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Home Builders Halt Campaign Funds After Setback

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By Jeffrey H. Birnbaum
Washington Post Staff Writer
Thursday, February 14, 2008

The National Association of Home Builders, one of the top 10 corporate donors to politicians, has stopped contributing to congressional candidates after it failed to get what it wanted in recent anti-recession legislation.

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The powerful lobby said Tuesday that it was taking the unprecedented action of halting its campaign-giving to protest Washington's failure to address "the underlying economic issues that would help to stabilize the housing sector and keep the economy moving forward." The group did not mention any specific initiatives.

The association had unsuccessfully pressed lawmakers to adopt a provision to reduce the tax liability of home builders by allowing them to offset their past profits with future losses. The lobby had also pushed to expand a program that allows states and localities to issue tax-exempt bonds that finance low-rate mortgages. Although both proposals were included in the economic stimulus package approved by the Senate Finance Committee late last month, neither was part of the final bill signed by President Bush yesterday.

Election experts said the lobby's move illustrated how closely interest groups tie their donations to the decisions they hope lawmakers will take on their behalf -- a connection that usually goes unspoken.

"This demonstrates in a starker fashion than we're used to seeing how groups use political contributions to promote their positions in Congress," said Kenneth A. Gross, a campaign finance lawyer at Skadden, Arps, Slate, Meagher & Flom.

The association's president, Brian Catalde, said in a statement that the group's political action committee, BUILD-PAC, had halted all disbursements to federal congressional candidates "until further notice." The statement added, "More needs to be done to jump-start housing and ensure the economy does not fall into a recession."

The association issued its statement soon after it praised the Bush administration for bringing six major lenders together for a program called Project Lifeline, which is designed to help prevent home foreclosures by giving some distressed owners a 30-day reprieve to work out alternatives.

"Lobbies like to pretend that congressional action and their donations aren't tied, " said Melanie Sloan of Citizens for Responsibility and Ethics in Washington. "But the home builders just confirmed that they are."

Ethics lawyers routinely warn interest groups to avoid saying or implying that the money they provide to candidates compensates them for taking a position on a particular piece of legislation. Such quid pro quos could be considered illegal gratuities or bribes.

The home builders' statement avoids any reference to specific legislation. "I don't think there's any basis to say that there's a violation of law here," said Robert K. Kelner, a campaign finance attorney at Covington & Burling.

But lawmakers do not like to be reminded in public that lobbyists offer them money in hopes of receiving favorable treatment. "Many PACs use a carrot-and-a-stick approach," Gross said. "But just a stick can boomerang."

The home builders' announcement also explodes the oft-repeated assertion by politicians that lobbyists deal with them only at arm's length. "How many members of Congress have you heard say, 'People donate to me, but it has no effect at all'?" Sloan said. "What the home builders have done is expose the underbelly of the connection between money and politics."


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