Tonight's State of the Union Address raised even less transparency issues than we expected. (See the text at the end of this post.)

President Obama called for a ban on insider trading in Congress, and proposes to ban lobbyists from bundling contributions, and to ban bundlers from lobbying.

The insider trading ban is a proposal Sunlight has supported, in the form of the STOCK Act, despite some initial misgivings. Congress should create clarity about self-dealing and insider trading, and the President is right to call on Congress to address this issue.

When Obama raised the issue of money in politics in his speech, though, he raises the "corrosive influence of money in politics." As wrong as insider trading may be, money in politics isn't about self-dealing. Obama is closer to hitting the mark in raising the issue of bundlers, but unfortunately raises a proposal that's unlikely to get discussed beyond tomorrow. A ban on lobbying or contributing to campaigns is unlikely to pass Congress, and unlikely to pass muster with the courts.  Even if it did, it would do little to mitigate the "corrosive influence of money in politics", since bundlers are often just the bag men operating at others' behest. If you're not getting the Chris Dodds of the world, your lobbying reform plan is probably aiming a little too low.

It's not clear why Obama is suddenly more interested in bundlers than say, lobbying disclosure (last year's lobbying SOTU provision), although it's possible that Obama is raising it because it will become a campaign issue, as Republican candidates have yet to release information about bundlers supporting them, as Obama has.

But this is still disappointing, since it again shows Obama relying on a flawed statutory definition of lobbyist in order to appear opposed to special interests, without actually having to do much.

Worse, though, than the lackluster vision for lobbying reform, is what's entirely missing from the State of the Union: any mention of the flood of dark money flowing into our elections. As I noted earlier today, Obama spent most of 2010 railing against the Citizens United decision -- warning us of the dangers of unlimited and secret contributions, and pushing for a legislative fix.

Since Republicans have blocked that effort, and former White House staffers started a super PAC to help Obama's re-election bid, Obama has almost completely ignored the issue. It's apparently too politically awkward to address when he's the beneficiary of all that dark money he spent 2010 warning us about.

It's good to have a President willing to raise transparency and money in politics in the State of the Union. But when insider trading and an ill-fated lunge at bundlers are all the vision he has to offer, we have to wonder whether Obama sees his old transparency platform as a political liability, rather than a vision to be perfected and implemented.

Speech Excerpt:

Some of this has to do with the corrosive influence of money in politics.  So together, let’s take some steps to fix that.  Send me a bill that bans insider trading by Members of Congress, and I will sign it tomorrow.  Let’s limit any elected official from owning stocks in industries they impact.  Let’s make sure people who bundle campaign contributions for Congress can’t lobby Congress, and vice versa – an idea that has bipartisan support, at least outside of Washington. Some of what’s broken has to do with the way Congress does its business these days.  A simple majority is no longer enough to get anything – even routine business – passed through the Senate.  Neither party has been blameless in these tactics.  Now both parties should put an end to it.  For starters, I ask the Senate to pass a rule that all judicial and public service nominations receive a simple up or down vote within 90 days.

Sunlight and the Center for Responsive Politics have teamed up on a collaborative investigative project that shows never-before-seen "contribution clusters" from outside lobbyists and their health care industry clients to key members of Congress.

We found that Sen. Max Baucus, D-Mont., chairman of the powerful Senate Finance Committee and author of the main health care reform bill now being debated in the Senate, was one of the biggest beneficiaries of this one-two punch from lobbyists and the interests they represent. Between January 2007 and July 2009 (the period we studied), Baucus collected contributions from 37 outside lobbyists representing PhRMA, the pharmaceutical industry's chief trade association, and from 36 lobbyists who listed drug maker Amgen Inc. among their clients.

In all, 11 major health and insurance firms had their contributions to Baucus boosted through extra donations from 10 or more of their outside lobbyists. (See our visualization and the full list from CRP.)

Nor was Baucus alone—other members also received contributions from the employees, their family members and political action committees of health care firms and from the outside lobbyists that represented them. Senate Minority Leader Mitch McConnell, R-Ky., collected lobbyist “bundles” from 14 major health care organizations. Sen. John McCain, R-Ariz., actually led the list, with 22 organizations—though much of that money was directed at his presidential campaign last year. (see the full list.)

PhRMA and Amgen were the organizations with the most outside lobbyists chipping in with extra contributions. Some 32 members of Congress got money from 10 or more PhRMA lobbyists over the last two-and-a-half years. Amgen's lobbyists did the same for 24 members.

There is no indication that the extra giving by lobbyists was part of a planned effort by the health care firms to solidify their support among key members of Congress. But whether coordinated or not, the newly-found clusters of lobbyist giving clearly illustrate the intensity of the full-court press that the industry is currently waging on Capitol Hill.

The research into the lobbyist-and-client giving was conducted by combining campaign contribution records with reports filed by lobbyists that identified their clients (read more on how we did it; full methodology here). The Center for Responsive Politics has been collecting that data for years, but this was the first time the two databases were combined to identify all cases where outside lobbyists contributed to the same members of Congress as their clients.

