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Comcast scores high for transparency of campaign contributions; Urban Outfitters scored a zero!

How much money do public companies spend on politicians, and what do they disclose?

An index offers a peek at the juicy details.

For the first time, the 2015 CPA-Zicklin Index gives a breakdown of every company in the S&P 500: which policies each company maintains on political contributions; if the company even has a policy; and links to how much moolah it donates.

The index, started in 2009, shows the largest publicly held U.S. companies’ political activity in a high-spending era marked by an unprecedented flood of dark money, said Bruce Freed, president of the Center for Political Accountability in Washington, which partnered with the Wharton School of the University of Pennsylvania to create CPA-Zicklin.

For investors, it’s a useful tool to evaluate companies’ policies and accountability.

For companies, it helps “assess whether they follow best practices for disclosure and accountability, and the extent to which they demonstrate commitment to these principles,” Freed added.

Anyone can access the index via the center’s website, PoliticalAccountability.net. For dollar amounts, the CPA-Zicklin Index links to databases such as the Federal Election Commission’s fec.gov, OpenSecrets.org, and FollowTheMoney.org.

The local communications giant Comcast, for instance, scored high on the CPA-Zicklin Index for transparency and for having a stated policy on political contributions. On its corporate website, Comcast posts a 59-page document listing donations totaling $6.5 million made in the most recent 2014 election cycle.

“Comcast’s political contributions are made from employee-funded political action committees (‘PACs’) that are sponsored by Comcast. The Comcast PACs are operated by a board of directors, chaired by the senior executive vice president. When permitted by law, political contributions are also made out of corporate funds,” the company said on its website.

Comcast’s largest 2014 donations included $367,000 to the Republican Party of Florida, $250,000 to the Democratic Governors Association, and $255,000 to the Republican Governors Association.

In Pennsylvania, Comcast donated mostly to individual candidates, including $50,000 to Tom Wolf for Governor, $10,000 to Bob Brady for Congress, $17,000 to Friends of Dominic Pileggi, $15,000 to Friends of Joe Scarnati, and $16,000 to the Mike Turzai Leadership Fund.

How did the CPA-Zicklin Index come into being?

Lawrence Zicklin, a former partner at the Wall Street firm Neuberger Berman, funded the Zicklin Center for Business Ethics Research at the Wharton School. (He currently teaches ethics at Wharton and several other business schools.)

William Laufer, director of the Zicklin Center, first proposed the index in July 2009.

In the 2015 index, three companies tied for a first-place rating of 97.1 points out of 100: Becton Dickinson; CSX Corp.; and Noble Energy.

Among regional companies, Comcast scored 81.4; AmerisourceBergen scored 82, and Hershey Co. scored 90. Those with low scores included Lincoln National (17.1), PNC Financial Services (5.7), and Urban Outfitters (0.0).

The average overall score in 2015 was 72.6 for companies with some sort of disclosure agreement.

Shareholder engagement “was sharply favorable” in helping raise scores, Freed explained.

“Companies engaged by shareholders, and reaching an agreement, had significantly better disclosure and accountability policies,” he said.

More than half the S&P 500 – 52 percent, or 259 companies – had detailed policies on campaign donations. Thirty-five percent, or 176 companies, had brief or vague policies.

The majority of S&P 500 companies – 54 percent, or 270 companies – had dedicated webpages to address political spending.

Zicklin said he became interested in campaign finance nearly a decade ago, when Massey Energy CEO Don Blankenship donated $3 million to a West Virginia judge who later decided a case in the company’s favor.

“I’ve also heard from many companies that they would like to get out of this game if they could,” Zicklin said. “In some cases, companies are being extorted. They’re told there’s a bill they really ought to support by some nameless politician, and they have to [donate].”

More important, he said, “Americans are very upset. They feel they have no part in how government is run – it’s all by big checkbooks.

