More companies shed light on political spending (Reuters)

WASHINGTON (Reuters) – More American companies are bending to shareholder pressure to reveal their spending to sway political campaigns despite court decisions allowing unfettered corporate cash in elections, according to a study released on Friday.

Colgate-Palmolive Co, IBM and Merck & Co are among the big names with the best grades from the Center for Political Accountability, a foundation-funded group that pushes companies to open up their books.

The landmark Citizens United ruling by the U.S. Supreme Court in 2010 ended most restrictions on campaign donations by corporations and unions, giving these groups the ability to write fat checks to back political causes.

But pressure has been building for years from shareholders of public firms to shed light on such spending. Proponents of disclosure argue that getting involved in politics poses big risks for a company's reputation and brand.

Target Corp learned that lesson the hard way, when it gave $150,000 in 2010 to a Minnesota business group that backed a Republican candidate for governor who was a staunch opponent of gay marriage.

Potential shareholder ire "has got the attention of companies because now there is greater recognition that political spending poses real risks," said Bruce Freed, president of the Center for Political Accountability. "Are they there yet? No. But the direction is important."

The candidate ultimately lost the race but Target was forced to defend itself from shareholders and some in the public, who threatened a boycott.

Shareholders have had increasing success in pushing companies to open up about their donations. Of the 33 resolutions at major companies that made it to a shareholder vote in 2011, the average support was about 34 percent, according to the Center. Several years back, support of such resolutions was about 10 percent.

Three-fifths of the Standard & Poor's 100 companies are now reporting direct corporate spending, while 43 companies report some information about political spending through third parties like trade groups, the survey found.

Before the Citizens United ruling, companies could spend $5,000 from their employee-funded political action committees on a candidate per election. Now, there are no limits.

Citizens United and other legal rulings will help make the 2012 presidential election the costliest ever, with a price tag of $6 billion or more, according to some independent estimates.

SECRET FUNDS

Some well-known corporations say they would not risk their brand by giving to a group with an overly political agenda.

"Most companies are worried about alienating consumers," said Wesley Bizzell, assistant general counsel of tobacco conglomerate Altria, which scored in the top tier in the survey.

Under Citizens United, pro-business trade groups like the U.S. Chamber of Commerce and other tax-exempt entities won new powers to spend unlimited pools of cash without disclosing donors.

Corporate America has a ways to go in detailing this funding, Freed and other activists said.

"All of the secret money is being laundered through tax- exempt groups, which means, if a corporation is going to agree to disclose its political activities, to be effective, it must include the money it gives to trade associations," said Fred Wertheimer, a veteran campaign finance lawyer and president of Democracy 21, which promotes campaign finance reform.

The use of funds from undisclosed sources rose to $135 million in the 2010 elections, up from about $76 million in 2008, according to the nonpartisan Center for Responsive Politics.

IBM, for example, requires that the money it gives to the Chamber not be for political activity such as advertising.

But most companies do not put such restrictions on the funds to these organizations.

"There is a lot of latitude for organizations to have it both ways." said Sheila Krumholz, executive director of the nonpartisan Center for Responsive Politics.

(Editing by Philip Barbara)

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Obama urges no "political games" on jobs plan (Reuters)

WASHINGTON (Reuters) – President Barack Obama called on Republicans not to play "political games" with his jobs plan as he pressed for swift passage of a $447 billion package he hopes will revive the U.S. economy and boost his re-election prospects.

Four days after challenging Congress to act in a televised address, Obama stepped up his campaign to sell his proposals to American voters as he prepared to send the jobs bill to lawmakers later on Monday.

"This is a bill that is based on ideas from both Democrats and Republicans, and this is a bill that Congress needs to pass, no games, no politics, no delays," Obama said in an appearance in the White House Rose Garden, holding up a thick text of the legislation held together with a black clip.

The president, who pushed through an $800 billion economic stimulus package in 2009, will see his re-election chances hinging heavily on his ability to reduce stubbornly high unemployment above 9 percent.

Top Republicans have said they are open to some aspects of the Obama jobs plan but are not convinced the infrastructure and other stimulus spending is a good idea, given it would further swell budget deficits in the near-term.

They have resisted the White House suggestion that the jobs plan would be "paid for" with longer-term deficit cuts, saying it is important to make fiscal health a priority now and not push it forward for future generations to grapple with.

