Reform You Can Take to the Bank

At its core, the McCain-Feingold bill was about getting rid of soft money. So
far, so good. But as part of the deal, the Senate voted to hike hard-money
limits. The Senate has thus exacerbated the money-and-politics problem. Assuming
that the bill becomes law, we can expect a future in which campaign costs soar,
elite donors tighten their grip on lawmakers, special interests get a bigger
payback from politicians, and incumbents remain entrenched.

So much for the promise of campaign finance reform.

As we have followed the money trail, we have seen how incumbents beat challengers
at the fundraising game. In 2000, Senate incumbents outraised challengers in hard
money by a ratio of nearly 2 to 1, according to the Center for Responsive
Politics. (The gap is even starker in contributions from high-level hard-money
donors, the very ones likely to take advantage of the new $2,000 per-candidate,
per-election limits.) The incumbents raised an average of $1.8 million from
donors of at least $1,000. By comparison, their challengers raised an average of
just $646,000 from this same group of donors. Of the four liberal Democrats who
picked up Senate seats in 2000, two were reliant on huge private fortunes. If
high-level donors give more, as they surely will since the new rules encourage
doing so, it is clear that incumbents will benefit the most.

And the wealthy will dominate like never before. Today the tiny donor class of
people who gave $1,000 or more to a federal candidate comprises only one-eighth
of 1 percent of the voting population. They already get a huge return on their
investment. Most of them give because they have parochial interests in the laws
that elected officials are charged with making. The hike in the amount of hard
money an individual can give to candidates, coupled with a second McCain-Feingold
provision that ups the overall limits that individuals may give to federal
politicians in a calendar year from $25,000 to $37,500, means that a couple with
two children could actually dole out $300,000 over an election cycle. Now that's
soft-money-size influence.

If you doubt that campaign contributors will figure this out, consider what
happens already under the current campaign finance rules. MBNA America Bank is
poised to be one of the biggest beneficiaries of bankruptcy reform legislation
that was recently passed by Congress and is sure to be signed by the president.
Now, follow the money. Charles Cawley, the company's CEO, is one of President
George W. Bush's "Pioneers," the volunteer fundraisers who pledged to raise at
least $100,000 apiece for his election. Overall, MBNA employees, their family
members, and the company's political action committee bundled $240,700 to the
president's campaign--all hard cash. They also bundled $365,725 to members of the
Senate Judiciary Committee, which had jurisdiction over the bill. Altogether,
MBNA contributed about $2.3 million in hard money to candidates and parties in
the 2000 elections. Under McCain-Feingold, there is no question that such bundles
will get bigger.

Multiply the campaign finance power of MBNA times hundreds of industry groupings
and you get a good idea of who calls the shots in Washington. In the 2000
elections, oil-and-gas companies distributed $33 million to candidates and
parties in hard and soft money. Electric utilities gave $19 million. The mining
industry gave $6.6 million. Stack all that money next to the $1.4 million given
by environmental groups and you realize the kind of horrific imbalances that will
result if the contribution limits are doubled. McCain-Feingold doesn't change any
of that.

The incumbent-protection package our elected officials call "campaign finance
reform" does have a silver lining: Once the self-congratulation dies down, the
escalation of raising abuses will help make the case to the American public that
what we need is comprehensive reform of the entire way we finance elections.

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