Campaign Reform Boomerang

Selling Out: How Big Corporate Money Buys Elections, Rams Through Legislation and Betrays Our Democracy

By Mark Green, Regan Books, 352 pages, $24.95

Campaign Finance Reform and the Future of the Democratic Party

By Jerrold E. Schneider, Routledge, 208 pages, $19.95

Reformers and their adversaries, Democratic and Republican partisans, and editorial writers alike generally make the same error in thinking that campaign-finance reforms will produce predictable political change. In practice, altering the rules governing the financing of campaigns usually works to accelerate whatever trends are already taking place in the political system: Ascendant demographic groups, ideologies and special interests are usually best positioned to capitalize on new rules, while forces in decline often depend on existing institutions for survival.

For the past three and a half decades, the political forces most consistently on the ascendancy have been conservatism and the Republican Party. Both conservatives and the GOP have adapted well to the campaign-finance reforms of the Watergate era and appear to be thriving under the 2002 McCain-Feingold legislation. Indeed, McCain-Feingold has thus far dramatically strengthened Republicans and weakened Democrats, just the opposite of what many of its advocates and opponents expected.

These two books by Mark Green and Jerrold E. Schneider raise legitimate and substantial questions concerning the corrupting role of private money in the financing of public elections. Both go on to make the dubious assertion, however, that adoption of a much broader system of public financing of campaigns would produce a major ideological shift to the left. For Schneider, who teaches political science at the University of Delaware, public financing would explicitly benefit the Democratic Party, which went into decline and moved to the right with the growing need, over the past 40 years, to buy television advertising time. In his view, "effective campaign finance reform" would strengthen not only the Democratic Party but also the economy because Democrats would no longer be pressed to accommodate special interests.

For Green, a former New York City public advocate and an unsuccessful candidate for mayor, money has also blocked enactment of a liberal agenda. "How can we produce smart defense, environmental and health policies if arms contractors, oil firms and HMOs have such a hammerlock over the committees charged with considering reforms?" he asks. "How can we adequately fund education and child care if special interests win special tax breaks that deplete public resources?"

In practice, the groups that Green is most concerned about, from the HMOs to the oil companies to the defense contractors, have become increasingly aligned with a Republican Party that is unambivalent in its advocacy of more military spending, tax cuts and deregulation. Green's analysis is far more applicable to the 1970s and '80s, when virtually every major interest group split donations almost evenly between the Democrats in control of Congress and the more ideologically compatible but weaker Republicans. The steady trend since the Republican takeover of Congress in 1994 has been toward a clearer ideological-partisan division among special-interest groups that arguably encourages clearer distinctions and voter choices between the two major parties and their candidates.

Conflicting conclusions can be drawn from these developments. Some proponents of campaign-finance reform argue that as the Democratic Party has come under pressure to raise ever larger amounts of money, it has abandoned its roots in the pursuit of corporate campaign contributions and is now paying the price of voicelessness in the face of Republican control of the House, Senate and White House. Others argue, however, that campaign money today pushes both parties toward a stronger allegiance to their core constituencies. On the Democratic side, candidates have increased their reliance on well-educated, culturally and socially liberal contributors, while the Democratic Party and its congressional incumbents have turned increasingly for support to labor unions, environmental groups, trial lawyers, reproductive and other rights activists, civil libertarians and Hollywood -- opening up the prospect of renewed vigor as the party sheds its dependence on corporate America. Only time will determine the validity of these analyses.

The expectation that the Democrats would benefit from limits on campaign spending as well as on contributions rests upon the premise that Democrats are the party of the "have-nots" and that the GOP is the party of the "haves." In practice, however, these traditional economic divisions have been weakening steadily. Beginning with the 1968 election, the strongest trend has been the defection from the Democratic Party of white working- and lower-middle-class voters in both the South and the North. More recently, beginning in the 1980s and gaining momentum throughout the '90s, has been the rise in Democratic voting among well-educated and affluent white professionals. Past class divisions are being supplanted by educational attainment and by ethnic-, racial-, gender- and other rights interests -- from gun rights to reproductive rights to civil rights. In addition, religious conviction increasingly determines partisan identification: The more religiously observant a voter (as measured by church attendance), the more likely he or she is to cast a ballot for a Republican.