"It is my hope that we will be able to work together to put in place the best ideas of both parties and help put Americans back to work," John Boehner, Republican speaker of the House of Representatives.

Boehner said his party has a "different vision" from Obama on job creation and that the president's ideas will require "careful examination" in light of what Republicans see as wasteful spending in previous stimulus plans.

KEEPING UP PRESSURE

Obama sought to keep up the pressure.

"This is a bill that will put people back to work all across the country. This is a bill that will help our economy in a moment of national crisis," Obama said, flanked by teachers, police officers, construction workers and small business owners he said would be helped by his plan.

He took aim at Republicans who have resisted many of his economic initiatives in the past.

"We can't afford these same political games, not now," Obama said.

Cooperation could be hard to find in Washington's climate of dysfunction where a nasty feud over the government's debt levels this summer brought the country to the brink of default and led to an unprecedented U.S. credit downgrade.

But Republicans, while not wanting to give Obama any help before the November 2012 election, may have to cede some ground to help boost the economy or risk a voter backlash.

Obama will take his jobs message on the road again this week to build support for his ideas in battleground states.

His Tuesday visit to Ohio -- home of Boehner, the top Republican in Congress -- and Wednesday's stop in North Carolina mark the start of a series of trips the president is set to take to convince skeptical voters he has the right formula to get the economy going again.

He may also replicate his August bus tour through Iowa, Illinois and Minnesota -- possibly in another part of the country -- to try to generate enthusiasm for his proposed tax cuts and infrastructure projects and to pin blame on Congress if lawmakers fail to move quickly on the jobs package.

(Additional reporting by Andy Sullivan; Editing by John O'Callaghan)

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News Corp's UK political meetings to be published (Reuters)

LONDON (Reuters) – Ministers in Britain's coalition government, criticized for being too close to Rupert Murdoch's scandal-hit News Corp, face more scrutiny this week when details of their meetings with the company's executives are published.

News Corp executive James Murdoch is also under pressure over his handling of a phone-hacking scandal that has hit the Murdoch family's media empire and could jeopardize his own position at the company.

British police are considering a request from opposition Labor politician Tom Watson to investigate claims that the 38-year-old son of News Corp head Rupert Murdoch gave "mistaken" testimony to a parliamentary hearing last week.

Another Labor lawmaker, Chris Bryant, has written to News Corp's independent directors calling on them to suspend both James and his 80-year-old father for failing to exercise proper corporate control.

The scandal, centered on the now defunct News of the World newspaper, has led to the resignation of senior executives at News Corp and also cost two of London's top policemen their jobs after they were accused of getting too close to the company.

Prime Minister David Cameron has also faced the worst crisis of his 15 months in charge, his judgment questioned after he hired former News of the World editor Andy Coulson as his communications chief.

Finance minister George Osborne echoed Monday Cameron's regret over the appointment of Coulson, who quit his government post in January and was arrested earlier this month.

"Knowing what we know now, we regret the decision (to hire Coulson) and I suspect Andy Coulson wouldn't have taken the job knowing what he knows now as well," Osborne told reporters after meeting his Indian counterpart Pranab Mukherjee.

The government will publish details of ministerial meetings with News Corp executives, seeking to dispel claims that the company was wielding undue influence when the government was deciding on its $12 billion bid for full control of pay TV company BSkyB.

"When it comes to my meetings with the proprietors and editors of all newspapers, we are very shortly going to publish the details of my meetings and the meetings of other members of the government," Osborne added. Cameron has already given details of his own such meetings.

FOCUS TURNS TO BSKYB

News Corp dropped its BSkyB bid and closed down the 168-year-old News of the World to try to defuse the scandal after allegations the newspaper had listened in to voicemails of crime victims included a murdered schoolgirl.

The scandal has shaken the company that Rupert Murdoch turned into a global media after starting out with an Australian newspaper.

James Murdoch is expected to retain the support of investors and independent directors of BSkyB -- which he chairs and in which News Corp holds a 39 percent stake -- when the company announces its financial results Friday.

James and his father appeared before parliament's media committee last Tuesday to answer questions on phone-hacking.

News Corp's British arm News International had long maintained that hacking at the News of the World was the work of a lone "rogue reporter."

However, two former senior figures at its British newspaper arm disputed Friday James Murdoch's claim at the committee hearing that he had been unaware in 2008 of an e-mail that suggested such wrongdoing was more widespread.

