By Dave Roberts

SAN FRANCISCO — The left, which has championed the media and legislative crusade against bullying, is itself engaged in the bullying of one of the few groups you’re still allowed to demonize in this country: corporations. Not content with dominating the media, academia, unions, the courts and much of the government, leftists are now trying to shut down the free speech of businesses.

“What they are trying to do is to cow corporations from supporting free market-oriented groups, including trade associations and even government affairs type of operations,” said former Securities and Exchange Commissioner Paul Atkins, speaking at a Pacific Research Institute luncheon in San Francisco on June 27. “In the wake of Citizens United, the unions and state pension funds and shareholder activists have been agitating because they are, of course, not happy about Citizens United.”

The Supreme Court in that 2010 case upheld the free speech rights of corporations and unions to make political contributions. So, having lost in the highest court, leftists are taking the low road, a chapter out of the Saul Alinsky playbook, in an attempt to muzzle opposition to their political agenda. Alinsky advocated getting individual and institutional shareholders in corporations to assign their proxy votes to leftist groups in order to pressure boards of directors to do their bidding.

The latest campaign seeks to push corporations into disclosing their contributions to political action committees, advocacy organizations, trade associations and any other political or quasi-political activities. That information will then be used to organize boycotts, shareholder meeting protests and other campaigns in an effort to shut off corporate contributions to groups and causes with whom they disagree.

“They are basically trying to subvert the shareholder proposal process in order to try to influence corporate behavior,” said Atkins. “Usually corporations, especially in the retail area, want to try to avoid controversy. Because they are pulled and tugged by people on both sides. And so they don’t want to be subject to boycotts or negative publicity or things like that.”

Target boycott

A good example is the 2010 boycott against Target. The retail giant had committed the “crime” of contributing $150,000 to Minnesota Forward, a political group that supported the campaign of a gubernatorial candidate who opposed gay marriage. In response to the boycott, Target apologized for the contribution.

“Going forward, we will soon begin a strategic review and analysis of our decision-making process for financial contributions in the public policy arena,” said Target CEO Gregg Steinhafel in a letter. “Target will take a leadership role in bringing together a group of companies and partner organizations for a dialogue focused on diversity and inclusion in the workplace, including GLBT issues.”

Caving into leftist groups like Moveon.org worked — the boycott fizzled out. Target’s website notes that, while the company continues to belong to trade associations and other policy-based organizations, “the positions they take do not always reflect Target’s views.” A Target pie chart shows nearly equal contributions to Republican and Democratic PACs.

Attacking ALEC

Having tasted Target’s blood in the water, the leftist sharks recently went after corporations that had joined the American Legislative Exchange Council.

“It’s kind of a nerdy group, sort of behind the scenes,” said Atkins. “They work towards building model statutes for state legislatures, things like tax reform, regulation and health care and all sorts of things. Among the things they were asked to help with was ‘Stand Your Ground’ laws and also ‘Voter Identification.’ So, in the wake of the Trayvon Martin shooting, Van Jones’ group called Color of Change and another group figured out that Pepsi and Coke and Wendy’s and McDonald’s and a few other companies had contributed to ALEC. So they blew all this up and said, ‘Ah ha, look, Pepsi, Coke and all of these other companies are helping Voter ID, so it’s racial profiling’ or whatever their charge was.”

More than a dozen corporations have reportedly dropped out of supporting ALEC, producing more blood in the water.

Now some companies are considering buckling under to the latest pressure to disclose their contributions — or perhaps get out of politics altogether in order to make the sharks go away. But Atkins is hoping that the companies stand their ground.

“Sure you have some corporations that might support something that might not be in the best interest of their shareholders,” he said. “But overall, for the most part, corporations really do support things like a push for a better tax system, push for a better regulatory system, support things like the National Association of Manufacturers, the Chamber of Commerce, the American Petroleum Institute and things like that, which really do a lot of good.