Both Green and Schneider make strong points, but blaming the troubles of the political left (or right) on the evils of campaign money is facile. The problems of the Democratic Party and of liberalism have emerged at a time of widespread economic and sociocultural upheaval, and the notion that a change in campaign-finance law by itself will correct those liabilities is fanciful.

In addition, the history of campaign-finance reform over the past quarter-century does not provide grounds for the two authors' confident predictions of outcomes. The campaign-finance laws enacted in 1974 and 1976, during and immediately after Watergate, were highly successful in one respect: They increased the transparency of campaign financing. These same laws, however, encouraged the legal institutionalization of special-interest contributions by encouraging the creation of political action committees (PACs). Access to clients' PAC money, in turn, has become an indispensable tool for many of the lobbyists who work Capitol Hill.

More recently, there has been the 2002 enactment of the McCain-Feingold bill, a measure both authors praise but view as too small a step. No serious attempt to sort out the ideological and partisan effects of McCain-Feingold can begin until the 2004 elections are complete. And the Supreme Court, which will soon hear arguments on the constitutionality of the bill, will almost certainly alter the measure.

Thus far, however, the consequences of McCain-Feingold have been strongly in favor of the Republican Party and particularly beneficial for the presidential campaign of George W. Bush. The major thrust of McCain-Feingold was to prohibit the national, senatorial and congressional parties from raising and spending "soft money" -- the large contributions, often in excess of $1 million, from corporations, unions and rich people. In theory, the soft-money prohibition would work against the interests of the GOP, the party of the wealthy and of corporate America.

In fact, the single area of campaign finance where the Democratic Party has achieved parity with the GOP has been in the now-banned mega-dollar, soft-money competition. In 2000 and 2002, the Democratic Party organizations raised, respectively, $245.2 million and $245.9 million in soft money, almost exactly what the Republican Party raised ($249.9 million and $250 million). In terms of smaller and still-legal "hard money" contributions, by contrast, the Republicans crushed the Democrats, raising a combined total of $867.8 million to the Democrats' $495.4 million during 2000 and 2002. So far this year, with Republicans in full control of the federal government and with soft money banned, the disparity has grown even larger. Through June, the Republican National Committee had reported raising $54.6 million, compared with the Democratic National Committee's $18 million, a ratio of 3.3-to-1.

Schneider argues for a sharp reduction in the maximum an individual can contribute, from the current $2,000 to a candidate and $25,000 to a political party down to $50 -- again, in theory, a cut that would be more painful to the GOP than to the Democrats. In practice, however, that is not the case. While the Federal Election Commission does not require separate reporting of $50 and smaller contributions, it does provide a measure of donations under $200, listed in the party reports as an unitemized lump sum. At this relatively low level, the Republican advantage is even greater, 3.7-to-1 in the case of the Republican National Committee and the Democratic National Committee, which, through May this year, had received $31 million and $8.4 million, respectively, in donations of less than $200.

The Center for Responsive Politics in June of this year conducted a study of the partisan split of campaign contributions of all sizes in the 2001-2002 election cycle. There was one clear finding: The lower the level of contribution studied, the better the Republicans did. Among donors of $1 million or more, the Democrats had a 12-to-1 advantage, $48 million raised compared with $4 million by the GOP. Among those giving between $100,000 to $999,999, the parties were virtually even, the Democrats raising $40 million, the Republicans $39 million. At all levels below $100,000, the Republican Party had the edge, and that edge grew steadily as the contribution level declined. In other words, the large soft-money contributions now banned by McCain-Feingold had, in fact, functioned to lessen the Republican financial advantage.

Both Schneider and Green view McCain-Feingold as a first step toward reform, lacking the crucial element of substantial public financing. But this begs the question that must be addressed by proponents of campaign reform: If a little reform tilts politics to the right, what would a big reform do? In fact, the political consequences of tinkering with the campaign-finance regime are difficult to predict.

