Reforming Reform

Even as it prepares for yet another attempt to ban unregulated soft money in the form of the modest McCain-Feingold bill, the movement for campaign finance reform is further than ever from its goal of getting money out of politics.

That's because passing McCain-Feingold would have little effect in the real world. Much of the $400 million or so in soft money--mostly from corporations and the rich--that deluged Democratic and Republican caches this year would simply be spent in other ways to influence electoral politics. Candidates and political parties would continue to sell their political souls for billions of private dollars in the form of regulated hard money from wealthy individuals and political action committees. More and more outside groups, increasingly representing business and industry coalitions, would continue to air phony issue ads that are really disguised candidate support. These remain perfectly legal given the Supreme Court's view that money is tantamount to constitutionally protected speech.



The tottering system of spending limits, matching funds, and public financing in presidential races--which was dealt a body blow by George W. Bush's $100-million fundraising blitz--may collapse entirely. More self-financed, super-rich candidates are likely to follow New Jersey's Jon Corzine and Minnesota's Mark Dayton into Congress. The courts, ever more receptive to the arguments of campaign lawyers, could continue to open up new loopholes. And the always weak Federal Elections Commission (FEC), now virtually powerless, remains largely incapable of deterring or punishing those intent on abusing the system.

Supporters of McCain-Feingold argue gamely that it would end the ability of big corporate donors to deposit contributions of $100,000, $1 million, and more into party coffers--and that's true. Corporations, along with unions, are barred from contributing hard money (which is also strictly limited by amount), while parties can accept soft money in donations of any size, from any entity, thus allowing unlimited mischief. Still, the bill would have significant impact only if it were a first step toward far more sweeping reforms. And there is a very real danger that people will think something substantial has been accomplished--and that pressure for real changes will dissipate.



Losing Ground

Like a football team whose offense has been pushed so far downfield that its goal has receded over the horizon, the movement for campaign finance reform has lost sight of its desired end result. Except for a few state "clean election" ballot wins (which were not repeated this year), the movement has failed to deliver even a single significant victory on behalf of its constituents in 25 years. Worse, it has lost enormous ground. A quarter-century after the post-Watergate reforms that put the current system into place, advocates have failed to engage Americans on the need for reform. Though voters are wearily aware of the fact that wealthy special interests are routinely guilty of legalized bribery of parties and politicians, rarely if ever have they been mobilized to express their awareness in ways that have practical consequences.



The fact that soft money has become the number one priority for many reform groups is evidence of how much territory has been lost over the past decade. Ten years ago, when soft money was merely germinating and unregulated issue ads barely registered, reform groups lambasted the pernicious influence of money from PACs and wealthy individuals. They reserved particular scorn for "bundling," the odious practice under which legal, $1,000 contributions are gathered into huge chunks of $100,000 or more by a single fundraiser, representing, say, a law firm, an accounting company, a Wall Street house, or a lobbying firm. (Then as now, the entry-level or start-up costs for a congressional or presidential campaign all but excluded those who could not bring huge sums to the table.) All of this is hard money, and it hasn't gone away. A report by Public Campaign in late October showed that over the first 18 months of the most recent election cycle, the politicians and parties collected five times more hard money ($1.3 billion) than soft money ($256 million). And data gathered by the Campaign Finance Institute showed that the hard money cost of winning a House seat in 2000 was more than $825,000, up 26 percent over 1998 and double the levels of 1990 through 1994--with incumbents vastly outspending challengers while being re-elected at a 98 percent rate. McCain-Feingold supporters acknowledge that the fragile consensus gradually building to eliminate soft money--a consensus that includes increasing numbers of political moderates, Republicans, and even some business organizations--breaks down completely when the issue is replacing hard money with public financing or legislating a stop to phony issue ads. So if banning soft money is a first step, it is a small one indeed, and it is not likely to be followed any time soon by additional, aggressive reforms. "We're a little aghast at how much attention there is on soft money," says Nick Nyhart, executive director of Public Campaign, who says that the labeling of soft money as "sewer money" ignores the fact that hard money is not exactly the effluent of a Rocky Mountain spring. "Because soft money is most winnable, somehow people have forgotten that it's just a first step," says Nyhart.



The clearest evidence that the reform movement is adrift is the fact that John McCain has emerged to personify campaign finance reform for the American people. McCain, an ultraconservative demagogue, parlayed his chairmanship of the corporate-dominated Senate Commerce Committee into millions of dollars for his quixotic presidential bid. A strong opponent of public financing of federal campaigns and supporter of "paycheck protection," the misnamed scheme to eviscerate organized labor's political clout, McCain is a Keating Five-tarred politician whose coziness with Washington-based interest groups ought to have made him an example of why the system needs to be fixed. With barely a nod to irony, the onetime bomber pilot managed to seize the issue as a means of getting his long-shot campaign momentarily airborne.



