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Public Financing
By Jafreen Uddin – 08/11/08
Given the recent slew of politicians being caught and investigated for accepting inappropriate donations and favors from special-interests, it is no surprise that the presidential candidates' fundraising strategies are getting a closer look. Large donations—and the motives behind them—are a murky issue, though hardly a partisan one; for every
billionaire hedge-fund manager who raises more than $100,000 for Sen. Obama, there is an
oil-trading company owner who bundles over $50,000 worth of contributions for Sen. McCain.
With bundled donations, special-interests can sidestep the contribution limits in campaign finance laws by allowing one individual to collect money from a variety of sources, thereby "bundling" the small donations into one large sum and delivering it to a candidate. It is no surprise that the collector in this scenario (or what the New York Times in an important editorial today aptly called the "hunter gatherer") can use this method of fundraising to their advantage, bringing in the usual suspects of special access and favors to the world of campaign finance. By controlling the contributions of many different donors, the bundler has more power (and a larger sum of money) than if he or she donated alone.
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Tags: Democracy, Campaign Finance Reform, Contribution Limits, Disclosure, Public Financing
By Michael Waldman – 06/20/08
An edited version of this posting appeared as a guest post on the Anderson Cooper 360 blog June 20.
Barack Obama's decision to opt out of public funding for the general election is not a surprise. It was so well telegraphed, he should take out a patent.
The presidential public funding system worked well for three decades after it was enacted in the early 1970s. It leveled the playing field, boosted competition and reduced corruption. Think of it this way: in the first five elections under presidential public funding, a challenger beat an incumbent president three times. There's no congressional district in America with that much competition!
But the presidential system needs repair, for reasons among those prompting Obama to turn away the federal funds. Principally, candidates simply don't get enough money to mount a fully strong race in a modern election. The amount, when it was set, was about two thirds of the amount spent by the McGovern campaign of 1972—in other words, two thirds of the least successful presidential campaign in modern history!
The real question is what will Barack Obama—or John McCain—do to reform the system when one of them takes office?
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Tags: Democracy, Campaign Finance Reform, Contribution Limits, Other Reforms, Disclosure, Public Financing
By Bethany Foster – 05/09/08
Cross-posted from Gavel Grab
As Bert Brandenburg noted earlier this week, the Fourth Circuit delivered some good news for public financing advocates last Thursday by unanimously upholding North Carolina's system of public funding for judicial campaigns. This is a major victory for citizens concerned about fair and impartial courts.
The North Carolina decision is one of multiple recent developments on the public financing front. On the same day that the Fourth Circuit issued its decision, plaintiffs in Arizona filed an amended complaint against the matching funds provisions of that state's public funding program for statewide and legislative races. The case is back in the District Court after going up to the Ninth Circuit and then getting remanded.
Finally, in late March, a federal district court judge dismissed the core challenges to Connecticut's public financing law, ruling that the matching funds provided by that system do not violate the free speech rights of non-participating opponents and independent spenders.
Read the rest of this post here.
Tags: Democracy, Campaign Finance Reform, Public Financing, Fair Courts
By Laura MacCleery – 04/24/08
Cross-posted from The Nation web site.
The US Supreme Court heard oral arguments Tuesday in a campaign finance case,
Davis v. FEC. This Court has had a rather ominous track record on
campaign finance reform since the appointment of Chief Justice John G. Roberts
and Justice Samuel Alito, and the Court's reactions to the argument do not bode
well for those who care about limits on the role of money in politics.
The lawsuit concerns an obscure area of a major federal law enacted in 2003,
the Bipartisan Campaign Reform Act (BCRA). But given the Court's considerable
hostility to rules on campaign finance, demonstrated by two recent, closely
decided decisions on contribution limits in Vermont and issue advertising in
campaigns, the argument was yet another important sign of where the Court is
headed on campaign finance matters.
A two-time-losing federal "millionaire" Congressional candidate, New York
businessman Jack Davis is challenging the so-called "Millionaire's Amendment"
section of BCRA, which relaxes various contribution limits for opponents of
candidates who intend to spend more than $350,000 of their own money on a
campaign for federal office....
