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Sugar Daddy: Fund-Raising Series Part 2

March 25, 1997 at 12:00 AM EDT
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JIM LEHRER: Now campaign fund-raising. We continue our series by special correspondent Hedrick Smith. Tonight: How special interests try to influence Congress with campaign money.

HEDRICK SMITH: For the ordinary American voter, the whole debate about campaign finance is complicated and seems remote from daily life. Terms like “PACs,” “soft money,” “independent expenditures” are confusing. But the truth is political money affects us all–our jobs, our taxes, our grocery bills.

SPOKESMAN: The committee will come to order–

HEDRICK SMITH: For behind the public fight over legislation–the hearings, the debates, the votes–there is another hidden struggle–the political money war between corporations, labor unions, and other organized groups trying to influence Congress by pouring contributions into the campaigns of key legislators. Chuck Lewis of the Center for Public Integrity.

CHUCK LEWIS, Center for Public Integrity: The Banking Committee will take money from bankers. The Agriculture Committee will take money from sugar, tobacco, and other agribusiness interests, and so on and so on. And so every single committee over time becomes somewhat captive to the very interest that they’re ostensibly regulating on behalf of the American people. And the American people become distant–a distant consideration.

HEDRICK SMITH: This Washington game is now so common that all sides accept big giving as the inside ticket to the legislative process. Last year, for example, Congress passed and President Clinton signed a giant telecommunications bill that changed the way we receive telephone service. Before the vote, more than $4.3 million from broadcasters and cable and telephone companies flowed into Congressional campaign war chests.

In the legislative battle over broadening shareholder rights to sue, it was the lawyers versus Wall Street, and together they contributed some ten million dollars during the fight. Or take another example: the 1995 farm bill. You may not have been paying much attention, but buried in that farm bill was a federal program that costs you, me, and everyone else in this country 8 cents more per pound for this–sugar. According to the General Accounting Office, that’s $1.4 billion a year. Some critics contend that that program survives year after year largely because of political money.

The story begins in the vast sugar cane fields of South Florida, where half of the nation’s cane sugar is produced. The sugar industry here is a creation, in large part, of the U.S. government. Once Everglades land, it was drained by the Army Corps of Engineers in the 1940′s and turned into some of richest farmland in America–500,000 acres sold mainly to two huge corporate farms, U.S. Sugar and Flo-Sun.

For decades, the government has helped these and other sugar growers by protecting their markets. Washington has ensured a profitable price for the U.S. sugar industry by limiting imports of lower cost sugar from the world market. The higher sugar prices resulting from restricted imports have meant a windfall for U.S. Sugar and Flo-Sun. Flo-Sun alone reaps about $65 million a year from the price support, according to the GAO. Defenders of the federal sugar program, like US Sugar’s Bob Buker, argue that it is unfair to compare U.S. sugar prices with the world price. They assert that some foreign governments dump subsidized sugar on the world market at artificially low prices.

BOB BUKER, Vice President, U.S. Sugar: We should never disarm and allow ourselves to fall prey to foreign subsidized competition. Foreign competition yes, if it’s just competition with Belgian and French and German farmers, have at it, we’ll beat them But we can’t out-compete their governments.

HEDRICK SMITH: But even proponents of the federal sugar program concede that 24 other countries produce non-subsidized sugar more cheaply than we do. And some critics, like environmentalist Ron Tipton, consider the program an out and out boondoggle for big sugar growers.

RON TIPTON, World Wildlife Fund: This is not about the family farm–I’ll cite you a statistic. Two companies, the Flo-Sun Corporation and US Sugar, produce about 65 percent of the total sugar cane grown in the state of Florida. Those folks don’t need a price set at double the world market.

HEDRICK SMITH: Flo-Sun spokesman Jorge Dominicis.

JORGE DOMINICIS, Flo-Sun Corporation: If you let farming products into this country at a price that is lower than the cost of production of the people who are sending those products to us, there isn’t going to be a farmer left in America. That is just bad policy.

HEDRICK SMITH: Whatever the merits of the sugar program, there is no doubt that the big U.S. sugar growers have learned how to work the system to protect their program. They’re among the biggest givers to both political parties. The king of all sugar givers is Flo-Sun Corporation, controlled by two brothers, Alfonso and Jose Fanjul. The Fanjuls are Cuban exiles who fled Castro and rebuilt their sugar empire in Southern Florida, with big help from Uncle Sam’s price support. Over the past 30 years, they have become consummate inside players in American politics.

CHUCK LEWIS: Presidential candidates and party officials go through South Florida and kiss their ring. I mean, that is sort of what their influence is. It’s substantial, and they’re unabashed about what they do. And their giving is quite lavish.