Overall, the research found that about 90 percent of the lobbyist donations were given by the lobbyists themselves. Another 10 percent came from members of their immediate families, mainly spouses. Interestingly, about one-third of the contributions were given not to the members’ campaign committees, but to their leadership PACs—separate funds that members control—but that get far less media scrutiny than their reelection campaigns. The leadership PACs also have higher contribution limits, enabling lobbyists to give well beyond the nominal $2,400 limit that applies to campaign committees.

To see Sunlight's previous visualizations of health care lobbying--which also relied on data from the Center for Responsive Politics--click here.

According to The Hill, only one political action committee (PAC) reported bundling campaign contributions for a political candidate during the first filing period for disclosed bundlers. The PAC of Gilead Sciences, a health care company, disclosed raising $17,500 for Rep. Henry Waxman's PAC, LA PAC. It should come as no surprise that disclosure is virtually nil since the Federal Election Commission (FEC) eviscerated the bundling disclosure law when it implemented its regulations for disclosure.

In 2007, Congress passed a large ethics and lobbying reform package, the Honest Leadership and Open Government Act, containing disclosure requirements for lobbyists bundling campaign contributions for candidates. The law for bundling disclosure was not implemented immediately as the FEC, then dormant due to controversy surrounding appointments, was required to set out regulations for the filing of disclosure reports. When the FEC finally issued their regulations, they took knocked the wind out of the law.

The two major rules that they issued were:

1. Candidates would have to show that, either, the lobbyist bundling contributions received a "benefit" -- i.e. a honorary award, an autograph from the candidate -- or the candidate must maintain a tracking system that gives credit to lobbyists bundling contributions for their campaign or PAC.
2. Lobbyists who are co-hosting a fundraiser for a candidate can divide the amount raised between them, thus circumventing the $16,000 disclosure threshold. This division of raised contributions goes so far to allow co-hosting non-lobbyists to be alotted a portion of the total raised amount.

Both of these rules allow bundlers to easily evade disclosure requirments. The second of those rules was denounced by then-Sen. Barack Obama, an early supporter of bundling disclosure, before the FEC enacted it, when he said on the floor of the Senate, "In a situation where a fundraising event is co-hosted by a number of different lobbyists, I am concerned that some might want to avoid reporting bundled contributions by dividing up the total receipts of a fundraising event among many sponsors or co-hosts of the event. Certainly, that was not our intention."

That was not their intention, but that is what the FEC enacted. And now we have one disclosure, despite bundling being a common form of fundraising in Washington.

Yesterday, the Federal Election Commission unanimously approved new disclosure rules regarding bundling, the practice of collecting campaign contributions from friends, co-workers, clients and other associates. (Currently an individual can give up to $2,300 per election to a candidate for president or Congress. But by collecting multiple checks from various sources, bundlers have no limit on what they can raise for a candidate, gaining much favor with the campaign. Lobbyists are masters at the practice.) The FEC was finally creating guidelines for the implementation of the Honest Leadership and Open Government Act of 2007, which Congress passed partly to bring more transparency to bundling.

Unfortunately, the FEC ruling compromises the transparency purpose of the law to 'provide for the broadest possible disclosure' of bundling activities. The FEC ruled that campaigns, parties and candidate-affiliated political action committees would now have to disclose the names, addresses, employers and amounts raised by these called "bundlers," according to CQ. Sounds good, right? But this requirement applies only to registered lobbyists. (Hint: not all influence peddlers are registered.) Plus, the rule applies only when there is a written record of the bundling, or when the candidate gives something to a lobbyist in return like a title or a gift of appreciation, such as an autographed photo. "Knowledge on the part of a candidate that a lobbyist has bundled contributions is not enough under the new FEC rule to trigger reporting requirements, according to the Campaign Legal Center (CLC). "Instead, in the absence of a written record, knowledge plus a tangible benefit to the lobbyist is required to trigger the reporting requirements."

Other huge loopholes exist. The new rules require only those individuals who bundle $15,000 or more be disclosed. As Paul Ryan, FEC program director for CLC, points out, the rule allows jointly hosted events, where several lobbyists can split up the credit for the money raised, allowing them to fall below the $15,000 disclosure threshold.

The FEC has, until very recently, been inactive, as a result of partisan gridlock between the Bush Administration and the Democratically-controlled Senate over appointments to the panel so it took them over a year to make this ruling. Too bad they got their act together.