The email related to a 700,000 pound ($1.1 million) out-of-court settlement paid to the head of English soccer's players union and signed off by James Murdoch in 2008, shortly after he took charge of News Corp's European operations.

In a letter to the media committee's chairman, James Murdoch said he had answered questions in parliament truthfully.

But legislators may now contact the men disputing his account, ex-News of the World editor Colin Myler and the newspaper group's top legal officer Tom Crone, to hear their version of events.

"James Murdoch is in a precarious position," said media analyst Steve Hewlett. "If it emerges that he knew the details of what he was signing, then he's in trouble."

"But if he knew absolutely nothing about why he was signing away so much money, then another question arises, as to whether he is competent to run the business, and whether he is a worthy successor to his father."

(Additional reporting by Tim Castle, writing by Keith Weir; Editing by David Stamp)

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Italy political consensus helps calm markets (Reuters)

ROME (Reuters) – A quick agreement by Italy's government and opposition to pass a closely watched austerity package helped calm markets on Wednesday, but there were calls for further steps to reductions in the deficit.

Facing a market rout after stocks plunged and borrowing costs hit record highs on Tuesday, government and opposition parties shelved their differences and agreed to ensure quick approval of a four-year, 40 billion euro austerity plan.

"The market remains nervous, very attentive, but we had an Italian reaction that was remarkably fast on budget austerity," said Deutsche Bank analyst Gilles Moec.

"The growth issue remains, but there was an immediate, patriotic reaction by the Italian political class that has positively impressed investors."

Economy Minister Giulio Tremonti, widely seen as the guarantor of Italian financial stability, said the government's austerity package would be approved by Friday, and he brushed aside rumors that he may step down.

"Hic manebimus optime," he told a meeting of the Italian banking association, borrowing a phrase from the Roman historian Livy meaning: "We will stay here, extremely well."

At the same event, European Central Bank Governing Council member Mario Draghi urged the government to move ahead with further measures to ensure it meets its target of bringing the budget back into balance by 2014.

"The substance of future measures aimed at balancing the budget by 2014 should be defined as rapidly as possible," he said. "This is what markets are looking at above all today."

He also criticized the European policy response to the debt crisis, saying policymakers needed to "bring certainty to the process by which sovereign debt crises are managed" with clearly defined objectives and instruments.

International Monetary Fund economists have urged "decisive implementation" by Italy to cut its huge public debt, noting that the austerity plan was based on optimistic forecasts with measures weighted toward later years.

Market falls on Friday and Monday wiped around 26 billion euros off the FTSE MIB blue-chip index and sent Italian bond yields up to more than 6 percent, the highest since the launch of the euro more than a decade ago.

On Wednesday, the premium investors demand to hold Italian debt rather than safe-haven German bonds narrowed by 11 basis points to 280 basis points -- after hitting a euro lifetime high of 353 basis points at one stage on Tuesday.

The yield on the 10-year BTP bond stood at 5.46 percent, down 13 basis points but still 46 basis points higher than its levels a week ago.

With the BTP spread against German Bunds narrowing, Italian bank shares -- which have born the brunt of the sell-off because of their vast holdings of government paper -- recovered some of the heavy losses they had suffered on Friday and Monday.

However, Goldman Sachs cut its price targets on Italian banks by 12 percent on average due to expected higher funding costs and lower profitability after the recent rise in Italian government bonds.

MARKET TEST LOOMS

A further test of Italy's ability to keep tapping the markets comes on Thursday, when the Treasury offers up to 5 billion euros of long-term BTP bonds, and markets are waiting nervously to see how the auction succeeds.

If Italy, the third-largest economy in the euro zone, were to share the same fate as Greece or Ireland, consequences would be incalculable. Much too big to bail out, a severe crisis could call the future of the entire euro area into question.

Ratings agency Fitch said on Wednesday it expected the government to succeed in cutting the deficit and said the market turmoil did not reflect Italy's fundamentals.

"The sharp rise in Italian and other euro zone government bond yields in recent weeks reflect a crisis of market confidence in the European policy response to the euro zone debt crisis rather than deteriorating sovereign credit fundamentals," Fitch said in a statement.

Italy has a public debt equivalent to around 120 percent of gross domestic product, second only to Greece in the euro zone and compounded by one of the world's most anemic growth rates.

Tight spending controls, a conservative banking system and a high rate of private savings have helped shield it from the worst of the euro zone debt crisis, but the sell-off this week is a reminder of its potential vulnerability.