HEDRICK SMITH: Alfonso Fanjul works the Democratic side. He’s a big Democratic giver who served as co-chairman of Bill Clinton’s Florida campaign in 1992. Jose Fanjul works the Republican side He was a national vice-chairman of Bob Dole’s Finance Committee during his 1996 presidential race, and was part of the so-called Team 100–$100,000 givers to the Republican Party.

The Fanjuls have cemented their high-level ties with lavish political contributions. But just how much they have given is difficult to track, even with the help of Federal Election Commission computers because the Fanjuls have found a multitude of routes for funneling their money into the American political system. First there are family members, Alfonso Fanjul and Jose, who also lists himself as Jose F; younger brother Alexander, listed also as Alex, and Alexander L, and his wife Nicole; brother Andres, also listed as Andres B, and his wife, Cathie. Then there’s the younger Fanjul, Lillian Fernandez and her husband, Luis. Then there are company executives like Jorge Dominicis, Erik Blomquist and Oscar Hernandez.

Other money is given through Flo-Sun subsidiaries, Okeelanta Corporation, Osceola Farms, New Hope Sugar. In all, according to one estimate by the Center for Responsive Politics, the Fanjuls’ network has given some $3 million in contributions to both parties and to members of Congress since 1979.

HEDRICK SMITH: Charity, political giving in your own home district, very understandable. But what’s noticeable is the giving from Flo-Sun, the Fanjul family, was across the board in hundreds of districts.

JORGE DOMINICIS, Vice President, Flo-Sun Sugar: Rick, as you know, Congressmen all over the country make decisions that affect people locally every single day of the week.

HEDRICK SMITH: Which suggests that donations are important to those decisions, by your own logic.

JORGE DOMINICIS: No, what it suggests is that it is important to contribute to people with whom you agree, whose philosophies you think are good for this country

HEDRICK SMITH: Certainly the sugar industry faces big, well-funded opponents–like soft drink companies and candy companies–which would profit greatly from reduced sugar prices. But critics, like Florida Congressman Dan Miller, point out that the sugar industry has one unique advantage.

REP. DAN MILLER, (D) Florida: They only really have to worry about one vote about every five years. Most businesses have to worry about a lot of different issues that they are concerned about. But basically, sugar only has to worry about one vote every five years when this bill comes up.

HEDRICK SMITH: That vote is the farm bill which is shaped here every five years, in the House Agriculture Committee, and its counterpart in the Senate, stocked with members from farm states. Pennsylvania Senator Rick Santorum.

SEN. RICK SANTORUM, (R) Pennsylvania: When I got on the Ag Committee, I could just walk around the room and point to the crop that was represented by the Senator who was there. I mean, they got on the committee to protect their crop.

HEDRICK SMITH: Sugar’s lock on the Ag Committees has been reinforced with political money. By the time the committees began to consider the 1995 farm bill the 49 members of the House Ag Committee had received an average of $16,000 apiece in sugar money in the preceding five years. Much of that money came from Florida’s two big growers.

REP. DAN MILLER: They build up friends. You know, every year they give money, whether there’s a big vote that year or not, expecting that when that big vote comes they’re going to be with them.

HEDRICK SMITH: But in 1995, it looked as though sugar’s hold on Congress might be weakening. There was a new Republican majority bent on eliminating big federal programs like sugar, and Kansan Pat Roberts, then the new House Ag Committee chairman, was fiercely devoted to breaking up the old system of crop subsidies. But when Chairman Roberts moved to cut out special crop price supports like sugar’s, he touched off a full-scale rebellion in his own committee. Leading the charge for sugar was Republican Mark Foley, in whose district much of the nation’s cane sugar is grown.

HEDRICK SMITH: It is a good deal less to buy sugar somewhere outside the United States than it is to buy it in the United States. Why should American consumers pay for it?

MARK FOLEY: Why should I care about six counties I represent; families who depend on jobs for a living. families who go to the grocery store, families who are feeding their children and are not on welfare? These are the people whose eyes I have to look into when I go home on weekends, knowing that they have a job.

HEDRICK SMITH: In the two years before the farm bill, Foley was the second largest recipient of sugar PAC money which helped him win reelection to a new term in Congress last November. Most of the sugar money came from Flo-Sun and U.S. Sugar.

MARK FOLEY: Well, they’re constituents who live in my community, much like so many others I have a database of over 5,000 contributors that have given anywhere from ten to a thousand dollars. I would suggest that they have the same right to participate in the political process as anyone else.