Though McCain's solution is hardly a panacea, the excitable senator did succeed in bringing the evils of the current campaign finance system to the attention of the American public far more effectively than anyone else, including Vice President Al Gore. Indeed, Gore--who'd been saddled with the fundraising abuses of the Clinton administration and who'd engaged in questionable practices on his own--was an unseemly messenger for reform. Though running against a Texas governor who had thrown over a deeply flawed but functional public financing system for presidential campaigns, Gore was utterly incapable of gaining traction on the issue. Despite Gore's support for McCain's soft money ban and despite his halfhearted backing for public financing of congressional campaigns, voters were perceptive enough not to see Gore as a standard-bearer for reform. According to a post-election poll by Stanley Greenberg, a pollster for Gore, just 4 percent of voters cited campaign finance reform as a reason to back the vice president, placing it dead last on a list of campaign issues raised by Gore. "The public focused first on things that mattered to them, like Social Security, education, and health care," says Greenberg, neglecting to mention that voters may have also focused on Gore's aggressive solicitation of hundreds of millions of dollars from industry favor-seekers.



Raising McCain



The reform coalition that backs McCain-Feingold makes three arguments for the bill: that banning soft money is an essential prerequisite for additional reform, that cutting off the flow of soft money to the parties would make them less beholden to contributors, and that the money would mostly stay out of politics. "Until you solve the soft money problem, nothing else is going to work," says Fred Wertheimer, president of Democracy 21. Providing public resources to candidates--whether in the form of public financing, free television time, or postage--would be nearly impossible if big donors were allowed to continue to swamp the system with soft money contributions, he says, pointing out how the presidential system of public financing was flooded with an unlimited stream of soft money to the parties.



Steve Weissman, a lobbyist on campaign finance reform for Public Citizen's Congress Watch, says, "I have seen the parties' soft money determining issues and events." He cites the debates over a patients' bill of rights and a prescription drug benefit in Medicare as just two examples. Because it arrives in such large amounts, he says, soft money has a disproportionate influence in comparison to hard dollars.



Weissman argues that a great deal of what now ends up in party coffers would disappear from politics if soft money were banned. "The donors want to give it to a party," he says. "A party is an officially sanctioned group that can deliver." Besides, he says, much soft money is given because of intense political pressure on the donor by politicians, and that would stop if party officials could no longer dun contributors. "Many donors are being extorted to give money," he says. Agrees Wertheimer: "There's always going to be some seepage. But it's not going to corrupt the process the way it's being corrupted now."



But how effective, really, would a ban on soft money be? Some of the money would surely be redirected. Instead of contributing to the national parties, soft money donors would spend the money themselves on issue ads or create independent front committees to do so. The historical record shows that even a tiny loophole eventually widens under the pressure of money seeking to influence the political system. In fact, that's the history of soft money itself. Soft money began in the late 1970s, when the FEC ruled that state political parties could spend unregulated money on activities like voter registration and get-out-the-vote efforts; it took off in 1988, when the Democratic National Committee began spending funds to aid Michael Dukakis's campaign for president. That year, soft money for both major parties totaled less than $50 million; by 1992 it was $86 million, and by 1996, $262 million. In 2000 the two major parties--and their congressional campaign committees--raised well over $400 million in soft money. Most of that paid for issue ads in a few swing states in the presidential contest and in a few dozen House and Senate races deemed close enough to matter.



Nyhart of Public Campaign is one who believes that a soft money ban would instantly erode. "The system would start to adjust," he says. "In the first go-around, you'd probably see something like 30 percent of the soft money redirected--and it would increase from there, first in a trickle, then a creek, and finally a flood." Larry Makinson, director of the Center for Responsive Politics, adds that many corporations have by now added a soft money line item to their budgets and would likely continue to deploy those funds in other guises if soft money were outlawed.



At the very least, a tight ban on soft money would have to be accompanied by a law prohibiting the kind of unregulated issue ads that have become standard fare during elections. According to the Annenberg Public Policy Center, 30 groups mounted issue advocacy drives in 1996; the total climbed to 77 in 1998 and to more than 125 (as of September) in 2000, involving millions of dollars. These abuses might be halted by legislation crafted to regulate ads that carry the name or likeness of a specific candidate for Congress within, say, 60 days before an election, though such legislation would be immediately challenged as unconstitutional. [See Robert Dreyfuss, "Harder Than Soft Money," TAP, January-February 1998.]



