Wal-Mart doesn't discount politicians

By Pallavi Gogoi

updated 3:26 p.m. ET Sept. 29, 2006

California Gov. Arnold Schwarzenegger has legions of close friends, collected over decades as a Hollywood box office draw and rising political star. Yet few may consider him as dear as Wal-Mart Stores, which gave the Republican governor $22,300 on May 15, and earlier contributed $200,000 for initiatives Schwarzenegger had supported. In addition, the company has given $300,000 to the state GOP and additional funds to local politicians, making California the biggest recipient of Wal-Mart's political largesse.

California is just one of the places where local politicians are benefiting from Wal-Mart's growing interest in state affairs. Over the past four election cycles, the giant retailer has been steadily boosting its contributions to state and local politicians, just as such politicians have been taking on bigger roles in deciding key issues concerning the company's operations, from the local minimum wage and required health-care benefits to zoning for big-box retailers. Money has gone to everyone from Schwarzenegger and New York gubernatorial candidate Eliot Spitzer to Maryland Gov. Robert Ehrlich and Illinois state Senate President Emil Jones Jr.

Wal-Mart gave a total of $326,875 in the 2000 election cycle, $431,017 in 2002, and $857,179 in 2004, according to research by the Institute on Money in State Politics, a nonpartisan, nonprofit research organization based in Helena, Mont. For the 2006 election cycle, the company has given $644,655 so far and seems to be on track to hit a record for political contributions.

"They've gone from zero to warp speed in political giving all across the board," says Bruce Freed, co-director of the Center for Political Accountability, a nonprofit group that tracks corporate political spending. The totals include only direct contributions to politicians and political parties. Adding in money for ballot initiatives and other local issues brings the total of Wal-Mart state giving so far this cycle to $1.25 million.

Wal-Mart says it's become necessary to step up its contributions. For two decades it largely shunned politics because company founder Sam Walton didn't believe such activities benefited his customers. In fact, Wal-Mart didn't hire any lobbyists or establish any political action committees until 1998.

No longer on the sidelines
But that reticence, the company now says, has allowed critics to launch unilateral attacks and set the agenda on a number of issues. "For years we didn't participate — to our detriment," says company spokesman John Simley. "Now we're participating in the same political process as any citizen, in this case a corporate citizen."

MORE FROM BUSINESSWEEK My Brand, My Cause The Politics of Retail CEOs: Hot and Not Today's CEOs: Then and Now Meet the New Friendly Boss

Simley says contributions are now a carefully considered component of Wal-Mart's business strategy. "The process that we use to choose to whom we contribute has to do with the voting record and position of each official," he says. "We look at their records on anything that's relevant to our business, like trade, taxes, legislation related to pharmacy and grocery, and we also consider the magnitude of our presence in the districts they represent."

Today, Wal-Mart has become one of the most active corporations in the U.S. At the federal level, Wal-Mart is already the No. 1 corporate political contributor, giving $943,455 in the 2006 election cycle, followed by General Electric's $788,711 and Anheuser Busch's $671,644, according to the Center for Responsive Politics, another nonpartisan watchdog.

(MSNBC.com is a joint venture of GE's NBC Universal News unit and Microsoft Corp.)

Battleground states — for Wal-Mart
As for the states, Wal-Mart has become one of the most active givers, though it still ranks well behind telecom companies such as AT&T and tobacco companies like R.J. Reynolds.

Wal-Mart's contributions vary greatly by state, in part because the rules governing such donations are widely divergent. Twenty-one states prohibit corporate contributions altogether, and two dozen other states impose limits. For example, a corporation can give a maximum of $22,300 to a gubernatorial candidate in California, while New York limits corporate contributions to $5,000 per year. Five states — Illinois, New Mexico, Oregon, Utah and Virginia — have no giving limits.

The states have become an increasingly crucial battleground for Wal-Mart, as the federal government has declined to get involved in initiatives to boost the minimum wage or mandate higher health-care benefits. Politicians in at least 20 states have sponsored pieces of legislation (many of them dubbed "Wal-Mart bills") that aim to force the Bentonville, Ark.-based company to pay higher wages and offer workers more generous health benefits. Many cities — from Belfast, Maine, and Bennington, Vt., to Ashland, Ore., and Bozeman, Mont. — have passed ordinances banning large stores like Wal-Mart's behemoth supercenters, and others have enacted ordinances to force Wal-Mart to pay higher wages.

MORE FROM BUSINESSWEEK

BusinessWeek Section Front

HP's 'End Run' Around Windows Boeing Workers Are on the Brink McCain Woos the Undecided Microsoft Will Cut Xbox Prices in the U.S. Marcial: A New Spark in Energy Conversion Devices Google's Chrome Ups the Ante Stocks: New Season, Same Worries Young Republican Road Trip Stocks Fall on Economic Worries MLB's Real Competitive Advantage BusinessWeek Section Front