HEDRICK SMITH: The problem, to many critics, is not that sugar money sways a Congressman like Foley, but that it helps Foley and other incumbents stay in office. Last year, sugar and other donors gave Foley a whopping nine to one funding advantage over his opponent.

MARK FOLEY: Thank you!

NANCY WATZMAN, Center for Responsive Politics: The fact is that in this country to get elected to Congress you need a lot of money. I think in the ’96 elections that something up to about $700,000 for a winning House campaign. You have to get that money from somewhere unless you’re rich yourself. You have to get the money from the interests; the interests think a certain way, so people who get elected to Congress, even if they believe in their hearts the sugar program is the best thing for America, they’re still there because they got the money from the interest that could afford to pay them the money.

CHUCK LEWIS: That’s our system today. It’s an insider system in which incumbents and special interests are almost one and the same.

HEDRICK SMITH: Frustrated by his inability to block the sugar program in the Ag Committee, sugar’s chief opponent, Congressman Dan Miller, an ardent free-market Republican, decided to take the issue to the House floor.

REP. DAN MILLER: Mr. Speaker, today I rise to advocate the phase-out of the government-run sugar program in this country.

HEDRICK SMITH: As he prepared to introduce his legislation to phase out the sugar program, Miller got a phone call from Jose Fanjul.

HEDRICK SMITH: What was his pitch to you?

REP. DAN MILLER: You know, I don’t know why. He’s a friend of Bob Dole’s and he’s, you know, been very supportive of Republicans in the past, and, you know, would hope I wouldn’t take on this problem, because I’m from Florida and, you know, we Florida people should stick together, basically.

HEDRICK SMITH: Miller, who in the last two years has himself received $13,000 in political donations from sugar’s foes, pressed ahead with his amendment.

SPOKESMAN: Vote no on this amendment.

HEDRICK SMITH: But Miller ran into a deep-seated opposition in Congress, sown by years of quiet effort by the sugar industry. Former Senator Bill Bradley.

BILL BRADLEY, Former Democratic Senator: The sugar lobbying is never done in a kind of overt way; sugar lobbying is always done quietly. It’s a very successful effort because it is deep inside baseball.

HEDRICK SMITH: In February, 1996, the House defeated Miller’s legislation by just eight votes, 217-209, and retained the sugar program with some modest modifications. Five original co-sponsors of Miller’s amendment provided the winning margin by switching their positions to vote “for” sugar. Beginning on the day of the vote, their campaigns received more than $11,000 from the sugar industry.

RON TIPTON: They won for a simple political reason, and that is that the sugar growers and the community of agricultural interests that profit from the sugar program contribute significant amounts of money to political candidates.

HEDRICK SMITH: Did money tip the balance?

RON TIPTON: I think political money, political clout, political influence, political savvy.

HEDRICK SMITH: Among the votes to retain the program was then New Jersey Congressman Robert Torricelli, who was preparing to run for the Senate.

HEDRICK SMITH: If we read the records right, you got at least 33,000 bucks in campaign contributions from the sugar industry and the sweetener industry and the Fanjul family, people connected to sugar. What has sugar got to do with the state of New Jersey?

SEN. ROBERT TORRICELLI, (D) New Jersey: I make judgments every day that are important for California or Arizona or Florida in this case. I do so because I think what’s good for the country. If I approached every issue simply on a New Jersey perspective, I guess I wouldn’t vote for an airplane that wasn’t made in New Jersey, I wouldn’t vote for a crop that wasn’t grown in New Jersey.

HEDRICK SMITH: Senator Rick Santorum questions that logic.

SEN. RICK SANTORUM: If I’m in support of a program that’s costing my state jobs, that’s costing consumers and women and children money, that’s unnecessary, to go to a bunch of people who don’t live in my state and don’t produce in my state–I see it as quite a hill to climb to convince the voters that you’re doing this in their best interest and not in your interest.

HEDRICK SMITH: After sugar’s victory on the farm bill, the industry went after their nemesis. Congressman Dan Miller found himself targeted by a Tallahassee lobbyist working for the sugar industry.

REP. DAN MILLER: They came in the area talking to people, and said, “Will you run against Dan Miller, to beat Dan Miller?”. And they were offering up to half a million dollars of independent expenditure money to run against Dan Miller.

HEDRICK SMITH: Half a million dollars to defeat a single Congressman; it sounds extraordinary to an ordinary voter, and yet it underscores the stakes in the game for special interests like sugar, or banking or tobacco, or big labor, and the lengths to which they will go in using political money to get their way.

JIM LEHRER: Tomorrow night Hedrick Smith will report on campaign finance reform efforts at the state level.