• Lawyers allege that Sen. Ted Stevens received additional gifts outside of the over $250,000 in labor and renovations to his chalet. These gifts included a $2,695 massage chair, a $1,000 sled dog, and a $3,200 "hand-designed" stained glass window.
• Rep. Charles Rangel will recommend that the House Ethics Committee look into his personal finances after reports from the New York Post and New York Times revealed that Rangel failed to properly report income from a Dominican vacation home on both his personal financial disclosures and his income taxes.
• However, an Ethics Committee investigation may take time as the committee does not have a chairman at this time following the tragic death of Rep. Stephanie Tubbs Jones. Rep. Gene Green is the likely temporary replacement, although Speaker Nancy Pelosi won't appoint Green until after a Sept. 10 memorial service for Tubbs Jones.
• The Federal Election Commission will hold a hearing on Sept. 17 on proposed rules for the disclosure of contributions bundled by registered lobbyists.

Three makes a trend, right? Today, there are three news stories on presidential bundlers - campaign contributors who solicit money from other contributors and bundle it together - and their activities. All of these stories highlight the need for bundling disclosure rules from the Federal Election Commission. But two of these stories pinpoint the potential for abuse in the bundling system.

The Washington Post looks at the odd practices of one Harry Sargent III, the owner of an oil trading company with billion dollar defense contracts. Sargent has raised over $50,000 for Sen. John McCain's presidential bid from a collection of Arab-Americans who refuse to discuss why they gave money to the Republican's campaign:

Some of the most prolific givers in Sargeant's network live in modest homes in Southern California's Inland Empire. Most had never given a political contribution before being contacted by Sargeant or his associates. Most said they have never voiced much interest in politics. And in several instances, they had never registered to vote. And yet, records show, some families have ponied up as much as $18,400 for various candidates between December and March. Both Sargeant and the donors were vague when asked to explain how Sargeant persuaded them to give away so much money. "I have a lot of Arab business partners. I do a lot of business in the Middle East. I've got a lot of friends," Sargeant said in a telephone interview yesterday. "I ask my friends to support candidates that I think are worthy of supporting. They usually come through for me."

As the Post story notes, this seems analogous to the Norman Hsu case that played out in 2007. Hsu was a con-artist who bundled large sums of money for Sen. Hillary Clinton's presidential run from a collection of Chinese-Americans, many of whom were barely integrated into the larger American society. It turned out that Hsu funneled his own money through these individuals to be able to make contributions. Hsu was arrested for this and other crimes and Sen. Clinton returned hundreds of thousands of dollars in donations. Are Sargent's bundled contributions legitimate? Why do the people who operate as Sargent's fundraising operation refuse to discuss why they are giving these campaign contributions?

In a very similar case, two individuals of modest means, an office manager at Hess and her husband, an Amtrak foreman, contributed $61,600 to Sen. McCain's campaign committee and a joint Republican-McCain committee. McClatchy:

Alice Rocchio is an office manager at the New York headquarters of the Hess Corp., drives a 1993 Chevy Cavalier and lives in an apartment in Queens, N.Y., with her husband, Pasquale, an Amtrak foreman. Despite what appears to be a middle-class lifestyle, the couple has written $61,600 in checks to John McCain's presidential campaign and the Republican National Committee, most of it within days of McCain's decision to endorse offshore oil drilling. At a June fundraiser, the Rocchios joined top executives at Hess Corp. — Chairman and Chief Executive Officer John Hess, his wife, Susan, his mother, Norma Hess, and six other officials in giving a total of $313,500 to a joint McCain-RNC fundraising committee, Federal Election Commission records show.

Alice Rocchio insists that she and her husband used their own money to pay for these large campaign contributions, the first either her or husband have made. The June contributions to the joint committee were revealed in a Campaign Money Watch report earlier this week. The large Hess contributions came days before Sen. McCain switched his position on offshore drilling.

Clearly, these two stories show the danger of abuse in the bundling system and the clear lack of disclosure. While Congress approved disclosure of bundled contributions in the recent ethics reform bill, they only did so for federally registered lobbyists. In both cases, including the case of a federal contractor, neither party would be required to disclose the bundled contributions.

In our final bundling story of the day, the New York Times looks at the big dollar donors and bundlers surrounding Sen. Barack Obama's campaign. Despite the well-known small dollar donations machine the campaign built during the primaries, Sen. Obama is also raising massive sums from big dollar donors:

But records show that one-third of his record-breaking haul has come from donations of $1,000 or more: a total of $112 million, more than Senator John McCain, Mr. Obama’s Republican rival, or Senator Hillary Rodham Clinton, his opponent in the Democratic primaries, raised in contributions of that size. Behind those larger donations is a phalanx of more than 500 Obama “bundlers,” fund-raisers who have each collected contributions totaling $50,000 or more. Many of the bundlers come from industries with critical interests in Washington. Nearly three dozen of the bundlers have raised more than $500,000 each, including more than a half-dozen who have passed the $1 million mark and one or two who have exceeded $2 million, according to interviews with fund-raisers.

This latest info on the McCain and Obama bundlers comes thanks to an effort by a number of groups, including the Sunlight Foundation, to pressure both campaigns to disclose their bundlers as former candidates George W. Bush and John Kerry both did. Voluntary disclosure is all well and good, but as I mentioned adove, mandatory disclosure would increase accountability and would apply across the board to include House and Senate bundlers as well.