Shareholder protection: Stay tuned, coming this June to a ballot near you!

Most political analysts would agree: The single most politically significant
measure on the Special Election Ballot is Proposition 75, dubbed “Paycheck
Protection” by its proponents. Proposition 77, the Redistricting Reform
measure, is also a major reform. But without a change in the campaign
funding paradigm (especially at the state legislative level), fair districts
will not necessarily be competitive districts-Republicans are significantly
outspent by the majority party.

No, it is the major loss of political resources by public employee unions
that would rock the foundations of the status-quo in Sacramento.

Most political insiders, let alone members of the public, are unaware that
while everyone is totally engaged in this battle over whether public
employee union members should have to affirmative designate donations to
their union’s political activities, union leaders are quietly getting ready
for some payback via a measure they are dubbing, “Shareholder Protection.”

The “Corporate Political Accountability Act” (as called by its proponents)
basically works like this: companies would have to obtain permission in
writing from shareholders before spending money for political purposes. A
company would have to send its political ‘spending plan’ for the coming year
to stock holders, who would vote. A company can spend a percentage of their
planned political giving equal to the percentage of shareholders who vote
affirmatively for the plan. So, for example, if 42 percent of stockholder
vote yes, then a company can spend 42 percent of what it has in its spending
plan.

Signature gathering is under way for the this ballot measure, with the
statutory deadline for turning them in being Dec. 30, although advocates has
said they intend on cutting that short–who wants to be out gathering
signatures between Christmas and New Year’s?

The analogy that is being made is that if union members should have to
positively affirm that their pay can be used for political purposes, then
corporations should get the same sign off from their shareholders. This is
a flawed argument that is really comparing apples to oranges.

Public employees cannot realistically quit their jobs because they object to
the way their union’s PAC is spending the money taken from their paychecks.
An investor in a company, on the other hand, is very easily able to sell off
shares. If a company experiences a lot of shares being sold because of its
political leanings, that would certainly be a market-factor that would
impact the ‘behavior’ of the company.

To put this in terms that are easier to digest: If you object to Paramount
Pictures giving money to the California Democratic Party, and you owned
shares of their parent corporation, Viacom, you might be mad. If so, you
can call up your broker, or pull up your E-Trade account online, and sell
that stock. You can then use those same funds to go buy stock in a company
with political leanings you like, or one with no political leanings at all!

The political reality is that this is about unions trying to “even the
playing field” by drying up corporate contributions-which the unions feel go
largely to Republican candidates. But just go back and look at how much
corporate money went to Democrat Gray Davis to realize that is not always
the case.

So, where does it go from here?

Well, a lot of that may depend on what happens with Proposition 75. If it
passes, big public labor unions like the California Teachers Association
will actually be in debt and hardly in a strong position to finance a
statewide campaign for “shareholder protection”-especially while they, along
with every other public employee unions, will be focused on the
time-consuming task of lobbying their own members to donate to their union
PACs.

However, let us not forget that while it is public employee unions that
donate the most funds towards political candidates and causes, other unions
such as the AFL-CIO and its affiliates give millions, and they, along with
wealthy businessmen like George Soros or Stephen Bing, will make this
measure their number one priority.

There are two factors that could make this issue very interesting to watch
on the June, 2006 ballot. The first is that the Democratic primary for
governor will be taking place, which is likely to increase liberal turnout.

Even more interesting is that Gov. Schwarzenegger, as recently as at a
public forum this last Tuesday night in Walnut Creek, has voiced his support
for the concept of ‘shareholder protection.’