Overview of Presentation on Campaign Finance Reform

Plugging Leaks in the Dam: The Future [and Past] of Campaign Finance Reform and the Effects of Money in Federal Elections

A prefatory note: Andrew Milstein, HWS Instructor, delivered a talk at Geneva LWV Luncheon (April 3, 2007). The following information was compiled from Prof. Milstein's notes and is in a rough format. If you are interested in a more extended or "clean" format, please contact him at Milstein [at] hws.edu. E-mails to continue this public dialogue are also highly encouraged.

Introduction

• Unchecked power is unhealthy in a democracy.
• In our political system, money equals power, influence and, if not outright corruption, at least unequal access.
• A firm belief in a public interest, that people deserve to know where money is coming from with our elected officials (or those seeking the job) and where it is going.
• A belief that there should be some sort of an equal playing field so that elections don't merely go to the highest bidder.

Recent Elections

2000 - Dynamics of White House race changed when George W. Bush decided early on to forego federal matching funds in order to raise & spend unlimited sums of money during the primaries.

• In the first six months of 1999 alone, Bush raised more than $37 million. This was four times the amount that Clinton/ Gore reported during the same period in record-breaking 1996 cycle and more than any previous candidate had ever collected in a pre-election year. By end of the primary season, Bush exceeded the $100 million mark, a first in presidential politics. Final amount raised was $193 million ($67.5M in Federal Funds).

2004 - Bush $367M ($74.6 in matching funds) and Kerry $328M ($74.6M also in matching funds). These numbers don't include spending by political parties or advocacy groups.

Congress - 95% of House races and 91% of Senate races were won by the candidate who spent the most money.

• Most expensive race in Senate - NY Senator Hillary Clinton raised $57M and spent $47M for an uncontested race!
• Second most expensive - A Republican Incumbent in Pennsylvania spent $46M on a losing campaign!
• Most expensive race in the House - Florida's 13th district with $11M!

History

• Unlimited individual contributions.
• Nixon & McGovern raised $27M from fewer than 200 individuals.
• No public disclosure.
• Two factors led to change: (1) Watergate and (2) Democrats sought to level the playing field with Republicans who regularly raise more money.

Federal Election Campaign Act 1971 (FECA) and series of Amendments ('74, '76, '79, Buckley v. Valeo, '78) brought about four major changes:

• Disclosure: Money flowing to and from campaigns, including loans, now triggered at $250 for donors.
• Contribution Limits: Individual spending limits (continually changing)
• Expenditure Limits: As long as it is voluntary and tied to public funding (tax returns).
• Candidates can qualify to receive federal matching funds if they raise at least $100,000 in individual donations, with at least $5,000 collected in twenty different states.
• Then individual donations up to $250 are matched by the federal government from the pool of money created from the check off box on IRS returns ($3.00 per taxpayer).
• Candidates who accept federal money must agree to abide by a spending limit in the nomination campaign.
• Established a Federal Election Commission (FEC) to monitor this (3D/3R nominated with Consent)

Result: Loopholes

• Allowed for the formation of PACs in which group members, employees, stockholders, etc., can pool resources for higher contribution. PACs are more noticeable than individual contributors.
• Soft Money: Unlimited amount to political party for party-building activities.

Bipartisan Campaign Reform Act 2002 (McCain-Feingold) (BCRA) went into effect November 6, 2002.

• Raised individual limits (from $1000 each election cycle to $2000 each election cycle...raised to $2300 in '07)
• Raised Overall limits:
• $37,500 per cycle to candidates
• Individual. contribution to national party committees increased from $20K to $25K ($28.5K in '07)
• Total contribution limit increased to $97.5K ($108,200 in '07)
• $57,500 per cycle to all national party committees and PACs (breaks down to $20,000-$57,500 per cycle to all national party committees and maximum $37,500 per cycle to PACs)
• Banned soft money unlimited solicitation and distribution by national parties
• Limits issue advocacy ads in which candidates are named less than 30 days before primary and 60 days before general elections
• Forces candidate to "Approve this message" 

Loopholes fixed: only Soft Money.

