Monday, September 7, 2009

Campaign (corporate) financing


On Wednesday the Supreme Court will be hearing arguments in a case, Citizens United v. the Federal Election Commission. Originally the case was about a conservative group suing the FEC so as not to have to disclose who financed a film they made and distributed last year. Since the film was "political" (i.e. sharply critical of Hillary Clinton), the question is re the requirements of the McCain Feingold Act.

However, rather than deciding the narrow case, the justices scheduled arguments for hearing "whether the law itself raised constitutional questions and it said it would reexamine a 1990 decision that said restricting corporations from spending money from their general treasuries to support or oppose political candidates did not violate constitutional guarantees of free speech." A number of people are concerned that the justices will take advantage of this opportunity to overturn the ban on direct corporate contributions to political campaigns.

Good! This blogger has long argued for a system that allows for unrestricted (more or less) contributions as long as there is concomitant disclosure (for example, see OPED20 from March of 2002, reprinted below). However, those who are in favor of campaign finance restrictions are up in arms over this anticipated "judicial activism" and are predicting disastrous consequences. They don't seem to realize that no matter what laws are passed, the moneyed interests and politicians will find a way to get together! "Political action committees", "Soft money", "527 groups", etc., sound familiar? How else did expenditures in the last presidential election cycle easily top $1 Billion for the first time (see graphs above)?

Justices to Review Campaign Finance Law Constraints
A test case for Roberts
Citizens United v. Federal Election Commission at SCOTUSBlog
Citizens United v. Federal Election Commission at Scotuswiki

OPED20 Campaign Finance 'Reform' (reprint from March 2002)

A hot topic in the news is campaign finance reform. The McCain-Feingold-Cochrane Campaign Finance Reform Bill - Senate S27, has passed the Senate, while the Shays-Meehan Bipartisan Campaign Finance Reform Act - House HR 2356 - passed the House in February. Both these bills aim to regulate campaign financing by eliminating 'soft money' donations, and imposing other restrictions.

Since Shays-Meehan is slightly different from the Senate version discussions are back in the Senate. Senator Daschle has vowed to get it through the Senate by 3/25, Republicans (led by Mitch McConnell, R-KY) are resisting and threatening a filibuster.

Do a Google search

The passage of these bills was helped by revelations of Enron's massive political contributions, even though these paled in comparison to union contributions - In the 2001-2002 election cycle Enron ranked 33rd in soft money contributions, while in the 1999-2000 election cycle it ranked 15th in soft money contributions. (The AFSCME was on top in both of these cycles, the SEIU was once second and once third in the rankings, while the CWA was 6th in both cycles.)

Instead of fighting the "villain du jour" (today it is soft money, a few years ago it was Political Action Committees...) with restrictive and constitutionally questionable laws, we should ease restrictions on campaign financing but subject all financing to the light of day, a sort of Regulation FD for the political industry. The following is a suggested outline for a campaign reform system:

  • Raise hard money contribution limits to $20,000 per donor per phase of the election cycle (i.e. a donor could contribute up to $20,000 in the primary, and then $20,000 in the general election).
  • Cap soft money contributions at $100,000 per person or $500,000 per organization per phase of the election cycle. Thus the total amount of money an individual may contribute in aggregate would be $240,000 in a single year. There would be no exclusion for self-financed campaigns.
  • Every candidate would need to have a web site listing every contribution received with donor information. This would be the name and state of every individual donor, and the name of every organization (with industry classification and membership information, so that an organization can not be used as a front to avoid disclosing donors' names). Information for every contribution would have to be available on the web site within 24 hours of depositing donor checks. The web sites would be standardized so that they would be identical for all candidates, and would be indexed and searchable by amount, donor, state, organization, industry, etc. With immediate full disclosure, all sources of campaign funding would be fully transparent and available to interested individuals, the media, and the politicians' opponents (potentially to be used as a campaign issue...) To ensure compliance with the listing requirements, every infraction (no matter how small) would result in a $500,000 fine payable within 2 weeks. If the politician could not pay the fine within the deadline then he/she would be stricken from the poll.
  • All contributions to any post-election 'transition' activities and celebrations would be banned. While contributions to candidates can be considered 'at risk', contributions to the person who has won the election are more likely to be made to ensure 'access'. Being post-election this ban should avoid 'free speech' constitutionality problems.

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