If history is any guide, Congress will avoid action. In 1992 both houses of Congress passed a campaign finance reform bill that included partial public financing of federal elections--but they did so knowing that President George Bush would veto it, and he did. A year later, with President Clinton in office and Democrats running Congress, the legislation was unceremoniously spiked by House Democrats, led by the then-Speaker of the House Tom Foley. Michael Waldman, a former Public Citizen activist on the White House staff who was put in charge of getting Congress to move on reform in 1993, recounts in his memoir POTUS Speaks that when the Clinton administration met with Democratic leaders in the House on the issue, Democratic Representative John Dingell of Michigan growled, "Why are we putting up with all this Nader shit?" Needless to say, the bill died.



Still, advocates are cheered by the fact that the makeup of the U.S. Senate has changed in a way that favors McCain-Feingold. Last session, after enormous pressure was brought to bear on the House Republican leadership, the House passed a soft money ban propelled by Democrats and a phalanx of reform-minded Republicans. But the bill died in the Senate, when Republicans--led by Majority Leader Trent Lott and Kentucky Senator Mitch McConnell--filibustered the legislation and McCain's allies fell seven votes short of the 60 needed to end the filibuster. Even with the addition of several new Democratic senators, it will be difficult to force Senate action. Not only will Lott work harder to corral wavering Republicans, but several key Democrats--such as Robert Torricelli of New Jersey and Dianne Feinstein of California--look askance at a ban on soft money and won't push it.



If McCain-Feingold remains stalled in the Senate, expect a move to water down the bill even further. For example, a provision will likely be added to drastically raise the limits on hard money. In mid-November, McCain signaled his readiness to make exactly that fatal compromise, writing in The Washington Post that he would support "reasonable increases in hard money limits imposed more than a quarter of a century ago." Currently, individuals can give no more than $25,000 in total to candidates, parties, and PACs, and no more than $2,000 per election cycle to any one candidate. Raising those limits, of course, would open the gates to fresh hordes of wealthy favor-seekers. "You don't have to be a rocket scientist to figure out what the impact of raising contribution limits would be," says David Smith, director of public policy at the AFL-CIO. But buzzing around Washington is the idea that if a soft money ban were traded for an increase in hard money limits, perhaps up to a dozen or so additional Republican senators could be induced to vote for the soft money ban.



Not surprisingly, the proponents of that idea--which would transform a somewhat useful bill into a disastrous, Pyrrhic victory for reform--are centered in the business community and allied think tanks. Over the past few years, several corporation-sponsored organizations have emerged to champion a soft money ban. The Committee for Economic Development (CED)--whose biggest backers include Chase Manhattan, ExxonMobil, Ford, Procter and Gamble, and Prudential--is supporting a soft money ban tied to a tripling of hard money limits. The Campaign for America, founded in 1995 by corporate raider Jerome Kohlberg (the former Bear, Stearns executive who co-founded Kohlberg, Kravis, and Roberts), supports a similar coupling of a soft money ban with eased limits on hard money. And so does Michael Malbin, a former Dick Cheney aide who heads the newly created Campaign Finance Institute.



"Either the composition of the Senate has to change or the [McCain-Feingold] proposition has to change," says Malbin. "There are various way to change it. One is to trade off an increase in the amount of money people can give to parties and candidates." By raising those limits, he says, the bill would attract perhaps 70 or more votes in the Senate as more and more Republicans clamber aboard. (Smart liberal Democrats, of course, would clamber right off.) Even BIPAC, the Business-Industry Political Action Committee, which strongly opposes campaign finance reform, has had discussions with the CED about trading a soft money ban for increased hard money limits and won't rule out the possibility of finding common ground on the subject. "I see the rise of soft money as partly attributable to the fact that we have failed to index the limits on hard money," says Greg Casey, president of BIPAC.



Though business groups supporting campaign finance reform might seem like the equivalent of Burglars for Better Home Security, they've been welcomed by Common Cause, Public Citizen, and Democracy 21. "The CED effort has been a breakthrough contribution," says Fred Wertheimer, apparently untroubled by the Faustian bargain offered by the pro-reform business groups. Asked about the idea of raising hard money limits, Wertheimer says, "That's going to be on the table." He believes that whether reform groups will support the idea "will depend on what the numbers are and what the reforms are."



Extortion or Bribery?

One result of the business community's entry into the reform debate is an astonishing, and wrongheaded, reversal of where to point the finger of blame for the corruption that arises from money's role in politics. For many years, it has been standard rhetoric in the reform community to decry the campaign finance system as "legalized bribery," a term that rightfully implies that the donors are the wrongdoers. But guided by pro-business groups and their allies in the think tank community--and inexplicably aided by campaign reform groups--more and more the term "extortion" is used, shifting the blame to candidates and party officials who are imposing themselves on reluctant donors for big bucks. "We have been dunned," says Kohlberg. "Many of us feel that we are being hit up, or shaken down."