> Continue reading this piece at the Nation.com
Tags: Democracy, Campaign Finance Reform, Contribution Limits, Public Financing
By Maggie Barron – 04/23/08
More information emerged yesterday about the scope and scale of
the "small donor revolution." The Campaign Finance Institute released data on
individual donations to presidential candidates—large and small—which
suggests that despite the fanfare surrounding small donors, "the cumulative
bottom line for all campaigns so far has shown only an incremental, though
significant, change in the overall balance between small and large donations." In other words, if you take all presidential
candidates from both parties into account, not just Clinton and Obama, this
election has not dramatically tipped
the scales towards small individual donations after all.
From January 2007 to March 2008, 34% of donated dollars came in
amounts less than $200, versus 27% for the same period in 2003–4. It's a
significant increase, to be sure, but perhaps not the "revolution" that many
have suggested—and certainly not the "parallel
public funding system" that Obama has described.
This is not to
say that small donors are not an asset for campaigns. For example, a
full 52% of McCain's individual donations come from $2300 contributions (the
limit), whereas they make up only 8% of both Clinton's and Obama's totals. This
means that a large chunk of McCain's donors have "maxed out," while the Dems
can continue to return to their donors for more support. This allows donors to
stay engaged throughout their chosen candidate's campaign. Says one Obama
supporter quoted in the National
Journal, "Every time my husband and I are going to go out to dinner, we
figure the average cost is about $80, so we just donate it to Barack instead."
McCain, who is expected to
accept public financing for his general election campaign, will have to
depend on his supporters making donations directly to the RNC, which has a
whopping individual contribution limit of $28,500.
CFI also provides comparisons to previous elections. It's
interesting to note that in 2000, 40% of McCain's individual donations came
from small donors, while in this campaign small donations account for only 23%.
We have a lot to learn still about what this data means as
campaigns play out. Remember that CFI is counting donations, and not donors. And
on Election Day, every vote counts the same, whether it is cast by a small
donor or large.
Tags: Democracy, Campaign Finance Reform, Contribution Limits, Public Financing
By Ciara Torres-Spelliscy – 04/21/08
Cross-posted from the ACS Blog
April 22, the Supreme Court will
hear oral arguments in a case testing the constitutionality of the so-called
"Millionaires' Amendment" of the Bipartisan Campaign Reform Act ("BCRA," also
known as "McCain-Feingold"). The Millionaires'
Amendment passed in 2002 as part of a reform package to update and improve the
nation's campaign finance laws.
The Millionaires'
Amendment,
somewhat
levels the playing field for opponents of self-financed candidates who plan to spend
$350,000 or more of their own money on their campaign for federal office. Once a candidate for federal office spends
more than $350,000 of personal funds on a campaign, their opponent
will be allowed to raise private funds in amounts that are triple the normal
limits—up to $6,900/person/election—and can coordinate additional expenditures
with his or her political party, up to a cap.
The Amendment also requires certain financial disclosures from both
candidates so that the FEC can monitor when the cap has been reached. In all cases, the self-financed candidate can
spend as much money as he or she desires.
The law was
challenged by Jack Davis, of New York,
who alerted the FEC that he intended to spend $1 million dollars of his own
money in his 2006 run for Congress. In
the case, he argues that it is unconstitutional under First and Fifth
Amendments, and
claims that the additional benefits for his opponents chilled his own
speech.
Mr. Davis lost
on all counts in the lower court, which
found that the Millionaires' Amendment did not burden his speech since it "places
no restrictions on a candidate's ability to spend unlimited amounts of his
personal wealth to communicate his message to voters, nor does it reduce the
amount of money he is able to raise from contributors."
Instead, the court
held, the statute merely "provides a benefit to his opponent, thereby
correcting a potential imbalance in resources available to each candidate." Thus, the statute "preserve[s] core First
Amendment values by protecting the [opposing] candidate's ability to enhance
his participation in the political marketplace." The court also rejected Mr. Davis's equal
protection argument, because he had failed to show that Section 319 treats
similarly situated persons differently. It
is this opinion that Davis
seeks to overturn in the Supreme Court. The Brennan
Center for Justice submitted
an amicus brief in support of the FEC's
position.
The Davis case has
its roots in the seminal case of Buckley
v. Valeo, which (in)famously stands for
the proposition that money is speech. What
Buckley actually says is,
A
restriction on the amount of money a person or group can spend on political
communication during a campaign necessarily reduces the quantity of expression
by restricting the number of issues discussed, the depth of their exploration,
and the size of the audience reached. This is because virtually every means
of communicating ideas in today's mass society requires the expenditure of
money.