A senior Bank of Italy official said the impact of the recent surge in yields was limited in the short term but would be considerable if it persisted -- adding around 3 billion euros to government borrowing costs in the first year and more later.

"If these kind of levels persist, the burden for public finances would be severe," Ignazio Visco, deputy director general of the Italian central bank, told a Senate hearing.

(Additional reporting by Giuseppe Fonte, Michel Rose, Valentina Za, Nigel Tutt, Luca Trogni and Elvira Pollina in Milan; Writing by Silvia Aloisi and James Mackenzie; Editing by Hugh Lawson)

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Obama: political sacrifices needed for debt deal (Reuters)

WASHINGTON (Reuters) – President Barack Obama said on Saturday political sacrifices will be needed by both Democrats and Republicans to break a budget impasse and avoid a looming debt default.

Under pressure to reduce America's 9.2 percent jobless rate, Obama used his weekly radio and Web address to vow to seek common ground with his Republican opponents and try to overcome serious disagreements on taxes and spending cuts that he says will improve the atmosphere for job creation.

He is to meet with top lawmakers from both parties on Sunday evening in what he says will be a session to perhaps begin the hard bargaining that will be necessary for a deal. Negotiators are working through the weekend.

"Both sides are going to have to step outside their comfort zones and make some political sacrifices," Obama said. "And we agree that we simply cannot afford to default on our national obligations for the first time in our history."

Obama and House of Representatives Speaker John Boehner are trying to craft a sweeping budget deal that would ensure the national debt remains at a sustainable level by cutting $4 trillion from budget deficits over 10 years.

That would give lawmakers political cover to raise the government's debt ceiling of $14.3 trillion before August 2, when the country is due to run out of borrowing capacity. Failure to act soon, some warn, could push the United States back into recession and send shock waves through the global economy.

Democrats and Republicans remain at odds over what elements should be part of the deal. Democrats are pushing for roughly $1 trillion in new tax revenue, while Republicans want to restructure popular benefit programs.

The uptick in the jobless rate in June to 9.2 percent complicated the debate over the debt deal and was a harsh reminder of the fragility of the U.S. economy.

Republicans who would like to deny Obama a second term when he runs for reelection in November 2012 are keeping up the pressure on the president over jobs.

"If we've learned anything, it's that we cannot spend, tax, or borrow our way to prosperity," Representative Cathy McMorris Rodgers of Washington state said in the Republican weekly address. "To create jobs and set our country on a sound fiscal course, we must stop spending money we don't have."

Obama, Boehner and other congressional leaders are due to meet at the White House on Sunday at 6 p.m. EDT, with staffers working through the weekend to lay out options.

There could be some hard bargaining in the session but it is not likely to produce a final deal, White House spokesman Jay Carney said.

Boehner also tamped down expectations that Democrats and Republicans could reach agreement over the weekend. He said on Friday that the two sides must overcome serious disagreements on taxes and spending cuts.

"It's not like there's some imminent deal about to happen," Boehner told a news conference. "This is a Rubik's Cube that we haven't quite worked out yet."

(Editing by Bill Trott)

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Minnesota shutdown prompts political blame game (AP)

By MARTIGA LOHN and PATRICK CONDON, Associated Press Martiga Lohn And Patrick Condon, Associated Press – Fri?Jul?1, 9:30?am?ET

ST. PAUL, Minn. – With Minnesota's state government closed for business, the focus shifted Friday to who's to blame.

The shutdown started at 12:01 a.m. Friday, the product of an ongoing dispute over taxes and spending between Democratic Gov. Mark Dayton and Republican legislative majorities. Talks fell apart well before the deadline, leaving state parks closed on the brink of the Fourth of July weekend, putting road projects at a standstill and forcing thousands of state worker layoffs.

The heads of the state's Republican and Democratic parties each say the other side is responsible.

Minnesota GOP Chairman Tony Sutton called Dayton a "piece of work" and accused him of inflicting "maximum pain" for political reasons.

Democratic-Farmer-Labor Party Chairman Ken Martin laid the blame on Republicans, saying they drove the state to a shutdown to protect millionaires from tax increases sought by Dayton.

"Shame on you for putting the interests of your rich campaign donors ahead of the well-being of the constituents you are supposed to represent," Martin said.