An October poll by the CED found that 74 percent of senior business executives say business leaders are pressured to make political donations, and that they "fear adverse consequences for themselves or their industry if they turn down requests" for contributions. According to the poll, three-fifths of the executives support a soft money ban. But are they supporting a plan that would take political power out of their hands? Not likely. Some executives are whining about constantly being bothered by fundraising appeals from elected officials, but they are hardly proposing to eliminate money as an avenue of influence. The discomfort suffered here or there by some corporate executives and wealthy givers only clouds the real point. Money is where the power is, and the politicians are simply going where the money is--and tailoring their politics accordingly.



At least some of the wealthy donors profess to be motivated by enlightened self-interest. If business is perceived as dominating politics too flagrantly, Jerome Kohlberg worries, a potentially serious backlash could result. "They'd legislate against business, and people would hold business in low esteem. It could go all the way to socialism. It can happen here."



Though Kohlberg may sound apocalyptic, resentment about the unfair influence of money in politics is simmering just below the surface of American society. So far, by and large, that resentment has contributed to disaffection, cynicism, disenchantment, and a lack of voting. But three times in the 1990s, conservative demagogues have used it to spark their campaigns--Ross Perot in 1992, Jesse Ventura in 1998, and McCain this year. Liberal and left-wing leaders--including Ralph Nader in his presidential campaign--have so far been unable to use it to similar advantage. But there's no telling what might happen in the event of a serious economic or political crisis. With or without McCain-Feingold, a corrupt and corrupting system will continue apace.



As it stands, the reform movement will likely accomplish little more than tinkering around the edges of an awful system, leaving that system intact to run more efficiently for the donors and the well-funded politicians. Polite, bipartisan calls for good government, couched in the patient tone of a civics teacher explaining the issue to bored students, won't do it. Neither will consensus-building academic reports or study groups supported by overcautious foundations. True reform will take money, political muscle, and the kind of class warfare rhetoric that only rarely surfaces in current parlance.



After all, maybe two-tenths of 1 percent of Americans make contributions of $1,000 to U.S. political campaigns. Give or take a few, that's half a million people. For the sake of argument, let's give them a name: the ruling class. Building support for reform means driving a wedge between that half a million and the vast bulk of Americans who've been disenfranchised by the power of money in politics. It means making millions of people angry that Mercedes-driving, Martha's Vineyard-vacationing, boardroom-inhabiting, lobbyist-employing rich people use their money to intermingle so intimately with elected officials and set Washington's agenda.



Phony campaign finance reform would polish up the rough edges of what we have now, eliminating a few of its worst features but preserving the power of the elite to determine what gets acted on and what doesn't. Real campaign finance reform requires a massive power shift based on class. The test of whether it's any good will be whether or not it brings about a palpable and lasting transfer of raw political power away from affluent donors and the corporate elite to, well, the people.



An early sign of how intense that fight could be was provided by the election results from Oregon and Missouri, where voters overwhelmingly rejected ballot initiatives organized by Public Campaign and its allies, who would have extended statewide public financing of elections beyond Maine, Vermont, Massachusetts, and Arizona. The defeats--in Oregon, 60 to 40, and in Missouri, 65 to 35--came when the reformers, for the first time, ran up against well-funded, organized opposition from the business community. To win in Missouri and Oregon, not to mention in mega-states like Michigan and California and (eventually) in the U.S. Congress, will require money, organization, and grass-roots support, at far greater levels than currently envisioned.



As in the old adage that war is too important to be left to the generals, campaign finance reform is perhaps too important to be left to the reformers. Organized labor is the one institution with the leverage and resources to sustain such an effort--to mobilize progressive leaders and left-leaning politicians and ultimately to convince members of Congress that they have more to fear by refusing to pass reform than by scorning their financial angels. In 1997 the AFL-CIO for the first time endorsed public financing of elections and since then has gradually become more engaged on the issue, helping to finance ballot initiatives around the country in support of the so-called Clean Money reform organized by Public Campaign. "As a practical matter, it's gotten more important for us," says the AFL-CIO's David Smith. "For us, the most important thing is public financing. And it has to be adequate to get people over the threshold when starting a campaign so they can be competitive." But so far, at least, the AFL-CIO has directed the bulk of its resources to fighting its day-to-day battles.



The central paradox of campaign reform is that any reform Congress might pass is probably one we don't want. But if progressives can't use Congress to fix the system, the only alternative is to use the public's awareness of how bad the system is to fix Congress. If reformers try to adapt reform to an increasingly conservative, business-oriented Congress, they can win only changes that, while ultimately meaningless, help to stabilize the system. And it's a money-dominated system that keeps substantive policy reforms out of reach. Progressives can succeed only if they help people understand that what's at stake is not whether America has an equitable system of election financing, but whether or not America will have a progressive tax structure, universal health care, public preschool and day care, fair labor laws, a guaranteed living wage, and much more. ยค

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