“For example, in Washington right now, one of the big issues before the SEC is the Conflict Mineral provision of the Dodd-Frank rule. The American Petroleum Institute is doing a great job in trying to argue against this particular provision of Dodd-Frank, which will be very harmful to business and cost shareholders a huge amount of money. The reason why you have trade groups is so they have the guts, hopefully, to stand up. Because one individual corporation can always get cut down and have pressure put against it. That’s why you need the trade groups to get into it, or groups like PRI or others who are supported by corporations, or the Competitive Enterprise Institute in Washington, which has filed suit against Dodd-Frank and they had sued against the public company accounting oversight board in Sarbanes-Oxley before that. So, these groups are very valuable with respect to some of the disputes with government and regulation and those sorts of things.”

PRI, the Pacific Research Institute, is CalWatchDog.com’s parent think tank.

One of the challenges for corporations in resisting leftist pressure is that the issue is framed in terms of the laudable goal of seeking more information and transparency for shareholders.

‘Materiality’

“Why not just put all the chips out on the table and let the chips fall where they may?” asked Atkins rhetorically. “Well, the thing is when we talk about disclosure with public companies, the main rubric behind the securities laws and behind SEC rules is ‘materiality.’ Materiality means what a reasonable, rational investor would take to be an important fact that he would want to know in trying to decide whether to buy, sell or hold a particular company’s stock. This materiality concept goes back and is embedded in the Securities Act and been upheld by the Supreme Court time and again as giving a standard by which companies should decide what to disclose and what to put into their prospectus and annual report and what to leave out.

“So these sorts of contributions by public companies are clearly not material. They don’t rise to any level that would affect the corporation as far as the bottom line. A number of these shareholder activists argue, ‘Well, it’s material in that it could be controversial, and shareholders need to know it because it might cause a boycott like you saw with Target or whatever.’ But that’s very much a circular argument. Because the very same groups who are arguing for disclosure are the ones who then light the fuse to have these boycotts and other things go on. Ultimately, it’s the board of directors that oversees these sorts of contributions in the end who have a fiduciary duty to the shareholders to decide what is or is not in their best interest and how they should build shareholder value.”

Atkins pointed out that disclosure requirements are already in place for contributions to candidates, and that Congress always has the option of requiring similar disclosure for super PACs.

“But it should not be where the shareholders themselves disarm unilaterally and say, ‘OK, we will disclose and open ourselves up to criticism and what not,’” he said. “So what we are trying to do is encourage boards and others basically to stand their ground if they choose to do so. Some companies disclose and others don’t. But it is a very slippery slope if you start going down that road.”

By JOHN SEILER

As Gov. Jerry Brown and the state Legislature continue crafting a budget, skunks keep being thrown into the room.

The biggest skunk is that the $146 billion California State Teachers’ Retirement System, CalSTRS, is effectively insolvent. Funded at 80 percent of liabilities today, CalSTRS calculations show that its funding will drop to 0 percent of liabilities by 2042, just 31 years from now. Reported the San Jose Mercury News:

The threat isn’t to teachers who have retired or plan to, but to the people of California. Taxpayers, who already pick up 23 percent of CalSTRS expenses, will be increasingly burdened as the giant pension system fails to meet its obligations.

“The governor is ignoring that they need another $4 billion a year, every year, for CalSTRS,” Marcia Fritz told me; she’s president of the California Foundation for Fiscal Responsibility, which keeps track of the state’s pension problems.

To make the system solvent, she said, about $11,000 per teacher will have to be put into the system. “That will have to come from the state budget, school budgets or teachers’ pay.” Taxpayers fund the state budget and school budgets, so they could be on the hook for higher taxes.

She said that Brown “included in his budget exactly what the law requires,” but that state law doesn’t require enough to be put into the system. It didn’t take the governor long to forget the promise in his Inaugural Address of January 3: “First, speak the truth. No more smoke and mirrors on the budget. No empty promises.”

Fritz said that a way to get reduced pension costs would be to require all public employees, including those in public safety, to work five years longer before retirement. Doing so “would cut overall retirement costs in half.”

