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Charity loophole stays wide open

Capitol Hill

TEXT OF STORY

SCOTT JAGOW: Is the phrase Congressional Ethics an oxymoron? Hey, I'm just asking. Because yesterday, the House ethics committee unveiled new rules about junkets, like Tom Delay's infamous golf trip to Scotland. The rules are supposed to put an end to that kind of stuff. But as Marketplace's Steve Henn reports, they really don't.


STEVE HENN: Under the new travel rules for the House, charities will be allowed to pay for trips for members of Congress to just about any destination in the world.

Believe it or not, that is exactly how convicted lobbyist Jack Abramoff organized a series of golf trips to Scotland for members of Congress.

FRAN HILL: The House rules whether deliberately or inadvertently miss the entire point.

Fran Hill is a nonprofit tax expert at the University of Miami. Hill says under the new rules a convicted felon, a foreign power or Big Tobacco could give money to a charity for lavish congressional trips and the public would never know who was really picking up the tab.

HILL: The problem is that charities do not have to disclose the source of the funds or the use of their funds. Once you put a charity anywhere in that transfer of funds, you have defeated disclosure.

Adding insult to injury, Hill notes that any company that uses the charity loophole to lobby will also get a nice, fat tax deduction, too.

So how did this happen?

Meet John Graham, the man the Washington Post dubbed "Mr. Loophole."

JOHN GRAHAM: (Laughs) Well I think it was meant kind of tongue-in-cheek.

Graham runs the American Society of Association Executives. Basically a lobbying group for lobbying groups.

It was Graham's job make sure his members would still be allowed to invite congresspeople to their meetings and getaways, even after the recent ethics reforms.

GRAHAM: When we got a pretty good indication based on the poling numbers we were seeing that the leadership of the House was going to change and Democrats where going to take over, we started working on Speaker Nancy Pelosi and her staff.

Graham did his work well. The new rules will not end congressional getaways. They even allow lobbying groups to pay for one- or two-day trips anywhere in the U.S.

GRAHAM: We don't view it so much as a loophole as an improvement to the legislation.

Graham believes it easy to tell the difference between the good trips and boondoggles. And he notes the public is paying attention.

In Washington, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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