Goldwater Institute report reveals there’s not a whole lot of daylight between libertarians and corporatists

15 Mar 2013 12:13 am
Posted by: Donna

Arizona Working Families, a pro-labor group, and the Center for Media and Democracy have released A Reporter’s Guide to the Goldwater Institute What Citizens, Policymakers, and Reporters Should Know. The guide is a good primer on GI for those not familiar with it and also contains a lot of information about how the Institute operates, some of which may be disturbing to those who may still think of it as a group of principled small-government libertarians.

I was intrigued by this historical bit at the beginning:

It says its work advances the late Senator [Barry Goldwater]’s values: limited government, economic freedom, and individual responsibility.

But, as documented in Tony Ortega’s ground breaking investigative report for the Phoenix New Times, “Think Tank Warfare,” the late Senator disliked parts of what the Institute had grown to represent, and he reportedly wanted to implement “checks and balances” upon the institution to protect his name – before suffering a stroke and being unable to address the personal concerns he had raised. 3

What was it, exactly, that the conservative icon had grown to dislike about the Goldwater Institute? In the words of his widow, Susan Goldwater, “what he didn’t like was seeing it turn into a special-interest, big-business lobbying group.”4 Yet, despite these concerns, his son, Barry Goldwater, Jr., sits on the Institute’s board.

It’s possible that Senator Goldwater truly didn’t foresee how the arc of libertarianism bends toward injustice, and unfettered corporate dominance. I don’t know and he’s not here to explain it. I do know that while self-proclaimed libertarians rail constantly against government intrusions on what they define as freedom, they rarely have a problem with private businesses invading the privacy of, mistreating, and cheating their employees, even when it is a practical impossibility for those workers to object or quit.

Indeed, GI has waged a crusade against workers rights and their ability to organize for better wages and conditions for many years. Recently, they have pushed several bills, in concert with the American Legislative Exchange Council (of which they are a member), that attack unions. They really, really don’t like the minimum wage. One of the arguments I often get against raising the minimum wage by conservatives is that it’s an arbitrary increase in pay that is not tied to productivity. I rebut that by pointing out that productivity has been increasing, a lot, but those gains have not been going to most workers.

You know who has been enjoying gains in compensation that seem to be completely unmoored from their productivity? Yep, those lucky duckies at the top of the Goldwater Institute! From the Reporter’s Guide PDF:

CRONY CAPITALISM? BIG PAY, DESPITE BIG “SHORTFALLS”

The Goldwater Institute has routinely attacked Arizona workers, claiming for example that state employees are paid too much – while this charity has been paying its top employees high salaries (relative to cost of living in the Phoenix area) and giving huge bonuses, for a nonprofit with the tax benefits given to charities.

The compensation of the Goldwater Institute’s Executive Director, Darcy Olsen, jumped from $180,000 in 2007 to $268,182 for 2011, (the most recent year in which Goldwater’s tax forms are available). The compensation of the Goldwater Institute’s Director of Litigation, Clint Bolick, jumped even higher in this five-year period, from $126,875 to $300,624. Meanwhile, the real median wages of Arizona households dropped from $54,116 to $46,709 in this time.

Individual Responsibility? This tax-exempt organization has given its top two executives raises in compensation of 185% since 2007 (based on a combined average). But, the charity’s revenue did not increase by anywhere near that percent in the same period. It grew by only 18% in those five years. That is, their compensation increased by 10 times more than Goldwater’s revenues did. And, it increased despite the organization having budget shortfalls, or “losses,” in two of those five years, when the charity actually spent more than it raised (in 2009 and 2010, by -$140,351 and -$207,210, respectively)…

These bonuses and salaries make the Goldwater Institute’s top directors some of the highest paid 501(c)(3) non-profit employees in the state. As a charity, the organization pays no taxes on its donation revenues, and its donors can take a tax write-off for underwriting the Institute’s operations, which includes paying huge bonuses.

But wait, you may ask, what difference does that make if GI is a private organization freely choosing how to compensate their employees? If their donors don’t have a problem why should we? I have a problem with it for a couple of reasons, the first being that while it may not violate the letter of the law for a charity to pay such outlandish amounts of money to their senior executives in light of such dismal fiscal management, I’m pretty sure most donors to other charities wouldn’t be too happy about a similar state of affairs. Why does the 501(c)3 Goldwater Institute get away with having such an astonishingly high overhead? The second thing is that GI has been fattening its coffers with state money via prodigious litigation.

BIG BONUSES AT THE GOLDWATER INSTITUTE IN 2011 COINCIDE WITH A MILLION DOLLAR PAYOUT FROM ARIZONA TAXPAYERS — FOR KILLING STATE CLEAN ELECTION RULES

It is possible that the Goldwater Institute’s board believed the big bonuses to its top staffers were warranted based on their performances in 2011. After all, between the end of 2010 and the end of 2011, the Goldwater Institute had a total increase in revenue of $891,098, which helped move the organization from a budget deficit of $207,210 to net revenue of $425,614. That increase was largely due to a big jump in what the nonprofit categorizes as “program revenue,” amounting to about $1.3 million dollars.

The surge in income that made it possible for the Goldwater Institute’s top three highest paid executives to receive a total of $105,000 in bonus pay in 2011? Attorney’s fees paid by Arizona taxpayers!

