My One Minute of Campaign Finance Fame

October 13, 2014
Pay2Play

So I made my movie debut in John Wellington Ennis’s new documentary “Pay 2 Play: Democracy’s High Stakes” with a whopping two sentences.

The film “Pay 2 Play” is a clever look at the issue of money in politics.  For a topic that can be dull as dirt (and I say this with love since I deal with this nearly everyday), Ennis has pulled off the near impossible feat of rescuing the topic from the boredom of FECA, BCRA and FEC advisory opinions.  He does this by reminding the viewer of the telos these campaign finance laws and regs aspire to attain: a functioning, dynamic and responsive democratic process where good people with good ideas have a reasonable chance of attaining elected office.

The film “Pay 2 Play” is a well made and comic introduction into the world of money in politics for those who don’t live and breathe the issue.  And it has Easter eggs for those of us who do work on the issue like footage of the late Bob Edgar telling a crowd as he often did “we are the leaders we have been looking for.” Ennis also captures some of the problem highlighted in the new report, “The New Soft Money” that candidates are constantly dialing for dollars instead of working for constituents or spending time with voters. 

The film spends some quality time with Surya Yalamanchili (or “Chili” for short) a youthful former reality TV star who ran for Congress in Ohio’s Second District.  His campaign signs playfully read, “Washington needs some Chili.”  Shadowing Yalamanchili, Ennis shows us what a new candidate campaigning on a shoe string looks like: hopeful, hard working and doomed.

In the film, “pay to play” is a term used by Van Jones and several others as a summary of America’s general campaign finance system of privately funded elections.  But for campaign finance, governmental procurements and regulatory compliance lawyers, the term “pay to play” has a much more narrow definition.  In the legal world, pay to play rules are those that try to keep lobbyists, government contractors and highly regulated industries (like gaming and alcohol) from giving campaign money, gifts and good old fashioned bribes to government officials to get various perks. Those perks cover a range of things from pushing or stopping legislation, to granting licenses, to inking lucrative contracts.  The whole point is these governmental actions should be done on the basis of merit and not because the recipient wrote the biggest campaign check.

As life imitates art, fights over pay to play laws have been going on in courtrooms as the movie “Pay 2 Play” shows in theatres.  One such anti-pay-to-play rule that is being challenged in the courts is the Securities and Exchange Commission’s (SEC’s) Rule 206(4)-5.  Never heard of it?  Unless you are in the business of investing vast public pension funds for states and cities, you can be forgiven for not noticing this 2010 rule, which aims at curbing pay to play in public pension investments.  

The district court in the case explained the genesis of Rule 206(4)-5: “[a]spate of investigations and prosecution over the past decade revealed the reality of abusive pay-to-play activities in the selection and retention of pension plan investment advisers.  For example, in New York, an investment management firm seeking to win investment business from the New York State Common Retirement Fund paid ‘kickbacks’ to advisers of the New York State Comptroller in order to secure business.”

The New York Republican State Committee and the Tennessee Republican Party sought to stop this rule in its tracks arguing it was unconstitutional to limit the political spending of investment advisers seeking state contracts to invest public pension funds.  This complaint was dismissed by the district court for the District of Columbia for lack of subject matter jurisdiction (in other words that the case was brought in the wrong court).  So it will be up to the plaintiffs if they want to refile this challenge.  If you are a taxpayer, then you likely want this anti-pay-to-play rule to stay in place because who foots the bill in higher cost if pension investing isn’t done in arms-length transactions?  You guessed it.  The taxpayer

In another on-going case, Wagner v. FEC, a 70-year-old ban on politicking by government contractors is being challenged.  That case was heard en banc by the D.C. Circuit on September 30, 2014.  At least some on the bench seemed reluctant to abandon this anti-pay-to-play law. As reported by Politico: “Judge Cornelia Pillard also suggested there might be valid reasons to be more concerned about [government] contractors …. ‘Contractors tend to be individuals who are in and out and in and out,’ she said. ‘Doesn’t that exacerbate the risk of pay to play that’s the dynamic that’s at the center of this effort?’”

And as the AP noted, Judge Tatel saw constitutional tailoring between the goal of the law and its anti-corruption approach:

Appeals judge David Tatel [said], "There's no risk here that Congress is trying to accomplish some nefarious purpose, like leveling the playing field or limiting the amount of money in politics or even protecting incumbents," he said. "This law is focused on government corruption — corruption just in the procurement process — and its focus applies only to people participating in that process and only while they're participating" as contractors, he said. "So it seems that the fit is actually quite snug."

“Pay 2 Play” the film gives viewers a lot to think about including the filmmaker’s suggestions for ways to improve the democratic process like providing public financing for campaigns, improving disclosure of the sources of money in politics and free airtime for candidates.  But it is worth remembering while there are pushes for big, creative improvements in our electoral process, the existing laws and rules that tried to keep pay to play at bay are also fighting for survival in court on a daily basis.  Democracy needs both the lawyers who defend these good laws as well as the filmmakers to remind us of the bigger picture of why fair elections is  worth the fight.

The views expressed are the author's own and not necessarily those of the Brennan Center for Justice.