Reality Check: Khanna Says He Won't Take Corporate Money

After entering the Bay Area political scene with a splash, Democratic hopeful Ro Khanna makes a rare promise to voters that bears further exploration

To a population disenchanted with the functionality of its government, and specifically, an inept Congress struggling to pass even core legislation (government shutdown, anyone?), visions of reform and campaign finance transparency sure sound sweet right about now.

Democratic hopeful Ro Khanna, a former Obama Commerce Department appointee and current Silicon Valley attorney, is vying for the Democratic nomination for California’s 17th Congressional District.

Khanna has promised Bay Area voters something that does not grace the headlines of many political campaigns: A pledge not to accept corporate dollars, special interest dollars, lobbying dollars or the like.

“Everyone knows that corporations and special interests have too much power in Washington, and ordinary citizens’ voices are not being heard,” Khanna told NBC Bay Area Tuesday. “And the reason is that corporations and special interests are funding a lot of the influence in Congress. And so I’ve said, I’m not going to take any money from corporations or lobbyists, only money from individuals.”

A candidate’s fundraising activities have to be filed with the federal government, and specifically the Federal Election Commission, so a claim like Khanna’s can be fact-checked. The rub lies in how you define corporate money.

Khanna’s most recent filing covers all activity through Dec. 31, 2013. The next filing deadline will come in less than a month (they’re done on a quarterly basis).

Of the roughly $2 million Khanna has raised through December 31, the report indicates that all of the money is sourced to individual donations. The section for political action committees, advocacy groups and other entities capped by fundraising ceilings, called “other committee contributions” on the report, shows a zero sign.

So Khanna has upheld his lofty pledge so far?

Bill Whalen, a veteran California political expert and research fellow at Stanford’s Hoover Institution, says it’s a little more complicated than a simple yes or no.

“It’s very clever tactics,” Whalen said, referring to Khanna’s guarantee. “I won’t take money from those lousy lobbyists. I won’t take money from those evil corporations. All of those things that we associate with bad doings in Washington, so it’s a very smart tactic,” he said. “But you look at it closely and it doesn’t quite stand up.”

Whalen offers push back on two fronts.

One, incumbent challengers don’t generally receive huge financial backing from national parties, special interest groups or even corporate PACS, Whalen said. Those riches typically get channeled to establishment candidates.

“To the extent that Washington groups are giving money, they’ll give money to the Washington candidate, the incumbent congressman,” he continued. “To the extent that Nancy Pelosi or established Democrats are directing money, they’ll direct it toward Mr. Honda. So [Khanna] can take this very principled position because, in part, it’s not like he has a choice,” Whalen noted with a smile.

On this point, Khanna acknowledged the typical, systemic support for incumbent candidates but also challenged Whalen’s premise.

“A lot of challengers get special interest money,” Khanna responded. “If you look at the challengers who’ve run and are running across the country, they take political action committee money. They take corporate money. We could certainly go to some of these corporations and say, ‘Fund me through your corporate PAC,’ but we have not.”

Perhaps the more pressing question is whether some of Khanna’s individual donors should be considered ‘corporate’ sources.

An attorney who represents technology companies in intellectual property cases, Khanna has no shortage of deep-pocketed friends on his donor list, many of whom represent Silicon Valley’s most titanic corporations.

Facebook CFO Sheryl Sandberg, Google Chairman Eric Schmidt and Yahoo CEO Marissa Mayer are all among the supporters donating to Khanna’s campaign.

Should that count as a corporate endorsement?

Khanna says the tech elite who’ve backed him do so for his platform and ideas, but Whalen says it can be hard to separate the two.

“Here’s the interesting question,” Whalen posed. “Does that mean that Marissa Mayer’s money is good but Yahoo, which is a corporation, their money is bad? Does that mean that Sheryl Sandberg’s money is good, but Facebook, which is a corporation, their money is bad? What if Tim Cook wants to write you a check, or John Chambers? Does that mean that Apple and Cisco are bad? I think it’s kind of a double-standard here.”

The 17th District incumbent, Representative Mike Honda, a seven-term congressman, questions how a non-corporate campaign could contain so many sizeable donations from some of the tech industry’s biggest names.

"Ro Khanna has taken over $600,000 from CEOs and Venture capitalists: people who run, or own, corporations,” said Honda Communications Director, Vivek Kembaiyan, in an email statement. “This includes max-out contributions from Peter Thiel, who spent millions to elect tea party Senator Ted Cruz, and Marc Leder, who hosted the Mitt Romney 47% fundraiser. Congressman Honda has a strong progressive record, and the grassroots support to back it: over half of his contributions are from people giving $100 or less."

Venture to Honda’s FEC filing page and you’ll find that he’s raised roughly $1.2 million in campaign donations through December 31.

Roughly $300,000 or 26 percent of his total funds are attributed to “other committees contributions.”

Some of those funds come from the political action committees of companies whose CEOs and higher-ups donated directly to Khanna’s campaign, such as Yahoo and Oracle.

If you’re wondering, ‘what’s the difference,’ Khanna says for one, it’s level of donation.

“All of my contributions are individual contributions and they’re restricted- they can’t give the amounts that these corporations and political action committees can give,” Khanna said.

And that’s true, individuals are limited to $2,600 per candidate per election, while PACs are limited to $5,000.

Here, Whalen says context is everything.

“So you can’t take money from the Yahoo PAC, which is [limited to] $5,000 or $10,000, but what if the CEO puts you in a room with 50 of his or her fellow employees?” Whalen asked. “And they raise a lot more than $5,000 or $10,000 dollars?”

Should the Khanna and Honda race tighten up before their June primary, the greatest financial impact may in fact come from the so-called Super PACS, groups that can raise unlimited amounts of money from corporations and individuals and cannot donate directly to candidates, but *can purchase ads attacking or supporting those candidates.

Khanna has said he will reject help from the Super PACS, and is calling on Honda - who has also voiced his opposition to the Supreme Court’s decision in Citizens United, opening the door for a flood of corporate money - to do the same.

Thus far, Honda has not accepted the offer.

Whalen believes Super PACS could seal the fate of the primary.

“You have these large, nebulous outside groups which park money against candidates,” he said. “So at some point a Super PAC, should Honda be in trouble in this race, a Super PAC will descend into Silicon Valley and try to take apart Mr. Khanna.”

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