Government Spending Hypocrisy: Some Candidates Against Spending Get Tax Breaks, Government Contracts
Kimberly Leonard, The Huffington Post Investigative Fund, and Aaron Mehta, The Center for Public Integrity
In his quest for West Virginia's Senate seat, Republican John Raese frequently attacks "professional politicians' out-of-control spending spree" as he promises voters that he'll rein in the federal budget.
What the businessman-turned-politician leaves unspoken is that his own company has benefited from taxpayer spending. Greer Industries Inc. sold $2.7 million of products to the federal government and $29 million in raw materials to the state in the last five years.
Raese is among roughly two dozen Republican and Democratic candidates in this fall's congressional elections who attack federal largess but have benefited from it through companies, employers or relatives who got contracts, grants or tax breaks, the Center for Public Integrity and the Huffington Post Investigative Fund have found.
Discrepancies between statement and deed, of course, are nothing new in politics. Because candidates assume that the public loathes excess federal spending, they rail against it. But the ubiquity of federal largess means there's so much money out there, even those who hate it seem to benefit from it.
"Despite red-faced anger about government, it plays an increasingly important role in the lives of all Americans," noted Lawrence Jacobs, a University of Minnesota political science professor. "A country that is now increasingly dependent on government is now increasingly hostile to government."
The most common target of criticism has been the American Recovery and Reinvestment Act. Passed in February 2009, the stimulus promised to revitalize the economy by sending $787 billion around the country to create jobs and spur economic activity. Twenty-one months later, the role of government spending -- and especially the stimulus -- has become a flashpoint in elections around the country. Â Â
Stimulus in Wisconsin, Missouri, Kentucky
In Appleton, Wis., Republican House candidate Reid Ribble bashed the stimulus even though a construction firm owned by members of his family won a contract for $130,000 in stimulus funds to repair the roof of a local elementary school, the candidate's nephew and new owner of the company, Troy Ribble, confirmed. Â Â Â
Democrats critical of stimulus program effectiveness also had family members who received benefits. In Missouri, Senate candidate Robin Carnahan has called for a halt to expanded stimulus spending proposed by President Barack Obama. But her opponent points out that a company owned by Carnahan's brother, Wind Capital Group, received $107 million in stimulus funds last year. Carnahan's campaign did not respond to requests for comment. Â Â
In some races, the discrepancy has drawn attention. The operator of a restaurant owned by the family of Rob Portman, the GOP Senate candidate in Ohio, had requested tax credits for a historic restaurant and hotel Portman's family owns. Portman's campaign said that the request for aid was later withdrawn.
In Washington state, Republican Senate candidate Dino Rossi owns a share of a minor-league baseball team; state government tax breaks have supported construction at the stadium where the team plays. A spokeswoman for Rossi said the stadium received the money, not the team itself.
Controversy has also beset Democrat Ben Chandler, who represents the 6th district of Kentucky.
Chandler came under fire last year when it was revealed that the state hired his wife, at a salary paying nearly $80,000 a year, to help administer stimulus funds for Kentucky transportation projects. Â Now in a tough re-election race, Ben Chandler's ads emphasize his independence and seldom identify him as a Democrat. His campaign did not respond to requests for comment, but Chandler has previously said he had nothing to do with his wife's hiring.
While hostility toward Washington is the hallmark of this election season, government "is still where Americans look in times of a crisis," whether it's an oil spill in the gulf, a bank failure or a broader economic crisis, says the University of Minnesota's Jacobs.
Second Thoughts by Auto Dealers
Other candidates say that at the time their private firms took government money, they thought the initiatives might help the struggling economy and decided only later that the programs had been a mistake.
Republican businessman Tom Ganley, running a well-funded campaign for Ohio's 13th District, south of Cleveland, is one of several auto dealers seeking congressional seats who now denounce the "cash for clunkers" program but earlier took advantage of part of it.
Before he ran for Congress, Ganley's auto dealership received almost $3.7 million in "cash for clunkers" funds. He was initially in favor of the program, but later came out against it. Asked about the switch during the campaign he said, "Initially the program looked to be a success. ... But the next few months showed we were wrong," as sales dropped and the industry continued to struggle.
What was learned from cash for clunkers is that "we cannot rely on big government to fix the private sector," Ganley said.
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In southern Virginia, House candidate Scott Rigell, who has decried the stimulus and other government spending, participated in the program with his auto dealerships netting $568,500 for 137 sales, according to data from the Transportation Department.
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Rigell said his company and its 240-person staff would have been at risk if he had not participated in the clunkers program. Customers would have sought business elsewhere, cutting company revenue and putting employees at risk, he said. "I resent the government for putting our family business in that position," Rigell said, adding that he eliminated his own pay in December 2008 to avoid layoffs. Â Â
The situation was even more dire for Jim Renacci, a Republican candidate who owned Renacci-Doraty Chevrolet in Wadsworth, Ohio. Though his business received $168,500 for 39 transactions under the clunkers program, according to the Transportation Department, his dealership was eliminated by General Motors earlier this year as part of a government-mandated restructuring. Forty employees lost their jobs.
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State Film Tax Credits
In Connecticut, Republican Senate candidate Linda McMahon has also faced criticism. She is running a campaign tirade against big government with ads blasting "reckless spending, bloated bureaucracy and ... unthinkable debt."
But in 2009, McMahon's high-profile company, World Wrestling Entertainment, Inc., reaped $9.8 million in state film tax credits from the two previous years. This year, the company took $5 million in state infrastructure tax credits. McMahon says that the company has been run solely by her husband since she stepped down as CEO in September 2009 to run for office. In any case, she says that the publicly traded company had a responsibility to shareholders to seek the credits.
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| Candidate | Congressional Race | Business | Relationship | Government Funds |
|---|---|---|---|---|
| John Raese (R) | Senate, West Virginia | Greer Industries, Inc. | Owner | State purchased $29 million in raw materials during the last 10 years. $2.7 million in federal contracts. |
| Reid Ribble (R) | House, Wisconsin | The Ribble Group Inc. |
Former owner; now owned by nephew Troy Ribble | $130,000 in stimulus funds |
| Dino Rossi (R) | Senate, Washington state | AquaSox | Part owner | Stadium where the team played received $433,000 in state funds |
| Rob Portman (R) | Senate, Ohio | The Golden Lamb |
Owner | $10,000 in building waivers from the city government. Former operator requested funds from the city to offset rehabiliation costs but withdrew application. |
| Robin Carnahan (D) | Senate, Missouri | Wind Capital Group | Owned by brother | $107 million in stimulus funds |
| Ben Chandler (D) | House, Kentucky | n/a | n/a | State paid his wife $80,000 to help coordinate distribution of $421 million in stimulus funds. |
| Tom Ganley (R) | House, Ohio | Ganley Automotive Group | Owner | $3.7 million from "cash for clunkers" |
| Scott Rigell (R) | House, Virginia | Freedom Automotive | Owner | $568,500 from "cash for clunkers" |
| Jim Renacci (R) | House, Ohio | Renacci-Doraty Chevrolet | Owner | $168,500 from "cash for clunkers." Dealership eliminated by GM as part of a government-mandated restructuring. |
| Linda McMahon (R) | Senate, Connecticut | World Wrestling Entertainment | Former co-chairman and CEO; husband now fills roles | $9.8 million in state film tax credits and $5 million in state infrastructure tax credits. |
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First Posted: 10/30/10 08:57 PM ET Updated: 05/25/11 07:10 PM ET