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Congress for Sale: Ending Campaign Finance Corruption

By David Lytel

August 2000

Can anyone who reads a newspaper doubt that Senator John McCain is right when he calls our current campaign finance system "corrupt"? The only reason his observation is news is that it is a breathtaking admission of honesty from a Republican, which is rare enough to be newsworthy.

Voters 40 years old and older can remember the legendary scandals of the Nixon Administration. Awash in money – much of it delivered in suitcases of cash to the nation’s top elected officials and law enforcement officers – the corruption of Nixon’s re-election campaign only came to light because of the bungled burglary of the Democrat’s headquarters at the Watergate office building. Today’s campaign finance regulations come from that era and are about as out of date as disco and paisley shirts. The 1974 Federal Campaign Act Amendments, which created the Federal Elections Commission, were the first comprehensive regulation of campaign finance in national elections. For the first time campaigns were limited in how much money they could accept and from whom.

Regretfully, this hesitant and limited first step has been eroded by politicians, parties, contributors and the courts over the years so our election laws keep getting weaker all the time. In a victory for the rich, the Supreme Court ruled in 1976 that spending limits were unconstitutional limits to free speech. Worse, a 1996 decision allowed “soft money” (unlimited funds given to parties to be used for party-building activities) to be used for television advertising.

This led directly to the parties raising and spending even more of this “party-building” money on “issue advocacy ads.” They do not count as federal election spending because they do not directly advocate election or defeat of a federal candidate, but most television viewers can hardly tell the difference. This legal loophole in campaign finance regulations has turned into a giant gusher of cash and is far more crucial to political corruption than overtly illegal fundraising from foreign sources, which received so much attention after the 1996 election.

The nation’s campaign finance laws are so riddled with loopholes that they have become little more than guidelines for candidates and parties.

Even though campaign spending and soft money abuses have been well publicized by the media, the many attempts at reform throughout the 1990s and today have failed. It has not been for lack of trying by the brave few who would resist today’s system of financing politics.

Almost all Democrats in Congress support campaign finance reform. The best known effort is the McCain-Feingold and Shays-Meehan bill, which is bipartisan bill originally sponsored in the 105th Congress by Senators John McCain (R-Ariz) and Russell Feingold (D-Wisc) and by Representatives Christopher Shays (R-Conn) and Martin Meehan (D-Mass). This bill calls for a ban on soft money, a ban on contributions from foreign nationals, a ban on the use of postal franking privileges for mass mailings by members of Congress seeking re-election, closer monitoring of independent expenditures and prohibits bundling.

Most Republicans do not support this bill, since they know they cannot hope to retain control of the House and Senate without the advantage that money provides. Republicans also do not support this bill because it limits individual contributions. What they seek is a bill that places limits on labor union activities without putting controls on their corporate patrons.

If Democrats controlled Congress and the White House this bill wouldbecome law, which would be a huge step toward restoring public confidence and political competition.

While the McCain-Feingold and Shays-Meehan bill has heavy Democratic support and little Republican support, the Republican counter-proposal is to eliminate contribution limits altogether. Republicans claim that campaigns are not over funded and want to further open the floodgates of campaign funding. They would allow for unlimited fundraising and spending, with the only stipulation being full disclosure of contributors. This plan does little to address soft money abuse and heavily favors Republican candidates and their big business backers.

Remarkably, the growing public disgust with campaign finance abuse has led legislation closing one recent and egregious loophole -- "Section 527" organizations, also known as "stealth PACs.". Drawing their name from a section of the tax code, 527 organizations operate like PACs except they do not have to report their spending and conributions. This loophole has allowed corporations and the wealthy to spend millions to influence recent elections.

As public outrage over these "stealth PACs" grew, even the Republicans had to support calls for reform from President Clinton and Vice President Gore.

Gore's Plan versus Bush's

Al Gore’s proposal for campaign finance reform follows the line of Senator McCain’s bill, which Gore has urged the Senate to adopt. In addition, Gore has called for creation of “The Democracy Endowment” which would be very similar to a university endowment. The Democracy Endowment would raise $7.1 billion within a seven-year period, after which the interest from the investments would be used to finance the campaigns of general election candidates who agree not to accept any other sources of funding. Gore, like McCain and Feingold, believes that the issues and the character of the candidate should be what determine elections -- not money.

While Gore looks to even the playing field, Bush’s reform plan is an attempt to have something to say about a hot political topic while maintaining the status quo. Bush’s plan would ban soft money from labor unions and corporations, raise individual contribution limits and enact instant disclosure of contributions. Bush’s plan does very little to slow fundraising abuses. His plan to ban soft money only applies to unions and corporations and does not entirely do away with it. Worse, his plan raises individual contribution limits which is meant to facilitate a process known as "bundling" in which wealthy corporate executives make contributions on their own personal accounts but bundle them together so the political recipient knows which corporate interest is being truly represented, without actually breaking the law.

So how are we going to get meaningful campaign finance reform? Only with a Democratic Congress and a Democratic President.