BusinessTN

As the political campaign season kicks into high gear in Tennessee this summer, the state’s newly minted ethics bill, aimed in large part at controlling influence peddling on Capitol Hill, is being put to the test. One major component will fall conspicuously under the microscope. What will be the outcome of the legislature’s decision to cap what well-heeled political contributors—namely Bristol businessman and conservative Republican John Gregory—can pour into the political process through campaign contributions? Near the end of the legislative session in 2005, FBI agents descended on Capitol Hill and arrested a handful of lawmakers, charging them with accepting cash in return for favorable legislation benefiting an FBI shell company. In the aftermath, the Tennessee General Assembly passed broad ethics reform. One part of that new law placed a cap on the aggregate amount an individual donor can contribute to candidates and political action committees (PACs) during each two-year election cycle. Under the new law, an individual can give a maximum of $61,400 to all PACs combined and a maximum of $40,000 to all individual political candidates combined. Asked specifically about the effect of the caps on an individual like Gregory, Tennessee Registry of Election Finance Director Drew Rawlins says the caps will “keep him from just writing a million dollar check to a PAC. He’s going to have to choose his spots.” Yes, John Gregory, the former owner and CEO of Bristol-based King Pharmaceuticals and current managing partner of SJ Strategic Investments, has become Tennessee’s poster child for big political donors. But a little perspective is in order. First of all, big money donors are not a new phenomenon in Tennessee politics. Nor are they a partisan phenomenon. Take for instance the 1994 Democratic gubernatorial primary when then Shelby County mayor Bill Morris received a $100,000 donation from an agricultural magnate in his race against Phil Bredesen. Or consider East Tennessee real estate maven Franklin Haney, who in 1978 gave a whopping $75,000 to Richard Fulton for his first gubernatorial campaign. More recent examples (though not a precise apples-to-apples comparison) include defeated presidential candidate Al Gore, who in 2004 gave the Tennessee Democratic Party $700,000 in leftover presidential campaign money. And Bredesen himself dropped about $1 million of his own money into the Tennessee Democratic Party’s coordinated campaign in 2002. Despite both parties benefiting long term from big money donors, Tennessee Democrats have in recent years succeeded best at painting a picture of their opposition as the party most tied to big money special interests. They’ve done so largely by focusing on Gregory’s role in funding state legislative races during the last election cycle and by tying those contributions to Gregory’s past service to King Pharmaceuticals. King was in recent years the target of a federal investigation, which uncovered that the company had over billed the federal Medicaid system. The Democratic translation? State Republicans accepting money from Gregory were lining their pockets with dirty money from a man who had bilked TennCare, the state’s then beleaguered health care system for more than a million poor, uninsured and uninsurable Tennesseans. By any measurement it was a savvy piece of political strategy, and it arguably kept the Democrats from giving away even more ground on Capitol Hill to Republicans in the 2004 elections (the year Republicans in Tennessee gained their first majority in the State Senate since Reconstruction).

Just who is John Gregory anyway? After graduating with a pharmacy degree from the University of Maryland, Gregory opened the first retail pharmacy in Bastian, Va. In 1984, he co-founded General Injectibles and Vaccines, which supplied physician’s offices. GIV eventually became a 550-employee, $150 million revenue company. Then in 1993, Gregory and his brothers purchased King Pharmaceuticals, which at the time was a 90-employee company. By the time of his retirement in 2002, King had become a billion-dollar revenue company. Gregory founded the Tennessee Conservative PAC in 2004. Since then, he’s poured nearly $1 million into Tennessee legislative races in support of conservative candidates that according to the PAC’s Web site are willing to “articulate strong conservative social values such as respect for the lives of the unborn, support of traditional marriage, child rearing by the family and not the village and education as parental concern not just as another governmental institution.” Gregory did so mainly by writing big checks to political action committees that distributed money to Republican candidates. Records show that of the top five PACs Gregory supported, including those of Republican Senator Majority Leader Ron Ramsey (RAAMPAC) and Republican House Minority Leader Tre Hargett (TARGET PAC), Gregory funds accounted for over one-third of all funds. The results? Half of the 22 candidates Gregory supported were victorious in the historic 2004 elections, including six challengers. Gregory’s PAC (which included 25 other donors) is in part credited with helping the Republicans in Tennessee achieve their Senate majority.