Back in 1998, a majority of Arizona citizens voted for “Prop 200” to create the “Clean Elections Act,” which allowed the state to set limits on contributions and spending by candidates and also established a public finance system for state elections.9 Over a decade later, the Goldwater Institute sued. It sued to stop state “matching funds” that provided that, if a candidate participates in the public financing system and is outspent by a non-participating opponent, the candidate will receive matching funds to help level the playing field. The federal district court struck down the law, the Ninth Circuit reversed, and then in a narrowly split (5-4) decision the U.S. Supreme Court declared the match rule unconstitutional in 2011. (Goldwater’s suit was initiated after President George W. Bush put two judges on the U.S. Supreme Court who would later, in 2010, issue one of the most discredited rulings in history, Citizens United, striking down McCain-Feingold fair election rules.)

That paved the way for an award of one million dollars from the state of Arizona in claimed attorneys’ fees for the prevailing party, the Goldwater Institute. Goldwater’s key litigators? Dranias and Bolick, who received bonuses of $35,000 and $50,000 that year. Goldwater told the IRS it spent $1.1M for its litigation that year and also won fees of over $300,000 from other cases.

Those awards are perfectly legal, but GI could have waived them in the interest of ethical consistency. They certainly weren’t forced to lavish their executives with fat bonuses with those taxpayer dollars. I really don’t want to hear a damn word about first responders and teachers being overpaid by these people ever again.

Then there’s the matter of that sweet little low interest loan GI floated to a board member:

THE GOLDWATER INSTITUTE HAS USED ITS “EXCESS CASH” TO LOAN NEARLY $2M TO A BOARD MEMBER’S CORPORATION

Flush enough to pay more than $100,000 in bonuses to its nonprofit executives, in 2011 the Goldwater Institute increased by $700,000 a credit line it had extended through promissory notes — investing what it calls “excess cash” that allowed it to lend up to $1.9M to the company of its co-founder, donor and board member.

Specifically, in 2011, according to its IRS 990 form, the Goldwater Institute board approved an increase in the amount provided from its cash reserves of $1.7 million to Shamrock Foods Company, which is helmed by Norman McClelland, the CEO of the family business he inherited and grew into a dairy and foodservice distribution company with annual sales of over $1 billion a year.10 On Goldwater’s 990 form, it describes the corporation as “Shamrock Farms Co. Investing” and mentions McClelland.

I don’t know about you, but I’d be furious if my donations to the Humane Society or whatever were being loaned to a private corporation whose owner or CEO happened to be on the board. Conflict of interest, anyone? Mr. McClelland seems to have gotten quite the political influence bang for his “charitable” buck.

It is simply not publicly known, for example, how much money either McClelland or his company gave to Goldwater the year the cash loan was increased by $700,000 or in the prior 10 years since the promissory note arrangement began, or before that. The Goldwater Institute does not disclose the amounts of donations from McClelland in his personal capacity or his privately held company (if any). Neither McClelland nor Shamrock has any mandatory public disclosure of the checks they write to charities.

McClelland has donated an untold sum of his personal fortune from his business endeavors to help the Goldwater Institute. He helped found the Institute in 1988, and he served as the chairman of its Board of Directors from 1992 to 1994. He is also one of the officers of the Goldwater Institute’s subsidiary, the Goldwater Institute Holding Co., LLC. And, his friends have endowed the Robert P. McClelland Distinguished Fellowship to ensure that his “legacy will continue in the next generation of young conservative leaders.”

The Goldwater Institute could protest that the authors of the report are merely speculating about McClelland’s contributions over that time period. But it is fair to speculate about them, considering his history with GI and the secrecy that donors to that organization enjoy. And where is the “transparency” that the Goldwater Institute supposedly prides itself on? You could call it hypocrisy, and you would be right, but it’s worse than that. They seem to be completely untroubled by their duplicity. Accountability is for the little people, not them. One of the many ways that so-called libertarians and corporatists intersect. You’d almost get the sense they’re one and the same.

6 Comments

  1. Comment by Mike Slater on March 15, 2013 1:38 pm

    I signed up for the GI’s e-mails about 3 years ago. Good information for conservatives or libertarians. Not so much for liberals.

    Donna, if you recall Susan Goldwater was a liberal and when she married Barry he was pretty old and listened to her.

  2. Comment by Donna on March 15, 2013 2:08 pm

    Has Mike Slater ever made a comment that is at all relevant to what I’ve posted? I can’t think of any.

  3. Comment by Timmys Cat on March 15, 2013 9:18 pm

    Troll + relevance = oxymoron.
    Quite fitting, eh?

    “But wait! If you call now…..”

  4. Comment by Timmys Cat on March 15, 2013 9:37 pm

    Wonderful post, Diva. You broke it down quite well.

    Sooooo, if I catch the gist of the GI scam, it is that they play all ends off the middle. They take corporate money to go after specific public policy which benefits said corporations. My hunch is they search for lawsuits that most likely will succeed and then shop them to their “donors”. Then they collect fat taxpayer settlements and fees for lawsuits brought under the banner of a noble political cause that gives them exemption from taxes. Since this is a so called private non-profit they get to hide all their machinations from oversight.
    Bolick gets to double dip because not only does he get to “advise” on policy, like education, he also helps run a charter school system that takes in millions of tax dollars.
    Right wing grifters is a more apt title for this lot. Sure it’s legal, but it sure is cynical and sleazy.

    Speaking of transparent, the Republic sure did a job of whitewashing and burying their short article on the study. Quite nice of them to present Olsens rebuttal after each point. i guess they also overlooked the transparency of divulging Robert Robb, a member of their editorial board, is also a past board member of GI.
    “Keep moving, nothing to see here!”

  5. Comment by Old Economy Steve on March 16, 2013 9:12 am

    Well you see the problem here Donna is that Goldwater was listening to a non-man-person. What’s the word for one of those again? I once knew it but can’t seem to remember.

  6. Comment by Mike Slater on March 16, 2013 4:31 pm

    Donna, maybe your liberal mind just can’t take any comments that you don’t agree with.

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