- Study proves financial benefits from White House visits
- Obama donors secure more visits during administration
- Firms use White House access to boost stock prices
The latest episode of “The Drill Down with Peter Schweizer” discusses the financial benefits of visiting the White House and its implications on the stock prices of corporations.
Full Transcript:
Hi, I’m Peter Schweizer, and this is the Drill Down, where we Drill Down on cronyism and corruption in the federal government.
It’s no secret that large corporations have major influence on American politics across the spectrum. This influence comes largely through the access that wealthy corporations can buy.
And while we have always suspected that the relationships between public officials and private companies have benefitted those companies, a new study attempts to quantify just how much of a difference it can make.
Two professors with the University of Illinois analyzed White House visitor logs for seven years of the Obama administration. They searched for top corporate executives of S&P firms that were scheduled to have face to face meetings with high ranking federal officials.[i]
From the start of 2009 to December of 2015, these researchers tracked 2,286 meetings between corporate representatives and federal officials, and then measured the performances of those businesses compared to equivalent companies.
It turns out, visiting the White House pays off with more than just a photo-op.
According to the study, companies that visited the White House more often were statistically shown to secure more government contracts, receive more substantial financial relief, and absorb more information advantages regarding upcoming or current legislation.
And maybe this makes sense, since corporations that contributed more to Obama’s presidential campaigns were shown to make more visits to the White House during his presidency.
But the benefits came in more substantial ways as well.
Companies that met with Obama and his top aides saw greater increases in their average stock prices relative to their corporate peers. Put simply, the companies that visited Obama officials saw their stocks increase in statistically significant ways over their competitors.
These jumps were especially pronounced in 2009, Barrack Obama’s first year, as well as 2012 through 2014, the beginning of his second term.
So, who were the top visitors to the Obama White House? Honeywell CEO David Cote was the most frequent visitor, appearing at the White House 30 times. Jeffrey Immelt from General Electric comes in 2nd with 22, and Roger Altman of EverCore Partners was third with 21 meetings. Google executives, of course, also stopped by quite often.[ii]And the timing of these visits is interesting also.
The Wall Street Journal reported that Google executives’ frequent visits to the Obama White House were instrumental in the Federal Trade Commission’s decision to drop its antitrust investigation into the company.[iii]
Meanwhile, the study found General Electric CEO Jeffrey Immelt made fourteen visits to the White House in the months right before his firm received 25 million dollars in stimulus money from the Obama administration. In January 2011, Immelt was appointed to head the President’s Council on Jobs and Competitiveness – one could assume that this was a result of his frequent visits and close relationship to the administration.[iv]
And in a 2012 confidential presentation that was obtained by a reporter, Honeywell executives touted their close relationship with President Obama and Vice President Biden as leverage in their standoff with union employees.[v]
The study also found that firms that met with White House officials saw an uptick in positive news coverage during the 12 months following their visits. The researchers concluded that the increase in positive coverage paired with negotiations that would occur with government officials resulted in more profitability for these firms.
What other evidence does this study provide to quantify the benefits these companies enjoyed during the Obama administration?
Three days after Donald Trump’s victory in the 2016 presidential election, the stock returns of firms with access to the Obama administration were already shown to be underperforming compared to their competitors. If corporate visits to Obama really meant nothing and the abnormal stock returns were a coincidence, the change in administration shouldn’t affect them any more than any other company.
We do not know if certain businesses today are benefitting in the same way, because the Trump administration does not disclose its White House visitor logs.
And that’s too bad, because what this study makes clear is that visiting the White House is good for business. What’s less clear is whether it’s good for America.
I’m Peter Schweizer, and this is the Drill Down. For more videos, check out our social media and subscribe to our YouTube channel.
Sources
- Jeffrey R. Brown and Jiekun Huang, “All the President’s Friends: Political Access and Firm Value,” NBER Working Paper Series, Paper No. 23356, April 2017, https://www.nber.org/papers/w23356.pdf.
- Brody Mullins, “Google Makes Most of Close Ties to White House,” Wall Street Journal, March 24, 2015, https://www.wsj.com/articles/google-makes-most-of-close-ties-to-white-house-1427242076.
- Ibid.
- Brian Montopoli, “White House Defends Embrace of G.E. CEO Despite Report Company Didn’t Owe Taxes in 2010,” CBS News, March 25, 2011, https://www.cbsnews.com/news/white-house-defends-embrace-of-ge-ceo-despite-report-company-didnt-owe-taxes-in-2010/.
- Mike Elk, “In Leaked Docs, Honeywell Cities Obama Ties As Key to Anti-Union Strategy,” In These Times, on Internet Archive, November 16, 2012, https://web.archive.org/web/20130313171415/http://inthesetimes.com/working/entry/14198/leaked_confidential_honeywell_document_say_obama_administration_connections (the screenshot of the site was captured on March 13, 2013