“I can’t change Citizens United,” the Supreme Court decision on political donations by companies, “but I can at least make it transparent.”

earvedlund@phillynews.com

215-854-2808@erinarvedlund

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Philly Inquirer: Wharton Profs On Aftermath of US Default

Aftermath of a U.S. government default

Erin E. Arvedlund Published Wednesday, October 16, 2013

If the U.S. government defaults on its debt, what will be the impact in the financial world, and what does it mean for the average citizen?

S.W. PARRA / Fresno Bee
S.W. PARRA / Fresno Bee

The answer: There would be a lot of pain to go around.

Perhaps most disturbing would be universal doubt about the creditworthiness of the United States. It would be an unprecedented shattering of the international image of the nation.

Right behind that comes wave after wave of fiscal uncertainty. That doubt will roil the markets, but it goes beyond just bad times for investors.

Uncertainty will play havoc with business owners and middle-class households, who will cut expenses, creating job losses, reducing consumer spending, and rocking an overall economy that has struggled to recover from 2008.

There are key dates approaching, including two additional Thursdays, Oct. 24 and 31.

 

How much debt is due?

Roughly $120 billion of U.S. debt will mature on or about Thursday. An additional $93 billion is scheduled to mature Oct. 24. The Treasury is expected to roll over the debt – essentially, take on new debt to pay the old debt, which is due to be paid.

The Bipartisan Policy Center recently noted: “One risk is that buyers of government debt will be less likely to participate in Treasury auctions, and for those that continue to participate, [they will] more likely demand higher interest rates, increasing the cost of servicing the existing debt.”

 

Interest payment due?

The first real test will be the $6 billion in interest payments due Oct. 31.

In the short term, if there is a default, investors might see the stock market – measured by the S&P 500 benchmark index – drop about 27 percentage points, according to the International Monetary Fund. U.S. Treasury bond yields would jump at least 2 percentage points.

 

Long-term implications

Borrowing rates will increase. Already, mortgage rates have spiked since May, and that’s rocking the recovery in household creation, mortgage applications, and construction, basically, long-term debt. That will slow the housing recovery, something the Federal Reserve wants to avoid.

 

More QE from Fed

The Fed would likely delay any hike in interest rates, attempting to keep short-term borrowing costs as low as possible, until at least the end of 2015 or early 2016, according to professor Susan Wachter of the Wharton School.

Wachter said the Fed could ultimately decide that a debt crisis warranted even more quantitative easing.

China and Japan are the biggest holders of U.S. debt – $3 trillion between them. The debt crisis has only exacerbated the U.S. borrowing situation, and worst case, the Chinese start to sell.

 

Weaker dollar

“The U.S. is writing checks that so far no one has started to cash,” said Wharton professor Mauro Guillen. “But what will be the tipping point?”

For now, the U.S. dollar remains the world’s reserve currency, meaning the primary currency in which we and other nations trade and save. But with a debt crisis, the U.S. dollar weakens.

A cut in the U.S. credit rating would further weaken the dollar vs. other currencies.

 

Spike in gold prices

Only 3 percent of central bank reserves around the world are held in gold, and Mauro estimates that the price of the yellow metal would spike in a sovereign debt crisis. Good for holders of gold, bad for paper currencies.

 

Cuts in Social Security

Social Security is by far the biggest U.S. government program, under which 95 percent of Americans are supposed to be guaranteed some form of pension as they retire. If Congress can’t pass a budget, the leaders in Washington might start looking for the money in other places – such as Social Security and other entitlement programs.

 

Likely outcomes

A higher retirement age, and payouts of only about two-thirds of today’s Social Security benefits, says Wharton professor Olivia Mitchell.

 


Your Money: Default would crush confidence, squeeze markets, wreak havoc on households, shatter trust.

Oct. 17

The government

will exhaust the emergency measures it has used since

May to allow the government to continue borrowing money.

 

The government is scheduled

to roll over

$120 billion

in maturing debt.

Oct. 22

Congressional Budget Office estimates that this is the first date the government could exhaust all of its reserves and begin missing payments.