More importantly, the idea that campaign-finance reform will solve the problems of the Democratic Party and of liberalism avoids addressing the much more substantial problems facing Democrats today. These issues include dealing with the aftermath of the civil-, women's- and sexual-rights revolutions that together have fundamentally changed the meaning of liberalism and conservatism. In addition, Democrats must face the challenge of developing social policies that are effective and do not have negative repercussions in a global economy. Most Democratic and liberal initiatives on the domestic front -- welfare spending, pro-union laws, environmental and workplace regulation -- are premised on national, not global, economics. Global competition has imposed substantial competitive costs on these policies.

Finally, there has been a profound shift in the character of the money used to finance political campaigns. Driven in large part by an aggressive conservative movement and its allies in Congress, the major institutional sources of campaign money have increasingly abandoned what many liberal reformers view as a primary source of legalized corruption: the giving of money to everyone in office to win votes and loyalty regardless of party. At the core of both Schneider's and Green's arguments is the conviction that the seeking of support from corporate America has distorted the Democratic Party and its candidates. But the most important trend in campaign finance, especially in House and Senate elections, has been the steady abandonment of the Democratic Party and its candidates by major segments of corporate America.

Part of this trend results from the fact that the Democrats are out of power. But just as important is the reality that the Republican Party has become aggressively and unashamedly pro-business, welcoming votes on workplace deregulation, tort reform, energy policy and a host of other issues that demonstrate virtual unanimity on the Republican side of the aisle. These trends have been accelerated by the intense pressure on business contributors exercised by top Republican leaders of the House, especially Majority Leader Tom Delay (R-Texas), and by conservative strategist Grover Norquist, whose "K Street Project" has sought to force the hiring of Republicans to run the major trade associations and lobbying offices and to persuade these interests to give the lion's share of their contributions to Republican candidates.

As a result, the trend in campaign contributions has been distinctly away from the "buying access" strategies of the 1970s, '80s and through much of the '90s to a clearer and more consistent ideological and partisan division of the special-interest community. Major segments of business -- especially pharmaceuticals, mining, oil and gas, defense, commercial banking and accounting -- have basically made a decision to back the GOP, with many other industries moving in that direction. The Democratic Party and its candidates are increasingly dependent on three core sources of money: unions, especially public-sector unions; trial lawyers; and Hollywood and the entertainment industry generally.

These contribution patterns may not represent the perfect solution to the problem of money in politics, but they do suggest that money has become more ideologically consistent. In many respects, the agendas of labor unions, trial lawyers and Hollywood coincide with the general agenda of the Democratic Party and do not violate fundamental party principles.

The same argument applies, at least in part, to the major sources of soft money. In the 2001-2002 election cycle, during which soft money was legal, eight of the top 10 soft-money donors were Democratic givers. Five of them were unions, giving from $3.5 million (the American Federation of Teachers) to $6.6 million (the American Federation of State, County and Municipal Employees). The other three donors were Haim and Cheryl Saban, $9.3 million; Fred Eychaner, $7.4 million; and Stephen L. Bing, $6.7 million. This is fundamentally ideological and partisan money, contributions from men and women who have made fortunes, believe in a culturally and economically liberal and Democratic agenda, and are not seeking special favors. If anything, predominant Democratic views on capital-gains-tax rates, the estate tax and the top income-tax rate are adverse to such donors' own interests.

The future direction of campaign-finance law and regulation is uncertain, although prospects for the kind of public financing initiatives Schneider and Green propose are currently nil. The McCain-Feingold bill is the law of the land through the end of this year. The Supreme Court on Sept. 8 will hear arguments on the constitutionality of the measure, and the court is expected to rule toward the end of 2003 or early in 2004. Whatever it decides will govern campaign fund raising and spending until Congress acts again. Unless the court takes a step that sends both parties into a tailspin -- an unlikely prospect -- there is very little likelihood of further congressional action in the near future.