Alternatively, she said, pensions payouts could be cut in line with the reduction in the value of private-sector 401(k) retirement funds. “It shouldn’t be any different,” she said, with those living off the taxpayers’ money having to reduce their budgets the same as taxpayers have been forced to by economic reality.

Right now, she warned, governments across the state are encouraging workers to retire early, thus getting high-paid workers off the budget, while putting the cost on the pension system.

Fritz pointed to an updated list on her group’s Web site of retired teachers that pull in more than $100,000 a year from teacher pensions. The number of such retirees now is 5,309. Here are those at the top of the list:

Of the top seven, three were in the Los Angeles Unified School District, one of the worst-performing districts in the country, with only 41 percent of students graduating high school. No wonder the costs to school a child in LAUSD, as I have reported, are an incredible $30,000 per student.

Fritz added that 25,000 retired teachers receive $75,000 or more a year in CalSTERS pensions.

Federal budget slashing

A second big hit to the state budget could be the loss of $1.5 billion from the federal government. The new Republican majority in the House of Representatives approved the cuts in the budget it passed on February 19. The budget still will have to be approved by the Senate and President Obama. Negotiations are ongoing. And most of the cuts would be across-the-board, affecting other states as well.

But the position of California at the bargaining table has eroded since Rep. Nancy Pelosi, D-Sacramento, stepped down as House speaker.

Among the cuts, reported the Los Angeles Times:

$55 million in Pell Grant reductions

$100 million in biomedical research for the University of California system

$125 million for K-12 schooling

$15 million for the Presidio Trust in San Francisco, Pelosi’s home base

Budget maneuverings

As to the state budget itself, the passage of Proposition 25 last year is making things go much more smoothly — so far. Prop. 25 reduced from two-thirds to a majority the threshold for passing a budget in each house of the California Legislature.

Prop. 25 effectively freezes minority Republicans out of budget discussions. Their only remaining leverage is holding out on Brown’s call for them to join the majority Democrats in putting a $12 billion tax-increase vote before voters in a June special election. For that, a two-thirds vote in each house still is required.

Reported the Los Angeles Times on the smooth budget approval:

The legislators made relatively minor changes to the governor’s $84.6 billion spending proposal. Some differences remain on cuts in home healthcare services and healthcare for the developmentally disabled, as well as on Brown’s proposed elimination of redevelopment agencies.

But as Bob Morris of the California Independent Voter Network noted:

The effective deadline for this to happen would be March 7, as the state needs three months to prepare for the election. But it’s simply not possible for the governor to implement sweeping public pension reform in a couple of weeks. Plus, even if he could, it’s a certainty that CalPERS and public unions would sue to block it, tying it up in court for years…

Last Thursday, Republicans upped the ante saying they won’t vote to put taxes on the ballot even if Brown does magically slash pension benefits and impose a spending cap.  Republican Sen. Bob Dutton of Rancho Cucamonga said, “They [Democrats] really don’t need us to govern at all. They just need us if they want to raise taxes.”

Morris then described the tactic Republicans are using as one derived from activist Saul Alinsky and called “Eyes, Ears and Nose”:

Eyes: “If you have a vast organization, parade it before the enemy, openly show your power.”

Ears: “If your organization is small, do what Gideon did: conceal the members in the dark but raise a clamor that will make the listener believe that your organization numbers many more that it does.”

Nose: “If your organization is too tiny even for noise, stink up the place.”

It’s worth adding that President Obama himself, as a community activist in Chicago early in his career, was influenced by the techniques of Alinsky, who also hailed from Chicago.

Alinsky died in 1972 out here in Carmel. As the budget and pension debacles continue, it’s worth keeping in mind a quote of his from his well-known 1971 book, “Rules for Radicals”:

In this world laws are written for the lofty aim of “the common good” and then acted out in life on the basis of the common greed.

John Seiler is a reporter and analyst at CalWatchDog.com.

His email: writejohnseiler@gmail.com.