The Tennessee PAC explains on its Web site that Gregory’s mission is in fact merely to level the playing field in Tennessee where historically Democrats (supported by teacher PACs and union PACs) have outspent Republicans by a four-to-one margin. “As a devout Christian committed to pro-life and traditional family values agenda of the Republican Party, he decided something had to be done,” the site reads. “His motivation for doing so, in his own words, is to provide for his children ‘a place where they can live for the next 40 years in a just society with common sense morality.’”

Gregory did not reply directly to requests for an interview. The PAC’s government affairs point man, Jim Holcomb, a former member of both the Tennessee House and Senate, informed Business Tennessee that Gregory does not make himself available for interviews regarding his political affiliations and involvements. “This is because he does not desire that he personally be a topic of political debate,” Holcomb states. “He prefers that to be the role of the candidates and others in the party hierarchy, so the focus will be on the issues confronting Tennessee voters.”

Holcomb adds however that, “As he has always done, Mr. Gregory will continue to adhere strictly to the law and, of course, he will operate within the constraints of the current contribution caps. Mr. Gregory’s stated objective then and now is to support committed conservative candidates who are pro-life, will protect traditional family values, and who are fiscal conservatives. The goal in supporting these candidates has always been to insure that they had enough financial support to have their message heard.”

But cynics on Capitol Hill are already anticipating scenarios wherein big money donors like Gregory could circumvent the new legislation. They almost universally agree that somehow, someway, a pot of money equal to or larger than what was spent in previous years will find its way into Tennessee legislative races. For instance, though the law bans individuals from passing campaign money to candidates through minor children or friends, there is nothing to stop Gregory’s wife from donating a combined $101,400 to the Tennessee political process this election cycle that is in addition to her husband’s contribution. In addition, the law still leaves the door open for Gregory (or another big donor) to give an unlimited amount to a state party, which could then use that money to cover operating expenses like utility bills or get out the vote campaigns, freeing the party up to use all other smaller donations to exclusively fund candidate campaigns. The Tennessee Journal has postulated that under the current law Gregory could file as a gubernatorial candidate without actually campaigning, give millions of dollars to his own campaign, then transfer the money to the state party.

In the end, however, it appears the law has significantly undercut the longstanding ability of big money political donors in Tennessee to disproportionately affect campaign fundraising. What are the political ramifications? There are two schools of thought on Capitol Hill. The upside, say some Hill observers, is that politicians will be forced to get more small contributions from more average income people, which could be construed as a marked improvement to the democratic process in Tennessee. But the downside, they say, is that politicians will now have to campaign even more to get the amount of money they need to win office, which translates into even less focus on performing the business of the people.

Political observers will be closely watching the actions of John Gregory and the Tennessee Conservative PAC to see how the new ethics guidelines affect his ability to impact the political process. But in fact it could be that his work has already been accomplished for the current election cycle. Gregory’s advocacy of conservative candidates in the last election cycle, one unfettered by caps, led to a Senate majority for the GOP in Tennessee, the linchpin that led to a constitutional amendment designed to block homosexuals from marrying being placed on the November 2006 ballot. That referendum is sure to drive a large conservative turnout to the polls later this year. Voters showing up to oppose gay marriage—many of whom may not have shown up to vote otherwise—will likely take the extra few moments to vote for the conservative lawmaker in their district as well. With so many sitting lawmakers on both sides of the political aisle retiring from the legislature this year, several races across the state are more wide open than they have been in many years. The outcome could potentially be a Republican majority in both chambers of the General Assembly.

That would shake Tennessee politics to its core. They might even take to calling Capitol Hill “The House That Gregory Built.”