New Leaks in the Dam

1. Weakened Parties - Gave power to 527s (named after section 527 of IRS tax code, exempts groups with assets in non-interest bearing accounts from reporting anything about their organization to the IRS...Moveon.org is the example. Groups or individuals can fund PAC and avoid limits and disclosure by spending money in a 527.

• Started by Citizens for Better Medicare: mobilized by pharmaceutical industry to block price controls for prescription drugs!
• Using an innocuous name: Foundation for Responsible Government; American Family Values Committee for Good Common Sense; Coalition to Make Our Voices Heard; Swift Boat Veterans for the Truth

2. Allows Bundling - individuals can group donations together to produce larger contribution

• President Bush has mastered this and turned into a hierarchical structure with titles and levels. For example, "Pioneers" bundle $100,000 in $1,000 increments and "Rangers" bundle $200,000. Donors are reported to the President and RNC.

• And that's not all. Bush campaign also appears to be one of the first campaigns to actively keep track of which industries and companies are among its top donors. Newsweek Magazine in January reported that the Bush camp assigned "tracking codes" to checks to help industries monitor how well they were doing underwriting Bush presidential ambitions.

Problems

1. Candidates are opting out of public financing in primary elections, and the general election is not far behind.

• George W. Bush was the first to do so and win. In 2000, Bush raised more than $95M for nomination alone, two-thirds before start of the election year. John Kerry refused it too! Both returned for General Election.

• Hillary Clinton has already declared she will opt out of public financing in both primary and general elections. On 4/2/07, she announced that, in first quarter, she raised $26M plus $10M from her Senate Campaign...more than Bush had at the six-month point!

• Mitt Romney is at $23M...Giuliani $15M...McCain only at $12.5M...Brownback $1.9M (but 575K from Senate Campaign)...Huckabee $500K

• FEC believes two candidates who reach Election Day in 2008 will raise more than $500M apiece! Including other primary candidates, total spending could top $1 Billion!

2. The Primary schedule has been moved, making the process much shorter (Super Duper Tuesday is likely to determine the winner by Feb 5 or soon after). No more Bill Clinton, Ronald Reagan, Jimmy Carter.

3. Rise in issue advocacy: groups run ads on single issue.

Solutions to This Problem

1. Public Financing: Complete or Required Partial

• The Fair Elections Now would provide candidates for the U.S. Senate the option to forego private funding of their election campaigns by choosing to participate in the public financing system. The system would also provide candidates with vouchers for purchasing broadcast airtime.

• Free Air Time: Bipartisan Campaign Reform Act (McCain-Feingold-Durbin Act) requires TV and Radio broadcast stations to provide free air time to candidates and political parties for political debate before elections.

• BUT: In 1993, the "Check the Box" tax donation was increased to $3 for individuals/$6 for joint returns.
• However, the portion of taxpayers who "check the box" has dropped. In 1978, 28.6% did so. In 1999, only 10.4% checked the box. Now the percentage is below 10%.

• Put Your Tax Dollars to Good Use - Level the playing field with the Presidential Election Fund
• Did you know that by checking a box on your federal income taxes, a contribution of $3 is given to the Presidential Election Campaign Fund? No money is taken from your return, but this fund ensures that the voices of people like you and me can be heard over the voices of corporations and special interest groups.

2. Free Media

• Airwaves are free to corporations that own them, why not tell them to give back.
• some experimentation in `96 and '00, but no one pays attention...
• Broadcasters, a powerful lobbing group, will fight this. The amount of money taken from elections is stunning on every level.

3. More limits on private expenditures? This would hurt lesser known candidates the most...incumbents and famous people are already known...free speech issue.

4. Greater Openness - Keep sunshine on the process! Attorney General Cuomo's Project Sunlight to use internet to track donors, lobbyists, state contracts, etc.

At some point people have to get fed up with the wasted resources, the type of candidates we get, and the decrease in content.