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The Black, White and Gray of Campaign Finance Reform in the US


by Sophia Barkat




In 1996, the Democratic National Committee, amongst other things, had secretly rented out certain bedrooms in the White House to influential businessmen. Even more, Vice President Gore and President Clinton had also used the White House to call donors to raise soft money. And Clinton had attended 103 teas and dinners with donors to the DNC. 1  In so doing, the DNC and the White House had raised $3 million from questionable activities and illegal sources. 2


Once the news of such activities made headlines, the wrong doings were admitted and the money returned. However, neither the DNC, nor Gore or Clinton were ever tried or anyone brought to justice, even though a Senate Governmental Affairs Committee, the Department of Justice and the Federal Election Commission were involved in the investigation and the Senate and House both had Republican majorities. 3


The obvious question is why?  The answer is an obvious  "why not?"


After all, how do you think State, local and Federal officials get elected? Fact is neither party wishes to truly make campaign finance an honest business. They only want to draw the lines such that they may know how to gray it. Fact is, money and power go together. Those with money always seeks to influence those in power so as to help them make more money. In "Continuity and Change in House Elections" 4, Ansolabehere and Snyder show this quite clearly in their essay, "Money and Office." The essay is an account of how corporate PAC money suddenly lands in the pockets of incumbents in Congress seeking re-election, especially so in the pockets of members and Chairs of Committees and Sub-committees, and House and Senate Majority and Minority Leaders. This happens, irrespective of party affiliation of the members of such committees or who runs the House or Senate. If such funds from corporate PACs are not bribery for favors and are simply campaign finance for re-election why the unusually large monies to those in places of influence over other congressional members?


Opening the can of worms exposes both parties, not one.


The problem is one of institutional Conservatism in the US that allows people in elected places to be influenced by money. Laws, institutions and the like legalize this marriage. Politicized institutions of Law strike down democratic ones striving for fairness. Take the overly Conservative Supreme Court of the 1970s
for e.g – not that it has changed one bit today. It is a major deterrent to campaign finance reform in the U.S. In 1974, just three years after the Congressional Federal Election Commission Act (FECA) first placed spending limits on election campaigns, the Supreme Court threw out all spending limits by FECA in the notorious Buckley vs. Valeo case.


In the ruling, FECA’s spending limits on federal election campaigns was deemed as unconstitutional, being in breach of the First Amendment. Money was now to be legally equivalent to Speech. But is money speech? To an extent, yes. After all, media costs are a major form of campaign spending. Without the media no candidate can win. Since the media offer no free time to candidates, only funding can answer this problem. An obvious solution is to opt for Public Funding, as many Presidents have before the 90s – Clinton, Reagan etc. 5


But the Public Financing System puts limits on how much a candidate can spend, so as to discourage raising money from PACs and other sources, as it matches dollar-for-dollar individual contributions of less than $250 to a candidate’s campaigns. This does not help when media costs keep rising. And between 1976 and 1996 alone, media costs have sky-rocketed. In 1976, the total cost of political broadcast by local, state and federal election candidates advertising was $50.8 million. In 1996, it climbed to $400.5 million. 6  Numbers like these suggest that public financing of Presidential elections is likely to become obsolete, and the illicit role of wealth in politics is likely to stay intact.


It is no wonder that real reform hasn’t occurred. Every time new reforms occur new institutionalized laws will creep up to allow the marriage of money and power to foster.


Take the example of the McCain Feingold Campaign Finance Reform Bill of 2001. It disallows soft money from ever being used in federal elections. In so doing, it has received "Bi-partisanship" status in Congress and is hailed by many as a great reform. But even with the cut in soft money, the 2004 elections are likely to raise more campaign finance than in 2000, when both Congressional and Presidential races occurred last. It is because of the new tax status of Issue Advocacy groups such as MoveOn.org, created in the last decade, the 527 Organizations, which are not considered as political organizations like PACs, and do not have to disclose their source of funding, and which are not yet regulated by Federal Campaign Finance Laws. The result of the 2001 FECA reform has been the mushrooming of issue advocacy groups to fill up the void created by the Bill. The 527 Organizations provide free media advertisements on behalf of issues that election candidates might openly state they take. Indirectly, therefore, they keep on providing money to campaign finances, defeating the McCain Feingold Act’s sole purpose of removing soft money access to federal elections, which specifically bans the use of candidate names in such ads.


There are also many gray areas in campaign finance law, such as those exhibited in the 1996 White House scandal. It raises many questions. Should, for e.g., federally elected officials like Presidents and Vice Presidents be involved in fund-raising for the party – i.e. soft-money fundraising – even if it is never going to be used in federal elections? And how do we know if soft money gets used in federal elections anyway?


After all, campaign finance laws allowed, up until 2001, National and State Party Committees much flexibility about how they spent their money. National Party Committees could spend unlimited amounts of money in voter registration programs before general elections provided that no candidates were named. 7  This could involve media costs for televised debates in which the primary election candidates were given "free", so to speak, exposure by the party. And this exposure could be legal up until the winner of the Primary formally declares himself or herself to be the Presidential Candidate. Pushing back the announcement gives the Presidential candidate some more soft-money to use.


The Supreme Court, quite predictably, has ratified the McCain Feingold Act into law, legally prohibiting use of soft-money in federal elections, and ignored obvious loopholes with the law as previously pointed out. 8


This kind of shuffling around of soft-money is why the McCain-Feingold Act is a weak form of reform. Needless to say, the Congress had no problem passing it. There are gray lines to every reform and they will always be exploited.