242 U.S.
1, 19 (1976). Buckley stuck an uneven balance that we have been living with ever
since. It is constitutional to regulate
political contributions but it is unconstitutional to regulate expenditures, including
expenditures by a wealthy candidate on his own candidacy. Despite the fact that most self-financed
candidates end up losing their elections for lack of a strong base of support
among voters, post-Buckley,
self-financed candidates, who can make a huge media buy with a single check,
have often had a demonstrable funding advantage over other candidates, who must
gather hundreds of small contributions before making a similar advertising purchase. As races for Congress have grown more
expensive over time, parties have increasingly turned to candidates who can
afford to self-finance to run for election.
This trend could discourage candidates of lesser means from running for
office. The Millionaires' Amendment was
a response by Congress to this Buckley-inspired
doctrinal inequity.
This case will
be a key test of how hostile the Roberts Court has actually become to campaign
finance regulation on the heels of 2006's
Randall v.
Sorrell (striking down $200-$400 contribution limits as being
too low and invalidating expenditure limits in Vermont) and 2007's FEC v. Wisconsin
Right to Life II (invalidating the application of BCRA's electioneering
communications regulations to a political ad by a nonprofit. BCRA defines "electioneering communications"
as television and radio communications that refer to a clearly identified
candidate for federal office, that are publicly distributed within 60 days
before a general election or 30 days before a primary election, and are targeted
to the relevant electorate.)
Mr. Davis and his amici have argued that disclosure under the Millionaires' Amendment is
particularly burdensome. This is the
first chance since the 2003 decision in McConnell for
the Court to opine on disclosure burdens, a subject which at that time garnered
8 supportive votes from Justices on the Court. Disclosure is widely viewed as the least
restrictive tool in the campaign finance toolbox.
This case is
also an opportunity for the Court to clarify (1) whether the specific $350,000 "trigger"
provision in the Millionaires' Amendment is permissible, and (2) whether
generally mechanisms to equalize funding among candidates with different
financial resources are allowable. While
the endorsement of such a mechanism has been adopted by lower courts in the
public financing context, the Davis case is
the first time that the Supreme Court will entertain this type of argument when
both candidates are using private funds.
If the Court
would like to rid itself of this case on mootness grounds,
it certainly has the opportunity, since the 2006 election is undoubtedly
over. If the Court would like to avoid
the merits it could also punt based on Mr. Davis's failure to establish an
actual injury since although Mr. Davis spent significant sums of his own money in
his 2006 race for Congress, his opponent did not utilize of any of the
Millionaires' Amendment's benefits.
Tags: Democracy, Campaign Finance Reform, Contribution Limits, Other Reforms, Public Financing
By Laura MacCleery – 04/15/08
Cross-posted from the Huffington Post
Sen. Barack Obama's comments last week provided grist for renewed speculation about whether or not he will accept public financing for the general election. With no apparent sense of irony, he said to a roomful of donors at a high-ticket fundraiser that "we have created a parallel public financing system" of free-flowing Internet donations.
This remark may be a signal that Obama is considering using private money for the general election, which would make him the first candidate to do so since the election of President Nixon (before public funding was an option). It certainly is a clear sign that the explosion of small donors will require us to take a fresh look at the structures of campaign finance law.
But it will not help us move forward if enthusiasm for this influx of small donors obscures the facts. Money from large donors is not exactly going the way of the dinosaurs—79 bundlers for Obama have hit up their friends for aggregate contributions of $200,000 each. Still, it is certainly indisputable that having more small donations and less reliance on a tiny pool of wealthy people is a happy development in a democracy.
A true public financing system allows candidates to avoid $2,300-a-person fundraisers like Tuesday's event. But it could look quite different from what we have now, which forecloses any private fundraising in the general election if a candidate accepts a public grant. Indeed, the development of a "parallel" system suggests a way to update the moribund presidential public funding program.
> Read entire piece here.
Tags: Democracy, Campaign Finance Reform, Other Reforms, Public Financing
By Laura MacCleery – 04/07/08
Cross-posted from a Roll Call editorial.