The Alliance for a Better Minnesota, a left-leaning group supportive of Dayton, plans to run weekend radio ads in three popular vacation areas blaming Republicans for the impact of the shutdown, including closed state parks. The group also debuted a "shutdown shame" website.

Though nearly all states are having severe budget problems this year, Minnesota stands as the only government to have shut down, thanks to Dayton's determination to raise taxes on high-earners to close a $5 billion deficit and the Republican Legislature's refusal to go along. The shutdown would be Minnesota's second in six years as the partisan divide deepens.

Here, as in 21 other states, there's no way to keep government operating past the end of a budget period without legislative action, according to the National Conference of State Legislatures. Even so, only four other states — Michigan, New Jersey, Pennsylvania and Tennessee — have had shutdowns in the past decade, some lasting mere hours.

There was no word early Friday of any plan to continue budget negotiations.

Even before the final failure, officials padlocked highway rest areas and state parks, herding campers out. The full impact will hit Friday morning as thousands of laid-off state employees stay home until further notice and a wide array of services are suspended.

Critical functions such as state troopers, prison guards, the courts and disaster responses will continue. On Friday morning, former Supreme Court Chief Justice Kathleen Blatz will begin the court-appointed job of sifting through appeals from groups arguing in favor of continued government funding for particular programs.

Dayton addressed the looming shutdown at about 10 p.m. Thursday, emerging after a day of fitful negotiations with legislative Republicans to say the two sides were still fundamentally divided over how much the state should spend the next two years and that the shutdown was inevitable.

"This is a night of deep sorrow for me," Dayton said.

Republican lawmakers had gathered at the Capitol for hours, demanding that Dayton do what he had said for months he would not do: Call a special session so they could pass a "lights on" budget bill to keep the government running. The governor insisted he would not give up that leverage without a total budget solution that incorporated the many facets of state spending. The governor has sole power to call a special session, but once one starts, it's lawmakers who will decide when to adjourn.

"I think the governor's insistence that we pass a full budget is not going to be of much comfort to Minnesotans who are going to see delays on the highways because construction projects stop," said Senate Majority Leader Amy Koch, R-Buffalo. "It's not going to comfort people who can't use our state parks, or who can't get a driver's license."

Officials in state parks had already started herding out campers Thursday, saying it would have been too difficult in the dead of night. Also Thursday, people rushed to get driver's and fishing licenses at offices and service centers that would be locked up by morning.

A stoppage in Minnesota also halts non-emergency road construction, shuts the state zoo and Capitol, and stops child-care assistance for the poor. More than 40 state boards and agencies expected to go dark.

The shutdown in retrospect was something of a slow-motion disaster, with a new Democratic governor and new Republican legislative majorities at odds for months over how to eliminate a $5 billion state budget deficit. Dayton has been determined to raise taxes on high-earners to close the deficit, while Republicans insisted that it be closed only by cuts to state spending.

Even after the shutdown looked like a certainty, Dayton and Republicans did not soften their conflicting principles. Dayton said he campaigned and was elected on a promise not to make spending cuts to a level he called "draconian." He said he has been more flexible than Republicans in trying to compromise in order to acknowledge their principles.

"I've gone halfway, and I'm not going to go further," Dayton said.

Republicans have been equally firm. Republican Sen. Michelle Benson said earlier in the day she wouldn't budge on raising taxes or new revenue in any form.

"If we don't start taking a different approach to how we manage our government, we're going to swing from one bad economic circumstance to another," Benson said. "We can't just keep throwing more money at government and hoping that makes things better."

Dayton has proposed raising taxes on couples earning more than $300,000 and individuals making more than $180,000. He said Thursday night that he had offered to target the tax increase to even higher earners, those making more than $1 million a year.

Republicans have opposed any new taxes or new revenue sources, arguing instead that the state should rely on spending cuts, including deeper reductions in health and welfare spending than Dayton is willing to accept.

Some GOP moderates have talked of breaking the impasse with other means of raising revenue, such as eliminating tax breaks or authorizing a casino. Dayton has said he is open to such ideas.

Lawmakers now face the prospect of spending the holiday weekend at parades and events in their districts, facing a public who can point to an oversized symbol of gridlock at the state Capitol. Some admitted that Dayton might have the upper hand politically.

"I personally think the Republicans will probably be more damaged than the governor" by the shutdown, said freshman Rep. Mike LeMieur, R-Little Falls, who toppled an incumbent Democrat in November. "The fact is that we're all up for re-election again next year, and he's not up for three years."

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