And while some laws are gray, others are simply redundant. One very popular form of campaign finance reform is to limit the money that PACs and Advocacy Groups can give in hard money. When limits are raised, the organizations simply give more legally. When the limits are lowered, the same powerful groups simply form new 527 Organizations to channel the money for them. A corporate PAC may not be able to give more than dollar X to a federal election candidate’s campaign, but it can give unlimited undisclosed monies to say MoveOn.org, where individuals and corporations alike are protected by tax-code 527.


Senator McCain (R-AZ), troubled by this loophole, has recently introduced a motion to bring 527 Organizations to order. In a May 11, 2004 press release he announced that the FEC should pass a regulation to curb these organization. 9  He said: "Every day, 527 groups whose purpose is to influence the presidential election are breaking the law. They're spending millions of dollars in soft money to influence federal elections in plain violation of the Federal Election Campaign Act of 1974, and are now using the FEC's inaction to widen a hole in the soft money ban which the Supreme Court just upheld."


Reportedly the FEC is considering passing a motion to do just that. It would be interesting to see what the Supreme Courts decision would be, considering 527 Organizations are not classified as political organizations, and are protected by the First Amendment as far as running ads on issues on TV or radio. Will free speech be protected in this case? And what good would putting limits on expenditures of such organizations have? After all, they can just regroup and multiply.


To address some loopholes and idiosyncrasies of the FECA various other ideas have been proposed by politicians. Vice President Gore, for e.g., proposed that all contributions to federal elections be made directly to a public endowment, set to be $7 billion, from which candidates may drawn finances up to a certain limit. 10


Senators McCain & Feingold in their initial bill tried to get free TV, radio and newspaper time for candidates for Presidential Elections but later opposed the FCC's attempt to mandate it.
11 He said, "While I believe that campaign finance reform is sorely needed and that free television time for candidates is a crucial and key component of any campaign finance reform, only Congress can enact such reform. Mandating free broadcast time cannot and should not be done by a regulatory agency. If the FCC moves forward in an attempt to mandate free TV time for candidates, it would be clearly overstepping its authority. While I am certain the Congress would appreciate any technical advice from the FCC regarding broadcast issues, only the Congress can enact this or any other kind of programming obligation on broadcasters."


This portion of the bill did not find much acceptance in his Republican Majority Congress either. I wonder, why?


There was the Doolittle Bill proposed in the 107th Congress by Rep. John Doolittle (R-CA) which proposed more disclosure but proposed to get rid of limits on contributions or spending, although critics of the Bill say it didn’t propose enough disclosure either. The idea was that since candidates and parties can always find loopholes to laws and limits there was no point in setting any. 12


It is true that while only hard money and soft money contributions of individuals can effectively be regulated, contributions by individuals to issue advocacy groups cannot. It is also true that setting limits on PACs has no long-term effect either. So naturally, the Doolittle Bill had some appeal, though in the end, it also can do very little.


The last most obvious example of campaign finance problems is when officials break the black-and-white laws, hoping to get away with it. Bill Moyers of PBS recently did a show on NOW about this problem. He showed us how Ronnie Earle, the District Attorney for Travis County, Texas, is now investigating Senate Majority Leader Tom Delay (R-TX), in particular one of DeLay's political action committees called "Texans for a Republican Majority," also known as TRMPAC. It's accused of illegally using money from corporations to get candidates elected to state office. The illegal method in question is simply this: TRMPAC as a PAC has limits on how much it can give to state or federal candidates. By avoiding public disclosure he kept the actual donation amount a secret. Apparently, Delay’s methods won the Republicans their first Texas majority in 130 years.  13


The last example is a rather obvious form of dishonesty and legal breach. It is brought on by the fact that there are not enough people to enforce FECA laws, as Ronnie Earle, points out in the transcript of the interview. There in lies a rather interesting institutional problem in FECA. Will we ever have enough people to police the system and how soon can this be, given that campaign finance spending has reached the billion dollar mark?






References:

1.  PBS, Frontline: Washington's Other Scandal, with Bill Moyers, October 1988


2.  Anthony Corrado, "Campaign Finance Reform"  (2000), Introduction.


3.  
Anthony Corrado, "Campaign Finance Reform"  (2000), Introduction.


4.  Continuity and Change in House Elections, edited by Brady, Cogan, Fiorina (2000)


5.  
Anthony Corrado, "Campaign Finance Reform"  (2000),  Chapter: "The Presidential Public Financing System."


6.  
Cantor, Rutkus, Greely, "Free and reduced-rate television time for political candidates", (Washington DC, Congressional Research Service 1997) pg. 5.


7.  
Anthony Corrado, "Campaign Finance Reform"  (2000), Chapter: "An Overview of Campaign Finance Law"


8.  
Anne Gearan (AP Dec 10, 2003), Supreme Court Upholds Key Portions Of New Political Money Law
 

9.  Press Release by Senator John McCain (R-AZ), May 11, 2004, "
McCain's Statement On The FEC’s Proposed Delay On Ruling On The Issue Of 527s"


10.
CNN, Inside Politics: Al Gore Unveils Campaign Finance Reform Package; Politicians Enter the Fray Over Rising Gas Prices (March 27, 2000)


11. Press release by Senator John McCain (R-AZ), Jan 28, 1998, McCain Critical Of FCC Free TV Time Proposal




12.  
Anthony Corrado, "Campaign Finance Reform"  (2000), Chapter: "Options for Reform".


13.  
PBS, Now with Bill Moyers, Transcript: June 11, 2004, "David Brancaccio's Interview with Ronny Earle"







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