For the first time ever, presidential candidates have managed to turn small donors into their greatest funding source, sending signals that the small-donor revolution — a mere experiment by Howard Dean just four years ago — has officially arrived. In February 2008, according to a Campaign Finance Institute analysis of the latest official campaign receipts, Sen. Barack Obama (D-Ill.) raised 56 percent of his contributions in increments of $200 or less, while Sen. Hillary Rodham Clinton (D-N.Y.) raised 52 percent in similar amounts.
But this February was the first time the much-celebrated small donors of these campaigns exceeded the halfway mark in overall receipts. And looking further down the ballot, there is little sign that the small-donor revolution is taking root. In Congressional politics, the world of small donors is decidedly smaller.
February's presidential numbers reveal some key, unrevolutionary trends. First, the gains were notably lopsided between the parties. While both Democrats in February raised a total of $30.5 million from these small donors, Republican candidates, overall, collected only $5.1 million from the same group. Arizona Sen. John McCain brought in a mere 20 percent from donors who gave $200 or less.
Second, large donors are still a significant part of the overall take. Even in February, CFI reported that donations of $1,000 or more were 22 percent, 25 percent and 67 percent of the Obama, Clinton and McCain campaigns' contributions, respectively.
It also is too early to say whether the small-donor welcome mat will stay out very long. In January, CFI research shows that 46 percent of Obama's $36 million and 35 percent of Clinton's nearly $20 million came from contributors donating $200 or less. McCain raised 24 percent of his contributions ($2.6 million) from these small donors. Who's to say February's numbers weren't just a spike in the enthusiasm surrounding Super Tuesday?
More critical, however, is whether this small-donor frenzy spills over into the hundreds of far less visible Congressional campaigns that lack the fanfare of national change. CFI reports that Democratic and Republican Senatorial candidates are collecting just 6 percent to 22 percent of their funds from small donors. In total, in 2007, donations of $200 or less were a mere 17 percent of all Senate contributions and 27 percent of House-raised funds.
Congressional incumbents, predictably, have the highest reliance on deep-pocketed donors. Pre- election-year fundraising comparisons reveal that incumbents in 2007 took in six to seven times more money from large donors (giving $1,000 or more) than from contributors in the $200 or less category.
And Congress is where concerns about the influence of money on politics should be most acute. Last session, Congressional ethics scandals sent two Members of Congress to jail for influence-peddling, and there have been three additional indictments of lawmakers thus far, as well as five Members who reportedly are still being investigated by law enforcement. In Alaska, state-level scandals made one of the most senior Members of the Senate, Ted Stevens (R), the target of a federal investigation. And it may not be over yet. Notorious super-lobbyist Jack Abramoff is, according to the latest press reports, still cooperating with investigators.
So, despite the rise of a small-donor democracy, contribution limits still very much matter and are likely to matter for some time to come. The soft-money ban in the Bipartisan Campaign Reform Act of 2002 deserves much of the credit: By prohibiting corporate and union contributions to political parties, BCRA pushed candidates to reach out more broadly for individual support.
Looking forward, both meaningful limits and transparency rules are important for the health of an exciting new wave of reforms — public funding systems — because they keep overall costs reasonable and inform the public about all of the players seeking to influence the outcome of elections.
Indeed, without a system of limits in place, it will be hard for publicly funded candidates to keep up with the spending of privately financed competitors. And a robust system of disclosure of independent expenditures enables public funding systems to release more public money when warranted by an influx of outsider money into a race. Limits and disclosure are critical complements to the public funding systems that have succeeded in Arizona and Maine.
Limits can be tailored to specifically value the significance of small donors by allowing innovative vehicles like small-donor political action committees. These special PACs collect contributions in more limited amounts from individual donors than PACs generally can, but they also can give more total money to each candidate than other types of PACs. In this way, small donors make a big splash without rules that could elevate the influence of the wealthy above other voters.
Future proposals will no doubt evolve in appreciation of the burgeoning growth and power of small donations. Certainly, the landscape of money in politics is being transformed in encouraging ways. The influx of small money is a great sign that politics is engaging voters, and it does improve the health of our democracy. But in all the thrill and excitement, we should not forget that contribution limits are playing an important role in making this revolution possible — and ensuring the voices of small donors aren't drowned out by big money and special interests.
Tags: Democracy, Campaign Finance Reform, Contribution Limits, Other Reforms, Public Financing
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