes sense to have a PAC at all anymore. In some cases it might, but in most cases, it likely won't. Small PACs just won't be large enough players at that size to make any meaningful difference. Additionally, if corporations can now freely spend their own dollars, how can they really justify asking their employees to part with precious individual dollars to pursue an agenda that is in the company's best interest?

Those middle-of-the-road companies would likely be better served by aggregating those now-marginalized dollars and collectively building their appropriate trade association PACs to the level where their industry can compete in the new arena. Very few retail sector companies will be able to unilaterally protect their own interests and rise above the fray going forward. Most large retailers would be better served re-committing their efforts to collective action and building strong, viable trade associations that, with enough political support from their members, can impact the process when needed.

But, at the end of the day, what is all that money used for? To earn the support of the electorate? To bring their messages to voters? Here, the retail sector has an inherent advantage in the process that must be fully maximized to make up for the likely loss of political clout. That advantage is the power of grassroots. The retail community is the largest employment sector in the economy and has thousands of representatives in every local, state and federal voting district in the country. If properly leveraged, it can touch more voters than any advertising campaign politicians have to offer.

If you don't believe me, go ask the banks and credit card companies. While they have exponentially greater political resources, the retail community, led by the convenience store sector, out-worked them, out-hustled them and created more pressure on elected officials than the mighty financial sector could muster. Hence, the victory on interchange fees.

I always believed that the retail footprint was the biggest political advantage in the country. The credit card interchange fight showed that to be true. With the Citizens United ruling now extended to the states, our disadvantage in the money chase just got significantly greater. In response, our equally significant grassroots advantage just got more important. Companies need to rethink their 40-year reliance on PACs as their primary weapon of choice in the game of political warfare and realign their thinking around industry cooperation and empowerment and harnessing the collective power of their workforces, their footprints and their customer bases. Maybe the SCOTUS decision is a blessing in disguise.

Joe Kefauver is managing partner of Parquet Public Affairs, a national issue management, communications, government relations and reputation assurance firm that specializes in service-sector industries. Parquet's clients include Fortune 500 corporations, trade associations, regional businesses and non-profit organizations. For more information, visit www.ParquetPA.com.

Editor's Note: The opinions expressed in this column are the author's, and do not necessarily reflect the views of Convenience Store News.